gasoline inventories at a record high; DUC well backlog at 7.1 months as wells drilled & wells completed hit 6 month lows

oil prices slipped this week for the first time in 4 weeks, in trading that was somewhat less volatile than what we've seen over the past few months, suggesting that prices may be entering a trading range...after rising 4.3% to $53.80 on OPEC output cuts and wishful thinking on trade last week, US oil prices for February delivery traded sharply lower when the markets reopened after the King holiday on Tuesday, after a warning from the International Monetary Fund and weak economic data from China renewed concerns of a slowing global economy and reduced oil demand, with prices ​for​ February oil ending the day down $1.23 at $52.57, while oil contracts for March delivery fell $1.03 to $53.01... now quoting March oil as the market price, oil prices gave up early gains on Wednesday as fears of a widespread economic slowdown, which would dent demand for fuel, weighed on prices and then extended ​into losses when the API reported a surprisingly large increase in US crude supplies, with oil ending down 39 cents at $52.62 a barrel....however, oil prices reversed that slide and rose 51 cents to $53.13 a barrel on Thursday, after a​n administration​ backed Venezuelan leader swore himself in as the country’s interim president and the US threatened sanctions on their oil exports, a move which would hurt US oil refiners more than it would Venezuela....oil prices continued to climb on the new Venezuelan crisis on Friday, despite surging US oil and gasoline supplies, with oil ending the session up 56 cents at $53.69 per barrel...thus for the week, the March US oil contract recovered to end just 0.7% lower than a week earlier, while the international benchmark price for Brent crude for March ended 1.7% lower over 5 days of trading at $61.64, and also posted its first week of losses in four weeks...

natural gas contract prices were also lower this week, mostly ​due to a 13% drop on Tuesday that was precipitated by weaker cash prices for the physical commodity, lower LNG exports, and a long range forecast for warmer weather...then, after falling 44.2 cents to $3.040 per mmBTU on Tuesday, prices of natural gas for February delivery fell another 6 cents on Wednesday after afternoon weather models warmed in the long-range forecast, but​ then​ reversed those losses and rose 11.9 cents on Thursday and 7.9 cents on Friday to end the week at $3.178 per mmBTU, still down 8.7% from the prior Friday's close...

the natural gas storage report for the week ending January 18th from the EIA indicated that the quantity of natural gas in storage in the US fell by 163 billion cubic feet to 2,370 billion cubic feet over the week, which meant our gas supplies were thus 33 billion cubic feet, or 1.4% above the 2,337 billion cubic feet that were in storage on January 19th of last year, but still 305 billion cubic feet, or 11.4% below the five-year average of 2,675 billion cubic feet of natural gas that have typically been in storage as of the 3rd weekend of January....this week's 163 billion cubic feet withdrawal from US natural gas supplies was a bit more than the Reuters' survey estimate that 154 billion cubic feet would be needed, but it was somewhat less the average of 185 billion cubic feet of natural gas that have been withdrawn from US gas storage during the second full week of January over the last 5 years...while 54 billion cubic feet was pulled from natural gas supplies in the East and 56 billion cubic feet were pulled from storage in the Midwest this week, those regions are now running only 8.6% and 5.3% below normal respectively...on the other hand, natural gas supplies in the Pacific region, which were only down 11 billion cubic feet this week, are still 26.9% below their five year average for this time of year..

as this week's report noted, our natural gas supplies are now above those of the same weekend a year ago....that's because the temperatures over the recent month this year have been considerably warmer than the equivalent month of last year, and hence much less natural gas has been needed from storage....over the 5 weeks ending January 18th, we only needed to withdraw 303 billion cubic feet of natural gas from storage to meet our needs; however, over the 5 weeks ending January 19th of last year, we found it necessary to pull 1,133 billion cubic feet of natural gas from storage to meet our needs, which were even less at the time, with considerable electrical generation and export capacity having been added in the past year...as you can see from the map below, all regions except for the east remained warmer than normal this past week, and temperatures in the upper Midwest were much above normal, and we still managed to need 163 billion cubic feet of natural gas from storage...hence, the forecast for much colder than normal temperatures for the coming week should put our natural gas supplies for this year to the test, and determine if our stores can remain "within the five-year historical range for this time of year" throughout the remainder of th​is winter...

(source) 

The Latest US Supply and Disposition of Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending January 18th, indicated a large increase in our oil imports and a big drop in our oil exports, while our oil refining slowed modestly, which thus resulted in a large addition of surplus oil to our commercial crude supplies...our imports of crude oil rose by an average of 664,000 barrels per day to an average of 8,191,000 barrels per day, after falling by an average of 319,000 barrels per day the prior week, while our exports of crude oil fell by an average of 931,000 barrels per day to an average of 2,035,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 6,156,000 barrels of per day during the week ending January 18th, 1,595,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was ​estimated to be unchanged at a record 11,900,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 18,065,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 17,049,000 barrels of crude per day during the week ending January 18th, 174,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 1,139,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....thus, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 132,000 barrels per day short of what was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+132,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 7,739,000 barrels per day last week, but was still 2.1% less than the 7,904,000 barrel per day average that we were importing over the same four-week period last year.... the 1,139,000 barrel per day increase in our total crude inventories ​was a 1,139,000 barrel per day addition to our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported unchanged at 11,900,000 barrels per day because the rounded estimate for output from wells in the lower 48 states was unchanged at 11,400,000 barrels per day, while a 16,000 barrel per day decrease to 491,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending January 19th was at 9,878,000 barrels per day, so this week's rounded oil production figure was 20.5% above that of a year ago, and 41.2% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...     

US oil refineries were operating at 92.9% of their capacity in using those 17,049,000 barrels of crude per day during the week ending January 18th, down from last week's 94.6% of capacity, but still the highest capacity utilization rate for the middle ​week ​of January since 1999....likewise, the 17,049,000 barrels per day of oil that were refined this week were again at a seasonal high for the date for the 30th time out of the past 34 weeks, and 3.4% higher than the 16,483,000 barrels of crude per day that were being processed during the week ending January 19th, 2017, when US refineries were operating at 90.9% of capacity... 

even with the decrease in the amount of oil being refined, the gasoline output from our refineries was a bit higher, rising by 20,000 barrels per day to 9,604,000 barrels per day during the week ending January 18th, after our refineries' gasoline output had increased by 192,000 barrels per day the prior week....with the modest increase in this week's gasoline output, our gasoline production was 2.6% higher than the 9,358,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 208,000 barrels per day to 5,204,000 barrels per day, after that output had decreased by 151,000 barrels per day the prior week....however, despite those decreases, this week's distillates production was still 7.8% higher than the the 4,827,000 barrels of distillates per day that were being produced during the week ending January 19th, 2018.... 

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week rose by 4,050,000 barrels to 259,615,000 barrels by January 18th, after jumping by a near record of 15,569,000 barrels during the prior two weeks....our gasoline supplies rose​ again​ this week as our imports of gasoline rose by 184,000 barrels per day to 561,000 barrels and as our exports of gasoline fell by 283,000 barrels per day to 547,000 barrels per day, while the amount of gasoline supplied to US markets rose by 303,000 barrels per day to 8,868,000 barrels per day...with this week's increase, our gasoline inventories are at a record high, 6.4% higher than last January 19th's level of 244,040,000 barrels, and roughly 6% above the five year average of our gasoline supplies for this time of the year...

since our gasoline inventories are now at a record high, we'll include a historical graph of those gasoline inventories for some context:

the above graph was lifted from a Zero Hedge hedge article titled "Gasoline Overproduction Leads To Negative Margins" which in turn was a reposting of an oil price article with the same title, which itself is largely a restatement of a Reuters report which addresses global gasoline inventories, rather than those just in the US...the oil price article incorrectly assumes that record US gasoline inventories are due to overproduction, whereas as we've noted, our gasoline production over the recent weeks has been running below that of a year ago and hence is now close to a two year low for the most recent 5 week period...actually, as we've reported, our gasoline inventories have recently grown ​largely due to lower domestic consumption and reduced exports...the misunderstanding in the associated article notwithstanding, the graph above correctly shows our weekly gasoline inventories beginning in 2002, and the pattern of seasonally high gasoline supplies in the middle of winter each year should be fairly evident...since there has been a gradual increase in gasoline inventories over the 17 years shown, it's not surprising that a new record high would be set in any given January or February, when unnecessary driving is at a seasonal low...​in this case, ​the 259,615,000 barrels of gasoline that we had stored on January 18th exceeded the 259,063,000 barrels we had stored on February 10th, 2016 by just 0.2%...

with the decrease in our distillates production, our supplies of distillate fuels decreased for the 12th time in eighteen weeks, falling by 617,000 barrels to 143,009,000 barrels during the week ending January 18th, after our distillates supplies had increased by a record 23,107,000 barrels over the previous three weeks...our distillates supplies decreased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 219,000 barrels per day to 4,668,000 barrels per day while our imports of distillates fell by 23,000 barrels per day to 355,000 barrels per day, and while our exports of distillates rose by 62,000 barrels per day to 979,000 barrels per day....even with this week's decrease, our distillate supplies were 1.8% above the 139,840,000 barrels that we had stored on January 19th, 2017, even as they remained 2% below the five year average of distillates stocks for this time of the year...

finally, with rising imports and falling exports, our commercial supplies of crude oil increased for ​just the ​2nd time in 8 weeks, rising by 7.970,000 barrels over the week, from 437,055,000 barrels on January 11th to 445,025,000 barrels on January 18th...with a run of 10 large weekly increases before the recent smaller decreases, ​however, ​our crude oil inventories are now roughly 9% above the five-year average of crude oil supplies for this time of year, and more than 30% above the 10 year average of crude oil stocks for the middle of January, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories had mostly been rising since this past Fall, after falling until then through most of the prior year and a half, our oil supplies as of January 18th were thus 8.1% above the 411,583,000 barrels of oil we had stored on January 19th of 2017, while remaining 8.8% below the 488,296,000 barrels of oil that we had in storage on January 20th of 2016, and 4.0% below the 463,552,000 barrels of oil we had in storage on January 22nd of 2015..   

This Week's Rig Count

US drilling activity, as evidenced by the number of drilling rigs active at the end of the week, increased for the first time in 4 weeks this past week, but still remains below the levels of early October, when oil prices were 30% higher...Baker Hughes reported that the total count of rotary rigs running in the US rose by 9 rigs to 1059 rigs over the week ending January 25th, which was also 112 more rigs than the 947 rigs that were in use as of the January 26th report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, which was the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil rose by 10 rigs to 862 rigs this week, which was also 103 more oil rigs active this week than were running a year ago, while it remained well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 1 rig to 197 natural gas rigs, which was still 9 more rigs than the 188 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling in the Gulf of Mexico increased by 1 rig to 20 rigs this week, as the only rig that had been drilling offshore from Texas was shut down, while new drilling began from 2 platforms ​set up ​offshore from Louisiana...that's an increase of 3 Gulf rigs from a year earlier, when 16 rigs were deployed offshore from Louisiana and a rig was also active offshore from Texas....since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 20​1​8, the Gulf of Mexico totals are identical to the US totals...meanwhile, in contrast to the ​increased activity offshore, a single platform which had been drilling through a inland body of water in southern Louisiana was shut down this week​,​ and now only one remains, the same number of such "inland waters" rigs as​ there were​ a year ago...

the count of active horizontal drilling rigs increased by 3 rigs to 932 horizontal rigs this week, which was also 124 more horizontal rigs active than the 808 horizontal rigs that were in use in the US on January 26th of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the directional rig count increased by 4 rigs to 59 directional rigs this week, which was still down from the 73 directional rigs that were in use during the same week of last year...at the same time, the vertical rig count increased by 2 rigs to 68 vertical rigs this week, which was also up from the 66 vertical rigs that were operating on January 26th of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of January 25th, the second column shows the change in the number of working rigs between last week's count (January 18th) and this week's (January 25th) count, the third column shows last week's January 18th active rig count, the 4th column shows the change between the number of rigs running on Friday and those 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 26th of January, 2018...    

since there is an apparent increase of 7 horizontal rigs shown in the basin totals shown above, we know that 4 horizontal rigs working in other basins not tracked separately by Baker Hughes must have been shut down...and since those basin count changes shown only account for activity ​in ​a handful of states, we know that most of the state count changes involved increases or decreases in rigs in those same basins...​meanwhile, ​the rig counts in all four Permian basin Texas Oil Districts were all unchanged this week, so New Mexico's 4 rig increase included three rigs in the Permian and one elsewhere in the state, as there are at least ​2 other plays in New Mexico which have been drilled recently...although the Eagle Ford of southern Texas shows no change in its count, drillers​ in​ the Eagle Ford did in fact add a natural gas rig while shutting down an oil rig, leaving 72 oil rigs still active there...other natural gas rigs were added in Ohio's Utica shale and West Virginia's Marcellus, ​where there were 2 rigs added while a Pennsylvania Marcellus rig was shut down...to arrive at the 'minus one' natural gas rig number we mentioned earlier, 4 natural gas rigs working in other basins not tracked separately by Baker Hughes were concurrently shut down...finally, in addition to the totals for the major producing states that are shown above, drillers in Mississippi also added a rig this week and now have 3 rigs active, same number as a year ago, while Bakken frackers shut down another one of their rigs in Montana, where just a single rig remains active, same as a year ago...there had been as many as 4 rigs working in Montana at the beginning of December...

DUC well report for ​December

Tuesday of this past week saw the release of the EIA's Drilling Productivity Report for January, which includes the EIA's December data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the 9th month in a row, this report showed an increase in uncompleted wells nationally in ​December, even though both drilling of new wells and completions of drilled wells decreased....like most previous months, this month's uncompleted well increase was mostly due to a big increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of west Texas, with a moderate increase of uncompleted wells in the Eagle Ford of south Texas also contributing...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 218 wells, from a revised 8,376 wells in November to 8,594 wells in December, a 31.2% increase from the 6,548 wells that had been drilled but remained uncompleted in December a year ago...that was as 1,429 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during December, down from the 1,531 drilled in November, while 1,211 wells were completed and brought into production by fracking, a decrease of 88 well completions from the 1,299 completions seen in November...at the December completion rate, the 8,594 drilled but uncompleted wells left at the end of the month now represent a 7.1 month backlog of wells that have been drilled but not yet fracked...  

as has been the case for most of the past two years, the December DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian basin saw its total count of uncompleted wells rise by 205, from 3,843 DUC wells in November to 4,048 DUCs in December, as 601 new wells were drilled into the Permian, but only 396 wells in the region were fracked...at the same time, DUC wells in the Eagle Ford of south Texas increased by 41, from 1,520 DUC wells in November to 1,561 DUCs in December, as 214 wells were drilled in the Eagle Ford during December, while 173 Eagle Ford wells were completed...over the same period, the number of DUC wells in the Anadarko basin region centered in Oklahoma increased by 7 to 1,077, as 166 wells were drilled into the Anadarko basin while 159 Anadarko wells were fracked....in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 6 wells to 193, as 55 wells were drilled into the Haynesville during December, while 49 Haynesville wells were fracked during the same period...

on the other hand, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 27 wells, from 556 DUCs in November to 529 DUCs in December, as 111 wells were drilled into the Marcellus and Utica shales, while 138 of the already drilled wells in the region were fracked...in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 3 wells to 455, as 175 Niobrara wells were drilled in December while 178 Niobrara wells were being fracked...lastly, DUC wells in the Bakken of North Dakota fell by 11, from 742 DUC wells in November to 731 DUCs in December, as 107 wells were drilled into the Bakken in December, while 118 of the drilled wells in that basin were completed....thus, for the month of December, DUCs in the 5 oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 239 wells to 7,872 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 21 wells to 722 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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AEP Ohio solar farm hearings begin - Times Gazette - At the first week of an evidentiary hearing at the Public Utilities Commission of Ohio (PUCO) offices, expert witnesses provided compelling testimony in support of the largest clean energy project in Ohio’s history. The case will determine if American Electric Power (AEP) Ohio’s application to prove the need to build at least 900MW of Ohio renewable energy projects, which include 400 MW of solar powered generation to be located in Highland County, will be approved. In addition to AEP Ohio, expert testimony was provided by the Sierra Club, Natural Resources Defense Council (NRDC) and Ohio Partners for Affordable Energy (OPAE), with the Mid-Atlantic Renewable Energy Coalition set to testify in support later this week. These experts explained in detail the benefits that would be brought to Appalachian Ohio and AEP’s electricity customers. Opponents to AEP’s plan were also expected to make their case this week, starting Wednesday. PUCO commissioners will make the ultimate decision and determine renewable energy’s role in Ohio’s energy future after all testimony concludes. AEP Ohio’s experts kicked off the hearing by providing an overview of the renewable energy projects and made the case for the need in Ohio. These experts noted that large corporations now have aggressive renewable energy procurement goals, driven by both the environmental benefits as well as the economic savings and fuel price risk hedging benefits of renewable energy. They also explained how, for years, the Ohio has failed to produce enough electricity within the state to meet usage requirements. The gap between supply and demand inside Ohio continues to widen and with recent retirement announcements from other Ohio utilities, more coal and nuclear plants will shut down and this gap will become even larger. Ohio currently depends on energy produced in other states to be brought in to meet the needs of its people, businesses and industry. 

Deal could keep Davis-Besse online until at least May 31, 2020 — FirstEnergy Solutions Corp. said Wednesday it has struck a tentative deal with its creditors to keep its Davis-Besse nuclear power plant and its other power-generating facilities in Ohio and Pennsylvania online at least through their previously announced shutdown dates. Davis-Besse — Ottawa County’s largest employer and one of Ohio’s largest sources of tax revenue — is scheduled to shut down no later than May 31, 2020. Other nuclear facilities — the Perry nuclear plant east of Cleveland and the twin-reactor Beaver Valley complex west of Pittsburgh — are scheduled to be phased out before the end of 2021 while the remaining FES coal-fired power plants are still destined to be permanently shut down by mid-2022. The proposed agreement will form the basis of a reorganization plan that is subject to approval by Judge Alan M. Koschik of U.S. Bankruptcy Court in Akron. The plan is expected to be filed by Feb. 8, the company said. During a conference call with The Blade following the announcement, David Griffing, FirstEnergy Solutions vice president of governmental affairs, said company officials are “working like crazy trying to extend the lives of those plants” but continue to get little response to its calls for legislative relief on the state or federal levels. “I would say there’s still a lot of heavy lifting to do,” Mr. Griffing said. No signs of a buyer or bailout have emerged yet. FES and its parent, FirstEnergy Corp., have lobbied for relief from record-low natural gas prices for years.

15 Permits Awarded in the Utica Shale; Rig Count at 16 - – The Ohio Department of Natural Resources awarded 15 new permits for horizontal wells across eastern Ohio’s Utica shale during the week ended Jan. 19, the agency reported.  Ascent Resources was awarded eight permits for wells in Harrison County, while Eclipse Resources secured four new permits in Guernsey County, ODNR said. EM Energy Ohio LLC was awarded three permits for wells in Monroe County, ODNR said.  The number of rigs operating across the Utica shale stood at 16 for the week. As of Jan. 19, ODNR had issued 2,982 permits for horizontal wells, of which 2,514 are drilled and 2,137 are in production. ODNR did not issue permits for wells in Mahoning, Columbiana, or Trumbull counties in the Utica’s northern tier. Also, no well permits were issued in neighboring Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.

Enbridge Gas Pipeline Fire Causes Damage in Ohio - First responders were called to a fire at an Enbridge Inc. natural gas pipeline in Noble County, Ohio Monday, several news outlets reported. A tweet posted to Enbridge’s Twitter page Monday afternoon stated that Enbridge personnel were responding to an “incident” on its Texas Eastern pipeline system. According to Reuters, who quoted Chasity Schmelzenbach, emergency management director for Noble County, Ohio, as of 2 p.m. CST, the explosion appeared to have destroyed two homes. Schmelzenbach said they received reports of flames shooting up to 200 feet and could be seen from up to 15 miles away. She added that one person was taken to a hospital with what appeared to be minor injuries. The primary fire on the pipeline had been extinguished. Enbridge has said it will provide updated details as they become available. 

Enbridge Gas Pipeline Explodes in Ohio - A natural gas pipeline owned by Enbridge exploded in Noble County, Ohio at approximately 10:40 a.m. on Monday.At least two people were reportedly injured and two homes are believed to have been damaged in the incident."We got reports flames were shooting (up) 80 feet to 200 feet (25-60 meters)," Chasity Schmelzenbach, emergency management director for Noble County, Ohio, told Reuters. "You could see it upwards of 10-15 miles (16-24 km) away. Lots of people thought it was in their backyard because it does appear large."The Canadian energy transportation company confirmed that the incident occurred on its 30-inch Texas Eastern pipeline. The pipeline was built in 1952-53 and an in-line inspection was performed in 2012, "and no remediation was needed," Enbridge said.The fire has been contained and residents near the incident have been evacuated, the company said, adding that "field operations immediately started to shut in and isolate that section of pipeline.""Our first concern is for the safety of the community and our employees," Enbridge said. "We have activated our emergency response plan and are cooperating with authorities in our response." The 9,029-mile Texas Eastern pipeline carries natural gas from the U.S. Gulf Coast and Texas to high demand markets in the northeastern U.S., according to the operator's website. It's not yet clear if the shut-in will impact its customers, Reuters noted. In October, another Enbridge-owned pipeline exploded in rural land north of Prince George, British Columbia, forcing 100 people to evacuate from the nearby Lheidli T'enneh First Nation. Enbridge is the same company behind the proposed Line 3 oil pipeline in northern Minnesota and the contentious Line 5 oil pipeline, which is notable for a section that runs along the bottom of the Straits of Mackinac, a narrow waterway that connects Lakes Huron and Michigan.

Enbridge gas pipeline explosion causes fireball in Ohio (Reuters) - An explosion of an Enbridge Inc natural gas pipeline in Ohio on Monday created a fireball of flame and damaged homes, prompting the evacuation of nearby residents. The explosion occurred on Enbridge’s Texas Eastern pipeline system and appeared to have destroyed two homes, said Chasity Schmelzenbach, emergency management director for Noble County, Ohio. “We got reports flames were shooting (up) 80 feet to 200 feet (25-60 meters),” Schmelzenbach said. “You could see it upwards of 10-15 miles (16-24 km) away. Lots of people thought it was in their backyard because it does appear large.” Enbridge later said that two people were injured and two structures damaged in the incident, which occurred at 10:40 a.m. EST (1540 GMT). It said the fire had been contained, but that residents near the incident had been evacuated. The Calgary-based company said it had “immediately started to shut in and isolate that section of pipeline” and was cooperating with authorities in its response. The U.S. Pipeline and Hazardous Materials Safety Administration has been notified about the explosion and has dispatched an investigator to the scene, an agency spokesman said. Enbridge’s Texas Eastern pipeline carries natural gas from the U.S. Gulf Coast and Texas to high-demand markets in the mid-Atlantic and Northeast, according to Enbridge’s website. It was not immediately clear if the shut-in would impact customers in some of the most densely populated areas in the United States during a particularly severe cold snap. A fire on an Enbridge gas pipeline in northern British Columbia late last year led to supply disruptions throughout the Pacific Coast, forcing a number of Washington state refineries to temporarily shut or curb operations. 

Pipeline explosion in Noble County injures one, destroys 2 homes - — At least one person has been injured and two homes are believed to have been destroyed by a gas line explosion Monday morning on Smithberger Road in Noble County.“The fire (in the line) is dissipating and firefighters are fighting secondary fires in the area,” said Noble County Emergency Management Agency Director Chasity Schmelzenbach. “We also have one confirmed injury and the victim was transported to the hospital (in Marietta).”Fire departments with firefighters at the scene include the Caldwell, Summerfield and Lewisville departments.The name of the victim who reportedly suffered burns as a result of the fire was not available as of press time. He was taken to a Marietta hospital by United Ambulance.The explosion was reported at 10:40 a.m.A Noble County resident who lives approximately a mile out of Caldwell — and seven miles from the scene — reported the explosion knocked items of the wall at her home.“Our house shook so bad things came off the walls,” said Trina Moore. “Pictures came off the wall and it shook for about 15 seconds, but it felt like forever. All of the neighbors ran outside.”Scanner traffic from emergency responders in Noble County indicated the ground was shaking after the explosion. A Noble County sheriff’s sergeant responding to the scene reported via radio that flames were shooting an estimated 80 feet into the air. The fire was visible for miles around the scene.

Enbridge's TETCO Ohio pipe blast causes gas flows to decline (Reuters) - The flow of natural gas through parts of Enbridge Inc's Texas Eastern (TETCO) pipeline dropped on Tuesday following an explosion in Noble County in southeast Ohio on Monday. The explosion, which occurred on TETCO's 30-inch (76.2 cm) line about two miles south of Summerfield, Ohio, at around 10:40 a.m. EST (1540 GMT), injured two people living nearby and damaged three homes, Enbridge said in a statement on Tuesday. The Calgary-based company said it was working with the Public Utilities Commission of Ohio and the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) to identify the cause, monitor repairs and evaluate environmental impacts. On Tuesday, however, flows through TETCO in Monroe County fell to 1.3 bcfd. One billion cubic feet is enough gas for about 5 million U.S. homes for a day. Flows also declined in Athens and Scioto Counties in southern Ohio and Bath, Monroe and Boyle Counties in eastern and south central Kentucky, according to the Refinitiv data. In addition, flows reversed direction in Greene County in southwest Pennsylvania. Greene County is one of the state's biggest gas producing counties. Officials at Enbridge could not immediately say which direction the gas was flowing through the damaged pipeline. They said there were three pipes in the area of the blast. The 9,029-mile (14,531-km) TETCO pipeline was designed to carry gas from the U.S. Gulf Coast and Texas to high-demand markets in the mid-Atlantic and Northeast. Over the past five years or so, TETCO became bi-directional, which means it can also carry gas from the Marcellus and Utica shale in Pennsylvania, Ohio and West Virginia, where production is growing rapidly, to markets in the U.S. Midwest and the Gulf Coast. 

Enbridge TETCO Ohio pipe blast cuts US Marcellus, Utica natgas output - (Reuters) - U.S. natural gas output in the Marcellus and Utica shale in Pennsylvania, Ohio and West Virginia dropped by 7 percent on Wednesday, following an explosion on Enbridge Inc's Texas Eastern (TETCO) pipeline on Monday. The blast, which injured two people who lived nearby and damaged three homes, occurred on TETCO’s 30-inch (76.2 cm) line about two miles south of Summerfield in Noble County in southeast Ohio at around 10:40 a.m. EST (1540 GMT), the Calgary-based company said in a statement. Before the incident, drillers were producing about 30 billion cubic feet per day (bcfd) of gas in the Marcellus and Utica region. That dropped to just 28 bcfd on Wednesday, according to Refinitiv, a financial data provider. One billion cubic feet is enough gas for about 5 million U.S. homes for a day. At the time of the blast, gas was flowing through TETCO from the Marcellus and Utica shale fields south toward the Gulf of Mexico, according to gas traders. The amount of gas moving through TETCO south of the damaged pipe in Athens and Scioto Counties in southern Ohio dropped from around 1.2 bcfd on Monday to less than 0.1 bcfd on Wednesday, according to Refinitiv data. In Bath, Monroe and Boyle Counties in Kentucky, flows also fell from over 1.0 bcfd on Monday to about 0.1 bcfd Wednesday. In Pennsylvania, meanwhile, flows in Greene County in the southwest corner of the state reversed direction from 0.6 bcfd moving West on Monday to 0.4 bcfd heading east on Wednesday. Greene County is one of Pennsylvania’s biggest gas producing counties. Officials at Enbridge could not say when the damaged section of pipe would return to service. The Calgary-based company said it was working with the Public Utilities Commission of Ohio and the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) to identify the cause, monitor repairs and evaluate environmental impacts. Enbridge said the damaged section of pipe was built in 1952-53 and an inspection of the line was performed in 2012 with no remediation needed.

US natgas pipeline flows reversed after Enbridge TETCO Ohio pipe blast (Reuters) - Enbridge Inc reversed the direction of natural gas flows on its Texas Eastern (TETCO) pipeline in Ohio after an explosion on one of its lines there on Monday, according to financial data provider Refinitiv. Before the blast, which injured two people and damaged three homes, gas was flowing south through the damaged section of pipe from the Marcellus and Utica shale in Pennsylvania, Ohio and West Virginia toward the Gulf Coast, according to Refinitiv and gas traders. After the explosion, however, small amounts of gas started moving north from the Gulf Coast on southern sections of the pipe. This would allow the pipeline to serve customers in states like Tennessee and Kentucky who stopped receiving gas after the explosion. Enbridge said it isolated two other gas pipes near the damaged 30-inch (76.2 cm) line near Summerfield in Noble County in southeast Ohio so crews can safely investigate the integrity of those two lines prior to returning them to service. The Calgary-based company did not estimate when it would return the pipeline to service. Before the incident, drillers were producing over 30 billion cubic feet per day (bcfd) of gas in the Marcellus and Utica region. That dropped to around 29 bcfd on Monday-Thursday, according to Refinitiv. One billion cubic feet is enough gas for about 5 million U.S. homes for a day. In counties south of the damaged pipe, like Athens and Scioto in southern Ohio and Bath and Boyle in Kentucky, about 1.2 bcfd of gas was flowing south on TETCO toward the Gulf of Mexico on Sunday, according to Refinitiv. But since the blast, almost 0.1 bcfd has been flowing north on the pipe through those counties on Tuesday-Thursday. On the eastern side of the damaged pipe, flows in Greene County in southwest Pennsylvania also reversed direction. About 0.6 bcfd of gas was moving toward the Gulf Coast on Sunday before the blast. Since then, however, about 0.5 bcfd has been heading east toward New Jersey. Greene County is one of Pennsylvania’s biggest gas producing counties.

