oil prices were again higher this week, largely on optimistic chatter coming out of the US-China trade talks in Beijing, but finally snapped their longest rally in 9 years when prices fell back for the first time since December 27th during Friday's session...after rising $2.63 or 5.8% to $47.96 a barrel last week, mostly on news of a big drop in OPEC output, US oil prices for February delivery opened higher and initially jumped to as high as $49.79 a barrel on Monday morning, on Saudi shipment cuts and expectations ahead of US-China trade talks, but later fell back to close just 56 cents higher at $48.52 a barrel, supported by steadier equities markets...optimism about the trade talks in Beijing again drove prices higher throughout the day on Tuesday, with oil prices finishing $1.26 or 2.6% higher at $49.78 a barrel...oil prices then spiked when the trade talks in Beijing were carried over into an unscheduled third day on Wednesday, with US crude finishing $2.58 or 5% higher at $52.36 a barrel, despite an EIA report showing much bigger-than-expected increases in stockpiles of gasoline and distillates...that EIA report and concerns about US-China trade talks initially sent oil prices tumbling 1% on Thursday morning, but prices recovered to close 23 cents higher at $52.59 a barrel, its ninth straight day of gains, supported by comments from Fed chairman Powell that lifted stock markets...however, hopes for the longest rally on record were dashed on Friday when worries over a global economic slowdown returned after talks in Beijing broke up without a deal being struck to end the escalating US-China trade war and oil prices fell $1, or 1.9%, to $51.59 per barrel, snapping a 9-session streak of price gains...
natural gas prices, meanwhile, ended the week higher on the strength of a Friday rally, but traded near $3 per mmBTU for most of the week as warm weather persisted....after the steepest monthly price drop in 15 years left natural gas prices at $3.044 per mmBTU at the end of last week, a change in the weekend forecast that delayed the arrival of January cold pushed prices 10 cents lower on Monday...natural gas prices then rallied more than 10 cents on a report of lower production on Tuesday, but fell back to close at $2.967 per mmBTU, a gain of just 2.3 cents....a forecast for slightly colder temperatures later in January added 1.7 cents on Wednesday, but even a larger than expected withdrawal of natural gas from storage couldn't sustain a rally on Thursday, as prices fell back 1.5 cents...however, the forecast cold finally arrived in force on Friday and sent natural gas prices 13 cents higher as they closed the week at 3.099 mmBTU, 5.5 cents higher than the prior week's close...
the natural gas storage report for the week ending January 4th from the EIA indicated that the quantity of natural gas in storage in the US fell by 91 billion cubic feet to 2,614 billion cubic feet over the week, which left our gas supplies 204 billion cubic feet, or 7.2% below the 2,818 billion cubic feet that were in storage on January 5th of last year, and 464 billion cubic feet, or 15.1% below the five-year average of 3,078 billion cubic feet of natural gas that have typically been in storage heading into the first weekend of January....this week's 91 billion cubic feet withdrawal from US natural gas supplies was more than the average estimate for a 75 billion cubic feet withdrawal that a Reuters poll had forecast, but it was much less the average of 182 billion cubic feet of natural gas that have been withdrawn from US gas storage during the New Year week in the last 5 years...an all time record 359 billion cubic feet of natural gas were withdrawn from storage during the week ending January 5th of last year, so that large withdrawal obviously impacted the 5 year average, as well as being the reason that our storage deficit from last year fell from 14.3% last week to 7.2% this week...
The Latest US Supply and Disposition of Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, also reporting on the week ending January 4th, indicated that despite a large increase in our oil imports and a modest drop in our oil exports, the data showed a modest withdrawal of oil from our commercial crude supplies because the unaccounted for crude factor was reversed from that of the prior week ...our imports of crude oil rose by an average of 454,000 barrels per day to an average of 7,846,000 barrels per day, after falling by an average of 264,000 barrels per day the prior week, while our exports of crude oil fell by an average of 172,000 barrels per day to an average of 2,065,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,781,000 barrels of per day during the week ending January 4th, 626,000 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 reportedly unchanged at 11,700,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 17,481,000 barrels per day during this reporting week...
meanwhile, US oil refineries were using 17,566,000 barrels of crude per day during the week ending January 4th, 194,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 240,000 barrels of oil per day were reportedly being pulled out of the oil storage in the US....hence, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports, from oilfield production and from storage was 155,000 barrels per day more than what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (-155,000) 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"...since our unaccounted for crude was at +906,000 barrels per day last week, this week's oil supply and disposition figures would be considered more accurate than last week's...(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 7,579,000 barrels per day last week, but was still 3.6% less than the 7,863,000 barrel per day average that we were importing over the same four-week period last year....the 240,000 barrel per day increase in our total crude inventories was due to a 240,000 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 11,700,000 barrels per day because the rounded figure for output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while a 10,000 barrel per day increase to 505,000 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 5th was at 9,492,000 barrels per day, so this week's rounded oil production figure was 23.3% above that of a year ago, and 38.8% 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 96.1% of their capacity in using those 17,566,000 barrels of crude per day during the week ending January 4th, down from last week's December record 97.2% of capacity, but still the highest capacity utilization rate for the first week of January since 1999....likewise, the 17,566,000 barrels per day of oil that were refined this week were again at a seasonal high for the date for the 28th time out of the past 32 weeks, and 1.4% higher than the 17,323,000 barrels of crude per day that were being processed during the week ending January 5th, 2017, when US refineries were operating at 95.3% of capacity...
with the decrease in the amount of oil being refined, the gasoline output from our refineries was also lower, falling by 141,000 barrels per day to 9,392,000 barrels per day during the week ending January 4th, after our refineries' gasoline output had decreased by 611,000 barrels per day during the week ending December 28th...with that decrease in this week's gasoline output, our gasoline production was the lowest in 50 weeks, and 1.1% lower than the 9,525,000 barrels of gasoline that were being produced daily during the same week last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 28,000 barrels per day to 5,563,000 barrels per day, after that output had increased by 147,000 barrels per day the prior week....despite that decrease, this week's distillates production was 5.1% higher than the the 5,592,000 barrels of distillates per day that were being produced during the week ending January 5th, 2017....
even with the pullback in our gasoline production, our supply of gasoline in storage at the end of the week jumped by 8,066,000 barrels to 248,062,000 barrels by January 4th, the 7th increase in the past 12 weeks, and the largest increase in gasoline inventories since the week ending January 1st, 2016....our gasoline supplies rose this week because our imports of gasoline rose by 236,000 barrels per day to 550,000 barrels while our exports of gasoline fell by 145,000 barrels per day to 727,000 barrels per day, and while the amount of gasoline supplied to US markets rose by 113,000 barrels per day to 8,735,000 barrels per day, after falling by 725,000 barrels per day the prior week....with this week's increase, our gasoline inventories are again at a seasonal high for the first week of January, 4.5% higher than last January 5th's level of 237,322,000 barrels, and roughly 5% above the five year average of our gasoline supplies for this time of the year...
with our elevated level of distillates production, our supplies of distillate fuels increased for the 5th time in sixteen weeks, rising by 10,611,000 barrels to 129,431,000 barrels during the week ending January 4th, after our distillates supplies had increased by 9,529,000 barrels during the prior week...this week's increase was the largest one week increase since the week ending January 2nd, 2015, and the two week increase of 20,140,000 barrels was the largest two week increase on record...our distillates supplies increased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 248,000 barrels per day to 2,955,000 barrels per day (after falling by 1,663,000 barrels per day over the course of the prior 2 weeks), and because our imports of distillates rose by 66,000 barrels per day to 261,000 barrels per day, while our exports of distillates rose by 131,000 barrels per day to 1,353,000 barrels per day....but despite this week's big increase, our distillate supplies were still 2.1% below the 143,088,000 barrels that we had stored on January 5th, 2017, and 5% below the five year average of distillates stocks for this time of the year...
since our distillate supplies have just seen the largest two week jump on record, we'll include a graph showing what that looked like..
the above graph came from a email from John Kemp of Reuters, which might also have been posted on his twitter page, and it shows US distillate fuels inventories in thousands of barrels by "day of the year" for the past ten years, with the past ten year's range of our distillates supplies on any given day of the year shown in the light blue shaded area, and the running median of our distillates inventory, or the midpoint of the 10 year daily range, traced by the blue dashes over each day of the year...this graph also shows the number of thousands of barrels of distillates we had stored at the end of each week in 2017 traced by a yellow graph, and our distillates supplies for each week of 2018 traced in red...to that red 2018 graph i have added an extension into the week ending January 4th, 2019, to bring his last graph for last year up to date....
notice that within the light blue shaded area that there is a seasonality to distillates supplies, as they're normally built up during the spring and summer when refineries are running flat out, and then drawn down and consumed during the winter months, when demand for heating oil is greatest...as you can see in yellpw, as recently as February 2017, our distillate supplies were repeatedly setting wintertime record highs, but then fell to below average by summer as our distillate exports increase...then, during this past year, when supplies of distillates should have been increasing during April and May - days 91 to 151 above - as they normally do, they were falling instead, largely because we had been exporting our distillates production at a record pace, and hence our supplies tracked near a 10 year low for most of June and June...so even though distillates supplies recovered somewhat during August, they began falling again in September and, like natural gas, were nearly 10% below their 10 year average heading into winter, when distillates are used as heat oil...so even though our refineries have started producing distillates at a near record pace in the weeks since, and we've thus seen the largest two week build on record, at least partially due to the recent mild temperatures, our supplies as of January 4th were still 2.1% below those of a year ago, and 5% below the 5 year average for this time of year...
finally, with this week's reversal in the unaccounted for crude factor, our commercial supplies of crude oil decreased for fifth time in 6 weeks, falling by 1,680,000 barrels during the week, from 441,418,000 barrels on December 28th to 439,738,000 barrels on January 4th...however, with a run of 10 large weekly increases before the recent smaller decreases, our crude oil inventories are still roughly 8% above the five-year average of crude oil supplies for this time of year, and roughly 30% above the 10 year average of crude oil stocks for the beginning 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 have largely been rising since this Fall, after falling through most of the past year and a half until then, our oil supplies as of January 4th were thus 4.8% above the 419,515,000 barrels of oil we had stored on January 5th of 2017, while remaining 7.8% below the 479,012,000 barrels of oil that we had in storage on January 6th of 2016, and 2.1% below the 450,956,000 barrels of oil we had in storage on January 8th 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, was unchanged for the week ending January 11th, as drilling for oil decreased, likely in light of recently depressed oil prices and a 6.7 month backlog of uncompleted wells, while drilling for natural gas increased, likely reflecting the high natural gas prices of several weeks ago, when this week's drilling work was being contracted... Baker Hughes reported that the total count of rotary rigs running in the US remained at 1075 rigs over the week ending January 11th, which was still 136 more rigs than the 939 rigs that were in use as of the January 12th 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 fell by 4 rigs to 873 rigs this week, which was still 121 more oil rigs 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 increased by 4 rigs to 202 natural gas rigs, which was also 15 more rigs than the 182 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...however, this week marked the first time that active natural gas rigs have topped 200 since September 4th, 2015....
a rig that had been drilling from a platform in the Gulf of Mexico offshore from Louisiana was shut down this week, which reduced the Gulf of Mexico rig count to 21 rigs for thisreport, which was still 2 rigs more than the 19 rigs deployed in the Gulf of Mexico a year ago at this time...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 2017-18, those Gulf of Mexico totals are identical to the US totals...in addition to the rig offshore from Louisiana being idled, a rig drilling from a platform on Louisiana inland waters was also shut down this week, leaving two such "inland waters" rigs operating there, still up from the one inland waters rig active a year ago...
the count of active horizontal drilling rigs increased by 3 rigs to 948 horizontal rigs this week, which was also 143 more horizontal rigs than the 805 horizontal rigs that were in use in the US on January 12th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the vertical rig count increased by 1 rig to 65 vertical rigs this week, which was also up from the 62 vertical rigs that were in use during the same week of last year...on the other hand, the directional rig count decreased by 4 rigs to 62 directional rigs this week, which was also down from the 72 directional rigs that were operating on January 12th 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 11th, the second column shows the change in the number of working rigs between last week's count (January 4th) and this week's (January 11th) count, the third column shows last week's January 4th 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 12th of January, 2018...
while the Permian basin saw a one rig increase, the net change in the Texas Permian basin was a decrease, as two rigs were added to Texas Oil District 8, which is the core Permian Delaware, while 3 rigs were pulled out of Texas Oil District 7C, or the southern portion of the Permian Midland...meanwhile, the Permian Delaware that extends into New Mexico saw the addition of two rigs, netting an increase of one for the entire basin...meanwhile, the 4 rig increase in the Marcellus, 2 in Pennsylvania and 2 in West Virginia, accounts for this week's natural gas rig increase by itself; however, natural gas rigs were also added in Ohio's Utica and northern Louisiana's Haynesville, as two natural gas rigs that had been drilling in basins not tracked separately by Baker Hughes were concurrently pulled out...since the natural gas rig increases that are evident above account for an increase of 6 horizontal rigs, we know that 3 horizontal rigs must have been shut down elsewhere...two of those obviously had been drilling in Oklahoma's Cana Woodford, but even those were partially offset by the Permian increase...so there must have been 2 horizontal rigs pulled out of basins not tracked separately by Baker Hughes...with no unaccounted for changes in other states, it would seem those would have had to be in Oklahoma, unless we had a masked rig switch elsewhere, such as a horizontal rig pulled out of a state while a vertical rig was added, which would appear as a goose-egg in the summary tables...
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19 Rigs Active During Last Year of 2018 – The Ohio Department of Natural Resources reports that 19 oil and gas rigs were in operation across Ohio’s Utica shale during the week ended December 29.The last full week of 2018 witnessed four permits for horizontal wells awarded to two energy exploration companies, according to the latest data provided by ODNR. XTO Energy Inc. secured two permits for wells in Belmont County, while Ascent Resources LLC — today the most active driller in the Utica — was awarded two permits for wells in Jefferson County. As of Dec. 29, 2,957 permits have been issued for new horizontal wells across Ohio’s Utica, ODNR reports. Of that number, 2,491 of those wells are drilled and 2,120 are in production. No new permits were reported in Mahoning, Columbiana and Trumbull counties. Utica permit activity in nearby Lawrence and Mercer counties in western Pennsylvania was also quiet during the week, since no new permits were reported in those counties, according to the Pennsylvania Department of Environmental Protection.
U.S. Chamber says anti-energy group prevents development - — A new report by the U.S. Chamber of Commerce Global Energy Institute (GEI) found that the anti-energy "Keep it in the Ground" (KIITG) movement has prevented at least $91.9 billion in domestic economic activity and eliminated nearly 730,000 job opportunities. In addition, federal, state, and local governments have missed out on more than $20 billion in tax revenue. The report, "Infrastructure Lost: Why America Cannot Afford To ‘Keep It In the Ground,’" quantifies the impacts of delayed and cancelled energy infrastructure projects that would enhance American consumers’ access to abundant, affordable energy and provide hundreds of thousands of good-paying jobs. In recent years, KIITG activists have worked to derail these projects by waging countless lawsuits, protests and even vandalizing private property with the goal of delaying or outright killing projects.Dan Alfaro, spokesperson for Energy In Depth - Ohio, noted that "This report is the first we’ve seen that has quantified the true costs of these Keep it in the Ground efforts, and I think it’s going to open a lot of eyes to the actual, real-life consequences these misguided protests and nuisance lawsuits have on the workforce and the communities they affect."As the Global Energy Institute notes in this report, these figures are coming from 15 projects – there are more examples out there that add to these figures, and unfortunately we’ve seen some of them here in Ohio. The effort to ban fracking in the city of Youngstown is probably the clearest example of what kind of negative economic impact the KIITG movement has had here. The city’s voters have rejected the anti-fracking initiatives put forth by out-of-state, out-of-touch activists eight times, and it has been the taxpayers in the city that are on the hook to pay the costs of having these measures on the ballot." CELDF has been behind a number of these efforts in Ohio – in Youngstown and communities across the state - and they’ve gone on the record stating they are not concerned if their efforts end up bankrupting the cities they’re using to advance their anti-oil and gas objectives. "These are incredibly costly tactics, and unfortunately it’s the taxpayers, the workforce, and the communities that are bearing the burden of these costs." Alfaro said.
Radium found in commercial roadway de-icing, dust suppression brine - Pittsburgh Post-Gazette - An Ohio environmental organization is suing to learn more about unhealthy radiation levels in a commercial de-icing and dust suppression liquid made from gas well brine sold in several states, including Pennsylvania. The Buckeye Environmental Network filed suit against the Ohio Department of Natural Resources last week, claiming the agency has illegally denied its request to inspect public records and documents pertaining to the environmental and health impacts of the brine product AquaSalina, manufactured by Brecksville, Ohio-based Nature’s Own Source. According to a July 2017 ODNR report that was released early this year after the network filed a right-to-know request, the department found samples of AquaSalina that contained concentrations of radium, a known carcinogen, that are higher than those naturally occurring in brine produced from “conventional,” that is non-shale, gas wells. The ODNR’s Division of Oil and Gas Resources Management, Radiation Safety Section, tested 14 samples of AquaSalina collected from six locations in Ohio, and found radium 226 and 228 levels that exceeded the state’s “discharge to the environment limits” and its safe drinking water limits by a factor of 300. The study said the production process used by Nature’s Own Source seems to have produced “TENORM,” or Technologically Enhanced Naturally Occurring Radioactive Material, that contains more radiation than the brine had when it was pushed out of the wells. Among the sites where the ODNR obtained AquaSalina for testing in June 2017 was a Lowe’s home improvement store in Canton, Ohio, and a hardware store in Hartville, Stark County, south of Akron. “The levels in the de-icer were typically over 300 times the U.S. Environmental Protection Agency limit for drinking water and exceeded Ohio regulations,” Mr. Stolz said. “I was concerned to see that the product purchased at the hardware store had total radium (226 and 228 combined) levels of 2,500 picocuries per liter, 500 times the U.S. EPA limit.”
A Small Town's Battle Against Radioactive Fracking Waste - - Estill County isn’t the kind of place you’d think would have a radioactive waste problem. Half of this quiet, unassuming nook of eastern Kentucky is covered like a quilt with farmhouses and churches, while the other half rests in the shade of Daniel Boone National Forest. In Estill’s center, nestled between the Appalachian foothills and the Kentucky River, sits Irvine (population 2,400). Route 89 slices through town as Main Street, crossing the river via a light-green truss bridge on its way to the middle and high schools. Right across the street from the schools, which serve students from all over the county, sits the local landfill. So when news broke in early 2016 that the local landfill had for months been illegally burying 1,900 tons of radioactive—and potentially carcinogenic—material, this tight-knit community was shocked. “It’s an insult to the intelligence of the people who live here,” says Nancy Farmer, a lifelong resident who spent 34 years on the Estill County Board of Education. “It’s certainly insulting that life in Estill County is being valued less than life anywhere else, because they’re willing to put this kind of material close to students in two different schools.” In 1995, Farmer volunteered to help create a legally binding Host Community Agreement between the county and the landfill owners. As a solid waste facility, the Blue Ridge Landfill could take neither ash residue from a nearby nerve gas and blister gas storage facility (where around 2 percent of our country’s chemical weapons have been kept since 1942) nor radiological waste from anywhere else. But two decades later, the landfill began illegally accepting radioactive waste anyway. This time it was fracking leftovers sent across state lines from West Virginia and Ohio. For three years the radioactive waste has sat within a few hundred feet of the schools, and the town is locked in battle over what to do with it.
Why vote to accept toxic waste? - Why vote to accept toxic waste? Recently our state representatives voted for, and passed, SB-1196, a bill that would allow Michigan landfills to apply for approval to receive highly radioactive wastes from Pennsylvania and other states that do not allow them in their landfills.These wastes include radiums and radioactive lead that are in fracking water that is used to force natural gas and oil out of deeply buried rock layers. Such wastes come from fracking operations in Ohio and Pennsylvania (DTE’s Nexus natural gas pipeline runs from Pennsylvania and Ohio through southeast Michigan). Radioactive waste water will be transported up I-75 and U.S. 23 to a proposed landfill near Detroit in Wayne County.You might ask why our state representatives, including Bronna Kahle, Jason Sheppard and Joseph Bellino, among others, would vote for such toxic waste to be dumped in Michigan. Is it a coincidence that our state representatives also accepted campaign money from DTE and the oil and gas industry? Money speaks louder than conscience for many of our state legislators apparently. Remember their deeds when elections come, please. In 1989 such a dump was proposed for Riga Township, but due to fierce local opposition, it was abandoned. When will our state representatives learn?
Chester County DA names former federal prosecutor to beef up pipeline probe | StateImpact Pennsylvania - Chester County’s District Attorney on Friday named a former federal prosecutor with experience in environmental law to work on a criminal investigation into Sunoco’s controversial Mariner East 2 pipeline, and said the probe will go ahead regardless of any talks with the company. Seth Weber, a former federal prosecutor, has been appointed special prosecutor by the Chester County district attorney, who is conducting a criminal investigation of the Mariner East 2 pipeline project. DA Tom Hogan said Seth Weber prosecuted many complex environmental cases as well as political corruption, drugs and violent crime cases during a 26-year career as an assistant U.S. attorney for the Eastern District of Pennsylvania. Hogan said in an interview on Friday that his office has been in touch with Sunoco since the investigation was announced, and that company officials are due to come to his office next week to discuss turning over the many documents that his office has demanded. The company said after the probe was announced on Dec. 19 that it looked forward to speaking with Hogan’s office in the hope of bringing the matter to an “appropriate resolution.” But Hogan said the investigation will proceed whether or not there are talks with Sunoco. “Nothing is going to stop the investigation,” Hogan said. “It’s simply a matter of them turning over information to us and us going through the information and then we will probably be back to them requesting more information. We will be interviewing people, experts will be reviewing stuff, all the things that normally go into an environmental investigation.” Hogan said the outcome of the probe might include “criminal charges, or a report, or nothing.” He added: “We don’t know what we don’t know.” Sunoco said Weber’s appointment is an addition to what it called a “meritless” investigation. Hogan “will not be able to avoid the inescapable conclusion that Energy Transfer has not engaged in any form of criminal activity, and the issues referenced have already each been thoroughly investigated, reviewed, and ultimately resolved by the appropriate government agencies,” said Lisa Dillinger, a spokeswoman for Sunoco’s parent, Energy Transfer. Weber offered his services after hearing about the investigation, and has agreed to join two other prosecutors as part of the team even though he will not be paid, Hogan said.
Judges Say DEP Unlawfully Issued Air-Quality Permits To Sunoco At Marcus Hook - A Pennsylvania court said the Department of Environmental Protection unlawfully issued air-quality permits to Sunoco for its natural gas liquids plant at Marcus Hook in Delaware County, and it ordered the department to re-do its analysis over whether the plant should be subject to two sets of emissions rules. The Environmental Hearing Board, which hears appeals against DEP actions, said in a ruling on Wednesday that the DEP was wrong to treat sections of the plant as separate entities when assessing their emissions, and should have evaluated the plant as a whole. And it said Sunoco appeared to have applied for the air permits for different parts of the plant rather than in aggregate in an attempt to avoid two sets of emissions regulations that would have been triggered if the operation had been considered as a whole. The regulations are known as PSD, or Prevention of Significant Deterioration, and NSR, or New Source Review. "There is some evidence of record to show that Sunoco had a plan to develop its facility in such a way as to deliberately avoid triggering PSD/NSR requirements," Judge Bernard Labuskes wrote in a 78-page opinion for all five EHB judges. He called the application a "deliberately evasive plan" and said there was clear evidence that Sunoco intended to combine all of the facilities for which it had separately submitted air-permit applications. "There is no question that Sunoco did have a plan to make all the adjustments necessary to turn the Marcus Hook facility into a comprehensive NGL hub," he wrote.
FERC Staff Issues Environmental Assessment for Adelphia Gateway Project - Adelphia Gateway, LLC today announced the Federal Energy Regulatory Commission (FERC) Staff issued its Environmental Assessment (EA) for the Adelphia Gateway Pipeline Project (Project) recommending that the FERC Certificate Order for the Project contain a finding of no significant environmental impact."Adelphia Gateway is an important project that will deliver clean, low cost natural gas to constrained markets in the Greater Philadelphia region," said Steve Westhoven, president and chief operating officer of New Jersey Resources, the parent company of Adelphia Gateway. "We are pleased FERC Staff issued the Environmental Assessment and confirmed the project will have no significant environmental impact as it converts an existing pipeline to natural gas. We look forward to continuing to work with regulators and local communities to place Adelphia Gateway into service." The EA process is designed to independently analyze Adelphia Gateway's proposed conversion of an existing oil pipeline to natural gas and assess potential environmental impacts of the construction and operation of the Project. Following receipt of a FERC Certificate Order and all other necessary regulatory approvals, Adelphia Gateway expects the Project to be placed into service in 2019. The Adelphia Gateway Project will convert 50 miles of an existing 84-mile pipeline — spanning portions of Delaware, Chester, Bucks, Montgomery and Northampton counties — from oil to natural gas. The northern 34 miles of the pipeline, which extends from western Bucks County to the Martins Creek terminal in Northampton County, has delivered natural gas since 1996. The Project also involves construction of compressor station facilities in West Rockhill Township and Lower Chichester Township and approximately 4.7 miles of new laterals in Delaware County, Pennsylvania and New Castle County, Delaware.
Algonquin pipeline protesters guilty of trespassing, but judge spares them punishment - A Cortlandt judge on Tuesday found three protesters guilty of trespassing for locking themselves inside a natural gas pipeline in Verplanck in 2016 but let them go free without any punishment. Judge Kimberley Ragazzo rejected a prosecutor’s request that the protesters perform 300 hours of community service with an organization not affiliated with environmental causes. Instead, Ragazzo said the three were free to continue protesting as long as they don’t break the law. “This case has dragged on long enough,” Ragazzo said. Rebecca J. Berlin of Yorktown Heights, Janet Gonzalez of Yonkers and David Publow of Troy spent 16 hours inside a section of pipeline on Oct. 10, 2016, protesting the federal government's decision to allow the pipeline be installed near Indian Point nuclear power plant. The three were arrested shortly before midnight by state troopers who spent the day negotiating with them to exit a section of pipe 42 inches in diameter that was being readied to carry gas under the Hudson River. While there, they sent short videos out on Twitter. Their attorney, David Dorfman, said he will appeal the guilty verdict.
Vermont Gas ordered to show whether engineer OK’d pipeline plans -- Vermont Gas, owner of the 41-mile natural gas pipeline between Colchester and Middlebury, has to show the state’s utility regulator whether a professional engineer signed off on construction plans. The Vermont Public Utility Commission issued an order Thursday upholding a request by opponents to further expand an investigation into the pipeline’s construction. Three months after the Addison County Natural Gas pipeline was completed in April of 2017, the utility regulator began looking into claims that the pipeline was not buried deep enough. The state’s Agency of Natural Resources and Department of Public Service submitted filings in March seeking to expand the investigation into pipeline construction methods. James Dumont, an attorney representing five Monkton and Hinesburg residents who oppose the pipeline, filed a motion in November to expand the investigation further to assess whether a professional engineer had signed off on the pipeline construction plans. The request was made in response to a National Transportation Safety Board review of the Lawrence natural gas explosions that found the Massachusetts operator did not seek approval of a professional engineer before construction. The Department of Public Service made a filing in December supporting this request. Pipeline opponents submitted another filing in December arguing that Vermont Gas should have to argue why the pipeline should be allowed to continue to operate if it did not have an engineer’s approval. PUC hearing officer Michael Tousley wrote in the order that RCP Inc. — the Texas-based engineering firm hired by the PUC as an independent investigator in the case — should assess whether a Vermont-licensed professional engineer signed off on the pipeline construction plans.
What Is Driving The Recent Drop In Northeast Production? - After hitting a new high of 31.7 Bcf/d on December 5, Northeast production has tumbled more than 0.7 Bcf/d for no clear reason. With maintenance and freeze-offs likely out of the question, evidence suggests the dip may be tied to a slowdown in drilling in late summer that is finally beginning to manifest itself now. If the recent dip is indeed a function of a drilling slowdown rather than a short-term blip in production, it would tighten not just balances this winter, but also next summer, resulting in upward pressure on regional prices and at Henry Hub. Northeast production peaked on December 5 at 31.7 Bcf/d, but has averaged a mere 31 Bcf/d since that mark and fell as low as 30.4 Bcf/d on December 14. There are no major maintenance events in the region driving the production drop. Further, while recent temperatures in the Northeast have dipped as low as 20 degrees on December 8 following the production peak, Platts does not believe freeze-offs are driving the decline given freeze-offs in the Northeast have historically occurred when temperatures dip into the single digits or lower. As well, Platts utilized pipeline specific gas quality data for major Northeast production pipelines to determine if the recent fluctuations in regional production can be tied to changes in the heat content of the natural gas stream. Gas quality data from TCO, Dominion, Rover, Tennessee and TETCO shows that the heat content of the gas hitting these five pipelines has been relatively consistent since November, making it unlikely to explain the nearly 1 Bcf/d decline from the start of December to the most recent seven days. With that in mind, Platts believes the most recent production drop in the Northeast may be tied to a slowdown in drilling in late summer that is starting to be reflected in this month’s production volumes. We note that both the August 2018 and September 2018 periods saw a large decline in wells drilled, and equally important, wells completed. As Northeast wells typically hit peak production roughly 3-5 months after they are brought online (based on average type curves for the Utica), it would follow that the wells completed in August and September should be hitting their peak in December and then entering their natural decline phase thereafter. That would explain the march up to 31.7 Bcf/d on December 5 and then the quick drop off in production immediately following that peak, despite no maintenance events and little evidence of freeze offs. It would seem reasonable that producers tried to maximize production from those wells that were completed in August/ September and were peaking in late November/early December during the recent price rally above $4. However, of note, production then began to dip before prices fell back below $4, suggesting operators maximized production from those wells completed in August/September and could no longer keep production afloat.
