Sunday, February 10, 2019

not out of the woods on natural gas stores; EIA will report record oil production in excess of 12 million bpd next week

oil prices gave up last week's gains and then some this week, while still remaining in the same narrow range they've been in over the past month...after rising nearly 3% to $55.26 a barrel on the new sanctions on Venezuelan oil exports last week, prices for US oil for March delivery fell 70 cents to $54.56 a barrel on Monday, after unexpected weakness in U.S. factory data raised concerns that an economic slowdown would reduce demand for oil...oil prices then fell another 90 cents to $53.66 on Tuesday, after a survey showing that euro zone business expansion had nearly stalled in January heightened concerns about a global economic slowdown....however, oil prices reversed early losses on Wednesday, after the weekly EIA data showed a drop in product inventories and a smaller rise in U.S. crude stockpiles than the Tuesday API report suggested, and went on to close up 35 cents for the day at $54.01 a barrel...selling returned on Thursday, with March crude prices tumbling 2.5% to $52.64 a barrel, amid indications that the trade war between the U.S. and China would continue....oil prices managed to gain 8 cents against a strong dollar to close at $52.72 a barrel in quiet trading on Friday, but still ended the week 4.6% lower--the largest weekly percentage loss for a front-month contract since the week ended Dec. 21...

meanwhile, natural gas prices continued lower after falling to a 28 week low last week, as the March contract ended this week down 15.1 cents at $2.583 per mmBTU, the lowest closing price since last March, despite an EIA gas storage report that showed the largest draw this season...the natural gas storage report for the week ending February 1st from the EIA indicated that the quantity of natural gas held in storage in the US fell by 237 billion cubic feet to 1,960 billion cubic feet over the week, which meant our gas supplies were 135 billion cubic feet, or 6.4% below the 2,095 billion cubic feet that were in storage on February 2nd of last year, and 414 billion cubic feet, or 17.5% below the five-year average of 2,375 billion cubic feet of natural gas that have typically been in storage as of the 1st weekend in February....this week's 237 billion cubic feet withdrawal from US natural gas supplies was somewhat less than the S&P Global Platts' survey of analysts expectations that 249 billion cubic feet of stored gas would be needed, but it was quite a bit more the average of 150 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years...

with the polar vortex pushing temperatures more than 20 degrees below normal, 84 billion cubic feet of natural gas were needed from storage in the Midwest during the week, well above the normal 51 billion cubic foot pull for the region, and as a result the region's natural gas supply deficit increased to 14.7% below normal for this time of year, while at the same time natural gas supplies in the South Central region fell by 79 billion cubic feet, as their supply deficit increased to 12.2% below the normal for the first weekend of February...the Eastern states also saw an above normal withdrawal of 59 billion cubic feet of gas, as their natural gas deficit increased to 11.7% below their 5 year average of gas stores at the beginning of February....9 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region, which normally pulls out 7 billion cubic feet for the same week, as their deficit from normal rose to 26.1%, but since temperatures in the Pacific states stayed above normal during the polar vortex, they only needed 6 billion cubic feet of gas from storage for the week, and their deficit from normal fell to 25.9% below their five year average for this time of year as a result...

while the EIA reports that "total working gas is within the five-year historical range", that's because the 5 year reference period includes 2014, which saw multiple outbreaks of the polar vortex, with a withdrawal of 990 billion cubic feet over 4 weeks in February that helped drive that year's natural gas supplies to the lowest on record by the end of March...we certainly don't expect to approach that kind of cold anymore this year, but the temperatures after January of last year were not exceptional, and yet we still approached the current heating season with our natural gas supplies at the lowest level in 15 years...since our natural gas supplies are 6.4% below those of a year ago as of this week, it will take smaller withdrawals through the remainder of this winter and/or larger inventory building this spring and fall to avoid entering the winter of 2020 in the same or worse shape than we entered this one...that fact isn't lost on natural gas traders, who are still pricing natural gas for January 2020 delivery more than 15% higher than the price of the front month contract for natural gas today...