Enbridge expects to restore part of damaged Ohio TETCO pipe next week - (Reuters) - Enbridge Inc said it plans to restore southbound natural gas flows on part of its Texas Eastern (TETCO) pipeline in Ohio by the middle of next week following an explosion on one of three lines there this week. The shutdown on Monday forced drillers using the pipe to reduce output in the Marcellus and Utica shale in Pennsylvania, Ohio and West Virginia, the nation's biggest gas producing region, a week before a polar vortex is expected to freeze the eastern half of the country. Total output in the Marcellus and Utica slipped from 30 billion cubic feet per day (bcfd) before the blast to around 29 bcfd on Monday-Friday, according to financial data provider Refinitiv. TETCO told customers in a notice late Thursday it was working to return at least one of the undamaged pipes in the area of the blast and increase north-to-south flows there to around 1 bcfd between Jan. 28-30 from zero now. That would be just days ahead of the forecast deep freeze, which is expected to bring the coldest weather in over a decade to parts of the Midwest and very low temperatures in the Northeast and Southeast, according to meteorologists at Radiant Solutions. Before the blast, which injured two people and damaged three homes near Summerfield in Noble County in southeast Ohio, about 1.2 bcfd of gas was flowing south on TETCO from Ohio toward the Gulf of Mexico, according to Refinitiv. After the explosion, TETCO started moving up to 0.2 bcfd of gas north into Kentucky and Ohio. On the eastern side of the damaged pipe, flows in Greene County in southwest Pennsylvania also reversed direction. About 0.6 bcfd was moving toward the Gulf Coast before the blast. Since then, about 0.5 bcfd has been heading east toward New Jersey. Greene County is one of Pennsylvania's biggest gas producing counties.

2019 Outlook- Experts predict an increase in production for Marcellus Shale region - 2018 shale production is expected to rise between seven and eight percent from 2017, according to E&P, and into 2019, growth predictions aren’t slowing down. Cabot Oil & Gas Corp. is predicting production to increase 20 to 25 percent in 2019, in accordance with increased natural gas demand and prices.The price of natural gas rose nearly 17 percent to $2.36 per thousand cubic feet according to Oil & Gas Investor.The Marcellus is playing a significant role in the USA’s total gas production. Rig count for unconventionals across the US increased by 17 percent year- over-year from 748 in Nov. 2017 to 877 as of Nov. 16, 2018. Much of this increase was driven by the Marcellus shale region, where rig counts are up from 38 to 42 percent as of Nov. 2017 to 58 as of Nov. 16, 2018. Natural gas production has been increasing for more than a decade with the Marcellus and Utica shale region, Permian Basin, and Haynesville shale region collectively accounting for 15 percent of total natural gas production in 2007. Just over ten years later, the regions account for more than 50 percent of total production—according to the EIA. Tom Murphy, the co-director of the Marcellus Center for Outreach and Research at Penn State University provides his insight into how development in the Marcellus region will unfold, and how factors including recent elections and climate change may play a role in the natural gas 2019 outlook. (interview transcript)

US natgas production to jump roughly 1 Bcf/d: Dpr - Natural gas production in the Lower 48 U.S. states’ seven most prolific basins/plays will jump 849 million cubic feet per day (Mmcf/d) from January to February, federal data shows. The Energy Information Administration’s just-released January Drilling Productivity Report (Dpr) projects total gas production from the seven so-called regions will reach 77.56 billion cubic feet per day (Bcf/d), from 76.71 Bcf/d in January. All seven regions are expected to see a month-to-month increase in natural gas production, led by Appalachia, the combination of the Marcellus and Utica Shale plays. Appalachia production will jump 232 million cubic feet per day (Mmcf/d), to 31.57 Bcf/d, from 31.34 Bcf/d, the Dpr states. Not far behind is the Permian Basin, which will see a jump in associated gas production due to the tremendous crude oil production in West Texas/southeast New Mexico. Natural gas production will rise by 221 Mmcf/d in the Permian, to 13.18 Bcf/d in February, up from 12.96 Bcf/d in January, Kallanish Energy projects. The Haynesville Shale play is the third of the seven regions projected to see a triple-digit jump in production. The play’s gas production will rise by 149 Mmcf/d, to 10.07 Bf/d, from 9.92 Bcf/d in January. The Eagle Ford Shale play is expected to see natural gas production increase by 98 Mmcf/d, to 7.14 Bcf/d in February, from 7.05 Bcf/d in January. Natural gas production in the Anadarko, Niobara and Bakken combined will rise by 149 Mmcf/d, the Dpr projects. .

Environmental Groups Appeal Ohio Cracker Air Quality Permit - A coalition of environmental groups is challenging an air quality permit issued to a proposed petrochemical plant along the Ohio River. Ohio EPA issued the air quality permit to the PTT Global Chemical America project, proposed for Belmont County, Ohio,  in late December.The plan, called an ethane cracker, would use high heat to break down 1.5 million tons of ethane each year into smaller molecules used in plastics and chemical manufacturing.Ethane is brought up during natural gas fracking.The Sierra Club, Center for Biological Diversity, Earthworks and Freshwater Accountability Project filed an appeal of the air quality permit Friday to the Ohio Environmental Review Appeals Commission.They argue the state underestimated the amount of pollution the plant will emit should have required more effective technology to reduce those emissions.The permit would allow the cracker to release almost 400 tons of volatile organic compounds each year and produce the equivalent carbon dioxide emissions of putting about 365,000 cars on the road.At a public hearing in November, state EPA officials said air quality and public health would not be impacted by the plant. Dozens of local residents and environmental groups testified they had concerns.The plant would be the second cracker built in the Ohio Valley.

Energy Department Hires a Top Cheerleader for Petrochemical Hub Before Issuing Report Favoring It – – Steve Horn - Near the end of 2018, the U.S. Department of Energy (DOE) hired the leading promoter within academia of a massive and multi-faceted petrochemical complex proposed for West Virginia. A month later, the agency issued a report favoring the construction of such a complex. On November 9, the Energy Department’s National Energy Technology Laboratory (NETL) named as its new director former West Virginia University Professor Brian Anderson. NETL, which spearheads federal energy-related research and development (R&D) efforts, is currently deciding whether to grant $1.9 billion in R&D money toward building out the proposed petrochemical complex, known as the Appalachian Storage Hub.  Those alarmed by the prospect of the hub point to the fact that towns along the Gulf of Mexico have higher rates of cancer. Some call that dense stretch of petroleum refineries and petrochemical plants near the Gulf the “Petrochemical Corridor,” while locals call it “Cancer Alley.”  Critics also say the project could further drive up demand for hydraulic fracturing — or “fracking” — of natural gas within the nearby Marcellus Shale and Utica Shale basins. As DeSmog has reported in an ongoing investigative series titled “Fracking for Plastics,” the Appalachian hub is just one piece of a broader plan for the petrochemical industry's ambitions to transform the Appalachian region into a cutting-edge, fossil-fueled storage and refining epicenter. That could spell serious consequences for worsening the impacts of climate change. Just a few short weeks after announcing Anderson's hiring, the Energy Department published a report titled, “Report to Congress: Ethane Storage and Distribution Hub in the United States,” and mandated by the Energy and Water Development Appropriations Bill of 2017. “The Department is directed to issue a report on the feasibility of establishing an ethane storage and distribution hub in the United States, given the increased production of natural gas liquids (NGLs) from shale developments and recognizing that ethane is the largest component of those NGLs,” the 2017 bill reads. “The report should examine potential locations, economic feasibility, economic benefits, geologic storage capabilities, above ground storage capabilities, infrastructure needs, and benefits to energy security.”

Appalachian Underground Gas Storage Hub Gov. Justice's 'No. 1 Economic Focus' -- West Virginia Gov. Jim Justice said a major underground natural gas liquids storage facility proposed for the Ohio Valley is a top economic priority for his office. Speaking at the annual winter meeting of the Independent Oil and Gas Association of West Virginia in Charleston Wednesday, Justice said administration officials spoke this week to a “major player” involved in the development of the Appalachian Storage and Trading Hub, although he did not offer specifics. Justice said he would be reaching out to federal officials shortly to continue advocating for its development. "The number one economic focus on my office today is the natural gas hub," Justice said. If built, the hub would allow more natural gas liquids to remain in Appalachia. Storage is a key infrastructure investment needed to attract petrochemical manufacturers to the region. Justice touted his relationship with President Donald Trump and Energy Secretary Rick Perry as reasons why he was confident storage hub, which has been in development for almost a decade, would be built. He said the hub is crucial to the state’s future prosperity. "The hub ensures, the hub ensures job boom in West Virginia forever," he said. "It ensures our security forever, the way I see it. Forever. " The project would be built with a combination of private investment and a $1.9 billion loan guarantee from the Department of Energy, which is being applied for by the project's developer, the Appalachia Development Group, LLC. ADG's CEO Steve Hendrick told meeting attendees he had growing confidence in the hub becoming a reality. "Something that many people may have thought was a pipedream just a few years ago, no pun intended," he said. "Something that many may still think is a dream, well I'm here to tell you, and any doubters who might be still out there, that the hope I've carried with me since we got this started and enganged in the effort, which shockingly was some nine years ago, this hope is based in reality and opportunity that is right on the tips of our fingers."

How Trump Could Burn West Virginia, Causing It To Lose An $84 Billion Gas Deal With China - West Virginia may personify the trade war with China — a state with $84 billion on the line and money that would transform the area. State officials and economic developers are working hard behind the scenes. But they are hampered by something completely out of their hands — the actions taken by Donald Trump to start levying tariffs on certain goods coming out of China.  In November 2017, China Energy Investment Corp. signed a non-binding trade agreement with the state of West Virginia that would pump billions into its economy. In return, China would get access to the plethora of shale gas that rest below the state’s land, all to feed its own chemical and manufacturing base.  “The Chinese are right at our doorsteps,” West Virginia Governor Jim Justice said at a press event. “As are the people from Qatar. As are other foreign investments coupled with U.S. investment. They are truly friends. But they are working through this tariff stuff and trade imbalance. They can’t pull the trigger until this done. It will be settled. We will not get in an all-out trade war with China.”    West Virginia is thus fighting a two-front a war — one of which it has the power and the other of which it does not. Or does it? In 2016, the state voted overwhelmingly for Trump. And if Governor Justice weighed in and leveraged that support, that could help settle this trade conflict. After all, the purpose of the World Trade Organization is to hear trade disputes, all to avoid disrupting global markets. If China, for example, enters into new long-term contracts with other countries to provide everything from soybeans to natural gas, American businesses lose. And China, too, could suffer if this drags on, which is why it promised last week to pare down its trade surplus to zero by 2024 by, in effect, requiring the purchase of more American goods — empty words, because the government there can’t force its consumers to buy U.S. products. But the biggest victim here would be West Virginia. Insiders told this reporter at the state capitol that Governor Justice doesn’t expect talks to get back on track for at least a year. That’s a long time for a state that is bleeding population and where the gross domestic product fell in 2016 by 0.9%.

State issues initial Line 5 tunnel project permit amid Nessel review - The state of Michigan has issued its first permit to Enbridge Energy for a controversial Line 5 tunnel construction project, even as the governor and attorney general have questioned the legality of the construction agreement. Weeks prior to the passage of legislation enabling the project, Enbridge submitted permit applications to the Michigan Department of Environmental Quality and the Army Corps of Engineers to begin taking rock and soil samples from the area, said Enbridge spokesman Ryan Duffy. The DEQ on Tuesday issued the permit. A public hearing on the permit application was held Nov. 27, more than two weeks before Republican former Gov. Rick Snyder signed a law creating the tunnel's oversight body, the Mackinac Straits Corridor Authority. Democratic Attorney General Dana Nessel started a review of the legislation and other agreements Jan. 2 at the request of Gov. Gretchen Whitmer to resolve "any legal uncertainty." Nessel is expected to issue an opinion by "early March at the latest," spokeswoman Kelly Rossman-McKinney said. Nessel has said there were “serious and significant concerns” about the law and warned interested parties that "in no way should any entity rely on this act to move forward unless and until these matters have been resolved." The DEQ will continue "to handle permit applications as per state regulations,” said DEQ spokesman Scott Dean. The Army Corps of Engineers received a permit application from Enbridge, but is awaiting additional information from the Canadian company and input from the U.S. Fish & Wildlife Service, which is delayed by the partial government shutdown, said Army Corps spokeswoman Lynn Rose. The permitted borings are part of the geotechnical phase of the project and “will aid in the design and construction of the tunnel,” Duffy said.  The four-mile dual pipeline span beneath the Straits of Mackinac has long been a source of concern to environmentalists, who worry about the catastrophic effects of a Great Lakes oil spill.

Mariner East pipelines can keep flowing as PUC rejects shutdown request -  The Pennsylvania Public Utility Commission on Thursday upheld a judge’s decision not to block operations of the controversial Mariner East pipelines after southeastern Pennsylvania residents contended they were unsafe.Administrative Law Judge Elizabeth Barnes denied an emergency request by seven Delaware and Chester county residents on Dec. 11 to block the startup of Sunoco Pipeline’s Mariner East 2 pipelines and to shut down the older Mariner East 1.The five-member Public Utility Commission unanimously affirmed the judge’s ruling. Commissioner David Sweet called it “thorough and well-reasoned” and said there was not sufficient evidence to reverse it.Mariner East 2 started service on Dec. 29.Sunoco used a 12-inch, 1930s-era pipeline that previously carried petroleum products as a link around unfinished sections of the new pipeline where regulators shut down construction after the project caused sinkholes and disrupted drinking water supplies. The $5 billion cross-state pipeline project is designed to move natural gas liquids, like ethane, propane and butane, from southwestern Pennsylvania’s shale gas wells to the Marcus Hook industrial complex and port near Philadelphia. The residents argued that the new and existing pipelines carrying highly volatile liquids through densely populated southeastern Pennsylvania are inherently dangerous, too shallow and close to homes, and that the company has not developed proper emergency management plans in case of a failure. Judge Barnes — who had previously ordered a temporary shutdown of the pipelines in a different case — ruled against the residents, saying they had not proven that the pipelines posed a clear danger to life or property that justified an emergency shutdown until the full case can be resolved. The 350-mile pipeline project across southern Pennsylvania is among the largest infrastructure projects in the state in decades. Its progress has been hampered by hundreds of permit violations for spills, water supply disruptions and ground subsidence, as well as safety concerns and mounting public opposition. Most recently, Chester County District Attorney Thomas Hogan opened a criminal investigation into the pipelines’ construction, which Sunoco has called baseless.

Mariner East 2 worker’s ‘obscene’ comments draw ire of Chesco DA - The embattled Mariner East 2 pipeline set the stage for an “obscene” war of words between a Chester County resident and a pipeline worker, county District Attorney Thomas P. Hogan said Wednesday.  Hogan railed against the out-of-town worker in a statement, calling his use of a demeaning word and a sexist epithet in a social media exchange “inappropriate and unprofessional.” “We will not allow our citizens to be bullied," Hogan said, adding that he had discussed the incident with Sunoco Pipeline LP, the pipeline’s operator, and Pipeliners Local 798, the union representing the worker. Hogan’s statement came weeks after he initiated a criminal investigation into Sunoco, which started pumping natural gas liquids through the pipeline last Dec. 29. The incident in December unfolded on Instagram, when the worker posted the slurs in a comment on a post from an outspoken critic of Mariner East 2. She responded by raising concern about welds along the pipeline, specifically mentioning “manipulated data” and the integrity of the pipes used.The worker sent a second message assuring her his welds “were fine.”“But if my weld was bad, I hope it’s in your backyard so I can watch your house burn down on the news,” he added, apparently referring to when a similar pipeline exploded in Beaver County, Pa., last year.The woman, who spoke with the Inquirer and Daily News on the condition of anonymity because she said she feared retaliation, said this was the second time a pipeline worker had sent her harassing messages, after a similar incident last summer on Twitter.“These are the very same workers whom the safety of my family and my community relies on,” said the woman, who lives with her children near the pipeline. “This type of behavior is unacceptable. These are also the workers whose jobs are being given a priority over our safety and our environment.”

Another Sinkhole Opens Along Controversial Mariner East Pipeline Route --Sunoco's controversial Mariner East pipeline project in Pennsylvania is beginning 2019 on unstable ground, literally. A sinkhole opened in the suburban development of Lisa Drive in Chester County Sunday, exposing the old Mariner East 1 pipeline built in the 1930s.Sunoco, a subsidiary of Energy Transfer Partners, repurposed the older pipeline to carry up to 70,000 barrels of natural gas from the Marcellus Shale region to a refinery in Marcus Hook each day. It was shut off for two months in 2018 when sinkholes developed in the same development, The Philadelphia Inquirer reported. John Mattia lives 60 feet from the new sinkhole, which is about five feet wide by 10 feet deep."I find it alarming to say the least that in an area that they say they already remediated there is a new sinkhole," Mattia told StateImpact Pennsylvania. "To have this happen again and to expose the pipeline completely, I find despicable."Sunoco has said that there was "no impact" to the pipeline from the sinkhole. However, it agreed to shut down the pipeline and purge it of natural gas while the subsidence is filled in. The Public Utilities Commission's (PUC) Bureau of Investigation and Enforcement said Sunday the pipeline would not be able to restart without its approval. The incident comes four months after another Energy Transfer Partners pipeline exploded in Beaver County, Pennsylvania, possibly because of a landslide.

Another sinkhole appears, exposing Mariner East pipeline - A sinkhole related to the Mariner East 1 natural gas liquids pipeline opened in the backyard of a Chester County, Pennsylvania, home Sunday, authorities said. The five-foot wide, 10-foot-deep sinkhole appeared less than a year after the Pennsylvania Public Utility Commission ordered Mariner East pipeline operations to stop when sinkholes were found in the same neighborhood of single-family homes. The pipeline resumed operation last May. On Sunday, a broken water-drainage system associated with Mariner East 1 caused the sinkhole, exposing a portion of the pipeline, the Chester County Department of Emergency Services told the Philadelphia Daily News newspaper. Police were called around 4:30 p.m. The pipeline was shut off. “We are working in coordination with the Pennsylvania Public Utility Commission’s Bureau of Investigation and Enforcement and its consultants to perform activities to ensure the area remains stable," according to a statement from Energy Transfer LP, which manages the pipeline. "It is too early to know additional details at this time.” The eight-inch line began operating in 1931 to flow gasoline from east to west across Pennsylvania, and was repurposed as a natural gas liquids pipeline in 2014 by Sunoco Logistics, an Energy Transfer unit. The line flows 70,000 barrels per day of ethane and propane from Marcellus and Utica Shale plays in Western Pennsylvania, West Virginia and Eastern Ohio to destinations in Pennsylvania, including the Marcus Hook Industrial Complex on the Delaware River near Philadelphia. Officials with Sunoco and the PUC responded to the sinkhole on Sunday and Monday to evaluate the situation and “work together to come up with a game plan” to seal the hole with concrete, said Bill Turner, Chester County deputy director for emergency management. Locals said there was little mystery to the sinkhole. “It’s riddled with caves of various sizes,” Eric Friedman, the spokesperson for Del-Chesco United for Pipeline Safety, told the Daily News Monday of the area’s geologic makeup. .

Sunoco to ‘purge’ part of Mariner East 1 after new sinkhole opens at Lisa Drive - Energy Transfer said late Monday it would “purge” a section of its Mariner East 1 pipeline of natural gas liquids while filling new subsidence that opened up on Sunday on a pipeline construction site at Lisa Drive in Chester County’s West Whiteland Township.The planned action followed the appearance of a new sinkhole at the suburban development where  sinkholes in early 2018 prompted regulators to halt the operation and construction of the Mariner East pipelines because of concerns about public safety.The company, which shut off the pipeline in response to the new sinkhole, said it had agreed with the Public Utility Commission’s Bureau of Investigation and Enforcement to remove the product while the area is stabilized. It said the pipeline will be “purged of product while the subsidence is filled with specialized grouting to ensure it remains stable and geophysical testing is performed.”At the same time, pipeline crews will “actively monitor” all rights of way used by Mariner East in the area “to ensure they remain safe and secure.”The PUC said in a news release Monday night that its investigation and enforcement bureau will have to approve a re-start of ME1.On Sunday, Sunoco/Energy Transfer confirmed the existence of the hole at Lisa Drive, where critics argue the geology is too unstable to support new and existing pipelines that are part of the controversial Mariner East project. The new hole exposed Mariner East 1, a 1930s-era pipeline that has been repurposed to carry natural gas liquids along the same route where two new Sunoco pipelines are being built.

Remainder of Mariner East 1 Pipeline Shut Down as Sinkhole Investigation Continues - Less than a week after being partially exposed by a sinkhole, the remainder of a controversial pipeline through Chester County, Pennsylvania, has been shut down.A sinkhole developed over the weekend along Lisa Drive in West Whiteland Township that exposed a section of the Mariner East 1 pipeline, which is operated by Sunoco Pipeline LP. Workers used flowable fill material and sand to secure the secured section of the pipeline. Sunoco then made the decision to shut down the remainder of the line after a discussion with the Pennsylvania Public Utility Commission's Bureau of Investigation and Enforcement.  Sunoco is purging a 44-mile section of the pipeline, from Beckersville, Berks County, to Marcus Hook, Delaware County, in order to fully isolate the Lisa Drive location for testing, officials said."Following discussions with the PUC’s I&E, the remainder of ME1 has been “shut down” by SPLP (since Jan. 21), meaning no product is flowing in this pipeline anywhere in Pennsylvania," a spokesperson for the PUC wrote. "SPLP is not permitted to resume the transportation of product through ME1 until approval is received from I&E."The construction of the gas pipeline through Chester County, Pennsylvania, has been a contentious issue for years, but the sinkhole added a bizarre twist over the weekend. An armed constable from central Pennsylvania, 100 miles from the Philadelphia suburbs, flashed a badge at an actual local detective Sunday when the investigator arrived to look into residents' complaints of the sinkhole, according to the Chester County district attorney.   "The Detective, who is familiar with all of the Chester County constables, asked the armed man who he worked for. The man then finally identified himself as a constable from Northumberland County in central Pennsylvania. When pressed further by the Detective, the man admitted that he had been hired as security by Sunoco."

Chesco D.A. accuses Sunoco of hiring armed, out-of-county 'muscle' - — Chester County District Attorney Tom Hogan, who has already announced a criminal investigation into construction of the Mariner East pipeline, now is questioning what he says is a move by Sunoco and parent company Energy Transfer Partners to hire constables from outside the county as “hired muscle showing up to intimidate our citizens.” The district attorney’s office said in a prepared release that it had discovered that Sunoco has apparently hired armed constables from outside the county to act as a private security force around the pipelines, while “holding themselves out as acting in an official capacity to people approaching the area of the pipelines.” In early January, Hogan launched a criminal investigation of Sunoco. He said he was moving to protect concerns of residents and suggested state officials had failed to do so. He wonders what it will take to get the attention of Gov. Tom Wolf and the Public Utility Commission. “All of this is happening on their watch,” Hogan said.  The D.A. said that when a new Jan. 20 sinkhole appeared, Chester County detectives were dispatched to the scene.When a detective in plain clothes approached the scene, “an armed man flashed a badge” and identified himself as a constable.The detective didn’t recognize him and personally knows all the constables. He asked the guard who he worked for.The man then “finally identified himself” as a constable from Northumberland County in central Pennsylvania.The detective subsequently informed the man that he was not permitted to claim any official authority or use his badge for such a purpose. Hogan also said he will be calling the constable’s boss.

The Bliss of the Knife -- Do the destroyers of the Earth do it for energy and profit? Fracking has bad fundamentals and no long-term future but leaves behind everywhere a toxic desert and wrecked communities. Yet the elite consensus exalts it and the people tolerate it. It seems that energy and profit aren’t the real collective reasons civilization is fracking to death its own basis for life, fracking to death the water, air, soil, the all-comprehending environment.Since there’s no rational or practical basis for turning much of America and Europe and the rest of the globe into fracking death zones, since even by their own productionist measures they could instead subsidize alternatives which are more effective and less destructive, we’re left with the conclusion that the real purpose of the fracking onslaught is destruction for the sake of destruction. They do it for the bliss of the knife. And the economic civilization as a whole, “growth” aka cancer, and the science cult, historically are grounded in the Christian dominion theology, Man vs. Nature, the reclamation of Earth from the wilderness of Satan (and before that the long, bitter Hebrew monotheist struggle against the Canaanite Asherah cult), destruction for the sake of destruction, waste for the sake of waste, ecocide for the sake of ecocide. It wants the bliss of the knife.

National Grid: 7,100 customers without heat due to gas outages - Newport Public Schools will be closed for the rest of this week, and Gov. Raimondo has declared a state of emergency in Newport County, following a National Grid outage that's left 7,100 customers without natural gas. Crews are currently working to fix the issue, which is on Aquidneck Island. A spokesperson for the company warned customers in Newport and Middletown that they might lose gas service Monday evening, which thousands later did. Newport Public Schools announced following the outage that schools would be closed Tuesday, later announcing that the schools would be closed for the entire week.  Newport firefighters told ABC6 that the outage has impacted nearly all National Grid customers in the city, including some in Middletown. National Grid officials assure residents this low pressure issue doesn’t pose a danger, unlike what happened in Massachusetts back in September.  "It is not like the overpressurization in the Merrimack Valley. This is an underpressure issue," said Horan.

Explosion at Ohio pipeline happened moments before Newport gas incident— An explosion at a gas pipeline more than 600 miles away occurred minutes before a dramatic drop in pressure forced energy officials to shut down natural gas to the lower portion of Aquidneck Island on Monday.According to a news release from Enbridge - a Canada-based energy supplier - a gas pipeline ruptured in Noble County, Ohio (outside of Columbus) that sparked an explosion, destroying several homes and injuring two people. Enbridge supplies gas to Algonquin which supplies the northeast. The explosion in Ohio happened at 10:40 a.m. About 20 minutes later, National Grid President Tim Horan said they noticed a dramatic loss in pressure in their gas lines. Citing safety concerns, Horan said they decided to shut down the gas feeding the lower portion of the island. It could be days or weeks before they are able to restore service to all of their customers. A spokesperson for National Grid said they are aware of the explosion in Ohio. A contact at Enbridge did not return an email asking if the incidents were connected. At a news conference Tuesday, Horan said a valve feeding gas to Rhode Island malfunctioned. A National Grid spokesperson later said that valve is located in Weymouth, Mass. In their news release, Enbridge said the rupture caused two fires and public safety officials had to shut down area roadways. Aerial footage of the blast shows a scorched field with dozens of hay bales smoldering.  Algonquin spokeswoman Marylee Hanley said a temporary reduction in available natural gas in the supply led to the disruption in service in Newport County.  "Safety and operational reliability remain our top priority. Natural gas pipeline capacity in New England remains an ongoing concern, particularly during severe cold conditions." A spokesperson later said the two events were not connected but it is still unclear what led to the reduction in natural gas.

Trump Eyes Action to Limit States' Powers to Block Pipelines - The Trump administration is considering taking steps to limit the ability of states to block interstate gas pipelines and other energy projects, according to three people familiar with the deliberations. The effort, possibly done through an executive order, is aimed chiefly at states in the Northeast U.S., where opposition to pipeline projects has helped prevent abundant shale gas in Pennsylvania and Ohio from reaching consumers in New York and other cities. New York used a Clean Water Act provision to effectively block the construction of a natural gas pipeline being developed by Williams Partners LP to carry Marcellus shale gas 124 miles (200 km) to New England. The project got the green light from the Federal Energy Regulatory Commission but ran into obstacles in New York, where regulators denied a water quality permit. While mostly targeted toward boosting limited pipeline capacity in the Northeast, the initiative could help drive permitting and construction of other energy projects, including coal export terminals. For instance, Lighthouse Resources’ proposed coal export terminal in Longview, Washington, was ensnared when the state’s Department of Ecology denied a critical Clean Water Act permit, citing concerns about air quality and increased railroad traffic to serve the site. The new initiative dovetails with expectations that President Donald Trump would use his State of the Union address to tout efforts to accelerate permitting and construction of oil and gas pipelines, though he’s postponed the speech and the exact timing of any announcement remains unclear. The potential White House action was earlier reported by Politico. Pipeline advocates who say states are abusing their authority under the Clean Water Act have advanced ideas for reining it in.