S&P: U.S. gas-fired capacity additions soared in 2018 - The amount of gas-fired generating capacity added in the U.S. in 2018 nearly doubled the amount added the year before, according to S&P Global Market Intelligence data.New gas-fired capacity in 2018 totaled 18,550 MW, nearly three-fourths of the 24,808 MW added from all sources. The additions more than offset the 16,900 MW of capacity, mostly coal-fired, that were retired last year. In 2017, gas-fired capacity additions totaled 9,837 MW, about half the 19,367 MW that were added.The largest share of new capacity, totaling about 10,500 MW, was added in the PJM Interconnection region in the mid-Atlantic, and most of those new additions were large gas-fired units. Two of the largest gas-fired power plants that began operating in 2018 are outside of competitive markets and directly serve their utility owners. Duke Energy Corp. added its 1,640-MW Crystal River CC (Citrus County) plant in Florida for its local utility Duke Energy Florida LLC, and the Tennessee Valley Authority added its 1,132-MW Thomas H Allen CC plant to replace a nearly 60-year-old coal-fired plant that was retired.Wind and solar capacity additions declined in 2018 compared to the year before. About 3,081 MW of wind was built in 2018, down from 4,987 MW added in 2017. Among wholesale power markets, ERCOT had the largest amount of wind capacity built, with about 1,080 MW, followed by the Southwest Power Pool, which had 580 MW. Another 705 MW of wind was built in the western U.S. outside of organized markets. The solar industry took a hit when the Trump administration issued tariffs in January 2018 on imports of solar cells and panels. About 2,888 MW of solar was built in 2018, down from 3,964 MW added in 2017.
Rogersville Shale Test Wells in KY, WV Appear to be a Flop ...The clock has run out on state confidentiality laws and results are now available for several test wells drilled in both the Kentucky and West Virginia in the Rogersville Shale–and the results are rather lackluster. NGI ace reporter Jamison Cocklin has been checking records in records recently released to the public and found the following:Test results from the Rogersville Shale in Eastern Kentucky and Southwest West Virginia continue to trickle out, but activity in the unproven play remains stagnant.Only six test locations have been permitted since 2013, when Cimarex Energy Co. subsidiary Bruin Exploration LLC was issued the first stratigraphic test permit in Lawrence County, KY. Charleston, WV-based Hard Rock Exploration Inc. had applied for a vertical test permit in Putnam County, WV, but it filed for bankruptcy in 2017. The mid-2014 commodities downturn also helped to curtail exploration activity in the play.While there’s been little activity recently, data from earlier wells that had been protected by state confidentiality laws has since become available, again revealing lackluster results from a play that has generated some buzz in recent years as an up-and-coming target for Appalachian producers.*Jamison reviewed production records and shared numbers in the article–but they are his numbers to share. You’ll need a subscription (or free trial) to read the full article.The last time we wrote about/heard about the Rogersville test well program was in late 2015 (see MDN’s Rogersville stories here). The bottom line appears to be this: With the prolific Marcellus, Utica and Upper Devonian shales to tap in PA, OH and WV, and with less-than-stellar results from the few Rogersville wells already drilled, don’t look for any more Rogersville drilling to happen any time soon.
State lawmakers join forces against offshore drilling — A group of nine Democratic state lawmakers from different coastal states announced Tuesday that they are going to use their coming legislative sessions to try to block attempts at offshore drilling. The lawmakers’ announcement came as new and re-elected legislators were entering office around the country after an election that saw high turnover in some states, and the group said it wants to take advantage of new political dynamics that could favor environmental bills. The announcement also came about a year after Trump’s administration announced plans to expand drilling. The lawmakers, who are affiliated with nonprofit advocacy group National Caucus of Environmental Legislators, said their bills will seek to limit the possibility of drilling off their coasts. State legislatures are limited in what they can do to stop drilling beyond state waters, but the lawmakers said they’re showing a united stand against the practice. “We need to pass permanent legislation in our states so that this ban would be in place for the future,” New Hampshire Sen. Martha Fuller Clark said. “We can’t afford to rely on Washington to protect us.” Others lawmakers involved in the effort represent Connecticut, Georgia, Hawaii, Maine, Massachusetts, New York, Oregon and Rhode Island. Some of the lawmakers said they would seek outright bans on drilling, while others said they would look to pass bills that restrict it or do more to hold companies liable for spills.
Report: Gas leaks plague Bay State - Gov. Charlie Baker took a victory lap Saturday touting the Merrimack Valley’s economic recovery after September’s deadly gas explosions — but state records investigated by the Herald show that months before the region was rocked by fire, the state’s crumbling infrastructure and gas leaks made the blasts almost inevitable. The study revealed the state had more than 34,000 reported gas leaks in 2017. Almost 7,500 of those were considered “Grade 1” leaks — the highest classification, representing an “existing or probable hazard to persons or property” and requiring repair “as immediately as possible.” “We’re literally sitting on bombs,” said Audrey Schulman, executive director of Cambridge-based HEET, a nonprofit that helps residents save energy in their homes and lower gas emissions. Her organization maps gas leaks across Massachusetts using DPU data. “The pipes in Massachusetts are past their well-use dates.” The state Department of Public Utilities (DPU) presented a December 2018 report to state legislators on the prevalence of natural gas leaks in Massachusetts, highlighting the number of leaks for 2017 and the time and cost estimates for eliminating the mounting backlog of the leaks. Massachusetts law requires utility companies to grade all reported natural gas leaks on a 1 to 3 scale based on the hazard posed by the leak:
- A grade 1 leak represents an “existing or probably hazard to persons or property and requires repair ‘as immediately as possible.'”
- A grade 2 leak is non-hazardous to persons or property at the time of detection, but “justifies scheduled repair based on probable future hazard.”
- A grade 3 leak is non-hazardous to persons or property at the time of detection and can be “reasonably expected to remain non-hazardous.”
In 2017, there were a collective 34,369 leaks on the gas distribution system. Broken down as follows: 7,437 Grade 1 leaks; 6,393 Grade 2 leaks; and 20,539 Grade 3 leaks. Those figures do not represent the number of ongoing and unrepaired leaks.
Ridgefield fracking ban heads to hearing then vote - The town’s nearly year-long debate over a ban against “fracking” — hydraulic fracturing — and the reuse of wastes from the fracking process, which is used in oil and gas extraction, will likely come to a conclusion in the next week. A proposed anti-fracking ordinance petitioned for by more than 600 environmentally concerned citizens will go to a public hearing at 10 a.m. Saturday and then a town meeting at 7:30 p.m. Wednesday — both in town hall. The proposed ordinance carries fines of up to $250, as well as a requirement to remediate damage and reimburse the town for costs related to violations. The heart of the proposal being put before townspeople by the Board of Selectmen, at the request of 664 petition signers, is a prohibition on the use or reuse of wastes from natural gas or oil extraction on property in town, disposal of it in wastewater treatment or solid waste processing facilities, as well as a ban on a long list of activities including the sale, acquisition, transfer and handling of such wastes.
TransCanada spokesperson on Maryland’s pipeline block: “We’re committed to this route” — A recent decision by the Maryland Board of Public Works to deny an easement for a natural gas pipeline leading to West Virginia’s eastern panhandle is stirring reaction from the company behind the project. TransCanada subsidiary Columbia Gas Transmission, LLC previously requested an easement for an eight inch, 3.37 mile fracked gas line from Fulton County, Pennsylvania into Morgan County, West Virginia. Known as the “Potomac Pipeline”, this would connect an existing line in Pennsylvania to the Mountaineer Gas line from the Berkeley Springs area through Martinsburg. This line would eventually extend into Jefferson County and some of it would serve the controversial Rockwool insulation plant in Ranson. The West Virginia Public Service Commission approved a $119.8 million plan for that extension in December. In a letter dated January 1 and addressed to the Maryland Board of Public Works, a group of 65 Maryland delegates and senators expressed concern over the Potomac Pipeline. The effort was a two year campaign spearheaded by environmental advocates Potomac Riverkeeper Network. Primary concerns of Columbia’s pipeline include potential impact to the Potomac River and the Western Maryland Rail Trail, which the proposed line would go underneath. “We’re going to be drilling more than 100 feet below the rail trail and the river, so there will be no impact to either one,” TransCanada spokesperson Scott Castleman said on MetroNews Talkline. “There will be no impact during construction, recreation activities, business activities, everything else can continue as usual. “In the unlikely event of a leak under a water body, natural gas will bubble to the top and dissipate into the atmosphere. There’s no impact to the water with a pipeline of this nature.”
With Democrats in House majority, they might threaten the very fracking that has lowered US emissions - Now that Democrats have recaptured the House, energy production on public lands in the American West is likely to come under increased scrutiny. But it’s hard to see what anyone would gain from slowing down an oil and gas leasing program that’s become a growth engine for the nation’s economy and is having a huge positive impact on job creation. If you want to understand the importance of the Trump administration’s decision to ease restrictions on issuing leases for drilling on public lands, a good place to start is with the need for natural gas, a fuel that is more plentiful than oil and burns much more cleanly. From an environmental point of view, the increased use of natural gas has driven down U.S. emissions of carbon dioxide from the electric power sector to a 20-year low by substituting for carbon-rich coal. Last year, U.S. production of natural gas broke all-time records, reaching 33.4 trillion cubic feet. Nearly a quarter of the gas is produced in Texas, with increasing amounts coming from Colorado, New Mexico, and Wyoming. The Western states are blessed with substantial reserves of natural gas, and it would be nothing short of folly not to extract those resources. If we can’t take advantage of our natural gas resources, we must rely on imports. Consider that as recently as 2007 the U.S. was spending billions of dollars a year to buy liquefied natural gas from foreign countries. Now the U.S. is significantly more energy secure, and we’re able to export liquefied natural gas to buyers around the world, thanks to the growth in gas production that’s been made possible by the shale revolution and made-in-the-USA extraction technologies such as fracking and directional drilling.
Will 2019 be the year Virginia cracks down on methane emissions? -An Atlantic Coast Pipeline compressor station before Virginia regulators could be the first to face tougher standards amid heightened scrutiny of methane leaks in the state.The Virginia Department of Environmental Quality’s draft permit for a compressor station in Buckingham County includes a requirement for inclusion of a vent gas reduction system the agency claims will cut methane emissions by more than 99 percent due to reduced venting of natural gas.If approved by the State Air Pollution Control Board, this would mark the first time the department has issued a permit requiring the methane-reduction technology. It looks to be a sign of more regulation to come.As high-profile battles over the Atlantic Coast and Mountain Valley pipelines rage, Virginia has quietly moved to begin regulating greenhouse gases — including methane emissions — more tightly.In September, Virginia Gov. Ralph Northam announced a series of initiatives to combat climate change, including the creation of a task force that will look at methane emissions from natural gas infrastructure and landfills and likely recommend new state regulations. The task force is forming as Northam tries to balance demands from Dominion Energy, a political powerhouse in terms of campaign finance and lobbying, and environmentalists in his own Democratic Party — some of whom have criticized him for not taking a firm stand against the pipelines.
Mountain Valley Pipeline says expansion will not cause excess natural gas supply — Mountain Valley Pipeline told federal regulators it was not overbuilding as it defended its MVP Southgate natural gas pipeline expansion from protests by two North Carolina agencies and a coalition of environmental groups. Mountain Valley said in a Tuesday motion filed with the Federal Energy Regulatory Commission that the project is designed to meet growing gas demand in central North Carolina and southern Virginia. "The project will not create excess gas supply," the pipeline developer wrote. "The project will provide natural gas transportation capacity and access to new supplies in the Marcellus and Utica shale regions to meet demand in the Southeast." Mountain Valley was responding to protests by the North Carolina Utilities Commission, the North Carolina Department of Environmental Quality and groups led by Appalachian Mountain Advocates. Among other issues they raised, these parties said the rates proposed by the company were not properly supported, the project did not seem to be in the public interest and the project would result in too much pipeline infrastructure in the region. "The Southgate project would create an excess supply of natural gas," the North Carolina Department of Environmental Quality said in a letter dated December 10, 2018. Mountain Valley has applied to FERC for a certificate of public necessity for the expansion project, which is supported by a firm gas transportation service contract of 300,000 Dt/d with SCANA utility PSNC Energy. Mountain Valley asked the commission to authorize the project by December 1, 2019, in order to meet its target in-service date of November 1, 2020, as part of an agreement with the customer. Construction on the nearly 73-mile MVP Southgate pipeline is expected to begin in the first quarter of 2020. It will be operated by EQM Midstream Partners. The project would connect to the mainline of the Mountain Valley pipeline near Chatham, Virginia, and extend to delivery points in Rockingham and Alamance counties, North Carolina. Facilities would include new 24- and 16-inch diameter pipeline and a 28,915-horsepower compressor station (CP19-14).
Potential Species Extinction Stops Work on the Atlantic Coast Gas Pipeline - Dominion Energy has put a halt to construction of the 965-km multibillion dollar Atlantic Coast Pipeline, after the 4th U.S. Circuit Court of Appeals ruled that more study is needed to properly evaluate the environmental impact of pipeline construction on four endangered species across West Virginia, Virginia and North Carolina.Environmental groups claim the rusty patch bumble bee, the Indiana bat, the Madison cave isopod (a type of crustacean) and the clubshell mussel would all be adversely affected by the Atlantic pipeline, even threatening their very existence.According to the environmental group’s legal briefs, "pipeline construction could harm endangered species in a variety of ways. The clubshell mussel would be buried alive by dredging and grading. Digging and blasting could crush or trap the Madison cave isopod. The rusty-patched bumble bee could be injured or killed by tree felling. And tree clearing would force pregnant female bats to change their flight routes, exposing the bats to predators."Lawyers for the pipeline contend that the court's decision is overly broad and argue that construction could take place in North Carolina, where none of the four endangered species have sensitive habitats. The new stay is expected to be in effect pending review of environmentalists' challenge to the documents. Oral arguments in the case are scheduled for March, 2019.
Lobbyist: 'Rogue environmental groups' standing in way of building pipelines --Construction on the Atlantic Coast Pipeline has been halted because “rogue environmental groups” are getting in the way, an energy lobbyist told lawmakers Tuesday.“It’s on hold because the 4th Circuit Court of Appeals allowed a rogue environmental group to contest various permits that we have on the project,” Bob Orndorff, state policy director for Dominion Energy, said to the Joint Committee on Natural Gas Development on behalf of the West Virginia Oil and Natural Gas Association, during a presentation of various facts and figures about natural gas jobs in West Virginia.The natural gas pipeline being built by Dominion Energy voluntarily halted construction along the project’s 600-mile-long path in December after the 4th Circuit Court of Appeals issued a stay to the U.S. Fish and Wildlife Service’s Biological Opinion and Incidental Take Statement. The next week, a panel vacated the Forest Service’s Special Use Permit and Record of Decision, required to build the project through the George Washington and Monongahela national forests.In the opinion, Judge Stephanie Thacker, of West Virginia, quoted Dr. Seuss’s “The Lorax.” “We trust the United States Forest Service to ‘speak for the trees, for the trees have no tongues,’” the opinion says. Chief Judge Roger Gregory and Judge James Wynn, who also heard oral arguments in the case in September, joined. “It’s the federal agencies who went rogue here. They ignored the law, they ignored warnings from their own experts to approve a destructive and unnecessary pipeline,” said DJ Gerken, senior attorney for the Southern Environmental Law Center, which argued on behalf of conservation groups in both legal challenges. The halt has cost thousands of jobs, Orndorff said. Some people can continue to work because the Atlantic Coast Pipeline is required to maintain erosion and sediment control, he said. There’d be even more jobs if the Federal Energy Regulatory Commission allows the Atlantic Coast Pipeline to “button things up,” he said. That would mean at least putting the pipe in the ground, welding it and re-vegetating the land around it. The Atlantic Coast Pipeline is one of many pipelines being built in the region to tap into the booming Marcellus Shale formation. Many pipelines have similarly faced legal challenges and environmental violations.
Toscano Urges Against Investing in Atlantic Coast Pipeline (WVIR) - Charlottesville State Delegate David Toscano is urging state leaders to consider investing in renewable energies instead of Dominion Energy’s Atlantic Coast Pipeline. The 600-mile underground pipeline construction project that travels through North Carolina, Virginia, and West Virginia has been met with contention by advocacy groups and state legislators. Delegate Toscano compared the pipeline to an old, leaky car that is not worth the investment to keep going. He says investing in other improvements to energy efficiently could mean transitioning to a fossil fuel-free economy in the future. In a statement on his website posted earlier this week, Toscano said that the use of electricity has remained the same, while the cost of renewable energy has gone down. He argues that this means the pipeline is not needed and improvements to energy storage could mean less reliance on fossil fuels. “The energy landscape has changed so dramatically in the last five years,” Toscano said. “The cost of solar energy and wind energy has come down dramatically and the game-changer in energy storage is the ability to store energy and then dispatch it when the sun doesn’t shine and the wind doesn’t blow.” According to Toscano, investing in some of those technologies rather than the ACP will help Virginia transition to a fossil fuel-free based economy in the future.
State air board backs Buckingham compressor station for Atlantic Coast Pipeline - A pitched public battle over a natural gas compressor station for the Atlantic Coast Pipeline in Buckingham County ended with a vote of approval for a permit that state officials hailed as a new national standard for air pollution controls on gas turbines and opponents branded as tainted by political interference from Gov. Ralph Northam. The State Air Pollution Control Board voted 4-0 to approve the compressor station permit Tuesday, acting without three of its seven members — two of whom Northam had replaced abruptly in November. The vote came during a raucous two-hour meeting at a Chesterfield County conference center that was thronged by protesters and Virginia State Police. “The bottom line here is the Buckingham Compressor Station will be the most stringently regulated compressor station in the country and the public’s health will be protected,” said Mike Dowd, director of the Department of Environmental Quality’s Air Division, as dozens of protesters stood behind him with their backs turned. Opponents vowed to continue the fight against the compressor station permit in court and accused the board of ignoring the “disproportionate impact” of the project on Union Hill, a community centered around two African-American churches and the former site of a slave-holding plantation that spawned it. “The compressor station is making us the sacrificial lamb,” said John Laury, 74, an African-American resident who grew up in Union Hill and moved back to the community more than 15 years ago. Dominion Energy, lead partner for the Atlantic Coast Pipeline, said the board decision represents “the final state approval needed in Virginia” for the $7 billion, 600-mile pipeline project, which would rely on three compressor stations to deliver natural gas from West Virginia to southeastern Virginia and eastern North Carolina.
Virginia gives Dominion permit for Atlantic Coast natgas pipe compressor (Reuters) - An environmental board in Virginia unanimously approved an air permit for a compressor station on Tuesday for Dominion Energy Inc's planned nearly $7 billion Atlantic Coast natural gas pipeline from West Virginia to North Carolina. The fight over the permit was just one of several battles Atlantic Coast and other pipelines are facing to move gas from the Marcellus and Utica shale in Pennsylvania, West Virginia and Ohio to customers in the U.S. Southeast. There are two big gas pipes under construction in Virginia - Atlantic Coast and EQM Midstream Partners LP's Mountain Valley project. Both are at least $1 billion over budget and about a year behind schedule due primarily to legal battles with environmental and local groups opposed to the projects. "While the (compressor) approval process has concluded, we know we have to continue building trust in the community," Karl Neddenien, spokesman for Atlantic Coast said in an email, noting the company will invest in a new community center, a rescue squad and more. In December, the Virginia Air Pollution Control Board delayed a vote on the compressor over concerns it would violate civil rights by forcing the historically African-American Union Hill community to bear an unequal burden from pollution and other disruptions. In addition to the compressor permit, Dominion has been dealing with legal battles over other state and federal permits. In early December, Dominion suspended all construction on Atlantic Coast after the U.S. Court of Appeals for the Fourth Circuit stayed the U.S. Fish and Wildlife Service's Incidental Take Statement, which authorized pipeline construction in areas inhabited by threatened or endangered species. Neddenien said construction of the 600-mile (966-km) project remains on hold pending clarification of the scope of the Fish and Wildlife permit stay. Before the court issued the stay, Dominion said it expected to complete Atlantic Coast in mid-2020. Now, however, the company said it was waiting for the outcome of its request for clarification before offering any update on the project's schedule or cost.
Turn The Pipe Around - Will Crude Soon Be Flowing South On Capline? -The possibility of reversing the flow on Capline — the U.S.’s largest northbound crude oil pipeline — has been discussed for a number of years now. Finally, it may be on the horizon. The three owners of Louisiana-to-Illinois pipeline announced last week that this month they plan to initiate a binding open season for a reversed Capline system that would enable southbound flows starting in the third quarter of 2020 — only a year and a half from now. And, as we discuss in today’s blog, reversing Capline’s direction could open up new crude-slate possibilities for Louisiana refineries and boost crude exports out of the Bayou State. Every so often, the Mississippi River’s flow flips and its water runs north, if only for a few hours at a time. It happened most recently in the aftermath of Hurricane Isaac, in the summer of 2012, when the storm’s high winds and waters sent Ol’ Man River the other direction; it also happened during Hurricane Katrina, seven years earlier. The most amazing flow reversal of all, though, happened way back in 1812, when an estimated 8.8-magnitude earthquake — the strongest of several major quakes to hit Missouri and Arkansas that winter — shook, rattled and rolled the whole middle of North America. (The New Madrid earthquake was so strong that it collapsed brick walls as far away as Cincinnati and caused church bells to ring in Boston.)
BP just discovered a billion barrels of oil in the Gulf of Mexico - BP's investment in next-generation technology just paid off to the tune of a billion barrels of oil. The British energy company has discovered 1 billion barrels of crude at an existing oilfield in the Gulf of Mexico. BP also announced two new offshore oil discoveries and a major new investment in a nearby field. BP is the Gulf of Mexico's biggest producer, and it's making strides to hold that title. BP now expects its fossil fuel output from the region to reach 400,000 barrels of oil equivalent per day by the middle of the next decade. Today, it produces about 300,000 boepd, up from less than 200,000 boepd about five years ago. On Tuesday, the company said it will spend $1.3 billion to develop a third phase of its Atlantis field off the coast of New Orleans. Scheduled to start production in 2020, the eight new wells will add 38,000 bpd to BP's production at Atlantis. The decision comes after BP found another 400 million barrels of oil at the field. BP made the massive 1 billion-barrel discovery at its Thunder Horse field off the tip of Louisiana. Executives are crediting their investment in advanced seismic technology and data processing for speeding up the company's ability to confirm the discoveries at Atlantis and Thunder Horse. BP says it once would have taken a year to analyze the Thunder Horse data, but it now takes just weeks. "We are building on our world-class position, upgrading the resources at our fields through technology, productivity and exploration success," Bernard Looney, BP's chief executive for production and exploration, said in a statement. Just northeast of Thunder Horse, BP also announced new discoveries at fields near its Na Kika platform. BP says it plans to develop reservoirs at its Manuel prospect, where Shell holds a 50 percent stake. Producers also found oil at the Nearly Headless Nick prospect near Na Kika, where BP has a 20.25 percent working interest.
BP Okays $1.3B Expansion in Gulf of Mexico - BP has approved a $1.3 billion expansion for the Atlantis Phase 3 development in the U.S. Gulf of Mexico, the company announced Tuesday. The development, which includes the construction of a new subsea production system from eight new wells, will boost production at the platform by as much as 38,000 barrels of oil equivalent per day (boepd). The approval for the Atlantis Phase 3 development is timed great for BP as the supermajor recently discovered an additional 400 million barrels of oil at the Atlantis field. The project is scheduled to come onstream in 2020. Additionally, BP announced that another one billion barrels of oil have been identified at the Thunder Horse field as well as two new discoveries near the Na Kika production facility. “BP’s Gulf of Mexico business is key to our strategy of growing production of advantaged high-margin oil,” said BP Upstream chief executive Bernard Looney. “And these fields are still young – only 12 percent of the hydrocarbons in place across our Gulf portfolio have been produced so far.” Looney added that the company sees “many opportunities” for further development through the middle of the next decade and beyond. BP’s two discoveries near the Na Kika facility – the Manuel discovery located on Mississippi Canyon block 520 and the Nearly Headless Nick discovery located on Mississippi Canyon block 387 – could provide further tie-back development opportunities. BP’s net production in the Gulf of Mexico has increased significantly over the past five years. The area currently produces more than 300,000 barrels of oil equivalent per day. BP expects its production to grow to 400,000 barrels of oil equivalent per day through the middle of the next decade – fueled by recent project startups, including Thunder Horse Northwest and Thunder Horse South expansions and the Thunder Horse Water Injection project, as well as the addition of the Argos platform platform at the Mad Dog field.
BP approves expansion of Gulf oil project (AP) — BP has approved a $1.3 billion expansion at one of its oil projects in the Gulf of Mexico and discovered an additional 1.4 billion barrels at two of them. “BP’s Gulf of Mexico business is key to our strategy of growing production of advantaged high-margin oil. We are building on our world-class position, upgrading the resources at our fields through technology, productivity and exploration success,” Bernard Looney, BP’s Upstream chief executive, said in a news release Tuesday. “And these fields are still young - only 12 percent of the hydrocarbons in place across our Gulf portfolio have been produced so far. We can see many opportunities for further development, offering the potential to continue to create significant value through the middle of the next decade and beyond.” The Courier reports the announcement comes amid a 4½-year offshore oil bust that has cost the Houma-Thibodaux area about 16,000 jobs. Over the past few months, several reports from economists and consultants have predicted an uptick in the Gulf this year, forecasts that hinge on how high oil prices rise above current levels of about $50 a barrel. The development of Atlantis Phase 3 will include the construction of a new subsea production system from eight new wells that will be tied into the current platform, 150 miles (240 kilometers) south of New Orleans. The company says it’s scheduled to begin operating in 2020 and is expected to boost production by an estimated 38,000 barrels of oil equivalent a day gross at its peak. BP operates Atlantis and holds a 56 percent working interest, with BHP holding the remaining 44 percent. BHP is expected to make a final decision early this year on whether to proceed with the expansion. BP’s actions come after the company’s recent breakthroughs in advanced seismic imaging and related technology that revealed an additional 400 million barrels of oil in place at the Atlantis field, officials said. The same innovation helped the company find an additional 1 billion barrels oil at its nearby Thunder Horse field, officials said. And new discoveries near BP’s Na Kika platform provide additional development opportunities, officials said. BP is already the Gulf’s largest oil producer, and officials say the latest discoveries will help it grow output to about 400,000 barrels a day within the next decade.
OPEC Oil Exports To The U.S. Fall To Five-Year Low - The United States received in December the lowest volume of OPEC-derived crude oil in five years, according to market intelligence firm Kpler and data from Refinitive Eikon, cited by Reuters on Thursday. 1.63 million bpd of oil from OPEC member countries made its way to US shores in December, down from 1.80 million bpd in November and 1.78 million bpd in October. Saudi Arabia shipped 534,000 barrels per day to the United States in December, a near 100,000 bpd drop from November. Algeria’s shipments were also down almost 100,000 bpd, and Nigeria’s shipments to the US dipped by almost 50,000 bpd. Iraq, on the other hand, increased crude oil shipments to the United States by 140,000 bpd, and for somewhat of a shock, Venezuela shipped 22,738 barrels per day more to the US in December, although the long-term trend here shows a steady decline in Venezuela’s oil exports to the US, which were around 912,000 bpd in 2012, falling to 618,000 bpd by 2017, according to the Energy Information Administration. Saudi Arabia’s crude oil exports to the US have also been falling steadily in recent years, from 1.361 million bpd in 2012 to 1.052 million bpd in 2015, and then to 949,000 bpd by 2017. The United States has been imported less crude oil altogether—not just less OPEC crude. With the rise of US shale, the United States has cut its thirst for foreign crude oil from 262.8 million barrels per month in January 2017 to 226.6 million in October 2018—the last month for which there is data, according to the EIA.
Suddenly, A Slew Of Gulf Coast Crude Loadings Onto VLCCs - In 2018, a handful of midstream companies started racing to develop deepwater export terminals along the Gulf Coast that can fully load Very Large Crude Carriers (VLCCs) with 2 MMbbl of crude oil from the Permian and other plays. While some of those companies are moving toward final investment decisions (FIDs) that would bring their plans to fruition in the early 2020s, terminal operators with existing VLCC-capable assets — both onshore and offshore — turned up the volume in a major way in December. Today, we outline the strides made in recent days by the export programs of the Louisiana Offshore Oil Port (LOOP), Seaway Texas City and Moda Midstream. In today’s market, there’s only one existing terminal that can fully load a VLCC in one fell swoop — that’s the Louisiana Offshore Oil Port, or LOOP, off Port Fourchon, LA. We’ve reported in our weekly Crude Voyager that in February 2018 LOOP kicked off its export program, loading an entire supertanker for shipment to China. They did it again in March, and then sent out one a month from June through September. The exports out of LOOP quieted for a few months as the facility worked on expanding its capacity to load tankers at a faster rate. When December rolled around, LOOP showed off its new upgrades to the market by loading three supertankers — about 6 MMbbl of crude in total — in a matter of only seven days. That’s impressive — it had never been done before — but companies like Enterprise Products Partners have indicated that their planned offshore terminals will be capable of more than doubling that pace — to as many as seven supertankers in a week’s time.
