US oil production and oil exports at record highs; backlog of uncompleted wells remains at 7.1 months

oil prices rose on OPEC's deep supply cuts for a second week, bolstered by optimism that US and Chinese negotiators would reach a trade deal before Trump's punitive tariffs take hold on March 1st...after rising 5.4% to $55.59 a barrel last week on a report showing that OPEC had already cut its output to the agreed level, US crude contracts for March delivery rose 50 cents to $56.09 a barrel after the markets reopened on Tuesday on evidence of further OPEC production cuts and optimism about the ongoing US trade talks with China...the rally following last week's OPEC cuts continued for a sixth day in a row on Wednesday, after Trump said negotiations with China were going well and suggested he was open to extending them beyond March 1st, as the March oil contract expired 83 cents higher at $56.92 a barrel and the US crude contract for April, which had risen 47 cents on Tuesday, rose 71 cents to finish Wednesday at ​$​57.16 a barrel on hopes that output cuts and U.S. sanctions on Iran and Venezuela would bring oil markets into balance later this year...with the media reports now quoting prices for April oil, prices pushed to new 2019 highs on the supply cuts led by OPEC early Thursday but ended the day 20 cents lower at $56.96 a barrel after the EIA reported that U.S. crude supplies rose for the 5th straight week...prices rose to their highest levels this year again on Friday on hopes that the US and China could resolve their trade disputes before a March 1 deadline during negotiations this week and ended the day 30 cents higher at $57.26 a barrel, their highest close in nearly three and a half months...

natural gas prices, meanwhile, also rose for a second week, but still remained near the 10 month lows plumbed earlier this month...citing trading in the natural gas contract for March delivery all week, natural gas prices rose 3.7 cents to $2.662 per mmBTU on Tuesday as the two week forecast trended colder over the weekend and physical gas prices remained firm, but​ then​ dipped 2.6 cents on Wednesday on concerns of oversupply following several weak weekly storage numbers...gas prices jumped 6.1 cents on Thursday, however, afterthe EIA announced a slightly larger draw from storage than was expected and then added another 2 cents on Friday to end the week at $2.717 per mmBTU​,​ as weather models indicated continued colder than normal temperatures for most of the US...

the natural gas storage report for the week ending February 15th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 177 billion cubic feet to 1,705  billion cubic feet over the week, which meant our gas supplies ended the period 73 billion cubic feet, or 4.1% below the 1,778 billion cubic feet that were in storage on February 16th of last year, and 362 billion cubic feet, or 17.5% below the five-year average of 2,067 billion cubic feet of natural gas that have typically remained in storage as of the the middle of February....this week's 177 billion cubic feet withdrawal from US natural gas supplies was between 5 and 35 billion cubic feet higher than ​queried Platts analysts ​foecast how much stored gas would be needed​​, and was somewhat more than the average of 148 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years.....as you can see on the temperature map from the EIA below, the densely populated eastern third of the US remained warmer than normal during the period, while most of the US west of the Mississippi was colder than normal, and hence used more gas than normal for mid-February...

surprisingly, natural gas storage facilities in the Eastern US saw a 49 billion cubic feet draw from their supplies over the week, actually a bit more than their average 47 billion cubic foot withdrawal over the past five years, as the region's gas supply deficit ticked up to 9.8% below average for this time of year, while natural gas supplies in the Midwest fell by 56 billion cubic feet, also an increase from their normal 51 billion cubic feet pull, as their supply deficit increased to 14.0% below the normal for the middle of February...the South Central region saw a 47 billion cubic feet drop in their supplies, up from their normal 40 billion cubic foot withdrawal, as their natural gas storage deficit increased to 16.1% below their five-year average for this time of year...at the same time, 8 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 5 billion cubic feet during this same week, as their gas supply deficit from normal rose to 33.1%, while 17 billion cubic feet of natural gas were withdrawn from storage in the Pacific region, in contrast to the 5 billion cubic feet normally withdrawn, and their natural gas supply deficit rose to 36.7% below normal for this time of year....

The Latest US Oil Supply and Disposition Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending February 15th, indicated a big jump in our crude oil imports from the prior week's 22 year low, and a ​similar large jump in our oil exports, and hence another modest addition of surplus oil to our commercial supplies of crude oil....our imports of crude oil rose by an average of 1,312,000 barrels per day to an average of 7,522,000 barrels per day, after falling by an average of 936,000 barrels per day the prior week, while our exports of crude oil rose by an average of 1,243,000 barrels per day to a record average of 3,607,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,915,000 barrels of per day during the week ending February 15th, 69,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be 100,000 barrels per day higher at a record 12,000,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 15,915,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 15,711,000 barrels of crude per day during the week ending February 15th, 57,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 525,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....thus, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 321,000 fewer barrels per day than the oil that was added to storage plus what refineries reported they used during the week....to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+321,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

with our crude oil exports now at a record high, we'll include a historical graph showing how they got there..

the above graph of US crude oil exports came from the EIA page containing the html spreadsheet for US oil exports, which is the same page we cite each time we refer to oil export data, and it shows weekly US crude oil exports in thousands of barrels per day over the past 16 years, from early 2003 to the current week...as you can see, prior to January 2017, our oil exports were minimal, because by law they had been outlawed for 40 years, with the exception of oil exports to Mexico and Canada, which were allowed under provisions of the North American Free Trade Agreement (NAFTA)...since th​e time​ when they were permitted​, however, our exports have steadily risen, often limited by the number and size of ships that could be loaded in one week and the number of ​US ​ports which could provide such loading (which also accounts for the week to week volatility you see in the chart above)...contributing to the push to ship our oil offshore has been a price differential between US light sweet crude grades such as West Texas Intermediate, and the price of the similar North Sea Brent, the international benchmark price, which has been running close to 10% for most of the past year...as of Friday's close, Brent oil for April delivery was being quoted at $67.12 a barrel, as compared to the $57.26 a barrel pricing for April WTI...so obviously, US oil traders will continue selling as much US crude into international markets as our port capacity will allow, all the while pulling down large windfall profits even after paying the roughly $2 a barrel trans oceanic transportation costs... at the same time, our refineries are importing the usually cheaper poorer grades of heavy sour crude they need and paying a premium price for them, because of a shortage of such grades of oil due to the Venezuela embargo...

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports actually fell to an average of 6,990,000 barrels per day last week, 10.5% less than the 7,808,000 barrel per day average that we were importing over the same four-week period last year.... the 525,000 barrel per day increase in our total crude inventories was all added 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 to be 100,000 barrels per day higher at a record 12,000,000 barrels per day because the rounded estimate for output from wells in the lower 48 states rose by 100,000 barrels per day to 11,500,000 barrels per day, while the 11,000 barrel per day decrease in  Alaska's oil production to 487,000 barrels per day was not enough to change the rounded national total...last year's US crude oil production for the week ending February 16th was at 10,270,000 barrels per day, so this reporting week's rounded oil production figure was 16.8% above that of a year ago, and 42.4% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 85.9% of their capacity in using 15,711,000 barrels of crude per day during the week ending February 15th, unchanged from the prior week, which had been the lowest capacity utilization rate in 16 months....the 15,711,000 barrels per day of oil that were refined this week was the lowest refinery throughput in 16 months, 0.8% below the 15,833,000 barrels of crude per day that were being processed during the week ending February 16th, 2018, when US refineries were operating at 88.1% of capacity... 

with the reduction in the amount of oil being refined, the gasoline output from our refineries was also lower, falling by 130,000 barrels per day to 9,489,000 barrels per day during the week ending February 15th, after our refineries' gasoline output had decreased by 237,000 barrels per day the prior week....with that decrease in this week's gasoline output, our gasoline production was 6.1% lower than the 10,107,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 5,000 barrels per day to 4,759,000 barrels per day, after that output had decreased by 537,000 barrels per day the prior week....but even with that decrease, this week's distillates production was more than 6.0% above the 4,489,000 barrels of distillates per day that were being produced during the week ending February 16th, 2018.... 

with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,454,000 barrels to 256,847,000 barrels by February 15th, after rising by 408,000 barrels over the prior week....our gasoline supplies fell this week in part because the amount of gasoline supplied to US markets increased by 152,000 barrels per day to 8,800,000 barrels per day, after decreasing by 425,000 barrels per day the prior week, while our imports of gasoline fell by 37,000 barrels per day to 420,000 barrels per day ​and ​as our exports of gasoline fell by 147,000 barrels per day to 812,000 barrels per day...but having set a record high four weeks ago, our gasoline inventories are still at a seasonal high for the middle of February, 3.0% higher than last February 16th's level of 249,334,000 barrels, and roughly 4% above the five year average of our gasoline supplies at this time of the year...

with the decrease in our distillates production, our supplies of distillate fuels fell for the 15th time in twenty-two weeks, decreasing by 1,517,000 barrels to 138,683,000 barrels during the week ending February 15th, after our distillates supplies had increased by 1,087,000 barrels over the prior week...our distillates supplies decreased this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 449,000 barrels per day to 4,216,000 barrels per day, as demand for heat oil increased, while our exports of distillates fell by 74,000 barrels per day to 1,191,000 barrels per day, and while our imports of distillates fell by 7,000 barrels per day to 431,000 barrels per day....with this week's decrease, our distillate supplies ended fractionally below the 138,945,000 barrels that we had stored on February 16th, 2018, and remained roughly 2% below the five year average of distillates stocks for this time of the year...

finally, with rising ​oil ​imports more than offsetting record exports while ​our ​refining ​of oil ​remained at a 16 month low, our commercial supplies of crude oil in storage increased for a 5th consecutive week, rising by 3,672,000 barrels over the week, from 450,840,000 barrels on February 8th to a 15 month high of 454,512,000 barrels on February 15th...with weekly increases now in 16 out of the last 22 weeks, our crude oil inventories are roughly 6% 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 middle of February, 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 mostly been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of February 15th were thus 8.1% above the 420,479,000 barrels of oil we had stored on February 16th of 2018, while still remaining 12.4% below the 518,683,000 barrels of oil that we had in storage on February 17th of 2017, and 4.6% below the 476,325,000 barrels of oil we had in storage on February 19th of 2016...   

This Week's Rig Count

drilling activity in the US slowed a bit this past week, and remains below the levels of this past Fall, when both oil prices and natural gas prices were somewhat higher....Baker Hughes reported that the total count of rotary rigs running in the US fell by 4 rigs to 1047 rigs over the week ending February 22nd, which was still 69 more rigs than the 978 rigs that were in use as of the February 23rd report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil fell by 4 rigs to 853 rigs this week, which was still 54 more oil rigs than were running a year ago, while it was well below the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations was unchanged at 194 natural gas rigs, which was still 15 more rigs than the 179 natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling activity from offshore platforms in the Gulf of Mexico decreased by a net of 2 rigs to 19 rigs this week, as 3 platforms offshore from Louisiana were shut down this week while one was added offshore from Texas, where there are now two rigs drilling in state waters...the 17 rigs running offshore from Louisiana is an increase of 1 from the 16 rigs active there a year ago, while the 2 Texas offshore rigs are also an increase of 1 from the single rig active in Texas waters last year at this time..

the count of active horizontal drilling rigs increased by 1 rig to 916 horizontal rigs this week, which was also 74 more horizontal rigs active than the 842 horizontal rigs that were in use in the US on February 23rd of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the vertical rig count decreased by 3 rigs to 63 vertical rigs this week, which was also down by 4 rigs from the 67 vertical rigs that were in use during the same week of last year....in addition, the directional rig count decreased by 2 rigs to 68 directional rigs this week, which was also down from the 69 directional rigs that were operating on February 23rd 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 February 22nd, the second column shows the change in the number of working rigs between last week's count (February 15th) and this week's (February 22nd) count, the third column shows last week's February 15th 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 23rd of February, 2018...      

​even thought the Permian shows no net change, there was movement within the basin; Texas Oil District 8, or the core Permian Delaware, ​saw three rigs added, and there are now 31​7 rigs drilling there​, while 1 rig was pulled out of ​Texas Oil District 7C, or the southern Permian Midland, ​one rig was pulled from Texas Oil District 8A,​ ​corresponding to the northern Permian Midland​, ​and one rig was pulled from the extreme western part of ​the Permian Delaware​ in New Mexico​...the ​other ​details are rather straightforward this week, compared to some weeks of late, with the 2 rig decrease in Oklahoma accounted for by the 3 rig decrease in the Cana Woodford of central Oklahoma offset by the addition of a single rig in the Granite Wash near the Texas panhandle, while the 2 rig decrease in Louisiana is accounted for by the 3 rig decrease in the state's Gulf of Mexico waters, offset by the addition of a rig in the Haynesville shale in the northwestern part of the state....the Haynesville shale addition represents a natural gas rig, as does the addition of a rig in the Marcellus of West Virginia...those were offset by the natural gas rig that was shut down in the Barnett shale of the Dallas / Ft Worth area, and another natural gas rig that was shut down in a basin not tracked separately by Baker Hughes...

DUC well report for January

Tuesday of this past week saw the release of the EIA's Drilling Productivity Report for February, which includes the EIA's January data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the 10th month in a row, this report showed an increase in uncompleted wells nationally in January, as both drilling of new wells and completions of drilled wells increased slightly​, but drilling continued to outpace completions​....like most previous months, this month's uncompleted well increase was almost entirely due to a big increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of west​ern​ Texas​ and New Mexico​, with a modest increase of uncompleted wells in the Eagle Ford of south Texas also contributing...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 207 wells, from a revised 8,591 DUC wells in December to 8,798 DUC wells in January, a 28.3% increase from the 6,857 wells that had been drilled but remained uncompleted as of the end of January a year ago...that was as 1,453 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during January, up by 17 from the 1,436 wells drilled in December, while 1,246 wells were completed and brought into production by fracking, a increase of 35 well completions from the 1,211 completions seen in December...at the January completion rate, the 8,798 drilled but uncompleted wells left at the end of the month represent a 7.1 month backlog of wells that have been drilled but not yet fracked...  

as has been the case for most of the past two years, the December DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian basin saw its total count of uncompleted wells rise by 205, from 3,843 DUC wells in December to 4,048 DUCs in January, as 609 new wells were drilled into the Permian, but only 404 wells in the region were fracked...at the same time, DUC wells in the Eagle Ford of south Texas increased by 29, from 1,520 DUC wells in December to 1,561 DUCs in January, as 214 wells were drilled in the Eagle Ford during January, while 185 Eagle Ford wells were completed...over the same period, the number of DUC wells in the Anadarko basin region centered in Oklahoma increased by 4 to 1,085, as 164 wells were drilled into the Anadarko basin ​during January ​while 160 Anadarko wells were fracked....meanwhile, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range increased by 3 wells to 519, as 184 Niobrara wells were drilled in January while 181 Niobrara wells were being fracked...in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region also saw their uncompleted well inventory increase by 3 wells to 205, as 56 wells were drilled into the Haynesville during January, while 53 Haynesville wells were fracked during the same period...

on the other hand, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 22 wells, from 529 DUCs in December to 507 DUCs in January, as 116 wells were drilled into the Marcellus and Utica shales, while 138 of the already drilled wells in the region were fracked...​and ​lastly, DUC wells in the Bakken of North Dakota fell by 15, from 742 DUC wells in December to 731 DUCs in January, as 110 wells were drilled into the Bakken in January, while 125 of the drilled wells in that basin were completed....thus, for the month of January, DUCs in the 5 oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 226 wells to 8,086 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 19 wells to 712 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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New Energy Company in the Utica Shale is Headquartering and Hiring in Northeast Ohio - WKSU News - Encino is a natural gas and oil acquistion and development company created by a group of successful former executives of other major gas & oil corporations. Late last year it made a multi-billion dollar deal to get the Ohio holdings of Chesapeake Energy, the original leader in the Utica Shale development. Encino's Director of External Affairs Jackie Stewart says the company is now committed to its new Utica headquarters in Louisville. “We’re trying to hire local.  I mean, over 70% of our entire employees are here in Ohio.”She says the size and richness of the Utica shale has a lot to do with that. “When you think about the future and oil and natural gas career pathways in Ohio, we have world class rock here.  So, we’re going to be here for a long time.” Stewart says Encino has already hired more than a 100 people in Louisville and is actively recruiting.

Is Drilling and Fracking Waste on Your Sidewalk or in Your Pool? – They’ve spread it on roads. They’ve irrigated almond farms and fruit groves with it. The oil and gas industry’s liquid waste has been used for a variety of commercial and industrial purposes over the years. But never has the “beneficial use” of this waste stream been so grossly applied, or so close to home, as it is today.  Meet Eureka Resources and Nature’s Own Source. Both of these companies have attracted attention by processing liquid waste from oil and gas operations and creating commercial products for use in pools and on roads, sidewalks, patios, stairs or anywhere else a consumer may put it.  Eureka Resources treats toxic wastewater from drilling and fracking for natural gas in Pennsylvania, and the agency that approves this is the Pennsylvania Department of Environmental Protection (PADEP). In June 2014, Eureka Engineer Jerel Bogdan wrote to PADEP to confirm what, exactly, the company had to do in order to sell the salt byproduct from the company’s waste treatment process to consumers.   But instead of listing what Eureka had to do, the letter confirmed what Eureka didn’t have to do — like test its salt for fracking chemicals, even though in 2017, Yale Public Health found that 55 unique chemical compounds used for fracking are “known, probable, or possible human carcinogens.”  Here are the four standards Eureka must adhere to, according to Bogden’s letter to PADEP (emphasis added):

• A full chemical equivalency analysis of Eureka salt products vs. the salt material currently in use by a given industrial user is not required.
• Eureka is required to maintain analytical data/records on file that confirm the salt product meets only those qualitative requirements listed on the MSDS [Material Data Safety Sheet] for the salt material that a potential buyer is currently procuring from other suppliers.
• Eureka is not required to use an accredited third-party analytical laboratory for the qualitative comparison noted above; in-house analytical resources may be used for the comparison if Eureka can demonstrate that those resources are able to generate data sufficient for all parameters included in the comparison.
• Eureka is not required to submit the qualitative comparison data to the PADEP for review but rather is required to maintain data/analytical results on file, to be provided upon request by the PADEP.

So, who is buying Eureka’s frack salt? Cargill purchased 4,700 tons of salt from Eureka between May 2015 and December 2016. One of Cargill’s meat processing plants, Cargill Meat Solutions in Wyalusing, Pennsylvania, is less than 10 miles away from Eureka’s wastewater treatment facility, and “processes about 1,500 head of cattle per day,” according to Cargill’s website. Cargill “advised the Department” that Eureka’s “[c]rystallized sodium chloride” is used by Cargill “to prepare and treat animal hides, resulting from Cargill’s meat packing operations. Cargill prepares the animal hides using one of Eureka’s salt products for commercial sale.” Eureka’s frack salt is also approved for sale as a pool salt. The investigative news team at Public Heraldexposed that Eureka’s byproduct is packaged and sold as Clorox Pool Salt. Workers at Eureka’s Standing Stone facility package the salt in Clorox bags and pallet them for shipment via an “unnamed third-party distributor to be sold at regional stores like Wal-Mart, Home Depot and Lowes.”

Drilling on shaky ground: Why Chesco’s DA is investigating the Mariner East pipeline project -- (podcast)  Over two years of construction, the Mariner East 2 pipeline — which carries natural gas liquids across Pennsylvania to an export terminal in Delaware County — has been plagued with delays and mishaps. The construction has destroyed some private water wells, opened sinkholes, and sparked a criminal investigation by the Chester County District Attorney. On this episode of The Why, StateImpact Pennsylvania reporter Susan Phillips takes us along the pipeline’s winding path and explains why the DA is taking this unprecedented step.

Delaware County seeks to join lawsuit against owners of Mariner East pipelines -- Delaware County on Thursday filed a petition with the Pennsylvania Public Utility Commission to join a lawsuit filed by area residents against the owners of the controversial Mariner East pipelines. If granted, the motion to intervene would allow lawyers for the county to present evidence, call or cross-examine witnesses, and file briefs in the case brought by seven residents of Delaware and Chester Counties against Sunoco and its parent company, Energy Transfer Partners. The formal complaint by the residents alleges numerous safety risks associated with the Mariner East pipelines, which are part of a multibillion-dollar effort to bring natural gas liquids from the Marcellus Shale gas region in Western Pennsylvania to the Sunoco refinery in Marcus Hook and elsewhere. In December, an administrative law judge denied an emergency request by the residents to halt operations of the pipelines because of safety concerns. That decision was unanimously upheld by the PUC last month. The residents’ original lawsuit is proceeding.

Criminal investigation of Mountain Valley Pipeline underway, document shows - The Mountain Valley Pipeline is under criminal investigation into possible violations of the Clean Water Act and other federal laws, one of the companies building the project has confirmed. EQM Midstream Partners, the lead company in the joint venture, made the disclosure in an annual report filed Thursday with the U.S. Securities and Exchange Commission. Since construction of the buried natural gas pipeline through Southwest Virginia started last year, crews have repeatedly run afoul of regulations meant to keep muddy runoff from contaminating nearby streams and rivers. Although Mountain Valley has been named in enforcement actions brought by the Virginia Department of Environmental Quality, and in a lawsuit filed by Attorney General Mark Herring, this week’s filing is the first confirmation of a criminal investigation. On Jan. 7, EQM received a letter from the U.S. attorney’s office in Roanoke stating that it and the Environmental Protection Agency were looking into criminal and civil violations related to pipeline construction, according to the SEC filing. About a month later, a grand jury subpoena was issued “requesting certain documents related to the MVP from August 1, 2018 to the present,” EQM reported in the filing. “The MVP Joint Venture is complying with the letter and subpoena but cannot predict whether any action will ultimately be brought by the U.S. Attorney’s Office or what the outcome of such an action would be,” it said. A spokesman at EPA headquarters in Washington, D.C., said the agency does not comment on potential or ongoing investigations. Brian McGinn, a spokesman for the U.S. attorney’s office, also declined to comment, citing a similar policy of neither confirming nor denying the existence of an ongoing investigation.