EIA expects relatively flat natural gas prices, continued record production through 2020 -  EIA’s January 2019 Short-Term Energy Outlook (STEO) expects several U.S. natural gas market trends from 2018 to continue into 2019 and 2020, including relatively stable Henry Hub natural gas prices and increasing natural gas production and exports. According to the STEO, total U.S. natural gas consumption is expected to increase slightly through 2020, with increases in the electric and industrial sectors offsetting decreases in the residential and commercial sectors. EIA expects the U.S. benchmark Henry Hub natural gas spot price to average $2.89 per million British thermal units (MMBtu) in 2019 and $2.92/MMBtu in 2020, about 25 cents lower than the 2018 average of $3.15/MMBtu. Prices in the forecast are expected to be comparable with recent years as production growth largely keeps pace with demand and export growth. NYMEX trading during the five-day period ending January 10, 2019, suggests that a range of $1.85/MMBtu to $4.80/MMBtu encompasses the market expectation for Henry Hub prices in December 2019 at the 95% confidence level. EIA expects record-high dry U.S. natural gas production to continue to grow through 2020, from an estimated 83.3 billion cubic feet per day (Bcf/d) in 2018 to 90.2 Bcf/d in 2019 and 92.2 Bcf/d in 2020. Most U.S. production will come from the Appalachian Basin in the Northeast, followed by the Permian Basin in western Texas and eastern New Mexico and the Haynesville shale formation in eastern Texas. Factors supporting continued production growth include improved drilling efficiency and cost reductions in drilling and well completions, as well as increased takeaway capacity from the highly productive Appalachia and Permian production regions. Total U.S. natural gas consumption remains relatively flat compared with 2018 levels in the STEO forecast, increasing 1.3% in 2019 and 1.1% in 2020 to a total of 83.6 Bcf/d in 2020. EIA anticipates that the United States will continue to export more natural gas than it imports during the coming years as production continues to outpace domestic consumption. Most of the increase in natural gas exports will come from additional liquefied natural gas (LNG) capacity additions at the Cameron LNG and Freeport LNG facilities located along the Gulf Coast, and the Elba Island LNG facility in Georgia. EIA expects LNG exports to increase from an estimated 3.0 Bcf/d in 2018 to 5.1 Bcf/d in 2019 and up to 6.8 Bcf/d in 2020, more than double 2018 levels.

Natural Gas Crushed On Weaker Physical Prices And Long-Range Warmth - (graphics) It was a slaughterhouse at the front of the natural gas strip today, with the February contract settling almost 13% lower from its Friday settle.  Weaker cash prices certainly played a role, as traders were looking for cash to provide some strength for the market and instead it led the way lower this morning.  The result was by far the most losses at the front of the strip on the day.  The February/March spread set a new low on the day with such February-concentrated selling.  This pulled the G/H spread right back into the historical range.  Much of the cash weakness today appeared to be due to looser balances. We outlined these looser balances for clients today in our Note of the Day and again in our live chat, where we looked at a large recent dip in LNG exports.  We also outlined how we expect weather model guidance to trend through the coming week in our flagship Natural Gas Weekly Update, and observed Climate Prediction Center forecasts tick warmer again this afternoon for Week 2.  Then in our Afternoon Update we summarized the latest 12z weather model changes and how we see natural gas risk skewed into next week.

Warmer American Weather Model Guidance Reverses Gas Mid-Day --February natural gas prices were initially strong this morning, as overnight model guidance trended colder before afternoon models generally warmed in the long-range. This pressured the prompt gas contract quite a bit, leading it to settle down around 2% on the day.  After the February contract led this morning, it lagged the most along the strip into the settle too.  In fact, later contracts caught a bid into the settle, pulling the March/April H/J contract spread back to within a couple cents of its recent lows back early in January.   Meanwhile, we can clearly see the warmer trend across the South on afternoon GEFS weather model guidance that shot prices lower (image courtesy of Tropical Tidbits).  This came as traders were positioning ahead of what should be the largest reported natural gas storage withdrawal of the heating season thus far.  A large withdrawal is expected in the East particularly, where both DTI and TCO announced their combined largest storage withdrawal of the winter thus far.  Yet there is little doubt that forward weather forecasts will matter more to traders than the EIA print tomorrow unless it misses significantly from consensus, as it was the warmer Week 2 risks across the South that really hit prices today.  Either way, we expect an active day tomorrow with significant weather forecast changes and an important EIA gas storage number to be announced.

Natural Gas Futures Not Phased by Slightly Larger-than-Expected EIA Storage Pull -- The Energy Information Administration (EIA) on Thursday reported a slightly larger-than-expected 163 Bcf withdrawal from U.S. natural gas stocks, prompting only a modest reaction from a futures market focused on the impact of upcoming polar vortex-influenced cold.The 163 Bcf withdrawal, recorded for the week ended Jan. 18, falls on the bullish side of major surveys but is bearish versus the five-year average 185 Bcf pull and the 273 Bcf withdrawal EIA recorded in the year-ago periodThe figure didn’t provoke a pronounced reaction from the futures market, at least not right away. Prior to the report, February Nymex futures had been trading in a range from around $3.060-3.110. As EIA’s report hit trading screens at 10:30 a.m. ET, the front month traded as high as $3.120 and as low as $3.075 before hovering around $3.075-$3.095 for the next 10 minutes or so, in line with the pre-report trade.By 11 a.m. ET, futures were trading around $3.071, up 9.1 cents from Wednesday’s settle.Estimates prior to the report had pointed to a withdrawal slightly smaller than the actual figure. A Bloomberg survey had showed a median expectation for a 155 Bcf pull, while a Reuters survey had showed an average 154 Bcf withdrawal. Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at a withdrawal of 160 Bcf. “February gas prices are not particularly impressed with this number, but with cold weather only confined to the East on the week and a large draw both in the Midwest and in the South Central we see this print as indicating significant upside risk on any return of colder weather into the middle of February,” Bespoke Weather Services said.  “With a colder February our end-of-draw expectations have dipped below 1.2 Tcf and can fall further if forecasts cool more than expected; we of course need cold risks on model guidance to rally, but we expect those to build over the coming week and support prices.” Total Lower 48 working gas in underground storage stood at 2,370 Bcf, 305 Bcf (11.4%) below the five-year average but 33 Bcf (1.4%) higher than last year’s stocks, according to EIA. By region, the largest withdrawal occurred in the Midwest at 56 Bcf, while 54 Bcf was pulled in the East. The Pacific region withdrew 11 Bcf for the week, while 6 Bcf was pulled from Mountain region stocks. The South Central saw a net 38 Bcf withdrawal, including 29 Bcf from nonsalt and 8 Bcf from salt stocks, according to EIA.

Major LNG Buyers' Uncontracted Demand to Quadruple by 2030 - Energy consultants Wood Mackenzie’s latest research reveals that uncontracted demand, by the world’s seven largest LNG buyers, could quadruple from 20 million metric tons today to 80 by 2030. Buyers of LNG based in north-east Asia including Japan, China, South Korea, India and Taiwan account for more than 50 percent of today’s global LNG market of 308 million metric tons. However, by 2030, global LNG demand will reach 450 million metric tons forecasts Bloomberg NEF. This projected increase of contracted and uncontracted demand from Asian buyers is very good news for both traditional LNG exporters such as Qatar and Australia, the newcomers in the U.S. Gulf of Mexico and Russia’s Yamal as well as upcoming Mozambique. LNG is going to be the chief beneficiary of the climate agenda, to contain the global rise in temperature to below 2 degrees Centigrade, economic development in emerging economies and parallel action against visible and destructive air pollution, most notably in China. As Nicholas Brown, Wood Mackenzie research director, has stated, "as China pushes on toward a lower-emission economy, its demand for gas and LNG has grown significantly and we expect the trend to continue in the longer term." It is not only the world’s leading purchasers of LNG in Asia that are looking for new supplies of this cleaner energy resource but also buyers from other parts of the world, most notably Europe including Italy’s Enel, Britain’s Centrica and France’s EDF. This is especially the case as legacy LNG supply contracts of 20 years will expire soon, prompting the need to secure new supplies. It is likely that these new purchases will be both contract and spot market based, with an eye for low average costs and good security of supply. Wood Mackenzie expects a record number of final investment decisions on LNG projects in 2019, potentially raising production by an additional 220 million metric tons per year. This represents a large and rapid forthcoming expansion in world LNG supply when compared to the early years, when supplies increased from 200 million tonnes in 2000 to 300 million tons in 2018, according to BP’s Energy Outlook for 2018. Amongst the multiple large-scale projects that are likely to be given final investment decision approval are Russia’s $27 billion Novatek's Arctic 2 LNG project, at least one of Anadarko’s Mozambique schemes and possibly three or more American-based expansion projects. There are also proposed expansion schemes in the Pacific region including Australia’s Gorgan and Woodside and in Papua New Guinea, which are expected to get the green light soon. It is clear, according to Brown, that “Asia’s major buyers will be at the forefront in ensuring this next generation of LNG supply is brought to market.” 

Pipeline wars arrive at Supreme Court. What's next? - Legal fights over the expansion of natural gas pipelines across the East Coast are starting to make their way to the Supreme Court. Since October, pipeline challengers have filed at least three petitions that have reached the country's most powerful bench. More are expected. Each case targets oversight of natural gas pipeline projects that have proliferated across the nation as a result of hydraulic fracturing in the Marcellus, Utica and other Appalachian shale plays. And each shows critics are becoming more savvy in their challenges, particularly against approvals by the Federal Energy Regulatory Commission. Pipeline opponents have won some of their challenges in federal court. Notable victories include 4th U.S. Circuit Court of Appeals rulings that scrapped forest-crossing and species take permits for the 600-mile Atlantic Coast gas pipeline through West Virginia, Virginia and North Carolina. Recent court orders have halted construction on the project. Pipeline critics have also suffered some losses, including three cases the Supreme Court could consider. "Because of fracking, there's been so much natural gas pipeline-building activity for the last 10 years," said Alexandra Klass, an energy law professor at the University of Minnesota. "A lot of that is now happening in states on the East Coast where there's more organized opposition to building pipelines, versus places like Texas. "You also have much more concerns these days about climate impacts, particularly in that part of the country," she added. One pipeline-related petition is up for review Friday. The Supreme Court takes up just a tiny fraction of the thousands of cases it receives each year. Here's a look at the projects and questions at the heart of the cases:  

U.S. Supreme Court declines to hear challenge of Mountain Valley Pipeline - The U.S. Supreme Court has declined to hear a case in which a group of landowners argued that their property was illegally taken through eminent domain laws for the Mountain Valley Pipeline. In October, about a dozen landowners along the pipeline’s route asked the high court to reverse the dismissal of their lawsuit, heard in Roanoke’s federal court, that challenged the way developers of the natural gas pipeline were allowed to obtain forced easements through their property. In an order filed Tuesday, the Supreme Court did not explain why it is not taking the case. Mia Yugo, one of three Roanoke attorneys who asked the court to consider the appeal, said it would have been “extremely rare” for the case to have actually made it to the floor of the nation’s highest court. The Supreme Court agrees to hear oral arguments and render a decision in only about 80 of the approximately 8,000 cases that get filed each year. Among the constitutional questions raised by the lawsuit was whether eminent domain — a power normally invoked by governmental bodies for projects such as highways and power lines — should be awarded to a private company in pursuit of profits. In what the lawsuit called “a government sanctioned-land grab,” Congress through the Natural Gas Act has allowed the Federal Energy Regulatory Commission to delegate the power of eminent domain to companies like Mountain Valley, once it determines there is a public need for the natural gas they plan to ship through massive buried pipelines. U.S. District Court Judge Elizabeth Dillon dismissed the lawsuit in December 2017, saying she lacked jurisdiction to hear the case. The 4th U.S. Circuit Court of Appeals upheld her ruling in a decision that the landowners then appealed to the Supreme Court. 

Roanoke attorneys seek criminal investigation of Mountain Valley Pipeline -- Crews building the Mountain Valley Pipeline may have violated civil and criminal laws by continuing construction in streams and wetlands after a permit was suspended, two Roanoke attorneys say in asking for a federal investigation. Charlie Williams and Tom Bondurant told The Roanoke Times this week that they have shared with the Environmental Protection Agency a “substantial body of evidence” gathered by Preserve Bent Mountain, an organization they represent. After reviewing photographs and other documentation from the group, which spent weeks monitoring pipeline construction, Williams and Bondurant asked the EPA in a Nov. 26 letter to conduct a formal investigation. “We concluded there was enough evidence of violations of criminal law, particularly the Clean Water Act, that we could make a good-faith submission to the EPA,” said Williams, who specializes in environmental law at the firm of Gentry Locke. Bondurant, a Gentry Locke attorney and former federal prosecutor, said that it could be a criminal offense for Mountain Valley to continue work in water bodies after its stream-crossing permit was suspended last October by the U.S. Army Corps of Engineers. It was unclear if an investigation has begun. Officials with the EPA did not return calls or respond to emailed questions Monday and Tuesday. A Mountain Valley spokeswoman declined to comment.

Trump administration seeks to pull back more Atlantic Coast Pipeline permits facing challenge — The Trump administration is seeking to pull back another permit for the Atlantic Coast Pipeline that is facing a legal challenge -- a US Army Corps of Engineers authorization governing water crossings in parts of West Virginia. The Corps' motion Friday in the 4th US Circuit Court of Appeals followed a similar request by the administration January 16 for voluntary remand of a National Park Service permit for ACP that was also being challenged by environmental groups in the same court. Both actions highlight the difficulties in the 4th Circuit for federal agency permits for the 600-mile, 1.5 Bcf/d project, one of several meant to move Appalachian gas to Mid-Atlantic markets. Still, one analyst suggested the requests for remand could help speed the regulatory process along, keeping control of the timeline with the agencies, rather than the court. "While both requests came from the government, they are both positive developments for the project because it likely means the time period to a sustainable affirmative decision will be shortened," said LawIQ Director of Research Gary Kruse. In the case of the water crossing permit, the Corps justified its request by pointing to the same court's decision in November striking a similar permit for the neighboring Mountain Valley Pipeline. In that case, the court found that West Virginia's waiver of the requirement for a more site-specific individual state water quality certification was invalid and that therefore the verifications of water crossings by the Corps' Huntington District were arbitrary and capricious. The Corps, in its recent motion, asserted that an order granting remand in the ACP case is appropriate because the court already has found that a state waiver "under similar circumstances," in the MVP case, was invalid or procedurally deficient." It asked the court to vacate the verifications and remand the matter to the Corps (Sierra Club v. US Army Corps of Engineers, 18-1743). In both cases, environmental groups have argued that the pipelines should not have been allowed to use a type of permit known as Nationwide Permit 12 because the projects failed to meet certain special conditions set by state -- for instance that a crossing must be completed within a 72-hour period. As part of an effort to get the projects back on track, the West Virginia Department of Environmental Protection has since sought to change some of the special conditions for using the nationwide permit -- including some at issue in the ACP litigation. Earlier this month, the DEP extended the public comment period on those proposed changes until March 4.

Judge Halts Seismic Testing Permits During Shutdown -   A federal judge ruled that the Trump administration cannot issue permits to conduct seismic testing during the government impasse. The Justice Department sought to delay—or stay—a motion filed by a range of coastal cities, businesses and conservation organizations that are suing the Trump administration over offshore oil drilling, Reuters reported. The department argued that it did not have the resources it needed to work on the case due to the shutdown. Although Judge Richard Gergel of the U.S. District Court in South Carolina granted the stay on Friday, at the same time, he effectively halted federal workers from moving forward on any oil-drilling matters until the government re-opens and is funded, as the Southern Environmental Law Center explained in a celebratory press release. "The government was trying to have its cake and eat it too, and we're pleased the Court did not allow that to happen," said Laura Cantral, executive director of the South Carolina Coastal Conservation League, one of the groups suing to stop seismic blasting in the Atlantic, in the press release.  Environmentalists have been angered about the federal government giving Big Oil a bye during the shutdown, after the Department of Interior recalled Bureau of Ocean Energy Management (BOEM) workers to continue permitting onshore and offshore oil and gas drilling and testing. But as Gergel wrote in his order: "The Court hereby enjoins the federal defendants, BOEM, and any other federal agency or entity from taking action to promulgate permits, otherwise approve, or take any other official action regarding the pending permit applications for oil and gas surveys in the Atlantic."

Tellurian's Driftwood LNG project takes step forward with positive final environmental review -  — Tellurian's proposed Driftwood LNG export terminal reached a milestone Friday as US regulators issued a positive final environmental review for the Louisiana project. Because liquefaction terminals take about four years to complete, many of the active developers such as Tellurian will need to reach final investment decisions this year to be able to start up in the 2023-24 timeframe during which LNG buyers are expected to have the greatest need for new supply.The conclusions in the Federal Energy Regulatory Commission's final environmental impact statement keep Tellurian on track to reach a final investment decision and begin construction in the first half of 2019, subject to the agency issuing a permit certificate for the project. The FEIS said approval of the project, with the mitigation measures recommended, would result in a less than significant level of environmental impacts. "We look forward to receiving the agency's order granting authorization to site, construct and operate our Driftwood project," CEO Meg Gentle said in a statement. "Tellurian will then stand ready to make a final investment decision and begin construction in the first half of 2019, with the first LNG expected in 2023."Among other things, FERC's recommended mitigation measures state that Tellurian shall not start construction until the developer consults with the US Fish and Wildlife Service to determine whether proposed project activities could affect the eastern black rail -- a small marsh bird -- or its habitat, and files copies of all correspondence with the agency's secretary. Investors are eagerly awaiting proof of commercial viability for the terminal and three feedgas pipelines Tellurian also plans to build. Commercial success will determine how many of the second wave of US LNG export projects move forward in 2019 in what will be a critical year for decision-making. Tellurian has pitched a different business model than its peers to finance construction, asking customers to pay an up-front fee for an equity interest in Driftwood Holdings, which will consist of entities including the terminal, that will then give them the right to lift 1 million mt/year of LNG from Driftwood for the life of the terminal.

US to become a net energy exporter in 2020 for first time in nearly 70 years, Energy Dept says - The boom in U.S. oil and natural gas production will make the U.S. a net energy exporter in 2020 — a feat the country has not achieved in nearly 70 years, the Department of Energy's statistics bureau said on Thursday. The U.S. will start exporting more energy products than it imports as U.S. crude output continues to grow and domestic oil consumption declines, the U.S. Energy Information Administration said in its latest Annual Energy Outlook. Growing shipments of natural gas and petroleum byproducts will also boost the country's role as a major energy exporter.The report, which makes projections for the next 50 years, marks the latest revision to EIA's timeline for the U.S. to become more energy independent. Last year, EIA forecast the U.S. would become a net exporter by 2022. In 2017, it said the nation would achieve the status in 2026. Last week, EIA said the U.S. will start exporting more crude oil and petroleum products than it imports by the final quarter of 2020. After that it would remain a net oil exporter for years to come. Towards the end of its 50-year forecast period, EIA expects the U.S. to once again start importing more petroleum products than it exports, as economic growth fuels demand for gasoline.EIA expects U.S. oil production to continue setting new records each year for nearly another decade. The bureau sees American oil output hitting a new annual high through 2027, when booming production starts to level off. Last year, the nation's drillers pumped an average 10.9 million barrels a day, breaking the annual record going back to 1970. Once production cracks 14 million barrels a day in the coming years, EIA expects the U.S. output to stay above that level through 2040.  The shale drilling will also support a rise in natural gas liquids production, which yields byproducts like ethane, propane and butane. These NGLs are used to make a wide range of products and chemicals, including plastics. EIA says NGL output could account for about a third of total liquids production through 2050. The country will remain a net coal exporter through 2050, but EIA does not see shipments growing due to competition from other nations better positioned to serve big importers.

Undistracted, Kinder Morgan staying in gas exports-focused lane — Kinder Morgan will stick to its targeted growth plans to serve strong demand for US natural gas exports and won't let concerns among some shareholders about the pipeline operator's lackluster stock performance push it to make expensive investments that don't fit its strategy, executives said Wednesday. The comments during a series of presentations to analysts come as the Houston-based company inches closer to starting up its Georgia liquefaction project and continues to develop two new Texas gas pipelines that would boost takeaway capacity from the Permian Basin by approximately 4 Bcf/d. With its vast network of pipelines and storage facilities throughout North America weighted heavily to natural gas, Kinder Morgan benefits from fixed fees and take-or-pay contracts that significantly limit its overall exposure to commodity price fluctuations. That market position hasn't stopped its shares from falling 6%, on a dividend-adjusted basis, over the last 12 months, raising questions about its outlook. "There's a lot of capital chasing midstream energy projects," CEO Steve Kean said during his presentation, which was webcast. "It would be easy to lose your discipline and try to win projects just to win them. We don't do that, and we haven't done that." He added, "We don't have to build everything from scratch." That's not to say Kinder Morgan won't build - when it believes it makes sense. The 0.4 Bcf/d LNG export terminal being built at Elba Island near Savannah, Georgia, is a brownfield project that involves converting a facility that was originally built to receive LNG cargoes and regasify the fuel into pipeline-ready gas. Kinder Morgan asked US regulators on Wednesday for permission to introduce hazardous fluids to loading pumps at the terminal as it inches closer to startup of the first liquefaction train, currently expected at the end of March. The project is supported by a 20-year offtake contract with Shell.   Kinder Morgan has proposed two gas pipelines to boost takeaway capacity from the Permian in West Texas, to demand centers, including the Texas Gulf Coast. Permian Highway Pipeline will be designed to transport up to 2 Bcf/d of from the Waha area to the Gulf and Mexico markets. Gulf Coast Express is a 1.98 Bcf/d project.

Analysis- Slowing LNG demand growth in Asia clouds market outlook for US exporters - — Slowing LNG import growth in Asia is taking its toll on global prices this winter, leaving the Platts JKM this month at its lowest in three years, in a sign of rising headwinds for US LNG exporters. In December, LNG imports to South, Southeast and Northeast Asia totaled the LNG equivalent of 1.07 Tcf, which was actually the highest monthly import volume on record, data compiled by S&P Global Platts Analytics shows. In China, an ongoing conversion of the residential heating market in favor of natural gas saw import volume surpass 289 Bcf in December - its second-highest monthly volume on record. In November, the country actually briefly surpassed Japan as the world's largest LNG importer, taking over 291 Bcf. Despite those headline import numbers, some of the region's other large buyers, including Japan, India and Taiwan, saw cargo deliveries decline last month, compared to December 2017 levels. In Japan, LNG imports last month were down about 4% compared to December 2017, driven partly by warmer temperatures, but also by a spate of nuclear restarts at previously shuttered facilities. In Taiwan, warmer weather was likely to blame for lower import volumes. Weaker demand from some of Asia's legacy importers is keeping prices in check this winter. From December 1 to date, the prompt-month Platts JKM, the benchmark price for Asian LNG imports, has averaged just $8.69/MMBtu - its lowest for the peak-winter period since 2015-2016. On Wednesday, the contract tumbled to $8.044/MMBtu for March-delivered cargoes and is now hovering just above a recent eight-month low, S&P Global Platts data shows. While late-winter LNG prices in Northeast Asia typically decline along with seasonal gas demand in the region, this year's downturn has come much earlier than usual, and appears likely to stick.

Europe tops buyers for U.S. LNG with winter cargo influx (Reuters) - Energy companies are flooding Europe with U.S. natural gas, establishing a foothold in a market dominated by Russia and seen as a key battleground in Washington’s efforts to curb Moscow’s energy influence. Europe is now the top buyer of U.S. liquefied natural gas (LNG) after a near fivefold spike in U.S. LNG sales to the continent this winter, overtaking South Korea and Mexico, a Reuters analysis showed. Profit rather than politics is driving the increase, despite pressure from U.S. President Donald Trump for Europe to wean itself off Russian gas. (Graphic: Total U.S. LNG exports by destination- tmsnrt.rs/2S34mcL) Energy companies have switched sales to Europe after prices in Asia fell sharply on lower-than-expected demand. Prices in Europe, traditionally seen as a market of last resort, have held firm. “It’s all about commercial reasons,” said James Henderson, director of the natural gas research program at the Oxford Institute for Energy Studies. “U.S. LNG will go where there is the biggest margin.” “There is no political motive here.” U.S. LNG shipments to Europe totaled 3.23 million tonnes, or 48 cargoes, in October to January, compared to 0.7 million tonnes, or nine cargoes, a year ago. The United States is currently second only to Qatar, the world’s largest LNG producer, as an LNG supplier to Europe, Refinitiv Eikon data showed. The figures have not previously been reported. (Graphic: Total European LNG imports by source - tmsnrt.rs/2RUgIEb) LNG is natural gas frozen to a liquid state so that it can be transported in tankers. The industry is burgeoning, buoyed by demand from China, where the government is pushing to cut carbon emissions, partly by swapping from coal-generated power to gas. Traders had expected Chinese demand to soar again this winter but Beijing had bought cargoes well in advance and so far, a mild winter has kept stocks high. A 10 percent tariff imposed by Beijing on U.S. LNG imports during a trade war also hurt. Awash in supply, sellers of U.S. LNG have pivoted to Europe, where pipeline gas from Russia dominates. Gazprom pumps 190 billion cubic meters, or the equivalent of 145 million tonnes a year (mtpa) to Europe, four times the current capacity of all U.S. LNG export terminals. A new pipeline, Nord Stream 2, will allow Russia to export even more gas to Germany, the largest consumer, although Washington is trying to halt work on the project. LNG offers countries an alternative to piped gas and forces Russia to compete on price. 

Europe Now #1 Customer For US LNG; Overtakes South Korea And Mexico -- From SeekingAlpha market news.  Europe is top buyer of U.S. LNG with winter cargo influx - Reuters

• Europe is now the top buyer of U.S. liquefied natural gas after a near 5x spike in U.S. LNG sales to the continent this winter, overtaking South Korea and Mexico, according to a Reuters analysis, after prices in Asia fell sharply on lower than expected demand while prices in Europe, traditionally seen as a market of last resort, have remained steady.
• U.S. LNG shipments to Europe totaled 3.23M metric tons, or 48 cargoes, in October to January, compared to 700K tons, or nine cargoes, in the year-ago period, bringing the U.S. to second place behind only Qatar as an LNG supplier to Europe.
• U.S. LNG also offers countries an alternative to piped gas and forces Russia to compete on price; Russia's Gazprom  pumps 190B cm, or the equivalent of 145M metric tons/year to Europe, 4x the current capacity of all U.S. LNG export terminals.
• last year, 700K metric tons = 9 cargoes
• one year later, 3.23 million metric = 45 cargoes

Big Oil's Strategy For A Global Energy Transition - “While the speed, timing, and details of the transition are highly uncertain, the direction should be clear: toward a low-carbon future,” David Koranyi wrote in a report for the Atlantic Council.  Oil companies are responding in different ways with varying levels of urgency.  One key strategy from the oil majors is to make big bets on natural gas. The prospect of plateauing demand for oil in transportation has oil executives eyeing natural gas, which they view as a safer long-term investment due to the resilience of demand for gas in the electricity sector as coal phases out. Most oil companies are also investing heavily in chemicals and petrochemicals. Environmental groups would correctly note that this is hardly a strategy for a clean energy transition, but oil executives (and analysts including the IEA) see demand for plastics, fertilizers and other petrochemical products as a larger source of demand growth going forward than the transportation sector. Shell is building a massive ethane cracker in Western Pennsylvania to build plastics from shale gas, for instance. ExxonMobil and others are doing the same on the Gulf Coast. Another strategy for the oil majors is to invest in short-cycle shale rather than conventional, offshore or other long-term projects such as oil sands. Shale drilling can return capital within a matter of weeks or months; an offshore project has a multi-decade time horizon. Due to the enormous uncertainty over peak demand, shale is seen as comparatively low risk. For example, Chevron just announced that it would spend $9 to $10 billion on short-cycle investments through 2022. “Most of our assets are competitive when tested against aggressive scenarios,” Chevron said in a presentation, referring to the possibility of an early onset of peak demand. Finally, the oil majors – in fits and starts and to varying degrees – are beginning to invest in renewables. The European oil majors in particular have their hands in solar, offshore wind and electric vehicles.

US refiners processed record crude oil volumes in 2018 - Record runs allowed U.S. refiners to continue a multiyear streak of strong margins in 2018 despite higher crude prices during the first three quarters and a weaker fourth quarter after product prices tanked along with crude in October. While rising crude prices threatened refinery margins, a high Brent premium over domestic benchmark West Texas Intermediate (WTI) kept feedstock prices for U.S. refiners lower than their international rivals. The availability of discounted Canadian crude also helped produce stellar returns for Midwest, Rockies and Gulf Coast refiners that are configured to process heavy crude. Product prices only weakened in the fourth quarter when gasoline inventories began to rise. Today, we highlight major trends in the U.S. refining sector during 2018 and look forward to 2019. This blog is based on analysis originally published by Morningstar Commodities and Energy Research. U.S. refiners processed record volumes of crude in 2018. After processing an average 16.6 MMb/d of crude in 2017, according to the Energy Information Administration (EIA), U.S. refiners upped their game to input an all-time high of about 17 MMb/d in 2018. Increased throughput in 2018 came with minimal additions to operable capacity and represents an annual average utilization rate just above 93% based on weekly EIA data. The 2018 refinery input levels were consistently above the prior 10-year average.