Cheniere ramp-up fuels US LNG feedgas demand strength — US LNG feedgas deliveries remained near record levels Monday with Cheniere Energy continuing equipment testing on the second liquefaction train at its export facility near Corpus Christi, Texas, S&P Global Platts Analytics data showed. Commissioning of the unit is progressing well, a company spokesman said in an email responding to questions. The biggest US exporter of LNG produced from shale gas has been ahead of schedule with construction at the Texas terminal, as well as its Sabine Pass liquefaction facility in Louisiana. With as many as three more export terminals expected to start up in 2019, the US is on the verge of becoming a major player in the global supply of LNG. The additions and expansions are expected to more than double the amount of domestic LNG feedgas demand this year compared with 2018. The biggest question mark hanging over the US industry, and by extension market participants in Asia, Europe and Latin America, is how many new projects will be advanced by developers in what is shaping up to be a busy year for final investment decisions. To hit the early- to mid-2020s timeframe when global supply is forecast to be short, construction would need to start in 2019, or soon after. Shortly after Cheniere received Federal Energy Regulatory Commission approval last week to introduce fuel gas to its Corpus Christi Train 2, total deliveries to the terminal managed to exceed 700 MMcf/d for the first time and have now done so the last two days, Platts Analytics data showed. Overall, across Cheniere's two terminals and Dominion Energy's Cove Point terminal in Maryland, total US LNG feedgas demand Monday was about 5 Bcf/d, near the record level of almost 5.6 Bcf/d reached on Saturday, Platts Analytics data showed. Since exporting its first cargo December 11, feedgas deliveries at Corpus Christi have averaged 412 MMcf/d and the terminal has now exported a total of three cargoes, according to Platts' vessel tracker, cFlow. Platts Analytics estimates Train 1 at Corpus Christi will enter commercial service in February with Train 2 slated for August.
More US LPG export capacity on the way, part 2. - LPG exports out of Gulf Coast marine terminals averaged 1 MMb/d in 2018, a gain of 12% from 2017 and 35% from 2016. And, with U.S. NGL production rising steadily, 2019 is looking to be another banner year for LPG shipments to overseas buyers. The increasing volume of propane and normal butane — the NGL purity products generally referenced as LPG — is filling up the existing export capacity of the Gulf Coast’s six LPG terminals and spurring the development of a number of expansion projects. Today, we continue our blog series on propane and butane export facilities along the Gulf, West and East coasts, and what’s driving the build-out of these assets. As we said in Part 1, the U.S. flipped from being a net LPG importer to a net exporter seven years ago, in 2012. Since then, exports by ship have skyrocketed to more than 1.1 MMb/d in 2018, with the vast majority of that volume (about 92%, as of year-end 2018) being sent out of the half-dozen LPG terminals in coastal Texas and Louisiana. The rest of the exports-by-ship are flowing through either the Ferndale terminal in Washington State (red dot and lettering in Figure 1), the Marcus Hook facility near Philadelphia (green dot and lettering) or DCP Midstream’s Chesapeake terminal in Virginia (light blue dot and lettering). In the initial blog in this series, we also noted that the bulk of U.S. LPG exports have been bound for Asia and Latin America, with smaller but still-significant volumes sent to Europe, Africa and the Caribbean. We concluded Part 1 with a review of the Gulf Coast’s — and the U.S.’s — largest LPG export facility: the Enterprise Hydrocarbon Terminal (EHT; dark blue dot and lettering) on the Houston Ship Channel, whose capacity is in the midst of being expanded to 720 Mb/d from the current 545 Mb/d. EHT, which can also handle a number of other energy commodities, is connected by several pipelines to Enterprise Products Partners’ NGL fractionation and storage complex at Mont Belvieu; Enterprise owns all or part of nine existing fractionators (combined capacity, 755 Mb/d) at the hub and is building 300 Mb/d of additional fractionation capacity there that will come online in the first half of 2020. Today, we turn our attention to Targa Resources’ Galena Park Marine Terminal (aqua dot and lettering), also along the Houston Ship Channel, Phillips 66’s Freeport LPG Export Terminal (purple dot and lettering) down the coast in Freeport, and Energy Transfer’s export facility (yellow dot and lettering) in Nederland, TX.
U.S. oil export boom sparks a battle to build Texas ports (Reuters) - Booming U.S. oil exports have set off a scramble to build Gulf Coast ports to handle more than 3 million barrels per day in new supplies expected over the next five years. Of seven proposed oil-export projects, nowhere is the opportunity greater or the competition more fierce than in Corpus Christi, Texas, where three firms are vying to open the state’s first deepwater port. Commodities trader Trafigura has taken an early lead with a planned offshore facility that has an easier path to regulatory approval and faces fewer objections from environmentalists. Its chief competitor - a partnership of investor Carlyle Group and the Port of Corpus Christi to build an onshore port - has responded by petitioning regulators to kill Trafigura’s project. Port lobbyists have cited past criminal allegations involving the firm in other countries and potentially “catastrophic” environmental impacts. Rising demand for new ports follows a 2015 decision by the U.S. Congress to lift a 40-year ban on crude exports after advances in drilling techniques sparked a rapid rise in domestic shale production - especially in Texas. The United States had been the world’s top oil buyer for decades, and its port infrastructure was built to import rather than export. Now, surging exports threaten to overwhelm existing ports as U.S. production is projected to hit 12 million barrels per day (bpd) this year, up from 9.35 million in 2017.(U.S. crude producers send more shale oil to the world : tmsnrt.rs/2H48vJp ) “We’ve got a wave of oil headed toward the coast,” said Jeremiah Ashcroft III, chief executive of Lone Star Ports LLC, the Carlyle-backed company formed to develop its Corpus Christi project. Only one U.S. facility, the Louisiana Offshore Oil Port, can fully load supertankers capable of carrying 2 million barrels. The Corpus Christi port - the closest to the most prolific shale fields in Texas - exports less than 1 million bpd, and its harbor is too shallow to fully load supertankers. The market ultimately may support more than one new deepwater port, but the first firm to build near Corpus Christi will have the best shot at cutting long-term deals with producers expected to ship an estimated 2.1 million bpd to the region through new pipelines set to open this year.
Analysis: US product stocks rocket higher as refiners hit their stride and demand falters - Analysis: US product stocks rocket higher as refiners hit their stride and demand falters — US refined product stocks moved sharply higher last week amid surging refinery utilization, US Energy Information Administration data showed Friday. US distillate stocks increased 9.53 million barrels during to a 10-week high of 129.43 million barrels during the week-ended December 28, EIA data showed. Gasoline in storage also grew sharply, adding 6.89 million barrels last week to 239.99 million barrels, the highest level since mid-June. The stock builds far exceeded market expectations. Analysts surveyed for an S&P Global Platts analysis Wednesday said gasoline and distillate stocks each likely added just 1.6 million barrels last week. NYMEX refined product futures fell from intraday highs following the larger-than-expected inventory build, and settled mixed on Friday. February ULSD was 2.72 cents higher at $1.7692/gal, but February RBOB ended the session down 17 points at $1.3478/gal. The sharp rise in distillate stocks pared the nationwide deficit to the five-year average to 8.2%, in from 10.9% during the week prior, while the gasoline supply overhang extended, with storage moving to 4.3% above the five-year average. Distillate stocks were driven higher in part by strong refinery runs last week. Nationwide refinery utilization increased 2.1 percentage points to 97.2% of capacity, and net crude inputs surged 410,000 b/d to a 16-week high at 17.8 million b/d. Analysts surveyed on Wednesday had been expecting utilization rates to edge 0.3 percentage point higher to 95.1% of capacity last week. Refinery runs strengthened to above 90% of capacity across all regions last week. Atlantic Coast utilization surged to 91.8% of capacity, an increase of 8.4 percentage points from the week prior. Gulf Coast refinery utilization increased 1.4 percentage points to 99.4% of capacity, the strongest level reported for the last week of December since at least 2010. The uptick in refinery utilization pushed nationwide distillate production up 147,000 b/d to 5.59 million b/d, on par with the all-time record high production levels set in December 2017. But strong refinery runs failed to bolster gasoline output, and nationwide production fell 701,000 b/d to 9.64 million b/d.
Texas Snaps 2-Year Streak of Oilfield Job Growth-- Jobs in the Texas oil patch dropped for the first time in almost two years, according to the state’s workforce commission. The number of workers handling exploration and drilling duties fell by 500 to 247,700 in November compared with the previous month, according to the latest data from the Texas Workforce Commission. Snapping a streak of 23 months for oilfield expansion, the state is weathering volatile oil prices that have lost more than a third of their value since October. “We have seen tremendous growth in the oil and natural gas industry in Texas, including consistent job expansion, but growth is not guaranteed,” Todd Staples, president of the state oil and gas association, said Friday in a statement. Home to a pair of the world’s busiest shale oil fields -- the Permian Basin and the Eagle Ford -- the Lone Star State has yet to fully climb back to the high of 308,900 upstream workers reached at the end of 2014, before a decline in crude prices that lasted more than a year. The state’s data only covers so-called upstream jobs related to oil and natural gas extraction, excluding other large sectors such as pipelines and refiners. It’s subject to historical revisions later on, according to the Texas Oil & Gas Association. The Permian Basin lost jobs for a third straight month in November, the Federal Reserve Bank of Dallas said in a Dec. 28 report. Companies began laying off completion crews late last year due to maxed out pipes in West Texas, exhausted spending budgets and slumping crude prices.
New Data Suggests Shocking Shale Slowdown - U.S. shale executives often boast of low breakeven prices, reassuring investors of their ability to operate at a high level even when oil prices fall. But new data suggests that the industry slowed dramatically in the fourth quarter of 2018 in response to the plunge in oil prices.A survey from the Federal Reserve Bank of Dallas finds that shale activity slammed on the brakes in the fourth quarter. “The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—remained positive, but barely so, plunging from 43.3 in the third quarter to 2.3 in the fourth,” the Dallas Fed reported on January 3.The 2.3 reading is only slightly positive – zero would mean that business activity from Texas energy firms was flat compared to the prior quarter. A negative reading would mean a contraction in activity.The deceleration was true for multiple segments within oil and gas. For instance, the oil production index fell from 34.8 in the third quarter to 29.1 in the fourth. The natural gas production index to 24.8 in the fourth quarter, down from 35.5 in the prior quarter. But even as production held up, drilling activity indicated a sharper slowdown was underway. The index for utilization of equipment by oilfield services firms dropped sharply in the fourth quarter, down from 43 points in the third quarter to just 1.6 in the fourth – falling to the point where there was almost no growth at all quarter-on-quarter. Meanwhile, employment has also taken a hit. The employment index fell from 31.7 to 17.5, suggesting a “moderating in both employment and work hours growth in the fourth quarter,” the Dallas Fed wrote. Labor conditions in oilfield services were particularly hit hard.
Oil lobby frets over trade war -- The nation’s main oil lobbying group is growing increasingly concerned about the impacts to the industry from President Trump’s ongoing trade war. Mike Sommers, the American Petroleum Institute’s (API) president, said U.S. tariffs on steel and China’s tariffs on liquefied natural gas (LNG) are among the top concerns of oil and gas companies. “We want this dispute to end quickly,” Sommers told reporters Tuesday in advance of his "State of American Energy" speech, an annual event the oil industry group hosts in an attempt to set the energy policy agenda for the year. “We of course want to ensure that U.S. intellectual property is protected,” Sommer said, nodding to one of Trump’s main justifications for tariffs on China. “But at the same time, we have to do it in a way that doesn’t affect American economic leadership, that is really driven by American energy leadership.” Sommers told lawmakers, oil executives and lobbyists later at his speech that the trade war threatens to leave a “void” in world gas markets, since China would buy less gas from the United States. “It’s a void other countries are happy to fill,” he said. “Our position at API is pretty straightforward: fight back against anti-American trade practices. Just do it in ways that don’t undermine America’s economic leadership.” China last year put a 10 percent tariff on LNG from the U.S., and threatened to increase it to 25 percent. Also last year, Trump put a 25 percent tariff on imported steel in a bid to protect domestic steelmakers. Sommers said that’s hurting pipeline companies in particular, citing a Plains All-American Pipeline project faced delays and increased costs because of difficulty in buying steel. “This is a major issue for us. We’re working closely with the administration to clear this matter up,” he told reporters. Gretchen Watkins, president of Shell Oil, said trade barriers are especially disruptive if they impact ongoing projects. Susan Dio, president of BP America, said her company works with global supply chains. “It is important ... that we can actually move products and things across the supply chains very very effectively, and that does impact the investment decisions that we make.”
Problems for US Producers at $50 -- U.S. producers can’t generate cashflow and production growth at $50 per barrel oil. That’s what Virendra Chauhan of Energy Aspects outlined in a television interview with CNBC on Wednesday. “$50 oil is not a level at which U.S. producers can generate cashflow and production growth, so we do expect a slowdown there, and that’s going to set up for a constructive second half of the year we think,” Chauhan told CNBC in the interview. “I think there are select companies which will survive but as an industry … certainly at $50 per barrel the [shale] industry does not generate enough cashflow to be able to entice investors,” he added. In a Bloomberg radio interview on December 19, John Kilduff, founding partner of Again Capital Management LLC, outlined that we were getting into the zone where U.S. shale producers stop making money. “You’re getting into that zone now … particularly when you sort of add in all the costs, not just the pure say drilling and extraction methodology. That’s going to start to get tough for them right now,” Kilduff said in the interview at the time. “But they have been successful, many of them, particularly in the Permian Basin where they’ve driven breakeven costs down to around $35 to $40 a barrel,” he added. According to a report released on Monday from Rystad Energy, U.S. fracking activity slowed in the second half of last year. “After reaching a peak in May/June 2018, fracking activity in the Permian has gradually decelerated throughout the second half of 2018,” Rystad Energy senior analyst Lai Lou stated in the report. Chauhan analyzes global supply demand fundamentals, with a particular emphasis on upstream and shale, according to Energy Aspects’ website.
Fracking Jobs Peaked In June; So Did Flatbed Rates -On Monday, the energy data and consulting firm Rystad Energy released a report showing that daily fracking jobs for trucks reached a peak of 48-50 in May and June of 2018 before gradually declining to about 44 jobs per day in November. Because fracking is so trucking-intensive – the sand, water, and chemicals must be transported to a large number of shifting production sites – FreightWaves wanted to see if the same curve was present in flatbed trucking prices and tender rejections. Flatbed rates and and capacity tightness in oil patch-associated lanes tracked the story Rystad was telling fairly closely. "After reaching a peak in May/June, fracking activity in the Permian Basin has gradually decelerated throughout the second half of 2018," stated Rystad Energy senior analyst Lai Lou in a press release. According to DAT's RateView tool, broker-to-carrier spot rates for flatbed trucks experienced a similar deterioration after peaking in June or July. Flatbed trucks driving from Houston to Lubbock were taking $2.35/mile net of fuel in February, but that rate spiked to $2.91/mile in June before falling to $2.14/mile in November. The Houston to Oklahoma City lane was more volatile at $2.20/mile in February, peaking at $3.08/mile in July, before crashing to $2.03/mile in November. From Birmingham, Alabama, where major flatbed carriers are based, to Houston, flatbed rates started at $2.07/mile net of fuel in February, peaked at $2.84/mile in June, and fell to $1.85/mile over the past seven days. Finally, the Shreveport, Louisiana to Oklahoma City lane, which connects the Haynesville shale play with the SCOOP/STACK play, paid flatbeds $2.55/mile in February, $3.10/mile in June, and only $1.97/mile over the past seven days. It's worth noting that oil patch flatbed prices tracked the national rate to a certain extent, which bottomed in February at $2.00/mile, peaked at $2.42/mile in June, and fell to $2.01/mile in November. But the oilfield lanes are priced at a premium compared to national averages and are far more volatile – much more of a boom-and-bust environment.
US oil and gas rig count falls seven to 1138 in first full week of 2019 - The US oil and natural gas rig count fell by seven to 1,138 during the first full week of 2019, which saw oil prices recover some lost ground, breaking above the $50/b mark, S&P Global Platts Analytics data showed Thursday. The number of active oil rigs was unchanged at 897 this week, while the gas rig count dropped by six to 220. Also, a one-rig decline was seen in rigs not specified for oil or gas. In total, domestic plays have lost 95 rigs since the recent high of 1,233 in the middle of November. Front-month WTI crude hit the mid-$70s/b in early October, which may have incentivized activity. Click here for full-size graphic Analysts say a loss of more rigs would not surprise them, based on oil prices that fell more than 40% between those early October levels and late December, although prices have since regained some ground. On Thursday, front-month NYMEX crude futures settled at $52.59/b, up 23 cents day on day. "Rigs have come off slightly, but are generally flat with the end of last year," Platts Analytics analyst Taylor Cavey said. "A number of producers have already come out and said they were going to scale back from previous plans," given lower commodity prices, he said. While more information will be released in fourth-quarter 2018 conference calls, "I'd imagine we'd see more producers follow suit and scale back operations if prices remain low," he added. This week, the Permian Basin of West Texas/New Mexico saw the biggest activity increase, adding four rigs to reach a total of 478, with the other named basins unchanged, or up or down one or two rigs. Last weekend, Wells Fargo oilfield services analyst Jud Bailey estimated Lower 48 states drilling and completions spending for 2019 would see an 11% year-on-year decline, compared with a 1% increase predicted previously, owing to what he called lower oil prices and a "shaky macro backdrop." "Our revised spending scenario, which now assumes that E&Ps set initial spending plans [based on around] $47-$50/b WTI, drives a roughly 120-to-140 decline in [the] rig count from late December levels and a year-over-year decline in the horizontal rig count of 8% in 2019," Bailey said. For the week that ended Wednesday, Platts' WTI assessments averaged $49.14/b, up $3.65, while its WTI Midland assessment averaged $43.16/b, up $3.49 and the Bakken Composite averaged $48.51/b, up $6.12. For natural gas, Platts' Henry Hub assessment averaged $2.79/MMBtu, down 24 cents, while Dominion South averaged $2.52/MMBtu, down 19 cents. In addition, 334 more new drilling permits were procured domestically in the week that ended Wednesday than in the previous week, for a total of 1,764. The Permian had the largest number, about a third, or 109, for a total of 189. An additional 35 permits went to operators in the Eagle Ford Shale, for a total of 49, and 26 went to Haynesville Shale players for a total of 39.
Report- Oil & natural gas production continues to rise despite flat jobs growth - The Texas oil and natural gas industry appears to be doing more with less.Crude oil and natural gas production continues to rise despite flat job growth, a new report from the Texas Independent Producers & Royalty Owners Association reveals. Texas crude oil production reached 1.35 billion barrels through November 2018 — an increase of 209 million barrels compared to the same period in 2017, the association reported.December figures are still pending, but crude oil production is expected to surpass the 1.5-billion-barrel forecast for 2018.Natural gas production increased slightly for a total of 7.5 trillion cubic feet produced through November 2018. Most of the increased output came from the Permian Basin of West Texas, which has become the top shale play in the United States, the association reported.Despite the production gains, job growth stalled in November. The oil and natural gas industry added 10,000 new jobs in Texas between January and November but that jobs growth has slowed down amid lower crude oil prices. "Job growth in the Texas upstream sector was essentially flat in November compared to many months of consecutive growth," TIPRO President Ed Longanecker said in a statement. "A slowdown in employment was expected due to the impact of takeaway capacity constraints in West Texas, lower crude oil prices, added expense to E&P projects from increasing service costs, as well as rising material costs resulting from steel and aluminum tariffs. Ongoing innovation and efficiencies being utilized in the industry, expanding pipeline capacity, and an expedited resolution to trade disputes will support increased energy production and job growth for the state of Texas."
USAC jet fuel prices spike to 16-month high on supply woes — Jet fuel differentials on the US Atlantic Coast climbed to their highest levels in 16 months Monday as stock levels in the region continue to sag. S&P Global Platts assessed jet barrels on Buckeye Pipeline in New York Harbor at the NYMEX February ULSD futures contract plus 13 cents/gal. That was up 4 cents from Friday and highest since it reached plus 14.50 cents/gal on September 7, 2017.USAC jet fuel inventories fell 656,000 barrels to 8.29 million barrels, according to the latest US Energy Information Administration data. That was down just over a million barrels from the same period last year. "I'm having trouble finding sellers," a USAC distillates broker said.
Something Extraordinary Is Happening In Jet Fuel Markets -- Asia and the United States are experiencing historic prices for jet fuel, yet their current circumstances couldn’t be more opposite. In Asia, jet fuel has plummeted over the past two months to its biggest discount on record for this time of the year. At the exact same time, the United States Atlantic Coast is being hit by the highest jet fuel prices in the region in more than a year. The cash differentials for jet fuel cargoes in Singapore, a major port for Asian trade, hit a discount of $1.34 a barrel as compared to benchmark quotes earlier this week. This means that prices for January are at their putting them at their weakest since at least 1998, when Refinitiv Eikon started collecting this type of data. The jet fuel cash differentials recorded in Singapore have more than quadrupled over the last two months, also hitting their lowest level since August 2015 on a daily outright basis. In Asia, the drop in jet fuel prices is in large part thanks to a supply surge and a relatively warm winter, which is keeping demand for kerosene (an important component of jet fuel) lower than in past years. Temperatures in some of the region’s most populated cities, including Tokyo, Beijing and Shanghai, are expected to remain unseasonably warm for the next few weeks. Even in colder North Asia, where kerosene is generally widely used to heat homes during these months, there have been no prolonged cold snaps so far this year. The price of East-Asian jet fuel could pick up in the next few months if the cold weather finally comes in or with the significant spike in demand that’s expected to come with the major travel surge around Lunar New Year. The holiday will land on Feb. 5-6 this year. In India, state oil companies also cut the price of aviation turbine fuel by nearly 15 percent, the second consecutive drop in Indian jet fuel prices. In fact, the drop in aviation turbine fuel prices in India is so significant that jet fuel is now cheaper than both gasoline and diesel in most parts of the country. Meanwhile, in the eastern United States, jet fuel differentials have risen to their highest levels in 16 months in the face of a stock slump across the region. United States Atlantic Coast (USAC) jet fuel inventories have plummeted 656,000 barrels to a total supply of just 8.29 million barrels according to numbers from the most recent US Energy Information Administration data. This makes the region’s overall jet fuel reserve more than a million barrels less than during the same time period last year. “I'm having trouble finding sellers," one USAC distillates broker told S&P Global.
Texas Hill Country landowners fight Kinder Morgan pipeline - Hank Sauer, a retired health care administrator, 84, had lived on the property with his wife. But she suffered health problems, and the couple moved into an assisted-living facility in San Antonio. Sauer is worried that a natural gas pipeline proposed by Houston-based Kinder Morgan, one of the largest pipeline companies in the country, will reduce his land’s value. He’d been looking to sell the property, but said he recently pulled it off the market because interest dropped off after Kinder Morgan announced the project. He was seeking to sell the land for just under $1 million. “We have no ill will toward pipelines — they’re needed. But put them somewhere where they’re not going to destroy lives and destroy people’s communities,” said Sauer, who describes himself as “very conservative.” Kinder Morgan is surveying the possible route and lining up agreements with property owners. If the company receives the necessary permits and approvals, it wants to start construction by this fall and open the pipeline at the end of 2020. Agencies that will review the project include the Texas Railroad Commission, U.S. Fish and Wildlife Service, U.S. Army Corps of Engineers and the Texas Commission on Environmental Quality. The company’s proposal — and simmering fight with landowners in the pipeline’s path — comes as pipeline operators pump billions of dollars into major projects to eliminate a shortage of pipelines to transport oil and gas from America’s largest oil field. Pipeline companies such as Kinder Morgan can legally seize private land for their projects through eminent domain, though they’re required to fairly compensate owners for the property. That has landowners in the Hill Country scrambling to learn their rights and figure out what they can do to either reroute or stop the pipeline. Kurt Sauer, one of Hank’s sons and a lawyer, said he finds it hard to understand why the state gives pipeline companies the ability to use eminent domain.“I missed that class in law school that not only can government take your property and build a road or a pipeline but now some private companies get to take your property without considering anything, or without you getting to have any say in it whatsoever,” he said.
Walz administration reconsidering lawsuit against Enbridge pipeline project - Under former Gov. Mark Dayton, Minnesota’s Department of Commerce put up a strong fight against a controversial proposal for a crude oil pipeline in northern Minnesota, even as the project won approvals and permits from state regulators.But whether that approach will continue under Gov. Tim Walz, who was sworn in earlier this week, is now unclear. The fledgling DFL administration is evaluating whether to proceed with a key lawsuit challenging the Line 3 pipeline plan from Calgary-based Enbridge, Steve Kelley, the Commerce Commissioner, said on Wednesday. Kelley, a former DFL state senator, was appointed by Walz last week.“The governor has asked the department to take another look, with the change of administrations, at the Enbridge litigation, and that’s my responsibility to do,” Kelley said during a panel discussion hosted by the Minnesota Chamber of Commerce. “And let’s say I just haven’t finished that job in the last two days.”The Line 3 project has drawn passionate debate, pitting environmentalists concerned about fossil fuel emissions and the safety of transporting crude oil through Minnesota’s lake country against some businesses and trade unions who say the new pipeline will bring an economic boost in Greater Minnesota. Protests against the pipeline have already erupted on a few occasions since Walz was elected, most recently in the middle of a speech Walz was giving in the Capitol shortly after being sworn in. A large group of unions, politicians, businesses and local chamber of commerce officials said they planned to hand deliver a letter to Walz’s office on Thursday morning urging the governor to withdraw the state lawsuit against Line 3. Enbridge says the new 36-inch pipeline, known as Line 3, is necessary to replace an aging 34-inch pipeline that is corroding and operating at roughly half capacity. If built, the $2.6 billion, 337-mile Minnesota portion of the new Line 3 would carry roughly 760,000 barrels of oil per day through the state. The state’s independent Public Utilities Commission granted Enbridge two key approvals last year — a Certificate of Need and a route permit. But the Commerce Department appealed that Certificate of Need in December, arguing Enbridge had not adequately shown the pipeline is necessary to meet state demand for oil, according to a written statement issued by Dayton at the time.
Oil drillers, nature lovers get access to public lands despite shutdown -- Food is going uninspected by regulators. Time-sensitive data is going uncollected by scientists. And other federal workers are going without pay while doing critical work manning airport terminals and border crossings. While the partial government shutdown’s effects reverberate throughout the federal bureaucracy, the Trump administration is actively working to ease the impact on wilderness lovers and oil drillers alike. Officials at the Interior Department have made a conscious effort to pursue two priorities President Trump has emphasized in his time in office — energy exploration and access to public lands — during the shutdown, according to a top department official who spoke on the condition of anonymity in order to talk frankly. The Trump administration’s prioritization of energy exploration means the oil and gas business, one of the most heavily regulated industries in the United States, says it has yet to feel any real consequence from the shutdown.“To this point, we have not seen any major effects of the shutdown on our industry,” Mike Sommers, president and chief executive of the oil and gas business’s chief lobbying organization, the American Petroleum Institute, told reporters Tuesday.The department’s Bureau of Land Management, for example, has accepted and published 22 new drilling permit applications in Alaska, North Dakota, New Mexico and Oklahoma between the start of the shutdown and Wednesday afternoon. Officials said they did not anticipate any delays in the processing of either permit applications or requests for inspections of drilling operations on federal land.The Bureau of Energy M anagement, which gets a large portion of its budget from fees, is operating at near full strength. Nearly every job is exempt “in order to comply with the administration’s America First energy strategy” and expand leases to the oil and gas industry -- “work must continue toward” selling leases that could lead to drilling on the outer continental shelf, according to the agency’s contingency plan. But elsewhere the department says it is not even accepting other sorts of filings — such as public-records requests from journalists, activists and other members of the public made under the Freedom of Information Act — due to the shutdown.
Climate Activists Keep the Pressure on Polis With Anti-Fracking Petition - With a little less than 24 hours to go before his inauguration, Governor Jared Polis got a polite but firm reminder from environmental activists about the issues that could very well define his time in office: fracking and climate change. With inaugural banners already hanging outside, representatives from 350 Colorado, Colorado Rising and a half-dozen other groups paid a visit on Monday, January 7, to Polis’s new digs at the State Capitol, where they delivered a petition calling on Colorado’s incoming governor to take action against the oil and gas industry. “We’re very concerned, obviously, about the climate crisis,” Micah Parkin, executive director of 350 Colorado, told a Polis staffer in a brief meeting; activists were told the governor-elect wasn’t available to receive the petition in person. “We know the governor cares about these issues, and we hope he’ll take this very seriously.” Polis spokeswoman Maria De Cambra said that the incoming administration hadn’t had time to review the petition amid preparations for today's inauguration, and declined to comment on its demands. Polis will be inaugurated today, January 8. The petition, signed by more than 5,000 people and endorsed by 180 organizations from across the state, calls on Polis to take “immediate and meaningful actions” to protect Coloradans from both the health and safety hazards posed by fossil-fuel extraction and the long-term risks of climate change. Activists are calling for a moratorium on drilling permits until new regulations can be put in place, and the petition’s demands offer a glimpse at where Colorado’s long-running battles over fracking could be headed as Polis and the new Democratic majority in the state legislature take over.
Weld County oil and gas spill report for Jan. 6 - 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. Any spill release that may impact waters of the state must be reported as soon as practical. Any spill of five barrels or more must be reported within 24 hours, and any spill of one barrel or more, which occurs outside secondary containment, such as metal or earthen berms, must also be reported within 24 hours, according to COGCC rules. Spills and leaks typically are found during routine maintenance on existing wells, though some actual “spills” do occur among the 23,000-plus wells in the county.