Some 21 Chemicals of Major Concern Identified In Unconventional Oil & Gas Extraction - In the last decade unconventional oil and gas (UOG) extraction has rapidly proliferated throughout the United States (US) and the world. This occurred largely because of the development of directional drilling and hydraulic fracturing which allows access to fossil fuels from geologic formations that were previously not cost effective to pursue. This process is known to use greater than 1,000 chemicals such as solvents, surfactants, detergents, and biocides. In addition, a complex mixture of chemicals, including heavy metals, naturally-occurring radioactive chemicals, and organic compounds are released from the formations and can enter air and water. Compounds associated with UOG activity have been linked to adverse reproductive and developmental outcomes in humans and laboratory animal models, which is possibly due to the presence of endocrine active chemicals. Using systematic methods, electronic searches of PubMed and Web of Science were conducted to identify studies that measured chemicals in air near sites of UOG activity. Records were screened by title and abstract, relevant articles then underwent full text review, and data were extracted from the studies. A list of chemicals detected near UOG sites was generated. Then, the potential endocrine activity of the most frequently detected chemicals was explored via searches of literature from PubMed.  Evaluation of 48 studies that sampled air near sites of UOG activity identified 106 chemicals detected in two or more studies. Ethane, benzene and n-pentane were the top three most frequently detected. Twenty-one chemicals have been shown to have endocrine activity including estrogenic and androgenic activity and the ability to alter steroidogenesis. Literature also suggested that some of the air pollutants may affect reproduction, development, and neurophysiological function, all endpoints which can be modulated by hormones. These chemicals included aromatics (i.e., benzene, toluene, ethylbenzene, and xylene), several polycyclic aromatic hydrocarbons, and mercury.  These results provide a basis for prioritizing future primary studies regarding the endocrine disrupting properties of UOG air pollutants, including exposure research in wildlife and humans. Further, we recommend systematic reviews of the health impacts of exposure to specific chemicals, and comprehensive environmental sampling of a broader array of chemicals.

ATTENTION to Orphaned Oil & Gas Wells Needed in West Virginia -There are currently more than 4,500 orphaned oil and gas wells that have gone unplugged for so long that the driller/operator has gone out of business and there is no one to plug it. A company called Diversified is buying declining, conventional wells from EQT and other Marcellus Shale drillers. WV-SORO expects Diversified will plug only 310 of the 17,000 wells they have purchased in the next 15 years, and after 2019 to start leaving 10,000 more unplugged. These wells are located on surface and mineral owners across West Virginia. The Legislature needs to pass the “Orphaned Oil and Gas Well Prevention Act” (SB 576 & HB 3065) in order to stop more wells from being orphaned. Currently operators only have to post a “blanket” “performance” bond in the amount of $50,000 – as little as $20 a well for some – when plugging costs $25,000 to $65,000 or more for each well.It will be good if the Legislature passes other bills like HB 2779 and HB 2673, that will generate money to plug a few orphaned wells, perhaps 60 a year. (These bills have already passed the House of Delegates.) But we need the Orphaned Oil and Gas Well Prevention Act passed in order to prevent more wells from being orphaned by requiring what we are calling “plugging assurance” for three kinds of wells: 1) new wells, 2) existing wells that are producing but no longer producing in paying quantities, and 3) wells are transferred (often from a driller that can afford to plug its old wells to one that cannot).  “Plugging assurance” would be a single well bond in the actual cost to plug the well, or plugging assurance would be payment into an escrow account for each well in the treasurer’s office of the cost to plug the well when it is time.

DC Circuit knocks down green groups' challenge to FERC order on MVP gas pipeline— The DC US Circuit Court of Appeals tossed aside a host of environmental groups' objections to the Federal Energy Regulatory Commission's natural gas pipeline reviews, in a case involving the 300-mile, 2 Bcf/d Mountain Valley Pipeline. The quick-turnaround ruling by a three-judge panel is mostly welcome news for the industry, as the court nixed several arguments recurring in multiple challenges to pipelines being built to move Appalachian gas to market. As an unpublished decision, the ruling has limited impact in other circuits, but sheds light on the thinking of the critical DC panel. The ruling backed FERC's reliance on precedent agreements with project affiliates to demonstrate the need for the project and upheld the use of eminent domain even before all permits are in place. FERC "reasonably explained" that an affiliated shipper's need for new capacity and its obligation to pay for service are not lessened just because the shipper is affiliated with the project sponsor, the court said (Appalachian Voices, et al., v FERC, 17-1271). On greenhouse gas considerations, a major matter now dividing FERC commissioners, the court also backed the agency's approach. The DC Circuit found FERC satisfied the court's recent mandate in a decision involving the Sabal Trail pipeline by providing an upper bound estimate of emissions resulting from end-use combustion and by giving several reasons why the petitioners' preferred metric, the Social Cost of Carbon tool, is not an appropriate tool to assess the significance of climate change impacts. "That is all that is required for National Environmental Policy Act," the ruling said. "Not only do petitioners offer no alternative to the Social Cost of Carbon tool for assessing the incremental climate change impacts of downstream [GHG] emissions, but their opening brief also fails to address several of the reasons FERC gave for rejecting the Social Cost of Carbon tool," it added. While that helps MVP, FERC midyear last year pulled back from including in its environmental reports such upper bound estimates for downstream emissions, except in cases where the end use of the gas was clear.

ACP Compressor Station at Union Hill VA now Under Challenge by SELC - — Today the Southern Environmental Law Center, on behalf of its client the Friends of Buckingham, challenged the Virginia Air Pollution Control Board’s decision to approve Dominion’s Atlantic Coast Pipeline Buckingham County compressor station. “The Air Board has refused to address the disproportionate harm that our community will have to bear as a result of the construction of this polluting compressor station,” said John W. Laury of Friends of Buckingham. “The members of our community should not have our health put at risk for a project that wasn’t properly vetted for environmental justice or air quality concerns.”The Air Board and the Department of Environmental Quality did not meet their obligations under state and federal laws to consider less polluting alternatives and the best available pollution controls for minimizing pollution from the proposed compressor station. “The backdrop to the board’s decision about the compressor station is the mounting evidence that customers in Virginia do not need the Atlantic Coast Pipeline to meet their energy needs,” said Southern Environmental Law Center Senior Attorney Greg Buppert. “When a project like this pipeline goes forward without a full and transparent evaluation of its public necessity, it unfairly puts communities like Union Hill in harm’s way.” Dominion’s Atlantic Coast Pipeline project is already stymied because a federal court has vacated or put on hold multiple required permits for failing to comply with applicable law and federal agencies have themselves revoked other permits.

Governor's Racial Reckoning May Halt Gas Project -- Virginia Governor Ralph Northam’s racial reckoning could spell more trouble for Dominion Energy Inc.’s $7 billion-plus Atlantic Coast gas pipeline, with one of its facilities sited in an historically African American community. While the 600-mile (966-kilometer) project is facing several setbacks, one element, a planned compressor station, is drawing particularly heated backlash for its proposed location in Union Hill, a community west of Richmond that was founded by freed slaves after the Civil War. Environmental groups and social activists are hoping to capitalize on the attention generated by the state’s political turmoil to further their efforts to block the project. And now former U.S. Vice President and outspoken fossil fuel critic Al Gore is slated to attend an event on Tuesday meant to draw attention to environmental justice issues surrounding the project. Pipelines, particularly those slated for the Northeast, are facing an unprecedented pushback as environmental groups find increasing success in court. In addition to Atlantic Coast and the similarly contentious Mountain Valley project, work on several pipelines that are planned to run through states including New York and New Jersey has yet to actually begin as key permits remain ensnared in lawsuits. In media interviews, Northam has vowed to finish his term despite calls for his resignation after a page in his medical school yearbook surfaced showing a person in blackface and another in Ku Klux Klan robes. He’ll now focus on pursuing an agenda of racial reconciliation, he said. Pipeline opponents will likely use Northam’s comments to compel him to intervene on issues surrounding the Atlantic Coast pipeline, Height Securities LLC analyst Katie Bays said in a note to clients last week. That could include Northam ordering the state’s Department of Environmental Quality to review its decision last month to issue an air permit for the compressor station, she said. If the permit is revoked, the company could opt to site the station somewhere else, though that would risk hiking costs for a project that’s already seen its price tag balloon.

In bitter cold, gas barge off Massachusetts helped keep down New England energy prices - Gas and electricity consumers in New England got a break this winter as power generators tapped an offshore liquefied natural gas barge during bitterly cold weather in late January and early February, keeping prices down in contrast to last year’s costly winter.The reliance on the LNG barge 13 miles east of Boston Harbor followed changes to electricity markets put in place last year by ISO-New England, the region’s power grid operator. This was the first winter for the new system that increases penalties on generators that fall short of ISO’s instructions to keep the power on. “At this stage, everybody feels pretty good about how the winter has come along," said Dan Dolan, president of the New England Power Generators Association. “Anecdotally, we feel good about the operations of the system.”Relying briefly on gas drawn from the barge, called a “floating regasification system,” is not specifically part of the new market mechanisms, he said.“It’s hard to pin it down as to what drove it,” Dolan said of the decision to use LNG from the offshore barge. “Some companies made the commercial decision that it was the best way to meet their obligations.”Revised market rules allow generators to change their offers to supply power on an hourly basis to account for changing fuel costs. Financial penalties also were added, slapping punitive fines that could reach “tens of millions of dollars" for failing to meet ISO instructions, he said. “The risk of not meeting obligations has gone up," Dolan said. “It creates more incentives to bring in LNG.”David Ismay, a clean energy and climate change staff attorney at the Conservation Law Foundation, a Boston environmental organization, said New Englanders saved an average of about $40 million – and avoided 20,000 tons of carbon pollution – each day during the cold snap compared with the days after Christmas 2017.

Holyoke utility, citing pipeline constraints, halts natural gas hookups -- SUPPORTERS OF BUILDING another natural gas pipeline into the region have been quiet for some time, but they resurfaced on Thursday after discovering a municipal utility in Holyoke had declared a moratorium on new natural gas hookups last month. Holyoke Gas & Electric announced on January 28 that pipeline capacity constraints were preventing access to new supplies of natural gas, requiring the imposition of a moratorium on news natural gas connections. “While inexpensive natural gas has never been more plentiful in the United States, there is insufficient pipeline capacity in our region to deliver additional load,” the company said in a notice to customers. “Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region’s ratepayers.”   The Baker administration, which previously supported expansion of the region’s natural gas pipeline capacity, issued a statement on Thursday saying the Holyoke situation highlights the pressing need for energy diversification. The statement said nothing about pipeline expansion; instead, it praised recent procurements of offshore wind and hydro-electric power and the aggressive rollout of state energy efficiency programs as the way to “provide residents and businesses with reliable, cost-effective clean energy while reducing carbon emissions.” But pipeline supporters seized on the Holyoke news to make their case for more pipe in the ground. Stephen Dodge, executive director of the Massachusetts Petroleum Council, said the Holyoke announcement means 10 communities with more than 150,000 residents can no longer expand their use of natural gas.

Gas Shortages Give New York an Early Taste of the Green New Deal - The combination of hydraulic fracturing and horizontal drilling—sometimes known as the “shale revolution”—has enabled Texas, Pennsylvania and other states to produce record quantities of natural gas, some of which is being frozen, loaded onto giant ships, and transported to customers in places like Chile, China and India. Thanks to the environmental policies of Gov. Andrew Cuomo, New York has missed out on this windfall. Now, in a preview of what life might be like under the Democrats’ proposed Green New Deal, some New Yorkers are about to face a natural-gas shortage. Consolidated Edison , an energy utility that provides gas and power to the New York City area, announced last month that beginning in mid-March it would “no longer be accepting applications for natural gas connections from new customers in most of our Westchester County service area.” The reason for the shortage is obvious: The Cuomo administration has repeatedly blocked or delayed new pipeline projects. As a Con Ed spokesman put it, there is a “lot of natural gas around the country, but getting it to New York has been the strain.” New York policy makers have also killed the state’s natural-gas-drilling business. In 2008 New York drillers produced about 150 million cubic feet of natural gas a day—not enough to meet all the state’s needs, but still a substantial amount. That same year legislators in Albany passed a moratorium on hydraulic fracturing, the process used to wring oil and gas out of underground rock formations. In 2015 the Cuomo administration made the moratorium permanent. By 2018 New York’s gas production had declined so much that the Energy Information Administration quit publishing numbers on it. New York now imports nearly all of its gas even though part of the Marcellus Shale, one of the biggest and most prolific sources of natural gas in the country, extends into the state’s Southern Tier region. To get an idea of how much gas the state might have been able to produce from the Marcellus, New Yorkers can look across the state line to Pennsylvania, which now supplies about two-thirds of the gas consumed in New York. At the end of 2018, Pennsylvania drillers were producing about 18 billion cubic feet of gas a day. That’s more gas than Canada now produces.

You Say You Want A Constitution - Can Gas-Pipe Projects Through New York Be Revived? - The vast majority of the incremental natural gas pipeline capacity out of the Marcellus/Utica production area in recent years is designed to transport gas to either the Midwest, the Gulf Coast or the Southeast. Advancing these projects to construction and operation hasn’t always been easy, but generally speaking, most of the new pipelines and pipeline reversals have come online close to when their developers had planned. In contrast, efforts to build new gas pipelines into nearby New York State — a big market and the gateway to gas-starved New England — have hit one brick wall after another. At least until lately. In the past few weeks, one federal court ruling breathed new life into National Fuel Gas’s long-planned Northern Access Pipeline and another gave proponents of the proposed Constitution Pipeline hope that their project may finally be able to proceed. Today, we consider recent legal developments that may at long last enable new, New York-bound outlets for Marcellus/Utica gas to be built. More than four years ago, in our 50 Ways to Leave the Marcellus Drill Down Report, we discussed the race by midstream companies to add new gas pipeline takeaway capacity out of what was already the U.S.’s premier natural gas production area. By late 2014, production in the Marcellus/Utica was topping 18 Bcf/d and headed for 30 Bcf/d by 2019. Well, here we are in The Year of the Pig and, sure enough, production is at ~30 Bcf/d and most of the 40-plus takeaway projects we listed have been completed and are in operation. We looked at a number of the more recent takeaway additions in our “Waiting on the World to Change” blog series, including Williams/Transco’s 1.7-Bcf/d Atlantic Sunrise project, Enbridge/DTE Energy’s 1.5-Bcf/d NEXUS Gas Transmission, and TransCanada’sMountaineer Xpress and Gulf Xpress, which together will allow another 1 Bcf/d to flow south/southwest out of the Marcellus/Utica.

New England Power Grid Operator Not Expecting New Gas Pipelines To Be Built -- The operator of the electric power grid in New England issued its annual assessment today. The grid is foundationally strong but remains vulnerable to fuel supply shortages, according to Gordon van Welie, the president and CEO of ISO New England, the Holyoke-based nonprofit that oversees the electric power generation and transmission system for the six New England states. "The region's resource mix is shifting towards less on-site fuel and more resources subject to natural gas availability and changes to wind and sun," said van Welie. In a conference call with reporters Wednesday morning, van Welie pointed to the grid’s reliability in delivering uninterrupted power during last winter’s two-week cold snap and the heat waves of last summer. This winter has been relatively mild and has presented no serious challenges for the power grid, he said. As in previous annual reports, van Welie warned about vulnerabilities to electricity generation in the region as fuel sources shift from coal, nuclear, and oil to natural gas, solar and wind. "New England's grid is undergoing rapid change," he said. The risk of shortages is greatest in the winter when natural gas is needed for heating buildings and there is less solar generation. Asked if he thought there would be natural gas pipeline expansion in the region, van Welie said it is not likely. "I do not think we are going to see any significant pipeline expansion into the region and our view is we have to operate with what we have," said van Welie. Demand for electricity has been declining for several years because of energy conservation measures and more rooftop solar arrays on individual buildings -- there are now about 160,000 rooftop solar installations. Van Welie predicted that in the next decade, demand for electricity would increase as more electric vehicle charging stations come online.

The Hidden Risk in the Fracking Boom - Rolling Stone -- At 10:40 a.m. on Monday, January 21st, a pipeline carrying natural gas ruptured in rural Noble County, in southeastern Ohio, producing a fireball that surged 120 feet into the air and engulfed the Noll family home, with 12-year-old son Nash inside. The boy’s grandfather rushed into the inferno and rescued him, says Noble County Emergency Management Agency Director Chasity Schmelzenbach, and together the two ran for their lives. Nash ended up with burns on the back of his legs and neck and on top of his head. “We are just happy our son is alive, honestly,” said mother Brittany Noll when reached by phone at a Comfort Inn, where the family was staying after the explosion. Their home had been largely destroyed. It was the second time in three years that an explosion carrying a furious wave of burning methane gas had erupted into the lives — and bedrooms and living rooms — of residents living along this 76-year-old pipeline system. The 9,029-mile Texas Eastern Transmission Pipeline, which runs from the Gulf Coast to the Philadelphia and New York City metro areas and is operated by Canadian energy giant Enbridge, also exploded in April 2016 in Salem Township, Pennsylvania, about 30 miles east of Pittsburgh. That incident produced a crater 50 feet long by 12 feet deep and generated a fireball — videotaped by morning commuters — that obliterated a home, melted a road and sent a 26-year-old man to the hospital with third-degree burns over 75 percent of his body.And in Noble County, last month’s blast was the second major pipeline explosion in the space of a single year. “That is scary,” said resident Cheryl Rubel, as she recorded a video of a January 31st, 2018, explosion on a pipeline operated by the Kansas-based firm Tallgrass Energy. Her camera zoomed over a dark yard to reveal flames shooting above the nearest hilltop and noise like a roaring freight train. In September 2018, a natural-gas pipeline exploded in Beaver County, Pennsylvania, on the Ohio border. Three months prior, in June, a pipeline had exploded in nearby Marshall County, West Virginia. “There goes another one,” a resident told the Pittsburgh Post-Gazette.

How the Consumers Energy polar vortex emergency unfolded – A disastrous confluence of natural and man-made events led to a dire emergency for Consumers Energy and its 1.8 million customers on Michigan on Jan. 30. In a minute-by-minute explanation of the circumstances leading up to an emergency alert text message sent to Michiganders at 10:30 p.m., urging them to turn down their thermostats on what was then the coldest night of the year, Consumers CEO Patti Poppe told members of the Michigan House Energy committee Wednesday that all the planning done by the utility over the years to ensure the heat stayed on was nearly for naught. “I stood in the control room with 20-30 veterans of the company and their faces were ashen,” Poppe said. “They have never seen anything like this before.” “This” was a series of events that started with a fire at the Ray Compressor station in Macomb County at 10:33 a.m. on Jan. 30. That alarm triggered a series of safety actions that took 50 percent of the utility’s natural gas supply out of commission on a day when temperatures were hovering below zero. Committee members commended the utility for its actions during the emergency, but wondered whether the company needed better contingency plans in place and whether the decision to phase out coal-fired plants from the utility's full complement of energy resources was a prudent one. "Are we putting all our eggs in one basket?" said state Rep. Jack O'Malley, R-Lake Ann. "It seems to me that natural gas is the base load now. Doesn't it make sense to keep some coal or nuclear available? Just to have a few more valves." Here’s how the emergency unfolded: (timeline)

TransCanada Seeking to Avoid Political Firestorm Over Potomac Pipeline Appeal - Last month, the Maryland Board of Public Works voted unanimously to deny TransCanada an easement to put its fracked gas pipeline under the Potomac River just west of Hancock, Maryland. The decision dealt a major blow to not just TransCanada, but to the Mountaineer Gas pipeline in West Virginia, which TransCanada would have fed with fracked natural gas, and to the proposed Rockwool insulation factory in Jefferson County, which was banking on the gas to fuel its furnaces. It was a victory for anti-pipeline activists. And then the question became – what are TransCanada’s and Mountaineer’s next moves? Rumors had it that TransCanada was going to litigate the case in the courts. But still, no word from TransCanada. Why not? Turns out that TransCanada is waiting until the Maryland legislature adjourns on April 4.   Earlier this month, someone at the Economic Development Authority messaged TransCanada’s Brittany Carns asking her about the company’s plans. The message was obtained through the Freedom of Information Act by Tracy Cannon of Eastern Panhandle Protectors, Brent Walls of the Potomac Riverkeeper Network and Regina Hendrix of the West Virginia Sierra Club. (selected transcript)

US-China trade dispute puts a chill on American natural gas export boom - The natural gas market is emerging from winter relatively unscathed despite potentially disruptive Chinese tariffs on U.S. gas. But the ongoing trade dispute is still putting a chill on cooperation between the two energy powerhouses and threatens to sideline billions in investment. Chinese tariffs on U.S. natural gas have halted Beijing's purchases of U.S. LNG, a form of the fuel chilled to liquid form for transport by sea. The trade dispute has also delayed at least one LNG export terminal slated for construction in Louisiana and threatens to push back the start date for other facilities. In the long-run, analysts say it's inevitable for gas trade to resume between China and the U.S. China is the engine behind growing LNG demand, while the U.S. is the world's top natural gas producer. "On the one hand, China is the fastest growing LNG market and the U.S. is the fastest growing LNG supplier." But a breakthrough on gas trade depends on reaching a deal on separate issues that are difficult to resolve. Beijing and Washington are reportedly hammering out a blueprint to address those tough issues, from assuring American companies have access to Chinese markets to protecting U.S. intellectual property. However, it now appears that negotiators will move the goal line back from the original March 1 deadline to strike a deal — forestalling a potential increase in tariffs, but delaying the removal of China's current 10 percent tax on U.S. LNG. The dispute comes as developers are planning a second wave of U.S. LNG export terminals, mostly along the Gulf Coast. The trade feud is also continuing as the Federal Energy Regulatory Commission on Thursday broke an impasse that held up key approvals for new U.S. LNG export terminals.