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 1st, indicated that we again managed a modest addition of surplus oil to our commercial crude supplies, despite a big jump in our crude oil exports, largely because of a large swing from unaccounted for crude demand to unaccounted for crude supply...our imports of crude oil rose by an average of 63,000 barrels per day to an average of 7,146,000 barrels per day, after falling by an average of 1,108,000 barrels per day the prior week, while our exports of crude oil rose by an average of 926,000 barrels per day to an average of 2,870,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,276,000 barrels of per day during the week ending February 1st, 863,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be unchanged at a record 11,900,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,176,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,633,000 barrels of crude per day during the week ending February 1st, 170,000 more barrels per day than the amount of oil they used during the prior week, while over the same period 180,000 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 637,000 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 (+637,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...since that "unaccounted for crude" figure was at minus 445,000 barrels per day the prior week, it represents a swing of 1,082,000 barrels per day in that error margin, enough to consider th​is week's week over week changes very unreliable....(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,487,000 barrels per day last week, which was 7.3% less than the 8,078,000 barrel per day average that we were importing over the same four-week period last year.... the 180,000 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 unchanged at 11,900,000 barrels per day because the rounded estimate for output from wells in the lower 48 states was unchanged at 11,400,000 barrels per day, while a 9,000 barrel per day increase to 498,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending February 2nd was at 10,251,000 barrels per day, so this week's rounded oil production figure was 16.1% above that of a year ago, and 41.2% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...     

as we've often mentioned, these weekly oil production figures we report are preliminary, and the EIA also releases confirmed monthly oil production figures a few months later, after they have collected all the precise production reports that aren't available on a weekly basis....that monthly report ​for ​November was released this week, and since the monthly data shows a production jump that's not yet reflected in the weekly figures, we'll include a graphic showing both, so we can see what that ​difference ​looks like... 

February 9 2019 confirmed crude production

the above graph was taken from this week's OilPrice Intelligence Report, and it shows the history of confirmed oil production data monthly from January 2016 to November 2018 in blue, and then the weekly estimates of US oil production up until the current week in yellow after that period, with both metrics in thousands of barrels per day (note the yellow arrow is a bit off)....above the graph, OilPrice also gives us the rounded weekly estimates of oil production in thousands of barrels per day for the weeks ending December 28th through February 1st, as was reported by the EIA....we follow that weekly data because it's what the oil traders follow, and hence it moves oil prices and ultimately the decisions on the part of exploitation companies to start drilling for oil...however, the confirmed oil production figures for November were released this week and showed our crude production at a higher than expected 11,900,000 barrels per day average during that month, up from the confirmed 11,555,000 barrels per day in October...the weekly production estimates for November, on the other hand, had ranged from 11,600,000 barrels per day to 11,700,000 barrels per day, and thus averaged 220,000 barrels per day lower than the confirmed figures....when the confirmed oil production figure comes in that much higher than the weekly estimates, the EIA will subsequently adjust their weekly estimate to reflect the new confirmed production totals...hence, it's reasonable to assume that EIA's production estimate for next week will be at least at 12,100,000 barrels per day, and most likely higher, hence topping 12 million barrels per day for the first time in history...

meanwhile, US oil refineries were operating at 90.7% of their capacity in using 16,633,000 barrels of crude per day during the week ending February 1st, up from the prior week's 90.1% of capacity, and a fairly high capacity utilization rate for this time of year....however, the 16,633,000 barrels per day of oil that were refined this week were 1.0% below the 16,797,000 barrels of crude per day that were being processed during the week ending February 2nd, 2018, when US refineries were operating at an even higher 92.5% of capacity... 

even with the modest increase in the amount of oil being refined, the gasoline output from our refineries was a bit lower, falling by 48,000 barrels per day to 9,856,000 barrels per day during the week ending February 1st, after our refineries' gasoline output had increased by 300,000 barrels per day the prior week....with the decrease in this week's gasoline output, our gasoline production was 2.3% lower than the 10,085,000 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) increased by 102,000 barrels per day to 5,121,000 barrels per day, after that output had decreased by 185,000 barrels per day the prior week....with that increase, this week's distillates production was little changed from the 5,129,000 barrels of distillates per day that were being produced during the week ending February 2nd, 2018.... 

even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose by 513,000 barrels to 257,893,000 barrels by February 1st, after falling by 2,235,000 barrels over the prior week....our gasoline supplies rose this week mostly because the amount of gasoline supplied to US markets fell by 491,000 barrels per day to 9,073,000 barrels per day, after increasing by 999,000 barrels per day over the prior two weeks, and because our imports of gasoline rose by 102,000 barrels per day to 625,000 barrels while our exports of gasoline rose by 288,000 barrels per day to 895,000 barrels per day....having set a record high two weeks ago, our gasoline inventories are still at a seasonal high for the first weekend of February, 5.1% higher than last February 2nd's level of 245,474,000 barrels, and roughly 5% above the five year average of our gasoline supplies for this time of the year...