- • PDC ENERGY INC, reported Dec. 31 a tank battery spill about 6 miles northeast of Kersey, near Weld County roads 64 and 61. An unknown amount of oil and between five and 100 barrels of produced water spilled. A water vault valve failure released the produced water and oil inside containment.
- • BONANZA CREEK ENERGY OPERATING COMPANY LLC, reported Dec. 29 a tank battery spill about 10 miles northwest of Orchard, near Weld roads 62 and 89. About 10 barrels of oil spilled. A dump valve on a vertical scrubber froze in the open position, causing the production tanks to overpressure and spill oil inside containment.
- • KERR MCGEE OIL & GAS ONSHORE LP, reported Dec. 28 a historical tank battery spill about 7 miles northeast of Fort Lupton, near Weld roads 22 and 41. Less than five barrels of oil, condensate and produced water spilled. Waters of the state were impacted. A groundwater sample indicated benzene and total xylene concentrations of 358 μg/L and 10,000 μg/L respectively.
- • WHITING OIL & GAS CORPORATION, reported Dec. 25 a tank battery spill about 7 miles northwest of Avalo, near Weld roads 120 and 133. About nine barrels of produced water spilled. Crews found the spill during operations, and the underground produced water transfer line was isolated.
- • EXPEDITION WATER SOLUTIONS COLORADO LLC, reported Dec. 23 a well pad spill about 3 miles northeast of Firestone, near Weld roads 20 and 19. Between two and three barrels of oil-based mud spilled. The oil-based mud hauler failed to completely close the valve on the back of his truck.
- • VERDAD RESOURCES LLC, reported Dec. 23 a tank battery spill about 3 miles northeast of Keota, near Weld roads 100 and 109. Between one and five barrels of oil spilled. A leak formed in a line to a tanker truck, spilling oil on roadbase.
US Shale Drilling Activity Slowed in 2H 2018- After peaking in mid-2018, U.S. fracking activity slowed in the second half of 2018, according to a report released Jan. 7 by Rystad Energy. The nation’s shale drilling activity was stable from April to August 2018 with an average daily level of 48 to 50 fracked wells. However, activity slipped to 44 jobs per day in November 2018. “After reaching a peak in May/June 2018, fracking activity in the Permian has gradually decelerated throughout the second half of 2018,” Rystad Energy senior analyst Lai Lou stated in the report. Lou added that seasonal activity deceleration began in November for all major plays except the Eagle Ford. But some operators weren’t a part of the deceleration as the report notes major ExxonMobil experienced a strong uptick in fracking activity in October 2018. Energen Corporation was also unmoved by the slowdown. “In general, many of the key operators have exhibited a largely flat trend from June to October 2018, which implies that the market-wide deceleration in fracking activity has a more significant implication for smaller operators in contrast to the major players in the Permian,” Lai said. “In terms of absolute numbers, the reduction in the number of jobs for top 10 operators collectively is around 10 percent from June to October while the corresponding percentage for the remaining operators is as high as 48 percent in the same timeframe.”
U.S. fracking fell 12% from midyear, report says - U.S. shale activity dropped by more than 10 percent from a midyear peak to November, according to a new report Monday from the Norwegian research firm Rystad. Energy companies completed about 50 shale wells per day in the U.S. in June and that number slipped down to 44 wells hydraulically fractured, or fracked, and completed by the end of November, Rystad estimates. Oil prices plunged about 40 percent from early October through December, and pipeline shortages in West Texas' booming Permian Basin have slowed fracking activity in the region. In fact, well completions activity seemingly dropped everywhere except South Texas' Eagle Ford shale, which is nearer Gulf Coast port and refining hubs with ample pipeline capacity already in place, Rystad concluded. "After reaching a peak in May and June '18, fracking activity in the Permian has gradually decelerated throughout the second half of 2018," Rystad senior analyst Lai Lou said. "There has been a considerable slowdown in Bakken and Niobrara in November based on our estimation," Lou added, citing the major shale plays in North Dakota and Colorado, respectively. Rystad also concluded that smaller operators face much bigger impacts. The biggest player, Exxon Mobil, even bucked the trend and increased fracking activity in October before slowing down in November. In general, major operators have declined about 10 percent since midyear, while smaller players have cut back as much as nearly 50 percent, according to Rystad.
US Fracking Wells Are Producing Far Less Than Forecast - According to a new report by the Wall Street Journal, thousands of shale oil wells that have been drilled over the last five years are pumping less than what was forecast to investors. The new discovery has raised questions about the strength behind the United States' newfound supply of shale oil. The WSJ compares well productivity estimates that were disclosed to investors versus public data of how these wells have performed to date; after analyzing 16,000 wells operated by 29 producers in places like North Dakota and the Permian basin, the Journal found that about 66% of projections made by companies between 2014 and 2017 are reportedly "overly optimistic". In total, these companies are set to pump about 10% less oil and gas than was forecast, an amount which equates to about 1 billion barrels of oil and gas over 30 years, which would be priced at about $30 billion at current market prices. In some regions, companies are reportedly off track by more than 50%. As previously discussed, the US shale boom has been one of the main reasons that the US has become an oil superpower over the last couple of years, while trimming the US reliance on foreign oil to virtually nothing. But now shale drillers are under pressure to cut spending, as oil prices have cratered almost 50% in the last three months. Two companies that operate in the Permian basin, Pioneer Natural Resources Co. and Parsley Energy are among the main culprits lagging behind forecasts (the analysis excluded several oil conglomerates like Exxon, because they didn’t make shale projections). That said, Pioneer and Parsley disputed the report's findings, saying that the lifespan of wells was different from forecasts, while other companies like Whiting Petroleum Corp. simply stated that the forecasts can be unreliable and that they were going to move away from providing them. Certainly an easy thing to say now that investments have been made. Another driller, Oasis Petroleum Inc., tried to hide behind accounting-style excuses, stating about projections: “It’s not a science, it’s more of an art.” Prior to the shale boom in 2007, oil companies were valued close to their reserves. Now these companies, on average, are valued almost three times higher. It is no secret that shale companies have taken a significant amount of capital from Wall Street over the last 10 years - mostly in the form of junk bonds - and investors have mostly lost money. Since 2008, an index of United States based oil and gas companies was down 43% while the stock market has doubled in the same time. The article examined 29 companies which collectively spent $112 billion more in cash than they have generated from operations over the last decade.
Producers weigh DUC production at $50/b oil - — The volume of drilled but unproduced wells continues to build across the US to record levels, but market sentiment is mixed on whether oil prices need to continue to recover from levels now around $50/b to entice new production. As the price of oil began to slip early in Q4 2018 from the mid-$70s/b, many upstream operators projected they would begin producing their DUC inventory in early 2019. But oil has since slid to mid-2017 levels and producers' views may have changed. On Wednesday, front-month WTI crude futures settled at $52.36/b, up $2.58 on the day, as prices continued to climb for a recent low of $44.61/b December 27. While crude prices have trended higher, market-watchers are mixed on what will induce operators to begin producing banked wells. "The lower oil price raises some questions about whether you go ahead with completing these wells," "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." Operators consider DUC production a bargain. Roughly 30%-40% of a well's total cost is drilling, so paying less when it comes time to produce is an attractive prospect, especially when oil prices are lower and they want to maximize cash flows. If 2019 oil prices are weak, "DUCs will likely have extra significance in helping [operators] maintain or grow production volumes," Even though the DUC count rose last year, some companies may have begun completing and producing their banked well inventories before oil prices dropped, Thummel noted US oil production in 2018 was larger than expected and the oil rig count also rose last year, but not enough to support such a large output growth spurt. As a result, "there had to be a lot of DUCs completed" last year, Thummel said. "That may have been part of why we were able to grow production so much. It's not as if [individual] wells produced much more than anticipated." Evercore ISI noted in its 2019 Global E&P Spending Outlook released last month E&P operators drilled more than 15,000 wells in seven major US shale basins during the previous year, but completed less than 13,000 as DUC inventory increased by nearly 30%. Ultimately what operators do will depend on how long oil prices remain pressured and how much takeaway capacity is available to bring onshore oil to lucrative US Gulf Coast markets. That is especially true in the Permian Basin of West Texas/New Mexico, where pipelines are now about full. According to the US Energy Information Administration, there were 8,723 domestic oil and natural gas DUCs in November 2018, with 4,039 of those, or 43% of the nationwide total, in the Permian.
Attorneys debate constitutionality of Lake Sakakawea mineral law — An attorney representing a group of North Dakota taxpayers argued Friday that a law approved by legislators two years ago “gives away” $2 billion in state oil and gas mineral assets and should be declared unconstitutional. But attorneys representing North Dakota said the legislation being challenged is not a giveaway, but a process to define the boundary and extent of the state’s mineral interests. East Central Judicial District Judge John Irby heard legal arguments for more than two hours on Friday in the lawsuit brought by Rep. Marvin Nelson, D-Rolla, former Republican governor candidate Paul Sorum and others. The case against the state of North Dakota challenges the act approved by legislators in 2017 known as Senate Bill 2134 that sought to resolve disputes over the ownership of oil and gas minerals under Lake Sakakawea. The taxpayer plaintiffs argued that Irby should declare the act unconstitutional and invalid while the state argued the lawsuit should be dismissed. The taxpayer plaintiffs argue the state owns the minerals under the Missouri River, including lands submerged by the construction of the Garrison Dam, which created Lake Sakakawea. Attorney Terrance Moore, representing the taxpayers, said the legislation transfers about $200 million in oil and gas revenue from state taxpayers to a select group of private parties.
Activist seeks dismissal from pipeline racketeering lawsuit (AP) — An American Indian and environmental activist named in a federal racketeering lawsuit says her opposition to the Dakota Access oil pipeline was constitutionally protected free speech, not an attempt to incite violence as the company alleges. Krystal Two Bulls asked a judge in a court filing last month to dismiss her from the lawsuit filed by Texas-based Energy Transfer Partners, which built the $3.8 billion pipeline to move North Dakota oil to Illinois. The company’s $1 billion lawsuit filed in August 2017 and revised in August 2018 claims environmental groups and five individuals, including Two Bulls, interfered with company business, facilitated crimes and acts of terrorism, incited violence, targeted financial institutions that backed the project, and violated defamation and racketeering laws. ETP’s lawyers maintain that Two Bulls was a key player in the Red Warrior Camp, an aggressive faction of pipeline protesters the company labels “a front for eco-terrorists.” The Standing Rock Sioux Tribal Council ultimately asked the group to leave the protest area near its reservation in southern North Dakota in late 2016. Two Bulls’ attorneys argue in court documents that her anti-pipeline activism was not illegal. “Plaintiff’s attempt to recast Ms. Two Bulls’ lawful advocacy as racketeering is nothing more than an attempt to punish and chill political speech plaintiffs do not like,” they said.
Judge allows tribes to challenge Corps’ Dakota Access study (AP) — A federal judge is allowing four Native American tribes in the Dakotas to challenge the recent conclusion of federal officials that a Dakota Access oil pipeline spill wouldn’t unfairly affect them, further prolonging a court case that has lingered for more than two years. The Standing Rock, Cheyenne River, Yankton and Oglala Sioux sued in July 2016 and are still fighting even though the $3.8 billion pipeline began moving North Dakota oil to Illinois in 2017. They fear environmental harm should the pipeline spill into the Missouri River, which they rely on for drinking water, fishing and religion. U.S. District Judge James Boasberg in June 2017 ordered the Army Corps of Engineers to do more study on the pipeline’s impacts on tribes. The agency last fall completed more than a year of additional work that it said backed up its earlier determination that the pipeline does not pose a higher risk of adverse impacts to minorities. The tribes contend the Corps has simply rubber-stamped earlier conclusions that were welcomed by President Donald Trump after he took office. The tribes maintain the Corps either didn’t allow them adequate input or didn’t give enough weight to the information they provided. The Corps has said the tribes have been difficult to work with. Tribes late last year asked to challenge the Corps’ 140-page report on its additional work. Boasberg, in a ruling dated Thursday, said he will allow it but that the Corps and Texas-based pipeline developer Energy Transfer Partners can oppose the introduction of any new tribal claims not specifically related to the additional study. The Corps and ETP had said in late December that they would not try to block tribal challenges as long as the judge made that stipulation. Boasberg has set a Jan. 31 deadline for the Corps to give the tribes access to all of the documents it used in making its decision.
Oil, brine spill at Williams County well contained on site (AP) — A tank overflow at a well in Williams County spilled nearly 1,700 gallons of oil and 11,000 gallons of byproduct saltwater. Complete Energy Services reported the spill Wednesday at a well about 6 miles southeast of Tioga. The state Oil and Gas Division says the oil and brine were contained on site and all of it has been recovered. A state inspector has been to the site and will monitor any additional cleanup.
TransCanada Hopes to Start Construction on Keystone by Summer -- TransCanada Corp. is hoping to start construction by June on its decade-old Keystone XL oil pipeline project, even as the U.S. government shutdown threatens to delay a key legal proceeding. In a court filing on Monday, the Calgary-based pipeline company said its current schedule requires pre-construction activities including setting up pipe yards and work camps to resume by February. That would allow full work to begin by June and be completed in late 2020, with the pipeline entering service in early 2021. TransCanada reiterated that a yearlong delay would cost the company $949 million in lost profits and delay the hiring of about 6,600 workers. The company would also face higher construction costs as competition for crews increases in 2020, TransCanada said in a letter filed in U.S. District Court in Montana. The 1,200-mile (1,900-kilometer) pipeline, which would help carry 830,000 barrels of crude a day from Alberta’s oil sands to U.S. Gulf Coast refiners, has faced legal holdups amid staunch opposition from environmental groups and landowners. The same court last month sided with environmental groups opposing the project and said TransCanada couldn’t resume field work while it awaited a new environmental review from the U.S. State Department. Prior to that ruling, TransCanada had hoped to start construction as early as mid February. A hearing is scheduled for Jan. 14, though the Justice Department -- which is representing the State Department in the proceedings -- lacks funding due to the partial government shutdown. TransCanada asked the court to move forward with that hearing without the Justice Department, a move the agency supported in a separate letter.
US government says shutdown shouldn't stop Keystone hearing --The U.S. government shutdown may prevent Justice Department attorneys from going before a Montana judge next week to ask him to lift his hold on Keystone XL oil pipeline construction.But the federal attorneys and the Canadian company that wants to build the pipeline say their absence shouldn't delay Monday's hearing on the matter in U.S. District Court in Great Falls. Justice Department attorney Bridget McNeil said in a court filing Monday that government lawyers are prohibited from working except in emergencies during the shutdown. But, she added, federal attorneys' participation in the hearing shouldn't be necessary. "The company believes that the potential absence of the federal government at the hearing does not provide cause to delay the matter," attorney Peter Steenland Jr. told the court in a filing last week.In November, Morris ordered an injunction prohibiting TransCanada from any pipeline construction activities and some pre-construction activity. The judge ruled that the Trump administration had not fully considered the environmental effects when it approved a permit to build the 1,184-mile (1,900 kilometer) pipeline from Alberta that would ship up to 830,000 barrels a day of crude oil to the Gulf Coast.TransCanada appealed Morris' ruling last month to the 9th U.S. Circuit Court of Appeals. On Monday, the company plans to argue that Morris' order blocking construction should be stayed while that appeal is pending, "with the goal of preserving the 2019 construction season," according to the company's request. Norrie Ramsay, a TransCanada vice president, said in a sworn statement that the company laid off about 650 contract workers from pre-construction activities as a result of Morris' order. If pre-construction activities resume by March 15, the company could still begin construction by Aug. 1, he wrote. Any later, and the company would be unable to perform any construction in 2019, creating a one-year delay that would add significant costs to the project, he wrote.
South Dakota County Secures More Jail Cells to Prepare for KXL Pipeline Protests - Officials from a South Dakota county secured more jail cells to prepare for potential protests of the controversial Keystone XL (KXL) pipeline, the Black Hills Pioneer reported.Last month, the Butte County Commission in South Dakota approved an agreement to use Faulk County jails for $85 per day per detainee, should the demonstrations go ahead and if protestors are arrested. Faulk County is roughly 270 miles east of Butte County.The KXL's planned route will cross through the northeastern corner of Butte County."The only reason we did it was kind of an insurance thing," Butte County Commissioner Stan Harms said Monday, as quoted by the Rapid City Journal. "We don't have a jail in Butte County. We normally use Sturgis, and if we can't get in there, the overflow goes to Deadwood or Rapid City. Now, we have Faulk County in case everything is full up."The arrangement was made even though a federal judge blocked construction of the long-gestating project in November. Despite the judge's orders, TransCanada plans to start construction on the $8 million tube this year, according to the AP. The developer remains "committed" to building the 1,179-mile pipeline designed to carry 830,000 barrels a day of tar sands oil from Alberta to Nebraska.
Gas pulled from Aliso Canyon storage for first time this winter — The Aliso Canyon natural gas storage facility, which has seen limited use for almost three years, has again been pressed into service, according to Southern California Gas. "Due to cold weather over the last week and high customer demand for natural gas, all SoCal Gas storage fields, including Aliso Canyon, have been used to provide system reliability," the company said on its web site. The withdrawal had little effect on spot gas prices, which were coming off a three-week high reached Tuesday when SoCal Gas city-gates hit $7.65/MMBtu. The last time it finished higher was December 10, when it closed the day trading at $8.535/MMBtu. On Thursday that pricing point shed 99.5 cents to come in at $6.655/MMBtu. In Friday trading, it was off another 80 cents to $5.86/MMBtu. The withdrawal prompted SoCal Gas to issue a system-wide notice stating it would work with California balancing authorities to reduce power generation demand on the SoCal Gas system for Monday, boosting Southern California day-ahead power prices. SP15 on-peak day-ahead was up $3, trading in the mid-$40s/MWh area for Monday delivery. CONSTRAINTS This is the first withdrawal from Aliso Canyon this winter. The storage facility has been under capacity and withdrawal constraints since February 2016 following a leak at the site that took several months to repair. The facility can deliver about 1 Bcf/d. But California regulators have said gas cannot be taken out of Aliso Canyon except as a last resort. That point came Thursday. Los Angeles saw temperatures peak in the upper 60s and lows were in the low 40s, which would give a boost to demand as customers used their furnaces. Demand was also affected by other areas of Southern California, as some inland cities, such as Riverside, saw temperatures drop into the 30s, further boosting need. Demand in the SoCal Gas footprint has been at high levels since the start of the year, topping the 4 Bcf/d mark three times and averaging 4.136 Bcf/d. By contrast, the company's December demand averaged 2.691 Bcf/d. Withdrawals from Aliso Canyon could continue as long as the cold weather persists, the company said.
Another Cold Delay Hits Gas - Stop us if you've heard this before: Cold later in January was delayed yet again over the weekend, sending the February natural gas contract over 3% lower on the day. The role of weather was incredibly evident with all the losses right at the front of the natural gas futures strip. The result was that the G/H February/March contract spread approached lows previously set last week. Following a bearish EIA print last Friday, it was weather that seemed to keep prices buoyed. That catalyst was eliminated over the weekend, as in our Morning Update we highlighted a significant weekend GWDD loss which led to the Sunday evening gap lower. In our Natural Gas Weekly Update published after that Morning Update we outlined our expectation for how weather forecasts will change through the week as well as what kind of balance Thursday's EIA print may reveal following last Friday's very bearish print. Of note was a recent significant tick higher in natural gas Salt storage. We also outlined what the latest Nino and tropical forcing developments could mean for weather model guidance this week, and compared our long-range forecast to the Week 3-4 forecast of the Climate Prediction Center. Finally, in our Afternoon Update we ran through afternoon weather model guidance and expected overnight trends, showing that generally afternoon model guidance fit expectations with Climate Prediction Center Week 2 forecasts little-changed.
Production Dip Keeps Gas Firm - The February natural gas contract logged a small gain on the day, with colder mid-day weather model runs being canceled out by warmer European model guidance into the settle and limiting the gain to just under 1%. This February gain was in line with what we saw for most contracts in 2019, and it was actually the summer contracts that were the strongest on the day. The March contract meanwhile logged a small loss. The result was a large move higher in the February/March contract spread back to recent highs. Meanwhile, the famed March/April H/J spread actually fell to new lows on this March weakness today. Prices were initially quite strong on overnight GWDD additions that we outlined in our Morning Update. This followed a turn in our sentiment to "Slightly Bullish" in our Afternoon Update yesterday, which verified well as prices shot over $3 multiple times today. Of note was a recent dip in production since the new year, which has kept supply more limited. After ramping into the new year, year-over-year production growth is only sitting around 9 bcf/d right now. This could help increase upside in gas prices if it persists and weather forecasts trend colder; we outlined the possibilities of this in our Note of the Day, Afternoon Update, and subscriber live chat. We also released our Seasonal Trader Report today, where we looked at our forecast through the remainder of winter and considered the impacts of a recent weakening in El Nino conditions.
U.S. natural gas prices sink on mild weather and hedge fund sales - (Reuters) - U.S. natural gas prices have fallen sharply as the unusual cold weather of late November and early December has given way to warmer-than-normal temperatures in the last four weeks. Futures prices for gas delivered at Henry Hub in February 2019 have fallen below $3 per million British thermal units from a peak of almost $4.80 in the middle of November. The exceptional rally in gas prices during the late summer and early autumn has unwound, leaving gas prices back at the low level that has prevailed for the last three years (https://tmsnrt.rs/2RIgtvy ). Cumulative heating demand for the 2018/19 heating season was around 6 percent higher than the long-run average through Dec. 12, according to the U.S. government Climate Prediction Center. But the sustained period of cold in late autumn and early winter has been replaced by an extended period of mild weather and cumulative heating demand has now dropped 4 percent below normal ("Degree days statistics", CPC, Jan. 8). Government forecasts show average or above-average temperatures expected across most of the major population centres of the United States for much of the next three months. So far this winter, gas stocks have fallen much less for any given level of heating demand than in the previous heating seasons, which has also helped rebalance the market. Surging gas prices have encouraged electricity generators to run gas-fired units for fewer hours in the fourth quarter and turn to coal-fired units instead, cutting gas consumption and making scarce stocks go further. Working gas stocks in underground storage were 726 billion cubic feet (20 percent) below the previous five-year average in mid-December, according to data from the U.S. Energy Information Administration. By the end of the year, however, the deficit had eased to just 561 billion cubic feet (14 percent) due to warmer weather and a reduction in hours by gas-fired generators ("Weekly natural gas storage report", EIA, Jan. 4).
Natural Gas Price Adds to Gains Following Inventory Report - The U.S. Energy Information Administration (EIA) reported Thursday morning that U.S. natural gas stockpiles decreased by 91 billion cubic feet for the week ending January 4. Analysts polled by Reuters were expecting a storage withdrawal in a range of 50 billion to 115 billion cubic feet. The five-year average for the week is a withdrawal of 182 billion cubic feet, and last year’s withdrawal totaled 359 billion cubic feet, an all-time record driven by extremely cold weather along the east coast. Natural gas inventories fell by 20 billion cubic feet in the week ending December 28.Natural gas futures for February delivery traded up about five cents in advance of the EIA’s report, at around $3.03 per million BTUs, and rose to around $3.06 after the report was released. For the period between January 10 and January 16, NatGasWeather.com expects “moderate” demand and offers the following outlook: A strong cold front will push across the Great Lakes and Northeast the next several days with lows reaching the 0s to 20s for strong demand. However, much of the rest of the country will be mostly mild with highs of 40s to 70s to counter. Weather systems with rain and snow will track into the West Coast with rain and snow, but with only slight cooling. This weekend into early next week will bring weather systems across the southern and eastern US with rain and snow, followed by warming mid next week. Total U.S. stockpiles increased week over week from about 14.3% to 7.2% below last year’s level and also rose from about 17.2% to 15.1% below the five-year average. The EIA reported that U.S. working stocks of natural gas totaled about 2.614 trillion cubic feet at the end of last week, around 464 billion cubic feet below the five-year average of 3.078 trillion cubic feet and 204 billion cubic feet below last year’s total for the same period. Working gas in storage totaled 2.818 trillion cubic feet for the same period a year ago.
Larger Gas Storage Draw Can't Get Prices Moving - Gas prices got going early this morning, running up towards $3.1 resistance before reversing lower into the morning's EIA natural gas storage number. Despite a fairly bullish number prices continued lower through the afternoon as the physical market lagged, with the February contract settling down about half a percent on the day. As has been the case all week, it was the March contract that lagged the most through the day. This move came despite the EIA announcing a -87 bcf net implied flow of natural gas from storage next week compared to our estimate of -75 bcf. Another 4 bcf of gas was reclassified from working to base gas, resulting in a weekly net storage change of -91 bcf. Yet not even this could save gas prices, as cash prices sunk through the morning and afternoon GEFS model guidance decreased cold risks slightly (images courtesy of Tropical Tidbits). Still, it was a jumpy day where the main story continues to be summer gas strength versus March weakness, with the February contract stuck in between as the February/March G/H spread continues ticking higher. Meanwhile, the H/J March/April spread continues to sell off and is now inside the historical range of the last few years. This comes as, even with today's slightly larger storage number, storage levels fell far less than the 5-year average of -187 bcf. Additionally, though the print was tighter than last week's pull and expectations, it was still loose to the last 10 weeks on aggregate. Now traders are focusing back on long-range weather expectations and the latest daily balance developments to determine the next move for gas prices. Despite daily moves under $2.9 and near $3.1 over the past week and a half, most recent settles have been right around the $2.95-$2.98 range, with prices proving unable to sustain any move outside this range.
Cold Arrives In Force And Sends Gas Soaring --After what was a relatively slow week for natural gas prices, the February gas contract finally shot higher as all model guidance increased the intensity of cold in the final third of January. The contract logged an over 4% gain into the settle and continued higher sitting now up more than 6% on the day. It was actually the March contract that eked out the largest gain on the day, with the February contract taking the lead post-settle but the entire strip rallying. This is exactly the rally we had been warning clients about all week was possible once weather cooperated, as we outlined that we expected bullish weather trends this week and held a "Slightly Bullish" weekly natural gas sentiment. In our Afternoon Update yesterday we highlighted that our Slightly Bullish sentiment would continue into the day as we expect the dip yesterday afternoon under $3 would be brief, and in our discussion we said that "...with supportive model guidance $3.1 is in play tomorrow and/or early next week..." Finally, this morning in our Morning Update we reiterated that both $3.1 and $3.25 were in play into early next week, and we expected a rally today on overnight GWDD forecasts that held yesterday's colder trends. We also outlined that 12z models and Week 3 forecasts were likely to turn more bullish today. All this verified well with American and European model guidance showing very significant Week 2 cold risks this afternoon that shot gas prices through resistance. It started with American guidance, which showed very significant cold Days 12-16 (images courtesy of Tropical Tidbits). The Climate Prediction Center picked up on this too, increasing Week 2 cold risks in their latest forecast this afternoon. Their afternoon update also showed that cold was likely to linger in the East through Weeks 3-4.
US Drops Four Oil Rigs This Week – Rigzone --The US oil rig count dropped by four this week, while the country added four gas rigs, keeping the total rig count flat.U.S. drillers cut four oil rigs this week, marking the second consecutive week of declines, according to data compiled by Baker Hughes, a GE Company. However, the U.S. added four gas rigs this week, keeping the total rig count flat at 1,075. Oklahoma lost four rigs this week, while Texas and Louisiana dropped two rigs apiece. New Mexico, Pennsylvania and West Virginia all added two rigs each, while Kansas and Ohio both dropped one rig.As far as basins go, the Marcellus had the most gains this week, adding a total of four rigs. The Haynesville, Permian and Utica each added one rig. The Cana Woodford, the only basin to drop rigs this week, lost two rigs. A recent report by Rystad Energy showed that fracking activity in the U.S. slowed in the second half of 2018 and several operators are predicting more modest approaches to CAPEX in 2019 due to a fall in crude oil prices.
Despite shutdown, Trump administration continues work to begin oil drilling in ANWR - As the partial government shutdown drags on, the Trump administration is making sure some Interior Department employees continue work on one of its biggest, most controversial priorities: opening the Arctic National Wildlife Refuge to oil drilling. Drilling opponents were quick to criticize the move, contrasting it with the overflowing trash cans and unattended public toilets in national parks managed by Interior, which have become a symbol of the continuing stalemate in Washington, D.C. Emails obtained by Alaska’s Energy Desk show that on Jan. 3 — 13 days into the shutdown — Bureau of Land Management project coordinator Nicole Hayes wrote to community leaders in Alaska to schedule public meetings for the ongoing environmental review process needed to allow oil lease sales in the Arctic refuge. When contacted Friday by Alaska’s Energy Desk, Hayes’ email account sent an automatic reply: “Due to the lapse in funding of the federal government budget, I am out of the office. I am not authorized to work during this time, but will respond to your email when I return to the office.” The new Democratic chairman of the House Natural Resources Committee is demanding details on how the Department of the Interior is continuing its push toward oil lease sales in the Arctic National Wildlife Refuge despite the partial government shutdown.Congressman Raul Grijalva of Arizona wrote to acting Interior Secretary David Bernhardtq uestioning whether his department’s work is appropriate during the partial shutdown. Interior is continuing its environmental review for oil lease sales in the Arctic refuge, as well overhauling the management plan to the west of the refuge in the National Petroleum Reserve-Alaska.