US refined products build likely to continue as refinery runs remain strong- analysts - — The buildup in US refined product stocks likely continued last week as refinery runs held substantially above historic averages, according to analysts surveyed by S&P Global Platts Tuesday. Nationwide gasoline stocks likely rose 2.9 million barrels to around 258.5 million barrels in the week that ended January 18, a consensus of the analysts surveyed showed. Distillate stocks were expected by analysts to increase 900,000 barrels to around 143.9 million barrels last week. The expected gasoline build would mark the eighth consecutive inventory increase and would push stocks to nearly 5.8% above the five-year average, according to US Energy Information Administration data. An expected fifth straight distillate build would put stocks less than 1% below the five-year average. A steady increase has pared the deficit to the five-year average from a peak of nearly 11% in mid-December. But the pace of refined product inventory builds has notably slowed. Last week's gasoline stocks increase was expected to be the smallest since mid-December and less than half the more than 7.5-million barrel jump EIA reported for the week prior. The expected distillate build was also the smallest in four weeks and less than a third of a nearly 3 million barrel build in the week that ended January 11. Refiners likely dialed back run rates by 0.2 percentage points to around 94.4% of total capacity, analysts said. While the expected decline would put utilization rates 2.8 percentage points lower than a late December peak, likely contributing in part to the slower product build, run rates remain historically very strong. Last week's dip would put nationwide utilization 3.5 percentage points above the year-ago level and more than 7.5% above the five-year average. The budding gasoline supply overhang has begun to weigh on refining cracks. NYMEX front-month gasoline cracks dropped to average $7.26/b in the week that ended January 18, compared with $7.50/b a week earlier. But distillate cracks are steady, even as stocks have reverted to the average. Continued below-average temperatures along the Atlantic Coast last week likely maintained this level of demand. New York City totaled 243 heating degree days during the seven-day period that ended January 18, up from 199 heating degree days in the week prior, according to National Oceanic and Atmospheric Administration data.

Brent-WTI spread spurs gulf coast crude shipments to PADD 1 refineries. - Earlier this decade, East Coast refineries found it cost-effective to ramp down their crude imports and turn to the price-advantaged U.S. shale oil they could rail in from the pipeline-constrained Bakken or send up by tanker from the crude-saturated Gulf Coast. Things changed, though. New southbound crude pipelines out of the Bakken came online, the ban on most crude exports was lifted — providing a new outlet for Texas crude production — and the economic rationale for railing or shipping in domestic crude to PADD 1 refineries withered. Now, things have changed again. Most important perhaps, is that the price spread between WTI and Brent has widened, and once more it can make financial sense for these refineries to revert to crude-by-rail out of the Bakken and to shipping in crude on Jones Act tankers from Corpus Christi and other Gulf Coast ports. Today, we discuss these recent trends, what’s driving them, and how long they might last. The nexus of East Coast refineries’ crude supply, including CBR from North Dakota (PADD 2) to PADD 1 refineries, and shipments of Eagle Ford, Permian and other light, sweet crude from the Gulf Coast to PADD 1, has been a frequent topic in the RBN blogosphere — especially in the early years of the Shale Era. As we said in While CBR Gently Weeps, Bakken production growth in the early 2010s far outpaced the addition of new pipeline capacity, and building rail-loading terminals represented a logical, near-term fix. For one thing, these terminals could be constructed quickly and at relatively modest cost; for another, using the rails gave shippers destination flexibility (allowing oil to be moved to wherever the netbacks were highest). The East Coast turned out to be a logical market — refineries there were set up to process light, sweet crude, the vast majority of which they imported from West Africa and other foreign sources, generally at prices tied to the Brent benchmark. If the delivered cost of price-discounted Bakken crude (including the cost of transportation by rail) was lower than the cost of imported crude — and it was — why not rail in more Bakken crude and back off on the volumes being imported?

Shale Slowly Choking Off Historic Gasoline Trade  -- The rise of U.S. shale oil is choking off a historic gasoline trade, dealing a blow to European refineries that for decades have relied on American drivers to buy their excess supplies.  Over the past month, tankers shipping European gasoline to the world’s biggest consumer detoured to Venezuela and Caribbean islands. There’s even been a rare jump in shipments in the opposite direction. Imports from Europe fell to the lowest since November earlier this month and remain well below last year, according to customs data and ship-tracking.  A surge in U.S. shale oil production, which is rich in gasoline, is a major contributor to the diminished flows because refineries are running the hardest in more than 15 years. That’s led to a fundamental shift in the nation’s stockpiles of the road fuel, now at their highest seasonally since at least 1990, thereby depressing demand for resupply from Europe. "Shale oil production is going through a dream phase and the U.S. is going to make more gasoline,” said Olivier Jakob, managing director at Petromatrix GmbH. The slump in cross-Atlantic flows is being caused by a combination of more shale oil refining and weak demand in the U.S., he said. So far, Europe’s refiners have managed to send a little more to alternative markets like Latin America, West Africa, the Middle East, Asia and as far away as even Australia, although Jakob says those markets are oversupplied too. Gasoline shipments and blending components to Asia from Europe jumped more than 80 percent to about 70,000 barrels a day this month from December, while exports to the Middle East are at their highest since October, according to preliminary data from oil analytics and tanker-tracking firm Vortexa. And those markets are only going to become increasingly competitive, particularly with China exporting more last year -- and adding refining capacity in 2019 -- to add to regional supplies.

US gasoline glut hits new record, crude stocks up – EIA - (Reuters) - U.S. gasoline inventories jumped to a record high in the most recent week even as refiners cut back activity, the Energy Information Administration said on Thursday, while crude stocks rose sharply. Gasoline stocks rose for an eighth consecutive week, by 4.1 million barrels to a record 259.6 million barrels, compared with analysts' expectations in a Reuters poll for a 2.7 million-barrel gain. Crude inventories rose by 8 million barrels in the week to Jan. 18, compared with analysts' expectations for a decline of 42,000 barrels. Refining output pulled back in the most recent week after a period where refineries have been running at high capacity to meet seasonal needs for diesel and heating oil and to feed export demand. But that has produced a glut of gasoline that could potentially spur refiners to back off in coming weeks and as heating oil season recedes. Gasoline futures dipped on the news, falling 0.2 percent to $1.383 a gallon. U.S. crude futures were modestly higher, however, causing the refining margin, or crack spread, for gasoline (RBc1-CLc1), to fall by 5 percent. "Gasoline demand remains anemic, causing a further rise in those inventories. U.S. crude oil production remains near record levels, as well," said John Kilduff, partner at Again Capital Management in New York. U.S. crude oil futures gained 24 cents to $52.86 a barrel as of 11:24 a.m. EST (1624 GMT), while Brent lost 18 cents to $60.96 a barrel. Refinery crude runs fell by 174,000 barrels per day, EIA data showed. Refinery utilization rates fell by 1.7 percentage points, but remain relatively strong, running at 92.9 percent of capacity. "It says less product will be coming down the pipe but we are already dealing with very high inventories in gasoline and distillates for this time of year," Distillate stockpiles, which include diesel and heating oil, fell by 617,000 barrels, versus expectations for a 229,000-barrel drop, the EIA data showed.

Gasoline Overproduction Leads To Negative Margins - Excess supply of gasoline coupled with slow demand has pressured refiners margins, Reuters reports, noting refining margins for the fuel in the United States sank to US$45.70 a barrel yesterday. The drop follows the fourth weekly increase in gasoline inventories in the U.S., all of them quite hefty, leading to an all-time high of gasoline supplies, at 259.6 million barrels as of January 18. Over the last four weeks, the Energy Information Administration reported gasoline inventory builds reaching a combined 26.6 million barrels. However, the United States is not the only large gasoline hub where inventories are rising as demand remains sluggish. According to the Reuters report, inventories in the Netherlands, Japan, and Singapore are also at multi-year highs, with the annual increase in their combined level at 21 million barrels, data from consultants FGE has shown. The U.S. shale oil boom has yielded predominantly light crude, from which gasoline is made, so the most recent surge in production has resulted in more production of the light fuel. However, U.S. refiners have also upped their gasoline output levels as they increase distillate fuel production as well, as it fetches higher margins. “Overproduction of gasoline ensued and now you’re in a situation where in various parts of the world gasoline cracks are basically zero or negative,” Wood Mackenzie analyst Zachary Rogers told Reuters.  The prospects for gasoline demand don’t seem too bright, either. Worry about a global economic slowdown persist despite reports from Asia that governments are preparing for stimulus measures. Also, Wall Street seems to be unanimous in its expectation of a slowdown during the so-called “late-cycle” stage that precedes a recession.

Venezuela Sanctions Likely to Hit Some US Refiners -- Refiners in Texas and Louisiana would be hard hit by sanctions on Venezuelan crude under consideration at the White House, a move that would leave U.S. oil companies struggling to find alternative supplies. President Donald Trump recognized Juan Guaido as the interim president of Venezuela on Wednesday in the most provocative move yet against the leftist regime of Nicolas Maduro. Maduro responded by breaking diplomatic relations with the U.S., giving American diplomats 72 hours to leave the country. The Trump administration has drafted a slate of sanctions but hasn’t decided whether to deploy them, said people familiar with the matter. Earlier this month, White House officials warned U.S. refiners that sanctions were being considered, and advised them to seek alternative sources of heavy crude. Some U.S. refiners worried about sanctions experimented with alternatives last year before ultimately returning to Venezuelan crude. The hardest-hit would be Citgo Petroleum Corp., the refining arm of Petroleos de Venezuela SA, or PDVSA, the state-run oil company. Citgo imported the most Venezuelan crude in the first 10 months of 2018, followed by Valero Energy Corp.  Marathon Petroleum Corp., Total SA and Motiva Enterprises LLC cut intake by more than a half during that period, and as Venezuelan oil production slumped to the lowest levels seen since the 1940s. Oil companies have urged the Trump administration not to limit imports of Venezuelan oil, warning the action could disadvantage Gulf and East Coast refiners designed to handle the country’s heavy crude, while also causing gasoline prices to rise. Shutting off Venezuela imports would exacerbate a drought of the heavy, high-sulfur oil that’s preferred by Gulf Coast refiners and normally sells at a discount to higher-quality crude. Prices are already surging, after OPEC and its allies cut supply and the Canadian province of Alberta forced producers to do the same to stem global and regional gluts. Mars Blend crude rose to a five-year high versus the U.S. benchmark Wednesday, according to data compiled by Bloomberg, while the profit margin for processing Mexican Maya oil sank to the lowest in four years. Alternatives aren’t readily available. Mexico, whose production is mired in a prolonged slump, has already increased shipments to the U.S. Gulf, surpassing Venezuela last year as the region’s top supplier. Meanwhile, Ecuadorean and Colombian crude often heads to the U.S. West Coast, leaving American refiners competing with each other. Refiners have told allies in the White House and on Capitol Hill that a unilateral crude oil ban will disadvantage U.S. refiners without advancing U.S. policy objectives in Venezuela, because India, Russia and China will continue buying the country’s oil.

Citgo Suspends Oil Refinery Unit In Texas -- Venezuelan PDVSA’s crown jewel, U.S.-based refiner Citgo, has idled a gasoline production unit at a small refinery in Corpus Christi, Texas, Reuters reports, citing sources in the know. The sources said the closure had been motivated by economic reasons, since the unit was not making any profit, while Citgo itself said in a regulatory filing it had idled the unit for “non-operational reasons.” Citgo, Reuters notes, has been running its refineries at lower than usual rates as a result of lack of spare parts, underinvestment, and low flows of light crude that refineries need to mix with Venezuelan heavy crude to produce fuels and other products. Citgo has been in the spotlight recently as the only profitable unit of the troubled Venezuelan oil company, which a Canadian miner is seeking to take control of in lieu of financial compensation for the forced nationalization of its operations in Venezuela by the late Hugo Chavez’ government. 

2018 Year-End Oil Price Declines Won't Stop Texas Oil Industry Growth -- After 23 consecutive months of growth, the Texas Petro Index (TPI) declined in November and December, Texas oil economist Karr Ingham told news reporters Jan. 23. The decline comes in response to the sharp drop in crude oil prices at the end of 2018 which he said “spooked producers.” Still, he maintains that the recent declines in the TPI doesn’t necessarily mean an end to the current cycle of growth and expansion for Texas’ upstream oil and gas economy. “It has virtually always been the case that a decline in the TPI signaled the onset of a contraction of some magnitude, but that may not be the case this time,” said Ingham. “A series of geopolitical market events may have been the primary culprit in that particular price event, and the market seems to be working through those in early 2019.” Ingham said numbers from the Texas Workforce Commission reveal that oil and gas employment declined by about 500 jobs. However, he says that’s more of a coincidence rather than a direct result of falling oil prices. “Employment never responds to oil price declines that quickly. It was coincidental,” he said. Ingham goes on to highlight the record production numbers in Texas and the United States in 2018. “Texas really flexed its muscle in 2018,” he said. The state’s crude oil production made up 40 percent of total U.S. crude production in 2018. Texas is on track to provide 45 percent of U.S. production by year-end 2019. 

Crude oil production rises, latest DPR projects - Crude oil production from the seven most prolific plays/basins in the Lower 48 U.S. states is expected to increase by 62,000 barrels per day from January to February, federal data shows. The just-released January Drilling Productivity Report (Dpr), produced by the Energy Information Administration, shows total crude production from the seven so-called regions will climb to 8.18 million barrels per day (Mmbpd), from 8.12 Mmbpd. Six of the seven regions will see a production increase from this month to next. The biggest month-to-month increase is projected for the Permian Basin, up 23,000 Bpd, to 3.85 million barrels per day (Mmbpd) in February, from 3.83 Mmbpd in January. (All numbers are rounded.) The Niobrara and Eagle Ford were next, expected to see 12,000 Bpd and 11,000 Bpd increases, to 681,000 Bpd and 1.44 Mmbpd, respectively, Kallanish Energy finds. The Anadarko, Appalachia (the Marcellus and Utica Shale plays combined) and Bakken regions combined will see a 16,000 Bpd January-to-February production jump. The Haynesville Shale play will see no movement in production from January to February, remaining flat at 43,000 Bpd, the DPR reveals. . 

Huge Backlog Could Trigger New Wave Of Shale Oil -- The number of drilled but uncompleted wells (DUCs) in the U.S. shale patch has skyrocketed by roughly 60 percent over the past two years. That leaves a rather large backlog that could add a wave of new supply, even if the pace of drilling begins to slow.  The backlog of DUCs has continued to swell, essentially uninterrupted, for more than two years. The total number of DUCs hit 8,723 in November 2018, up 287 from a month earlier. That figure is also up sharply from the 5,271 from the same month in 2016, a 60 percent increase. The EIA will release new monthly DUC data on January 22, which will detail figures for December. Some level of DUCs is normal, but the ballooning number of uncompleted wells has repeatedly fueled speculation that a sudden rush of new supply might come if companies shift those wells into production. The latest crash in oil prices once again raises this prospect.  The calculus on completing wells can cut two ways. On the one hand, lower oil prices – despite the recent rebound, prices are still down sharply from a few months ago – can cause some E&Ps to want to hold off on drilling new wells. That may lead them to decide to complete wells they already drilled as a way of keeping production aloft while husbanding scarce resources. Companies that are posting losses may be desperate for revenues, so they may accelerate the rate of completions from their DUC backlog.  On the flip side, producers don’t exactly want to bring production online in a market that is subdued. “The lower oil price raises some questions about whether you go ahead with completing these wells,” Tom Petrie, head of oil and gas investment bank Petrie Partners, told S&P Global Platts. “Some companies want to get them in a producing mode; others say they won't get an adequate return right now, so they'll wait.”   However, the pipeline bottleneck in the Permian – which, to be sure, has eased a bit as some additional capacity has come online in recent months – could prevent a sudden rush of DUC completions. After all, the soaring number of DUCs was itself at least in part the result of the pipeline bottleneck.

Permian Basin output to drive record-setting oil output for decades- US EIA –- — Record-breaking US oil production is expected to continue for decades, driven largely by the Permian Basin, the US Energy Information Administration said in its Annual Energy Outlook Thursday. In the outlook's reference case, EIA forecasts US oil output, which averaged 10.93 million b/d in 2018, will climb to nearly 15 million b/d by 2027 before flattening out and falling below 12 million b/d by 2050. But in its high oil and natural gas resource and technology case, the upper end of the EIA's forecast, the agency sees oil production climbing above 20 million b/d by 2040. In its low oil price case, however, EIA forecasts US oil output will peak just below 13 million b/d within five years and gradually fall to about 8.3 million b/d by 2050. "The size of resources and the pace of technology improvements to lower production costs translate directly to long-term total production," EIA said. "Much higher oil prices can boost near-term production, but cannot sustain the higher production pace." Shale production in the Lower 48 states will account for nearly 70% of domestic production over the next three decades, according to the report. The majority of the growth will take place in the Permian, according to Meg Coleman, leader of EIA's exploration and production team. The report looked at potential oil and gas production in some areas being opened by the Trump administration, including the Arctic National Wildlife Refuge, where it sees some output coming online in the 2030s. But the EIA did not consider potential production from new offshore areas the administration is looking to open, particularly the Atlantic Ocean, Coleman said. The report forecasts that recent deepwater discoveries in the Gulf of Mexico will boost offshore output to 2.4 million b/d in 2022. "Many of these discoveries resulted from exploration when oil prices were higher than $100/b before the oil price collapse in 2015 and are being developed as oil prices rise," EIA said. "Offshore production then declines through 2035 before flattening through 2050 as a result of new discoveries offsetting declines in legacy fields." EIA forecasts that the US will become a net energy exporter in 2020 and remain so through at least 2050, due largely to rapid growth of domestic crude, gas and NGLs output and a slowdown in US consumption growth.

Frac Water Demand in US Skyrockets - The demand for frac water in the United States is about to skyrocket, according to new research by Rystad Energy. While U.S. shale oil production is hitting record levels, Rystad has found that frac water demand has more than doubled since 2016. The demand in the Permian alone currently exceeds all of U.S. demand of 2016. The future for frac water demand also looks positive, with Rystad predicting demand to grow by an additional 6 percent in 2019. The Permian will see demand surpass 2.5 billion barrels by 2020. “Frac water demand has sky-rocketed. This surge is driven by both increased activity and higher proppant intensity,” said Rystad Energy senior vice president Ryan Carbrey. “But even with such steep growth, market concerns about sourcing challenges and bottlenecks appear to be minimal.” Rystad noted strong growth for the water treatment market in 2018, with a 28 percent expansion to 1.4 billion barrels last year. The market is forecast to double 2016 totals by 2020. The Permian will see substantial treatment growth, according to Rystad, surpassing 800 million barrels by 2021. “Water disposal is not currently an issue across the Permian as a whole, but some operators are having local difficulties,” added Carbrey. “We expect the water disposal market in 2021 will be tighter due to significant water production increases from the Permian-Delaware. More infrastructure would be needed beyond 2021.” 

Weld County oil and gas spill report for Jan. 20 -- The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks. Information is based on Form 19, which operators must fill out detailing the leakage/spill events.

• • CRESTONE PEAK RESOURCES OPERATING LLC, reported Jan. 11 a well spill about 5 miles northeast of Fort Lupton, near Weld County roads 20 and 39. About 10 barrels of condensate spilled. Crews believe a pipe got stuck in sand in the well while they pulled production string with a workover rig. The rig pulled on the string, which suddenly released, and jumped about 12 inches out of the hole. When the tubing came out, the condensate blew out of the well and misted north, onto a swath of ground inside the sound walls. Condensate also misted over the sound walls, covering about 1.75 acres of farmland. The soil will be scraped and disposed of, and the topsoil will be replaced.
• • NOBLE ENERGY INC, reported Jan. 11 a flowline spill about 9 miles southeast of LaSalle, near Weld roads 40 and 55. About one barrel of oil, condensate and produced water spilled. The flowline from the wellhead to the tank battery developed a pinhole leak during production, spilling fluid to the ground surface.
• • KERR MCGEE OIL & GAS ONSHORE LP, reported Jan. 10 a tank battery spill about 2 miles southeast of Mead, near Weld roads 30 and 11. Between one and five barrels each of oil, condensate and produced water spilled. Waters of the state were impacted or threatened. A separator fire tube corroded. Lab results indicated groundwater from about 11 feet below ground surface had benzene and toluene concentrations above COGCC standards.
• • KERR MCGEE OIL & GAS ONSHORE LP, reported Jan. 10 a historical tank battery spill about 2 miles northeast of Erie, near Weld roads 12 and 3. Less than five barrels of oil, produced water and condensate spilled. Waters of the state were impacted or threatened. Crews found historical impacts during abandonment. Groundwater was encountered 15 feet below ground surface within the excavation.
• • PDC ENERGY INC, reported Jan. 10 a tank battery spill about 1 mile southwest of Ault, near Weld roads 82 and 33. Between five and 100 barrels of oil and an unknown amount of produced water spilled. The tank header pipe broke, spilling fluid inside secondary containment.
• • KP KAUFFMAN COMPANY INC, reported Jan. 8 a historical flowline spill in Frederick, near Weld roads 16 and 15. Less than a barrel each of oil and produced water spilled. Crews found the spill while cleaning a non-reportable release caused by high line pressure in a flowline. Historical contamination is being excavated and disposed of at a landfill.
• • AKA ENERGY GROUP LLC, reported Jan. 7 a gas compressor station spill about 1 mile west of Gilcrest, near Weld roads 42 and 27. Between one and five barrels of condensate and less than a barrel of produced water spilled. A third-party truck driver transferred condensate to the incorrect tank battery, which was already full, spilling about two barrels of condensate and produced water inside secondary containment and two barrels of the mix outside secondary containment.
• • DCP OPERATING COMPANY LP, reported Jan. 7 a pipeline spill about 2 miles north of Fort Lupton, near Weld 20 and U.S. 85. Between one and five barrels of condensate spilled. A six-inch gas gathering pipeline developed a leak.

Why “orphan” oil and gas wells are a growing problem for states - The Denver Post — When Bill West drives his weed sprayer over wheat and hay fields at his ranch northwest of Gillette, Wyo., he bumps into the occasional debris from the more than a hundred defunct natural gas wells on his 10,000-acre property.The company that owned the wells went out of business four years ago, leaving behind fuse boxes, internet boxes and thousands of feet of underground pipe.“They just walked away and left everything sitting,” said West, 85. “It’s up to the state to take care of it now.”So-called “orphan” oil and gas wells, which have been abandoned by defunct companies that cannot pay to plug them, are a growing problem in many states thanks to a recent slump in energy prices that has forced marginal operators out of business. Adam Peltz, a senior attorney at the Environmental Defense Fund, said he heard officials from 10 states highlight their work on orphan wells at a spring meeting of the Interstate Oil and Gas Compact Commission. “It’s probably the issue that was raised by the most number of states.” Peltz said that dealing with orphan wells is a cyclical issue — more wells become the state’s responsibility after a downturn — but it’s getting worse over time, as states struggle with a backlog of wells that dates back decades.Nobody knows how many orphan and abandoned drilling sites litter farms, forests and backyards nationwide. The U.S. Environmental Protection Agency estimates there are more than a million of them. Unplugged wells can leak methane, an explosive gas, into neighborhoods and leach toxins into groundwater.Methane leaking from abandoned wells caused explosions at a Colorado construction site in 2007 and at a Pennsylvania home in 2011.In 2014, an Ohio elementary school had to be evacuated because of a gas leak traced to an abandoned well underneath the gym. Near the West Texas town of Imperial, effluence from decades-old oil wells has created a “lake” of salty, sulfurous water.

Gas leaks reach surface in Garfield County - Cleanup efforts are continuing following two recently reported leaks from oil and gas facilities into surface waters in Garfield County. State officials say one of them reached Parachute Creek, which was the site of a major spill discovered in 2013 involving a Williams pipeline, and the new leak there also involves a Williams pipeline. A report filed with the Colorado Oil and Gas Conservation Commission said a buried 16-inch diameter natural gas gathering line owned by Williams subsidiary Bargath ruptured Friday, creating a large hole near an irrigation ditch and spraying fluids across an agricultural field and Garfield County Road 215, or Parachute Creek Road, about six miles north of Parachute. Williams initially estimated that five barrels, or 210 gallons, of natural gas condensate leaked, but now is estimating the total to be less than 30 barrels, or 1,260 gallons. The COGCC reported that hydrocarbons, in the form of rainbow sheens, were visible at a drainage's confluence with Parachute Creek, but downstream in the creek no sheens are visible and no hydrocarbon odors have been detected. Booms have been deployed in the drainage and the creek in an effort to contain the spread of any potential contaminants, and water samples have been taken in the creek. Communities with drinking water supplies downstream of Parachute Creek have been notified of the spill. The second leak involves a Caerus Oil and Gas pipeline facility in the Una area along the Colorado River southwest of Parachute. The leak was reported to Caerus by an operator for Summit Midstream who saw it Jan. 14. An unknown amount of produced water, initially estimated at between 42,000 and 126,000 gallons, that contains benzene and other contaminants leaked, with some of it reaching gravel pit waters along the Colorado River, according to reports filed with the COGCC. Greg Deranleau, environmental manager for the COGCC, said that agency has environmental staff on the ground overseeing the cleanup efforts and response.

Anti-fracking activist sues outgoing Lafayette Mayor Christine Berg over alleged First Amendment violation - Lafayette resident and founder of anti-fracking group East Boulder County United Cliff Willmeng filed a lawsuit Thursday against the city's outgoing Mayor Christine Berg, alleging she violated his First Amendment rights by blocking and removing critical comments of his on her official Facebook page.  It comes just months after Willmeng, who was joined by Marine Corps reservist Eddie Asher, sued Thornton Mayor Pro-Tem Jan Kulmann for essentially the same thing, alleging that the elected official — who was a proponent of oil and gas interests — violated free speech rights by censoring her government social media page. "The case is almost identical," Willmeng said Thursday. "(Berg's) political party is different (from Kulmann's), but the principles are all the same. "She has been the mayor for some time and played a central role in weakening the community response to oil and gas," he added, suggesting a long-reiterated belief among local activists that the city's efforts to update its drilling regulations translates as dealings with the industry.. The lawsuit suggests that Berg maintains an official Facebook page as mayor and has repeatedly deleted critical posts. "Plaintiff Clifton Willmeng is a concerned citizen who has posted comments critical of Defendant Berg on her Facebook page," attorneys Darold W. Killmer, Andrew McNulty and Tania Valdez of Killmer, Lane & Newman, LLP —who are representing Willmeng in his suit — wrote in Thursday's filing. "For that, Defendant Berg removed his comments and blocked him from posting any further messages. Defendant Berg's practice of stifling Mr. Willmeng's valid criticism of her is unconstitutional, and this suit seeks to end it."

Scientists ask Minnesota governor to stick with Line 3 suit (AP) — A group of scientists on Thursday urged Gov. Tim Walz to join them in opposing Enbridge Energy’s plan to replace the stretch of its Line 3 crude oil pipeline that cuts across northern Minnesota. Walz, who took office this month, has said he will examine all aspects of the proposed project before deciding whether to press on with a lawsuit seeking to overturn the Public Utilities Commission’s approval of it. The lawsuit was brought by the state Commerce Department during the administration of Walz’s predecessor, fellow Democrat Mark Dayton. More than 50 people, including scientists from the liberal activist group Science for the People, gathered in the governor’s reception room to say the science is clear that the Line 3 upgrade will aggravate climate change by facilitating further use of fossil fuels. They called on Walz to continue with the lawsuit and for a face-to-face meeting with him and Lt. Gov. Peggy Flanagan. “Nowhere is the call for science-based decision-making so urgent as around the need for rapid climate action,” said Christy Dolph, a University of Minnesota researcher. The governor’s deputy chief of staff for communications and scheduling, Kristin Beckmann, welcomed the scientists, took detailed notes and said she’d convey their concerns. But she did not commit to granting the meeting. Calgary, Alberta-based Enbridge says Line 3, which was built in the 1960s, needs replacing because it is deteriorating. It says the project would restore full capacity and ensure reliable deliveries of crude to Midwestern refineries. James Doyle, a physics professor at Macalester College, noted that Line 3 would carry Canadian tar sands oil, which takes a lot of extra energy to extract and transport. He pointed to research showing that those oilfields are among the world’s top generators of carbon dioxide. House Republican leader Kurt Daudt countered with a statement saying the science shows that Line 3 needs replacement and that pipelines are the safest way to transport oil.

Oregon a Battlefield Again for Fracked Gas Pipeline and Jordan Cove LNG Terminal -   Oregon's residents are working to hold Democratic Governor Kate Brown to task over what they see as the most pressing climate issue facing the state: the proposed Jordan Cove liquefied natural gas (LNG) export terminal and its Pacific Connector Gas pipeline. Backed by the Canadian company Pembina Pipeline Corporation, the project would transport natural gas extracted via hydraulic fracturing (fracking) from Colorado to Oregon's coast, where it would be super-cooled into liquid form and loaded on ships to international markets. Gov. Brown has remained neutral on Jordan Cove, prompting a range of efforts from activists to sway her against it. For example, Jordan Cove opponents interrupted her 2019 swearing in ceremony and took to the streets with protests. In addition, since the new year, thousands of residents have flooded Department of State Lands regulatory hearings to oppose the project, which they say would jeopardize major fresh waterways and marine areas in the state. According to Rogue Climate, which has helped mobilize opposition to the project, more than 3,000 residents, including landowners, ranchers, tribal members, youth, local businesses and representatives of the Pacific Coast Federation of Fishermen's Associations, attended hearings in opposition.Klamath Tribal Council Chairman Don Gentry told DeSmog that the tribal council believes "we need to exhaust every administrative opportunity that we have to express our opposition to the project and hopefully the permits and licensing will be denied."The Tribe has participated in the regulatory process throughout, he says, and brought up a host of concerns at the most recent hearings. Those concerns include the pipeline's "potential to disturb human remains and cultural sites" (such as a historic village on the Klamath River), "risks to the [Klamath] River itself," the Tribe's effort to rehabilitate the river's salmon run, risks to wildlife and generally, the perils the pipeline in particular poses for tribal aboriginal territory, as protected by U.S. treaty.