even with the increase in our distillates production, our supplies of distillate fuels decreased for the 14th time in twenty weeks, falling by 2,257,000 barrels to 139,013,000 barrels during the week ending February 1st, after our distillates supplies had decreased by 1,122,000 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, jumped by 551,000 barrels per day to 4,673,000 barrels per day, not surprising given the heating needs for the week, while our exports of distillates rose by 37,000 barrels per day to 1,229,000 barrels per day and our imports of distillates rose by 324,000 barrels per day to 459,000 barrels per day...with this week's decrease, our distillate supplies are now 2.0% below the 141,826,000 barrels that we had stored on February 2nd, 2018, and fell to roughly 4% below the five year average of distillates stocks for this time of the year...

finally, with the caveat that the source of much of this week's crude supply was unaccounted for, our commercial supplies of crude oil in storage increased for the 4th time in the past 10 weeks, rising by 1,263,000 barrels over the week, from 445,944,000 barrels on January 25th to 447,207,000 barrels on February 1st...with weekly increases now in 14 out of the last 20 weeks, our crude oil inventories are roughly 6% above the five-year average of crude oil supplies for this time of year, and ​nearly 30% above the 10 year average of crude oil stocks for the first weekend 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 had mostly been rising since this past Fall, after falling until then through most of the prior year and a half, our oil supplies as of February 1st were thus 6.4% above the 420,254,000 barrels of oil we had stored on February 2nd of 2018, while still remaining 12.1% below the 508,592,000 barrels of oil that we had in storage on February 3rd of 2017, and 5.0% below the 470,676,000 barrels of oil we had in storage on February 5th of 2016...     

This Week's Rig Count

US drilling activity, as evidenced by the number of drilling rigs active at the end of the week, increased for the second time in 6 weeks this past week, but still remains well below the levels of October and November, when both oil and natural gas prices were considerably higher....Baker Hughes reported that the total count of rotary rigs running in the US rose by 4 rigs to 1049 rigs over the week ending February 8th, which was also 74 more rigs than the 975 rigs that were in use as of the February 9th 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 rose by 7 rigs to 854 rigs this week, which was also 63 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 decreased by 3 rigs to 195 natural gas rigs, which was still 11 more rigs than the 184 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...

offshore drilling activity was unchanged, with 19 rigs still deployed in the Gulf of Mexico this week, with all of those offshore from Louisiana...that was still 3 more Gulf rigs than were drilling a year earlier, when 15 rigs were deployed offshore from Louisiana and a rig was also active offshore from Texas....since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2018, this week's Gulf of Mexico totals are again identical to the overall US offshore totals...

the count of active horizontal drilling rigs decreased by 2 rigs to 923 horizontal rigs this week, which was still 91 more horizontal rigs active than the 832 horizontal rigs that were in use in the US on February 9th 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 increased by 5 rigs to 68 vertical rigs this week, which was still down from the 70 vertical rigs that were in use during the same week of last year...meanwhile, the directional rig count increased by 1 rig to 58 directional rigs this week, which was also down from the 73 directional rigs that were operating on February 9th 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 8th, the second column shows the change in the number of working rigs between last week's count (February 1st) and this week's (February 8th) count, the third column shows last week's February 1st 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 2nd of February, 2018...    