Federal regulators just removed a barrier to exporting more US natural gas - Federal regulators on Thursday broke an impasse over approving new projects to export natural gas from the United States, potentially easing the way for a flurry of applications to build the multi-billion dollar facilities. In doing so, the regulators approved a liquefied natural gas export terminal for the first time in two years, pushing through a disagreement over how they should assess the facilities' contribution to climate change. However, divisions remain within the commission on the issue, and one of the four sitting members dissented from the majority decision. The Federal Energy Regulatory Commission on Thursday decided to approve Venture Global's proposed Calcasieu Pass export terminal in Cameron Parish, Louisiana, as well as a pipeline to supply the facility. The project is one of about a dozen vying to tap surging U.S. natural gas production and export LNG, a form of the fuel chilled to liquid form and shipped overseas in massive tankers. However, applications have been held up while FERC's four commissioners hash out the greenhouse gas issue. The five-person commission has been down one member since former commissioner and Republican Kevin McIntyre passed away last month, leaving the body split between two Democrats and two Republicans. FERC Chairman Neil Chatterjee said he's optimistic that in light of Thursday's deal, FERC now has a framework in place that will help the commission more expeditiously process applications. "No question about it, it's a top priority of mine and I think my colleagues' as well," he told CNBC on Friday.

Coast Guard responds to oil spill in Tenn. River near Paducah - (KFVS) - The U.S. Coast Guard has responded to a diesel oil spill near Paducah, Ky. in the Tennessee River. At 8:27 a.m. the vessel Patricia I. Hart was being transported by a tug boat to a dry dock and hit a pier at James Marine Inc. at mile marker 4.5. Around 3,000 gallons of diesel spilled into the water. The source of the discharge has been secured. An oil spill response team recovered around 250 gallons and removed 2,700 gallons from the vessel’s tanks. The spill was contained with sorbent pads and containment boom. There are no reports of injuries or waterway impacts. The Marine Safety Unit Paducah arrived at 9:15 a.m. to investigate. Coast Guard members are set to return on Wednesday, Feb. 20 to continue the investigation and cause.

TransCanada restarts shut portion of Keystone oil pipeline in St. Charles County -- TransCanada Corp. restarted a section of the Keystone oil pipeline on Tuesday, following a leak in St. Charles County earlier this month, company spokesman Terry Cunha said. TransCanada had shut an arm of Keystone from Steele City, Neb., to Patoka, Ill., on Feb. 6 after leaking 43 barrels of crude oil. The oil leak occurred north of St. Charles near Highway C, about 1,700 feet south of the Mississippi River. The shutdown restricted the flow on the 590,000 barrels-per-day Keystone pipeline system, a critical artery taking Canadian crude from northern Alberta to refineries in the U.S. Midwest. The line restarted with a 20 percent reduction of pressure, a spokesman for U.S. regulator PHMSA (Pipeline and Hazardous Materials Safety Administration) said.

US marks one year of VLCC oil exports from LOOP as new ports line up— The US has been directly loading and exporting VLCCs for one year as of this week from the Louisiana Offshore Oil Port, the only US port able to fully load the supertankers without lightering from smaller vessels. LOOP has picked up speed in its first year of exports, from one ship every month or two, to two VLCCs loading within a few days of each other in early December. The port has also picked up future competitors -- eight of them. Analysts expect at least two of the proposals to get built by 2022, likely one each offshore greater Houston and Corpus Christi. With most of the growth in Permian oil production in the coming years destined for export markets, midstream companies are racing to build additional deepwater terminals capable of loading 2 million barrels of crude onto a VLCC within a day. Gulf Coast dock capacity would rise to 7 million-8 million b/d if two VLCC terminals are added, said Sandy Fielden, director of oil and products research at Morningstar Commodities and Energy. "So far dock capacity has handled over 3 million b/d and probably can do 5 million b/d in a pinch today," he said. Fielden projects Permian crude production expanding by 2.3 million b/d by end-2021, from about 4 million b/d in Q1 2019. US oil production crossed 12 million b/d for the first time in January and is on track to exceed 13 million b/d by March 2020, with most of the growth coming from the Permian Basin, according to the Energy Information Administration. Click here for full-size graphic LOOP loaded 11 VLCCs in its first year of direct crude exports, all of which headed to Asia. About 12.5 million barrels of oil went to India, 5 million barrels to China, and 2 million barrels each to Japan and South Korea, according to data from Platts trade flow software cFlow. The Saudi-flagged VLCC Lulu had the quickest turnaround. It arrived at LOOP on December 4, loaded 2.1 million barrels of crude and sailed on December 7 toward the east coast of India, cFlow data showed. The Liberia-flagged Khurais VLCC called twice at LOOP, in late August and early December, loading 2 million barrels each time and sailing to Kochi, India. The wave of competitors looking to join LOOP in direct VLCC exports in the next few years have proposed far more capacity than the US is expected to produce. So even the developers admit that not every proposed port will get built.

US sanctions on Venezuelan oil could cut the output of refineries at home - U.S. sanctions against Venezuela’s state-owned oil and gas company, along with some government officials and executives, are intended to put pressure on the government headed by Nicolás Maduro. As the interim director of the Tulane Energy Institute, which tracks energy markets and provides forecasts, and someone with 35 years of oil industry experience, I’m certain that they will also reverberate in this country too – especially in Louisiana, where the oil and gas industry is among the state’s biggest employers. Despite having the world’s biggest petroleum reserves, Venezuela is now functionally bankrupt and wracked by hyperinflation. Even before the sanctions against Petróleos de Venezuela, the state-owned company known as PDVSA, its crude production was rapidly declining. Refineries located along the U.S. Gulf Coast in Louisiana and Texas were just about Venezuela’s last source of hard currency. That came to a halt when the Trump administration slapped sanctions on PDVSA in late January 2019. Venezuelan crude is heavy and sour, meaning it is extremely dense and contains a high percentage of sulfur. Globally, most refineries process light sweet crude into gasoline, jet fuel, diesel and other fuels and products. Only specialized “complex” refineries can handle the dense petroleum produced in Venezuela and remove its unwanted sulfur. More than half of U.S. refinery capacity is ‘complex,’ meaning it requires at least some heavy crude oil to operate properly. Nearly all Gulf Coast refineries are complex. Although U.S. oil production is rising, the domestic industry still needs to import heavy crude to keep the complex refineries operating efficiently. As of early 2019, 90 percent of U.S. imports were heavy crude. Countries that export this heavy petroleum include Mexico, Canada, Colombia, Ecuador, Russia, Saudi Arabia, Nigeria and Iran. However, due to delays in the construction of the Keystone XL pipeline and other pipelines that may eventually run from the northern border to the Gulf Coast, there’s no easy way to replace the blocked shipments from Venezuela.

US imports of ‘sanctioned’ Venezuelan oil surge fivefold -- Purchases of Venezuelan crude by US energy companies saw a five-fold weekly growth as of the middle of February, nearly reaching their pre-sanctions level, the latest data published by the International Energy Agency (IEA) shows. According to the Paris-based agency, imports of crude from Venezuela to the US amounted to 558,000 barrels per day during the week through February 15, compared to 117,000 barrels per day in the previous week. As of January 25, just days before US sanctions came into effect, American firms reportedly imported 587,000 barrels per day. Washington imposed economic penalties against Venezuela’s state oil giant PDVSA, freezing $7 billion of the company’s assets. The sanctions also block payments to PDVSA accounts with buyers of Venezuela’s oil directed to deposit all transactions in a separate account, to which the company doesn’t have access. The US Treasury issued temporary permits for buying Venezuelan crude to foreign companies until the current deals are expired, and the firms find new suppliers with the deadline set by the White House to expire on April 28. The latest sanctions also prohibit US sales of naphtha to the Bolivarian Republic. Naphtha is a mixture, produced from natural gas condensates or petroleum distillates, which is used to dilute thick, heavy crude to make it flow. The US penalties forced Caracas to purchase naphtha, as well as petrol and diesel, from Russian state oil corporation Rosneft, Indian conglomerate Reliance Industries, as well as Dutch commodity traders Vitol and Trafigura, according to ship-tracking data seen by Reuters. Washington and Caracas have been involved in a longstanding diplomatic spat for years. In January, Venezuelan President Nicolas Maduro announced a break of diplomatic relations with the US after President Trump recognized the leader of Venezuela's National Assembly Juan Guaido as the country’s interim president.

Top Citgo executives removed amid battle to control firm - sources (Reuters) - Citgo Petroleum Corp has removed at least three top executives close to Venezuelan President Nicolas Maduro, people familiar with the matter said on Monday, in a move to cement management control under a new board of directors. The U.S. refining arm of Venezuelan state-run oil company PDVSA has been thrust in recent weeks into the center of a political battle between an opposition leader and self-declared president backed by many Western nations, including the United States, and Maduro, a socialist whose re-election last year they consider illegitimate. Monday’s departures appeared to shift control of Citgo’s day-to-day operations to officials expected to recognize a new board of directors appointed last week by the opposition-controlled congress, led by self-proclaimed president Juan Guaido. Citgo Vice Presidents Frank Gygax, Nepmar Escalona and Simon Suarez, all of them Venezuelans promoted by Citgo Chief Executive Asdrubal Chavez from 2017 to 2018, were escorted out of Citgo’s Houston headquarters on Monday by human resources staff, the people said. It was not immediately clear if the executives were fired, forced to resign or if they retired. Chavez, a cousin of late Venezuelan leader Hugo Chavez, has been running Citgo from the Bahamas since last year as the U.S. government denied his visa petition to work from Houston. Other Venezuelan members of the oil refiner’s board are also working with him from the Caribbean office. Citgo is the eighth-largest U.S. refiner and runs plants in Illinois, Texas and Louisiana that provide about 4 percent of U.S. refining capacity. It also operates fuel pipelines and terminals, and supplies fuel to a retail network of 5,500 gas station across 29 U.S. states. The company has been hurt by U.S. sanctions imposed on Jan. 28 to curtail Maduro’s access to oil revenue. Citgo, the largest U.S. buyer of Venezuelan crude, can continue importing PDVSA’s oil only if the sale proceeds go to banks accounts controlled by Guaido. Citgo’s new board of directors is led by Venezuelan Luisa Palacios, four veteran oil executives and current Vice President of Strategy and Compliance Rick Esser. The new members have yet to take office in Houston. A fourth top Citgo official, General Auditor Eladio Perez, also was removed from his office on Monday, according to one of the people.

Houston ranks second in Texas for most unauthorized pollution, environmental study finds - The Houston metro area has the second most unauthorized air pollution in the state, analysis of reports filed by companies to state regulators by the Texas Environment Research & Policy Center, an environmental policy nonprofit, found.Over 9 million pounds of unauthorized emissions were released in Houston in 2017, second to Midland, where Texas' booming oil field, the Permian Basin, is located. Unauthorized emissions are events in which an industrial facility releases large amounts of pollution into the air during a breakdown, process malfunction, operator error or maintenance work. Companies are required to report unauthorized emissions to the Texas Commission on Environmental Quality. In 2017, 275 companies reported over 4,000 emissions events that resulted in the release of more than 63 million pounds of air pollution in the state, up 27 percent from 2016, the study found.  Midland had over 37 million total pounds of unauthorized emissions, the study found, nearly 60 percent of the state's total unauthorized pollution.   Air pollution from industrial sources can cause long-term health issues for the population exposed, such as higher rates of cancer and heart disease, and is a major contributor to climate change.

How Google, Microsoft, and Big Tech Are Automating the Climate Crisis - In a deal that made few ripples outside the energy industry, two very large but relatively obscure companies, Rockwell Automation and Schlumberger Limited, announced a joint venture called Sensia. The new company will “sell equipment and services to advance digital technology and automation in the oilfield,” according to the Houston Chronicle. Yet the partnership has ramifications far beyond Houston’s energy corridor: It’s part of a growing trend that sees major tech companies teaming with oil giants to use automation, AI, and big data services to enhance oil exploration, extraction, and production. Rockwell is the world’s largest company that is dedicated to industrial automation, and Schlumberger, a competitor of Halliburton, is the world’s largest oilfield services firm. Sensia will be, according to the press release, “the first fully integrated digital oilfield automation solutions provider.” It will enable drilling rigs to run on automated schedules, enhance communication between oilfield equipment, and help machinery assess when it is in need of repair or modification—all in the name of making drilling for oil smarter, cheaper, and more efficient. As the Chronicle put it, Sensia will “help producers churn out more oil and gas with fewer workers.” Which, of course, is precisely the opposite of what needs to be happening in regards to the churning out of oil right now. And yet, the biggest and most influential tech companies are making deals and partnerships with oil companies that move the needle in the opposite direction. Amazon, Google, and Microsoft have all struck lucrative arrangements—collectively worth billions of dollars—to provide automation, cloud, and AI services to some of the world’s biggest oil companies, and they are actively pursuing more. These deals, many of which were made just last year, at what may be the height of public awareness of the threats posed by climate change, are explicitly aimed at streamlining, improving, and rendering oil and gas extraction operations more profitable. These deals weren’t secret and many have been openly reported in trade journals and business sections, but somehow big tech’s sweeping embrace of the oil industry has managed to escape wider notice and criticism.

US crude oil exports hit a record last week at 3.6 million barrels a day --  The United States exported a record amount of crude oil last week, as output from the nation's shale fields continues to surge.The nation shipped out just over 3.6 million barrels a day in the week through Feb. 15, according to the U.S. Energy Information Administration. That easily topped the previous all-time high of 3.2 million bpd set in November.Also last week, U.S. production hit a record 12 million bpd. The reading is subject to significant revision, but this is the first time EIA's weekly report has shown American output hitting the threshold. The weekly reading has been hovering at 11.9 million bpd for the last five weeks. Much of that growing output is coming from U.S. shale fields, where drillers use advanced methods to squeeze crude oil and natural gas from rock formations. On Tuesday, EIA forecast output from seven major U.S. shale fields will rise by 84,000 bpd next month to 8.4 million bpd.The U.S. notched the new export record despite China halting imports of American crude in recent months amid a trade dispute with Washington. China had emerged as the biggest buyer of U.S. oil prior to that.Shipping data indicates that China was scheduled to receive its first cargoes of crude oil from the U.S. in months around Feb. 17, but it was not immediately clear if those shipments were baked into last week's figures.To be sure, weekly U.S. exports rise and fall by wide margins from week to week. The U.S. will start consistently exporting more crude oil and petroleum products than it imports at the end of next year, EIA recently forecast.

US crude stocks rise as record production offsets record exports— A slowdown in US refinery activity and record weekly oil production helped offset record crude exports last week, Energy Information Administration oil data showed Thursday. EIA pegged US crude output at 12 million b/d for the first time last week, up from 11.9 million b/d the week prior. As a result, US commercial crude stocks rose 3.67 million barrels, to 454.51 million barrels, for the reporting week ended February 15. The build was in line with market expectations. Analysts surveyed Tuesday by S&P Global Platts had been looking for a 3.5 million-barrel build. Crude stocks in the US Gulf Coast rose 1.67 million barrels to 232.64 million barrels last week, as regional crude runs slipped 99,000 b/d to 8.46 million b/d. USGC crude runs were last any lower in early-March. Further, the build comes despite US exports -- which come chiefly from the USGC -- rose 1.24 million b/d to 3.61 million b/d, the highest weekly total on record, according to EIA data. The jump in exports was likely triggered by a steadily wide Brent/WTI spread, which widened beyond $10/b over the past week. A wide Brent/WTI spread helps traders hedge export flows. A rebound in generally weak crude imports into the region also helped stocks build. USGC imports jumped 1.09 million b/d to a still-modest 2.52 million b/d. Crude stocks at Cushing, Oklahoma -- the delivery point for the NYMEX WTI futures contract -- jumped 3.41 million barrels to 45.02 million barrels. US gasoline stocks appear to be leveling off after surging for the better part of the past four months. Stocks fell in line with analysts' expectations, down 1.45 million barrels to 256.85 million barrels.. Stocks fell in line with analysts' expectations, down 1.45 million barrels to 256.85 million barrels. The draw most pronounced in the US Atlantic Coast, where stocks dropped 1.93 million barrels to 67.59 million barrels. This took stocks to 2.5% below the five-year average, a key indicator of the health of regional gasoline supply. This is the first time USAC gasoline stocks have been at a deficit to the five-year average since mid-May, and a far cry from the better-than-20% surplus seen in early October. Prompt NYMEX March RBOB remains in a seasonal contango of around 15 cents/gal, but that has eroded significantly from the near 20 cents/gal seen last week. US distillate stocks also fell in line with analysts' expectations, down 1.52 million barrels to 138.68 mil

Permian Frac Scene Could Get Busier Soon - Hydraulic fracturing operations appear to be ramping up in the Permian Basin, suggesting that the region’s oilfield services sector is regaining strength after suffering a dip in activity in recent months. “Operators have gone from full-go planning mode in December to slowing things down since pricing took a dive over the holidays,” said Matt Johnson, Principal with Los Angeles-based Primary Vision, Inc. “A combination of improved crude pricing, global supply and demand and favorable pressure pumper contracts may be just the three-pointer that operators need to make spring/summer action-packed.” Through its “Primary Vision Frac Spread Count,” Johnson’s firm gauges the health of the upstream oil and gas industry through the lens of hydraulic fracturing activity. The indicator hinges on frac spreads, or frac fleets, which comprise the equipment that a pressure pumper – an oilfield service company – uses to perform a frac stimulation job. By Primary Vision’s reckoning, an increase in the number of frac spreads translates into an uptick in activity and growth in production – and vice versa. As Rigzone reported Thursday, the U.S. Energy Information Administration expects oil production from the Permian to cross the 4 million barrel per day mark next month – more than four times the volume of daily output in 2010. On Feb. 18, Primary Vision reported that the national frac spread count had risen by 11 week-on-week to 452 and that the Permian accounts for approximately one-third of that figure. The Permian gained four frac spreads during the period to hit 147, Johnson told Rigzone. “The rig count is diverging from the frac spread count as we predicted earlier this year,” Johnson told Rigzone. “The Permian Basin has seen a decline of almost three percent of rigs and an increase in frac spreads of eight percent since early January. The perception is that U.S. operators are satisfied pushing their completion programs forward with WTI/NYMEX pricing above $50.”

Editorial: Update Colorado's forced-pooling laws - Boulder Daily Camera - A common reaction to forced pooling when people first learn about the practice is shock. And no wonder — state law allows oil and gas companies to make mineral rights owners, against their will, join extraction operations as part of a drilling pool.  Industry critics say this gives private interests the power of eminent domain. Mineral rights owners forced into pools might have little knowledge of their legal options and scant time to respond when pricey corporate lawyers come knocking with thick contracts full of legalese. Unwilling owners can end up paying penalties if they resist. Colorado pooling laws were crafted back in 1951, when they might have been appropriate for the circumstances of the day. But technology and other factors have changed since then, and laws must be updated accordingly.  Colorado's forced pooling provisions are comparatively favorable to industry. At least 34 states have forced pooling laws. In some of the those states, force-pooled owners are required to contribute to production costs only if the well successfully produces, and they bear none of the enterprise's risks. Other states use a so-called risk-penalty scheme, in which force-pooled owners must pay their share of operation costs plus a certain amount — the risk-penalty — to cover the risks that come with the energy development. Still other states offer payment options to force-pooled owners. Colorado is a risk-penalty state. And its risk-penalty standard is a punishing 200 percent. This means the force-pooled owner must pay their full share of costs for surface equipment plus double their share of costs associated with the actual production.  Forced pooling in many states may be imposed only if a certain percent of owners within a spacing unit voluntarily joined the pool. Virginia requires 25 percent of owners to willingly join a pool before others can be compelled to. Ohio requires 90 percent. In Colorado a sole owner who wants to drill in a given spacing unit can force a pool. Forced pooling was in part meant to prevent a holdout from blocking neighbors from realizing ownership benefits, but in Colorado it can allow a single owner to force many neighbors to have their property developed. In 2017 and 2018, the state's oil and gas regulator, the Colorado Oil and Gas Conservation Commission, handled 658 forced pooling orders.

Colorado Court: Oil, Gas Drilling Decisions Can't Hinge on Public Health - In a case that had threatened to sharply curtail oil and gas drilling in Colorado, the state Supreme Court ruled on Jan. 14 that state regulators cannot put health and environment above all other considerations when approving new fossil fuel development under the current state law.It's another setback for young activists and others in Colorado and across the country who have been pushing legal challenges and ballot measures to limit fossil fuel development in order to rapidly cut the nation's climate-warming emissions.But the plaintiffs in Colorado vowed to continue their fight, and they could see some help from the state legislature."There are two options now," said Julia Olson, executive director of Our Children's Trust, an advocacy group that is representing the plaintiffs who challenged how regulators were interpreting the state's oil and gas law. They can pressure lawmakers to amend the law, she said, or they can challenge the law's constitutionality.Two weeks later, the attorneys also tried a third route, requesting that the court reconsider its decision after information came to light about a judge who had issued an earlier opinion in the case. The court rejected that request on Jan. 28.Olson's group and one of the young plaintiffs are also part of a lawsuit brought by a group of children and young adults against the federal government in which they argue that it has a duty to limit fossil fuel development and limit greenhouse gas emissions. That case is awaiting a decision from the Ninth Circuit Court of Appeals on whether it can proceed to trial.