Trump Administration Works Overtime to Make Sure Shutdown Doesn’t Stop Oil Drilling - The partial U.S. government shutdown has docked fishing boats in Alaska, delayed public meetings on a proposed wind farm off the Massachusetts coast and blocked pharmaceutical companies from seeking approval for new drugs. But the Trump administration is working overtime to make sure the shutdown doesn’t halt oil drilling too -- in ways critics say may flout federal law. “One of the principles of government is that you serve everybody equally,” but that’s not what’s happening here, said Matt Lee-Ashley, a former deputy chief of staff at the Interior Department. “The oil industry is still getting business as usual and everybody else is getting shut out, so it’s fundamentally not fair and it may be illegal too.” To be sure, some government work on energy projects is at a standstill now. For instance, the shutdown appears to have halted environmental reviews of Dominion Energy Inc.’s $7 billion Atlantic Coast pipeline and TransCanada Corp.’s Keystone XL pipeline. Interior Department permits to conduct seismic surveys to help find oil in the Atlantic Ocean also have been held up by the impasse. But the Interior Department is still issuing permits for oil companies to drill wells on federal land and in the Gulf of Mexico. It is also moving forward on oil development in the Arctic National Wildlife Refuge and other parts of Alaska, going so far as to convene public meetings over whether to allow pipelines and drilling rigs near wetlands that sustain caribou and threatened birds. The department’s Bureau of Land Management, which conducted those meetings Friday and Saturday -- and has two more planned this week -- says it is using fiscal 2018 “oil and gas management appropriations” to keep the work going amid a standoff between Congress and Trump over fiscal 2019 spending. And the bureau asserts that onshore drilling permits are an exempted activity.
Appeals filed in lawsuits targeting Alaska oil lease sales (AP) — Environmental groups have appealed the dismissal of two lawsuits challenging federal lease sales in the National Petroleum Reserve-Alaska. Four groups sued in February, claiming lease sales in 2016 and 2017 were illegal because the Interior Department failed to consider their effects on greenhouse gas emissions and climate change. The lawsuit said extraction and burning of the reserve’s fossil fuel would harm Arctic wildlife in the reserve. U.S. District Court Judge Sharon Gleason dismissed the lawsuit in December on procedural grounds, ruling that the claims should have been brought up earlier at a planning stage. Gleason in December also dismissed the second lawsuit, which claimed that the Bureau of Land Management should have updated its environmental reviews before the 2017 lease sale. Five environment groups have appealed that decision.
BLM: Public meetings tied to drilling in Arctic National Wildlife Refuge have been postponed - A federal agency criticized for working on the Trump administration’s pro-drilling agenda during the partial government shutdown says it has postponed several public meetings it had planned to host before drilling can be allowed in the Arctic National Wildlife Refuge. The dates of the meetings, to be held in several Alaska communities and Washington, D.C., will be announced later, the Bureau of Land Management said in a statement Wednesday. The meetings are part of an environmental review that’s required before drilling can occur in the coastal plain of the 19-million-acre refuge in northeastern Alaska. After decades of bitter fighting over development in the refuge, Congress in late 2017 approved future lease sales that could lead to drilling there. The Alaska meetings had been proposed to take place in Anchorage, Arctic Village, Fairbanks, Kaktovik, Fort Yukon, Venetie and UtqiaÄ¡vik. BLM has been criticized by conservation groups and others for conducting work related to the environmental review in the refuge, though its offices have been closed during the shutdown. The agency had not publicly announced when the community meetings would be held, said Lois Epstein, Arctic program director for The Wilderness Society. She said Wednesday’s statement appears to be a response to pressure, including from U.S. Rep. Raul Grijalva, a Democrat from Arizona who chairs the House’s Natural Resources Committee.
US Rig Count Flat As Canadian Drillers Add 100+ Rigs In Winter Season - Baker Hughes reported no change to the number of active oil and gas in the United States this week.The total number of active oil and gas drilling rigs is holding steady at 1,075 according to the report, with the number of active oil rigs decreasing by 4 to reach 873 and the number of gas rigs increasing by 4 to reach 202.The oil and gas rig count is now 136 up from this time last year, 121 of which is in oil rigs.WTI prices were down on Friday despite newfound hopes that trade talks between China and the United States will prove fruitful soon. At 12:25pm EDT, the WTI benchmark was trading down $0.75 (-1.43%) at $51.94—up week on week, with Brent crude trading down $0.87 (-1.41%) at $60.81 per barrel—also up week on week. Today’s price decline marks the end to a more than week-long uptrend for prices that reached a five-week high, after a particularly volatile 2018, even by oil industry’s standards.Canada’s oil and gas rigs increased by 108 rigs this week—a rather abrupt halt to the 4-week losing streak that saw the energy-rich but infrastructure-poor country lose about 100 rigs over the last four weeks as drillers are gearing up for winter season. Canada’s total oil and gas rig count is now 184, which is 92 fewer rigs than this time last year, with a 83-rig increase for oil rigs, and a 25-rig increase for gas rigs for the week. Canada’s falling rig count is likely due in part to a new mandate that called for the country to collectively shave 300,000 bpd off its crude oil production figures.The EIA’s estimates for US production for the week ending January 4 has the United States holding fast at an average rate of 11.7 million bpd for the week. By 1:07pm EDT, WTI had decreased by 1.73% (-$0.91) at $51.68 on the day. Brent crude was trading down 1.75% (-$1.08) at $60.60 per barrel.
14 Indigenous Activists Arrested in Canadian Pipeline Standoff - A standoff between indigenous activists and TransCanada over a proposed natural gas pipeline in British Columbia (BC) came to a head Monday as Royal Canadian Mounted Police (RCMP) stormed a checkpoint set up by protesters to block construction, arresting 14, The Aboriginal Peoples Television Network (APTN) National News reported Tuesday.The RCMP were enforcing a court injunction issued Dec. 14, 2018 saying that Coastal GasLink, a subsidiary of TransCanada, could access unceded Wetsuwet'en territory in order to build a pipeline. The company says it has approval from the elected representatives of all 20 First Nation groups along the pipeline route, but the hereditary Wetsuwet'en leaders say that they are the ones who control access to the land, and they do not want any fossil fuel development to take place on it. "The RCMP's ultimatum, to allow TransCanada access to unceded Wet'suwet'en territory or face police invasion, is an act of war. Canada is now attempting to do what it has always done—criminalize and use violence against indigenous people so that their unceded homelands can be exploited for profit," the main protest camp said in a statement reported by The Guardian.The main camp, the Unist'ot'en camp, was established almost ten years ago on the Morice River to prevent three different pipeline projects from passing through the area, APTN reported. A separate Gidimt'en checkpoint, which the police rushed on Monday, was set up within days of the court injunction, according to The Guardian. The Unist'ot'en and Gitimd'en are two of the five clans that make up the Wet'suwet'en. The Gitimd'en checkpoint was toppled Monday, and it is not known when police will move on the Unist'ot'en camp, APTN said.
Alberta Seeks Oil Glut Solution - What’s worse: Too much oil, or too much gasoline? The government of Alberta, weighing the potential of a new refinery for the province, may be on its way to finding out. In 2018, surging crude production in the Canadian province ran into limited space on export pipelines, creating bottlenecks and sending the price of local oil to record lows relative to world benchmarks. Now Premier Rachel Notley’s government wants to see if keeping more of the oil at home with a new refinery will make a difference. On Dec. 11, the government reported it was surveying private companies about building a new refinery. The goal: Free up space for crude on local pipelines by turning more of it into higher-value fuels such as gasoline and diesel. Analysts, though, say existing refineries in the province already produce more refined fuel than is needed. “Its not a lot different than the issue they have with crude,” Jason Parent, vice president of consulting at Kent Group Ltd, a downstream consultancy based in London, Ontario. “You still have to ship that product to market.” The province will accept submissions for refinery proposals until Feb. 8 and will consider greenfield projects and expansions at existing sites. At this point, the government is only seeking a sense of the projects companies may be considering and isn’t yet ready to say how it would support those plans. Heavy Western Canadian Select, the type of crude produced in Alberta, fell to a $50 a barrel discount to West Texas Intermediate, the U.S. benchmark. The situation became so acute that Alberta’s government announced a mandatory, province-wide 8.7 percent production cut to keep prices from falling further. New oil export pipeline projects -- including TransCanada Corp.’s Keystone XL, and the expansion of the Trans Mountain pipeline to the Vancouver area -- have faced environmental opposition and court-imposed delays. Even Enbridge Inc.’s Line 3 expansion, approved and scheduled to start operation in the second half of this year, is facing legal challenges from opponents. While building more refining capacity in the province would reduce the glut of crude oil, the province’s five existing refineries already produce more refined fuels -- including gasoline, diesel and jet fuel -- than is needed. And, as with crude oil, pipeline links for refined products to markets outside Alberta are limited. The 300,000 barrel-a-day Trans Mountain line transported 42,000 barrels a day of fuels to the Vancouver area for use by drivers in British Columbia. Enbridge’s Line 1 moves gasoline and diesel from Edmonton, Alberta, to third parties in Gretna, Manitoba, but none to the U.S.
Canadian Crude Surges-- Canadian heavy oil’s discount to U.S. crude -- which shrank to the smallest in more than a year on Monday -- may widen again in 2019 as the reality sets in that Alberta’s oil-transportation woes are far from solved. While Western Canadian Select prices have surged since mid November, helped by a provincial plan to curtail 325,000 barrels of daily output, trading has been thin and doesn’t reflect the fundamentals of the physical market, said Andrew Botterill, a partner in Deloitte’s resource evaluation & advisory group in Calgary. Those fundamentals include pipeline bottlenecks and 35 million barrels of oil in storage, he said. WCS may retreat to $38 in 2019, while U.S. benchmark West Texas Intermediate may rise to $58 a barrel this year, implying a $20 differential, Botterill said in a note published Tuesday. That would be more than twice the $9.75 the discount notched on Monday. “We are still in an oversupply, and we do have a lot of volumes that are currently sitting in storage, and Canada as a whole has to get through that,” Botterill said in an interview. “So that does mean that there’s going to be some discounting, and it’s going to be a really tough first half of the year.” In the second half, Canadian prices may benefit from a ramp-up in rail capacity, which should add 120,000 barrels of daily offtake by 2020, he said. Enbridge Inc.’s Line 3 expansion should be online in the second half of the year, adding 370,000 barrels of new capacity, he said. Helping take the edge off of the turbulence may be increased demand from U.S. Gulf Coast refineries, which are looking to replace shrinking supplies from Mexico and Venezuela
Newly Elected President of Mexico to Ban Fracking – Mexico's president-elect Andrés Manuel López Obrador said he will end the use of hydraulic fracturing, orfracking, once he enters office on Dec. 1."We will no longer use that method to extract petroleum," the populist politician said Tuesday at a press conference, as quoted by the Associated Press.This is a setback for the energy industry that has eyed Mexico's shale-rich Burgos Basin in the north,DeSmog reported. It was only less than a year ago when Mexico's national energy ministry opened the onshore portion of the Burgos Basin for natural gas exploration and development by private companies.The horizontal drilling technique is used to unlock oil and natural gas deposits from shale beds. Fracking has significantly ramped up natural gas extraction and has aided local economies, but opponents say that fracking pollutes the air and groundwater, among other environmental and public health concerns. The technique has been banned in many U.S. municipalities and countries around the world.The "plan to ban fracking in Mexico represents the latest common-sense decision by a world leader to prohibit this inherently toxic, polluting practice," Food & Water Watch executive director Wenonah Hauter told DeSmog."President-elect Obrador is moving in the right direction on many issues, including energy and the environment," Hauter added. "He can move even farther by pledging to transition Mexico to a fully clean, renewable energy future, thereby setting a remarkable example for its neighbors to the north." According to the AP, Lopez Obrador also spoke against private electricity generation contracts that have displaced the state-owned Federal Electricity Commission, or CFE."The neoliberal governments deliberately closed the CFE plants in order to buy electricity from foreign companies at very high prices," Lopez Obrador said. "All of that will be corrected."
Mexico Fuel Theft Crackdown Sparks Shortages, Puts Govt. on Defensive - — Mexican President Andres Manuel Lopez Obrador said on Monday that his crackdown against fuel theft was yielding positive results, even as the intervention sparked severe fuel shortages in parts of the country and long lines of angry motorists. In a bid to eliminate years of mounting theft, state oil firm Pemex has changed its distribution, triggering shortfalls in at least six states, including Guanajuato, a major car-making hub in central Mexico. Guanajuato's state government said that less than one third of the state's gas stations were open on Monday. Lopez Obrador told a news conference the government had not established a date for when operations would return to normal, but stressed that supply was not in danger. "We are changing the whole distribution system, that's the reason for the shortage. We have enough gasoline," he said. Mexican television showed long lines of drivers waiting to fill up in central states as well as Jalisco in the west and Tamaulipas in the north. Years of fuel theft by criminal groups and others by tapping pipelines and stealing tanker trucks has led to losses totaling billions of dollars for public coffers. Lopez Obrador's government has ordered the armed forces to intervene in Pemex's facilities, including one refinery. "The supply will normalize, and at the same time we are going to guarantee that fuel is not stolen," said Lopez Obrador, who took office in December. "We have seen a reduction in theft like never before ... but we still have work to do."
Valero Milford Haven oil spill: Seabed to be assessed -- The scale of pollution caused by an oil spill on the Welsh coast is still being evaluated in order to protect "sensitive seabed habitats". Between 7,000 to 10,000 litres of oil leaked from a fuel line into the Milford Haven estuary on 3 January. While the loss of oil was limited and very little oil reached land, booms will remain in place to protect salt marshes and habitats in the estuary. The Welsh Government said the slick was no longer visible. The Valero jetty, where the spill took place, is on the south side of the Milford Haven estuary Natural Resources Wales has also issued an enforcement notice to Valero, which operates the refinery in Pembrokeshire, to stop the use of the two fuel pipelines on the jetty. A statement by Environment Secretary Leslie Griffiths said surveys were under way and the clean-up would continue as required.
Local councils heading for fracking showdown with government - Ministers are facing a fresh confrontation with local councils over their controversial plans to expand fracking, after one of the biggest combined authorities in the country set out plans to ban the practice.Greater Manchester’s decision to effectively stop companies from extracting underground shale gas in the region was greeted as a critical moment in the fight against fracking, which critics say is dangerous and unproven.The 10 local authorities that make up Greater Manchester will put planning measures in place to create a “presumption” against fracking for shale gas, said the area’s mayor, Andy Burnham, as part of its effort to become carbon neutral by 2038.The announcement, which comes as London finalises a similar scheme, will amplify discontent among local councils – including Tory-controlled authorities – that experts said could lead to a showdown with central government, and potentially kill off ministers’ plans.Concerns about the drilling technique were again raised in the run-up to Christmas when the energy company Cuadrilla was forced to pause operations near Blackpool three times after drilling caused small earthquakes that breached legal limits. Several other authorities – including Leeds, Wakefield, Hull and York – have expressed opposition to fracking, and experts believe the stance taken by Manchester and London will embolden others. Many Conservatives are also opposed. In Westminster, almost two dozen Tory MPs are reported to be against fracking and willing to “destroy the government’s majority” if it tries to weaken planning laws. Several Tory-run local authorities – including Derby, Dorset and Nottinghamshire – are fiercely opposed to the change in planning proposals, which would mean companies could drill test sites without applying for planning permission.
Nord Stream 2 Is Losing Support In Germany - The Nord Stream 2 pipeline is running into some trouble amid opposition from the Trump administration. Support for the Nord Stream 2 pipeline in Germany is slipping, according to a report from Bloomberg. Some politicians in Chancellor Angela Merkel’s coalition are moving against the pipeline for geopolitical reasons, citing fears that the project would allow Russia a freer hand in Ukraine.As it stands, Russia still needs to ship large volumes of gas to Europe via Ukraine. Nord Stream 2 would allow Russian gas to bypass Ukraine, giving Russia more leverage to meddle in Ukraine while still reliably delivering gas to Europe.Merkel has been supportive of the project, not least because several major western European companies have stakes in the pipeline, including Royal Dutch Shell, as well as major German companies Wintershall and BASF. Last year, Merkel, under intense pressure from the Trump administration and some countries in Eastern Europe, acknowledged that the Nord Stream 2 had geopolitical ramifications and suggested that the project could face roadblocks if the end result was harm to Ukraine. Still, she seemed to want to push the project forward.However, those efforts are starting to run into trouble. The recent seizure of Ukrainian sailors by Russia is starting to increase unrest within Merkel’s coalition, Bloomberg reports. A growing block of German politicians view the project is a geopolitical liability. The timing is not great for Nord Stream 2. The Trump administration has aggressively opposed the project for quite some time. “There is not only Russian gas coming through the pipeline, but also Russian influence,” Richard Grenell, the U.S. ambassador to Germany, said in a statement to Bloomberg News. “Now is not the time to reward Moscow.”
Russia produces record volumes of oil, gas in 2018 - (Xinhua) -- Russia produced record volumes of oil and gas in 2018, Energy Minister Alexander Novak said Thursday. He told Russian President Vladimir Putin at a meeting that last year Russia's crude oil output rose by 1.6 percent, or 10 million tons from 2017 to 556 million tons, according to a Kremlin transcript of minutes of the meeting. The increase was attributed to the operation of 54 new oil fields, including several major ones in the Krasnoyarsk region and the Yamalo-Nenets region. Last year's natural gas output hit a record in 18 years with 725 billion cubic meters, up about 5 percent from 2017, Novak said. Russia's gas exports rose by 20 billion cubic meters to nearly 225 billion cubic meters last year, with pipeline deliveries up 4.1 percent, and liquefied natural gas (LNG) exports up 70 percent to nearly 26 bilion cubic meters after new facilities of the Yamal LNG plant were put into operation, he said. The energy sector accounted for 25 percent of Russia's gross domestic product and nearly 45 percent of federal budget revenues, according to Novak.
Europe is fast-becoming a natural gas battleground for Russia and the US -- With 28 countries and a combined population of around 512 million people, the European Union is something of a prized market — and political battleground — for the world's largest energy exporters, particularly when it comes to natural gas. Russia has long been the dominant source and supplier of natural gas to Europe's mass market but the U.S. is looking to challenge Russia by stepping up its imports of U.S. liquefied natural gas (LNG) — gas which is super-cooled to liquid form — making it easier and safer to store and transport.Europe certainly appears keen to wean itself off Russian gas, and all the geopolitical implications that reliance entails, while making overtures to the U.S. Last July, European Commission President Jean-Claude Juncker and President Donald Trump agreed to strengthen U.S.-EU strategic cooperation with respect to energy and the EU said it would import more LNG from the U.S. "to diversify and render its energy supply more secure."Twenty-four percent of U.S. LNG went to the EU in October 2018, a month which saw the largest volume ever of EU-U.S. trade in LNG of almost 0.6 billion cubic meters. In the whole of 2017, only 10 percent of U.S. LNG exports went to the EU. The Commission, the EU's executive arm, expects U.S. gas exports to the region could double by 2022 and has vaunted the construction of LNG terminals across Europe. "The fact is that U.S. LNG, if priced competitively, can play and increasing role in EU gas supply, enhancing diversification and EU energy security," the EU said in a document detailing the state of EU-U.S. LNG trade in late November. The U.S. became a net natural gas exporter in 2017 for the first time in almost 60 years, according to the country's Energy Information Administration (EIA). It saw exports of its LNG rise 58 percent through the first half of 2018, compared with the same period in 2017. In fact, while U.S. LNG exports have continued to grow in 2018, U.S. natural gas pipeline import and export volumes have either remained relatively flat or declined from 2017 levels, the EIA noted. U.S. exporters looking to Europe have a big obstacle in the region, however, and that's Russia. Russia remains the largest supplier of natural gas to the EU in 2018, according to the Commission's latest data on EU imports of energy products in October. The other main suppliers are Norway and, at a lower level, Algeria and Qatar. Showing the extent of much of the EU's reliance on Russian gas, the Commission noted that 11 member states (Bulgaria, Czech Republic, Estonia, Latvia, Hungary, Austria, Poland, Romania, Slovenia, Slovakia and Finland) imported more than 75 percent of total national imports of natural gas from Russia in 2018, largely due to their proximity to the country.
Norway cuts oil output forecast for 2019 to 30-year low (Reuters) - Norway’s oil output in 2019 will be smaller than previously forecast and its lowest level in three decades, although it should rebound in the following years, the country’s oil industry regulator said on Thursday. Investment in Western Europe’s largest oil producer and Europe’s second-largest gas producer, behind Russia, is surging after a decline due to the slump in oil prices in 2014 to 2016. Despite that, oil output in 2018 of 86.2 million cubic meters (mcm), or 542 million barrels, missed a 90.2 mcm forecast made a year ago, the Norwegian Petroleum Directorate (NPD) said. NPD head Bente Nyland told Reuters that production last year and this year’s prediction were lower than previously expected due to start-up delays and production difficulties at several fields. The regulator said output in 2019 was expected to be 82.2 mcm, against a previous forecast of 87.2 mcm, but will rise to over 100 million cubic meters next year after Equinor starts its giant North Sea Johan Sverdrup field. Germany’s Wintershall said in October its Maria field in Norway was not meeting output expectations due to water injection issues. “The problems have not been solved yet,” Nyland said. Norway’s gas production last year stood at 119.3 billion cubic meters (bcm), also missing a 121.2 bcm forecast. In 2019 it is expected to rise slightly to 119.5 bcm but still below a previous forecast of 121.4 bcm and below the record 122 bcm produced in 2017. Norway’s combined oil and gas production is expected to come close to its 2004 record level by 2023, when production peaks at Sverdrup, which is expected to account for about 40 percent of Norwegian oil output after 2022.
Italy To Block Oil & Gas Exploration Permits - Italy plans to suspend the issuing of 36 pending oil and gas exploration permits, as the government finds upstream oil and gas activity not of strategic importance to the country.At the same time, the ruling populist coalition government, in power since June 2018, is looking to significantly boost the share of renewable energy in Italy’s power mix and total energy consumption, including in the transportation sector.The current government strongly supports Italy’s push to have as much renewable energy in its energy consumption as possible. The previous government also backed the rise of renewables and drafted a strategy to phase out coal-fired electricity by 2025. The new government is keeping the targets of the previous cabinet and has even increased some of the clean energy targets for Italy’s energy consumption and generation, in a bid to cut more carbon emissions in the country.The government has drafted an amendment to legislation proposing to block the issuing of oil and gas drilling permits, Italy’s Industry Ministry said in a statement on Wednesday, noting that the proposal would be discussed in the next few days at the relevant committees in Parliament.The proposed legislation would halt the issue of a total of 36 drilling permits, including three permits that have already been issued for drilling in the Ionian Sea, Industry Undersecretary responsible for energy, Davide Crippa, said. Italy—Europe’s fourth-largest energy consumer—is heavily dependent on imports to meet about 93 percent of its oil and natural gas needs.
Winners and Losers of Offshore Spending Revival - -- After four years of cutbacks, oil companies are poised to open their purses again and develop new offshore fields, although the benefits won’t be spread equally across the companies who provide them everything from seismic surveys to pumps and turbines.The long-awaited spending rebound will re-energize oil-services providers that have survived the deepest crisis in a generation thanks to cost cuts, mergers and sometimes painful debt restructuring. But for some debt-laden suppliers, the investment pickup may come too late.Notwithstanding recent oil-price volatility, spending on offshore oilfield services will rise by 6 percent in 2019 reaching $208 billion, before surging by another 14 percent in 2020, according to Norwegian consultancy Rystad Energy AS. That’s after almost halving since 2014.Oil producers will probably commit to 110 new undersea projects this year, up from 96 in 2018 and just 43 in 2016 -- when the industry slashed capex as oil slumped.The market for subsea equipment may expand by between 13 percent and 14 percent each year through 2023, said Audun Martinsen, head of oilfield service research at Rystad, in an interview. This is in part as suppliers resume to hike prices.Oilfield surveyors and providers of support and maintenance services should rebound at a slower pace as an overcapacity of vessels continues to glut the market and the rigs sector, the worst performing segment in offshore last year, should improve at last, Martinsen said.London-based oilfield services provider TechnipFMC Plc forecast that 2019 revenue at its subsea division will climb but margins may fall. This year the company is anticipating “continued strong activity” for investment decisions in small-to-mid-size projects, and “an increasing number of the larger greenfield subsea projects,” Chief Executive Officer Doug Pferdehirt said in December. “A lot of these offshore projects are located at deep waters,” benefiting subsea gear makers such as TechnipFMC and Subsea 7 SA, Rystad’s Martinsen said.
Oil spill from Espadarte field FPSO - Brazilian state-run oil firm Petróleo Brasileiro S.A. announced there was an oil spill on January 2 from its chartered floating production storage and offloading unit (FPSO) Cidade de Rio de Janeiro, in the Espadarte field offshore Brazil. Petrobras said approximately 4.9 cubic meters of oil leaked from one of the tanks of the FPSO, which is in the process of being decommissioned after ceasing production in July 2018. The spill was contained on January 3. The FPSO Cidade de Rio de Janeiro is operated by Modec do Brasil in the Espadarte field in the Campos Basin, approximately 130 kilometers from the Macaé coastline, on the north coast of Rio de Janeiro. It achieved first oil in January 2007. Petrobras said regulatory agencies have been informed, and a commission of inquiry will investigate the causes of the incident in cooperation with Modec.
$123B of Offshore Projects May be Sanctioned in 2019 - $123 billion of offshore projects could be sanctioned in 2019 if Brent rebounds to $60 per barrel and further cost reduction efforts are successful on current non-economic projects up for sanctioning. That’s according to Rystad Energy, an independent energy research and business intelligence company, which told Rigzone on Friday that its current Brent forecast for this year is $65 per barrel. “With a rebound to $60 per barrel Brent, 2019’s offshore project sanctioning has the potential to reach its highest level of activity since 2013,” Rystad said in a statement posted recently on its website. “The Middle East will have the most shallow water projects up for commitment decisions during the year. Moving into deeper waters, South America will surely take the global stage. The continent looks to review the largest deepwater plays during 2019,” Rystad added. Fifteen percent of the potential $123 billion to be committed in 2019 have breakeven prices over $60 per barrel, according to Rystad, which revealed that of those, the vast majority are for new fixed and floating facilities. “For 2019 to reach its full offshore sanctioning potential, further cost reduction efforts on these projects are needed,” Rystad stated. In a statement sent to Rigzone on December 18, Rystad said the outlook for offshore oilfield service contractors is strong. In the statement, Rystad revealed that more than 100 new offshore projects are aiming for 2019 sanctions and that an expected $210 billion will be spent on offshore oilfield services globally next year. Oil and gas operators gave the green light to 90-plus offshore projects in 2018, 62 in 2017 and 43 in 2016, Rystad highlighted in the statement.
President Bongo Safe After Military Coup Fails In Oil-Rich Gabon -- Soldiers in Gabon briefly took over a state radio in a failed coup attempt on Monday, but the government said four of the plotters had been arrested and that "normalcy would be restored" in the oil-rich Central African nation. A fifth suspect was on the run after soldiers announced plans for a “national council of restoration,” in the oil-rich country, where the ruling Bongo family has been dogged by accusations of corruption and fraud during nearly a half-century in power, the NYT noted. “The army has decided to put itself on the side of the people in order to save Gabon from chaos,” soldiers said after they took over a Gabon radio station.On Monday, government soldiers swarmed the streets of the capital, Libreville, guarding the national radio and TV stations, and military tanks and armed vehicles were visible. Taking a page out of every populist playbook, the military officers announced plans to "save a democracy in danger."However, a few hours later, democracy appeared to be in danger again as thing were returning to normal: "The government is in place,” a government spokesman, Guy-Bertrand Mapangou, told France 24. “The institutions are in place."Meanwhile, the target of the coup, President Ali Bongo Ondimba, has been out of Gabon since October while receiving medical treatment for what many believe was a stroke he suffered while attending a conference in Saudi Arabia according to the NYT. He had sought to reassure the nation he was fit during a New Year’s Eve speech televised from Morocco, where he is recuperating. Lt. Kelly Ondo Obiang, the leader of the self-declared - and very short-lived - Patriotic Movement of the Defense and Security Forces of Gabon, said on state radio that the speech “reinforced doubts about the president’s ability to continue to carry out of the responsibilities of his office,” Reuters reported.
Indian refiners pay for Iranian oil in rupees - UCO Bank executive (Reuters) - India has begun paying Iran for oil in rupees, a senior bank official said on Tuesday, the first such payments since the United States imposed new sanctions against Tehran in November. Washington gave a six-month waiver to eight countries, including India, allowing them to import some Iranian oil. India, the world’s third biggest oil importer, wants to continue buying oil from Iran as it offers free shipping and an extended credit period, while Iran will use the rupee funds to mostly pay for imports from India. “Today we received a good amount from some oil companies,” Charan Singh, executive director at state-owned UCO Bank told Reuters. He did not disclose the names of refiners or how much had been deposited. New Delhi recently issued a notification exempting payments to the National Iranian Oil Co (NIOC) for crude oil imports from steep withholding taxes, enabling refiners to clear an estimated $1.5 billion in dues. An industry source said India’s top refiner Indian Oil Corp and Mangalore Refinery & Petrochemicals have made payments for Iranian oil imports. Neither was immediately available for comment. Iran is devising payment mechanisms including barter with trading partners like India, China and Russia following a delay in the setting up of a European Union-led special purpose vehicle to facilitate trade with Tehran, its foreign minister Javad Zarif said earlier on Tuesday. In the previous round of U.S. sanctions, India settled 45 percent of oil payments in rupees and the remainder in euros but this time it has signed deal with Iran to make all payments in rupees as New Delhi wants to fix its trade balance with Tehran. Indian imports from Iran totalled about $11 billion between April and November, with oil accounting for about 90 percent. Singh said Indian refiners had previously made payments to 15 banks, but they will now be making deposits into the accounts of only 9 Iranian lenders as one had since closed and the U.S has imposed secondary sanctions on five others.