February 8 2019 rig count summary

as you can see, this week's rig increases were primary in Alaska and California, both major producing states, but neither of which have been in the vanguard of new drilling activity in recent years...we didn't see any news on where new drilling might be taking place in Alaska, but considering the time of year, it's unlikely it was anywhere on the North Slope or in the Arctic National Wildlife Refuge, where the administration is barreling ahead with plans to drill for oil...even with those Alaska and California increases, however, the state totals shown above don't add up to the 4 rig increase we reported, because Mississippi drillers also added a rig this week and now have 4 rigs running, up from 3 rigs a year ago...while the major basin count does reflect the decrease of 2 horizontal rigs, that doesn't mean there weren't changes elsewhere, just that the additions and subtractions in those 'other' basins netted out to zero...that's obvious from the natural gas rig count changes, which showed one natural gas rig added in the Dallas / Ft Worth area Barnett shale, where an oil rig was concurrently pulled out, one natural gas rig pulled out of the south Texas Eagle Ford, which saw two oil rigs added at the same time, and 3 natural gas rigs pulled out of basins not tracked separately by Baker Hughes...meanwhile, it looks like the three rig decrease in the Permian was spread out across the basin, with one rig pulled from Texas Oil District 8, which would be the core Permian Delaware, one rig pulled from Texas Oil District 7C, which would be the southern Permian Midland, and one Permian rig pulled out of ​the ​Permian Delaware​ in ​New Mexico...

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Ohio Utica well permits rose in January - Permits to drill wells in Ohio's Utica shale rose slightly in January from the month prior. The state approved 58 permits in January, up by eight permits from December 2018, according to data from the Ohio Department of Natural Resources. December permits soared by 92pc from November, likely on the start-up of more takeaway capacity from the Appalachian production region and expectations of increased winter demand. Monthly permit counts have rebounded recently after spending much of 2018 below levels in 2017. January permits were more than double the 26 approved in January 2018, while December permits were 19pc higher than a year earlier. Permits issued per month in 2018 ranged from nine to 50, and totaled 253 for the full year, a 44pc drop from total permits issued in 2017. Spot natural gas prices at Dominion Transmission South in January averaged $2.85/mmBtu, 10pc lower than a year earlier. Argus forward prices show Dominion South averaging $2.42/mmBtu in March, suggesting lower demand next month. Production in the Appalachia shale region in December topped 31.1 Bcf/d, according to estimates from the US Energy Information Administration, with January output expected to rise above 31.3 Bcf.

Ohio residents file federal civil rights lawsuit, stemming from fracking concerns - (WKBN) - Members from seven community groups in Ohio have filed a federal civil rights lawsuit against their board of elections and the Ohio Secretary of State. The complaint stems from citizens wanting a frack-free community and it claims officials have violated the plaintiffs' constitutional rights of freedom of speech, right of assembly, right to petition the government for redress of grievances, right to vote, right of due process, and right of local, community self-government.The lawsuit claims the plaintiff communities have collected signatures to place initiatives on the ballot at some point between 2015 and 2018 and that all the communities have been blocked from the ballot by the defendants’ "unlawful actions."The complaint describes these actions as “placing unlawful blockades, insurmountable hurdles, and arbitrary and irrational procedures between the people of Ohio and their exercise and enjoyment of direct democracy.”Members of Frackfree Mahoning Valley, say they have attempted to exercise the right to initiative by preparing and collecting signatures for proposed amendments to the Youngstown Municipal Charter.The proposed charter amendments have addressed such issues as community rights, a ban on horizontal hydraulic fracturing (fracking) for oil and gas, the right to clean water, and the right to free and fair elections. The seven groups filing the suit are from several Ohio cities and counties, including Youngstown, Toledo and Columbus, as well as Portage, Medina, Athens and Meigs counties. “Our government is based on the premise that the people create government to protect their rights and that when government is no longer doing that, the people have the right to alter, reform or abolish that government and form a new one that does,” said Susie Beiersdorfer, Youngstown Plaintiff.  “When the very government that is violating the people’s rights is blocking them from making change, we cannot accept this. We need to challenge it and protect our right to self-govern. In Ohio, we need to protect our right to direct democracy through the initiative process. That is what this lawsuit is about.” You can read the full Lawsuit here.