2018 oil, gas spills comparable to 2017 -- While 2019 is off to a bit of a rough start locally in terms of oil and gas industry spills, spill numbers last year both regionally and statewide were somewhat on par with the previous year. Colorado Oil and Gas Conservation Commission data shows that statewide, there were 599 reported spills last year of substances such as oil, condensate and produced water associated with well drilling and production. That's down from 619 the prior year. Most of last year's leaks (364) occurred in Weld County, which leads the state in drilling activity and active wells. Garfield County, which ranks second statewide in drilling activity and well numbers, had 45 reportable spills last year, down from 55 in 2017.Mesa County showed an increase in reportable spills, with 27, up from 11 the prior year. It saw a spurt in drilling the last two years largely involving Laramie Energy, which also accounted for most of last year's reportable spills in the county.Rio Blanco County had 39 spills last year, compared to 40 in 2017.Companies must report spills of one barrel (42 gallons) or more that occur outside berms or secondary containment. All spills of five barrels or more must be reported, and companies also must report spills of any size that impact or threaten waters, homes, livestock or public byways. The COGCC spill count includes what it calls releases, which it defines as unauthorized discharges to the environment over time. According to its latest annual report issued to the state Water Quality Control Commission, if companies find impacts from historical operations during routine operations or closure of facilities, "those impacts are typically reported as releases and the operator proceeds with investigation and cleanup.

North Dakota oil production sets record in December (AP) — North Dakota regulators say the state’s oil production set a record in December. The Department of Mineral Resources says the state produced an average of 1.4 million barrels of oil daily in December. That’s up from 1.37 million barrels in November. North Dakota also produced a record 2.65 billion cubic feet of natural gas per day in December, up from 2.52 billion cubic feet in November. There were 15,351 producing wells in December, down one from a record set in October. The December tallies are the latest figures available. There were 65 drill rigs operating in North Dakota on Friday, up one from the December average. 

North Dakota oil production hits new record  -- North Dakota oil operators took advantage of mild December weather and produced a record 1.4 million barrels per day that month, according to the Department of Mineral Resources. While oil production grew nearly 2 percent, natural gas production jumped 5 percent in December to a record 2.65 billion cubic feet per day, according to the preliminary figures. The previous high, 1.39 million barrels per day, was set in October. Natural gas flaring decreased slightly in December, but continues to miss the goals set by the North Dakota Industrial Commission. Companies captured an all-time high of 2.1 billion cubic feet per day in December. Operators burned off 513 million cubic feet per day, or 19 percent of gas produced statewide. The Industrial Commission targets limit flaring to 12 percent. Operators voluntarily restricted oil production by about 35,000 barrels per day in December to stay within flaring limits, Helms estimates. Most of the flaring came from wells that are connected to a pipeline, but there is inadequate infrastructure to handle all of the gas, said Justin Kringstad, director of the North Dakota Pipeline Authority. Several gas processing plants are under construction and are expected to be complete by the end of 2019.  January oil production is expected to be flat or slightly down, but severe cold in February is expected to lead to a production drop, Helms said. Modern drilling rigs can handle the cold weather, but hydraulic fracturing is difficult in subzero temperatures, Helms said. Williston recently reported a record low temperature of 43 below zero.

Senate approves fines for oil companies that fail to comply with audits - Oil companies that fail to cooperate with Department of Trust Lands audits could face fines of up to $1,000 per day under a bill unanimously approved Friday by the North Dakota Senate. The Department of Trust Lands has been struggling to complete audits of royalty payments because 20 percent of oil and gas operators have not provided documents requested by the state agency. In some cases, the department has been waiting years for the information, Land Commissioner Jodi Smith has said. Senate Bill 2212 would authorize the department to charge fines to energy companies that are not in compliance after 90 days. Sen. Merrill Piepkorn, D-Fargo, said the department’s only other recourse is to file a lawsuit or terminate a lease. The North Dakota Petroleum Council opposed the legislation. The bill as introduced would have levied fines of up to $5,000 per day after an operator was out of compliance for 30 days, but the department agreed to compromise on the fine and time frame. Also this week, the Senate unanimously approved Senate Concurrent Resolution 4010, which seeks a formal study of deductions taken from oil and gas royalty payments.

ND Oil and Gas Division reports brine spill near Williston - The North Dakota Oil and Gas Division was notified of a release occurring Wednesday, February 20 at the Knoshaug 14-11 #2TFH well, about six miles northeast of Williston, North Dakota. The North Dakota Oil and Gas Division says 260 barrels of brine were spilled Wednesday at a well site about six miles northeast of Williston. It was reported Thursday by Equinor Energy LP, which said the spill was caused by a valve and pipeline connection leak. The Oil and Gas Division says the spill was contained on site and has been recovered. A state inspector has been to the location and will monitor any additional cleanup.

A rough patch: Study shows how violent Bakken became as oil drilling surged -  — The notion that crime boomed in the Bakken as oil development took off is nothing new. But a study released this month by the Bureau of Justice Statistics offers a detailed look at the spike in Oil Patch violence. Counties in Montana and North Dakota that contain the Bakken shale formation saw their violent crime rate jump 23 percent from 2006 to 2012, according to the study. The violent crime rate dropped by 8 percent for the surrounding region during the same period. The bureau provided federal funds to RTI International, a nonprofit research organization that analyzed FBI data for the study, to see if there was a correlation between increased populations in the Bakken and crime, RTI research analyst Nick Richardson said. The time period was chosen because researchers wanted to look at years — 2006 to 2008 — before an oil boom brought rapid population increases to the Oil Patch from 2009 to 2012. The violent crime rate in the Bakken didn’t start to climb dramatically until 2009, according to the study. Researchers found that a crime rate of 105 per 10,000 people in 2006 rose to 130 per 10,000 in 2012, surpassing a rate of 124 in 2012 for non-Bakken counties in Montana and the Dakotas. “The increase in violent victimizations in the Bakken region counties was not part of a broader increase in violent victimizations reported by law enforcement across Montana, North Dakota, and South Dakota,” researchers said in the study. The rate of violent crime against men in the Bakken region surpassed the non-Bakken region, with the former jumping 31 percent from 2006 to 2012, or a rate of 90 per 10,000 males to 118, the study said. The latter dropped 10 percent from a rate of 116 per 10,000 males to 104 in that time frame. The increase in the Bakken region for men was higher than that of female violent victimization, which only climbed 18 percent from 2006 to 2012. However, the rate at which women were victimized in both the non-Bakken and Bakken regions largely outpaced male victimization. The rate of female victims in the Bakken rose from 118 per 10,000 females in 2006 to 140 in 2012, closing the gap on the non-Bakken rate, the study said.

Judge keeps most Keystone XL pipeline work on hold (AP) — A federal judge in Montana has largely kept in place an injunction that blocks a Canadian company from performing preliminary work on the stalled Keystone XL oil pipeline.U.S. District Judge Brian Morris on Friday denied a request by Calgary-based TransCanada to begin constructing worker camps for the 1,184-mile pipeline that would ship crude from Alberta to the Gulf Coast.However, Morris said TransCanada could perform some limited activities outside the pipeline’s right-of-way. Those include the construction and use of pipe storage and container yards.TransCanada attorneys had argued the injunction issued by Morris in November could cause it to miss the 2019 construction season and further delay the project. An appeal of November’s ruling is pending before the 9th U.S. Circuit Court of Appeals.

California's Dirty Oil Gets Pricey Amid Venezuela Sanctions - California doesn’t usually come to mind when talking about the U.S. oil boom, but the state’s dirty oil is commanding an increasingly large premium amid an international shortfall of dense, high-sulfur crude.Refiners in the Golden State have been forced to import most of their crude as the state’s production has dwindled. While production from the Permian Basin of West Texas is overflowing, a lack of transportation options is keeping it from reaching the Golden State cheaply.The average posted price for Midway-Sunset crude on Friday was $60.54 a barrel, nearly $5 above U.S. benchmark West Texas Intermediate futures, and near the all-time high of $5.06 premium set in November in data stretching back more than two years. More than 22 million barrels of the oil that’s heavier than such benchmarks as Mexican Maya or Western Canadian Select was pumped from the San Joaquin Valley in 2017. California's Midway-Sunset crude sells for over $6 premium to WTI. Such pricey crude is the result of a tightening market due to U.S. sanctions on Venezuela, mandatory production curtailments in Canada and cuts of heavy, sour grades by OPEC members such as Saudi Arabia, John Auers, executive vice president at energy consultant Turner Mason & Co. in Dallas, said by phone.Local factors also play a role, as California’s refiners lack many pipeline or crude-by-rail links to the rest of the country, Auers said. As such, accessing light, domestic grades produced in the Bakken or Permian Basin is harder for California plants than for those on the Gulf Coast.“They probably have less flexibility,” he said. “The guys in the Gulf, have always had more access to other grades.”Unlike the U.S. as a whole, California’s dependence on foreign oil imports has been growing steadily since the 1980s as the state’s own crude output and that of Alaska’s has diminished. Without surplus production, not much California crude makes its way to foreign markets. Districts associated with the state shipped out nearly 950,000 barrels in 2017 to the Bahamas, the most recent exports, according to U.S. Census Bureau data compiled by Bloomberg.

Canadian heavy crude slips with pipeline rationing set to rise  - Heavy Canadian crude prices widened to the biggest discount against New York futures this year as pipeline-operator Enbridge Inc. reported that rationing on its heavy oil lines would increase next month.Western Canadian Select, an oil sands benchmark, traded at $15 a barrel below West Texas Intermediate futures Tuesday, $1.50 wider than on Friday and the biggest discount this year, according to data compiled by Bloomberg.The discount widened as Enbridge said that crude shipments through the heavy oil pipelines of its Mainline, which is the largest Canadian oil export pipeline system, would be apportioned 41 percent in March, up from 39 percent in February. The system carries oil from Alberta to Superior, Wisconsin, where it connects to other lines linked to refineries in the U.S. Gulf Coast. Pipeline rationing on the system has barely budged since the provincial government announced mandatory production curtailments totaling 325,000 barrels a day in January and February, which were later reduced. Canadian heavy oil prices surged after the cuts were announced, with WCS’s discount to futures shrinking to less than $7 a barrel last month. The price surge made shipping the crude by rail cars, a more expensive alternative to pipelines, uneconomical and shipments on trains declined. Shipping full train of crude can cost between $15 and $20 a barrel.

Canadian National train derails in Manitoba, leaks oil (Reuters) - A Canadian National Railway Co train derailed early on Saturday in Western Canada, leaking an undetermined volume of crude oil, the company said. Thirty-seven tank cars derailed near St-Lazare, Manitoba. The leak has been contained and has not entered the nearby Assiniboine River, CN spokesman Jonathan Abecassis said in a statement. There were no injuries or fires, he said, adding that CN was preparing to clean up the spill and remediate the environment. The derailment comes as crude oil shipments by rail in Canada reached a record high late last year, after oil production expanded in the western province of Alberta and plugged up pipelines. Crude transport by rail is generally considered less safe than pipelines, although there was also a leak this month in TransCanada Corp’s Keystone pipeline in Missouri. Also this month, a parked Canadian Pacific Railway grain train rolled down a steep embankment in British Columbia, killing three crew members. Canada’s Transportation Safety Board, which regulates the rail industry, said it was deploying investigators to the site of the Manitoba train derailment. 

'You Can Smell Crude in the Air': Oil Leaks From Train Derailment in Canada - Almost 40 train cars carrying crude oil derailed near a small town in the Canadian province of Manitoba Saturday, leaking oil into the surrounding area, CBC News reported.The derailment of around 37 cars and subsequent oil spill took place on the property of rancher Jayme Corr, who lives around 10 kilometers (approximately 6.2 miles) south of the town of St. Lazare, in the rural municipality of Ellice-Archie."You can smell crude in the air. That's really concerning," Corr said. "There's oil leaking, and where they're sitting is [near] a water lagoon," he said. Canadian National Railway (CN) began to clean the spill Saturday and said that it had been contained and that no oil had entered the nearby Assiniboine River, the Winnipeg Sun reported."Our environmental team is preparing clean up and remediation to protect the environment," CN media relations director Jonathan Abecassis wrote in an email to the Winnipeg Sun. "A perimeter has been set up around the area to facilitate site access. CN crews are conducting a full site assessment to determine how much product has spilled."Corr told CBC News he was worried that the oil might contaminate the water source he relies on in the summer. Corr and other locals were not surprised by the derailment."It seems to be the trains go faster, they're longer, heavier, and the maintenance is getting less and less," Corr said. Ellice-Archie Councillor Jean-Paul Chartier told CBC News he often observed trains traveling through St. Lazare and worried they would derail and cause a disaster like the one that killed 47 in Lac-Mégantic, Quebec in 2013 when a train carrying crude oil derailed and exploded. "It's discouraging. Like you look at it everyday and you say 'hopefully it's not today and hopefully it doesn't ever happen.' But you've always got it in the back of your mind," Chartier said.

CN begins cleanup after derailment causes crude oil spill - CN’s environmental experts have begun the cleanup of Saturday morning’s derailment which caused a crude oil spill after almost 40 train cars derailed near the community of St. Lazare in western Manitoba. CN officials said several of the cars had been leaking but the product has been contained and has not entered the Assiniboine River. Train movements resumed at noon Sunday. The cause of the incident is under investigation. “CN apologizes for any inconvenience this incident has caused to the community and would like to thank the first responders who attended the derailment site,” said Jonathan Abecassis, media relations director for CN, in an email to the Winnipeg Sun. At around 3:30 a.m. on Saturday, 37 cars derailed and there was a partial leak of crude oil. First responders were on the scene Saturday morning. There were no reports of injuries or fires. On Saturday afternoon, CN reported that the leak had been contained and had not penetrated the Assiniboine River. “Our environmental team is preparing clean up and remediation to protect the environment,” said Abecassis in an email to the Winnipeg Sun. “A perimeter has been set up around the area to facilitate site access. CN crews are conducting a full site assessment to determine how much product has spilled.” The Transportation Safety Board of Canada (TSB) is deploying a team of investigators to the site. According to a spokesperson from the TSB, the team was expected to be on scene late Saturday afternoon or evening and should be there for several days. Located approximately 330 kilometres west of Winnipeg near the Saskatchewan border, St. Lazare is about 50 kilometres from Moosomin, Sask., where conservative leaders have been speaking at a pro-pipeline rally on Saturday. Supporters of moving oil via pipelines argue it’s a safer alternative to shipping by rail.

Environmental Defender Murdered in Mexico Days Before Vote on Pipeline Project - An indigenous environmental activist was killed in Morelos, Mexico Wednesday, three days before a referendum on the construction of a gas pipeline and two thermoelectric plants that he had organized to oppose, the Associated Press reported.Samir Flores Soberanes had challenged the words of government representatives at a forum about the so-called Morelos Comprehensive Project a day before his murder, The Peoples in Defense of Land and Water Front (FPDTA), the group Soberanes organized with, said in a statement."This is a political crime for the human rights defence that Samir and the FPDTA carried out against the [project] and for people's autonomy and self-determination," the group said in a statement reported by The Guardian.The Morelos state government, however, challenged whether Soberanes' murder was politically motivated. State prosecutor Uriel Carmona said that the murder was not related to the upcoming referendum and that investigators were considering the involvement of organized crime.Soberanes and the FPDTA opposed the energy project, which would have run a pipeline through Soberanes' home village of Amilcingo, because of concerns about how it would impact the health, safety and water of the largely indigenous communities in the surrounding area, the Associated Press reported. Newly elected Mexican President Andres Manuel López Obrador called the murder "vile" and "cowardly," but said the vote would take place when planned.

Early E&P guidance shows falling CAPEX but solid production growth -- Once the “riverboat gamblers” of U.S. industry, executives at exploration and production companies got religion after the brutal oil price crash in late 2014 and adopted a far more conservative approach to investment based on their new 11^th commandment: “Thou shalt live within cash flow.” So it’s no surprise that early 2019 guidance issued by more than half of the 45 major E&Ps we track shows them cutting back capital investment in response to last fall’s decline in oil prices from a more optimistic scenario a year ago. Nearly three-quarters of the 26 companies reporting their 2019 guidance are reducing exploration and development outlays, while only three of the remainder are budgeting increases greater than 10%. What is surprising is that these forecasts include solid production growth virtually across the board, especially for E&Ps that focus on crude oil. Today, we look at how a representative group of U.S. E&Ps are dealing with lower crude prices.

Energy Companies at Increasing Risk of 'Over-Investing' -- Oil and gas companies continue to link executive pay to the discovery of energy resources the world can’t safely burn, potentially jeopardizing shareholder value, according to a new report. As many parts of the world shift toward a low-carbon economy, energy companies may be at increasing risk “of over-investing, and wasting capital on projects that turn out to deliver poor returns and destroy value,” the report by the Carbon Tracker, a U.K. nonprofit focused on climate risks to fossil-fuel companies, finds. Companies that encourage executives to discover and produce new fossil fuels tend to see poorer stock performance than those who base compensation on financial returns and cost metrics, the study says.  In 2017, about 90 percent of companies in the study offered executives growth incentives based on maximizing oil-and-gas reserve replacement, production or revenue. Ten of the 40 companies studied by Carbon Tracker began using some metrics based on returns in 2018, or used more of them than previously, according to the report. Diamondback Energy Inc., a Midland, Texas-based independent producer, is the only company that did not include any growth metrics in its pay structure for 2018. BP Plc eliminated a compensation metric for replacing reserves and implemented a new one based on the return of capital after a 2015 shareholder resolution. Pressed by shareholders, Chevron Corp. announced last week new manager and employee performance metrics to reduce upstream emissions intensity and methane flaring. Anadarko Petroleum Corp., Cabot Oil & Gas Corp., Canadian Natural Resources Ltd. and Oil Search Ltd. weigh production and reserves-growth more than other companies in the study.

March To Enter Like A Lion, Bouncing March Gas - March gas settled up almost a percent and a half higher on the day today as Week 2 forecasts trended colder over the weekend and physical gas prices were firm today.  Yet despite strong cash prices it was actually the July natural gas contract that logged the largest gain today.   Futures first bounced on Henry Hub cash prices trading over $2.7 this morning.  This came following our Morning Update which highlighted "Slightly Bullish" risks for natural gas prices today due to colder long-range forecasts and impressive recent demand.  Long-range GEFS forecasts then maintained these significant cold risks, and though the 12z run lost a few HDDs it still proved to be supportive this afternoon following a solidly warmer operational GFS (images courtesy of Tropical Tidbits).   Traders are also positioning ahead of what should be a large storage withdraw announced on Thursday. Dominion Transmission announced their third largest draw of the season yesterday.

March Gas Reverses Ahead Of Tomorrow's Storage Number - The March natural gas contract dipped about a percent on the day as the winter strip dragged down the front on concerns of oversupply following several loose EIA storage numbers.  Strong cash prices helped March settle as one of the strongest contracts on the day.  Prices were initially higher this morning on small overnight GWDD additions as well.  However, afternoon GEFS guidance was a bit less impressive with medium-range cold, and weak spreads pulled the March contract down as well. In the end the April/October J/V spread settled around flat, though for awhile it was again trading narrower on the day.  Most traders are focused on the EIA number coming out tomorrow morning, though, which should show a large draw following a solidly colder week last week.  The last several prints have all been quite loose, which could help explain weakness in natural gas prices the last few weeks. We would expect a significant reaction around this print, and in our Seasonal Trader Report for clients updated our forward storage expectations off of our 5-month GWDD forecast and latest reading of balance. Of note in tomorrow's EIA number will be a return of LNG exports, helping explain the far larger draw versus the previous week.  Yet even still the week was not all that cold, with GWDDs near seasonal averages. We would look for a large draw in the Midwest, which was coldest through early last Friday.  In our Note of the Day and Afternoon Update we ran through our latest expectations for the number, explaining both the expected storage change and price reaction. We also outlined the latest daily balance trends and what weather and spread action indicated for price risk into the weekend.