Despite Shutdown, Trump Administration Continues Push to Open Western Arctic - At the 11th hour on Jan. 22, the Bureau of Land Management (BLM) quietly extended the initial public comment period in an environmental review process aimed at creating a new management plan (the Integrated Activity Plan or IAP) for the National Petroleum Reserve-Alaska (Reserve). Already, BLM has rescheduled public meetings with little notice, plus the government shutdown is still going strong and the agency has only extended the public process for one week. BLM's current rush job, meant to cater to ConocoPhillips and the oil industry, is unforgivable, especially when compared to the extensive work that went into—and broad stakeholder support that was garnered for—the current management plan. This IAP process seeks to undo the existing management plan that was put in place under the Obama administration less than five years ago. As part of this effort, BLM is seeking to eliminate important protections for key ecological Special Areas in the Reserve that Alaska Wilderness League and others have fought tirelessly for decades to protect. And as with many oil and gas projects across the country and offshore, the agency is continuing to press forward despite the current government shutdown. On Jan. 17, the Alaska Wilderness League—along with several of our partners—sent a request to BLM asking the agency to extend the public comment period due to the unavailability of staff to answer questions or serve as a public resource. What we've received is one additional week with no notice of the extension, and still no end to the shutdown in sight. The current management plan, approved in 2013, received strong public support and put in place sensible conservation protections for 11 million acres in the Reserve, setting aside five Special Areas of exceptional wildlife and wilderness value: Teshekpuk Lake, Colville River, Utukok River Uplands, Kasegaluk Lagoon and Peard Bay. President Obama's Department of the Interior (DOI) spent years working with tribal communities, local governments, the state of Alaska, the Western Arctic Caribou Herd Working Group and the public on this plan. Alaska Wilderness League, along with our partners, was integral to seeing this plan put in place with strong ecological protections. We worked diligently to advocate for key protections within the Reserve—helping to collect and deliver 400,000 public comments, collect 30 regional and local tribal resolutions representing 90 villages across Alaska, and organize dozens of events across the country to educate the public on the importance of Reserve Special Areas.

Arctic Refuge Oil Surveys Put Polar Bears in the Crosshairs - Send an army of industry workers into remote polar bear territory in the dead of winter, and things are not going to end well.Yet that's just what the Trump administration would open the door to as it prepares for oil and gas drilling and moves to authorize seismic testing, a precursor to drilling in the Arctic Refuge.Earthjustice has long worked to defend the Arctic Refuge, which now faces the greatest threat in decades asthe Trump administration barrels forward with plans for an oil and gas lease sale as early as next year. Members of the public have until Feb. 11 to comment on a draft plan to hold a lease sale.  Congress opened the coastal plain of the Arctic Refuge to industry leasing for the first time ever in December of 2017, by tacking a drilling provision onto a federal tax bill to avoid a filibuster. Most Americans are against drilling in the Arctic Refuge because the wilderness has extraordinary ecological value that warrants the highest safeguards. Bipartisan opposition has historically prevented industry from harming this cherished landscape. Polar bears on the coastal plain will be especially vulnerable to harm from seismic operations and drilling. Proposed oil exploration activities pose substantial risks of death or serious injury to denning mother and cub polar bears, according to the analysis of Dr. Steven Amstrup, chief scientist for Polar Bears International. Polar bears, classified as marine mammals, are already struggling. Sea ice is vanishing, a consequence of warmer winter temperatures, and polar bears cannot survive without it. According to the U.S. Geological Survey, reduced sea ice could result in the loss of approximately two-thirds of the world's polar bears within 50 years. The agency predicts Alaska's polar bears will be "extirpated under current emission scenarios"—which means they will go extinct if nothing is done to address climate change.  As ice melts away, polar bear mothers are increasingly going on land, to the coastal plain, to build their dens—and they are particularly vulnerable to disturbance while denning. The combination of having more polar bears on shore and more people conducting seismic testing operations means there will be more interactions between people and bears, resulting in greater risks to bears.

BP Drills Gas Hydrate Test Well on North Slope -  Rigzone - BP Exploration (Alaska) Inc. successfully drilled a research well on the North Slope in partnership with the U.S. Department of Energy and the U.S. Geological Survey to collect samples and gather knowledge about gas hydrate, a potential long-term unconventional gas energy resource. The stratigraphic test well enabled BP and the Department of Energy to gather core, log, reservoir performance and fluid data from an ice pad location at Milne Point. The drilling began Feb 3. Field teams began pulling hydrate core samples on Feb. 10. Extensive well logging and wireline formation testing was completed between Feb. 14-18. "With this project, we have significantly increased our understanding of gas hydrate-bearing formations on the Alaska North Slope," said Scott Digert, BP resource manager and the project's technical adviser. "The results also illustrate the value of collaborative research," he said. This test well is part of the ongoing research partnership between BP and the Department of Energy, which began in 2002. Known deposits of methane hydrate in Alaska and other parts of the world are enormous. However, the challenge is finding the technology to unlock the energy, to separate the natural gas from the solid gas-water-ice "clathrate" in which it occurs. The DOE has identified gas hydrate as a research target and funded the estimated $4.6 million cost of drilling the Milne test well. BP contributed seismic data, staffing and program oversight. The on-site coring and data team included scientists from the USGS, DOE, Oregon State University and an observer from India's hydrate program. Drilling crews and research team members collected about 430 feet of core samples. The cylindrical core segments, about 3 inches in diameter, were initially subsampled and analyzed on site due to the time-and temperature-dependent data requirements. They will be shipped to Anchorage for temporary storage before being distributed to gas hydrate researchers around the country. Subsequent data collection and analysis will continue for several months. A report of findings will be released thereafter. 

Crude Inventory Data Shows Surprise Build of 7.97 Million Barrels -- U.S. crude oil refinery inputs averaged 17.0 million barrels per day during the week ending January 18, 2019, which was 174,000 barrels per day less than the previous week’s average. Refineries operated at 92.9% of their operable capacity last week. Gasoline production increased last week, averaging 9.6 million barrels per day. Distillate fuel production decreased last week, averaging 5.2 million barrels per day. U.S. crude oil imports averaged 8.2 million barrels per day last week, up by 664,000 barrels per day from the previous week. Over the past four weeks, crude oil imports averaged about 7.7 million barrels per day, 2.1% less than the same four-week period last year. Total motor gasoline imports (including both finished gasoline and gasoline blending components) last week averaged 561,000 barrels per day, and distillate fuel imports averaged 355,000 barrels per day. U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 8.0 million barrels from the previous week. At 445.0 million barrels, U.S. crude oil inventories are about 9% above the five year average for this time of year. Total motor gasoline inventories increased by 4.1 million barrels last week and are about 6% above the five year average for this time of year. Finished gasoline and blending components inventories both increased last week. Distillate fuel inventories decreased by 0.6 million barrels last week and are about 2% below the five year average for this time of year. Propane/propylene inventories decreased by 3.7 million barrels last week and are about 2% above the five year average for this time of year. Total commercial petroleum inventories increased last week by 6.7 million barrels last week. Total products supplied over the last four-week period averaged 20.3 million barrels per day, down by 1.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.7 million barrels per day, down by 0.1% from the same period last year. Distillate fuel product supplied averaged 3.8 million barrels per day over the past four weeks, down by 3.5% from the same period last year. Jet fuel product supplied was down 4.9% compared with the same four-week period last year.

EIA's Annual Energy Outlook 2019 projects growing oil, natural gas, renewables production  - EIA’s Annual Energy Outlook 2019 (AEO2019), which will be released later this morning, includes projections of U.S. energy markets through 2050 based on a Reference case and six side cases that include different assumptions regarding prices, economic activity, and technology and resource estimates. AEO2019 projects continued development of U.S. shale and tight oil and natural gas resources. Natural gas and natural gas plant liquids (NGPLs) experience the highest production growth of all fossil fuels, and NGPLs account for almost one-third of cumulative U.S. liquids production through the 2050 projection period. In the Reference case, U.S. crude oil production continues to set annual records through the mid-2020s and remains greater than 14.0 million barrels per day (b/d) through 2040. The continued development of tight oil and shale gas resources, particularly those in the East and Southwest regions, supports growth in NGPL production—which reaches 6.0 million b/d by 2030—and dry natural gas production. Dry natural gas production reaches 43.4 trillion cubic feet by 2050.  Growth in drilling in the Southwest region also drives natural gas production from tight oil formations in the Reference case. Because drilling activity in oil formations primarily depends on crude oil prices rather than natural gas prices, the increase in natural gas production from oil-directed drilling puts downward pressure on natural gas prices. Sustained low natural gas prices and declining costs of renewable power enable the shares of electricity generated by natural gas and renewables to increase. The natural gas share increases from 34% in 2018 to 39% in 2050, and the renewables share increases from 18% in 2018 to 31% in 2050. The Reference case is not intended to be the most probable prediction of the future, but it instead forms a baseline for estimating the effects of new policy or technology changes in the future. The other six cases show the effect of changing other key model assumptions.  Other significant findings in AEO2019 include:

• The United States becomes a net energy exporter by 2020. In the Reference case, the United States becomes a net exporter of petroleum liquids in 2020 as U.S. crude oil production increases and domestic consumption of petroleum products decreases. The United States continues to be a net exporter of natural gas and coal (including coal coke) through 2050.
• U.S. net exports of natural gas continue to grow as liquefied natural gas becomes an increasingly significant export. In the Reference case, U.S. liquefied natural gas (LNG) exports and pipeline exports to Canada and to Mexico increase until 2030 and then flatten through 2050 as relatively low, stable natural gas prices make U.S. natural gas competitive in North American and global markets.
• Natural gas and renewable energy shares grow in U.S. electric generation. EIA’s Reference case highlights the impact of sustained low natural gas prices and declining costs of renewables on the electricity generation fuel mix. The natural gas share maintains its lead and continues to grow, increasing from 34% in 2018 to 39% in 2050. The renewables share, including hydroelectric generation, also increases from 18% in 2018 to 31% in 2050, driven largely by growth in wind and solar generation. Renewables grow to become a larger share of U.S. electric generation than nuclear and coal in less than a decade.
• Increasing energy efficiency across end-use sectors keeps U.S. energy consumption relatively flat, even as the U.S. economy continues to expand. Delivered U.S. energy consumption grows across all major end-use sectors, with electricity and natural gas consumption growing fastest.

US oil and gas firms are ready to spend as confidence grows, survey says - Executives in the U.S. oil and gas industry are said to be much more optimistic about growth in the sector, compared to last year. In its annual study, DNV GL, claimed that 85 percent of American executives questioned believed there were reasons to expect an increase in drilling in 2019. In the corresponding figure for 2018, the figure was 60 percent. U.S. oil and gas executives appeared to be more bullish than the global average of positive voices which DNV GL recorded at 76 percent. Click chart to view The group, which acts as a technical advisor to the oil and gas sector, added that almost half of U.S. companies were preparing for "significant increases" in spending on projects over the coming months. "There are brighter prospects for activity and investment across the value chain this year and beyond," DNV GL's Americas Regional Manager Frank Ketelaars said in a press release. Ketelaars added that expensive "Deepwater projects" could thrive thanks to reduced cost measures, while newer sources such as shale oil and liquefied natural gas (LNG) were also set to grow. Possible barriers to growth of U.S. oil and gas were the lack of skilled workers at the industry's disposal as the survey revealed that more than a third (37 percent) of U.S. executives expect to increase their company headcount in 2019. That number was just 20 percent in the same survey last year. Global confidence in the outlook for the oil and gas sector for 2019 sits at 76 percent, more than a doubling from the 32 percent recorded in 2017. U.S. West Texas Intermediate (WTI) traded at around $76 a barrel last October but had slumped to around $42 by December. Meanwhile, in a similar slump, Brent crude has fallen almost 30 percent since climbing to a peak of $86.29 in early October last year.

Oil and gas executives expect to boost spending this year: survey (Reuters) - The majority of senior energy industry executives expect to maintain or increase spending this year to meet demand for oil and gas after years of austerity, a survey by DNV GL shows. DNV, a technical adviser to the energy industry, surveyed 791 senior professionals from firms with annual revenue ranging from $500 million or less to those earning $5 billion and more. BP (BP.L), Shell, and many other companies cut capital spending and costs in 2016 after the price of benchmark Brent crude fell to a 12-year low of below $30 a barrel. Helped by output cuts by Organization of the Petroleum Exporting Countries and its allies, Brent climbed to an average price of $70 last year compared to $50 for the period 2015 to 2017. It was trading above $62 a barrel on Monday. DNV’s annual outlook of the global oil and gas industry showed 70 percent of respondents planned to maintain or increase capital spending in 2019, compared to 39 percent in 2017. Those expecting to sustain or increase operating expenditure also grew to 65 percent in 2019 from 41 percent in 2017. In addition, 67 percent believed more large, capital-intensive oil and gas projects would be approved this year. “Despite greater oil price volatility in recent months, our research shows that the sector appears confident in its ability to better cope with market instability and long-term lower oil and gas prices,” said Liv Hovem, who heads DNV’s oil and gas division. “For the most part, industry leaders now appear to be positive that growth can be achieved after several difficult years,” she added. 

Go Big Or Go Home, Part 2 - Will Large-Scale Pad Drilling Buoy Crude Output? -- When crude oil prices crashed in the second half of 2014 and 2015, producers survived by becoming leaner and more efficient. That transition included drastic reductions in the rates paid to services companies while wringing ever more oil and gas out of each well and, in the process, permanently altering the economics of drilling and completion. This year, producers are again facing a lower-price environment; since early October (2018), crude prices have dropped more than 30%. In the current, more conservative investment environment, can producers do it again? Can additional value be squeezed out with bigger well pads and longer laterals? Today, we continue a series exploring the benefits and risks of these highly concentrated and highly complicated operations.  In the first episode of this series, we explored the origins of pad drilling and the factors that catalyzed its widespread adoption across the oil patch. By splitting the substantial infrastructure, logistical, and rig-mobilization costs among multiple wells, pad drilling helped improve efficiency the last time crude prices dropped. That blog’s focus was on Northeast gas producers. Now we turn our attention to the crude-focused Permian. We’ll start with a look at a “mega-pad” with more than 60 wells and a couple of somewhat smaller pads, then conclude with a high-level analysis of the pros and cons of “going big.”

U.S. shale boom set to cool in 2019: Kemp (Reuters) - U.S. crude oil production will continue to grow through 2019 and 2020, but at a much slower pace than in 2018, according to the latest forecasts from the U.S. Energy Information Administration. U.S. crude and condensates production is estimated to have risen by almost 1.6 million barrels per day last year, according to the agency, the largest annual increase in history.But the agency forecasts growth will slow to just over 1.1 million barrels per day in 2019 and less than 0.8 million bpd in 2020 (“Short-Term Energy Outlook”, EIA, Jan. 15).Growth from the Lower 48 states excluding federal waters in the Gulf of Mexico is expected to slow even more sharply from almost 1.6 million bpd in 2018 to 0.95 million bpd in 2019 and 0.5 million bpd in 2020. Surging U.S. production, mostly from onshore shale plays, contributed to the oversupply which emerged in the oil market during 2018 and the consequent fall in prices during the fourth quarter. Slower growth from the shale plays will therefore have to play an important role in rebalancing the market during 2019 and 2020, even if the global economy avoids a recession (https://tmsnrt.rs/2Ho3ICn). “The dramatic fall in oil prices in the fourth quarter was largely driven by shale production surprising to the upside as a result of the surge in activity earlier in the year”, oilfield services firm Schlumberger told investors last week.

US E&P capex likely to remain flat to down on year in 2019: Schlumberger — US onshore E&P capital investments in 2019 are likely to be flat to slightly down from last year, with international activity outside North America picking up slowly over the next several months, Schlumberger's top executive said Friday. Paal Kibsgaard, CEO of the world's largest oilfield service company, said during a fourth-quarter earnings call that US land activity should also start slowly but pick up gradually in the second half. "In this scenario, it is likely that the E&P operators would gradually lower drilling activity and instead focus on drawing down the large inventory of drilled uncompleted wells," Kibsgaard said. Assuming WTI oil prices "reasonably" recover to average roughly 2018 levels of at least $60/b, operator focus on some of the thousands of drilled but unproduced wells (DUCs) would still drive US production growth, but at a rate "substantially" lower than the 1.9 million b/d in 2018, Kibsgaard said. On Friday, NYMEX WTI for February closed at $53.80/b. In November, there were 8,723 DUCs in the US, 46% of which were in the Permian Basin, US Energy Information Administration data showed. Permian DUCs have grown relatively rapidly, from 1,127 in August 2016 to 4,039 in November 2018.   On the other hand, Schlumberger's projected "solid" year-over-year revenue growth in 2019 from markets outside North America. Increases are expected in mid-single digits during the first half of the year, signaling operators' intentions to spend more money in those arenas, Kibsgaard said. Those companies will probably start the year at "conservative" spending levels in view of global oil prices that fell in Q4 2018 and remain $10-$20/b lower than last year, he added. ICE Brent closed Friday at $62.73/b. Activity pickups internationally will be led by Latin America, Asia and Africa as new investment programs are kicked-off in those regions, with more nominal activity growth in the North Sea, Russia and the Middle East. "The underlying decline from the aging production base in key oil producing countries like Norway, the UK, Brazil and Nigeria are being offset by new project startups, as well as more exploration activity," Kibsgaard said.

Warning Signs Flash For U.S. Shale - The largest oilfield services company in the world says that shale drilling activity is slowing, creating an uncertain outlook for 2019. The recent volatility in oil prices has created “less visibility and more uncertainty” on spending by shale companies in 2019, Schlumberger’s CEO Paal Kibsgaard said on an earnings call on January 18.Shale drillers are “generally taking a more conservative approach to the start of the year, again delaying the broad based recovery in the E&P spend that we expected only three months ago,” he said. Kibsgaard said that spending from the shale industry could be flat or down this year relative to 2018. That could translate into lower drilling activity, while E&Ps focus on drawing down the enormous backlog of drilled but uncompleted wells (DUCs). Companies working through DUCs could keep production aloft even as drilling slows, but output would likely fall relative to 2018, while decelerating further in 2020.Schlumberger’s chief executive also warned that the shale industry could see other problems going forward that could be even more significant. Shale drilling suffers from a precipitous decline in output soon after a well is completed. After an initial burst in output, wells see a rapid decline in production. This is not news; it has characterized shale drilling for years.But this dynamic appears to be a growing problem, one that could soon catch up with the industry. “It is also worth noting that with the continued growth in U.S. shale production, an increasing percentage of the new wells drilled are being consumed to offset the steep decline from the existing production base,” Kibsgaard told shareholders and analysts on Schlumberger’s earnings call. “The third party analysis shows that in 2018, this number was 54% of total CapEx and is expected to increase to 75% in 2021, clearly demonstrating the unavoidable treadmill effect of shale oil production.”  Beyond that, well interference is also a mounting problem. Drilling wells too close to one another can cannibalize production, raising costs and leading to less overall output. That becomes a larger problem over time after companies pick over the best acreage. Additionally, the length of laterals and the use of frac sand and other proppants have reached the limits of what they can achieve. “We could be facing a more moderate growth in U.S. shale production in the coming years than what the most optimistic views have been suggesting,”

Shale Pioneer Hamm- Output Growth Could Fall By 50% - U.S. shale production growth could slow by as much as half this year, according to one industry titan. Continental Resources’ Harold Hamm said that shale growth could decline by as much as 50 percent this year compared to 2018, although he added that it was just a “wild guess.” Hamm said that a lot of shale E&Ps are trying to keep spending within cash flow. This newfound mantra of capital discipline has been imposed on the shale industry after a decade or so of a debt-fueled drilling frenzy. “Producers have become more disciplined in their approach to capex,” Hamm said at the Argus Americas Crude Summit in Houston this week. “Several years back growth was a huge consideration. That consideration has been much less. The peak consideration now has been — are you overspending cash flow. Are you living within cash flow?”The signs of a shale slowdown have been mounting. The rig count fell sharply in recent weeks. Production growth has already begun to slow. Schlumberger, the world’s largest oilfield services company, has warned that it is already seeing shale companies pulling back on drilling activity. In the latest Drilling Productivity Report, the EIA forecasts that U.S. shale production will grow by 62,000 bpd in February compared to a month earlier. That is the slowest rate of growth in nearly a year, and down from the prior monthly production increases that have consistently exceeded 100,000 bpd. Related: Can Mexico Stop Its Oil Production Decline? Argus, using Barclays data, points out that North American onshore might only tick up by about 9 percent this year, down from the 18 percent jump in 2018. That could quickly translate into slower output growth. “Production is a direct response of capex today with this industry,” Hamm said at the Argus summit. “The more money that you inject the more you are going to extract.” Hamm said that the “sweet spot” for the shale industry is about $70 per barrel, which is high enough for growth by not so high as to overheat.

It’s Terrible Out There - Lack Of Greater Shale Fools Leaves Private Equity In A Bidless Panic -- On one hand the US shale industry has never had it better: following dramatic technological and efficiency improvements in recent years, US oil output is not only at an all time high at 11.9MMb/d, but is the highest of any OPEC or non-OPEC nation in the world. Oil production is so high, in fact, that as of October 2018, the US is now energy independent. Alas, this production glut blessing is also a curse, and according to one industry titan, US production growth could slow by as much as half this year.  Continental Resources’ Harold Hamm said that shale growth could decline by as much as 50% this year compared to 2018, OilPrice reported. Hamm said that a lot of shale E&Ps are trying to keep spending within cash flow. This newfound mantra of capital discipline has been imposed on the shale industry after a decade or so of a debt-fueled drilling frenzy. “Producers have become more disciplined in their approach to capex,” Hamm said at the Argus Americas Crude Summit in Houston this week. “Several years back growth was a huge consideration. That consideration has been much less. The peak consideration now has been — are you overspending cash flow. Are you living within cash flow?” The signs of a shale slowdown have been mounting. The rig count fell sharply in recent weeks. Production growth has already begun to slow. Schlumberger, the world’s largest oilfield services company, has warned that it is already seeing shale companies pulling back on drilling activity. Meanwhile, even though the broader junk bond market has thawed, and new bond deals are once again coming to market, the same is not true for US energy companies. In fact, companies in the E&P sector have not held a single bond sale since the start of November, according to Dealogic, while share sales have also slowed. The data suggest that after a record-breaking boom in US oil output in 2018, growth will be weaker this year... much weaker if Hamm is correct. Of course, for much of the past decade the US shale industry relied heavily on debt to finance its growth, with exploration and production companies raising about $300bn from bond issuance over the past 10 years. However, as crude prices started to slide last October, that source of capital was choked off, with just three bond sales by exploration companies that month, and none at all since November, according to the FT.

Nearly $1B Awarded for Canada LNG Project - Contracts and subcontracts totaling more than 937 million Canadian dollars (CA$) (US $705.3 million) have been approved for the LNG Canada export facility in Kitimat, British Columbia, as of December 2018, LNG Canada reported late Monday. “What these contracts and subcontracts represent, is tremendous opportunity for individuals to find employment on the LNG Canada project through our contractors and subcontractors,” Susannah Pierce, LNG Canada’s external relations director, said in a written statement emailed to Rigzone. According to LNG Canada, the above figures correspond to the first three months of construction for the project. Of the approximately CA$937 million approved, more than one-third of the contracts and subcontracts (CA$330 million [US $248.4 million]) has been awarded to local First Nations and other Kitimat-area businesses, the LNG Canada statement noted. “For First Nations communities, it is delivering on the opportunities we have committed to that will assist the Nations address issues of poverty, unemployment and skills development,” stated Pierce. “For local communities, it is the opportunity for young people to find employment that allows them to remain living in the North.” LNG Canada – a joint venture of Royal Dutch Shell plc (40 percent), Petronas (25 percent), PetroChina Co. Limited (15 percent), Mitsubishi Corp. (15 percent) and Korea Gas Corp. (five percent – will initially include two LNG trains and related infrastructure. Unlike other North American LNG export terminals, the British Columbia facility will boast a direct transpacific shipping route to Asian markets. “There are no choke or strategic shipping points in this route such as the Panama Canal, straits of Hormuz and the straits of Malacca,”  “West Coast Canada is the closest non-Asian supplier to the north Asian demand centers of China, Japan and Korea.” 

Oil-Sands Companies Throw New Tech at Old Foe -- In their quest to make one of the most expensive methods of producing crude more profitable, Canada’s oil-sands companies have been ramping up efforts to get their peanut butter-like bitumen to flow through pipelines more easily and cheaply. MEG Energy Corp. threw a spotlight on those efforts on Tuesday, when it said that it’s working with a financial adviser on strategic alternatives for its HI-Q partial upgrading technology. The company is betting that there may be a lucrative market for the method, which cuts out the need for costly diluting agents that take up precious pipeline space. Producers in the prolific oil sands -- the world’s third-largest petroleum reserves -- typically use natural gas condensate to turn their sticky heavy crude into something pipelines can carry. While much of it is produced from Alberta and British Columbia’s Montney shale formation, some diluent is imported from the U.S. as well. That condensate tends to trade on par with the price of light, sweet West Texas Intermediate or even at a premium to that grade, which itself trades at a premium to Western Canadian Select heavy crude. And to flow through a pipeline, bitumen needs to be about 30 percent condensate. Technology to reduce those requirements would go a long way toward making the historically costly oil-sands more competitive, and it would free up the pipeline space that has become so scarce that the Alberta government needed to mandate province-wide oil-production cuts. “The removal of that diluent obviously would not only impact the bottom lines of producers, but also could improve overall market sentiment in Western Canada, given the pipeline-access issues,” said Dinara Millington, vice president of research at the Canadian Energy Research Institute. MEG says its HI-Q technology allows bitumen to be shipped through pipelines without blending with lighter hydrocarbons. The technology employs a process that entails removing and recycling some diluent used in its initial processing, separating out the lighter and heavier portions of the bitumen, then removing solid materials known as asphaltenes. 

Pollution at fracking protest site rises despite lack of fracking - A shale gas company’s lorries, police vehicles and protesters’ wood fires have combined to drive up air pollution levels near a gas well in the north of England, despite fracking failing to get started at the site. Operations at the Kirby Misperton well in North Yorkshire have been delayed after the operator Third Energy ran into financial problems, but the project’s local pollution impact has been revealed by government-backed research. Alastair Lewis, a professor of atmospheric chemistry at the University of York, said his air quality monitoring project found a group of pollutants had increased in the vicinity of the site to levels normally seen in a city rather than a rural area. The cause was lorries supplying the well, opposition by campaigners and the resulting police operation. “The largest, most visible detectable impacts above the surface are on nitrogen oxides (NOx), from the use of compressors, generators and truck movements,” Lewis said. “And, strangely, in the case of Kirby Misperton, from policing, from [police] vehicles and protest camps. It’s a slightly unusual situation in that the activity of protesting itself is a large source of pollution.” He said protest tactics such as slow walking in front of lorries supplying the site would have driven up NOx levels, and police vehicles had been a “significant” source of the pollutants. North Yorkshire police spent more than £600,000 on policing protests at the site over the autumn and winter of 2017-18. Lewis said monitoring had also detected particulate pollution that he expected had come from the burning of wood by protest camps.

Fracking Wasn't Supposed to Cause Quakes in U.K. But Then the Ground Shook — Last fall an energy company began a hydraulic fracturing operation in northwest England that it hoped would be a milestone in creating a new, domestic source of natural gas for Britain — in much the same way that fracking has taken hold in the United States. Three months later, after regularly causing earthquakes, the fracking has stopped, and the company has begun pulling some equipment from the site. The company, Cuadrilla Resources, says it will continue to work in the cow pasture near Blackpool in Lancashire, seeking to extract natural gas economically and safely from the shale rocks. But so far, its results have failed to win over skeptics. Some gas has bubbled up through the fracking liquids in its well, demonstrating that the rock formation Cuadrilla was exploring, known as the Bowland Shale, indeed contains some fuel. But the company was forced to suspend fracking at least four times when the work led to earthquakes that exceeded a magnitude of 0.5, the upper limit set by British regulators. There were also many smaller tremors. This stop-and-go added to the company’s costs while doing little in Britain to improve the public image of fracking, which involves injecting special fluids under high pressure to free up gas trapped in shale rock. Cuadrilla is also running behind its original schedule: The company indicated in October that it planned to drill and frack two wells in three months, but has so far fracked just one. With fracking halted, trucks have been taking pumps and other heavy fracking gear off the site, leading to local speculation that Cuadrilla might be throwing in the towel, something that the company denies.Cuadrilla said in an email that it was shifting its focus from fracking to testing how much gas can be coaxed from the well. Such flow rates are important in determining whether shale gas drilling is commercially viable. The company said it was returning equipment that was not needed for this purpose.