U.S. crude starting to seep back to China, but needs lower price: Russell (Reuters) - U.S. crude oil is starting to trickle back to China with three cargoes slated to arrive next month, but volumes are still a long way off levels prior to the outbreak of trade hostilities between the world’s two largest economies. Vessel-tracking data compiled by Refinitiv shows three tankers carrying 3.94 million barrels are en route from the United States to China and will arrive in February. This is up from zero cargoes slated to arrive in January, a mere one in December and zero in both November and October. Prior to the tit-for-tat tariffs being imposed from the middle of last year, crude oil was a success story in the U.S.-China trade relationship as Beijing bought increasing volumes of booming U.S. shale oil production. In the first nine months of this year, China imported about 328,000 barrels per day (bpd) from the United States, representing about 3.6 percent of its total crude imports. China’s imports of U.S. crude reached a record high of about 460,000 bpd in June, according to the Refinitiv data. It’s worth noting that China hasn’t imposed any tariff on U.S. crude imports, unlike coal and liquefied natural gas, which were included in Beijing’s retaliatory measures. What seems clear is that Chinese refiners decided to hold back on buying U.S. crude either because they were nudged in that direction by the government, or because they were concerned that a tariff would be imposed. Using crude oil for politics is certainly nothing new, so the resumption of trade between China and the United States may well depend on the status of talks between the administration of President Donald Trump and its counterpart in Beijing. However, if the U.S.-China crude trade was strictly about economics, it’s likely that U.S. crude prices will have to fall some more, especially relative to competing grades of West African crude.
China awards 3.14 mil mt oil product export quota under processing trade: sources - China has awarded 3.14 million mt of export quotas for gasoline, gasoil and jet fuel for use under the processing trade route, a week after Beijing awarded 18.36 million mt of oil product quotas under the general trade route, market sources told S&P Global Platts Tuesday. Export quotas for jet fuel accounted for 92% of the allocations under processing trade, which was within expectations. The export quotas under the trade route for jet fuel are normally used for sending barrels to bonded storage for fueling international flights, while those under the general trade route are for exports directly to overseas markets. The latest allocation brings the total oil product export quota allocation in the first round of 2019 to 21.5 million mt, up 7.5% compared with the first round of 2018. Export quotas for middle distillates -- gasoil and jet fuel -- rose 25.2% and 17.4% year on year to 8.9 million mt and 7.35 million mt, respectively. Gasoline was the only product to see a decrease in its export quota allocation for 2019, falling 20.8% year on year to 5.25 million mt. Sinopec saw the largest decline in gasoline quotas, down 46% at 700,000 mt, and the largest increase in gasoil quotas, up 36% year on year at 4.9 million mt. China awards oil product export quotas to state-owned CNPC, Sinopec, CNOOC and Sinochem under the general and processing categories. Under the general trade route, state refiners are free to export from the domestic market, irrespective of whether the feedstock is domestic or imported crude. Unused quotas can be rolled over to the following quarter, but not to the following year. Under the processing trade route, refiners have less flexibility -- the feedstock must be imported crude and the products can only be sold to the party that supplied the crude feedstock, although the products can be resold again.
Oil, LNG trade at stake in US-China talks resuming Monday - Trade talks resuming Monday between the US and China could signal whether crude and LNG flows will pick up between the two countries this year or stay mired in the trade dispute. The US Trade Representative announced Friday that top energy and agriculture officials would be part of the US delegation attending meetings in Beijing Monday and Tuesday. US crude exports to China disappeared in August, with none reported through October, according to the latest US Energy Information Administration data. Before exports dried up, the US sent an average of 377,600 b/d to China in the first seven months of 2018, according to EIA data. The all-time highest monthly average was June's 510,000 b/d. US LNG shipments to China stopped in September, according to EIA data, but returned in October at lower levels than earlier in the year. The US sent 7.3 Bcf to China in October, compared with a 2018 monthly peak of 17.5 Bcf in April and 2017 monthly peak of 24.6 Bcf in October 2017. China hit US LNG with a 10% tariff in September and threatened to increase it to 25% in retaliation to Trump administration tariffs on $200 billion in Chinese goods. Charlie Riedl, executive director of the Center for LNG trade group, said some US LNG exports can continue to China despite the current tariff, but a 25% tariff would all but halt the flows. Kevin Book, managing director of ClearView Energy Partners, does not expect any major breakthroughs in next week's talks. But, he said, a resumption of oil and LNG flows will be one way to gauge whether the negotiations are making progress or breaking down. "If there's to be trade progress with China, the hydrocarbons should be the easy part," Book said. "The reality is that if things go well, China's willing to buy crude oil and LNG from the US because China needs crude oil and LNG. But China's also shown its willingness and ability to diversify itself away from the US in an instant." Next week's talks are the latest between the US and China since US President Donald Trump met with Chinese President Xi Jinping at the G-20 summit in Argentina in December. Trump said at the time that he would delay the next US tariff escalation until March 2, set previously for January 1.
China bans discharge from open-loop scrubbers in coastal waters: official (Reuters) - China’s maritime authority has banned the discharge of “wash water” used in ships to strip hazardous sulfur emissions from engine exhaust gases from Jan. 1, in an effort to curb pollution of its coastal seas. The ban on discharges from so-called open-loop scrubbers affects all rivers and ports along China’s coastline and includes the Bohai Sea, according to an official from the China’s Maritime Safety Administration (MSA). The measure mirrors a similar move made in Singapore ahead of International Maritime Organization (IMO) rules that will ban ships from using marine fuels with a sulfur content of more than 0.5 percent from 2020, unless they are equipped with exhaust “scrubbers” to clean up sulfur emissions. “We adopted the ban in designated regions mainly out of consideration to protect the environment and prevent sulfur content pollution in more acidic waters,” said the official. The ban, however, will not be extended to all of China’s territorial waters because of the increased costs for the shipping industry, said the official. China imposed tighter rules from the start of 2019 on sulfur and nitrogen oxide emissions from vessels in coastal areas, Hainan waters, and inland Yangtze and Xijiang river areas, according to the Ministry of Transport. The wash water ban also took effect on the first day of 2019, MSA said. Ship operators are also not allowed to discharge any residue from wash water or burn it on the ships, it said. “The bans will limit the use of scrubbers, and therefore high-sulphur fuel oil, in China, suggesting a strong uptick in diesel demand,” said research consultancy Energy Aspects in an email alert to clients on Tuesday. To comply with the ban on wash water discharge in designated waters, shippers will have to switch to a closed-loop scrubber system or to low-sulphur bunker fuels such as gasoil, or diesel, and low-sulphur fuel oil. Open-loop scrubbers use seawater to capture sulfur from engine exhausts before discharging this wash water back into the ocean after treatment. In closed-loop systems, scrubbing is performed using water treated with additives, recycling the liquid internally. Hybrid scrubbers are a combination of both.
MAERSK container ship massive oil spill in Hong Kong - Massive oil spill from container ship MAERSK GATESHEAD occurred early in the morning Jan 6 in Hong Kong, at Kwai Tsing Container Terminal, where the ship docked in the afternoon Jan 5. Shortly after, bunker tanker CARLUNG moored alongside container ship, obviously for bunkering. Spill was reported to authorities at 0530 HK time Jan 6, anti pollution operation was launched, and as of evening, was still under way. No doubt spill occurred during bunkering operation, though it is not known yet, who’s to blame and what went wrong. Judging from photo, oil leaked overboard from starboard cargo deck, during night time, probably that’s why it was spotted too late to stop fuel transfer and avoid overboard leak.Update: Confirmed oil spill caused by heavy fuel overflow during bunkering operation, quantity of fuel leaked overboard unknown, cleansing still under way.
One dead, two still missing after explosion rips through oil tanker - A crewman was killed, seven injured and two are still missing after an oil tanker caught fire off the coast of Lamma Island in Hong Kong on Tuesday. Three explosions were reported during the fire, with residents from as far away as Mui Wo and Discovery Bay on Lantau Island saying they heard loud bangs and saw windows shaking. Authorities said the blaze, which began at around 11.30am and was finally put out at 4.30pm, is believed to have started when the Aulac Fortune, a Vietnamese-registered vessel, was in the process of being refuelled by an oil barge. The 144-metre (472-foot) tanker, which has a tonnage of 11,290, was on its way to Thailand after unloading oil cargo in Dongguan, Guangdong province, but stopped off one nautical mile south of Lamma Island for the refuel. There was no oil cargo on the tanker at the time of the fire. Yiu Men-yeung, the Fire Services Department’s division commander for marine and diving, said on Tuesday evening the explosions and fire broke out on the tanker’s deck when the crew were connecting hosepipes to transport fuel from a nearby oil barge. “They hadn’t started the refuel when the crew heard three explosions,” Yiu said, adding that three fuel tanks on the oil barge were also damaged. Though the oil tanker was tilted 30 degrees, Yiu said there was no risk of its sinking or of an oil leak. “If there is a leak, the Marine Department officials stationed on site will make an enclosure immediately,” Yiu said, adding they would study ways to stabilise the vessel to allow investigators to board the ship and look into the cause of the fire. Three helicopters were sent to the scene in search of the missing sailors, while four fire services and more than 10 marine police vessels were also deployed. It took 140 firefighters and medical staff five hours to extinguish the fire, which was upgraded to a No 3 alarm at around 1.30pm.
Oil Tanker Fire Near Hong Kong Kills 1, Potential Spill Could Threaten Endangered Turtles and Dolphins - An oil tanker caught fire off of Hong Kong's Lamma Island Tuesday morning, leaving one person dead and two missing."We could see that the victim who passed away had been burned," police representative Wong Wai-hang said in a briefing reported by The New York Times. "There were clear injuries on his head and fractures in his hands and feet."An additional 23 crew members were rescued from the water. Four were injured and one was being treated in intensive care.The explosions were strong enough to be felt by residents of the nearby island, CNN reported."My windows shook really badly but (there) was no wind," Lamma resident Deb Lindsay told CNN. "I thought there had been an earthquake!" Lamma Island residents worried about a potential oil spill reaching their coastline. Southern Lamma Island hosts a protective nesting site for green turtles, a severely endangered species. An endangered colony of white dolphins also calls Hong Kong waters home. Hong Kong's Environmental Protection Department told CNN that cleaning vessels had been immediately placed on standby but that no oil spill had yet been detected. Some liquid was seen spilling from the boat, but it was unclear if it was oil or water from firefighting, and there was no oil residue on the water around the vessel.The boat had been refueling in Hong Kong on its way to Thailand from the southern Chinese city of Dongguan, The New York Times reported.The Fire Services Department's division commander of marine and diving Yiu Men-yeung told The South China Morning Post that the boat was tilted 30 degrees as of Tuesday evening but was at no risk of sinking. However, officials said the boat was too hot to tow away immediately, or to board to discover the cause of the fire, and would need several days to cool down.
Kuwait to use solar power to extract fossil fuels - The Zawya.com Middle East news website yesterday carried a report that said the state-owned Kuwait Oil Company was finalizing consultation on a plan to use solar power to aid oil production at the “giant” Ritqa oilfield. According to the report, and without any hint of irony, the oil company is ready to turn to solar to keep down the energy costs of expanding oil extraction, as part of the state’s plan to ramp up its production of the fossil fuel. During an experimental first phase, solar power would provide “most of the power required in a sustainable manner” as the oil company aims to extract 60,000 barrels per day of high viscosity oil from the field by the end of the year.
Saudis Slash Oil Output. Get Ready for Trump Tweets - The list of things that President Donald Trump criticizes in his tweets varies from one day to the next. He may soon have to direct his ire to oil prices and the actions of his ally, Saudi Arabia, once again. The desert kingdom is already making good on its promise to slash supply, and the initial evidence suggests that the biggest cut is being made in deliveries to the U.S. On top of that, the price it charges American buyers of its crude has been raised to near record levels for cargoes to be shipped in February. That could be bad news for a president who just celebrated falling gas prices. The OPEC+ group of countries met in December and, after Russia took the reins, eventually agreed to cut supplies by 1.2 million barrels a day from January. For Saudi Arabia, that meant cutting production to just over 10.3 million, but it pledged to go further — oil minister Khalid Al-Falih told reporters and analysts that it would be slashed to 10.2 million barrels a day in January. The first job was to unwind the output surge made in November that had helped to deliver the price drop hailed by Trump. That was done last month. Saudi production in December was back below the October baseline used for its (and most other countries’) promised cuts. Saudi crude production was cut to 10.65 million barrels a day in December from a record 11.07 million in November That couldn’t have been what Trump wanted, given what he tweeted the day before OPEC began its meeting in Vienna — at the time, crude prices were in the midst of their worst quarterly decline in four years. Bloomberg’s tracking of crude exports from Saudi Arabia indicates that the biggest drop in flows from the kingdom was in the volume heading for the U.S. Shipments to ports on the Atlantic, Gulf and West coasts fell by nearly 60 percent between November and December to just over 350,000 barrels a day. That’s the lowest since Bloomberg started tracking these flows in January 2017.
Trump Credits Own 'Talent' for Oil Prices - -- President Donald Trump said OPEC “is essentially a monopoly,” even as he credited his own “talent” for having brought down oil prices. “Four months ago, oil hit $83 a barrel," Trump told reporters in the Rose Garden after meeting with Congressional leaders to try and reach a deal on the partial government shutdown. Oil “was heading to $100 and then it could have gone to $125.” Trump repeated his statement from earlier this week that his efforts made the difference in bringing down the oil price. “After I made some phone calls to OPEC and the OPEC nations -- which is essentially a monopoly -- all of a sudden, it started coming down,” he said. "Didn’t happen by luck, it happened through talent.” Trump has previously tweeted that OPEC is a monopoly, including as recently as July and September. Legislation, formally called the "No Oil Producing and Exporting Cartels Act" but known as NOPEC, has been repeatedly introduced in both houses of Congress in recent years that would allow the U.S. Justice Department to file suit against the Organization of Petroleum Exporting Countries. U.S. Assistant Attorney General Makan Delrahim told members of a House Judiciary subcommittee last month that the administration “continues to study” the legislation, which would amend the 129-year-old Sherman Antitrust Act. OPEC is consulting with lawyers to prepare a strategy to defend against the legislation, people familiar with the matter said in July. Recent claims by Trump that he’s pressured OPEC into allowing oil prices to fall reflects an overlooked shift in White House policy, according to Bob McNally, former energy adviser to President George W. Bush and president of consulting firm Rapidan Energy Group. “Whereas until early November President Trump was mainly interested in preventing oil price spikes, afterward his goal shifted to delivering a meaningfully lower oil price,” McNally said in an email.
Hedge funds dump crude and diesel as economic outlook darkens - (Reuters) - Hedge funds are cautious on the outlook for oil prices, despite a slump at the end of last year, as fears about the global economy outweigh output cuts by OPEC and its allies. Fund managers cut bullish positions in Brent crude futures and options by 10 million barrels in the week to Dec. 31, exchange data published on Friday showed. Funds have cut their net long position in Brent to just 152 million barrels, down from almost 500 million at the end of September, and close to the lowest level since 2015. Portfolio managers' bullish long positions outnumbered bearish short ones by a margin of just 2.5 to 1, down from a ratio of more than 19 to 1 at the end of September (https://tmsnrt.rs/2SFtSlv ). There are some signs the heavy liquidation of bullish positions between the start of October and early December has run its course, with Brent prices seeming to find a floor above $50 per barrel. But most fund managers have preferred to wait before taking new long positions until the outlook for the global economy and equity prices becomes clearer. Portfolio managers were even more bearish towards middle distillates such as diesel, jet fuel and heating oil, cutting their net long position in European gasoil by 9 million barrels. Net length in ICE gasoil was cut to just 2 million barrels, down from a recent high of 112 million barrels in early October. The ratio of long to short positions was cut to just 1:1, down from a peak of more than 30:1 less than three months ago, and the lowest for more than two years. Middle distillate consumption is heavily geared to freight transportation by ship, road, rail and aircraft, as well as manufacturing, mining and the farm sector. Distillates tend to be in short supply towards the end of the economic and oil price cycles as industrial activity heads towards a peak, helping put upward pressure on crude prices. Until recently, fears of cyclical shortages were exacerbated by the scheduled introduction of new regulations on shipping fuels, which are likely to boost distillate consumption from the start of 2020. But the loss of momentum in global trade growth since the middle of 2018, coupled with fears about a further slowdown or even recession in 2019, has transformed investor sentiment.
Diesel futures point to economic slowdown in 2019- Kemp (Reuters) - By the end of last year, hedge fund positions in diesel had fallen to a level normally associated with a sharp slowdown in economic growth if not an outright recession. Most middle distillate fuels such as diesel, gasoil and jet fuel are consumed in freight transport (ships, trucks, railroads and air cargo) as well as manufacturing and mining. Middle distillate consumption and prices are therefore more closely tied to the state of the economy than other refined fuels such as gasoline. (https://tmsnrt.rs/2HjMiXV ) For the last 25 years, hedge funds and other speculators, collectively termed "non-commercial traders", have mostly held a net long or bullish position in distillate futures and options. The typical net long position reflects the overall expansion of the U.S. and global economies (expansions have been long while recessions have been relatively short). In most cases, when non-commercial traders have switched to a substantial net short or bearish position the economy has been experiencing a sharp slowdown or is already in recession. Large net short positions in 1995, 1998, 2002, 2010 and 2015 were all associated with slowdowns or recessions according to contemporary statements or minutes from the U.S. Federal Reserve's Open Market Committee. The exception was the net short position at the end of 2004, which came six months after the Fed noted a "soft patch" in the expansion, by which time the economy was improving enough for the Fed to raise interest rates again. Crucially, not all these episodes ended in a recession; some were transient slowdowns in an uninterrupted expansion. But given this history, the large liquidation of speculative long positions in diesel futures during the fourth quarter of 2018 was consistent with a substantial deterioration in the economic outlook.
Goldman Sachs slashes 2019 oil price forecast amid oversupply concerns - Goldman Sachs downgraded its oil price forecasts for 2019, citing a surge in global production and surprisingly resilient U.S. shale growth. The investment bank now expects international benchmark Brent crude to average $62.50 a barrel this year, down from a previous forecast of $70. Meanwhile, U.S. West Texas Intermediate (WTI) is expected to average $55.50 in 2019, down from a prior estimate of $64.50, the investment bank said in a research note published Sunday. "We expect that the oil market will balance at a lower marginal cost in 2019 given: higher inventory levels to start the year, the persistent beat in 2018 shale production growth amidst little observed cost inflation, weaker than previously expected demand growth expectations (even at our above consensus forecasts) and increased low-cost production capacity," analysts including Damien Courvalin and Jeffrey Currie said. On Monday, oil prices continued to move away from December's 18-month lows, with OPEC and non-OPEC production cuts providing some support. Last month, OPEC agreed to take 800,000 barrels per day (bpd) off the market from the start of 2019. Pledges from 10 other producers aligned to the influential oil cartel, including Russia, brought total output cuts to 1.2 million bpd. The aim of the energy alliance's production cut is to rein in global oversupply, fueled mostly by the U.S., where production reportedly grew by almost 20 percent to nearly 12 million bpd by the end of 2018. That would make the U.S. the world's biggest oil producer — ahead of OPEC kingpin Saudi Arabia and non-OPEC heavyweight Russia.
Oil market must solve short-cycle riddle in 2019 -- Oil producers are invariably in it for the long haul. Investing billions of dollars to find and develop new resources entails an almost clairvoyant understanding of future demand cycles. However, volatile prices and uncertainty over global growth may see more short-term thinking in 2019. This change in mindset has already happened in the US, now the world’s largest producer. The Permian shale oil basin is the world’s epicenter for so called short-cycle investment — where capital employed drilling wells can be recouped over a briefer period than in conventional fields. S&P Global Platts Analytics forecasts Permian oil production will more than double over the next two years. Output is expected to average 4.9 million b/d in 2020, climbing to 5.5 million b/d in 2021. These figures compare to 2.5 million b/d last year. According to the International Energy Agency, investment in oil projects globally fell 25% between the end of 2014 and 2016. In 2017, upstream spending flat-lined, with the IEA warning earlier this year investment in conventional projects “may be inadequate to avoid a significant squeezing of the global spare capacity cushion by 2023.” Without the kind of short-cycle production coming on stream in the Permian and elsewhere, the world could be staring down the barrel of a new supply crunch early in the next decade.“I’m confident we’ll say in 2020, even in 2021, short-cycle production is likely to be sufficient to meet demand,” But the success of Permian shale and short-cycle investment also brings problems. Oil production rocketing towards 12 million b/d in the US has encouraged OPEC and its allies led by Russia into cutting production to try and boost prices. Brent crude has retreated 30% since it reached $86/b in October amid growing signs of oversupply, weakening demand and rising inventories. “The rapid growth in shale output will push us into a lower-for-longer price environment,” said Currie. Some oil majors are also waking up to the opportunities of short-cycle investment. BP has beefed up its upstream presence onshore in the US with the $10.5 billion acquisition of BHP Billiton’s shale assets. Meanwhile, ExxonMobil has said it plans to triple its production from the Permian by 2025, a year after it acquired a 275,000 acre plot in New Mexico from the Bass family. Shell, which took a $2.1 billion writedown in 2013 on failed unconventional oilfield bets in the US and Canada, has said it could return in the near future.
Oil prices rise on trade talks and supply cuts, but global economy concerns linger - Oil prices climbed for a fifth session in a row on Monday, rallying from December's 18-month low thanks to OPEC production cuts and more stable equity markets. Crude futures extended earlier gains after Dow Jones reported that top oil exporter Saudi Arabia is planning to slash shipments this month to prop up prices and support its budget. "The market has jumped all over that," said John Kilduff, founding partner at energy hedge fund Again Capital. Kilduff noted that a drop in exports has been expected. The Saudis are "just being aggressive about trying to clean up the situation they fell into from oversupplying the market based on the fear of Iran sanctions," he told CNBC. U.S. West Texas Intermediate crude oil futures rose $1.55, or 3.2 percent, to $49.51 a barrel by 10:47 a.m. ET (1547 GMT). Brent crude futures rose $1.43, or 2.5 percent, to $58.49 a barrel, up from December's slide below $50, which was its lowest level since July 2017. Brent has gained about 12 percent since last Monday in its biggest week-on-week rally in two years. "Momentum is coming back into the market from very depressed price levels," Petromatrix strategist Olivier Jakob said. "We've had five consecutive days of price gains already, so what you have today is a continuation of that." The oil prices are drawing support from an agreed supply cut by OPEC, well as some non-member countries such as Russia and Oman. OPEC oil supply fell in December by 460,000 barrels per day (bpd), to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia. The aim of the production cut is to rein in a surge in global supply, driven mostly by the United States, where production grew by nearly a fifth to over 11 million bpd in 2018. "If compliance by OPEC and the allied non-OPEC countries is similarly high as in the agreement two years ago, the oil market is likely to be rebalanced during the first half year," Commerzbank said in a note..
Oil prices jump on U.S-China trade hopes, supply cuts - (Reuters) - Oil prices edged higher on Monday, rebounding further from 1-1/2-year lows reached in December, on support from OPEC production cuts and steadying equities markets. Brent crude LCOc1 futures rose 27 cents to settle at $57.33 a barrel, a 0.47 percent gain. U.S. West Texas Intermediate (WTI) crude CLc1 futures rose 56 cents to settle at $48.52 a barrel, a 1.17 percent gain. Oil futures have gained more than 7 percent since last Monday. “Momentum is coming back into the market from very depressed price levels,” Petromatrix strategist Olivier Jakob said. Prices drew support from a Wall Street Journal report saying that Saudi Arabia is planning to cut crude exports to around 7.1 million barrels per day (bpd) by the end of January. OPEC and its allies are trying to rein in a surge in global supply, driven mostly by the United States, where production surpassed 11 million bpd in 2018. Record high crude oil production C-OUT-T-EIA has pushed up U.S. inventories. OPEC oil supply fell in December by 460,000 barrels per day (bpd) to 32.68 million bpd, a Reuters survey found last week, led by cuts from top exporter Saudi Arabia. “We continue to view the OPEC production cuts that became official last week as a legitimate bullish consideration and we still look for the reduction to translate to a reduced U.S. crude surplus that could potentially be erased in some 8-9 weeks,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell by 565,000 barrels from last Tuesday to Friday, traders said, citing data from market intelligence firm Genscape. More upbeat equity markets also offered support. “When stock markets are strong oil usually follows suit,”
Oil Holds Above $48 - West Texas Intermediate (WTI) crude oil for February delivery gained 56 cents Monday to settle at $48.52 per barrel. The WTI remained above the $48 mark during the early week session, trading within a range from $48.11 to $49.79. Brent crude oil futures also exhibited positive momentum Monday. The March contract picked up 27 cents to end the day at $57.33 per barrel. Also on Monday, Rystad Energy released a report revealing a downward trend in U.S. hydraulic fracturing activity as 2018 progressed. According to the consulting firm, the number of daily frac jobs nationwide averaged from 48 to 50 from April to Aug. 2018 but slid to the 44 to 46 range from September to November. “Looking at preliminary data for November, we see evidence that seasonal activity deceleration has likely started in all major plays except Eagle Ford,” stated Lai Lou, senior energy analyst with Rystad. “There has been a considerable slowdown in Bakken and Niobrara in November, our analysis shows.” The price of a gallon of reformulated gasoline (RBOB) remained largely flat Monday. The February RBOB contract declined by less than a penny, settling at $1.34. Although colder temperatures are expected to bring more seasonal conditions to the Great Lakes and Northeast regions this week, natural gas futures retreated on Monday. The February Henry Hub natural gas price shed 10 cents to settle at $2.94.
Oil prices rise on trade talk optimism, OPEC cuts - Oil prices rose slightly on Tuesday, supported by hopes that talks in Beijing between U.S. and Chinese officials might defuse a trade dispute between the world's two biggest economies, while OPEC-led supply cuts also tightened markets.International Brent crude futures gained 88 cents, or 1.5 percent, to $58.21 per barrel by 9:38 a.m. ET (1438 GMT). U.S. West Texas Intermediate (WTI) crude oil futures climbed 76 cents, or 1.6 percent, to $49.28 per barrel. U.S. Commerce Secretary Wilbur Ross said on Monday that there was a "very good chance" of reaching a settlement, while China's Foreign Ministry said Beijing had the "good faith" to resolve trade friction with the United States. Some analysts warned, however, that the relationship between Washington and Beijing remained shaky and that tensions could soon flare anew. "Surely, there will be more twists and turns in the saga and increasing U.S. tariffs on Chinese goods after March from 10 percent to 25 percent cannot be excluded," Tamas Varga of PVM Oil Associates said. "For now, however, optimism prevails." There is also concern that a worldwide economic slowdown will dent fuel consumption, leading the hedge fund industry to cut significantly its bullish positions in crude futures. S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 and $50 per barrel for Brent and WTI, respectively. "Our lower oil price assumptions reflect slowing demand and rising supply globally," said S&P Global Ratings analyst Danny Huang. Crude prices so far in 2019 have been buoyed by supply cuts from OPEC including top exporter Saudi Arabia, as well as non-member Russia.
Why this week's US-China trade talks are a big deal for oil prices - The outcome of trade talks between the United States and China this week will play a major role in determining whether oil prices can continue to rally, analysts tell CNBC. Oil prices have risen for six straight sessions, clawing back gains after falling to 1½-year lows last month. The cost of crude collapsed more than 40 percent between early October and late December on concerns about slowing economic growth and oversupply in the oil market.Amrita Sen, chief oil analyst at research firm Energy Aspects, thinks crude futures have more room to run, but says the recovery is on shaky ground. "I think as long as the global economy isn't collapsing, we should be able to climb a little bit higher, but it is going to be very fragile because the biggest, biggest uncertainty right now is the trade war going on between the U.S. and China," she told CNBC Europe's "Squawk Box" on Monday. U.S. and Chinese trade representatives are meeting Monday and Tuesday to negotiate a path forward in the nations' ongoing trade dispute. The two countries have slapped tariffs on hundreds of billions of dollars worth of one another's goods. Additional tariffs threaten to weigh on global economic growth, and consequently, demand for oil and fuel. This comes at a time when forecasters have already warned that oil demand will grow more slowly than previously anticipated in 2019. According to Sen, oil prices fell too far, too fast, largely due to technical factors such as automated trading strategies. On the supply side, production cuts by major oil producers and slower-than-expected U.S. output will help oil prices recover, she says. Whether or not the market is oversupplied will largely boil down to demand. "At current levels, based on current fundamentals, the market is oversold," Sen said. "But it doesn't mean that it's going to correct straightaway, right? It can still take some time, unless and until you have the clarity, particularly with the trade talks over today and tomorrow."