Environmentalists from Youngstown, six counties file federal lawsuit - WFMJ- A coalition of activists from Youngstown and other parts of Ohio have filed a federal lawsuit accusing the state and local elections boards of violating their constitutional rights by preventing voters from deciding environmental issues. The 62-page civil suit was filed in U.S. District Court by members of grassroots environmental groups in seven Ohio counties, including Susie Beiersdorfer and Dario Hunter of Frackfree Mahoning Valley, which has been unsuccessful eight times in backing a ballot issue to ban fracking inside Youngstown city limits. In addition to former Ohio Secretary of State Jon Husted, the boards of elections in Mahoning and six other counties are named as defendants. The lawsuit claims that election boards and the Ohio Secretary of State have violated the groups' constitutional right to free speech and due process by rejecting petitions signed by hundreds and thousands of registered voters seeking ballot space on issues dealing with clean water, fracking, injection wells, and other environmental concerns. The groups say election officials and the Secretary of State should not be allowed to keep questions from the voters based on the content of the issues. The suit also challenges the constitutionality of House Bill 463 passed in 2017 which the lawsuit says further enforces the ability of election boards to reject voter initiatives based on the content of those initiatives. In addition to Frackfree Mahoning Valley, other plaintiffs include members of the Columbus Community Rights Group which failed to place an anti-fracking issue on the ballot after it was rejected by the Franklin County Board of elections. Members of Toledoans for Safe Water claim in the lawsuit that Lucas County Board of Elections rejected their initiative to enact a “Lake Erie Bill of Rights” after algae blooms in the lake caused a shutdown of the regional water supply in 2014. The Meigs County Home Rule Committee's efforts to enact a home rule charter that included bans on underground injection wells was rejected by the Secretary of State, according to the lawsuit. In southeastern Ohio, the Athens Community Bill of Rights Committee circulated petitions for a county-wide vote to ban injection wells was rejected by the Athens County Board of Elections. Efforts by Sustainable Medina County included an effort to put a stop to the Nexus gas pipeline, which runs from Columbiana County to Michigan. The lawsuit says petitions for a county charter initiative opposing the pipeline were rejected by then Secretary of State Husted. A county charter initiative that would have included prohibitions on fracking and injection wells by the Portage Community Rights Group was given a thumbs down by the Portage County Board of Elections. The suit asks a federal judge to declare as unconstitutional, parts of House Bill 463 that allows the review of ballot initiatives based on their content.

Environmental advocates sue over Ohio's methods of reviewing ballot measures - cleveland.com — Members of environmental activist groups in seven Ohio counties sued Republican Secretary of State Frank LaRose and several boards of elections over what it said were unconstitutional tactics that kept certain ballot initiatives from going in front of voters.The lawsuit, filed Friday in federal court in Youngstown, says the system the state has to set up to approve and deny ballot measures violates the First Amendment and other constitutional rights because elections boards and the secretary of state are allowed to review the substance of the measures, instead of just seeing whether those measures conform with state elections law.The activists come from Athens, Franklin, Lucas, Mahoning, Medina, Meigs and Portage counties and all say their measures were unconstitutionally blocked from the ballot. State courts, including the Ohio Supreme Court, previously ruled against placing on the ballot many of the measures the groups wanted to put in front of voters.“For several years, Ohio election statutes have unconstitutionally restricted Plaintiffs’ rights to place proposed measures on the ballot by allowing Defendants to engage in content-based, pre-enactment review of proposed ballot measures,” the lawsuit states.(You can read the lawsuit here or at the bottom of this story.)The lawsuit asks a federal judge to invalidate sections of Ohio law “that permit substantive, content-based review” by elections officials. Among those suing are members of Sustainable Medina County, an environmental advocacy group that sought to place proposals on the ballot that would ban fracking, oil injection wells and oil pipelines from going through the county. The group vociferously opposes the installation of a natural gas pipeline that will run from Ohio to Canada, the lawsuit states. The Medina County Board of Elections certified the group’s petition in 2015, but someone protested. Then-Secretary of State Jon Husted, now the lieutenant governor, subsequently invalidated the group’s petition and the Ohio Supreme Court upheld Husted’s decision, the lawsuit notes.The group altered and re-submitted petitions in 2016 and 2017, but Husted again denied them. The courts provided the group no relief, according to the lawsuit.Similarly, the Portage Community Rights Group tried in 2016 to place a measure on the ballot in Portage County that, among other things, would prohibit fracking and injection well usage. The county elections board denied the measure, saying the governmental structure proposed under the measure did not include a county executive, according to the lawsuit. Husted denied the group’s protest and told the elections board not to place the measure on the ballot. The Ohio Supreme Court later upheld that decision, the suit states.