Experts say it's safe to raise limit for tremors at Britain's fracking sites - Fracking at Cuadrilla’s Preston New Road site in Lancashire, northwest England was halted several times last year after seismic activity exceeded limits put in place under Britain’s traffic light regulation system. Under the system work at fracking sites must be halted for 18 hours if seismic activity of magnitude 0.5 or above is detected. Cuadrilla, the only company to have fracked for gas so far in Britain, has said the current seismic regulations are too stringent and could thwart the industry. “Existing regulations are quite conservative and are set at a level that is unlikely to be felt,” Brian Baptie, head of Seismology at the British Geological Survey, said at a briefing with journalists. He said the limit could safely be raised to magnitude 1.5 since this is a level similar to vibrations caused by a heavy bin lorry going past, and would not pose a risk to buildings or people. “(Magnitude) 1.5 would still be a conservative level,” Ben Edwards, specialist in engineering seismology at the University of Liverpool said at the same briefing. The seismologists warned that raising the limit could lead to higher magnitude so called trailing events, which can occur after fracking has stopped, but said these would still likely be too small to cause any damage. The government has said there are no plans to change the traffic light system. “If we are to take forward what could be a very valuable industry, it is only right that we do so with the toughest environmental regulations in the world,” Britain’s energy minister told parliament earlier this month. Fracking, or hydraulically fracturing, involves extracting gas from rocks by breaking them up with water and chemicals at high pressure. It is fiercely opposed by environmentalists who say extracting more fossil fuel is at odds with Britain’s commitment to reduce greenhouse gas emissions. They have also raised concerns about potential groundwater contamination.

Huge diesel oil spill into River Avon near Keynsham - The River Avon in Hanham has been hit by a massive diesel pollution incident. Boaters complained of headaches after the Avon was left looking like a "river of oil" from a huge spillage of diesel. The pollution affected River Avon residents in Hanham and Keynsham and an investigation has been launched by the Environment Agency. The agency said it was considering enforcement action against a company after they traced the source of the pollution up a tiny tributary stream, Bristol Live reports. People living on the water said they were left with headaches and nausea after the river around them suddenly became covered in diesel fuel on Tuesday evening this week. The river has taken days to recover, with each high tide washing the diesel back and forth.  One boat resident, Beatrice FitzGerald, said her family and her neighbours were left shocked by the level of pollution and how it affected them. “I noticed it first at around 6pm on Tuesday, and it was pretty immediate,” she said. “It absolutely stunk out the whole river, our boat, inside and outside. “I saw on the river this cover of diesel. It wasn’t even a rainbow sheen, it was thick - the river looked like a river of oil, it was that bad,” she said. “We all had headaches and felt sick. We raised the alarm,” she added. The Canal and Rivers Trust, the Environment Agency and the Bristol Harbourmaster came to investigate, and the following day, in daylight, the effect on wildlife was apparent. “The next day it was noticeable that there were no ducks, in fact, nothing," Ms FitzGerald said. The river here is normally quite busy and noisy with wildlife, but it was so quiet, no birds. "I saw a dead fish floating past, and others saw dead fish too. It all went silent.” After a couple of days, people living on the river said they saw Environment Agency officials had located the source of the leak, which had come from a tiny tributary brook to the south of the main River Avon. A spokeswoman for the Environment Agency said they had installed a small boom to stop further leaks.

Extremely Disturbing Footage Of Deadly Mexico Pipeline Explosion Surfaces - Mexican authorities have released a Sunday morning casualty update from Friday's chilling fireball that burst from an illegal gas pipeline tap near a small town north of Mexico City, which occurred just three weeks after Mexican President Andres Manuel Lopez Obrador involved the country's military in an initiative to combat gas thieves.Authorities have raised the death toll from the blast to 78, while 81 have been hospitalized with injuries.Here's more from the Associated Press' latest update:  Perez recalls telling his son: "Let's go ... this thing is going to explode." And it did, with a fireball that engulfed locals scooping up the spilling gasoline and underscored the dangers of an epidemic of fuel theft from pipelines that Mexico's new president has vowed to fight. By Sunday morning the death toll from Friday's blaze had risen to 79, with another 81 hospitalized in serious condition, according to federal Health Minister Jorge Alcocer. Dozens more were missing. 'Perez and his son escaped the flames. On Saturday, he returned to the scorched field in the town of Tlahuelilpan in Hidalgo state to look for missing friends. It was a fruitless task. Only a handful of the remains still had skin. Dozens were burned to the bone or to ash when the gusher of gasoline exploded. Just a few feet from where the pipeline passed through an alfalfa field, the dead seem to have fallen in heaps, perhaps as they stumbled over each other or tried to help one another as the geyser of gasoline turned to flames. Several of the deceased lay on their backs, their arms stretched out in agony. Some seemed to have covered their chests in a last attempt to protect themselves from the blast. A few corpses seemed to embrace each other in death. Lost shoes were scattered around a space the size of a soccer field. Closer to the explosion, forensic workers marked mounds of ash with numbers.

Death toll reaches 85 in Mexico fuel pipeline fire horror - People in the town where a gasoline explosion killed at least 85 people say the section of pipeline that gushed fuel has been a habitual gathering site for thieves, repeatedly damaged and patched like a trusty pair of jeans. On Friday, amid countrywide fuel shortages at gas stations as the government attempts to stem widespread fuel theft, this particular section of pipeline had come back into service after being offline for nearly four weeks when somebody punctured the line again. Word quickly spread through the community of 20,000 people that gas was flowing. Come one, come all. Hundreds showed up at the spigot, carrying plastic jugs and covering their faces with bandanas. A few threw rocks and swung sticks at soldiers who tried to shoo them away. Some fuel collectors brought their children along. At first the gasoline leak was manageable, locals say, emitting a tame fountain of fuel that allowed for filling small buckets at a time. But as the crowd swelled to more than 600, people became impatient. That's when a man rammed a piece of rebar into a patch, according to Irma Velasco, who lives near the alfalfa field where the explosion took place, and gasoline shot 20 feet (6 meters) into the air, like water from a geyser. A carnival atmosphere took over. Giddy adults soaked in gasoline filled jugs and passed them to runners. Families and friends formed human chains and guard posts to stockpile containers with fuel. For nearly two hours, more than a dozen soldiers stood guard on the outskirts of the field, warning civilians not to go near. Officials say the soldiers were outnumbered and their instructions were to not intervene. Only a week earlier, people in a different town had beaten some soldiers who tried to stop them from gorging on state-owned fuel. The lure of free fuel was irresistible for many: They came like moths to a flame, parking vehicles on a nearby road. The smell of gas grew stronger and stronger as thousands of barrels spewed. Those closest to the gusher apparently became delirious, intoxicated by fumes. Townspeople stumbled about. The night filled with an eerie mist, a mixture of cool mountain air and fine particles of gasoline.The fireball that engulfed those scooping up gasoline underscores the dangers of the epidemic of fuel theft that Mexico's new president has vowed to fight. By Sunday evening, the death toll blaze had risen to 79, with 58 others hospitalized, federal Health Minister Jorge Alcocer said. Dozens more were listed as missing. Soldiers formed a perimeter around an area the size of a soccer field where townspeople were incinerated by the fireball, reduced to clumps of ash and bones. Officials suggested Sunday that fields like this, where people were clearly complicit with the crime of fuel theft, could be seized by the government. But Attorney General Alejandro Gertz ruled out bringing charges against townspeople who merely collected spilled fuel, and in particular those hospitalized for burns. "Look, we are not going to victimize the communities," he said. "We are going to search for those responsible for the acts that have generated this tragedy."

Ninety three dead and dozens in critical condition from Mexico pipeline explosion - At least 93 people have died and dozens were severely wounded in an explosion of a gasoline pipeline with a leak in the community of San Primitivo in the central Mexican state of Hidalgo, just over 50 miles north of downtown Mexico City.  The victims are being treated in hospitals across Mexico and the United States, most of them with severe burns and fighting for their lives, according to the Secretary of Health. This includes one 12-year-old boy. Four died from their injuries on Tuesday. The explosion and the enormous human toll are an indictment and a direct result of the reactionary and militaristic policies of the government of Andrés Manuel López Obrador (known as AMLO) to accelerate the privatization of the country’s oil. On Sunday, the state governor, Omar Fayed, announced that most of the remains of those killed in the blast are unidentifiable and will take days or even months to identify by way of genetic samples provided by their families. Hours before the explosion, a leak was reportedly opened deliberately, creating a 22-foot fountain of gasoline that up to 800 neighbors approached during the afternoon to fill bottles for their families to use. At the time of the fire, about 200 people were reportedly in the immediate surroundings. Shortly after, harrowing images appeared everywhere on social media and the news stations showing dozens of men and women running away from what had become a giant wall of fire. Family members nearby, calling out the names of their loved ones and telling people on fire to roll on the ground, captured with their phones the moments victims approached them, pleading, “Help me, I’m dying.” The deadly fire took place in the context of a new supply and distribution system implemented by the recently-elected National Regeneration Movement (Morena) government of López Obrador to prevent the stealing of gasoline from pipelines. The government’s “strategy,” implemented the first week of 2019, has consisted in deploying more than 5,000 members of the military and police to Pemex installations—including six refineries, 39 storage and distribution terminals and others—and closing down 1,050 miles of pipelines until they can be policed by the armed forces or repaired.

AMLO Doubles Down to End Fuel Theft after PEMEX Explosion -- Mexico President Andres Manuel Lopez Obrador is doubling down on a controversial strategy to end fuel theft at Petroleos Mexicanos after a pipeline explosion caused by an illegal tap left at least 89 people dead and many injured. He joins a long line of presidents who have tried to fix Mexico’s struggling state oil producer -- with little to show for it. The leftist leader who took office on Dec. 1 has sought to combat the $3.5 billion trade in illicit fuel by increasing pipeline surveillance, improving technology and using more tanker trucks to transport gasoline. Lopez Obrador said the explosion won’t sway him from his strategy to end fuel theft. “Rather than stopping the strategy, the fight against the illegality and theft of fuel will be strengthened,” the president, known as AMLO, told reporters following the incident. Hundreds of people ignored orders from soldiers and gathered in Tlahuelilpan, in the central state of Hidalgo, to steal gasoline from a pipeline leak when it caught fire on Friday. The situation swiftly became unmanageable as crowds swelled and the army was unable to control it even after sending in reinforcements. A nearly four-hour lag between the leak alert and the closure of the valves was due to protocols at Pemex, the government said. There is an investigation into whether there was corruption or negligence in Pemex’s downstream control center, Lopez Obrador told reporters during his daily press conference on Monday. ‘Broken’ ModelThe blast is the latest in a series of problems facing Pemex, which has seen oil output decline every year since 2004 and is Latin America’s most indebted borrower. Pemex reports as many as 41 illegal pipeline taps a day and the fact that the blast occurred in spite of the government fuel theft crackdown “continues to show that the model is broken,” said John Padilla, managing director of energy consultant IPD Latin America LLC. “Every administration comes in with their magic bullet solution and they’ve all systematically failed,” he said. 

Maduro illegitimacy declaration sparks confusion in US oil sector - The US on Wednesday declared the presidency of Nicolas Maduro illegitimate, and recognized Guaido, the head of Venezuela's National Assembly, as the country's legitimate president. Other countries, including Canada, followed the US with similar declarations. Trump administration officials and supporters of the move said it was aimed at cutting off the Maduro regime from oil revenues. What "we're trying to do today is look at the issues involved in disconnecting the illegitimate Maduro regime from its sources of revenues and finding ways to transfer those revenues to the new, legitimate government" of Guaido, John Bolton, President Trump's national security adviser, said in an interview with Fox Business Network on Thursday morning. The "natural resources of Venezuela belong to the people of Venezuela not the dictator Maduro," Senator Marco Rubio, Republican-Florida, tweeted Thursday. "Valero & Chevron should work with President Guaido to make sure payment for oil [reaches] people not Maduro regime." But sources said the Trump administration has offered no guidance on legal obligations in commercial dealings with Venezuela going forward, complicating crude and refined product trading, joint ventures with PDVSA and investments in the South American country's oil sector. "Unless there's some kind of formal sanction, I don't think it creates legal trouble," said Joe McMonigle, an analyst with Hedgeye Risk Management. "But, it could present other exposure and risk that private companies just don't want to take." Treasury may issue formal guidance on sanctions compliance obligations related to Guaido's designation. But Treasury is unlikely to issue such guidance if it may be quickly overtaken by potential new sanctions, despite a push from US business interests for additional clarity. "Treasury is very careful and they're not going to move before they know what is going on, even if they understand there's a screaming urgency from the financial services and energy community to tell them what is going on," she said. "If they're waiting in the wings with a sanctions action, they're not going to show their cards right now," one source said Thursday. A Treasury spokesman did not respond to a request for comment. Maduro's illegitimate status in the US could be particularly problematic for the roughly 500,000 b/d of crude imported by US refineries owned by Chevron, Valero, PBF Energy and Citgo, which is owned by PDVSA. It is also unclear how Chevron's oil production operations in Venezuela may be impacted, sources said. "Chevron has no comment on the current situation in Venezuela," Isabel Ordonez, a Chevron spokeswoman, said in a statement. "Chevron operations in Venezuela continue and the company is committed to the country's energy development in compliance with all applicable laws and regulations." Spokesmen for Valero, PBF and Citgo did not respond to requests for comment. 

U.S. sanctions on Venezuela would reroute crude, leave refiners short (Reuters) - Potential U.S. sanctions on Venezuela’s crude oil exports would cut off the nation from Gulf Coast refiners that are among its biggest customers, likely forcing it to send more crude to China, India or other Asian countries, traders said on Wednesday. U.S. refineries that depend on Venezuela’s heavy crude would have even more trouble securing supplies as Canadian and Mexican crudes are often not as discounted and are limited in availability. The United States is considering moves to cripple Venezuela’s oil shipments, which account for nearly all of the country’s exports, in response to the reelection of President Nicolas Maduro that was widely viewed as a sham. Washington has recognized opposition leader Juan Guaido as Venezuela’s president as protests against Maduro erupted across the country. It is also considering sanctions on oil deliveries, a move it has until now resisted, energy company sources told Reuters on Wednesday. Venezuela, on average, exported about 500,000 barrels of crude a day to the United States in 2018, according to U.S. Energy Department data. Those shipments fell in November to an estimated 358,000 barrels per day, however, according to a report by Caracas-based consultancy Gas Energy Latin America seen by Reuters. Those deliveries are being made largely through oil-for-debt repayment structures as output from state-run oil company Petróleos de Venezuela, S.A., known as PDVSA, has slumped to near 70-year lows in a nationwide economic crisis. Venezuela’s output has been cut in half since 2016 to less than 1.2 million bpd, according to figures from OPEC secondary sources. Shipments to the United States account for about 75 percent of the cash Venezuela gets for crude shipments, according to a Barclays research note published last week. In the wake of sanctions, the country could seek additional deals with Turkey, India or other Asian nations, one trader of Venezuelan crude said. “It will be costly for Venezuela but eventually they’ll be able to sell that oil to Asia at a discount. There will be a period in the middle in which they have difficulty selling those barrels,” 

Venezuela’s US-Backed Coup Leader Immediately Targets State Oil Company and Requests IMF Money - The right-wing opposition leader that the United States is trying to undemocratically install as Venezuela’s president immediately set his sights on the country’s state-owned oil company, which he is hoping to restructure and move toward privatization. He is also seeking money from the notorious International Monetary Fund (IMF) to fund his unelected government.On January 23, U.S. President Donald Trump recognized the little-known, U.S.-educated opposition politician Juan Guaidó as the supposed “interim president” of Venezuela. Within 48 hours, Guaidó quickly tried to seize control of Venezuela’s major US-based oil refiner and use its revenue to help bankroll his US-backed coup regime.Guaidó is attempting to fire the directors of Citgo Petroleum, which is owned by Venezuela’s state oil company PDVSA, and seeks to appoint his own new board.   Reuters described Citgo as “Venezuela’s most important foreign asset”; Bloombergcalls it “the crown jewel of PDVSA’s assets.”Citgo is the largest purchaser of Venezuelan oil, although crippling sanctions imposed by the Trump administration have prevented the company from sending revenue to Venezuela, starving the government of funding.Citing US officials, The Washington Post reported that the Trump administration’s strategy “is to use the newly declared interim government as a tool to deny Maduro the oil revenue from the United States that p rovides Venezuela virtually all of its incoming cash.”The oil reporting agency S&P Global Platts reported that, in the immediate wake of the U.S. anointing Juan Guaidó as Venezuela’s supposed “president,” the opposition leader already drafted “plans to introduce a new national hydrocarbons law that establishes flexible fiscal and contractual terms for projects adapted to oil prices and the oil investment cycle.”This plan would involve the creation of a “new hydrocarbons agency” that would “offer bidding rounds for projects in natural gas and conventional, heavy and extra-heavy crude.” In other words, these are rapid moves to privatize Venezuela’s oil and open the door for multinational corporations.

Public urged to stay away from New Plymouth beach after spill - An investigation is under way after an estimated 100 litres of a diesel-type substance spilled from a stream and into the sea at New Plymouth's Ngāmotu Beach. Taranaki Regional Council staff at Ngamotu Beach after the spill on Monday morning.Earlier on Monday the Taranaki Regional Council warned the public to stay away from the swimming beach as a clean-up began. The flow of the unidentified hydrocarbon substance has been stopped. Taranaki Regional Council compliance manager Bruce Pope said trained oil spill responders were at the site and deployed booms to contain and recover the material at the stream outlet. Booms were put on the sand as part of the clean-up.Booms were also used in the Breakwater Bay marina area, near the lee breakwater, east of the beach. The council were alerted to the spill by a member of the public around 11.30am on Monday morning, he said. There was no visual evidence of a heavy slick on the water but the material had a strong diesel-like smell, witnesses said. The discharge was stopped late afternoon and the source was being investigated, Pope said. The clean-up will continue into the evening and the public is advised to steer clear of the beach in the meantime.Pope said the response team were assessing the nature of the material and the potential for any wider impacts. The investigation was ongoing and there was no clear evidence of what type of hydrocarbon material, although it was believed to be diesel, had been spilled, he said. The spill came from a small stream which drains at the end of the beach next to Port Taranaki property. 

South Korea's Hyundai Oilbank to receive Iranian South Pars in mid-February - — South Korea's Hyundai Oilbank will receive its first cargo of Iranian South Pars condensate in mid-February, a company trading source with direct knowledge of the matter said Tuesday. The cargo will arrive in a one million-barrel parcel. Altogether, Hyundai will take delivery of 6-7 million barrels of South Pars condensate from mid-February until end-April, the source said. Hyundai Oilbank's purchase comes as South Korea's other main South Pars condensate buyers, Hanwha Total and SK Innovation, are set to or have already taken delivery of their first cargoes of South Pars condensate, S&P Global Platts earlier reported. The Iranian Suezmax vessel Silvia I discharged around 1 million barrels of Iranian South Pars condensate at Incheon on January 19 for SK Innovation's subsidiary SK Incheon Petrochem, which runs a 100,000 b/d condensate splitter there, an industry source based in Seoul with direct knowledge of the matter said. SK Innovation will take its second delivery of another 1 million barrels of South Pars condensate at Incheon on January 31 onboard the Iranian Suezmax vessel Sana, the source added. Hanwha Total meanwhile is set to take delivery of around 3-5 million barrels of South Pars condensate in February. Price levels for Hyundai Oilbank's term South Pars cargoes were unclear, though traders said it was likely done at similar levels to where Hanwha Total inked its term South Pars deal, at a discount of around $2.50/b to Platts Dubai crude assessments on a delivered basis.

European fuel oil market boosted by Saudi crude exports, tight supply— The loss of Iranian fuel oil exports is supporting the high sulfur fuel market as Saudi Arabia compensates for the disappearance of Iran in the oil market by exporting its crude and instead running fuel oil in its power generation plants, boosting demand for imports from Europe. Saudi Arabia in November exported its highest volumes of crude oil in two years, the latest figures from the Joint Organizations Data Initiative showed Monday, as the kingdom boosted its supplies to offset the reimposition of sanctions on Iran by the US. Saudi Arabia, the world's largest crude exporter, shipped 8.235 million b/d of crude in November, a 534,000 b/d increase from October. It was the highest Saudi export volume since November 2016, just before OPEC instituted a production cut deal that began January 2017, according to the JODI data. "Yes, Saudi Arabia is running fuel oil," a fuel oil trader confirmed Tuesday morning. Refinery runs in November rose to 2.836 million b/d, up 21,000 b/d from October, while direct crude burn for power generation fell to 328,000 b/d, down 5,000 b/d, the JODI data showed. Iranian sour crude produces an ample amount of high sulfur fuel oil when processed in the crude distillation unit, therefore the loss of fuel oil barrels from Iran added to supply concerns. Further supply crunches have come from Russia, Mexico and Venezuela, and this has squeezed cracked fuel oil availability. Falling Russian exports and refinery upgrades in preparation for the International Maritime Organization's sulfur cap in 2020 tightened the European market in particular, translating into a counter-seasonally strong backwardation on the 3.5% FOB Rotterdam barge curve through 2019.

Saudi Arabia in Talks to Build Refinery in South Africa -- Saudi Arabia is in talks to build an oil refinery in South Africa as part of a pledge to invest as much as $10 billion in Africa’s most developed economy. Joint studies for a refinery and petrochemical complex will be conducted by state oil giant Saudi Aramco and South Africa’s Central Energy Fund, energy ministers from the two countries said in Pretoria on Friday. The negotiations mark a step forward in South Africa’s plans to add a refinery, which it has been considering for about a decade. Saudi Arabia made its spending pledge last July as South African President Cyril Ramaphosa sought investment to revive a flagging economy. Although South Africa has struck previous agreements to develop a new refinery -- including with China in 2011 -- the project is yet to get off the ground. With Saudi Arabia supplying about 40 percent of South Africa’s crude, ties between the two countries are close. South African Energy Minister Jeff Radebe has called for an increase in domestic refining to cut reliance on fuel imports. But the pending introduction of clean-fuel standards has, if anything, prompted refiners to stall rather than expand, with Sasol Ltd. considering selling a plant. Radebe and his Saudi counterpart Khalid Al-Falih signed a declaration of intent Friday to cooperate in oil and gas. Talks between the two have also broached the possibility of Saudi Aramco using the vast oil-storage tanks in Saldanha Bay, a harbor north of Cape Town offering a strategic location for trading. “We believe that South Africa will grow economically” and additional projects may follow those currently under discussion, Al-Falih said, suggesting that Aramco could also help supply South Africa with natural gas.

Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil - Saudi Arabia isn’t buying the peak oil demand narrative. OPEC’s largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs. Saudi Arabia will be the one to pump the last barrel of oil in the world, but it doesn’t see the ‘last barrel of oil’ being pumped for decades and decades to come. “I don’t see peak [oil] demand happening in 10 years or even by 2040,” Amin Nasser, president and chief executive officer of Saudi oil giant Saudi Aramco told CNN Business’ Emerging Markets Editor John Defterios on the sidelines of the World Economic Forum in Davos this week. “There will continue to be growth in oil demand … We are the lowest cost producer and the last barrel will come from the region,” Nasser told CNN. For several years, Nasser has been saying that peak oil demand is nowhere in sight, that petrochemicals will drive oil demand growth through 2050, and that all the ‘peak oil demand’ and ‘stranded resources’ talk is threatening an orderly energy transition and energy security. Saudi Arabia—which has just announced that its huge oil reserves are slightly higher than previously estimated—looks to diversify its economy away from heavy dependence on crude oil, but one of the goals of its Vision 2030 diversification plan is to use less oil in domestic power generation to free up more barrels for exports.

Russia seals position as top crude oil supplier to China, holds off Saudi Arabia (Reuters) - Russia came in as China’s largest crude oil supplier in December, cementing the top spot for all of 2018 for a third year in a row ahead of rival Saudi Arabia, customs data showed on Friday. Imports from Russia reached 7.04 million tons, or 1.658 million barrels per day, in December, up 40 percent from 5.03 million tons a year earlier, according to the data from the General Administration of Customs. For the full year, Russian imports rose to 71.49 million tons, or 1.43 million bpd, up 19.7 percent from 59.7 million tons in 2017. Demand for Russian crude was supported by a rise in throughput by China’s private refiners, who favor Russian grades such as ESPO, while geopolitical uncertainties also forced China to import less from countries such as Iran and Venezuela. Russian oil giant Rosneft has also marketed its ESPO grade more aggressively, signing new long term supply deals with state oil companies such as ChemChina and PetroChina. Saudi Arabia supplied China with 6.97 million tons in December, or 1.64 million bpd, up 48 percent from 4.71 million tons a year earlier. For 2018, OPEC’s top supplier boosted shipments to China by 8.7 percent to 56.73 million tons, or 1.135 million bpd. That means Russia’s lead over Saudi Arabia in supplying China almost doubled to 295,000 bpd in 2018 from 150,000 bpd a year earlier. U.S. shipments to China - which have been hit by a trade war between the two nations - came in at zero in December. Imports for 2018 were up 24.8 percent from 2017 at 245,616 bpd. Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March, Reuters reported in December. Venezuelan supplies to China tumbled 24 percent in 2018 to 16.63 million tons, or 332,600 bpd, after the OPEC member’s production fell to a seven-decade low amid a lack of investment, mismanagement and fleeing workers. Iranian imports were at 2.14 million tons in December, or 503,896 bpd, down 12 percent from a year earlier. Full year Iranian imports dropped to 29.274 million tons, or 585,475 bpd, down 20 percent from 2017 after the United States imposed sanction on Tehran over its disputed nuclear program. 

China's CNOOC boosts spending target to 5-year high, increases domestic drilling (Reuters) - China’s state-owned offshore oil and gas producer CNOOC Ltd said it is confident of achieving its spending target this year, the highest since 2014, as its responds to a call to build up the nation’s petroleum output and reserves. The company plans to spend 70 billion to 80 billion yuan ($10.3 billion to $11.8 billion) on exploration and production, CNOOC said in a press release on Wednesday, compared with an expected 63 billion yuan in capital spending for 2018. Beijing has called on the state oil giants to increase domestic exploration to help meet strong crude demand and counter falling output from maturing fields. This came after President Xi Jinping urged oil companies in August to improve national security by boosting domestic production and reserves. In response to the government’s call, CNOOC pledged last week to double its exploration activities and proven oil and gas reserves in China over the next seven years. The company is allocating more spending this year on domestic exploration and production, which will make up 62 percent of total expenditures versus last year’s 51 percent. “Our main focus will be exploring for large- to medium-sized oil and gas fields ... and will speed up exploration of natural gas,” the company said in a presentation of its plans published on its website. Domestic exploratory drilling will take up 12 billion yuan, or 76 percent of total exploration spending, while overseas work will account for the remaining 24 percent. The 12 billion yuan compares with 10 billion yuan estimated in 2018 and is nearly double to that of 2016. In global exploration, CNOOC will speed up spending on the Stabroek block offshore Guyana, where an Exxon Mobil-led consortium that includes the Chinese company has tapped recoverable reserves of 5 billion barrels of oil equivalent. 

China's CNOOC to double proven reserves, exploration by 2025 (Reuters) - China’s CNOOC Group said it aims to double its exploration projects and proven oil and gas reserves in seven years, the company said on Friday via its official Wechat account. The announcement was a direct response to President Xi Jinping’s call to improve the country’s national security by boosting domestic production and reserves, CNOOC said in the post. The offshore producer is expected to make a record investment to boost exploration projects and reach its target, according to CNOOC’s chairman Yang Hua. The company is due to release details of its production target and capital expenditure at the strategic outlook meeting on Jan. 23. “We faced adverse geological conditions as offshore oil and gas fields age. More exploration projects are being moved to deep water area, but these are both risky and costly,” said Xie Yuhong, head geologist, CNOOC, adding that the volatility in global oil prices added pressure on CNOOC to rein in expenses. The oil and gas explorer reported 2.613 billion barrels of oil equivalent in net total reserves by 2017-end, the best level seen since 2008.

IEA Sees Oil Demand Growth Defying Slowing Economy-- Global oil demand remains on course to be stronger this year than in 2018 as a boost from lower fuel prices counters slowing economic activity, according to the International Energy Agency. “We have seen prices fall very significantly since the peak at the beginning of October, and that is providing some relief to consumers,” Neil Atkinson, head of the IEA’s oil industry and markets division, said in a Bloomberg television interview on Friday. Still, in its monthly report the agency acknowledged “the mood music in the global economy is not very cheerful” and the outlook could change. Crude prices remain almost 30 percent below the four-year peak reached in October amid concerns over economic growth in China and the U.S., the world’s two biggest oil users, who remain locked in a trade dispute. To prevent markets tipping into oversupply, the OPEC cartel and its partners have announced substantial production cuts. Oil consumption will expand by 1.4 million barrels a day -- about 1.4 percent -- in 2019, slightly higher than last year’s expansion of 1.3 million, according to the Paris-based IEA, which advises most of the world’s major economies on energy policy. Brent crude traded near $62 a barrel in London on Friday, having surpassed $86 in October. Faltering manufacturing and slumping exports have stirred concerns that China’s economy, the oil market’s engine of growth for more than a decade, is slowing. A prolonged trade battle with the administration of U.S. President Donald Trump is only darkening the outlook. “Our expectation for slightly faster global demand growth in 2019 is maintained even though economic growth is likely to be slower than in 2018,” the agency said. “The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth.”