China trade war and US shale are the biggest concerns for outgoing OPEC chief --The U.S.-China trade war and booming American shale production are among the top worries for the United Arab Emirates' energy minister and former OPEC president. After a volatile year for oil prices, hydrocarbon-exporting countries are buckling down for what could be more turbulence ahead.In terms of geopolitical headwinds for 2019, "One is the potential of heated war between China and the United States," Suhail Al Mazrouei told CNBC's Hadley Gamble on Wednesday. Mazrouei finished his term at the helm of OPEC on January 1. I think this is one fundamental, not only affecting us but affecting the whole economics of the world. And I tend to be... more optimistic that we are not going to see a war. It's negotiation tactics, they will end on a resolution, whatever it takes, this year or next year." While cautiously optimistic on the outcome of ongoing trade negotiations between the world's two largest economies, Mazrouei stressed the impact of U.S. shale production on the market — something that's increasingly putting OPEC members under pressure. "But this is one thing, how much is coming from the shale oil production I think that's another factor we need to watch and we need to advise that it has to be reasonable," the minister said. And the Energy Information Agency has upgraded its supply growth outlook for American crude. U.S. domestic oil production is now expected to increase by 1.18 million bpd next year with output averaging 12.06 million bpd. That flood of fresh U.S. crude supply "will cement its newfound position as the world's top oil producer," according to consultancy firm PVM Oil Associates. Asked about the growing criticisms of OPEC coming from the White House, Mazrouei maintained that OPEC listens to what the U.S. has to say when it comes to oil prices and production but insisted that the cartel "always does the right thing." "I think what we do is we hear them (the U.S.). They are major consumers versus the major producing nations, we hear what they say but we will always do the right thing from our perspective which is always trying to maintain the balance (in supply and demand)."
Oil prices rise more than 2 percent on trade talks - (Reuters) - Oil prices rose more than 2 percent on Tuesday, supported by hopes that crude demand may rise more quickly if talks between U.S. and Chinese officials resolve the trade dispute between the world’s two biggest economies. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 settled up $1.26, or 2.6 percent, at $49.78 a barrel. During the session, the contract touched $49.95, the highest since Dec. 17. Brent crude futures LCOc1 rose $1.39 a barrel, or 2.4 percent, to $58.72. “The trade situation is definitely bullish; you have a good demand construction if we can wrap up this trade deal,” said Bob Yawger, director of futures at Mizuho in New York. The talks are going well so far and will continue on Wednesday, U.S. delegation member Steven Winberg said. These are the first face-to-face meetings between officials from the two countries since U.S. President Donald Trump and Chinese President Xi Jinping agreed in December to a 90-day truce in a trade war that has buffeted global financial markets. On Monday, U.S. Commerce Secretary Wilbur Ross and China’s foreign ministry expressed optimism on resolving the dispute. Some analysts warned, however, that tensions could flare anew. Oil traders also worried that a possible worldwide economic slowdown could dent fuel consumption. The hedge fund industry has cut significantly its bullish positions in crude futures. S&P Global Ratings said it had lowered its average oil price forecasts for 2019 by $10 per barrel to $55 for Brent and $50 per barrel for WTI. “Our lower oil price assumptions reflect slowing demand and rising supply globally,” said S&P Global Ratings analyst Danny Huang.
WTI Jumps After Bigger Than Expected Crude Draw - WTI rallied once again today but was unable (again) to break above $50 helped reflexively by stocks resurgence.“Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year,” said Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt.“They can be very convincing when they choose to be. And so we see the potential for Brent crude to go to $70 a barrel over the course of the year.”But overall price action has been positive into today's API inventory data.“There’s a confluence of factors helping -- a big driver is progress in trade talks and hopes that global growth will be supported,” said Stephen Innes, head of trading for Asia Pacific at Oanda Corp.“Fed’s easier stance and OPEC’s commitment to cut production, as well as expectations that inventories should drop are lending a hand to this positive investor sentiment.” API:
- Crude -6.127mm (-2.7mm exp)
- Cushing +331k
- Gasoline +5.5mm
- Distillates +10.2mm
Massive surges in gasoline and distillate inventories with a fractional crude build last week were dominated by API data for the last week showing a bigger than expected crude draw (and we suspect catch up builds in API data after DOE's data)...
OPEC cuts, US-China trade talks empower oil bulls — Crude futures settled higher Tuesday, extending the price rally for a seventh straight session amid growing evidence that OPEC supply cuts will tighten the market this year. ICE March Brent settled $1.39 higher at $58.72/b and NYMEX February WTI was up $1.26 to settle at $49.78/b. The oil complex gleaned support Tuesday from widespread optimism that ongoing US-China trade talks may avert a global economic slowdown by thawing tense relations between the two countries. NYMEX product futures also finished the day higher, with February ULSD settling 4.54 cents higher at $1.8238/gal and February RBOB up 2.19 cents at $1.3626/gal at market settle. While bullish sentiment stemming from a possible US-China rapprochement has supported prices this week, it is growing evidence of a tighter supply picture that has sustained the 2019 rally. OPEC's December crude output fell 630,000 b/d to a six-month low of 32.43 million b/d, an S&P Global Platts survey of industry officials, analysts and shipping data showed Tuesday. The cuts were led by Saudi Arabia, which trimmed its production 401,000 b/d to 10.6 million b/d last month. Riyadh has pledged to further cut January production to around 10.2 million b/d, well below the 10.31 million b/d level it pledged to maintain for the first half of 2019 as part of the 1.2 million b/d cuts OPEC and its allies agreed to in early December. Furthermore, Saudi Arabia announced Monday it would cut exports to around 7.1 million b/d by the end of January, with a goal of sending Brent crude to an $80/b level. But the price reaction to the announced cuts has so far been tepid as the market has instead waited for tangible signs of lowered output.
Why Have Oil Markets Turned So Bullish?- – Oil prices continue to post gains, extending a rally that is the longest in 17 months. The latest optimism centers on the ratcheting down of tensions between the U.S. and China, as well as a softer tone from the U.S. Federal Reserve. In the oil market, the OPEC+ cuts are phasing in, while Saudi Arabia has pledged to cut even deeper. “Saudi Arabia will continue to be the decisive factor for the markets this year, just as they were last year,” Eugen Weinberg, head of commodities research at Commerzbank AG in Frankfurt, told Bloomberg. “They can be very convincing when they choose to be. And so we see the potential for Brent crude to go to $70 a barrel over the course of the year.” Saudi Arabia will reportedly cut oil exports by 800,000 bpd below November levels, going beyond what it had promised as part of the OPEC+ agreement. The Wall Street Journal reports that the Saudis are cutting deeper in hopes of engineering a price rise to $80 per barrel. Oil prices rose sharply on the news on Monday, but the market still seems too soft for a return to $80 per barrel anytime soon. Riyadh is under fiscal pressure as the Saudi budget does not breakeven unless oil prices are in the mid-$80s. The UK’s North Sea saw 13 final investment decisions in 2018, more than the previous three years combined. Leaner and more efficient projects have helped the mature oil basin stage somewhat of a rebound. However, exploration is still at a record low, according to the FT. That raises questions about the viability of the region in the long run. Meanwhile, BP (NYSE: BP) is considering selling its stake in the Shearwater assets in the North Sea, which would free up the company to focus on its increasing presence in U.S. shale. A sale could be worth several hundred million dollars, according to Bloomberg.
Oil prices surge on hopes of successful US-China trade talks - Oil prices climbed 3 percent on Wednesday as the extension of U.S.-China talks in Beijing raised hopes that the world's two largest economies would resolve their trade standoff. U.S. West Texas Intermediate (WTI) crude oil futures were at $51.44 per barrel at 9:37 a.m. ET (1437 GMT), up $1.66, or 3.3 percent, the first time this year that WTI has topped $50. International Brent crude futures were up $1.74, or 3 percent, at $60.46 per barrel. Both crude price benchmarks added to Tuesday's 2 percent gains and have now been on the rise for eight straight days — their longest rally since June 2017. "After a dreadful December for risk markets, crude oil continues to catch a positive vibe," said Stephen Innes at futures brokerage Oanda in Singapore, citing tensions between the superpowers which have cast a pall over the world economy. The trade talks in Beijing were carried over into an unscheduled third day on Wednesday, amid signs of progress on issues including purchases of U.S. farm and energy commodities and increased U.S. access to China's markets. "Talks with China are going very well!" U.S. President Donald Trump tweeted, without elaborating. State newspaper China Daily said on Wednesday that Beijing was keen to put an end to its trade dispute with the United States, but that any agreement must involve compromise on both sides. Stephen Brennock, analyst at London brokerage PVM Oil, warned against excessive optimism. "Buyers have placed all their betting chips on the US and China resolving their trade spat," he said. "A failure to secure a meaningful breakthrough in the coming days will therefore spark a turnaround in sentiment. It is also worth noting that the global economic outlook continues to darken," he added. The World Bank expects global economic growth to slow to 2.9 percent in 2019 from 3 percent in 2018, it said in a semi-annual report released late on Tuesday.
Oil Extends Longest Rally in 1.5 Years -- Oil rose back above $50 a barrel, extending its longest rally in 1 1/2 years as global risk assets were buoyed by the prospect of a thaw in trade tensions between the world’s biggest economies. Futures in New York -- which last traded over $50 in December -- are up for an eighth straight session, rebounding from a collapse of almost 40 percent in the final quarter of 2018. U.S. President Donald Trump is said to be eager to strike a deal with China soon to perk up financial markets that have slumped on concerns over a trade war between the nations. Asian stocks on Wednesday followed a rally in the U.S. on investor optimism. For oil bulls, the brightening economic outlook provides some comfort after fears that the long-running trade war will hurt demand helped drag prices into a bear market from a four-year high in October. Confidence is also strengthening that the Organization of Petroleum Exporting Countries and its allies including Russia will curb output enough to counter booming U.S. supplies and avoid an oversupply. “Overall investor sentiment on risk assets is improving as the ongoing talks between the U.S. and China ease uncertainties in the market,” Ahn Yea Ha, a commodities analyst at Kiwoom Securities Co., said by phone from Seoul. “On the other hand, OPEC is signaling that it’s determined to clear a supply glut, which is also supporting crude prices.” West Texas Intermediate for February delivery climbed as much as 88 cents, or 1.8 percent, to $50.66 on the New York Mercantile Exchange, the first time it’s back above $50 since Dec. 17. It was at $50.42 at 7:56 a.m. in London. Prices have advanced about 12 percent over the previous seven sessions, undoing almost half of 2018’s full-year loss. Brent for March settlement rose 70 cents to $59.42 a barrel on the ICE Futures Europe Exchange in London. It’s jumped over 12 percent over seven sessions. The global benchmark crude traded at a premium of $8.69 a barrel to WTI for the same month. U.S.-China trade negotiations in Beijing have been concluded after being extended by a day which shows both the sides are serious, according to a Chinese foreign ministry spokesman. The talks were originally scheduled for two days, and Trump had earlier expressed optimism in a tweet, exclaiming “Talks with China are going very well!”
WTI Tumbles After Massive Gasoline, Distillates Inventory Builds - WTI crude has soared through $50 (and Brent above $60) overnight after API reported a surprisingly large crude draw and helped by a plunging US Dollar and hope around US-China trade talks.As Bloomberg reports, fears of a slowdown in oil demand are receding with an easing of the long-running trade tensions, which helped drag crude prices into a bear market after they hit a four-year high in October. Confidence is also strengthening that the Organization of Petroleum Exporting Countries and its allies including Russia will curb output enough to counter booming U.S. supplies and avoid an oversupply.“There is positive momentum in the oil market in the new year as economic optimism seeps back in,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.“If this state of affairs persists, OPEC and non-OPEC supply cuts that go into effect this month will prove more effectual in attenuating predicted implied global stock builds in 2019.” DOE:
- Crude -1.68mm (-2.7mm exp)
- Cushing +330k
- Gasoline +8.066mm - biggest since Dec 2016
- Distillates +10.611mm - biggest build since Jan 2015
API reported a major crude draw but huge builds in gasoline and distillates (though the latter may have been catch-up to the official data's large builds in the prior week) and DOE confirmed the biggest distillates build in four years and a huge gasoline build, combined with a smaller than expected crude draw...
Oil Enters Bull Market As Short CTAs Are Wiped Out -- After crude suffered a near record, 44% plunge in the fourth quarter, one which left commodity funds reeling and both OPEC and oil exporting nations in a panic, oil stormed back into bull market territory, as investors who’d abandoned crude just a month ago were lured back by an OPEC-led campaign to bring runaway supplies in check coupled with algos who turned from net short back to long.WTI crude closed above $52 a barrel, staging a powerful, 23% recovery after hitting an 18-month low on Christmas Eve. Brent, likewise, finished the day up 22% since bottoming out. After ending 2018 in a deep bear market, oil sharply reversed course on signs that oil exporters will follow through on last month’s pledge to slash production, with Saudi Energy Minister Khalid Al-Falih repeating that the plan was on track Wednesday even if DOE energy stocks showed a smaller drop in inventory thatn expected. The bigger catalyst in recent weeks, however, was hope that the U.S.-China trade war may be ending, boosting demand from the world's largest oil importer adding to oil’s momentum, even if hopes that the just concluded trade talks would lead to any immediate resolution turned out to be false. “‘Sentiment went from completely negative a couple of weeks ago to very positive right now,” said Matt Sallee, a portfolio manager who helps oversee $16 billion in energy assets for Kansas-based Tortoise. “Everyone’s just focused on the Saudis and they seem quite determined."
Oil prices rally 5%, highest levels in more than three weeks – Oil futures were on track Wednesday to finish at their highest levels in more than three weeks, with the U.S. benchmark topping $50 a barrel on continued optimism over U.S.-China trade talks and a weekly decline in domestic inventories. U.S. government data Wednesday, however, also revealed much bigger-than-expected increases in stockpiles of gasoline and distillates last week, prompting futures to briefly pare earlier gains.“Oil has yet to have a losing session in 2019, and the near-term path of least resistance is still higher based on momentum and near-term technicals,” said analysts at the Sevens Report. “However, the longer-term outlook is still unclear as production/export cuts won’t be enough to curb another bout of broad market volatility based on peak earnings concerns (if Q4 reporting season underwhelms) and economic growth doesn’t show signs of picking up.” West Texas Intermediate crude for February delivery rose $1.27, or 2.5%, to $51.05 a barrel, trading above the $50 level on an intraday basis for the first time since Dec. 14. A settlement at or above $51.04 would lift WTI out of bear market territory, according to Dow Jones Market Data, marking a rise of 20% or more from a closing low of $45.30 on Dec. 24.A positive finish would extend oil’s winning streak to eight sessions, the longest in about 18 months. March Brent crude rose $1.02, or 1.7%, to $59.74 a barrel, with prices for the most-active contract poised for its highest finish since mid-December.U.S.-China trade talks concluded Wednesday after being extended to a third day. Global stocks rose, with U.S. equities edging higher on Wall Street, and Bloomberg reporting that President Donald Trump is eager to complete a deal on the expectation that it would boost financial markets battered in part due to fears surrounding the trade battle. Analysts at Commerzbank said trade-related optimism was also lifting crude, noting that the slump in oil prices at the end of 2018 “was driven not only by the oversupply, but also by the selloff on the stock markets. This was due to fears that the trade conflict will slow economic growth in the U.S. and China, ultimately also dampening oil demand in the two leading oil consumer countries.”
Oil falls 1 pct on swelling US supply, concerns on US-China trade talks (Reuters) - Oil prices fell by about 1percent on Thursday on swelling U.S. supply and amid a cautious reaction to trade talks between the United States and China, the world's two largest oil consumers, that finished without concrete details to ending their dispute. U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were at $51.80 per barrel at 0432 GMT, down 56 cents, or 1.1percent, from their last settlement. International Brent crude futures LCOc1 were down 0.9percent, or 57 cents, at $60.87 per barrel. Both oil benchmarks rose by around 5 percent the previous day as financial markets around the world surged on the hopes that Washington and Beijing may soon be able to end their trade dispute, soothing fears of an all-out trade war between the two biggest economies and its possible impact on global growth. By Thursday, however, the positive feelings ebbed because ofa lack of a details on the talks despite a warm statement form China on the outcome, and financial markets took a breather from the rally. Vandana Hari of consultancy Vanda Insights in Singapore said in a note that oil prices dropped "as optimism fuelled by the U.S.-China trade talks earlier in the week appeared to have run its course and official statements after the conclusion of three days of negotiations, while indicating modest progress, lacked details." Meanwhile, U.S. bank Morgan Stanley cut its 2019 oil price forecasts by more than 10 percent on Wednesday, pointing to"weakening economic growth expectations" and rising oil supply from especially from the United States as reasons for their lower price forecast.
Oil rises again but global economic concerns cap gains (Reuters) - Crude prices edged higher on Thursday, supported by comments from the U.S. Federal Reserve chairman that lifted equity markets, but a more than week-long oil rally slowed as optimism surrounding U.S.-China trade talks faded. Brent crude LCOc1 futures rose 24 cents, or 0.4 percent, to settle at $61.68 a barrel. The global benchmark posted its first consecutive nine-day winning streak since September 2007. West Texas Intermediate crude CLc1 ended 23 cents, or 0.4 percent, higher at $52.59 a barrel, also its ninth straight day of gains, that beats a 2010 record. Earlier in the session, both benchmarks hit their highest in nearly a month. WTI hit a session high of $52.78 per barrel and Brent rose to $61.91 a barrel. Global financial markets have climbed recently on hopes that Washington and Beijing would avert an all-out trade war. The two superpowers concluded three days of talks on Wednesday. But the rise in global markets began to dwindle after the world’s two largest economies issued vaguely positive statements that lacked concrete details.[.N][USD/] Comments by Federal Reserve Chairman Jerome Powell on Thursday helped boost riskier asset classes, including oil, late in the session. Powell said the U.S. central bank had the ability to be patient on policy, but that the Fed would shed significantly more assets than it already has. “It was a mixed message from him, but I think it was sufficiently accommodative,” said John Kilduff, a partner at Again Capital Management. “It’s a continuation of that shift towards easier policies and more assistance to the underlying economy which helped boost crude oil prices.” U.S. equity markets broadly rose after the comments. [.N] Recently crude futures have tracked closely with Wall Street.
Oil Set for Biggest Weekly Gain in Two Years - -- Oil headed for its biggest weekly gain in over two years on hopes that OPEC will manage to shrink a glut and trade tensions between the U.S. and China will ease. Futures in New York have advanced 10 percent this week, as Saudi Arabia pledged that a producer coalition it’s leading will keep the market in balance. Still, prices are about 30 percent lower than their highs in October even after a rebound since Christmas Eve thrust crude back into a bull market. That signals investors need reassurance that the group will curb supply sufficiently and demand will hold up. Crude’s direction in coming weeks may be determined by whether the Organization of Petroleum Exporting Countries and allies including Russia implement output cuts they have promised for the first six months of 2019. Also crucial will be the outcome of trade negotiations between the U.S. and China -- the world’s two biggest economies. A deal between the nations could boost flagging global growth that underpins oil demand. “Oil has had a good rally as Saudi Arabia’s willingness to move forward with cutting output was clearly delivered to the market,” said Hong Sungki, a commodities trader at NH Investment & Securities Co. in Seoul. “But the trade negotiations between the U.S. and China still add some uncertainty to global financial and oil markets, possibly leading to corrections in prices in the shorter term.” West Texas Intermediate for February delivery traded 20 cents higher at $52.79 a barrel on the New York Mercantile Exchange as of 4:01 p.m. in Singapore on Friday. Futures rose 0.4 percent on Thursday, in their ninth straight daily advance and longest winning streak in nine years.
The Oil Bull Market Is Back - Oil entered a bull market this week, having gained 20 percent since the low point reached in December. WTI rose above $52 per barrel, while Brent moved above $61. “The mood brightens, and the market realizes that the world economy and oil demand are not grinding to a halt,” Norbert Ruecker, head of macro and commodity research at Julius Baer Group Ltd. in Zurich, told Bloomberg. “Moreover, there is confidence that the petro-nations will cut supplies as promised to balance the market.” Saudi Aramco released figures on its oil reserves this week, a figure that has been the subject of speculation for decades. The independent audit was originally initiated in anticipation of Saudi Aramco’s now-delayed IPO. The audit largely confirmed what Saudi officials have long said – that the Kingdom is sitting on massive reserves. The audit revealed 266.3 billion barrels of oil reserves and 307.9 trillion cubic feet of natural gas. Meanwhile, Aramco is expected to issue its first ever international bond sale later this year, with plans to use the proceeds to finance its acquisition of petrochemical giant Sabic. BP plans on drilling six new exploration wells in Azerbaijan by 2020, with the hopes of making another giant natural gas discovery. BP only recently brought its $28 billion Shah Deniz gas field online, but as Bloomberg reports, the oil major hopes to replicate that success. “Alongside Brazil, Azerbaijan stands out in terms of the areas of focus for the next few years,” Gary Jones, BP’s regional president for Azerbaijan, Georgia and Turkey, told Bloomberg in a phone interview. “It’s a very significant exploration program for us, which demonstrates the confidence and the role that we see in the Caspian.” The oil industry will increase offshore spending by 6 percent this year, according to Bloomberg and Rystad Energy. That figure will jump to a 14-percent increase in 2020.
Oil prices dip as worries over economic slowdown return --Oil prices fell more than 1 percent on Friday but were on track for weekly gains after financial markets strengthened on hopes the United States and China may soon resolve their trade dispute.Crude futures began falling shortly after U.S. crude hit a five-week high above $53 a barrel and moved above its 50-day moving average for the first time since mid-October."The move above $53 engendered some profit-taking, as it should," said John Kilduff, founding partner at energy hedge fund Again Capital.International Brent crude futures were at $60.84 per barrel at 11:38 a.m. ET (1638 GMT), down 84 cents, or 1.4 percent.U.S. West Texas Intermediate crude futures fell 75 cents, or 1.4 percent, to $51.84 per barrel.WTI and Brent are set for their second week of gains, rising about 8 percent and 6 percent respectively.Tightened supply following OPEC-led crude production cuts aided earlier 1 percent increases for both oil benchmarks, but concerns about the global economy kept markets in check."Profit-taking has weighed on oil prices in today's trading session following gains made earlier in the week," said Abhishek Kumar, senior energy analyst at Interfax Energy in London. "A lack of tangible progress in the U.S.-China trade talks, ongoing political uncertainty in the U.S., and fears that China's weakening economy could adversely hit global oil demand have also contributed toward the weakness in oil prices."
U.S. benchmark oil snaps longest win streak in 9 years, but books weekly gain - Oil futures ended lower Friday, pulling back a day after U.S. prices tallied their longest streak of consecutive session gains in nine years, but scoring a second weekly climb in a row.A move higher in the last few minutes of trading on Thursday allowed oil futures to notch a ninth straight session of gains. That was the longest winning streak since January 2010 for the U.S. benchmark. For global benchmark Brent, it was the longest in more than 11 years.“I think oil prices went up too high too quick, without a pause, so what we are seeing could simply be profit taking at around key resistance levels,” said Fawad Razaqzada, market analyst at Forex.com. However, “fundamentally, the outlook doesn’t look too bright. Not only is non-OPEC supply [looking] set to rise, but the demand outlook doesn’t look too great this year.”In Friday dealings, West Texas Intermediate crude for February deliveryCLG9, -1.69% fell $1, or 1.9%, to settle at $51.59 a barrel. The settlement Thursday at $52.59 a barrel on the New York Mercantile Exchange was the highest since Dec. 7, according to Dow Jones Market Data. WTI posted a weekly rise of about 7.6%. Prices climbed out of a bear market Wednesday and as of Friday’s settlement, have climbed by about 21% from the 52-week low of $42.53 on Dec. 24.
Trump 'hasn't been fair' to OPEC, Oman's oil minister says -- Oman's oil minister thinks President Donald Trump has given OPEC some undue flak. But echoing other Gulf ministers, Mohammed bin Hamad al-Rumhi stressed his desire to steer clear of political animosity with the American leader, appearing keen to give him the benefit of the doubt."Sometimes he hasn't been fair," al-Rumhi told CNBC's Hadley Gamble while at the Atlantic Council's Global Energy Forum in Abu Dhabi. "I'm sure he has good intention too, he thinks he is representing the people of the U.S. and he thinks this is the way to do it.""Nobody wants volatility, I am sure Trump doesn't want volatility, because volatility is difficult to manage," he said. Trump has spent months vocally criticizing the 14-member cartel for its management of oil output, urging the group to keep the taps open and oil prices low. "OPEC is ripping us off," Trump said in a tweet last October.In December, OPEC members along with Russia reached an agreement to cut their crude production by 1.2 million barrels of oil per day from the market in order to stem the fall in prices, something that further drew Trump's ire. "Unfortunately there are politics, but sometimes the politics forces people to go to the social media or to CNBC to present their case. And that is the reality of today," the minister said.
Saudi Arabia's massive oil reserves total 263 billion barrels, even bigger than previously known - Saudi Arabia's massive oil and gas reserves are even bigger than previously reported, according to an outside assessment commissioned by the kingdom. The independent audit not only revised Saudi reserves higher, but may help put to rest skepticism over the nation's oil and gas wealth, which has persisted in some corners of the market for years. It also shows national oil giant Saudi Aramco is taking strides towards transparency as it continues to consider a stock market debut. On Wednesday, Saudi Energy Minister and Aramco Chairman Khalid al-Falih said the kingdom expects the initial public offering for Aramco to take place in 2021, following a delay. State-controlled Aramco had 263.1 billion barrels of oil waiting to be tapped at the end of 2017, according to Dallas-based petroleum consulting firm DeGolyer and MacNaughton. That is 2.2 billion barrels more than Aramco reported in its last annual review. Aramco's natural gas reserves total 319.5 trillion cubic feet, according to the audit. The company, which is not a major player in the gas market, previously reported 302.3 trillion cubic feet of gas reserves. Saudi Arabia has additional reserves in an area along the border with Kuwait that has sat idle due to a dispute between the neighbors. Including this so-called Neutral Zone, Saudi oil reserves total 268.5 billion barrels, DeGolyer and MacNaughton concluded. That compares with an earlier estimate of 266.3 billion barrels.
Saudi Arabia’s Great Run Seems Headed for Trouble - In purchasing power parity terms, Saudi Arabia is a rich country — only slightly behind the U.S. in living standards. Meanwhile, the country’s leadership is feeling confident and powerful enough to prosecute awar in Yemen and kill dissident journalists.But beneath the placid surface, there could be trouble brewing. First of all, the country’s demographics are headed in a direction that is sometimes associated with social unrest. As recently as 2000, Saudi Arabian families were very large, with an average of more than six children per woman. But fertility has dropped precipitously, and is now below the replacement level of 2.1 children per woman: This means that there are a large number of Saudi Arabians now coming of age who will have relatively few children of their own to take care of. In countries with economies based on manufacturing, this would produce a demographic dividend, causing growth to accelerate due to an abundance of young workers.But in Saudi Arabia’s resource-dependent economy, it may simply put a strain on government finances. Saudi Arabia has traditionally been a rentier economy, where government jobs distribute oil money to the population and keep social tensions from rising. A bigger population means more mouths to feed. And youth unemployment in the country typically hovers between 25 and 30 percent, while overall unemployment hit record highs in early 2018.A big cohort of idle young adults with high unemployment and relatively light child-care duties could be a volatile mix. Political scientists have long noted the correlation between youth bulges and civil strife. This volatile situation could be made even more precarious by three additional factors: declining oil revenues, climate change and social liberalization.
Saudi Arabia plots new path to long-delayed Aramco IPO - Saudi oil giant Aramco is undertaking a series of moves that may pave the way for a long-delayed stock market debut.The kingdom plans an initial public offering for Aramco in 2021, Saudi Energy Minister Khalid al-Falih said during a news conference Wednesday. Falih backed the latest target for the IPO with several announcements that would essentially prep the market for the debut, which is expected to be the largest ever. Saudi Arabia on Wednesday released the results of an independent audit that confirms the kingdom controls more than 260 billion barrels in oil reserves. The assessment makes the metrics behind the world's largest energy company — long the subject of skepticism — a bit less opaque to potential investors in Aramco."This certification underscores why every barrel we produce is the most profitable in the world, and why we believe Saudi Aramco is the world's most valuable company and indeed the world's most important," Falih said in a statement.Falih later announced Aramco will issue bonds in the second quarter of this year. In order to tap the debt market, Aramco will release additional financial information, offering a wider glimpse into a private company whose inner workings are a closely held secret. "That shows that Aramco's hesitation about doing an IPO is not about keeping information private," said Ellen Wald, an independent energy policy analyst at Transversal Consulting. "It's not because they're hiding something." Falih did not say how much the bond sale would seek to raise, but it is widely expected to underwrite at least part of Aramco's purchase of a majority stake in Saudi petrochemicals company Sabic. The 70 percent stake that Aramco intends to buy is controlled by Saudi Arabia's sovereign wealth fund and valued at roughly $70 billion.
Pompeo says oil prices don't influence US response to Khashoggi killing, contrary to Trump's stance - Secretary of State Mike Pompeo on Monday said oil prices did not and will not influence the Trump administration's response to the killing of Saudi dissident Jamal Khashoggi.Pompeo's remarks, made in an interview with CNBC's Wilfred Frost, come three months after Saudi agents killed the Washington Post columnist in the kingdom's consulate in Istanbul, Turkey. In November, President Donald Trump declared the United States stands with Saudi Arabia, even though the CIA has reportedly concluded that Saudi Crown Prince Mohammed bin Salman played a role in the slaying.At the time, Trump linked his stance to Saudi Arabia's help taming oil prices, as well as its role countering Iran in the Middle East and its pledge to buy more American-made weapons."Saudi Arabia, if we broke with them, I think your oil prices would go through the roof. I've kept them down. They've helped me keep them down," Trump told reporters after issuing a statement spelling out his support for the Saudi government.One day later, Trump thanked Saudi Arabia for taking steps to lower oil prices and implored the kingdom to push them even lower. Asked whether low oil prices influenced the administration's response, and whether Trump might take a tougher stance if the Saudis let oil prices rise, Pompeo said, "They're disconnected.""We've taken a very clear message to the world with respect to the murder of Jamal Khashoggi," Pompeo told CNBC. "This was a heinous act. It's unacceptable. It's inconsistent with the way nations ought to behave around the world."