EIA Reports 177 Bcf Storage Draw, March Natural Gas Tacks on More Gains  - The Energy Information Administration (EIA) reported a 177 Bcf withdrawal from natural gas storage inventories for the week ending Feb. 15, 5 Bcf more than the highest estimate ahead of the report and a whopping 35 Bcf more than the lowest projection. Natural gas prices, which were already a few cents higher before the report’s 10:30 a.m. ET release, tacked on another couple of cents after the print hit the screen. By 11 a.m., the Nymex March gas futures contract had trimmed some of those gains, trading at $2.677, up about 4 cents. The storage number came in well above both last year’s 134 Bcf withdrawal for the week and the five-year average pull of 148 Bcf. Bespoke Weather Services, which had projected a 172 Bcf draw, said it viewed the larger pull as potentially an implicit revision of a few prior EIA prints that were significantly looser.   The reported withdrawal confirms that storage levels will easily dip below 1.2 Tcf and potentially 1.1 Tcf, and that at these price levels, balances are rapidly tightening, according to Bespoke. “With weather likely to remain supportive, this number confirms that $2.75 is in play for the March contract into the end of the week and allows us to maintain our slightly bullish sentiment,” Meisel said. Broken down by region, the EIA reported a 49 Bcf withdrawal in the East, a 56 Bcf pull in the Midwest, a 47 Bcf draw in the South Central and a 17 Bcf pull in the Pacific. The draw in the Pacific was a bullish surprise to some market analysts on Enelyst, an energy chat room hosted by The Desk. The hefty drawdown was seen as likely leading to increased volatility in a market that has already seen significant swings in recent weeks due to strong demand. Working gas in storage as of Feb. 15 stood at 1,705 Bcf, 73 Bcf below last year and 362 Bcf below the five-year average. Despite the growing deficits, analysts remain confident in production’s ability to refill storage this summer. Already, production is about 9 Bcf/d higher year/year and is expected to grow even further, especially once the summer gets under way. Before then, supplies will ramp up once cold weather abates, particularly in the Rockies, where more than 0.5 Bcf/d of production remains offline due to freeze-offs. The latest weather outlooks show cold lingering into at least the first week of March. The overnight weather data trended slightly colder with the Global Forecast System data adding seven to eight heating degree days (HDD) and the European model adding five to six HDDs, according to NatGasWeather. A large portion of the colder trend was for Feb. 27-March 5, although what happens March 7-10 “is uncertain as some of the data favors cold holding over much of the country while a second camp favors cold easing and temperatures moderating towards normal.”

Bullish EIA Number Pushes Gas Higher - The March natural gas contract rallied over 2% today as weather model guidance remained bullish and the EIA announced a slightly larger storage draw last week than expected.  As has been the theme all week the March natural gas contract was the strongest along the futures curve and led the way higher, buoyed by more cash strength.  Yesterday in our Afternoon Update we warned about bullish risks today as we expected both a bullish EIA number and more supportive weather model guidance. We reiterated this in our Morning Update today, where again we held Slightly Bullish sentiment.  This worked well as the EIA reported a draw of 177 bcf of gas from storage last week, which was only slightly larger than our estimate of 172 bcf but more significantly above the consensus around 165 bcf.  As we immediately warned subscribers following the number, we saw this as supportive for the natural gas market as it was solidly tighter than the last few weeks of EIA numbers. Cold Week 2 forecasts have continued to support prices as well.  This combination has helped lead a recovery in the April/October J/V spread.

Ireland: Developers of Shannon gas processing terminal ordered not to begin construction - A High Court judge has ordered the developers of a €500 million liquefied natural gas processing terminal in the Shannon estuary not to begin construction, and referred a case brought by Friends of the Irish Environment (FIE) to the Court of Justice of the European Union (ECJ).Mr Justice Garrett Simons has asked the EU court to rule on issues relating to the European Habitats Directive, notably to what extent it should have applied when An Bord Pleanála (ABP) in 2018 extended planning permission for the project by five years.In judicial review proceedings, FIE claimed the directive placed a particular onus on the proposed development that was not fully addressed when the extension was sought by Shannon LNG Ltd.The terminal, due to be located between Tarbert and Ballylongford in Co Kerry, includes construction of a large jetty out into the estuary to cater for large LNG tankers importing gas from locations throughout the world. The estuary is an EU-designated special area of conservation (SAC) and special protection area (SPA) for wild birds. It is also a “critical area” for bottlenose dolphins.

Irish High Court delivers killer blow to US Fracked Gas Imports by 'New Fortress Energy' -   The challenge by Irish environmentalists has proven that the 'New Fortress Energy' Shannon LNG consent process will take years and may now never come to fruition 'Safety Before LNG'  stated that today's decision was to be expected and does not come as any surprise and thanks the 'Friends of the Irish Environment' for fighting to prevent climate chaos from the environmental madness that is the US fracked gas industry.The 'Friends of the Irish Environment' environmental NGO has declared to the world that Ireland is not for sale to the US fracked gas industry.  It warned that the US fracked gas exporter 'New Fortress Energy'  will not be able to get full development consent for years because the Irish will simply not accept,  without a strong fight, the importation of fracked gas from America due to its devastating climate impacts, rendering it dirtier than coal. Fracked gas is illegal in Ireland and planning permission for the proposed 26km pipeline connecting the terminal has already expired. The licence to pollute  from the Environmental Protection Agency (EPA) will prove an even more difficult barrier for 'New Fortress Energy' due to stricter rules in force since 2014 obliging the EPA to consider  effects on human health. Ireland will not accept light-touch regulation where fracked gas is concerned and the environmental standards in Ireland will be too high for the US fracked gas exporter 'New Fortress Energy' to jump over.  'Safety Before LNG' says it is is now clear that the 'New Fortress Energy' plan to import fracked gas from the USA is nothing more than an unachievable illusion created to increase the value of its shares following the recent IPO by the company to raise funds which saw its own CEO Wes Edens gambling to maintain investor confidence by buying $35 million worth of shares in the company in inside trading declared to the US Securities and Exchange Commission.

Fracking firm applies to add more chemicals to fracking fluid at Lancashire drill site - Shale gas operator Cuadrilla has submitted plans to change the type of fracking fluid it uses at its Preston New Road site. The firm, which has paused operations at the site since before Christmas, wants to use a whole new raft of additives to the fracking fluid which is injected under pressure deep underground to release the gas to be collected. Cuadrilla's fracking equipment at Preston New Road near Little Plumpton The Environment agency has opened a public consultation on the bid which runs until March 20. Nick Mace, environment manager at Cuadrilla said the firm had varied the permit before. He said: “The reason for the proposed variation is that we’d like to modify our fracturing fluid so that more sand can be carried into the shale rock with the water when we re-commence hydraulic fracturing operations at the Preston New Road site. “To do this we propose to add some chemicals which have already been approved for use elsewhere in the UK by the Environment Agency. “The fracturing fluid will remain non-hazardous to groundwater, as it must do under UK regulation, and additional additives we are proposing to use are commonly found in food, toiletries and other products used around the home.” But fracking opponents Frack Free Lancashire said: “We are concerned, but not entirely surprised, that after years of claiming that the only two chemicals to be used in UK fracking were polyacrylimide and hydrochloric acid, that they should now be seeking, after just one failed frack, to expand the list of chemicals. "Equally concerning is the list of 41 potential additives to their drilling fluids of which no less than 14 are described by Cuadrilla themselves as “potentially hazardous”.

U.S. and Germany Defuse an Energy Dispute, Easing Tensions — Relations between the United States and Germany have mostly gone downhill since President Trump took office. But on Tuesday they took an unexpected turn for the better. Officials in Berlin agreed to help finance a port to import liquefied natural gas from America, a key United States demand. In return, the United States government is toning down its opposition to an underwater pipeline being built to Germany from Russia. The unofficial agreement, announced in Berlin by high-ranking American and German officials, was a rare case of rapprochement in a relationship that has been severely strained by American tariffs on European steel, continued threats to impose levies on German cars and personal enmity between Mr. Trump and Angela Merkel, the German chancellor.Germany’s gas supply had become a major point of contention. Last year, officials in Brussels promised to buy more American natural gas as a way of answering complaints by the Trump administration that trans-Atlantic trade favors Europe. At the same time, though, Germany continued to support construction of a pipeline under the Baltic Sea that would deliver gas from Russia. The project annoyed the United States as well as European countries like Poland, Slovakia and the Baltic states.Both the United States and Germany made concessions Tuesday, an unusual occurrence in the recent history of trans-Atlantic relations. Peter Altmaier, the German minister for the economy and energy, said the government would support construction of at least one terminal, probably in the vicinity of Hamburg, for offloading liquefied natural gas, or L.N.G., from special tankers. While the gas could come from anywhere, the project is seen as a way to open Germany to gas producers in Texas and other states.

Merkel Defends Deal For Putin's Gas; Fumes Over Taunts By Trump Admin - Donald Trump is really starting to ruffle Angela Merkel's feathers, as the German chancellor continues to fend off attacks by the Trump administration over the $10.8 billion (9.5 billion-euro) 758-mile (1,220 km) 'Nord Stream 2' undersea gas pipeline between Germany and Russia, according to Bloomberg.  U.S. diplomats leaned on officials in Paris and Brussels to join their opposition to the Nord Stream 2 project over the past 10 days as Merkel thrashed out an agreement over the plan with France, the people said. -BloombergIn January, the US ambassador to Berlin, Richard Grenell, sent letters to German companies working on the Nord Stream 2 pipeline warning them of "significant risk of sanctions" if they don't abandon the project. The letter suggested that the pipeline would make Europe dependent on Moscow, increasing the threat of Russian interventions. The Nord Stream 2 project is headed up by former German chancellor Gerhard Schröder, who is also a consultant to bank R othschild.  On Saturday, Vice President Mike Pence urged EU nations to reject the undersea pipeline during a speech in front of Merkel and other world leaders at the Munich Security Conference. The German chancellor had harsh words for the Trump administration - delivering an impassioned speech to Security Conference attendees defending the multilateral order "challenged by Trump," according to Bloomberg, earning a standing ovation from the audienced filled with presidents, prime ministers and senior defense officials.  "Merkel was on fire," said former Swedish Prime Minister Carl Bildt via Twitter.

Natural Gas Guru Who Corrected the CIA Says Russia and U.S. Pick the Wrong Fight - The scientist who built the most prominent Cold War energy advisory said the U.S. and Russia should set aside their fight over natural gas markets and focus on slashing fossil fuel pollution more quickly. Nebojsa Nakicenovic helped set the stage for the global gas boom five decades ago as part of an elite scientific team that fixed Central Intelligence Agency estimates “that were all wrong.” He combined the CIA’s views with secret Soviet data to provide the first full picture of the Earth’s plentiful methane reserves. But the window to tap those deposits is already almost closed, he said. “It was 50 years of retrograde,” Nakicenovic said in an interview. “Rather than achieving the transformation, we were working on the counter transformation in many ways. Now we have no time to waste. We need to be at zero emissions by mid century.” The remarks are meant to refocus debate about how to shape Europe’s energy networks, an issue on the agenda when Austrian Chancellor Sebastian Kurz meets President Donald Trump in Washington on Wednesday. The scientist, who was hired by a joint White House and Kremlin initiative to advise on the issue, brings a historical perspective to the discussion about whether Europe should draw its energy through pipelines from Russia or in tankers of liquefied natural gas from the U.S. Trump and Kurz will wade into the thorny debate over how the European Union gets its gas, and the issue is expected to come up during a bilateral meeting. Austria’s state-owned energy company has preferred financing pipelines that tie European industry together with Russian reserves. Trump wants allies to buy more U.S. liquefied natural gas and shun trade that could strengthen Russia’s military hand, especially the Nord Stream 2 pipeline. 

Europe Scrambles For Sour Crude Oil Amid Tight Market  - OPEC’s production cuts and the U.S. sanctions on Venezuela and Iran have been limiting the availability of heavy and sour crude grades to Europe, where prices for heavier grades have recently shot up amid an increasingly tightening market, crude traders tell S&P Global Platts.The U.S. sanctions on Iran had already limited some of the heavy grade supply into Europe. Then with the new round of OPEC/non-OPEC cuts that began in January, Iraq’s Basra Light and Heavy—typically very popular among European refiners—have also been in short supply on the spot market in Europe as Iraq is diverting more barrels of Basra to the premium market for Middle Eastern producers: Asia.  “There are no destination-free Basrah cargoes at the moment coming to Europe for the end of February as they’re targeting Asia,” a crude trader told Platts.To top off the sanctions on Iran and the OPEC cuts, the U.S. sanctions on Venezuela at the end of January further tightened the heavy crude market in Europe, and traders expect the market to tighten even more in the coming months.The sanctions on Venezuela and on Iran, as well as OPEC’s cuts, have led to a huge imbalance between light sweet grades and heavy sour grades, especially in Europe, as Middle Eastern and other oil producers are targeting to keep their sales on the Asian market.Due to tighter supply of medium and heavy sour crude oil, Middle Eastern benchmarks for sour crude grades traded higher than Brent Crude prices at the beginning of February in a rarely seen development in global oil prices. In Europe, some sour crude grades, such as Russia’s Urals, have started to trade at premiums to sweeter crudes because of the limited sour and heavy crude availability, according to S&P Global Platts data.

Venezuela gets fuel from Russia, Europe but the bill soars Reuters) - Venezuela is paying heavy premiums for fuel imports from Russia and Europe, with fewer than a dozen sellers seeing the risk as worth the reward after flows from the United States dried up because of sanctions, trading sources said and data showed. The South American nation exports crude but its refineries are in poor condition - hence the need to import gasoline and diesel for petrol stations and power plants, as well as naphtha to dilute its heavy oil. Since the United States imposed fresh sanctions on Venezuela on Jan. 28, products supplies have mainly come from Russian state oil major Rosneft, Spain’s Repsol, India’s Reliance Industries and trading houses Vitol and Trafigura, according to sources and vessel-tracking data. Russia has been a traditional political backer of Caracas, while India and Spain also have long-standing trade ties. But supplies even from those allies are coming at a cost. “The prices they are charging us are horrifying,” said an executive at Venezuelan state-run oil firm PDVSA who is familiar with recent purchases. The executive said the heavy premiums were partially due to the fact that single cargoes passed through several hands before reaching Venezuelan ports and also involved complex and expensive ship-to-ship transfers. A trader involved in one fixture said shipowners were now charging a fee of up to 50 cents per barrel to Venezuela versus 15-20 cents before sanctions. Last year, Venezuela imported most products from the United States with the main providers being PDVSA’s own U.S. subsidiary Citgo Petroleum and a U.S. unit of India’s Reliance. Monthly supplies fluctuated but in December alone PDVSA imported almost 300,000 barrels per day (bpd) of fuel as its domestic refineries worked at just below a third of its 1.3-million-bpd capacity, according to PDVSA data. Imports have fallen to some 140,000 bpd of gasoline, diesel, naphtha and other fuels since the end of January, Refinitiv Eikon data shows. In addition, at least 13 cargoes carrying 5 million barrels of various fuels are heading to PDVSA’s terminals or waiting in Venezuelan waters to discharge, according to shipping sources and Eikon data.

Fracking in Colombia given go-ahead despite risks and broken election promises -An expert commission has given the go-ahead for fracking pilot projects in Colombia, despite President Ivan Duque’s promise not to use the controversial method and questions about the legitimacy of the panel’s methods.Only three members of the 13-person commission were truly independent, with numerous fuel industry professionals, according to the Alliance for a Fracking-Free Colombia (AFFC).There was only one woman on the panel, which had only three months to write the report.  Public consultation was also serious lacking — the panel held just three meetings with regional communities.There is no social mandate to start fracking in Colombia.Fracking is an industrial process which breaks apart rock formations deep underground to extract fossil fuels. . The process has regularly contaminated water supplies, and has been linked to increased seismic activity.“There are ecological risks as well as public health risks,” Tatiana Roa of AFFC told Colombia Reports.  More than 90% of Colombians are against fracking in Colombia, according to a poll taken this Monday. The ecological stakes are high – Colombia has the second highest biodiversity of any nation on the planet, and has 10% of the Amazon rainforest within its borders. There is, however, big money to be made by fracking in Colombia: oil reserves currently reach 2 billion barrels, equivalent to about 5 years of supplies. According to President of EcoPetrol Felipe Bayon, fracking would increase reserves by between 2 billion and 7 billion barrels.

Shell, PetroChina spat holds up biggest Australian coal seam gas project (Reuters) - Royal Dutch Shell and PetroChina are at loggerheads over gas sales pricing at their Arrow Energy joint venture, holding up development of Australia’s biggest coal seam gas resource, three industry sources said. PetroChina, the listed arm of China National Petroleum Corp (CNPC), is eager to start developing Arrow’s 5 trillion cubic feet (140 billion cubic meters) of gas in the Surat Basin in Queensland to turn around loss-making Arrow Energy, one of its key overseas assets. It is at the mercy of venture partner Shell, however, as the Anglo-Dutch oil company is also majority owner of Arrow’s biggest potential customer, Queensland Curtis LNG (QCLNG), a liquefied natural gas plant on an island off Queensland state. “PetroChina, as a 50-percent stakeholder in Arrow, expects to maximize interests from the JV versus QCLNG. But for Shell, it may be thinking of using its operator role at QCLNG to protect its interests,” said a Chinese oil industry executive, who declined to be named due to the sensitivity of the issues. PetroChina’s investment is “already bleeding and the firm wants to cut losses, hoping not to make further bad investment decisions,” the executive said. Shell and PetroChina acquired the Surat gas resource in a A$3.5 billion ($2.5 billion) takeover of Arrow in 2010. They had expected to reach a final investment decision on the Surat project in 2018, with first production around 2020, after the Arrow venture signed a 27-year deal at end-2017 to supply gas from Surat to QCLNG.

Equinors plan for oil drilling in Great Australian Bight could impact Tasmania - Planned oil drilling in waters off Tasmania is feared to create havoc for the state's $150 million scallop industry and could result in an oil slick that would "envelop" King Island. International energy company Equinor this week released its draft environment plan for an exploration drilling program in the Great Australian Bight which it said concluded drilling could be done safely. The company's Australian representative Jone Stangeland said it would accept public comments before it submitted a final plan to the environmental regulator. He said the paper identified all relevant risks even if they were considered unlikely. "By identifying every possible risk, we can better prepare for safe operations,” Mr Stangeland said. Australia Institute state director Leanne Minshull said modelling in the plan did not provide comfort to residents, fishermen and other industries on King Island. "It shows that a major spill could envelop King Island, devastating local jobs and the ecology of surrounding areas,” she said. “Despite the oil well and the supposed profits being in South Australia, the potential damage to Tasmania is significant.” The modelling said there was a 2-per-cent chance of a high-risk oil spill. The probability of shoreline contact was predicted to be 68 per cent and the minimum days over which that would occur was estimated to be 54 days over a maximum length of 617 kilometres, under that high-risk scenario. The modelling showed 18 per cent of Tasmanian coastal waters were predicted to experience sea surface oil exposure at the moderate threshold in the unmitigated case of an oil spill which was predicted to last 44 days. This modelling was derived from 100 oil spill simulations.

Oil Spill From Shipwreck Threatens Solomon Islands' World Heritage Site -- A ship that ran aground in the Solomon islands Feb. 4 is now menacing a coral reef with an oil spill, The Guardian reported Tuesday. The 740 foot MV Solomon Trader was stranded on a reef near Rennell Island, home to the largest raised coral atoll in the world and a United Nations Educational, Scientific and Cultural Organization (UNESCO) World Heritage site, AFP reported. The bulk carrier has not been salvaged in the two weeks since it was stranded because of Cyclone Oma, Solomon Islands National Disaster Management Office (NDMO) director Loti Yates told Radio New Zealand early Monday morning."The boat is still on the reef and that water is coming into the engine room, which means that the hull of the ship has been breached," he said.Yates told Radio New Zealand there was "no sign of oil spillage," but The Guardian report, published in the evening New Zealand time, contradicted Yates' assurances:  “Situational reports seen by the Guardian say 'heavy fuel oil/black oil could be smelt from 800 metres' from the vessel. 'Discoloured brown water was observed in the lagoon approximately 600 metres south east.'The report said the vessel could not proceed anywhere under its own power and would have to be towed.  'Indications are that the oil leak gets worse at low tide. At low tide the oil is going directly onto the exposed reef.'"  The Guardian further reported that the prime minister of the Solomon Islands had already asked for help from Australia to clean the spill.

Indian Oil signs first annual deal for U.S. oil (Reuters) - Indian Oil Corp, the country’s top refiner, has signed its first annual deal to buy U.S. oil, paying about $1.5 billion for 60,000 barrels a day in the year to March 2020 to diversify its crude sources, its chairman said on Monday. IOC is the first Indian state refiner to buy U.S. oil under an annual contract, in a deal that will also help boost trade between New Delhi and Washington. The company has previously purchased U.S. oil from spot markets and signed a mini-term deal in August to buy 6 million barrels of U.S. oil between November and January. IOC chairman Sanjiv Singh said the annual contract will begin from April. He declined to give the name of the seller or pricing details, citing confidentiality. A trade source, who is not authorized to speak to media, said IOC signed the deal with Norwegian oil company Equinor which will supply a variety of U.S. crude grades. Equinor, which has set up an office in New Delhi to support oil marketing and trading, declined to comment. Indian Oil buys about 75 percent of its oil needs through long-term deals, mostly with OPEC nations. The term deal will help cut IOC’s dependence on OPEC crude, said Sri Paravaikkarasu, head of east of Suez oil for consultants FGE in Singapore. “Lots of geopolitical issues are going around. We expect lots of volume going away from Venezuela, west Africa and Iran, so it makes sense to have guaranteed term supplies from the U.S., where crude production is increasing,” she said. “There is a push for diversification everywhere. South Korea is giving a freight rebate for non-Middle East crude imports,” she added. India and the United States, which have developed close political and security ties, are also looking to develop bilateral trade, which stood at $126 billion in 2017 but is widely seen to be performing well below its potential. The two countries have set up seven groups of chief executives with top U.S. and Indian firms to boost bilateral trade in areas including energy. 