Hedge funds buy oil amid greater optimism on economy: Kemp - (Reuters) - Hedge funds have started to accumulate bullish positions in crude oil and diesel once more, amid rising optimism about the outlook for the global economy in 2019. Hedge funds and other money managers increased their net long position in Brent crude futures and options by 15 million barrels to 173 million barrels in the week to Jan. 15. Portfolio managers have raised their net long position in Brent in five of the last six weeks, by a combined 36 million barrels since Dec. 4, according to exchange data. Funds also boosted their net long position in European gasoil by 6 million barrels to 11 million barrels, the second small weekly increase in a row, after twelve large consecutive declines (tmsnrt.rs/2S2rQP2). In both cases, most of the new buying came from the closure of existing short positions rather than opening fresh long ones. It follows the largest sell-off ever recorded in crude and gasoil during the fourth quarter and suggests many fund managers sense prices have found a floor, at least temporarily. The new wave of buying in crude and gasoil is still small and net positions are still a fraction of the 500 million barrels of Brent and 126 million barrels of gasoil held in September. But it comes amid increasing optimism among investors about a future trade deal between the United States and China that could help avert a feared recession. The same optimism that has boosted the U.S. S&P 500 share index by 14 percent since Dec. 26 and South Korea’s trade-exposed KOSPI-100 index by 8 percent since Jan. 4 is helping reverse some of the recent losses in oil prices.

Rig Count Sensitivity And WTI Crude Price Fluctuations - WTI crude prices averaged $66.77 per barrel over the first three quarters of 2019 and peaked at around $75 per barrel at the opening of 4Q18. But as we all know, prices were punished over the rest of the quarter shedding about $30 per barrel (from the peak) by the year’s end as traders began to worry that global crude production appeared to be on a near term trajectory to outpace demand. A growing question culminating from the recent slump in prices is, “How will producers adjust their drilling campaigns now that the price environment has changed so dramatically?” Anecdotally we note that recent press releases by Diamondback and Chesapeake both announced these companies’ intentions to reduce the size of their drilling fleets in 2019. Plans for drilling by other publicly traded producers will likely also get announced in the weeks ahead as companies report their financial results for the fourth quarter. In the meantime, the introductory table provides a rough sensitivity analysis of how rig demand may shape up under certain crude pricing conditions over the next year. Comparing domestic crude prices alongside rig activity illustrates a strong linkage (i.e. correlation) between oil prices and rig counts. Without adjusting for lag (i.e. thetypical span before rig activity reacts to the change in price), the correlation between the rig count and the WTI crude price was 0.8796, which is already a strong relationship. However, factoring in a three month lag, improves the relationship by +855 basis points to a correlation of 0.9651 adjusted. 

To boost confidence in oil cut, OPEC issues quota list - OPEC on Friday published a list of oil production cuts by its members and other major producers for the six months to June, an effort to boost confidence in the move designed to avoid a supply glut in 2019. In a statement, an OPEC and non-OPEC ministerial panel also called on participating members of the Organization of the Petroleum Exporting Countries and allies to “redouble their efforts in the full and timely implementation" of the move. In the first half of 2019, OPEC and its allies will cut oil output by 1.195 million bpd to 43.874 million bpd. The full OPEC+ group will meet on April 17-18 in Vienna to decide whether to extend the agreement beyond June. The list of quotas is the same as one seen by Reuters and other news services in December and is as listed below. For the six months to June 2019:

Algeria 1,057 -32 = 1,025
Angola 1,528 -47 = 1,481
Congo 325 -10 = 315
Ecuador 524 -16 = 508
Eq. Guinea 127 -4 = 123
Gabon 187 -6 = 181
Iraq 4,653 -141 = 4,512
Kuwait 2,809 -85 = 2,724
Nigeria 1,738 -53 = 1,685
Saudi Arabia 10,633 -322 = 10,331
UAE 3,168 -96 = 3,072
Azerbaijan 796 -20 =776
Bahrain 227 -5 = 222
Brunei 131 -3 = 128
Kazakhstan 1,900 -40 = 1,860
Malaysia 627 -15 = 612
Mexico 2,017 -40 = 1,977
Oman 995 -25 = 970
Russia 11,421 -230 = 11,191
Sudan 74 -2 = 72
South Sudan 132 -3 = 129
Total OPEC 26,749 -812 = 25,937
Non-OPEC 10 18,320 -383 = 17,937
Total 45,069 -1,195 = 43,874

Oil firms as China's economic slowdown was not as big as some expected - Oil rose on Monday, reversing earlier losses, as investors latched on to positive supply-side drivers for the market, although concern about the wider economy simmered in the background after data pointed to a slowdown in China. Brent crude oil futures were up 12 cents at $62.82 a barrel by 1520 GMT, while U.S. crude futures were up 9 cents at $53.89 a barrel.Analysts said a more robust backdrop for financial markets, together with the prospect of slower crude production growth, were the major drivers behind the rally in oil."The stock market performance is one of the reasons why oil keeps marching higher. There also seems to be a general belief that the agreed cut in OPEC+ production will be sufficient to balance the market," PVM Oil Associates said in a note.Global equities fell after data pointed to a slowdown in Chinese economic growth in 2018 to a 28-year low. The numbers fed concern that the outlook for global growth may be darkening, particularly given U.S.-China trade tensions. But stocks are still up nearly 8 percent so far this month, which in turn has given oil investors more confidence to bet aggressively on a rise in crude prices.

Oil Prices Steady Following China GDP Data; OPEC Supply Cuts Remain in Focus - Oil prices steadied on Monday in Asia after official data showed China’s economic slowdown was in line with expectations and not as sharp as some analysts had feared. China's economy grew 6.4% in the fourth quarter of 2018 from a year earlier, as expected, official data from the National Bureau of Statistics showed. In 2018, the country’s economic growth came in at 6.6%, also in line with expectations. Oil prices firmed following the release of the data, with Brent Oil Futures trading at $62.83 per barrel at 1:06 AM ET (06:06 GMT), up 0.2% from their last close, while Crude Oil WTI futures were at $54.2 a barrel, up 0.3%.Meanwhile, traders are awaiting further news on U.S.-China trade frictions. Oil futures rallied around 3% on Friday following reports suggesting both countries were considering concessions ahead of a Washington visit from Chinese Vice Premier Liu He on Jan. 30 and 31 for talks aimed at resolving the ongoing trade standoff between the two countries.Elsewhere, Baker Hughes reported Friday that the number of domestic rigs drilling for oil fell by 21 to 852 in the week to Jan. 11.It was the third straight weekly decline in the rig count and the largest weekly drop since February 2016, suggesting a slowdown in domestic crude production. That followed a report Thursday from the Organization of the Petroleum Exporting Countries, which revealed that the group‘s output fell by 751,000 barrels to 31.6 million barrels a day in December.

Oil prices edge down as global growth worries threaten demand - Oil prices fell more than 1 percent on Tuesday on signs that an economic slowdown in China was spreading, stoking concerns about global growth and fuel demand. The gloomy news from the world's second-largest economy and top importer of oil pulled down financial markets across Asia. International Brent oil futures were at $61.94 per barrel at 0950 GMT, down 80 cents or 1.28 percent. U.S. West Texas Intermediate (WTI) crude futures were at $53.16 per barrel, down 1.19 percent or 64 cents. China reported the lowest annual economic growth in nearly 30 years on Monday. Its state planner warned on Tuesday that falling factory orders pointed to a further drop in activity in coming months and more job losses. While China's oil imports have so far defied the economic slowdown, hitting a record above 10 million barrels per day (bpd) in late 2018, many analysts believe the country has reached peak energy growth, with its thirst set to wane. "Slowing manufacturing activity in China is likely weighing on demand," said Singapore-based tanker brokerage Eastport, adding that industrial slowdowns tended to be leading indicators that fed gradually into lower demand for shipped oil products. In a sign of spreading economic weakness, growth in South Korea's export-oriented economy slowed to a six-year low of 2.7 percent in 2018, official data showed on Tuesday. The International Monetary Fund on Monday trimmed its 2019 global growth forecast to 3.5 percent, from 3.7 percent in last October's outlook. "This was the second downturn revision in three months, and we can still see further downgrades in the near future if trade tensions escalate, the UK exits with a no-deal from the EU, or China's economic growth drops more sharply,"  Despite the darkening outlook, oil prices have been getting some support from supply cuts since the beginning of this month by the Organization of the Petroleum Exporting Countries.

Oil prices drop on renewed global growth fears - Oil futures traded sharply lower Tuesday, under pressure after a warning from the International Monetary Fund and weak economic data out of China underlined concerns about global economic growth and energy demand. West Texas Intermediate crude for February delivery fell $1.93, or 3.6%, to $51.87 a barrel on the New York Mercantile Exchange. The contract expires at the day’s settlement. March WTI CLH9, -2.72% which becomes the front-month contract, traded at $52.17, down $1.87, or 3.5%.    March Brent  lost $1.94, or 3.1%, to trade at $60.80 on ICE Futures Europe.“Oil prices are under pressure due to new economic concerns. The IMF yesterday lowered its forecast for global economic growth this year, particularly because of the less dynamic growth expected in Europe. The NDRC, the state planning agency in China, sees a risk of a further cooling of the Chinese economy,” wrote analysts at Commerzbank, in a note.The IMF on Monday said it expects the global economy to grow 3.5% in 2019, down from a previous forecast of 3.7% in October and a growth rate of 3.7% in 2018. The fund cited growing trade tensions and rising U.S. interest rates. Earlier Monday, China reported its economy expanded by 6.6% in 2018, the slowest pace since 1990.Most U.S. financial markets were closed Monday for the Martin Luther King Jr. Day holiday. Brent crude rose 4 cents Monday in London.The Commerzbank analysts noted the International Energy Agency late last week confirmed its forecast for global oil demand despite an increasingly gloomy economic outlook, calling for demand to increase by 1.4 million barrels a day in 2019 thanks to the positive impact of lower prices.“If demand develops as the IEA predicts, the oil market will become gradually rebalanced during the course of the year. For this to happen, OPEC+ will need to consistently implement the agreed production cuts. OPEC has now published a detailed breakdown of the contribution required from each country,” they said. In other energy trading, March natural-gas futures NGH19, -7.59%  dropped 9.6% to $3.148 per million British thermal units, continuing to see high volatility on the back of changing weather forecasts.

What's Driving Oil Prices Down? - Oil prices started Tuesday down on gloomy economic news, with mounting fears that economic growth will slow in 2019. The International Monetary Fund warned on Monday that economic growth could slow this year. “While global growth in 2018 remained close to post-crisis highs, the global expansion is weakening and at a rate that is somewhat faster than expected,” the Fund said. The IMF lowered its global growth estimate to 3.5 percent this year, down 0.2 percent from its October estimate. The Fund said that the downward revision is modest, but that downside risks are rising. “While financial markets in advanced economies appeared to be decoupled from trade tensions for much of 2018, the two have become intertwined more recently, tightening financial conditions and escalating the risks to global growth.” After hitting a two-month high in recent days, oil prices have taken a breather on renewed concerns of an economic slowdown generally, and in China more specifically. On Monday, China reported its 2018 GDP growth rate at 6.6 percent, the weakest in nearly three decades.. Oil price discounts in Midland have narrowed sharply, converging towards WTI in Houston. The discount is now at its smallest since March 2018. Discounts once traded nearly $20 per barrel below WTI in Midland, but the discount has now fallen to roughly $2.25. Some midstream capacity has been added in recent months, while production growth hit a rough patch this month because of cold weather.  Schlumberger saw its share price jump over the last few trading days after reporting upbeat guidance for 2019. However, the oilfield services giant also said that its fourth quarter revenue fell by 12 percent quarter-on-quarter, the result of slowing drilling activity in the U.S. shale patch. “We could be facing a more moderate growth in U.S. shale production in coming years,” Schlumberger’s CEO Paal Kibsgaard told investors on an earnings call.

US shale's full impact still hasn't hit oil markets, IEA director says - Shale oil's impact will have "huge implications" for global energy markets for many years, Fatih Birol, executive director at the International Energy Agency, told CNBC on Tuesday.Oil prices have been trading sharply lower amid growing concerns that an economic slowdown in China could temper demand. And even as some producers cut their output, prices have been put under further pressure by a growing supply from the United States."(If) anybody thinks we have seen the full impact of the shale revolution in the United States, then he or she is making a big mistake," Birol told CNBC's Steve Sedgwick at the World Economic Forum in Davos, Switzerland."We will see huge implications of shale, both for oil and gas, for many years to come."OPEC and its production allies have officially implemented a fresh round of supply cuts, which will see 1.2 million barrels per day removed from the market from the start of January.Birol said that despite those cuts, prices in 2019 should face renewed pressure with Permian Basin output in western Texas and southeastern New Mexico set to ramp up. "A huge amount of pipeline capacity is coming in the Permian, 66 percent growth compared to previous years, so the U.S. oil industry's ability to react to the market is much faster and bolder now," he said.

Oil Holds Losses Near $53 -- Oil held its losses from Tuesday at near $53 a barrel as pessimism over the prospects for a U.S.-China trade deal clouded the global economic outlook. Futures in New York were little changed after falling on Tuesday, when they dropped with risk assets including global equities. The swoon was sparked by concerns that tensions between the world’s biggest economies will persist even after President Donald Trump’s top economic adviser denied a report that the U.S. has canceled preliminary talks with Chinese officials. The concerns over the world economy were exacerbated by disappointing U.S. housing data and the International Monetary Fund cutting its global growth forecasts this week. That’s threatening oil’s rally after prices got off to their best start to a year since 2001 on hopes the OPEC+ group of producers will cut enough output to shrink a global glut. While Mohammad Barkindo, the secretary general of the Organization of Petroleum Exporting Countries, said the group and its allies are beginning to make “very sharp reductions,” the energy ministers of Saudi Arabia and Russia both canceled their plans to attend and hold a bilateral meeting at the World Economic Forum in Davos, skipping an opportunity to reassure investors.  West Texas Intermediate crude for March delivery traded 20 cents up at $53.21 a barrel on the New York Mercantile Exchange at 7:46 a.m. in London. The February contract expired on Tuesday after slumping 2.3 percent to $52.57. Brent for March settlement was 32 cents higher at $61.82 a barrel on the London-based ICE Futures Europe exchange after dropping 2 percent on Tuesday. The global benchmark crude was at an $8.56 premium to WTI. 

Oil prices steady as slowdown worries offset outlook for lower supply - The oil market gave up early gains on Wednesday as a widespread economic slowdown, which may dent growth in demand for fuel, weighed on energy prices. Crude futures earlier got a boost from hopes that Japan and China would take fiscal stimulus measures to stem the slowdown. Prices got further support from expectations that U.S. crude stockpiles fell last week and official data indicated slowing growth in U.S. shale oil output in the coming years. International Brent crude oil futures dipped 6 cents to $61.44 per barrel at 10:55 a.m. ET (1555 GMT). U.S. West Texas Intermediate crude futures 15 cents lower at $52.86 per barrel. Oil prices fell by 2 percent on Tuesday as financial markets reeled from concerns about a global economic slowdown and the heavy losses spooked investors into safe-haven assets such as government bonds or gold. A litany of poor economic data worldwide sapped Asian markets, though some optimism emerged as China and Japan said they would use fiscal spending to boost growth. Chinese finance ministry officials on Wednesday said that the government would step up spending to support its economy, which last year registered its lowest growth rate since 1990. The Bank of Japan said it would keep the ultra-easy monetary settings that have been running since 2013. Oil prices have been supported by production cuts led by OPEC to rein in an emerging supply glut. Whether OPEC's efforts will be successful depend in part on the development of oil production in the United States.

WTI Extends Losses After Big Surprise Crude Build - Crude prices fell to the lowest level in almost a week as China warned of “serious challenges” to the global economy and the U.S. government shutdown cast a pall over growth.“You still have the same old things hanging over us, particularly the question of a trade deal between the U.S. and China," said  Michael Hiley, head of OTC energy trading at LPS Futures in New York. API:

• Crude +6.551mm (-500k exp)
• Cushing +359k
• Gasoline +3.635mm
• Distillates +2.573mm

After three weeks of dramatic product builds (and modest crude draws), it appears a record high production finally caught up with demand as API reported a major surprise crude build of 6.551mm barrels.  WTI was hovering around $52.60 ahead of the API data and extended the day's losses on the print...

Oil slips as EU seeks to trade with Iran, U.S. gasoline prices fall (Reuters) - Oil prices slipped on Wednesday as the European Union seeks to circumvent U.S. trade sanctions against Iran, and on weaker U.S. gasoline prices. Brent futures fell 36 cents, or 0.6 percent, to settle at $61.14 a barrel, while the most active U.S. West Texas Intermediate (WTI) crude contract for March fell 39 cents, or 0.7 percent, to settle at $52.62. France’s foreign minister said he expected a European-backed system to facilitate non-dollar trade with Iran and bypass fresh U.S. curbs imposed after Washington quit a landmark nuclear deal, would be established in coming days. Peter Cardillo, chief market economist at Spartan Capital Securities in New York said that EU announcement “knocked the wind out of oil prices.” Analysts also said falling U.S. gasoline prices and rising crude output in the United States were also pressuring the crude market. “We are paying particular attention to weakening NYMEX crack spreads where an increasingly heavy gasoline market is providing a limiter on near term WTI gains,” Jim Ritterbusch, president of Ritterbusch and Associates in Chicago, said in a report. The crack, or spread, between U.S. gasoline futures and WTI crude RBc1-CLc1 fell to $5.97 a barrel, its lowest since 2013. Both U.S. crude and product futures extended their losses in post-settlement trade after an industry report showed that U.S. crude stockpiles rose sharply last week, while gasoline and distillate inventories built. [API/S] Data from the American Petroleum Institute showed crude inventories increased 6.6 million barrels, compared with analysts’ expectations for a decrease of 42,000 barrels. Gasoline stocks rose by 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.7 million-barrel gain. Distillate fuels stockpiles gained by 2.6 million barrels, compared with expectations for a 229,000-barrel drop, the API data showed.

U.S. oil firms tell OPEC their growth will slow (Reuters) - U.S. oil producers sought on Wednesday to soothe OPEC’s worries about losing market share, telling the group that investors in the U.S. firms wanted a reduction in growth and higher payouts. The Organization of the Petroleum Exporting Countries and non-OPEC allies such as Russia have cut output since 2017 to support oil prices, while watching producers in the United States, which is not party to the cuts, drive up production. The United States has overtaken Russia and Saudi Arabia to become the world’s biggest crude producer. Output is approaching 12 million barrels per day (bpd). OPEC’s forecasts and even U.S. government predictions have repeatedly underestimated U.S. output growth. The bosses of U.S. firms Occidental Petroleum and Hess Corp, attending a session at the World Economic Forum in Davos, said that growth of U.S. shale oil output would slow. The session was a rare occasion when U.S. producers and an OPEC representative, OPEC Secretary-General Mohammed Barkindo, sat on the same panel. “I believe not as much money will be pouring into the Permian basin this time. I believe investors will hold companies accountable for returns and a lot of this didn’t happen previously,” Occidental Chief Executive Vicki Hollub said. Echoing her comments, Hess Corp founder and Chief Executive John Hess said shale production now accounted for about 6 percent of global production. “It will probably go up to 10 percent by mid-decade but then it flattens out,” he said. But he added that U.S. resources would start to degrade. “Shale is not the next Saudi Arabia. It is an important short-cycle component,” he said. Barkindo said OPEC aimed to balance supply and demand and had helped the United States by rescuing its oil industry from ultra-low oil prices. “The oil industry is under siege globally,” Barkindo said, adding that OPEC wanted to talk more regularly to U.S. producers to understand their industry better even if they could not participate in any OPEC-led production cuts. 

Oil prices fall on worries fuel demand to stall amid slowing global growth - Oil prices fell on Thursday as concern over the global economy reasserted itself, reversing earlier gains on the potential for U.S. sanctions on Venezuela. Brent crude futures were down 46 cents at $60.68 a barrel around 8:30 a.m. ET (1330 GMT), while U.S. West Texas Intermediate futures fell 26 cents to $52.36. An unexpected rise in U.S. crude inventories reported the day before eclipsed possible U.S. sanctions on the Venezuelan oil sector. The American Petroleum Institute said on Wednesday U.S. crude inventories rose by 6.6 million barrels in the latest week, versus expectations for a fall of 42,000 barrels. The U.S. Energy Information Administration reports official figures later on Thursday. "The chances for another down-day are not bad at all if you believe the confirmation of last nights (U.S. inventory) stats by the EIA this afternoon will actually put further downward pressure on prices. According to the API, all major categories built," PVM Oil Associates strategist Tamas Varga said. Investors at present perceive oil supply to be fairly tight relative to demand. But given concern over the longer-term outlook for global economic growth, bullish drivers have been short-lived in the last couple of weeks. Earlier, oil hit a session high of $61.38 after the United States said it could impose sanctions on Venezuela's crude exports as the Latin American country descends further into turmoil.

Oil Algos Go Wild After Gasoline Inventories Hit Record High - Crude prices edged higher overnight amid Venezuela disruption concerns after falling to the lowest level in almost a week after a surprisingly large crude build reported by API and as China warned of “serious challenges” to the global economy and the U.S. government shutdown cast a pall over growth.The White House recognized Juan Guaido as the interim president of Venezuela on Wednesday, a move that carries the risk of further disruption to the nation’s oil exports."With the U.S. now clearly taking sides with the opposition, changes might be in the making," said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. "This would deal a further blow to U.S. refiners that rely on whatever Venezuelan oil is still available and as such would be short-term bullish." DOE:

• Crude +7.97mm (-750k exp)
• Cushing -190k
• Gasoline +4.05mm
• Distillates -617k

The API reported a build across the board on nationwide crude, Cushing, gasoline and distillate inventories. We already saw large builds last week in products and that continued with crude also seeing an even bigger build than API... and Gasoline's 8th weekly build in a row pushed it to a record high... Production hit a new record high last week as the number of US oil rigs tumbled most in years. WTI crude futures chopped around between $52 and $53 ahead of the DOE data and kneejerked lower after the big surprise crude build...

U.S. oil up one percent on Venezuela turmoil, but hefty stock build weighs - (Reuters) - U.S. oil prices rose by 1 percent on Thursday, boosted by the U.S. threat of sanctions on Venezuela, but gains were capped by record high gasoline inventories and an unexpected big build in crude stocks in the United States. U.S. West Texas Intermediate (WTI) crude (CLc1) futures rose 51 cents to settle at $53.13 a barrel, a 0.97 percent gain. Brent crude (LCOc1) futures fell 5 cents to settle at $61.09 a barrel. Washington signaled it could impose sanctions on Venezuela's crude exports as Caracas descends further into political and economic turmoil. The threat to reduce supplies supported futures prices. The United States, the top importer of Venezuelan crude, is seeking to ensure that the OPEC member's oil revenue goes to opposition leader Juan Guaido, who swore himself in as interim president, and to cut off money from President Nicolas Maduro, a top U.S. official said on Thursday. "The breakdown in diplomatic relations was interpreted as upping the possibility of a U.S. sanction on Venezuelan oil that would likely force U.S. refiners to seek alternative supplies at higher prices, hence the WTI gains," Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. Venezuelan oil is predominantly heavy crude, which requires extensive refining. It is frequently blended with lighter crudes to give refiners higher-value products. With Iran already crippled by U.S. sanctions, a drop in Venezuelan exports could squeeze global supply further. Geneva-based Petro-Logistics said on its website that Iranian crude and condensate exports in December "fell steeply" from November to less than 1 million barrels per day (bpd) due to U.S. sanctions - lower than some other estimates. Both Brent and WTI are both backed by light, sweet crudes, and are not directly linked to Venezuelan oil. But concern about the supply of heavy crudes is apparent in the U.S. physical market, where the price for Mars Sour (WTC-MRS), a medium crude, shot to its highest since early 2011.  For graphic on Venezuela's crude exports and US crude prices, click https://tmsnrt.rs/2S57l4p

Oil prices climb as US threatens sanctions against Venezuela - Oil prices rose on Friday as turmoil in Venezuela triggered concerns that its crude exports could soon be disrupted. Washington on Thursday signalled it could impose sanctions on Venezuela's oil exports as Caracas descends further into political and economic turmoil. Brent crude oil futures were at $61.62 a barrel at 0755 GMT, 53 cents, or 0.9 percent, above their last close. At one point earlier on Friday, the international benchmark crude rose as high as $61.92 a barrel. Brent, however, has shed about 1.8 percent this week and was on track to post its first week of losses in four weeks. U.S. West Texas Intermediate (WTI) crude futures were at $53.70 per barrel, up 57 cents, or 1.1 percent. Amid violent street protests, Venezuela's opposition leader Juan Guaido declared himself interim president earlier this week, winning backing from Washington and large parts of Latin America, prompting Nicolas Maduro, the country's leader since 2013, to break relations with the United States. "The oil market is partially pricing in the risk to Venezuela's crude production, which has been plummeting in recent years and currently languishes just above 1 million barrels per day," Vandana Hari of Vanda Insights said in a note on Friday. Fundamentally, however, global oil markets are still well supplied, thanks in part to surging output in the United States, where crude production rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd. Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain's Barclays on Thursday said in a note. The bank cut its 2019 average Brent crude oil forecast to $70 a barrel, down from $72 previously.

Oil Prices Unmoved By Venezuela Turmoil - Oil was up in early trading on Friday and could close out the week with a slight gain, but benchmark prices were remarkably flat given the turmoil raging in Venezuela.   Venezuela has been rocked by turmoil this week, with the Maduro regime teetering on the brink of collapse. The U.S., clearly seeking regime change in Venezuela, recognized the head of the national assembly, Juan Guaidó, as the rightful president on Wednesday, which corresponded with massive nation-wide protests. However, by Thursday, the military stuck by President Maduro, which will provide the leader a lifeline. In the meantime, Venezuela’s oil production is expected to continue to decline. Guaidó has offered some details on new plans for the oil sector, including new picks to head up Citgo and PDVSA. He is trying to obtain control of the country’s oil assets, but with the military backing Maduro for now, there is no sign of an imminent downfall. Billions of dollars’ worth of investment from Russia and China are on the line. News reports suggest that the Trump administration is mulling harsh sanctions targeting Venezuela’s oil sector. It is unclear if the administration will follow through, but if it did, sanctions would hit U.S. Gulf Coast refiners that depend on heavy oil from Venezuela, including Citgo, Valero, Chevron  and PBF Energy.. Russia was China’s largest oil supplier in 2018 for the third year in a row, cementing its top spot ahead of Saudi Arabia for. Russia sent 1.43 million barrels per day to China last year, up 19.7 percent from a year earlier. China’s private refineries stepped up processing, while at the same time, China had to turn to Russia to replace lost barrels from Iran and Venezuela.  Freight rates for dry-bulk container ships have declined sharply over the last six months, a sign of flagging trade and a broader global economic slowdown. The Baltic Dry Index, which measures ship transport costs, has fallen by 47 percent since mid-2018, according to Reuters. “The global economy and dry-bulk shipping market are showing us very real signs of distress,” said Jeffrey Landsberg, managing director of commodity consultancy Commodore Research.

Modest Rig Count Gain Caps Oil Prices - Baker Hughes reported modest rise in the number of active oil and gas rigs in the United States this week. The total number of active oil and gas drilling rigs rose by 9 rigs, according to the report, with the number of active oil rigs increasing by 10 to reach 862 and the number of gas rigs decreasing by 1 to reach 197. The oil and gas rig count is now 112 up from this time last year, 103 of which is in oil rigs. WTI prices were trading up earlier on Friday as the crisis in oil-rich Venezuela deepens as opposition leader Juan Guaidó seeks to grab power from current president Nicolas Maduro, garnering him a backing from the United States to the ire of Maduro. Gains were capped, however, by the previous day’s EIA report that showed a major buildup in crude oil inventories for the week at 8 million barrels, bringing the total to 9% above seasonal limits. At 12:16pm EST, the WTI benchmark was trading up $0.52 (+0.99%) at $53.65—nearly flat week on week, with Brent crude trading up $0.40 (+0.65%) at $61.49 per barrel—down nearly $1 per barrel on the week. Canada’s oil and gas rigs increased by 23 rigs this week, after climbing by 25 rigs last week. Canada’s total oil and gas rig count is now 232, which is 106 fewer rigs than this time last year. The EIA’s estimates for US production for the week ending January 18 shows an increase at an average rate of 11.9 million bpd­—a record for the US—for the second week in a row.. By 1:06pm EDT, WTI had increased by 0.87% (+$0.46) at $53.59 on the day. Brent crude was trading up 0.61% (+$0.37) at $61.46 per barrel.

Oil climbs on Venezuelan crisis despite surging US supply - The United States signaled on Thursday it may impose sanctions on Venezuelan exports after recognizing opposition leader Juan Guaido as interim president this week, prompting President Nicholas Maduro to cut ties with Washington. But the ongoing U.S.-China trade dispute and broader gloom over world economic growth put a check on prices. Brent crude oil futures ended the session at $61.64 a barrel, up 55 cents, or 0.9 percent. Brent, however, has shed about 1.7 percent since the start of trade on Monday and is on track to post its first week of losses in four weeks. U.S. West Texas Intermediate (WTI) crude futures settled at $53.69 per barrel, up 56 cents, or 1.05 percent. WTI futures fell about 0.2 percent on the week, also posting the first week of declines in four weeks. RBC Europe predicted that U.S. sanctions could nearly double projected output shortfalls from Venezuela. “Venezuelan production will decline by an additional 300,000-500,000 barrels per day (bpd) this year, but such punitive measures could expand that outage by several hundred thousand barrels,” it said. Still, some analysts said the possibility of immediate sanctions were unlikely. “We view a blockade on Venezuelan imports as low probability and a last resort measure that is likely weeks if not months away should it materialize,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. “The evolving situation in Venezuela appears capable of delaying our expected test of $50 support.” Global oil markets are still well supplied, however, thanks in part to a spike in U.S. output. Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain’s Barclays said in a note. The bank cut its 2019 average Brent forecast to $70 a barrel, from $72 previously.