Northeast Ohio Could be Looking at a New Economic Boost from Underground   - Ethane is critical for making things like polymers, plastic, and paint. It’s also a companion product from natural gas wells--and wells in Ohio’s Utica shale are typically rich with it.  A U.S. Energy Information Administration report finds the country is now leading the world in an international export market for ethane.University of Akron economist Amada Weinstein says that might mean a resurgence of drilling.  And it may convince companies thinking about building multi-billion dollar chemical processing facilities known as crackers to go ahead and do so. “Yes.  So basically, if prices are going up for these petrochemicals for polymers then they have even more incentive to build these cracker plants being built in Pennsylvania and other places.” According to state figures, there has been in excess of $63-billlion in investment in shale development in the Ohio since 2011.  (see comments)

“Salt Water Disposal Wells” (SWD) Are Contaminating Our Region in PA, WV & OH - From a Study by Matt Kelso, FracTracker Alliance, January 31, 2019 - Oil and gas development generates a lot of liquid waste. Some of the waste comes that comes out of a well is from the geologic layer where the oil and gas resources are located. These extremely saline brines may be described as “natural,” but that does not make them safe, as they contain dangerous levels of radiation, heavy metals, and other contaminants. Additionally, a portion of the industrial fluid that was injected into the well to stimulate production, known as hydraulic fracturing fluid, returns to the surface. Some of these substances are known carcinogens, while others remain entirely secret, even to the personnel in the field who are employed to use the additives.  In many states, much of this waste is disposed of in facilities known as salt water disposal (SWD) wells, a specific type of injection well. These waste facilities fall under the auspices of the US Environmental Protection Agency’s Underground Injection Control (UIC) program. Such wells are co-managed with states’ oil and gas regulatory agencies, although the specifics vary by state. The oil and gas industry in Pennsylvania has not used SWD wells as a primary disposal method, as the state’s geology has been considered unsuitable for this process. The ban on surface “treatment” being discharged into Pennsylvania waters has increased the pressure for finding new solutions for brine disposal. This is compounded by the fact that the per-well volume of fluid injected into shale gas wells in the region has nearly tripled in that time period. Much of what is injected comes back up to the surface and is added to the liquid waste stream. Chemically-similar brine from conventional wells has been spread on roadways for dust suppression. This practice was originally considered a “beneficial use” of the waste product, but the Pennsylvania Department of Environmental Protection (DEP) halted that practice in May 2018. There are numerous concerns with salt water disposal wells. In October 2018, the PA-DEP held a hearing in Plum Borough, on the eastern edge of Allegheny County, where there is a proposal to convert the Sedat 3A conventional well to an injection well. Some of the concerns raised by residents include:

  • >>> Fluid and/or gas migration — There are numerous routes for fluids and gas to migrate from the injection formation to drinking water aquifers or even surface water. Potential conduits include coal mines, abandoned gas wells, water wells, and naturally occurring fissures in crumbling sedimentary formations.
  • >>> Induced seismicity — SWD wells have been linked to increased earthquake activity, either by lubricating or putting pressure on old faults that had been dormant. Earthquakes can occur miles away from the injection location, and in sedimentary formations, not just igneous basement rock.
  • >>> Noise, diesel pollution, loss of privacy, and road degradation caused by a constant stream of industrial waste haulers to the well location.
  • >>> Complicating existing issues — Plum Borough and surrounding communities are heavily undermined, and in fact the well bore goes right through the Renton Coal Mine (another part of which has been on fire for decades). Mine subsidence is already a widespread issue in the region, and many fear that even small seismic events could exacerbate this.
  • >>> Possibility of surface spill — Oil and gas is, sadly, a sloppy industry, with unconventional operations having accumulated more than 13,000 violations in Pennsylvania since 2008. If a major spill were to happen at this location, there is the possibility of release into Pucketa Creek, which drains into the Allegheny River, the source of drinking water for multiple communities.
  • >>> Radioactivity and other contaminants — Flowback fluids are often highly radioactive, contain heavy metals, and other contaminants that are challenging to effectively clean. The migration of radon gas into homes above the injection formation is also a possibility.