India advises refiner to avoid U.S. system for Venezuela oil buying - source (Reuters) - India has asked one buyer of Venezuelan oil to consider paying the South American nation’s national oil company PDVSA in a way that avoids the U.S. financial system, an Indian government source said, after Washington imposed fresh sanctions on Venezuela last month. The United States is seeking to cut off Venezuela’s oil revenue and pressure the nation’s President Nicolas Maduro to step down after it recognized opposition leader Juan Guaido as head of state. The sanctions mean that if oil buyers pay PDVSA through the U.S. banking system, the funds could be seized by U.S. authorities. There may also be problems for transactions by banks that have a heavy U.S. presence even if they aren’t in U.S. dollars and don’t go through the United States. The Indian buyer “expressed concern that there could be a problem in payments to PDVSA, so we have advised them to move away from the U.S. banking and institutional mechanism”, said the source, who did not wish to be identified due to the sensitivity of the matter. He declined to name the buyer. Most Western countries have recognized Guaido as Venezuela’s interim head of state, but Maduro retains the backing of Russia and China as well as control of state institutions including the military. The sanctions limit U.S. refiners to paying for Venezuelan oil by using escrow accounts that cannot be accessed by Maduro’s government. India still recognizes Maduro as Venezuela’s leader, which means “it does not make sense to shift to the other (escrow) payment avenue”, the source said. India’s Foreign Ministry on Thursday said the country was monitoring the evolving situation in Venezuela. 

$44B India Refinery Project At Risk - India’s poll politics and Prime Minister Narendra Modi’s ambition to win a second straight term has claimed an unlikely victim. A proposed $44 billion oil refinery on the western coast to be built with investments from Saudi Arabia. On Monday, the provincial government in Maharashtra state decided to relocate the project, a day ahead of Saudi Crown Prince Mohammed bin Salman’s visit to India. Modi’s Bharatiya Janata Party, which leads the government in the nation’s richest state, has been facing stiff opposition from ally Shiv Sena over the site of the refinery. “There is a lot of political risk associated,” The refinery’s completion “also depends on what is going to be the outcome of the next general election, who wins or if it is going to be a single party or a coalition government.” While the project is crucial for meeting India’s expanding appetite for fuels, shoring up popular support of the farmers who account for over 60 percent of the population is key for Modi’s re-election bid in polls due by May. Its ally Shiv Sena holds considerable influence in a state that elects the second-largest number of lawmakers and the ruling party hopes the deal will help contain discontentment over job creation and a slowdown in economic sentiment. Maharashtra Chief Minister Devendra Fadnavis announced relocating the project from the proposed location in Ratnagiri district just after sealing the alliance with the regional party that had joined the farmers in opposing the oil refinery in the area. The project will now be built at a different location, Fadnavis said, without specifying the new area. The mega plant, announced in 2016, hasn’t made much physical progress as locals refused to hand over land fearing damage to farming in the region famous for its Alphonso mangoes and cashew plantations. It is also classified as an ecologically-sensitive area.

Russia’s Lukoil Halts Oil Swaps In Venezuela After U.S. Sanctions - Litasco, the international trading arm of Russia’s second-biggest oil producer Lukoil, stopped its oil swaps deals with Venezuela immediately after the U.S. imposed sanctions on Venezuela’s oil industry and state oil firm PDVSA, Lukoil’s chief executive Vagit Alekperov said at an investment forum in Russia.Russia, which stands by Nicolas Maduro in the ongoing Venezuelan political crisis, has vowed to defend its interests in Venezuela—including oil interests—within the international law using “all mechanisms available to us.”Because of Moscow’s support for Maduro, the international community and market analysts are closely watching the relationship of Russian oil companies with Venezuela.  “Litasco does not work with Venezuela. Before the restrictions were imposed, Litasco had operations to deliver oil products and to sell oil. There were swap operations. Today there are none, since the sanctions were imposed,” Lukoil’s Alekperov said at the Russian Investment Forum in the Black Sea resort of Sochi.Another Russian oil producer, Gazprom Neft, however, does not see major risks for its oil business in Venezuela, the company’s chief executive officer Alexander Dyukov said at the same event.Gazprom Neft has not supplied and does not supply oil products to Venezuela needed to dilute the thick heavy Venezuelan oil, Dyukov said, noting that the Latin American country hadn’t approached Gazprom Neft for possible supply of oil products for diluents.   Under the new wide-ranging U.S. sanctions, Venezuela will not be able to import U.S. naphtha which it has typically used to dilute its heavy crude grades. Analysts expect that a shortage of diluents could accelerate beginning this month the already steadily declining Venezuelan oil production and exports.  Venezuela’s crude oil production plunged by another 59,000 bpd from December 2018 to stand at just 1.106 million bpd in January 2019, OPEC’s secondary sources figures showed in the cartel’s closely watched Monthly Oil Market Report (MOMR) this week.

Saudi Arabia's oil deal with Russia is now 'more fragile than ever,' analyst says - A rolling oil pact between Russia and Saudi Arabia which seeks to support prices by reducing output looks to be on shaky ground with only the Arab nation appearing to fulfil its promises.  Late last year, OPEC producing countries, and non-OPEC producers, led by Russia, agreed to cut supply by 1.2 million barrels per day(bpd), an arrangement known as OPEC+. Saudi Arabia agreed to account for the bulk of OPEC nation cuts and has confirmed it will drop its crude oil production by a further 400,000 barrels per day to 9.8 million b/d in March. If achieved it would mean that since the December, Saudi Arabia has become responsible for 70 percent of the total OPEC+ target.  In turn, Russia was set to account for the greater share of non-OPEC cuts, but from October to the beginning of February had only decreased output by 47,000 barrels per day. The slow pace to cuts from Russian oil producers drew criticism from Saudi Arabia's Energy Minister Khalid al-Falih, who told CNBC in January that Moscow had moved "slower than I'd like." That barb led to a response from Russian Energy Minister Alexander Novak who said at the beginning of February that Russia was "completely fulfilling its obligations in line with earlier announced plans to gradually cut production by May this year." Torbjorn Soltvedt, principal MENA politics analyst at Verisk Maplecroft, said in a note Tuesday that any end to Russian-Saudi coordination would likely add significant downward pressure on prices. "Although our base case is still that Riyadh and Moscow find a compromise to extend the agreement, the pact is now looking more fragile than ever," said Soltvedt.

Russian, Saudi leaders say ready to continue hydrocarbons cooperation- Kremlin— Russian President Vladimir Putin and Saudi King Salman bin Abdulaziz confirmed they are ready to continue cooperation on hydrocarbons during a phone call Tuesday, the Kremlin said in a statement. "When exchanging views on the situation on global hydrocarbons markets, Russia and Saudi Arabia confirmed they are ready to continue coordination," the Kremlin statement said. Russia and Saudi Arabia have ramped up energy cooperation in recent years, working together to establish the OPEC/non-OPEC production agreement as well as bilateral agreements on joint energy investment. Officials said previously that they are in talks over cooperation on LNG, crude, oil services and petrochemical projects. Putin is expected to visit Saudi Arabia in 2019.

Saudi Arabia resumes familiar role as swing producer: Kemp (Reuters) - Saudi Arabia has resumed its traditional role as the swing producer, sharply reducing its own output to tighten the oil market and push prices higher. The de facto OPEC leader has demonstrated, once again, that it can always tighten the physical market, boost prices and push the calendar spread into backwardation - if it is prepared to cut its own production enough. The familiar problem is that protecting prices comes at the expense of market share: the more the kingdom cuts its own production and tightens the market, the more it encourages increased output from other sources. In this case, rising prices threaten to extend the oil drilling and production boom in the United States, which would ultimately force Saudi Arabia to make even deeper cuts or abandon its price-defence strategy. Saudi Arabia has never been able to escape from this dilemma and the country’s oil policy has cycled between a priority on price defence and volume defence (tmsnrt.rs/2TYmwu1). The kingdom has always struggled to craft an exit strategy from periods of output restraint. Policymakers pursue production curbs for too long, tighten the market too much and drive prices to an unsustainable level. The result is usually a slowdown in consumption growth and an acceleration of non-Saudi sources of production that pushes the market back towards surplus and necessitates a new round of output cuts. The kingdom made the same mistake in 2008, 2014 and 2018, failing to raise production early enough, creating the conditions for unsustainable price inflation and sowing the seeds of the subsequent downturns. Like any oil exporter Saudi Arabia will always benefit from an increase in prices in the short term, but it can then prove difficult to put a lid on the market. Saudi Arabia’s informal price targets tend to ratchet up as realised prices rise, with its targets tending to be somewhat elastic. In the first nine months of 2018 Saudi Arabia allowed the market to tighten too much, pushing prices above $80. That proved unsustainable and triggered a slowdown in consumption growth and a surge in U.S. shale. The kingdom’s market management was not helped by a mercurial White House, which threatened to push Iran’s oil exports to zero and then granted generous sanctions waivers. The question is whether the Saudis will make the same mistake again in 2019. Experience suggests it will. 

New Brazil Production Adds to OPEC Headache  | Rigzone -- When the giant P-67 floating oil production vessel lit its flare tower earlier this month, it marked the start of a Brazilian supply boom that’s poised to challenge OPEC’s efforts to balance the global market. The mammoth facility -- long and wide enough to fit an American football field -- is the first of four similar platforms to begin pumping crude this year, lifting Brazilian output by roughly 365,000 barrels a day, its largest annual increase in at least 20 years, International Energy Agency estimates show. A second platform, P-76, has also started production, according to a regulatory filing Wednesday. The Brazilian surge, combined with more oil from shale fields from Texas to North Dakota, is set to create a headache for the Organization of the Petroleum Exporting Countries. In the worst-case scenario, it may force Saudi Arabia and Russia to roll their production cuts over into the second half of the year, testing the strength of the Riyadh-Moscow oil relationship. “Brazil is on the verge of major supply growth,” said Francisco Blanch, head of commodities research at Bank of America Corp. in New York. “U.S. shale is not the only driver of increased volumes.” Brazil has disappointed in the past, with output growth coming far below expectations because of maintenance issues, declines in mature fields, and delays installing new vessels for oil production and storage. The Tartaruga Verde field, which should have come online back in late 2017, didn’t start until June 2018. The P-67 itself was delayed several months. Still, oil traders and executives believe this year Brazil will make good on its promises. The P-67 vessel, about 260 kilometers (162 miles) from Rio de Janeiro, will pump about 150,000 barrels a day in the next few months, when it reaches its plateau. The second platform to start this year, P-76, can also process up to 150,000 barrels daily. The facilities are scheduled to be followed by P-68 and P-77 in 2019, and between 2020 and 2023, Petrobras aims to install another ten big vessels. 

Despite sanctions, Iran’s oil exports rise in early 2019: sources (Reuters) - Iran’s exports of crude oil were higher than expected in January and are at least holding steady this month, according to tanker data and industry sources, as some customers have increased purchases due to waivers from U.S. sanctions. Shipments are averaging 1.25 million barrels per day (bpd) in February, Refinitiv Eikon data showed and a source at a company that tracks Iranian exports said. They were between 1.1 and 1.3 million bpd in January, higher than first thought. A high rate of Iranian shipments would weigh on oil prices and work against a global push to cut supply in 2019 led by the Organization of the Petroleum Exporting Countries. OPEC member Iran negotiated an exemption from the production-cutting pact. “We think people are taking more ahead of the deadline,” said the industry source who tracks Iranian exports, referring to the scheduled end of U.S. sanctions waivers in May. Increased exports from the Islamic Republic might prompt renewed U.S. efforts to clamp down on flows. However, this would run the risk of driving up oil prices as Washington is also seeking to curtail exports from another foe, Venezuela. Iran’s exports have become more opaque since U.S. sanctions on the country’s oil sector took effect in November. While most agree they have dropped steeply, views on flows can differ by as much as several hundred thousand barrels per day - enough to affect prices. The February shipments are up from January’s 1.1 million bpd, according to Refinitiv. The industry source estimated January exports at 1.3 million bpd, close to February’s level. In any case, the January figures are higher than initial estimates. Some had predicted Iranian crude exports would stay below 1 million bpd last month, a similar rate to that in December. A source at a second company that tracks Iranian exports said shipments in the first 10 days of February were above 1.1 million bpd and on a rising trend - higher than the source expected. Washington gave waivers to eight buyers - including China, India, Japan and South Korea, which were all purchasing Iranian crude in February, according to Refinitiv.

US State Department discusses Iran crude oil, supply diversification with Seoul: source — A top US State Department official has discussed issues including Iranian crude oil imports with the South Korean government as well as urging it to diversify the country's crude supply further during a visit to Seoul earlier this week, a diplomatic source told S&P Global Platts Thursday. Francis Fannon, assistant secretary at the State Department's Bureau for Energy Resources, is on a visit to South Korea and Japan at a time when the East Asian oil consumers are calling for their 180-day sanctions waiver on Iranian oil imports to be extended beyond May.In a meeting with South Korea's Deputy Foreign Minister Yun Kang-hyeon Wednesday, Fannon and his counterpart "talked about the Iranian crude issue and South Korea's efforts toward diversification of sources of crude imports," the diplomatic source in Seoul said. But the source declined to elaborate on what exactly had been discussed on Iranian crude. Fannon also has discussions on broad cooperation in the energy sector with the South Korean government, as well as with unidentified local energy companies on topics including on energy innovation, investment and renewable energy, the source said. SK Innovation, which has been South Korea's biggest buyer of Iranian crude, said Thursday it has been making efforts to diversify its crude sources. "We have increased crude purchases from the US and other countries as alternatives to Iranian grades because it is uncertain whether the 180-day waiver will be extended," an official at SK Innovation said. SK Innovation also received about 2 million barrels of Iran's South Pars condensate in January, which marked South Korea's first imports since September last year when the Northeast Asian nation fully suspended crude imports from Iran due to the re-imposition of US sanctions. Fannon is due to head for Tokyo Thursday, according to the diplomatic source. The State Department has said the assistant secretary's two-country tour will focus on energy security, regional cooperation on energy as well as highlighting the importance of energy diversification in the Indo-Pacific region. "This visit to the Indo-Pacific region seems to be aimed at enhancing the regional security by such measures as expanding crude imports from the US, as well as calling for accelerating supply diversification,"   "It may lead to Iranian crude imports in the region being reduced as a result,"

Egypt Is Shaping Up To Become A Real Energy Hub - Egypt’s oil and gas future looks very bright. The large scale concessions awarded during the EGYPS2019 conference in Cairo, 11-13 February, shows the appetite of IOCs, such as Shell, BP and ENI in this emerging energy hotspot. After years of a major slump, partly due to continuing payment and security issues, the Pharaohs are again back in the top league. Continuing concerns about security in Egypt’s Western Desert or the Sinai no longer seem to be a breaking point for investors. At the second day of EGYPS2019 the announcement of five onshore and offshore licenses by EGPC, as presented by Egypt’s minister of energy Tarek El Molla, has created a very bright future for the North African oil and gas producer. The success story of the offshore deepwater gas field Zohr, operated by Italian oil major ENI, could be supported further by positive results from current exploration efforts in the offshore Noor field. If expectations are met, a new gas hub could be in the making, combining Cypriot and Israeli production with Egypt’s existing LNG infrastructure. The long awaited results of the Egyptian natural gas holding company EGAS were announced on the 12^th of February. Dutch oil major Shell was awarded 3 concessions, all crude blocks in sector 7 West Fayoum, sector 9 South East of Horus, and sector 10 South AbuSnan. Italian oil major ENI, currently in the news with regards to its major offshore gas projects Zohr and Noor, was awarded sector 11 East of Siwa, while sector 2 went to the General Petroleum Company, sector 4 to Neptune Energy, and sector 5 North Beni Suef to Merlon International.With regards to the Egyptian gas prospects, American oil giant ExxonMobil, which hasn’t been very active in Egypt for years, reentered the North African country by winning the north of Amreya Marine Company concession area. The North Sidi Gaber, as well as North El Fanar areas, went to Shell and Petronas. The North West Sherbin concession has been awarded to British oil major BP and Eni.

How China Came to Dominate South Sudan’s Oil - Few countries would look at South Sudan as an ideal location for a business venture, but China has built much of its reputation as a world power on an economic philosophy of risk-taking. South Sudan also offers a lucrative opportunity for entrepreneurs intrepid enough to take it: the East African country boasts 3.5 billion barrels’ worth of crude oil in proven reserves, and petroleum geologists will likely find more in the two-thirds of South Sudan that they have yet to explore. Despite the challenges of working in a war zone, China dominates what analysts have assessed as the third largest oil reserves in Africa.“Even before South Sudan became independent in 2011, China had a monopoly on the oil sector in Sudan,” Dr. David H. Shinn, a former American ambassador to Burkina Faso and Ethiopia and an adjunct professor of international affairs at the George Washington University, told The Diplomat. “This monopoly continued in independent South Sudan. While oil companies from other countries considered entering South Sudan, a combination of corruption and civil conflict kept them out.”China first decided to enter the petroleum industry in Sudan in 1995, 16 years before South Sudan gained independence and right in the middle of the Second Sudanese Civil War. The United States’ economic sanctions on Sudan, which faced accusations of committing war crimes at home and supporting terrorism abroad, did little to deter Chinese companies eager to take advantage of Sudanese oil reserves. Much of China’s success in Africa comes from the world power’s tendency to avoid criticizing allies who ignore human rights and international law. This approach to foreign policy underpins the Belt and Road Initiative, a project designed to expand China’s sphere of influence in the Global South. The South Sudan–China Friendship Association, whose board includes former South Sudanese foreign and interior ministers, has promoted the ambitious Chinese endeavor on Twitter.

Saudi Aramco agrees tie-up for $10 billion project in China - State-owned Saudi Aramco has signed an agreement to form a joint venture with Chinese conglomerate Norinco to develop a refining and petrochemical complex in Panjin city, saying the project is worth more than $10 billion. Aramco and Norinco, along with Panjin Sincen, will form a new company called Huajin Aramco Petrochemical Co as part of a project that will include a 300,000 barrels per day (bpd) refinery with a 1.5 million metric tonnes per annum (mmtpa) ethylene cracker, Aramco said on Friday. The deal was signed during a visit by Saudi Crown Prince Mohammed bin Salman to Beijing as part of an Asia tour. Aramco will hold 35 percent of the new company, with Norinco and Panjin Sincen owning 36 percent and 29 percent respectively, the statement said. Aramco will supply up to 70 percent of the crude feedstock for the complex, which is expected to start operations in 2024. The value of the project means it is the largest Sino-Foreign joint-venture, Aramco said. The agreement "is a clear demonstration of Saudi Aramco's strategy to move from beyond a buyer-seller relationship, to one where we can make significant investments to contribute to China's economic growth and development," Aramco CEO Amin Nasser said in the statement. It said there were also plans to establish a fuels retail business.

China Oil Find Could Trigger Shale Drilling Surge -- An oil discovery in a remote corner of northwestern China could trigger a surge in shale drilling, benefiting service companies and providing a needed output boost for the world’s biggest importer, according to analysts at Morgan Stanley. PetroChina Co. has achieved daily output of 100 tons of oil (733 barrels) at a test well in the Jimsar field in Xinjiang province, suggesting that shale oil has strong commercial potential in the nation for the first time, analysts including Andy Meng said in a Feb. 18 note. China has had some success in producing shale gas, but advancing on shale oil would be a particular help to the world’s largest crude importer, which has seen output decline since 2015 even as the country’s leadership extols the virtues of energy self-sufficiency. Still, it’s unlikely China will be able to scale the heights of U.S. shale, which accounts for about half of American production, Morgan Stanley said. The bank estimates shale oil output in China could reach about 100,000 to 200,000 barrels a day by 2025 -- still a sliver of total output. By comparison, the U.S. produced 8.3 million barrels a day in February, according to Rystad Energy. Nevertheless, excitement over shale could spur more spending and boost revenue for the oilfield service companies that will be called on to handle the higher workloads, Morgan Stanley said. Yantai Jereh Oilfield Services Group Co., which is up 31 percent this year, and SPT Energy Group Inc., which has risen 18 percent, are among the potential beneficiaries, it said. “We believe the Jimsar shale oil discovery is likely to trigger China’s shale oil revolution,” “We expect a further capex rise in 2019, which could make onshore oilfield services names the key beneficiaries.” While Jimsar is China’s first shale oil find, the country has been drilling shale gas for years. But difficult geology and restrictions that keep drilling in the hands of the state-owned giants have slowed development. While the U.S. Energy Information Administration estimates that China has nearly twice as much underground shale gas as the U.S., the U.S. produced about 639 billion cubic meters of the fuel in 2017, compared to about 9 billion in China.

Hedge funds accelerate oil buying: Kemp - (Reuters) - Investors bought crude oil futures and options at the fastest rate for almost six months in the week to Feb. 12. Hedge fund managers are becoming steadily more bullish on the outlook for oil prices as Saudi Arabia makes deep cuts in production, sanctions hit Venezuela and Iran, and the U.S. and China inch towards a trade deal. Hedge funds and other money managers were net buyers of 32 million barrels of Brent crude futures and options in the week to Feb. 22, according to position records published by ICE Futures Europe. Portfolio managers have been net buyers of Brent in nine out of the last 10 weeks, boosting their net position by a total of 130 million barrels since Dec. 4. Last week saw the largest purchases so far. Earlier in the current cycle most position-building came from closing previous bearish short positions, but the balance shifted in the most recent week with most accumulation from initiating new bullish long positions. Fund managers opened 29 million barrels of new long positions while cutting short positions by 3 million barrels in the week to Feb. 12. Funds now hold a net long position of 266 million barrels in Brent, up from 136 million at the start of December, though still far below the almost 500-million-barrel position at the end of September. Similar position-building is evident in European gasoil, where funds were net buyers of 11 million barrels of futures and options in the week to Feb. 12. Portfolio managers have been net buyers of gasoil for six consecutive weeks, with total purchases amounting to 38 million barrels. Like Brent, last week’s purchases of gasoil contracts were the largest so far, and the balance has shifted from short covering to initiating new long positions.