Analysis- OPEC cuts amplify supply side imbalances in crude oil - — Despite seemingly well supplied global crude oil inventories, prices for heavier, sour grades are starting to show a more nuanced dynamic in the oil market -- the imbalance between light and heavy crude oil supplies is growing, and price spreads between the two types of crude have narrowed as a result. There is an "assumption that oil is a homogeneous market. It is not," an analyst at a European refiner, who spoke on condition of anonymity, said. Output complications from Iran, Venezuela, Mexico and other producers of heavy sour crude oil barrels were thought to have been more than sufficiently offset by higher production from the US, Russia and OPEC, guiding perceptions of oversupply. However, the latter have released more volumes of lighter crude oil grades in the global market in recent months, compounding the disequilibrium between light and heavy crude supply. "At the moment, OPEC is cutting heavy crude, [while supply from] Mexico, Venezuela is lower, the European analyst said, adding that light crude supply from the US, and the North Sea as well as the Mediterranean in Europe was growing. As a result, the price premiums that lighter, sweeter crude grades typically command over heavier, higher sulfur ones has narrowed steadily in recent months. The disconnect can be seen most evidently in the Middle East crude oil price benchmarks, notably Dubai and Oman. Most crudes sold by Middle East producers, which make up the core of OPEC, are priced using one or both of these benchmarks as the underlying bases. The Dubai crude complex -- the spread between prompt Dubai swap and cash -- remained steadily in backwardation through the last quarter of 2018, despite both Brent and WTI seeing deep contango in their respective market structures during the same period. The spread between Brent futures and Dubai swaps averaged $2.58/b in Q3 of 2018, according to Platts data. The same spread narrowed to $1.86/b over Q4, and has narrowed even further to $1.16/b to date in January. A narrow Brent/Dubai EFS spread implies that medium to heavy sour Dubai-linked crude grades are getting relatively pricier compared to lighter, sweeter Brent-linked crude grades.  Saudi energy minister Khalid al-Falih and his OPEC counterparts have not detailed how they are distributing their output cuts across the different grades of oil that they produce, though heavier, sour grades typically get the first axe, given that they tend to trade at discounts to lighter, sweet crudes. But Falih acknowledged at the December OPEC meeting, in which the supply accord was agreed, that "the premium we used to get on lighter grades is falling fast," as differentials decline due to competition from ultralight US shale oil.

Saudi Ritz-Carlton Purge “Creative and Efficient,” Says Morgan Stanley Boss — The detention of scores of Saudi royals and businessmen in Riyadh’s Ritz-Carlton, where some were reportedly tortured, may be one of the most creative and efficient ways of tackling corruption, Morgan Stanley’s James Gorman said on Thursday.Speaking on a panel at the World Economic Forum in Davos, Gorman, CEO and chairman of the major investment bank, said businesses should not be dissuaded from engaging with Saudi Arabia despite the murder of journalist Jamal Khashoggi.“The murder of Jamal Khashoggi in the Saudi consulate in Istanbul was utterly unacceptable,” Gorman said as he responded to questions on a panel.“But what do you do? What part do you play in the process of economic and social change?”When probed about the detentions in the Ritz-Carlton, where more than 200 of the kingdom’s elite were held until they agreed to hand over a proportion of their assets to the government, Gorman said he did not judge any country’s attempts to root out corruption.Many of the country’s most powerful and successful businessmen were held in the luxury hotel, including Prince Alwaleed bin Talal, who has long had investments in major projects across the globe.Some of those detained were members of a branch of the Saudi royal family deemed a rival to the one in power.Prince Miteb bin Abdullah, the son of the late King Abdullah and once seen as a possible crown prince, was tortured and beaten alongside other royals and businessmen, sources told Middle East Eye at the time.One Saudi general was reportedly tortured to death. Though framed as an anti-corruption drive, much of the cash raised from the detainees has flowed into the direct control of Crown Prince Mohammed bin Salman, according to the New York Times.

Women detainees ‘being sexually assaulted and flogged’ in secret Saudi prisons - Female rights activists in Saudi Arabia have been sexually assaulted, tortured with electric shocks and flogged so hard they cannot stand,Amnesty has reported, as British MPs ratcheted up pressure on Riyadhto grant them access to the detainees. At least 10 rights defenders have been tortured, including being made to kiss each other while interrogators watched, Amnesty said in a report released on Friday.  One woman activist was wrongly told by an interrogator that her family members had died, a lie she was made to believe for an entire month. Others held in the secret prisons were tortured with electric shocks, flogged so hard they could not stand, or waterboarded, the human rights group said.  Among the women, who have all been held since a wave of arrests in May, are prominent rights activists such as Loujain al-Hathloul and Aziza al-Youssef, who campaigned for women’s right to drive and against the Kingdom’s oppressive male guardianship system which controls its female citizens. None has been officially charged or referred to trial, and most have no legal representation.The alarming reports come as a group of cross-party British MPs and international lawyers gave Saudi Arabia until the end of the month to grant them access to the women.

Satellite Imagery Reveals First Ever Saudi Domestic Ballistic Missile Program - Is an arms race between enemies Saudi Arabia and Iran on the horizon? Saudi Arabia has been long dependent on the US and UK to import all of its weaponry, however, new satellite images suggest Riyadh has established its first ever ballistic missile factory, according to weapons analysts who spoke to The Washington Post. Jump-starting a new domestic ballistic missile program has international observers worried this could be a major step towards a future Saudi nuclear program— especially given the Saudis have long worried their Shia rivals across the Persian Gulf are hiding a nuclear program. Though Iran has long advanced its own domestic missile production capabilities, it's come under intense scrutiny over the past decade, whereas it's more likely that any Saudi aspirations would draw little attention. Despite multiple billion dollar weapons deals with the US over the past years, there's no evidence that Washington has ever sold ballistic missiles to Riyadh over fears it would be "destabilizing for the region". This has resulted in the Saudis increasingly looking to China and Pakistan for such procurement. Saudi Arabia may further be feeling the heat to acquire its own freedom of production amidst the war in Yemen, which has seen short-range missiles launched by Iran-backed Houthis, in addition to wanting to check the threat of Tehran's own ballistic missiles and launch tests.  According to The Washington Post the newly constructed Saudi production facility is located near an established missile base in al-Watah, southwest of Riyadh. One leading expert at the Middlebury Institute of International Studies at Monterey, California, which first discovered the satellite evidence for the facility, worried, "The possibility that Saudi Arabia is going to build longer-range missiles and seek nuclear weapons - we imagine that they can't. But we are maybe underestimating their desire and their capabilities."

EU Adds Saudis To Terror-Funding List (As Iran-Sanction-Evading SPV Reaches Advanced Stage )Reuters reports that, according to two sources, the European Commission has added Saudi Arabia to an EU draft list of countries that pose a threat to the bloc because of lax controls against terrorism financing and money laundering.The move comes amid heightened international pressure on Saudi Arabia after the murder of Saudi journalist Jamal Khashoggi in the kingdom’s Istanbul consulate on Oct. 2.The EU’s list currently consists of 16 countries, including Iran, Iraq, Syria, Afghanistan, Yemen and North Korea, and is mostly based on criteria used by the Financial Action Task Force (FATF), a global body composed by wealthy nations meant to combat money laundering and terrorism financing.Saudi Arabia missed out on gaining full FATF membership in September after it was determined to fall short in combating money laundering and terror financing.The government has taken steps to beef up its efforts to tackle graft and abuse of power, but FATF said in September that Riyadh was not effectively investigating and prosecuting individuals involved in larger scale money laundering activity or confiscating the proceeds of crime at home or abroad.The provisional decision to add Saudi Arabia needs to be endorsed by the 28 EU states before being formally adopted next week.And this is where we get a little confused... because while Europe lists Iran as a state sponsor of terror, it is also, reportedly, at an "advanced stage" of completion of its special purpose vehicle to help European companies bypass U.S. sanctions on Iran.Citing three European diplomats, Bloomberg reports that the European Commission said it’s seeking to launch “very soon” with the official unveiling could come as early as Monday.“The SPV preparations have progressed; they are at an advanced stage,” the spokeswoman, Maja Kocijancic, told reporters in Brussels.“I hope that we can announce the launch very soon.”Progress had been slow as the EU, led by France, Germany and the U.K., has struggled to find a government willing to host the vehicle, which risks drawing criticism from the American administration.

Pentagon Still Denies Training UAE Pilots Despite Their Own Documents  – Newly released Pentagon documents confirm that the United States’ role in the Saudi coalition bombing of Yemen has long been much deeper than previously acknowledged by defense officials. In fact they show that the repeated Pentagon line that the US is “not a participant in the civil war in Yemen nor are we supporting one side or the other,” as was stated just last month by Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, is a flat lie to shield the public from the truth. The new government documents, obtained from Air Force Central Command via FOIA and published days ago by national security reporter Nick Turse reveal the US has been training the Saudi-UAE coalition pilots conducting the air war over Yemen, which has resulted in tens of thousands of civilian deaths, as documented by the UN and other international monitoring organizations. This even as the Pentagon attempted to appease Congressional critics last November by announcing it would cease aerial refueling of coalition aircraft conducting airstrikes in Yemen. It was further found out that due to “accounting errors” the fuel was being provided to the Saudis and Emirates free of charge, or rather it was being shouldered by the unknowing American taxpayer. According to Turse’s report on the files he unearthed, they reveal the following: “U.S. and allied pilots — “assisted 150 airmen in challenging ex[ercise] to prepare for combat ops in Yemen.” .  “Unit fighter personnel advanced the UAE’s F-16 fighter pilot training program; 3 pilots flew 243 instructor sorties/323 hrs that created 4 new instructors & 29 combat wingmen who immediately deployed for combat operations in Yemen.” But amazingly the Pentagon has stood firm in its denials even after the internal Air Force command documents came to light. A Central Command spokesperson told Yahoo News when asked to comment on the damning military files that it has not “conducted exercises with members of the [Saudi-led coalition] to prepare for combat operations in Yemen.”

Iran's General Soleimani Ramping Up Efforts To Counter Trump In Iraq And Syria - "Trump will pull out US forces in 30 days"… "Trump won’t withdraw now"… "Trump will pull out from Syria in four months"… "The US forces began withdrawing military equipment but not the personnel"… "Trump will maintain a 20 mile buffer zone in Syria"…All these contradictory announcements have come from the White House in the last month or so, indicating some combination of the current occupant of the White House’s lack of experience in foreign policy, or lack of control of his own administration. Nobody in the Middle East believes Trump. Only President Erdogan confirmed the serious intention of the US to withdraw from Syria but was knocked down by Trump’s threat to “cripple the Turkish economy if Turkey attacks the Kurds”. But soon after Trump’s threat to Erdogan, he again changed his mind and suddenly announced a new plan for a buffer zone “to protect the Kurds”, Turkey’s worse enemies in the Levant. Trump is signaling a high degree of confusion about his intention to stay or leave Syria. It doesn’t matter if the world doesn’t understand what Trump’s plan is. There is no point in trying to analyse and predict the next step because Trump himself doesn’t seem to know what to do next. He wakes up with one decision and seems to change it hours later or the following day.Nevertheless, Trump’s continuously changing plans are not preventing his adversary the Iranian General Qassem Soleimani — the head of the Iranian Revolutionary Guard Corps in the al Quds Brigade which perceives itself responsible for supporting all movements of the oppressed peoples in the world, mainly the Lebanese Hezbollah, Iraqi, Palestinian and Afghan groups, but others as well — from making plans to counter Trump in Syria and Iraq.Well informed sources say “Soleimani is holding meetings with various of his allies’ groups in the Middle East to stand against US forces and push them away from Iraq and Syria”. According to these sources, neither Iran nor Russia believe in Trump’s declared intention to withdraw and both are convinced that at least some US forces will remain in the Levant. Soleimani is planning to move more aggressively with his allies once the last ISIS stronghold east of the Euphrates is reconquered.

Iran Ready To Eliminate Israel From The Earth ; IDF Trolls Tehran Over Twitter - The head of Iran's air force said on Monday that the Islamic Republic's pilots are looking forward to facing Israel, and will "eliminate it from earth" after Israeli airstrikes on alleged Iranian targets inside Syria killed 11 people, including four Syrian soldiers.  Brigadier General Aziz Nasirzadeh, commander of the Islamic Republic of Iran Air Force (IRIAF) made the comments to the Young Journalist Club news agency following Israel's strike on munition storage facilities within Damascus International Airport, a military training camp and an Iranian intelligence site, according to The Independent. "The young people in the air force are fully ready and impatient to confront the Zionist regime and eliminate it from the Earth," said Nasirzadeh.Israel claims it launched the strikes in retaliation for a surface-to-surface rocket fired on Sunday by Iran's Quds Force from within Syria at a ski resort in the Israeli-occupied Golan Heights, which was intercepted by Israeli air defenses. "That’s a civilian site and there were civilians there," said Israeli army spokesman Lt. General Jonathan Conricus Monday morning, adding "We saw that as an unacceptable attack by Iranian troops, not proxies in Syria."  "In addition to that, the area from which the Iranians fired their missile is an area we have been promised that the Iranians would not be present in. We know it was not done in the spur of the moment, it was a premeditated attack."

Inside Israel’s Secret Program to Back Syrian Rebels - Israel secretly armed and funded at least 12 rebel groups in southern Syria that helped prevent Iran-backed fighters and militants of the Islamic State from taking up positions near the Israeli border in recent years, according to more than two dozen commanders and rank-and-file members of these groups. The military transfers, which ended in July of this year, included assault rifles, machine guns, mortar launchers and transport vehicles. Israeli security agencies delivered the weapons through three gates connecting the Israeli-occupied Golan Heights to Syria—the same crossings Israel used to deliver humanitarian aid to residents of southern Syria suffering from years of civil war. Israel also provided salaries to rebel fighters, paying each one about $75 a month, and supplied additional money the groups used to buy arms on the Syrian black market, according to the rebels and local journalists. The payments, along with the service Israel was getting in return, created an expectation among the rebels that Israel would intercede if troops loyal to President Bashar al-Assad tried to advance on southern Syria. When regime forces backed by Russian air power did precisely that this past summer, Israel did not intervene, leaving the rebel groups feeling betrayed. “This is a lesson we will not forget about Israel. It does not care about … the people. It does not care about humanity. All it cares about it its own interests,” said Y., a fighter from one of the groups, Forsan al-Jolan. Israel has tried to keep its relationship with the groups a secret. Though some publications have reported on it, the interviews Foreign Policy conducted with militia members for this story provide the most detailed account yet of Israel’s support for the groups.

Israeli Warplanes Launch New Airstrikes on Damascus — Israel’s military said it carried out strikes on Iranian targets in Syria early Monday after it intercepted a rocket fired from Syrian territory hours before. It said in a statement earlier that it was “currently striking” the Iranian Quds Force in Syria and warned Syria’s military against “attempting to harm Israeli territory or forces”, AFP said. It provided no further details on the raids.The Quds Force is in charge of Iran’s Revolutionary Guards’ overseas operations.Syrian state media cited a Syrian military source as saying Israel launched an “intense attack through consecutive waves of guided missiles”, but that Syrian air defences destroyed most of the “hostile targets”. Multiple explosions over #Damascus this evening as Syrian air defense attempts to respond against Israeli Air Force attacks on Iranian al-Quds sites. #Syria #Israel#Iranpic.twitter.com/RxdZkvXkrU —  Witnesses in Damascus said loud explosions rang out in the night sky for nearly an hour. The overnight strikes followed cross-border attacks on Sunday in which Syria said it repelled an Israeli air attack, Reuters reported. Israel then said it intercepted a rocket fired at the Golan Heights. “We have a permanent policy, to strike at the Iranian entrenchment in Syria and hurt whoever tries to hurt us,” Israeli Prime Minister Benjamin Netanyahu said on Sunday. The Israeli army said a popular winter sports site on Mount Hermon in the Israeli-controlled Golan Heights would be shut for the day. It added that otherwise things remained “routine” along the frontier with Syria.

Israel Destroyed Eight Syrian Military Targets, Killed at Least 11 Troops — Despite claiming that their Sunday night airstrikes against Syria were exclusively targeting Iran’s Quds Force, Israeli airstrikes against Syria appear to have almost exclusively hit Syrian military targets, particularly the nation’s air defenses around Damascus airport.Israeli strikes destroyed eight Syrian air defense batteries, and killed at least 11 troops in the strikes. The batteries were mostly aging Soviet designs, the sort Syria has traditionally favored for targeting incoming Israeli missiles.The Syrian systems had some success, too, with Russia reporting that the Syrians had successfully intercepted more than 30 Israeli missiles during the attack. Conspicuously absent from the engagement, however, were the Russian S-300 systems recently provided to Syria.A highly advanced air defense system designed to control a much longer range, the S-300s have so far not been deployed in these Israeli attacks. Analysts say that Syria’s priority is intercepting missiles, and not engaging the attacking warplanes, which is where the S-300s would clearly be a vast improvement over the older systems. Yet as Israel continues to escalate strikes in Syria, and is clearly going after Syrian military targets no matter what they claim about Iran. This may ultimately convince Syria that they have to engage the Israeli warplanes just to achieve some deterrent from constant Israeli attacks.

Syria threatens to attack Ben-Gurion, return to 'occupied' Golan - Syria threatened to attack Ben-Gurion Airport in response to Israel's aerial strike against a weapons storage site at Damascus International Airport earlier this week. The Syrian Ambassador to the United Nations, Bashar Ja’afari, warned of the possibility of such a retaliatory attack, when he spoke Tuesday at the UN Security Council’s monthly meeting on the Middle East in New York. “Isn’t it high time for this council to take the necessary measures to stop the repeated Israeli aggression against the territories of my country?” he asked. “Or should we attract the attention of the war makers in this council, by exercising our legitimate right to self-defense and respond to the Israeli aggression against the Damascus International Civil Airport by launching an aggression against the Tel Aviv airport." Ja’afari complained of the repeated Israeli aerial attacks against his country. Israel has executed repeated airstrikes in Syria to prevent Iranian military entrenchment in that country. The UNSC’s failure to act against Israel and the support it receives from permanent members of the UNSC has encouraged such “aggressions,” Ja’afari added. “These acts were not condemned. There were no calls to halt such acts by this UNSC, in light of the position of the US, Britain and France, who are partners and supporters of Israel in such aggression. He said that those countries "continue to play the role of false witness and prevent the UNSC from undertaking its responsibility." Syria intends to exercise its right to self-defense and to work to take back the Golan Heights, Ja’afari said. Israel captured the Golan Heights from Syria during the Six Day War in 1967 and has since annexed it. Israel has asked the Trump administration to recognize its sovereignty over that area. 

Israel Demands for U.S. Base Are a Hitch in Trump’s Syria Plans - U.S. troops in one small outpost in the south of Syria may be preparing for a longer stay, even as administration and military officials try to work out the details of President Donald Trump’s plan to withdraw.The American base at Al-Tanf, originally established as a southern foothold against Islamic State and a training ground for Syrian rebels, has become one of the main obstacles to the president’s plan to leave. Israeli and some U.S. officials argue that a continued American presence there is critical to interrupting Iran’s supply lines into Lebanon, where Hezbollah -- Iran’s proxy and Israel’s enemy -- has been building up its arsenal.U.S. troops at the base established a 55-kilometer “deconfliction zone” including part of the strategic Damascus-to-Baghdad highway. The surrounding territory is controlled by forces loyal to Syrian President Bashar al-Assad, who’s backed by Iran and Russia. The debate over what to do with Al-Tanf reveals U.S. goals in Syria that go beyond the official rationale of defeating Islamic State -- complicating Trump’s desire to exit. The administration also wants to constrain Iran’s influence, including by limiting its ability to use Syria as a launching point for operations against Israel.   “It all depends on Trump,”  “He ordered U.S. forces to leave Syria. There have been efforts to pare that back and to treat Tanf as separate from the northeast, but it’s unclear if the president will be convinced.”

Russia calls on Israel to stop 'spontaneous' Syria strikes - Russia has urged Israel to stop its "spontaneous" airstrikes on Syria, days after the Israeli military carried out fresh strikes against targets near the Syrian capital, Damascus. Israel has repeatedly attacked Syrian government positions under the pretext that it's attacking Iranian military advisers, who are in the country on a request from President Bashar al-Assad to assist the Syrian Army in their fight against foreign-backed terrorists. "The practice of spontaneous strikes on the territory of a sovereign state, in this case Syria, must end," Russian Foreign Ministry spokeswoman Maria Zakharova said Wednesday, according to Russia's TASS state news agency. Zakharova (pictured below) said such moves by Tel Aviv only fueled tensions in the region and harmed the long-term interests of all regional players, including Israel itself. "We should prevent turning Syria, which has suffered over the past years of the armed conflict, into an arena of settling geopolitical scores," she added. "And we urge everyone to think about the possible consequences of causing more chaos in the Middle East.” 

The YPG Is Expected to Negotiate With Damascus “Within Days” —— The head of the Syrian Kurdish YPG militia believes talks with the government over the future of the northeast region will begin in days after a “positive” reaction from Damascus.Any deal between the YPG and President Bashar al-Assad’s state could piece together the two biggest chunks of a nation splintered by eight years of conflict.Dialogue attempts have revived in the wake of US President Donald Trump’s decision to withdraw troops from the Kurdish-led region. “There are attempts to carry out negotiations … the Syrian government stance was positive,” the YPG commander Sipan Hemo told Reuters. “We believe they will start in the coming days.”   Hemo said there had been no direct talks with the state since, but Damascus had received the proposal, which focused on preserving Kurdish and minority rights, including education, as well as self-rule.

Syria Ceasefire On Brink Of Collapse As Russia Blames Turkey For Terrorist Growth  - Four months after Syria and Russia agreed to call off its joint attack on HTS/al-Qaeda held Idlib province, opting amidst US threats to cut a ceasefire deal mediated with Turkey, Moscow now says Ankara has failed to live up to its end of the bargain, which included agreeing to clear Idlib of terrorists and extremist groups. This means a joint Syrian Army-Russia assault on Idlib could again be on the horizon, which was a major source of tension and threats with the United States previously in September.  The collapse of the prior 'deescalation' agreement comes at a time when the White House has vowed to stick to the planned US pullout, however, this could be yet a another major development to complicate or delay any possible withdrawal timeline. FT described current Turkish-Russian talks in Moscow as follows: Russia has accused Turkey of failing to live up to a promise to clear Syria’s Idlib of extremist militant groups and admitted that a landmark ceasefire agreement made last September had failed. Ahead of crunch talks between the leaders of the two countries in Moscow on Wednesday, Russia’s foreign ministry said the Islamist extremist group Hayat Tahrir al-Sham (HTS) had “full control” of Syria’s last remaining major opposition stronghold. The damning assessment came four months after Moscow agreed to postpone a planned military assault on the city in exchange for a promise from Turkish president Recep Tayyip Erdogan to clear it of militants.

Former US Envoy: Most ISIS Support Comes From Turkey-Syria Border – “I probably spent most of my time in our first year on the job … in Ankara because most of the material coming to fuel the ISIS war machine frankly was coming across the border from Turkey to Syria,” said former US envoy to the international anti-ISIS coalition Brett McGurk, the Rudaw new website reported. He was interviewed by CNN’s Christiane Amanpour on Monday evening.  The United States wanted to work more closely with Turkey to ensure the lasting defeat of the Islamic State in Iraq and Syria (ISIS) in Syria but found Ankara’s plans to be unrealistic, and it was impossible for the coalition to work with fighters Turkey backed in Syria linked to al-Qaeda, McGurk added.“Our interests in Syria in many fundamental ways really diverge,” he said. “And when President [Recep Tayyip] Erdoğan puts on the table proposals that might look good in concept, every time we send our best people, our best planners, to really dig into what we can actually do together, it never really pans out.”  When Barack Obama was US president, Washington and Ankara both had covert and overt programs to oust Syrian President Bashar al-Assad. The United States shifted to an ISIS-centric approach and abruptly ended its covert program against Assad after Donald Trump became president in 2016.  When ISIS quickly exploited the complexities in war-ridden Syria in 2014, McGurk began forming the international coalition, of which Turkey was not a party. The coalition supported the establishment of the Syrian Democratic Forces (SDF) which are primarily composed of the predominately-Kurdish Peoples’ Protection Units (YPG). Ankara refuses to work with the SDF.“The opposition groups that Turkey supports that you, for example, would send into a safe zone are simply not groups the United States have currently worked with. They are very closely tied with extremist groups,” said McGurk.  McGurk, who has worked in the Middle East since the US invasion of Iraq, abruptly left the Department of State in December, following Trump’s announcement that US forces would withdraw. “All the border crossings are controlled by al-Qaeda. It’s a very serious problem,” he added.

Putin, Erdogan hash over Syria and US meddles in Venezuelan presidency TASS - Wednesday's talks in the Kremlin between Turkish and Russian Presidents Recep Tayyip Erdogan and Vladimir Putin confirmed that Moscow and Ankara are determined to play a crucial role in achieving peace in Syria amid Washington’s decision to scale down its presence there. That said, Iran should become the third guarantor of the Syrian settlement, Kommersant writes. At the talks, the two leaders agreed on holding a new summit in the Astana format (Russia, Turkey and Iran) and also try to step up cooperation with Western partners, which are taking steps to sabotage the Astana group’s efforts, as Putin noted. The Turkish leader focused on the role of Russia and Turkey in ensuring security in Syria, calling the US planned withdrawal from Syria "a positive step."  However, Head of the Political Research at the Center for Modern Turkish Studies Yuri Mavashev told Kommersant that Washington’s exit from Syria would stonewall the efforts of Russia, Turkey and Iran as part of the Astana trio. "From the very beginning, the war in Syria has been a story of shifting responsibility onto others. Now the sides won’t be able to share responsibility with anyone and this is a very important moment. Cooperation between Russia, Turkey and Iran will be complicated. If earlier they were allied against someone, now they will have to make efforts in order not to ruin this format," Mavashev said. Meanwhile, the two leaders signaled that there is no such threat at Wednesday's talks. One of the intrigues at the Kremlin-hosted negotiations was whether the two sides could agree on a possible military operation against terrorists in Idlib, the paper says. After the talks, Putin praised his counterpart for Turkey’s major efforts to eliminate the terrorist threat in Idlib. At the same time, he signaled that no terms have been outlined for a military operation, which Russia seeks to carry out jointly with Assad's forces. The Russian and Turkish defense ministers will continue drawing up additional joint measures, he said.

US Airstrike Kills at Least 52 in Somalia  — Following reported al-Shabaab attacks on a pair of southern Somalia army bases, the US carried out an airstrike against a target in Jilib, near the site of the attacks, and is claiming to have killed 52 people, all described as “al-Shabaab extremists.” If confirmed, this is the deadliest US strike in Somalia since October. The US has been escalating attacks against targets inside Somalia since President Trump took office, and those strikes seem to remain on the upswing. Though the initial assumption was that the strike was connected to the recent al-Shabaab attack in neighboring Kenya, the Africom statement makes clear this was direct retaliation for the strikes on the Somali military bases, not for the Nairobi incident. Al-Shabaab issued its own statement on those attacks, claiming to have killed at least 41 Somali soldiers in the course of raiding two bases near the port city of Kismayo. Somalia has not commented on the casualties.

Taliban kill 'more than 100 people' in attack on Afghan military base - The Taliban have launched a major attack on an Afghan military compound in central Maidan Wardak province, officials have said, with some putting the death toll at more than 100 people. Monday’s incident at a campus of the National Directorate of Security (NDS) is the latest in a series of deadly attacks in recent months by the Taliban, which has seized control of about half of Afghanistan. The Afghan authorities said the attack started on Monday morning, when a US-made armoured Humvee vehicle was driven into the compound and blown up. Gunmen also opened fire, before being killed by security forces. Government officials, speaking on condition of anonymity, have given differing estimates of the death toll. One said it could be as high as 126 people and another said yet more were thought to have been wounded. “Eight special commandos are among the dead,” said a senior member of Kabul’s defence ministry. An official from the Afghan public health ministry said the total of killed and wounded could be about 140 people. However, others offered a more conservative estimate. A senior NDS official in Kabul said at least 50 people were killed or wounded. Abdurrahman Mangal, a spokesman for the provincial governor in Maidan Wardak, said 12 people were killed and 12 were injured when the car bomb exploded near the Afghan special forces unit.

Taliban Rejects Call to Meet US Negotiator in Islamabad - While the Pakistani media were reporting on Friday that a deal was in place to host the next round of Afghan peace talks in Istanbul, the Taliban was quick to correct the record over the weekend, saying that they have no intention of taking part in these talks. Talks between the US and Taliban have been on a rough footing, with US requests for long-term bases in post-war Afghanistan angering negotiators, as the previous condition was a US pullout. Which might’ve been reason enough that the Taliban were reticent to get back on board with direct talks with Zalmay Khalilzad, though Taliban officials say it is the plan to include the Afghan government that is derailing it. The Taliban has long insisted that there is no point to include the Afghan government in the talks, because they are not able to meet any demands. The US has at times insisted Afghan participation is essential, though recent talk has been that the US was planning to offer the Taliban representation in a new Afghan government.