US Approves Missile Defense Upgrades for Saudi Arabia Despite Khashoggi Outrage — Anger at the Saudi government’s murder of Jamal Khashoggi had many in the US Congress saying that they intend to limit arms sales to the kingdom. The Trump Administration appears to be ignoring that, however, and continuing with Saudi arms deals.The State Department has notified Congress that Saudi Arabia will be receiving major upgrades to their Patriot PAC-3 missile defense systems, including an improved guidance system. The upgrades are expected to be worth $195 million.The State Department says that the approval is in keeping with President Trump’s announcement that the US will remain a “steadfast partner” to the Saudis irrespective of what happened to Khashoggi.This has been the president’s position, and his supporters are citing missile fire from neighboring Yemen. Whether Congress will react to this remains to be seen, but the administration seems to be betting they won’t. It’s possible, with a defensive missile system, that Congress will defer the conflict over arms sales to the Saudis for something bigger and more offensive-minded. Many senators have promised to hold up future deals.
Instead of shunning Saudi Arabia after Khashoggi killing, investors flock to $7.5 billion bond sale - Saudi Arabia raised $7.5 billion in its first dollar bond sale since the killing of Saudi dissident and U.S. resident Jamal Khashoggi incited an international uproar. Khashoggi's killing sparked concerns that international investors would shun the kingdom. Saudi Arabia is prosecuting several agents and officials allegedly involved in the slaying at the Saudi Consulate in Istanbul. Riyadh denies that Saudi Crown Prince Mohammed bin Salman was involved in the murder, but the CIA has reportedly concluded that the king-in-waiting was complicit in the killing. While some business executives have cut ties with the kingdom over the incident, bond buyers do not appear ready to overlook an investment opportunity in Saudi Arabia, the world's largest oil exporter. The issuance was nearly four times oversubscribed, with the order book peaking at $27.5 billion, according to the Saudi Ministry of Finance. Saudi Arabia sold $4 billion in 10-year notes that mature in 2029, and $3.5 billion in in 31-year notes that come due in 2050. U.S.-based investors accounted for 40 percent of the 2029 bond purchases and 45 percent of the 2050 debt, according to Reuters. On Wednesday, Saudi Energy Minister Khalid al-Falih said state-owned oil giant Aramco will issue bonds in the second quarter of this year. The debt will most likely be issued in dollars, he said.
Teenager Who Fled Saudi Arabia Fears She’ll Be Killed If Sent Back Home — A Saudi woman held at Bangkok’s international airport has said she will be killed if she is repatriated by Thai immigration officials, who confirmed the 18-year-old was denied entry to the country on Sunday. Rahaf Mohammed M Alqunun told the AFP news agency she was stopped by Saudi and Kuwaiti officials when she arrived at Suvarnabhumi airport and her travel document was forcibly taken from her, a claim backed by Human Rights Watch.“They took my passport,” she said, adding that her male guardian had reported her for travelling “without his permission”.Human Rights Watch Asia deputy director Phil Robertson slammed the Thai authorities and urged the UN refugee agency to help the teenager.“What country allows diplomats to wander around the closed section of the airport and seize the passports of the passengers?” he said, adding that there is “impunity” within the family unit in Saudi Arabia to abuse women. The incident comes against the backdrop of intense scrutiny on Saudi Arabia over its investigation and handling of the murder of journalist Jamal Khashoggi in its Istanbul consulate last year, which has renewed criticism of the kingdom’s rights record.
UN Refers Saudi Teenager to Australia for Refugee Resettlement — The United Nations has asked Australia to consider refugee resettlement for an 18-year-old Saudi woman who fled to Thailand at the weekend saying she feared her family would kill her, the Australian government has said.“The UNHCR has referred Ms Rahaf Mohammed al-Qunun to Australia for consideration for refugee resettlement,” Australia’s Department of Homeland Security said in an email on Wednesday.The department said it would consider the referral “in the usual way, as it does with all UNHCR referrals”. It declined to comment further.The UNHCR office in Thailand also declined to comment.Qunun was stopped by authorities at Bangkok’s main airport as she arrived on a flight from Kuwait at the weekend after running away from her family, who she says subjected her to physical and psychological abuse.Thailand initially said it would deport her at the request of Saudi embassy officials, barring her from traveling on to Australia where Qunun said she had intended to claim asylum.But armed with a phone, she barricaded herself into an airside hotel room and fought back, live-tweeting her fears of deportation in a campaign that swiftly galvanized international support and prompted a sharp U-turn by Thai officials.Qunun is now in the care of the UN’s refugee agency in Bangkok, which is processing her case. Australian officials have strongly hinted that Qunun’s request will be accepted.
Six killed in “preemptive” security operation in Saudi Arabia’s Eastern Province - The bloody siege by security forces of a village in the coastal Qatif region of Saudi Arabia’s Eastern Province has left at least six people dead and a number of others wounded.The assault, described by Saudi officials as a “preemptive” security operation, saw heavily armed troops storm the village of Al-Jish after surrounding it for 15 hours. The Saudi regime claimed that the operation was aimed at capturing “terrorists” and that those killed had been given a chance to surrender but died in an “exchange of fire.”No credibility whatsoever can be given to this official story from a monarchical dictatorship that describes anyone who opposes its rule or dares to insult the Saudi king or the country’s de facto ruler, Crown Prince Mohammed bin Salman, as a “terrorist,” whose offenses are punishable by beheading.The Eastern Province, where the siege took place, has been the scene of continuous repression by the Saudi regime since 2011, when demonstrations broke out among the area’s Shia population demanding democratic rights and an end to the systemic discrimination exercised by the monarchy, whose rule is bound up with the official, state-sponsored religious doctrine of Wahhabism, an ultra-conservative Sunni sect.The leader of the 2011 protests, the Shia cleric Nimr al-Nimr, who called for an end to the monarchy, was executed in January 2016, along with 46 others on charges of “terrorism.” Forty-three were beheaded, and four were shot to death by firing squads.The brutal repression has left the region, which is a center of Saudi Arabia’s oil industry, but whose population is the poorest in the country, seething. Sporadic demonstrations have continued, even as the Saudi regime maintains what amounts to a military occupation.
Drone Attack on Saudi Military Parade in Yemen Kills Top Coalition Officials — Yemen’s military, loyal to the Houthis, launched a retaliatory drone attack against a Saudi-led coalition military parade at Saudi Arabia’s Al-Anad airbase in Yemen’s southern province of Lahejj, killing several military personnel.Saudi state-owned media confirmed that multiple high-ranking officials were killed and several others injured when a combat drone struck an airbase where a military parade was taking place.A source in Aden told MintPress News that 20 people were killed and more than 25 injured, including Saudi coalition military leaders and a high-ranking member of Saudi Arabia’s presidential forces — adding that those figures may increase, as new casualties were still arriving in Aden amid an intense security presence.A Yemeni military source told MintPress that Yemen’s air force carried out the attack using a new type of unmanned aerial vehicle (UAV or drone) dubbed the Qasaf 2k (Canteen 2k). The Qasaf 2k is laden with a large amount of fragmented explosives and has a unique design which allows it to discharge its payload downwards at a distance of around of feet. A spokesman for the Yemeni army said the operation came in response to the continuation of Saudi-led coalition airstrikes and the targeting of innocent civilians. A recent Saudi-led coalition airstrike killed two civilians and injured three others when their home was targeted in the village of al-Fara in northwestern Yemen’s Hardh district on Thursday. Coalition attacks and airstrikes are ongoing despite a truce that was reached in Sweden in December 2018. Saudi coalition military officials say the dead and wounded include officers and senior military leaders, cohorts that in southern Yemen contain a strong contingent from the United Arab Emirates (UAE). The UAE oversees the Al-Anad base, the coalition’s largest in Yemen.
Iran Prepares Satellite Launch, Ignoring US Warnings, Says It’s For Peaceful Purposes - Despite recent warnings from U.S. Secretary of State Mike Pompeo, Iran is preparing to launch a remote sensing satellite into space, satellite images obtained by CNN on Tuesday showed. Researchers at the Middlebury Institute of International Studies at Monterey, California, stated that the images, which were taken on Jan. 4, 6 and 7, 2019 by Planet Labs, an American private Earth imaging company, showed activity at Iran’s aerospace company "Imam Khomeini Space Center." The recent activity was similar to steps that were taken before the launch of a previous satellite by Iran in 2017. Despite Pompeo's stance that the launch vehicle contains technology used in ballistic missiles, there is no evidence to prove that the launch is for military purpose. Images show that preparations for the launch of the satellite into orbit are underway. The satellite will be launched with the help of a Simorgh space launch vehicle which is an Iranian expendable small-capacity orbital carrier rocket. Jeffrey Lewis, of the Middlebury Institute of International Studies at Monterey said, "The Simorgh is a two-stage space launch vehicle that uses a cluster of four Shahab-3 engines in its first stage and smaller steering engines in its upper stage.” The photograph captured outside the site's assembly and checkout building on Jan. 4 showed a large white shipping container. Analysts believe the white container was likely used to transport the rocket's first stage before its reassembly on the launch pad. Photographs also showed a large vehicle and a fuel truck parked on the site. "The appearance of this canister is a strong indication that a rocket has been transported to the site and a space launch is likely in the coming weeks," Lewis said. Earlier this month, Pompeo had warned Iran of new sanctions if it went ahead with its planned satellite launches. He also stated that the country had planned to launch three rockets called the Space Launch Vehicles (SLV) within the next few months. He also said, these rockets had technology “virtually identical” of those used in intercontinental ballistic missiles.
US navy Seal pleads not guilty to murdering Islamic State prisoner - A decorated navy Seal has pleaded not guilty to charges of premeditated murder and other crimes in the stabbing death of a teenage Islamic State prisoner in Iraq and the shooting of unarmed Iraqi civilians. Special operations chief Edward Gallagher has been jailed since his September arrest, and a judge said he would rule next week whether the 19-year navy veteran should be released before trial. He was due to stand trial 19 February. “He didn’t murder anyone,” his attorney Phil Stackhouse told reporters outside the courtroom at a naval base San Diego. “He didn’t shoot at innocent people in the street.” Navy prosecutors have painted a picture of a highly trained fighter and medic going off the rails in 2017 on his eighth deployment, indiscriminately shooting at Iraqi civilians and stabbing to death a captured Islamic State fighter estimated to be 15 years old, then posing with the corpse, including at his re-enlistment ceremony. The case is unusual because of the seriousness of the allegations against an elite soldier and because the case includes accounts of fellow Navy Seals, an extremely tight-knit group even by military standards. At Gallagher’s arraignment, prosecutors handed over 1,700 pages of documents, including text messages they say show he tried to intimidate witnesses.
US Attacks in Syria Increased After Trump’s Withdrawal Announcement — Despite US President Donald Trump’s announcement that he will withdraw US troops from Syria, American strikes in the east of the country have increased.This was revealed Thursday by an investigation conducted by Al Jazeera and The Intercept, which found that there are about 50,000 to 60,000 people stuck in eastern Syria – which is dominated by Daesh – living under these US attacks.An activist, who refused to give his name, was reported saying: “The civilians in these areas have no place to go or hide from the US bombardment of their villages.” He added that the residents have been harmed at the hands of the Syrian government, the US and Daesh alike.>In the wake of international controversy and news that Daesh was not fully defeated in Syria, Trump declined to give a timeline for the US troops’ withdrawal from Syria, instead saying this would take place “over a period of time”. It remains unclear whether US airstrikes will continue once the troops leave.Describing the US strikes, a Daesh fighter said: “They just like to disrupt and mess everything up […] They bombed the places where they sell gasoline, or they sell cooking oil, or where they filter the water — they bomb all these places. They bomb everything just to make your life horrible.” The fighter added: “No building is empty here,” referring to the remaining Daesh-controlled villages in Deir Ez-Zour. The Intercept said that fighters and civilians in the villages have reportedly been describing the US bombing campaign as a scorched-earth policy.
US-Backed Syrian Militants Carry Out Rare Surface-to-Surface Missile Test - What do US forces in Syria do when the Commander-in-Chief orders a "full" and "immediate" draw down of troops from the country? They conduct a rare surface-to-surface missile test with their "rebel" partners on the ground of course. An exclusive report from Middle East news site Al Masdar finds the following based on a video of the missile test uploaded to opposition social media on June 3rd, though it's unknown precisely when the test was carried out:The U.S.-backed rebel forces carried out a rare missile test in the Al-Tanf region of southeastern Homs province recently.U.S.-backed "Revolutionary Commandos" reportedly conducted this missile test in the Al-Tanf Zone that is located along the Iraqi border. Below is the short video of the rebel group carrying out the missile test in conjunction with American forces:
Syria – Turkey Fails In Idleb, Is Unwilling To Take The Northeast - The neoconservatives in the Trump administration, Secretary of State Mike Pompeo, National Security Advisor John Bolton and the Syria envoy James Jeffery, are scrambling to save their plans for Syria that President Trump disposed of when he ordered a complete retreat.Those plans were for a permanent U.S. occupation of northeast Syria, the reduction of Iranian influence within the government held parts of Syria and an eventual disposal of the Syrian government under President Assad through negotiations. These were unicorn aims that had no chance to ever be achieved.Moreover Trump had never signed off on these ideas. Back in April he had announced that he wanted U.S. troops out of Syria. He gave his staff six month to achieve that. But instead of following those orders Pompeo and Bolton tried to implement their own plans:Late last year, some of the president’s hawkish advisers drafted a memo committing the United States to a longer-term presence in Syria that included goals of an enduring defeat of the Islamic State, a political transition and the expulsion of Iran, officials said. The president has not signed the memo, which was presented to him weeks ago. In fact, Trump had warned his aides for months that he wanted out of Syria in short order....Bolton’s Iran plan never really took effect at the Pentagon, where officials were not officially tasked with any new mission in addition to the operation against the Islamic State. Military officials likewise viewed Iran’s expansion into Syria as problematic, but they were skeptical about the lack of a clear legal justification that would be required for offensive military action against Iranian-backed forces. Trump recognized that those plans were nonsense and ordered to end them. In that process he came up with a likewise unicorn idea - to hand northeast Syria to Turkey to fight the already defeated Islamic State.
Deal with Syria regime ‘inevitable’: Kurdish commander - A deal between Damascus and Syria's Kurds over their autonomous region in the country's north is "inevitable", a senior Kurdish military official said on Saturday, insisting that Kurdish forces should remain in the area. Marginalised for decades, Syria's minority Kurds carved out a de facto autonomous region across some 30 percent of the nation's territory after the devastating war broke out in 2011. Kurdish forces, backed by a US-led coalition, spearheaded the fight in Syria against the Islamic State group after the jihadists seized large parts of the country and neighbouring Iraq in 2014. But Washington's shock December announcement that it would withdraw its troops from Syria pushed the Kurds to seek a new alliance with President Bashar al-Assad's regime, amid fears of a long-expected Turkish assault against Kurdish forces. Redur Khalil, a commander in the Kurdish-led Syrian Democratic Forces alliance, told AFP that Kurdish authorities and Damascus were bound to reach a deal. "Reaching a solution between the autonomous administration and the Syrian government is inevitable because our areas are part of Syria," said Khalil. Syrian government forces deployed late last month around the key city of Manbij in Aleppo province, after Kurdish forces called for them to arrive. "Negotiations are ongoing with the government to reach a final formulation for administering the city of Manbij," Khalil told AFP, adding that talks had shown "positive signs". If that leads to a solution that "protects the rights" of Manbij residents, a similar arrangement could be applied to SDF-controlled areas of Deir Ezzor province, east of the Euphrates river, he said.
2 Americans among foreign jihadists captured by Syrian Kurds - The Kurdish-led force battling the remnants of the Islamic State group in eastern Syria said Monday it captured five foreign jihadists, including two US citizens. The two Americans, two Pakistanis and an Irishman were part of a cell planning an attack on civilians fleeing the jihadist group's last bastion, the Syrian Democratic Forces (SDF) said. The SDF has spearheaded the battle against IS in eastern Syria and is close to flushing out the jihadists from their last pocket near the Iraqi border. The force, which receives key support in the air and on the ground from the US military, said in a statement that the jihadists were captured on December 30. The SDF said its forces detected "a group of terrorists who had been preparing to attack the civilians who were trying to get out of the war zone". "An operation against the cell was carried out by our forces," it said.
NBA player to skip team’s trip to London over fear ‘lunatic’ Turkish president will have him killed -On January 17, the NBA will go international when the New York Knicks and Washington Wizards face off in a regular-season game in London, England.But one key player will not be making the trip, because he fears for his life.Enes Kanter, a center for the New York Knicks and native of Turkey, has been an outspoken critic of the government there — especially of hardline President Recep Tayyip Erdogan. Kanter now feels that his life would be in danger if he were to travel overseas.“Sadly, I’m not going because of that freaking lunatic, the Turkish president,” Kanter told ESPN on Friday. “There’s a chance that I can get killed out there. So that’s why I talked to the [Knicks’] front office. I’m not going. “It’s pretty sad that just all this stuff affects my career and basketball, because I want to be out there helping my team win. But just because of that one lunatic guy, one maniac or dictator, I can’t even go out there and just do my job. So it’s pretty sad.”
Erdogan Signals Lasting Turkey Role in Syria Amid U.S. Confusion - Turkish President Recep Tayyip Erdogan signaled a lasting role for his country’s forces in neighboring Syria as Donald Trump’s national security adviser prepares to clarify for officials in Ankara the administration’s position on a U.S. troop withdrawal that’s generated confusion. Erdogan, writing in the New York Times on Monday, laid out an agenda for Turkey’s forces in Syria that he said will include an “intensive vetting process to reunite child soldiers with their families,” oversight of the creation of local governing councils and serving as an intermediary between the U.S. and Russia in ending the eight-year-old Syrian civil war. The goal is to ensure that Islamic State doesn’t resurrect itself, he said. “A military victory against the terrorist group is a mere first step,” Erdogan wrote. “The lesson of Iraq, where this terrorist group was born, is that premature declarations of victory and the reckless actions they tend to spur create more problems than they solve.” Erdogan’s statement comes as U.S. officials add caveats and conditions to Trump’s abrupt announcement last month that he intends to withdraw American troops from the conflict. National Security Adviser John Bolton is in Turkey and will meet with officials Tuesday. He said Sunday that that American forces would remain in Syria until Islamic State is defeated, though Trump initially signaled that troops would be coming home soon. Now, it’s not clear when U.S. forces will leave and officials have repeatedly said there’s no firm timeline for withdrawal. Bolton also said that the Trump administration will demand assurances from Turkey that it won’t attack the U.S.’s Kurdish allies, who are viewed as terrorists by Erdogan’s government. #160;
Syria Withdrawal Now Depends On Turkish Guarantee Not To Attack Kurds - President Trump will only withdraw American troops from northern Syria if the Turkish government guarantees it won't attack US-backed Syrian Kurdish forces, according to national security adviser John Bolton on Sunday. According to NBC News, Trump demanded the commitment from Turkish President Recep Tayyip Erdogan as one of several conditions which need to be met before US forces mostly exit the region. "There are objectives that we want to accomplish that condition the withdrawal," said Bolton. He spoke to reporters traveling with him to Israel and Turkey as he tried to clarify Trump’s Syria withdrawal policy for allies. He’s meeting with Israeli officials Sunday and Monday, and with Turkish officials, including Erdogan, on Tuesday.Since Trump abruptly announced on Dec. 19 that all U.S. forces in Syria would exit immediately, administration officials have shifted the timing to say it would happen more slowly. Officials are now setting a series of conditions for withdrawal that must first be met, which Bolton described as “policy decisions that we need to implement.” -NBC News"This is a cause and effect mission," said Bolton. "Timetables or the timing of the withdrawal occurs as a result of the fulfillment of the conditions and the establishment of the circumstances that we want to see. And once that’s done, then you talk about a timetable." Bolton also noted that the US troop withdrawal will not be a complete exit from Syria as Trump had originally ordered. Instead, most of the American forces would be withdrawn from northern Syria - where the majority of an estimated 2,000 US troops are deployed, while a small number of troops would remain in the southern part of the country. "The primary point is we are going to withdraw from northeastern Syria," said Bolton. "So it’s going to be a different environment after we leave, there is no question about that," he added. "But there is no desire to see Iran’s influence spread that’s for sure."
Lira Slides After Erdogan Refuses To Meet Bolton For Blocking Syria Withdrawal - Turkish President Erdogan sent the lira sliding on Tuesday when he refused to meet with Trump National Security Advisor John Bolton during the latter's trip to Turkey after Bolton successfully convinced Trump to hold off on withdrawing 2,000 US troops from Syria until it had received assurances from Turkey that the Turks wouldn't attack US-backed Kurds in the region.Bolton revealed the change in direction during a Sunday interview, ahead of a planned trip abroad where he will visit Turkey and Israel to discuss the terms of the US withdrawal.Instead of meeting with Bolton, Erdogan used a prescheduled speech in parliament to criticize American proposals that the Kurdish group play a key role in Syria after the US withdraws, according to Bloomberg. Turkey, Erdogan said, has already completed preparations for how it will combat the remnants of ISIS after the US withdraws and has already drawn up plans to neutralize "all terror threats," Erdogan said Tuesday during a speech to members of his ruling AKP Party."We will very soon mobilize to eliminate terrorist organizations in Syria," he said. "If there are other terrorists who would attempt to intervene in our intervention then it is our duty to eliminate them as well," Erdogan added in a likely reference to Kurdish fighters on Turkey's border, whom Erdogan views as a threat because of their affiliation with Kurdish separatist groups within Turkey. The news sent the lira lower amid renewed tensions between the US and Turkey following hopes that the feuding NATO members might finally be setting aside their differences.
Turkey says will launch Syria attack if US delays troop pullout - Turkey will go ahead with an offensive against Syrian Kurdish fighters in Syria if the United States delays the withdrawal of its troops from the war-torn country, Turkish Foreign Minister Mevlut Cavusoglu has said. "If the [withdrawal] is put off with ridiculous excuses like Turks are massacring Kurds, which do not reflect the reality, we will implement this decision," he told NTV channel on Thursday. Cavusoglu said a military operation against the US-allied Kurdish People's Protection Units (YPG), which it has pledged to carry out in northeastern Syria, is not dependent on the pullout of US troops. "We are determined on the field and at the table ... We will decide on its timing and we will not receive permission from anyone." Turkey has long condemned the US for its military relationship with the Kurdish fighters. Ankara considers the YPG and its political wing - the Kurdish Democratic Union Party (PYD) - to be "terrorist groups" with ties to the banned Kurdistan Workers' Party (PKK) in Turkey. Last month, US President Donald Trump said he is withdrawing some 2,000 US troops from Syria in a statement that shocked many politicians in Washington as well as Western and Kurdish allies fighting alongside the US in the war-torn country. Trump's decision to withdraw troops was initially expected to be carried out swiftly, but the timetable became vague in the weeks following his announcement.. On Sunday, US National Security Adviser John Bolton had set pre-conditions for the US pullout from Syria that included Turkey guaranteeing the safety of the YPG.
Erdogan To Trump- Leave Syria Now Before We Strike - Turkey has threatened to strike the Syrian Kurdish YPG militia if the United States delays its troop withdrawal from the country, according to The Guardian. "If the [pullout] is put off with ridiculous excuses like Turks are massacring Kurds, which do not reflect the reality, we will implement this decision," said Turkish foreign minister Mevlüt ÇavuÅŸoÄŸlu, referring to their threat to launch a military operation in Kurdish controlled Syria. Speaking with broadcaster NTV, ÇavuÅŸoÄŸlu said it was not realistic to assume that the United States will be able to collect weapons it gave to the YPG, which Turkish President Recep Tayyip ErdoÄŸan considers a terrorist group. Turkish officials had a tense meeting this week with Trump’s national security adviser, John Bolton, in Ankara aimed at coordinating the pullout process.ErdoÄŸan – who has welcomed the pullout plan – accused Bolton of a “grave mistake” by demanding that Ankara provide assurances on the safety of the Kurdish fighters before Washington withdraws its troops.The US secretary of state, Mike Pompeo, who is on a regional tour, also said on Wednesday that Turkey had committed to protecting Washington’s Kurdish allies fighting Islamic State in Syria. -The GuardianThe United States has worked closely with the Syrian Kurdish People's Protection Units (YPG) militia, which Ankara views as a "terrorist offshoot" of the Kurdistan Workers' Party (PKK), reports The Guardian. The PKK has vowed to battle the Turkish state since 1984."We are determined on the field and at the table … We will decide on its timing and we will not receive permission from anyone," ÇavuÅŸoÄŸlu said of the plan to strike, adding that various officials in the Trump administration had tried to discourage Trump from the pullout plan - creating "excuses" such as Turkey massacring Kurds, referring to Pompeo's comments.
Turkish-Backed Syrian Rebels Just Made a Deal With Al-Qaeda — After almost a solid week of losses at the hands of al-Qaeda, the Turkish-backed National Liberation Front has reached a deal with al-Qaeda on a 15-day truce. Both seem to be expecting this to lead to more fighting, and are using it to shore up their forces on their new frontier with one another. That fighting is likely to be at the important Idlib Province city of Maarat al-Numaan, as the truce was reached just as al-Qaeda was approaching the outskirts, but before the city itself could be attacked. The fighting between the two sides began early last week. According to al-Qaeda, the Nureddin al-Zimki, one of the NLF members, attacked them and killed some of their members. Over the next week, counterattacks saw al-Qaeda seize roughly 25 towns and villages. Maarat al-Numaan is on the main road connecting Aleppo and Hama, and is subsequently of considerable value to the rebels, or to the government. Though so far the Syrian government has not intervened, there is growing expectation that further al-Qaeda gains would virtually oblige them to move in and prevent al-Qaeda from getting too big.
Israel carries out overnight air strikes on Gaza - The Israeli military carried out air raids on the Gaza Strip overnight on Monday, causing damage to property, Palestinian media reported. According to Wafa, the official Palestinian news agency, Israeli warplanes fired two missiles at a site in Beit Lahiya in the northern strip. No casualties were reported. In a statement, the Israeli army said it had carried out air strikes against Hamas positions in response to a rocket being fired into Ashkelon in southern Israel. Fighter jets and helicopter gunships then raided "terrorist targets at Hamas military camps" on the Gaza Strip, the statement said. "Earlier today, an explosive device attached to multiple balloons was launched on a model plane from the Gaza Strip into Israeli territory," the statement said. A Hamas security source said one attack occurred east of Khan Younis in the southern Gaza Strip and hit an observation point for Hamas's armed wing, while the second was east of Gaza City. The security source said no injuries had been reported. The Gaza frontier has been relatively calm in recent weeks after a deal in which Israel allowed Qatar to provide millions of dollars in aid for fuel and salaries in the blockaded enclave. Since March 2018, Palestinian protesters have been demonstrating every Friday east of the strip near the Israeli border fence, calling for their right to return to their former homes now inside Israel. At least 240 Palestinians have been killed since the demonstrations began, most by Israeli fire during border clashes but also by air and tank attacks.
Palestine TV offices in Gaza ransacked, equipment destroyed (Reuters) - The Gaza offices of President Mahmoud Abbas’s official Palestine Television station were attacked and ransacked on Friday, adding to tensions between his Palestinian Authority and the Islamist Hamas movement which rules the territory. Rafat Al-Qidra, the office director, said five men broke into the premises early on Friday and destroyed cameras, editing and broadcast equipment worth nearly $150,000. “Whoever rules in Gaza must afford protection to everyone here,” Qidra told Reuters. The station broadcasts material supportive of Abbas’s Western-backed Authority, whose power base lies in the West Bank. Station officials immediately blamed Hamas for the attack. “Hamas is deeply involved in this conspiracy,” said Ahmed Assaf, chairman of the Palestininan Broadcast Corporation (PBC), speaking to the channel in the West Bank city of Ramallah. The PBC issued a statement saying the attack was a “clear reflection of the mentality of the Hamas movement and criminal gangs who believe only in their voice, and who seek to suppress freedoms”. Neither Assaf nor the PBC offered any evidence for their accusations, and Hamas officials swiftly condemned the incident. “What happened is rejected, and we condemn it,” Eyad Al-Bozom said in a statement issued by the Hamas-run Interior Ministry in Gaza. He urged the station’s officials to cooperate with investigators. There has long been antipathy between Hamas, which won the last Palestinian parliamentary elections in 2006 and is opposed to any peace negotiations with Israel, and with Abbas’s more moderate and secular Fatah faction
Canada charity used donations to fund Israeli army projects- CBC - The Canadian Broadcasting Corporation (CBC) has published an expose on a Jewish charity in Canada, which has been under investigation for using its donations to build infrastructure for the Israeli forces in violation of the country's tax rules.The Jewish National Fund (JNF) of Canada, one of the country's long-established charities, has been the subject of a Canada Revenue Agency audit after a complaint was filed in October 2017.The JNF funds numerous projects in Israel, such as reforestation efforts in areas hit by wildfires but it has also funded infrastructure projects on Israeli army, air and naval bases, the CBC, the country's public broadcaster, reported on Friday.Their activities are in violation of Canadian law which prohibits charitable funds from supporting a foreign army. CBC's article details many troubling aspects of the charity's projects which, along with funding infrastructure on Israeli military bases, it has also contributed directly to the construction of at least one hilltop settler outpost - illegal under international law, and considered illegal by Israel itself.
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