Oil Trades Near Highest Level Since November (Bloomberg) -- Oil traded near the highest level since November on optimism the U.S. and China can reach a trade deal and as an outage at the world’s largest offshore field in Saudi Arabia signaled tightening supply. Futures in New York rose as much as 1 percent after advancing 5.4 percent last week. President Donald Trump said talks with China were “very productive” as his team returned from Beijing and readied for another round of discussions in Washington this week, raising hopes that a trade war between the world’s largest economies will ease. The Saudis, meanwhile, were said to be repairing a damaged power cable that’s curbed output at the Safaniyah field. Crude’s surged about 24 percent this year as Saudi Arabia and Russia pledged to expand their output cuts, easing concerns that record U.S. production would result in a global glut. More supply is being threatened because of American sanctions against Venezuela and Iran. Reports that the U.S. and China had reached consensus in principle on the main topics in their negotiations further helped boost investors’ risk appetite. “Markets are astonished by the amount of production cuts and the further reductions Saudi plans to make,” said Howie Lee, a Singapore-based economist at Oversea-Chinese Banking Corp. “Even though there was no conclusive trade deal from Beijing, the already bullish oil market took no news as good news.” West Texas Intermediate for March delivery rose as much as 54 cents to $56.13 a barrel on the New York Mercantile Exchange and traded 49 cents higher at $56.08 at 7:34 a.m. in London. Transactions will be booked Tuesday for settlement because of the U.S. President’s Day holiday. Prices last week posted their biggest gain in more than a month. Brent for April settlement was at $66.65 a barrel, up 40 cents, on the London-based ICE Futures Europe exchange. It gained 6.7 percent last week. The global benchmark crude’s premium over WTI for the same month narrowed to $10.19, after widening to the biggest spread in more than three months on Friday.

Brent steadies, set for biggest first-quarter rise since 2011 (Reuters) - Brent crude oil steadied on Monday, on track for its strongest first quarter in eight years, thanks to a growing belief among investors that OPEC's supply cuts will prevent a build-up in unused fuel, though concern over China's economy offset gains. Brent futures were last down 6 cents at $66.19 a barrel by 1239 GMT, having touched a 2019 high of $66.83, while U.S. futures were up 37 cents at $55.96 a barrel. Oil has risen nearly 25 percent so far this year and is on course for its strongest first-quarter performance since 2011, thanks largely to a commitment by the Organization of the Petroleum Exporting Countries and allies to cut output. "Our numbers ... do tell us that we are looking at the tightest H1 crude balance in many years and, as such, a certain degree of price support does simply make sense for the time being," consultancy JBC Energy said in a note. Refiners around the world are also having to pay more to secure supplies of the medium, or heavy, sour crudes produced by Iran and Venezuela, both of which are under U.S. sanctions. The broader financial markets eased a little after data showing a drop in Chinese car sales in January raised concerns about the world's second-largest economy. Some of this weakness rubbed off on the oil market, but analysts said the overall trend in crude prices remained convincingly upwards for now.

Brent eases from 2019 highs as markets await trade talks outcome - Oil stayed within sight of its 2019 high of almost $67 a barrel on Tuesday, supported by OPEC-led supply cuts although concern about slowing economic growth that would curb demand weighed. The supply curbs led by the Organization of the Petroleum Exporting Countries have helped crude prices to rise more than 20 percent this year. U.S. sanctions against OPEC members Iran and Venezuela have also tightened the market.Brent crude slipped 31 cents to $66.19 a barrel, not far from the 2019 high of $66.83 reached on Monday.U.S. crude was up 38 cents at $55.97."The market is slowly regaining its bullish footing, subject to the perception of economic risks tied to U.S.-China trade talks," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.Demand-side worries remain the main drag on prices. HSBC Holdings warned on Tuesday that an economic slowdown in China and Britain would throw up further hurdles this year.More talks between the United States and China to resolve their trade dispute will take place in Washington on Tuesday. Traders said they were cautious on taking large new positions before the outcome of the talks."If they falter, we run the risk of sell-offs like we had in December," Tchilinguirian said. OPEC last week lowered its forecast for growth in world oil demand in 2019 to 1.24 million barrels per day and some analysts believe it could be weaker still.

Brent dips as demand worries weigh, U.S. oil prices hit 2019 high - (Reuters) - Oil prices were mixed on Tuesday as concerns about global crude oil demand and uncertainty over the latest round of U.S.-China trade talks countered investor optimism around tightening supplies. Brent crude slipped 5 cents to settle at $66.45 a barrel, hovering below its 2019 high of $66.83 reached on Monday. U.S. crude was up 50 cents to $56.09 a barrel, its highest since November 2018. Washington’s sanctions on oil out of Venezuela, a top supplier of sour crude to the United States, has helped support U.S. futures prices, In the bigger picture, “I think the market is looking for an excuse to follow through on the breakout, but there are still a lot of questions surrounding the U.S.-China trade deal” and the global economy, he said. A fresh round of talks aimed at resolving the trade dispute between the United States and China began on Tuesday in Washington, with higher-level discussions planned for later in the week. Traders said they were cautious about taking large new positions before the outcome of the talks. In a red flag about the economic outlook, Europe’s biggest bank HSBC warned it may delay some investments this year as it missed 2018 profit forecasts due to slowing growth in China and Britain. The Organization of the Petroleum Exporting Countries (OPEC) last week lowered its forecast for growth in world oil demand in 2019 to 1.24 million barrels per day. Some analysts believe it could be weaker. To stop a build-up of inventories that could weigh on prices, OPEC+, which includes members of the producer group and allies like Russia, began a new supply cut of 1.2 million bpd on Jan. 1. The cuts have helped crude rise more than 20 percent. Russian President Vladimir Putin and King Salman bin Abdulaziz Al Saud of Saudi Arabia, OPEC’s de facto leader, said they supported continued coordination on the global energy markets, the Kremlin said on Tuesday. Investors said the statement eased doubts that Russia would stick to the pact.

WTI Settles Above $56 - The March WTI contract price gained 50 cents Tuesday, settling at $56.09 per barrel. The WTI traded within a range from $55.29 to $56.33. Brent crude oil for April delivery ended the day at $66.45 per barrel. Tuesday’s settlement reflects a 20-cent gain for the Brent. Another potential factor of note for the oil market could be an attempt by Saudi Arabia to open up another front in its quest to curb production, Krishnan said. “While the Saudis have achieved much by targeting their production cuts on the heavier oils they ship to the United States, reports suggest they are also planning to reduce light crude oil supplies to Asian customers for cargoes loading in March, in an attempt to prevent Asian stockpiles of such light crude from building,” Krishnan explained. “In the past, the Saudis did not limit providing their Asian customers supplies of Arab Extra Light crude above contractual volumes.” The new twist in the Saudi game plan could backfire, added Krishnan. “This Saudi move to try and cover all basis with their production cuts could eat into their prized market share in Asia if they’re not careful, especially with U.S. producers just waiting to encroach on that turf,” Krishnan said. Moreover, Krishnan observed that a recent milestone in India is helping to elevate the United States’ oil market profile. “Boosting the significance of U.S. crude production, Indian Oil Corp. announced this week that is has signed a $1.5 billion deal to buy oil from the United States in an effort to reduce dependence on traditional suppliers,” said Krishnan. “This was the first term contract finalized by an Indian oil company for import of U.S.-origin crude grades, and the announcement came interestingly a day before Saudi Crown Prince Mohamad bin Salman landed in India for a state visit.”

Oil near 2019 highs amid OPEC cuts, US sanctions - Oil traded roughly flat on Wednesday after the U.S. government said shale output would rise to a record next month, denting a rally that sent prices to their highest this year. Brent futures were at $66.34 a barrel, down 11 cents on the day around 10:10 a.m. ET (1510 GMT), still within sight of Monday's high for the year of $66.83. U.S. futures were at $56.08 a barrel, down 1 cent, having touched a 2019 peak of $56.39 earlier. "Brent is trading in a narrow corridor at around $66.5 per barrel, while WTI is at around $56," Commerzbank analysts said in a note. "This still leaves them within spitting distance of the three-month high they achieved at the start of the week ... It seems that the sharp rise in oil production in the U.S. is having a slowing effect after all." The U.S. Energy Information Administration said in a monthly report on Tuesday shale production alone will hit a record 8.4 million barrels per day next month, suggesting little chance of a near-term slowdown in overall U.S. crude output. Saudi Energy Minister Khalid al-Falih said on Wednesday he hoped the oil market would be balanced by April and that there would be no gap in supplies due to U.S. sanctions on OPEC members Iran and Venezuela. The restrictions on the energy sectors of Iran and Venezuela by the United States have added to the drop in availability of the kind of crude oil that yields more valuable middle distillates, rather than cheaper fuels, such as gasoline. Despite the sanctions, Iran's crude exports were higher than expected in January, averaging around 1.25 million bpd, according to Refinitiv ship tracking data. Many analysts had expected Iran oil exports to drop below 1 million bpd after the imposition of U.S. sanctions last November, although it was much below the peak 2.5 million bpd reached mid-2018. Barclays said U.S. sanctions meant "although there is no lack of resources, there is an increasing lack of access to them".

Oil Prices Pull Back Amid Surging US Supply  - Oil prices pulled back from recent highs on Wednesday as surging U.S. output and concerns over slowing global growth overshadowed investor optimism over OPEC-led supply cuts as well as the U.S. sanctions against Iran and Venezuela. Global benchmark Brent crude dropped nearly half a percent to $66.14 per barrel, not far off their 2019 high of 66.83 dollars per barrel reached on Monday.  U.S. West Texas Intermediate (WTI) crude oil futures were down 0.3 percent at $56.30 per barrel after hitting 2019 highs of 56.39 earlier in the day.   U.S. crude production jumped by more than 2 million bpd in 2018 to a record 11.9 million bpd amid booming shale oil production, the Energy Information Administration said on Tuesday in a report.  Output is expected to keep rising while the global economy witnesses a synchronized slowdown in growth, according to BNP Paribas.

Oil Markets Poised For A Breakout - OPEC+ cuts, supply disruptions and an easing of trade tensions between the U.S. and China has boosted crude oil to a three-month high.  Some analysts see higher prices ahead, as the OPEC+ cuts create a tighter backdrop. Any unexpected outage could send prices much higher, while a breakthrough in the trade war could remove one of the largest downside risks. “Brent and WTI are both now seriously testing a major resistance zone, around $65 and $55, respectively, the break of which could be the catalyst for another rally,” Craig Erlam, senior market analyst at brokerage OANDA, wrote in a morning market briefing.. Saudi Arabia is going above and beyond in its production cuts, but it’s unclear how long Riyadh will be willing to shoulder the burden alone. “Saudi Arabia’s production cuts by more than the required level also serve to offset the lack of compliance shown by countries like Iraq. It is doubtful whether Saudi Arabia will be willing to do so long-term, however. After all, the Saudis are losing market shares to US shale oil producers,” Commerzbank wrote in a note.  A 495-megawatt energy storage system combined with a solar farm is set to be installed in Texas. Ironically, the project is intended to support oil operations in the Permian, according to Bloomberg. The energy storage system will be the world’s largest.   According to BP’s latest energy outlook, renewable energy and natural gas will together claim 85 percent of the world’s energy supply growth through 2040. The new analysis “brings into sharp focus just how fast the world’s energy systems are changing, and how the dual challenge of more energy with fewer emissions is framing the future,” BP CEO Bob Dudley said.

Oil near 2019 highs amid OPEC cuts, but economic slowdown applies brakes - Oil prices hovered around 2019 highs on Thursday, bolstered by OPEC-led supply cuts and U.S. sanctions on Venezuela and Iran, but were capped by slowing growth in the global economy.U.S. West Texas Intermediate crude oil futures were at $56.77 a barrel around 10:55 a.m. ET (1555 GMT), 39 cents below their last settlement. WTI hit a fresh 2019 high of $57.61 earlier in the day.Brent crude futures eased by 26 cents to $66.82 after touching a 2019 peak on Wednesday at $67.38.Oil prices have been driven up this year by supply cuts led by OPEC.OPEC and its de facto leader Saudi Arabia agreed late last year, along with producer allies such as Russia, to cut output by 1.2 million barrels per day to prevent a supply overhang from growing.OPEC member Nigeria signaled on Wednesday that it would limit output after its production climbed in January."Willingness of the OPEC+ group to adhere with the output cut agreement will remain supportive of oil prices in the run-up to their scheduled April meeting," said Abhishek Kumar, senior energy analyst at Interfax Energy in London."Sharply declining oil output from Iran and Venezuela will further prompt bullish sentiment in the market."U.S. sanctions have hit Iranian and Venezuelan crude exports while unrest has curbed Libyan output. However, analysts said that a global economic slowdown — signs of which emerged late last year — was preventing prices from surging beyond highs reached this week.

Oil traders bet on Saudi Arabia and White House lifting prices: Kemp (Reuters) - Oil traders are becoming very bullish on the outlook for prices, betting that Saudi Arabia will do whatever it takes to tighten the market even if consumption growth slows, helped by U.S. sanctions on Iran and Venezuela. Brent's calendar spread for the second half of 2019 has surged into a backwardation of 90 cents per barrel, the strongest for more than three months and a huge swing from a 70 cent contango near the end of last year. For many traders, spreads rather than spot prices are a better indicator of expected balance between production and consumption ("Price relations between July and September Wheat Futures at Chicago", Working, 1933). Backwardation implies many traders expect the market to be undersupplied in the second half of the year with a significant drawdown in global inventories of crude and fuels. The current swing to backwardation is similar to previous shifts in market structure when OPEC and its allies reduced production in 2017 and the United States re-imposed sanctions on Iran in 2018. Both of those shifts were accelerated and amplified by significant position-building in crude oil by hedge fund managers, and something similar is likely in 2019. Hedge funds and other money managers have been net buyers of Brent crude futures and options in nine of the last 10 weeks with net purchases equivalent to 130 million barrels (https://tmsnrt.rs/2TZZN0D ). Fund managers have almost doubled their bullish position in Brent to 266 million barrels, up from just 136 million barrels in early December, according to position records published by ICE Futures Europe. Position-building has been very similar to previous episodes, but total positions are still well below previous peaks of 500-600 million barrels, suggesting it could still have some way to run. Like other financial traders, hedge funds and other money managers tend to concentrate their positions in nearby futures contracts where there is more liquidity. Hedge fund buying is therefore lifting the price of nearby contracts and accelerating the shift into backwardation (just as fund selling depressed nearby contracts and accelerated the shift to contango in the fourth quarter).

Oil ends lower as U.S. crude supplies show 5th straight weekly rise --Crude-oil futures finished lower Thursday after a U.S. government report revealed that domestic supplies climbed for a fifth straight week as production jumped to a record level, but overall signs of declines in world-wide output capped price losses for the session.Oil prices for both benchmarks on Wednesday had marked their highest settlements since November on signs of tighter global crude inventories.April West Texas Intermediate crude on its first full day as a front-month contract, lost 20 cents, or 0.4%, to settle at $56.96 a barrel. March WTI had climbed for six consecutive sessions on the New York Mercantile Exchange to settle at a roughly three-month high of $56.92 on Wednesday, the day the contract expired. Global benchmark April Brent was little changed, inching lower by a penny to end at $67.07 a barrel on ICE Futures Europe. The Energy Information Administration on Thursday reported that domestic crude supplies rose a fifth straight week, up 3.7 million barrels for the week ended Feb. 15. That was a bit more than the 3.5 million-barrel rise expected by analysts polled by S&P Global Platts. Supply data were released a day later than usual because of Monday’s Presidents Day holiday. “Rebounding imports, both into the Midwest and the U.S. Gulf, have combined with ongoing subdued refinery runs to yield a fifth consecutive build to crude stocks,”   U.S. oil production also continues to hit record levels, with the EIA’s report showing total domestic output climbing by 100,000 barrels to a record of 12 million barrels a day last week. A separate monthly EIA report issued Tuesday showed expectations for an 84,000 barrel-a-day rise in March to 8.398 million barrels a day for oil production from seven major U.S. shale plays. “U.S. production finally hit the 12 [million barrel per day] mark and we expect that number to increase in the weeks and months to come as new pipelines in the Permian [Basin in the southwestern U.S.] are coming online,” Petroleum products, meanwhile, saw lower U.S. inventories. Gasoline and distillate stockpiles each edged down by 1.5 million barrels last week, according to the EIA. The S&P Global Platts survey had shown expectations for supply declines of 1.1 million barrels for gasoline and 1.4 million for distillates. On Nymex, March gasoline rose 1.6 cents, or 1%, to $1.614 a gallon, while March heating oil added 1.8 cents, or 0.9%, to $2.036 a gallon. The EIA also released data on natural gas Thursday, with supplies down 177 billion cubic feet for the week ended Feb. 15. That was larger the average forecast for a decline of 165 billion, according to a survey of analysts by S&P Global Platts. March natural gas settled at $2.697 per million British thermal units, up 6.1 cents, or 2.3%.

Oil prices hit fresh 2019 highs on trade hopes - Oil prices rose to their highest levels this year on Friday, supported by OPEC's ongoing supply cuts and hopes that Washington and Beijing may soon end their trade dispute. International Brent crude futures were up 49 cents at $67.56 per barrel around 10:10 a.m. ET (1510 GMT), striking a fresh high of $67.73 going back to mid-November. U.S. West Texas Intermediate crude oil futures rose 75 cents, or 1.3 percent, to $57.71 per barrel, also setting a fresh 2019 high at $57.81. Traders said prices were lifted from earlier drops by hopes that Washington and Beijing could resolve their trade disputes, which have dented global economic growth, before a March 1 deadline, during negotiations this week. Prices have also been supported by supply cuts led by OPEC. OPEC and some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million bpd to prevent a large supply overhang from growing. Goldman Sachs said in a note that it expects OPEC output to average 31.1 million bpd in 2019, down from 31.9 million bpd. At least in part offsetting that is surging U.S. crude oil production, which reached 12 million bpd for the first time last week, the Energy Information Administration said on Thursday. That means U.S. crude output has soared by almost 2.5 million bpd since the start of 2018, and by a whopping 5 million bpd since 2013. America is the only country to ever reach 12 million bpd of production.

Oil Prices Up On Trade Optimism - Oil is set to close out another week of gains, this time juiced by optimism over the U.S.-China trade negotiations. But the gains are also coming because OPEC+ is taking supply off of the market. “Saudi Arabia is delivering on the cuts it pledged, and I have no doubt they’ll deliver on pledges to do more,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. “It was a production boost from OPEC and an equity sell-off that pushed oil down during the fourth quarter, and now as both of those elements are in reverse prices are going up.” U.S. shale production is expected to grow by 84,000 bpd in March, according to the EIA, marking another month of strong increases. The gains will be led by the Permian (+43,000 bpd), followed by smaller contributions from the Niobrara (+16,000 bpd), the Bakken (+13,000 bpd), the Eagle Ford (+9,000 bpd) and Appalachia (+3,000 bpd). The number of drilled but uncompleted wells (DUCs) rose to 8,798 in January, a 2.4 percent increase from December. Meanwhile, weekly EIA data suggest that total U.S. production surpassed 12 million barrels per day last week, another record high. . Press reports suggest that the U.S. and China are making progress on trade negotiations, and President Trump has indicated he would be willing to let the talks continue past the March 1 deadline if progress was significant. Trump is expected to meet with China’s vice premier and top trade negotiator on Friday. There are still thorny issues that will be difficult to solve, but markets are welcoming the potential breakthrough in trade talks.  U.S. upstream M&A activity is set to slow this year, after dipping in 2018 compared to the year before. Last year, the number of deals declined to 93, compared to 125 in 2017, according to PwC. Deals in the U.S. shale industry fell from 106 in 2017 to 85 in 2018, although the value of the deals ballooned from $67 billion to $90 billion. Despite the expected slowdown, consolidation will continue, with smaller players selling out to larger ones as the industry pushes for scale. “The rationale for consolidation has never been higher,” Wells Fargo Securities managing director David Humphreys told Argus Media. “Scale is the key.”

Oil ends at a nearly 3 1/2-month high - U.S. crude-oil futures on Friday posted their highest close in more than three months, as U.S. equities and other assets found traction against the backdrop of upbeat U.S.-China trade talks.Oil finished lower Thursday after a U.S. government report revealed that domestic supplies climbed for a fifth straight week as production jumped to a record level, but ongoing evidence of declines in world-wide output capped price losses for the session.April West Texas Intermediate crude CLJ9, +0.19% rose 30 cents, or 0.5%, to end at $57.26 a barrel, which would represent the most-active contract’s loftiest close since Nov. 12, according to FactSet data. For the week, WTI rose roughly 3%.Global benchmark April Brent LCOJ9, -0.24% added 5 cents, or less than 0.1%, to settle at $67.12 a barrel on ICE Futures Europe, also representing its highest finish since Nov. 12. The international benchmark gained 1.3% for the week, its second weekly gain in a row.U.S. and Chinese trade representatives reportedly met for more than nine hours Thursday. Trump met with China’s top trade negotiator, Vice Premier Liu He on Friday. Still, deep divisions remain over fundamental issues, with U.S. officials pressing China to halt what Washington calls illicit technology transfers and improper subsidies for state-owned firms, The Wall Street Journal reported.  The U.S. Energy Information Administration on Thursday reported that domestic crude supplies rose a fifth straight week, up 3.7 million barrels for the week ended Feb. 15. That was a bit more than the 3.5 million-barrel rise expected by analysts polled by S&P Global Platts.“While Saudi Arabia willingly cuts output and exports, the U.S. producers continue to flood the market with shale oil,”  “Drilling activity has stabilized, which brings much-needed cooling to the recent shale boom frenzy. Yet U.S. oil production remains on track to reach 13 million barrels per day by the end of the year.

UAE Set to Buy $5.4bn of Arms Amid World Outrage Over Yemen War – The United Arab Emirates signed contracts to buy more than $5.4bn worth of arms and military equipment during an exhibition for weapons manufacturers in Abu Dhabi this week, despite ongoing calls to end the war in Yemen, where the UAE is playing a major role.The UAE’s official news agency WAM reported on Thursday that the deals were secured with companies from countries around the world, including the United States, China, Russia, France and the UK, at the International Defence Exhibition and Conference (IDEX).The UAE also awarded contracts to domestic weapon manufacturers during the five-day event, which concludes on Friday, WAM said.Abu Dhabi struck deals worth $1.9bn with US firms Lockheed Martin and Raytheon to purchase air defence missiles, Reuters reported.Sales agreements between foreign countries and American weapon manufacturers must be approved by the US State Department before they can be finalised. Congress also has veto power to stop such deals.The UAE’s weapons contracts come at a time of growing international criticism of the ongoing conflict in Yemen.Since 2015, Saudi Arabia and the UAE have led a military campaign in Yemen against the country’s Houthi rebels to restore the government of exiled President Abd Rabbuh Mansour Hadi.The conflict, described as the world’s worst humanitarian crisis by the United Nations, has killed tens of thousands of people and brought the already impoverished country to the verge of famine.US lawmakers have been pushing to end Washington’s assistance to the Saudi-led coalition.Earlier this month, the US House of Representatives passed a resolution to end the country’s involvement in the conflict. The bill is expected to soon be taken up by the Senate, which approved a similar measure late last year. While much of the criticism has focused on Saudi Arabia’s role in the conflict, the UAE is also playing a major part in the conflict in Yemen.

Iran Navy Begins Massive Drill Stretching Across World's Key Oil Chokepoints - Iran's navy has begun a three day war game exercise on Friday in the Persian Gulf, in an expansive area encompassing Strait of Hormuz in the Persian Gulf, to the Sea of Oman and even stretching to northern parts of the Indian Ocean, state media reports. Some reports indicate the games could go on for as much as a week, but all emphasized the "large-scale" nature of the drills in which Iran's navy will showcase the Fateh-class submarine — a domestically built sub carrying cruise missiles and torpedoes, as well as its Sahand destroyer.The cruise missile-firing capable Fateh, or "Conqueror", was launched for the first time at the start of this week and has been touted as "state-of-the-art" and with the ability to stay underwater for five weeks at a time. Crucially, the large exercises come after last week's US-sponsored Warsaw conference in which both Israeli and US officials made threats of war with Tehran. Indeed during the conference Israeli PM Benjamin Netanyahu openly stated that he was attending the summit with an aim to "advance the common interest of war with Iran."The games also come at a time when even foreign policy establishment insiders, such as the Council on Foreign Relation's Steven Cook, increasingly acknowledge that the White House's "march to war against Iran" is now "echoing the drumbeats" of the lead up to the 2003 Iraq invasion. Writing in Foreign Policy, Cook warns:  Taken together—the Warsaw conference, Pence’s bullying of the Europeans, Bolton’s threatening video, and the broader background noise in Washington—the events of the past week were familiar in a foreboding way. The chatter about Iran has not become the war fever that gripped Washington in 2002 over Iraq, but the echoes of that year are not hard to miss in the Trump administration’s effort to shape the domestic and international debate about Iran.

The Cult-Like Group Fighting Iran - Der Spiegel.-  On a country road in northwestern Albania, a rather odd collection of men and women living together in a camp are busy preparing themselves to topple the Iranian regime. Three times per week, many of them apparently practice slitting throats, breaking hands, jabbing out eyeballs with fingers and performing the so-called Glasgow Smile, which involves cutting cheeks from the corner of the mouth up toward the ear. That, at least, is the story told by a former member of the group.The camp, roughly the size of 50 football fields and surrounded by high fences, is located just a 35-minute drive from the lively bars of downtown Tirana, but the people inside live in something of a time capsule. Just like everyone in the camp, Somayeh Mohammadi is a member of the People's Mujahedin, a once-militant Iranian opposition group that was listed by the United States. and Europe as a terrorist group until 2012. These days, however, several members of the administration of U.S. President Donald Trump are supporting the group, commonly known by the abbreviation MEK. Both the administration and the MEK, after all, want to see the end of the current regime in Iran -- and now that the group has Washington's backing, the Mujahedin apparently hopes that its time has finally come.On the sidelines of the Middle East conference in Warsaw, which began on Wednesday, Israeli President Benjamin Netanyahu spoke of possible "war" with Iran. And at an MEK rally in Warsaw, Trump's lawyer Rudy Giuliani called for regime change in Tehran. For almost 30 years, several thousand members of the People's Mujahedin lived in exile in Iraq, but in 2013, many of them moved to Albania. And since 2017, the majority of the group has lived in the isolated camp near Tirana.

Why Iran Needs To Talk With The Taliban - The Trump administration is preparing a public argument for war on Iran. The Washington Times has some 'senior administration officials' claiming that Iran is allied with al-Qaeda and thus could and should be attacked: Iran-al Qaeda alliance may provide legal rationale for U.S. military strikes:  Iran is providing high-level al Qaeda operatives with a clandestine sanctuary to funnel fighters, money and weapons across the Middle East, according to Trump administration officials who warn that the long-elusive, complex relationship between two avowed enemies of America has evolved into an unacceptable global security threat. ..The Authorization for Use of Military Force (AUMF) passed by Congress in the days after the 9/11 attacks provided the legal framework for President George W. Bush to order U.S. military action against the Taliban for harboring Osama bin Laden and al Qaeda fighters in Afghanistan. The law has underpinned the U.S. counterterrorism campaign and has largely gone unchanged for the past 17 years through three presidential administrations.  Congressional and legal sources say the law may now provide a legal rationale for striking Iranian territory or proxies should President Trump decide that Tehran poses a looming threat to the U.S. or Israel and that economic sanctions are not strong enough to neutralize the threat.  That Iran is colluding with al-Qaeda, which it actively fights in Syria and Iraq, is obviously nonsense. When the U.S. attacked Afghanistan some families of al-Qaeda fighters fled to Iran where they were put under house arrest. They were and still are hostages Iran uses to prevent al-Qaeda attacks against its country. The Washington Times admits this:  One captured 2007 document, apparently written by an al Qaeda operative, concluded that, in the wake of the 2003 U.S. invasion of neighboring Iraq, “Iranian authorities decided to keep our brothers as a bargaining chip.”

Trump Tells Europe to “Take Back” 800 ISIS Fighters or He “Will Be Forced to Release Them” — Late Saturday evening President Trump lashed out at allies Britain, France, and Germany via twitter related to the United States’ Syria withdrawal. He urged European nations to take responsibility for their own captured foreign fighters in Syria by repatriating and prosecuting them; otherwise, Trump warned, the terrorists could “permeate Europe” upon their release.  “The Caliphate is ready to fall,” Trump tweeted. “The alternative is not a good one in that we will be forced to release them…” He said that the US “does not want to watch” Islamic State (or ISIS) “permeate Europe,” which he indicated would be the inevitable outcome.  The United States is asking Britain, France, Germany and other European allies to take back over 800 ISIS fighters that we captured in Syria and put them on trial. The Caliphate is ready to fall. The alternative is not a good one in that we will be forced to release them…….— Donald J. Trump (@realDonaldTrump) February 17, 2019 As part of the strange threat and sure to be controversial statements, the president further reaffirmed total US victory over ISIS as he mentioned US forces would imminently begin “pulling back after 100% Caliphate victory.” Earlier this month the Wall Street Journal cited US defense officials to indicate that “the military plans to pull a significant portion of its forces out by mid-March, with a full withdrawal coming by the end of April.”  The fate of the US-backed Syrian Democratic Forces (SDF), mostly Syrian Kurds, has remained a huge unknown as Turkey has been amassing troops along its border to invade in the aftermath of a US draw down. Some Pentagon generals have also warned of the rapid comeback of ISIS in the wake of any “power vacuum”. Trump’s latest tweet warning that ISIS foreign fighters would “permeate Europe” is also likely a reference to the fact that the SDF still maintains many hundreds of captured ISIS terrorists in its jails. SDF leadership has echoed a similar warning of late, saying it’ll be forced to release the jihadists as a result of any rapid US exit. The UN has estimated that in total up to 42,000 foreign fighters traveled to Iraq and Syria to join IS — which appears a very conservative estimate — and which includes about 900 from Germany and 850 from Britain.

But They Are Dangerous! European Leaders Shocked At Trump's ISIS Ultimatum - After President Trump's provocative tweets on Sunday wherein he urged European countries to "take back" and prosecute some 800 ISIS foreign fighters as US forces withdraw from Syria, or else "we will be forced to release them," the message has been met with shock, confusion and indifference in Europe. Trump had warned the terrorists could subsequently "permeate Europe". Possibly the most pathetic and somewhat ironic response came from Denmark, where a spokesperson for Prime Minister Lars Lokke Rasmussen said Copenhagen won’t take back Danish Islamic State foreign fighters to stand trial in the country, according to the German Press Agency DPA. “We are talking about the most dangerous people in the world. We should not take them back,” the spokesperson stressed, and added that the war in Syria is ongoing, making the US president's statement premature.  Germany's response was also interesting, given a government official framed ISIS fighters' ability to return as a "right".  A spokeswoman for Germany’s interior ministry said, “In principle, all German citizens and those suspected of having fought for so-called Islamic State have the right to return.” She even added that German ISIS fighters have "consular access" — as if the terrorists would walk right up to some embassy window in Turkey or Beirut!  Noting that the Iraqi government has also of late contacted Germany to transport foreign fighters to their home country for trial, she added, “But in Syria, the German government cannot guarantee legal and consular duties for jailed German citizens due to the armed conflict there.”

Assad Warns Syria’s Kurds That US Will not Protect Them  — President Bashar al-Assad warned Syria’s Kurdish-led Syrian Democratic Forces (SDF) on Sunday that their ally the United States would not protect them against any Turkish offensive as Washington looks to withdraw its troops.The US is set to pull out its soldiers from Syria after allied Kurdish-led forces capture the Islamic State (IS) group’s last holdout in the war-torn country.Any withdrawal risks leaving the Kurds exposed to a long-threatened attack by neighboring Turkey, which views some Kurdish fighters as “terrorists”.“We tell those groups who are betting on the Americans that the Americans will not protect you,” Assad said in a televised speech, reported by the AFP news agency. “The Americans do not hold you in their heart… They will put you in their pocket so you can be a bargaining chip.”Apart from fighting IS, the Kurds have largely stayed out of Syria’s civil war, working towards semi-autonomy in the northeast of the country. The looming prospect of a US withdrawal, announced in December, has sent them scrambling to rebuild ties with the Damascus government, but talks so far have failed to reach a compromise. Reuters reported a senior US general said on Sunday that the US would have to sever its military assistance to the SDF if the fighters partner with Assad or Russia. The remarks by Army Lieutenant General Paul LaCamera, who is commander of the US-led coalition battling IS in Iraq and Syria, underscore the tough decisions facing the SDF as the US prepares to withdraw from Syria. LaCamera warned that US law prohibits cooperation with Russia as well as with Assad’s military. Assad warned: “If you don’t prepare yourselves to defend your country and resist, you will be nothing but a slave to the Ottomans,” using a historic term for Turks. Almost eight years into a war that has killed more than 360,000 people and displaced millions, Assad’s forces control almost two-thirds of the country.Just two areas remain beyond its control: the militant-held northwestern region of Idlib, and about a third of the country under control of Kurdish-led forces. “Every inch of Syria will be liberated,” Assad said in Sunday’s speech.

Syrian Kurdish Commander Calls for US to Keep 1,500 Troops in Syria  — In comments to reporters on Monday, Kurdish commander Mazloum Kobani, the leader of the Syrian Democratic Forces (SDF), called on the United States to completely halt plans to withdraw from Syria, saying he needs an “enduring” presence from the US-led coalition.Kobani not only says he wants air support from the US, but a “force on the ground to coordinate with us.” That ground force, according to the commander, should include between 1,000 and 1,500 international forces.This would be expected to be overwhelmingly US troops, of course. There are an estimated 2,000 US troops in Syria, and a few hundred others from the coalition, mostly French and British. Kobani’s preference seems to be that they be Americans. Saying that Trump has promised to protect the Kurds, he says he expects the president to “live up to his word,” and as far as he is concerned, that means continuing the US military presence indefinitely.

Egypt Government Executes 9 Muslim Brotherhood Members In Single Day -- "We were electrocuted with enough electricity to last Egypt for 20 years," one man yelled during his final words before an Egyptian court. Mahmoud al-Ahmadi was among 9 suspected Muslim Brotherhood members sentenced to death for involvement in the assassination of Egypt's top prosecutor Hisham Barakat on June 29, 2015. The men were executed by hanging in a Cairo prison on Wednesday, which drew condemnation from groups like Amnesty International, given widespread reports that their confessions were obtained through torture. Barakat had been targeted and killed by car bomb when his convoy drove through the Egyptian capital in 2015, two years after General Abdel Fattah el-Sisi removed the Muslim Brotherhood President Mohamed Morsi in a military junta following the chaotic Arab Spring protests. Only two weeks into November, this brings the total number of executions in Egypt thus far this year to 15. Maya Foa, director of an international body of lawyers who spotlight human rights abuses called Reprieve, told Al Jazeera, "As these latest executions show, President [Abdel Fattah] el-Sisi's use of the death penalty is now a full-blown human rights crisis." The Sisi government has increasingly come under fire for its broad use of the death penalty following confessions obtained under duress, as well as mass trials. Reprieve says some nearly 1,500 individuals remain on death row, among them juveniles. 

‘There are no foreigners left’: Israeli settlers rampage in Hebron following expulsion of human rights observers Dozens of Israeli settlers launched an attack on Palestinians in the Old City of Hebron in the southern occupied West Bank on Tuesday night, yelling “death to Arabs!” in the street and hurling rocks at Palestinian homes. According to locals, more than 100 settlers accompanied by over 70 armed Israeli forces began marching down Shuhada street at 9pm in the Old City, heading towards the Palestinian neighborhood of Tel Rumeida. “They were chanting anti-Arab slogans, calling for the expulsion of all Palestinians from the area, saying this is the land of Israel, and saying we should all die,” Badee Dweik, 46, Co-Founder of the Human Rights Defenders group in Hebron told Mondoweiss. According to Dweik, who witnessed the events, settlers began harassing and throwing stones at any Palestinians who were walking outside. Shortly after, the settlers began hurling rocks at the windows of Palestinian homes. “Here in the Old City we are used to such attacks, so the Palestinians all have bars on their windows so that the settlers can’t break through,” Dweik said. He added that no one was badly injured, but several people sustained bruises on their faces and bodies from being physically assaulted by the settlers. Dweik said he believes that the attack was a direct result of the lack of presence of international volunteers and observers in the area. “The settlers, who are already extremely violent, are becoming more and more aggressive since the Israeli government decided to expel the TIPH mission in Hebron,” he said. “Getting rid of TIPH was a greenlight for settlers to be more violent, not just against Palestinians,but also against any internationals that they see here.”

Future rabbis plant with Palestinians, sow rift with Israel (AP) — Young American rabbinical students are doing more than visiting holy sites, learning Hebrew and poring over religious texts during their year abroad in Israel. In a stark departure from past programs focused on strengthening ties with Israel and Judaism, the new crop of rabbinical students is reaching out to the Palestinians. The change reflects a divide between Israeli and American Jews that appears to be widening. On a recent winter morning, Tyler Dratch, a 26-year-old rabbinical student at Hebrew College in Boston, was among some two dozen Jewish students planting olive trees in the Palestinian village of At-Tuwani in the southern West Bank. The only Jews that locals typically see are either Israeli soldiers or ultranationalist settlers. “Before coming here and doing this, I couldn’t speak intelligently about Israel,” Dratch said. “We’re saying that we can take the same religion settlers use to commit violence in order to commit justice, to make peace.” Dratch, not wanting to be mistaken for a settler, covered his Jewish skullcap with a baseball cap. He followed the group down a rocky slope to see marks that villagers say settlers left last month: “Death to Arabs” and “Revenge” spray-painted in Hebrew on boulders and several uprooted olive trees, their stems severed from clumps of dirt. This year’s student program also includes a tour of the flashpoint West Bank city of Hebron, a visit to an Israeli military court that prosecutes Palestinians and a meeting with an activist from the Hamas-controlled Gaza Strip, which is blockaded by Israel.

Political Bombshell as Gantz, Lapid Join Forces to Replace Netanyahu --Prime Minister Benjamin Netanyahu's two biggest rivals on the center-left announced early Thursday morning that they have decided to join forces and merge their parties, causing a political shakeup ahead of elections. 

• ■ Joint slate will be named 'Blue and White.' Gantz will be prime minister for two and a half years before handing over reins to Lapid, who would serve as FM
• ■ Ex- IDF chief Gabi Ashkenazi joins unified roster
• ■ Likud blasts union: 'It's either their left-wing gov't or us'

Chinese president meets Iran's parliament speaker - (Xinhua) -- Chinese President Xi Jinping on Wednesday met with visiting Iranian Parliament Speaker Ali Larijani at the Great Hall of the People in Beijing.No matter how the international and regional situation changes, China's resolve to develop a comprehensive strategic partnership with Iran will remain unchanged, Xi said during the meeting, hailing that China and Iran have a long history of friendship and share long-tested mutual trust and friendship.Under the new situation, China and Iran should further deepen strategic mutual trust and continue to extend mutual understanding and support on issues involving each other's core interests and major concerns, said Xi.The Chinese president called on both sides to step up communication and coordination, meet each other halfway to properly advance their pragmatic cooperation, and strengthen exchanges and cooperation in such areas as security, countering terrorism and culture.Xi called for closer collaboration and coordination within multilateral frameworks, so as to jointly promote the building of a new type of international relations and foster a community with a shared future for humanity.Exchanges between legislative bodies of the two countries are an important part of the comprehensive strategic partnership, Xi said, calling on the National People's Congress of China and Iranian Parliament to strengthen exchanges and cooperation, learn from each other's experience in state governance, cement communication and coordination in international and regional organizations, and play a bigger role in promoting bilateral relations.

China Sticks Up For Iran As Geopolitical Pressure Mounts - Amid the geopolitical quagmire among Iran, Saudi Arabia and the U.S. over a number of issues ranging from Tehran's nuclear ambitions, its ballistic missile program and its regional hegemony overtures which have Riyadh scrambling for a response, China is joining the fray. Yesterday, Chinese PresidentAmid the geopolitical quagmire among Iran, Saudi Arabia and the U.S. over a number of issues ranging from Tehran's nuclear ambitions, its ballistic missile program and its regional hegemony overtures which have Riyadh scrambling for a response, China is joining the fray.Yesterday, Chinese President Xi Jinping told the speaker of Iran’s parliament that China’s desire to develop close ties with Iran will remain unchanged, regardless of the international situation. Xi’s remarks came just one day before the visit of Saudi Crown Prince Mohammed bin Salman (MbS) to China to drum up support since several western powers have taken a harder line against the young prince over his alleged involvement in the killing of Saudi dissident journalist Jamal Khashoggi.Xi met Iranian Parliament Speaker Ali Larijani on Wednesday and added that the two countries had a long friendship and shared a long-tested mutual trust. “No matter how the international and regional situation changes, China’s resolve to develop a comprehensive strategic partnership with Iran will remain unchanged,” Xi was quoted a saying in comments published the next day by China’s Foreign Ministry. China and Iran should further deepen strategic mutual trust and continue to support each other on core interests and major concerns, Xi added. Beijing is able to court both Iran and Saudi Arabia at the same, something the U.S. is unable to do. China, however, prides itself on not taking sides in domestic politics of other nations, even if those nations have a dismal human rights history.

Relatives of China's oppressed Muslim minority are getting blocked online by their own family members, who are terrified to even tell them how bad their lives are - Abdul'ehed, a teacher and poet in Istanbul, Turkey, has been systematically cut off by all her family members on WeChat, the ubiquitous Chinese messaging app. There is only one reason for her entire family — who live in Xinjiang, western China — to cease all contact so abruptly: fear. Her family are Uighurs, a majority-Muslim ethnic minority group China has been relentlessly persecuting. Life in Xinjiang has effectively come to a standstill over the last two years. According to the US State Department, China has detained up to 2 million Uighur residents, for increasingly flimsy reasons, one of which is messaging people who live in other countries. China's unprecedented crackdown is why Abdul'ehed's relatives in China deleted her from their contacts, leaving her unable to talk to them or even see their latest pictures. INSIDER interviewed four members of the Uighur diaspora, who report a similar experience of being abruptly cut off by those they love most, for fear of retribution by the heavy-handed Xinjiang regional government. Most people in Xinjiang have either blocked their contacts abroad or are too scared to talk to them.  Reports from activists and media outlets claim that Uighurs who cross the authorities are physically tortured, forced to renounce their religion, and force-fed unknown medications that interfere with their memories. Abdul'ehed's said: "At first I was so hurt. I thought: 'They didn't have to do that.' After that, I understood that something serious was going on." "I'm glad they deleted me," she said. "Because I, somehow, may be a reason for authorities to arrest them." Local authorities in Xinjiang don't officially notify relatives abroad when they round people up. And because most people in Xinjiang have either blocked all their contacts abroad, or are scared to talk about what's going on, they are struggling to find out about their loves ones.