Marathon working to fix flare at Detroit refinery that caused odor - Marathon Petroleum Corp. said it was working to fix a malfunctioning flare at its Detroit refinery that created a pungent odor that permeated the air in metro Detroit on Sunday morning.  "We don't have an estimate for when the repair work will be complete, but we have significantly reduced the amount of material going to the flare, and anticipate being able to de-pressure the vessels connected to the flare by the end of the day tomorrow,"   Marathon anticipates workers will finish removing the contents of the vessels connected to the flare by the end of the day on Monday, and this will allow them to deactivate the flare. At that point, repair work will begin, he said.  According to the statement, Marathon believes the odor is largely from mercaptan, which is a substance added to natural gas to give it a detectable smell. The statement added that an investigation to determine what caused the release is ongoing, and once that is determined, Marathon plans to implement "necessary corrective actions so that this does not happen again." The Marathon refinery is located in southwest Detroit and borders the city of Melvindale, Kheiry said. Wind blowing from the west carried the odor north and northeast. Some people noticed it miles away in Warren in Macomb County. Early Sunday, around 4 a.m., Michigan State Police and local 9-1-1 centers began receiving phone calls from metro Detroit residents reporting a strong odor permeating the air, MSP said. In a series of tweets, MSP said it suspected that the smell was coming from Marathon Oil properties, and that its Emergency Management and Homeland Security Division has been in contact with Marathon, plus local authorities around the Detroit/Dearborn border. "At this time Marathon still shows NO air quality issues on their meters," MSP said in a tweet. "Based on wind direction Marathon agrees their facility could be the source."

Consumers fire highlights ongoing gas safety issues in Michigan, regulator says – The fire at Consumers that put Michigan in a precarious natural gas situation during the bitter cold last month is one in a series of concerning natural gas incidents, the Michigan Public Service Commission said when it opened an investigation into the matter Thursday.The commission will investigate a Jan. 30 fire at the Consumers Ray Natural Gas Compressor Station in Macomb County that jeopardized heat for Michigan residents during a period of extreme cold. Consumers avoided service interruptions by securing agreements from large energy users to cut back and asking residents to voluntarily turn down their heat to 65 degrees. “Events of the past week, let alone the past year, have significantly heightened the Commission’s safety concerns with Michigan gas utilities,” said Commissioner Norman Saari.He pointed to numerous recent natural gas issues, including aPontiac explosion and a Warren gas line issue.Commission Chair Sally Talberg said in a number of these incidents no one has been injured, but it’s an issue the commission sees and is following.And part of it, she said, comes down to infrastructure.“The gas distribution lines, a lot of them are quite old, they were made of cast iron or bare steel,” she said. “Since 2011 we’ve accelerated the replacement of those so that we can protect against accidents.” Talberg said any time there was an explosion MPSC staff were on-site taking measurements and data to identify the cause and any potential violations. But in this case the commission opened a more formal investigation because of the broad impacts on customers.

Group raises questions about Enbridge's insurance on Line 5 - A new report says the State of Michigan did not thoroughly review Enbridge’s ability to cover costs in the case of a spill from its twin Line 5 oil pipelines before it signed an agreement with the company. The pipelines run underneath the Straits of Mackinac. Water law non-profit “For Love of Water,” or FLOW, released a report saying both Wisconsin and Minnesota have hired experts to assess Enbridge's insurance on its projects in those states, but Michigan has not done the same. Skip Pruss, FLOW’s board chair, said that both assessments in other states found problems with Enbridge's coverage.“Given the fact that our two sister states did comprehensive background analyses and risk management studies and employed experts to do it, we wanted to know what Michigan has done," he said. "Michigan apparently hasn’t done any expert review. No experts have been retained.”Pruss called Enbridge's Line 5 insurance "likely deficient and inadequate," based in part on consultations FLOW had with the firm that did assessments in Wisconsin and Minnesota.Additionally, the report details six specific concerns with Line 5's spill coverage, including the dollar amount of insurance and whether it extends to Enbridge subsidiaries.FLOW released the report during a joint press conference with the group "Oil and Water Don't Mix" and the tribal chairman of the Bay Mills Indian Community, Bryan Newland. Newland spoke about his ongoing concern that a Line 5 spill would irreparably damage the ancestral lands of indigenous people in the area."We enjoy a treaty right to use the waters of the Great Lakes for fishing for commercial purposes and also subsistence, and no amount of financial insurance is going to be able to replace that if it's gone," he said. "When the integrity of our sacred locations is disrupted, it can't be repaired by purchasing another place or by getting an insurance check." The Line 5 pipelines carry up to 23 million gallons of crude oil daily.

State, crews monitoring problem in deep gas well in Westmoreland County  - CNX Resources Corp. has spent the past week trying to get a Utica Shale well near the Beaver Run Reservoir in Westmoreland County under control after a problem there was followed by gas pressures spiking at nearby shallow wells. The Cecil-based oil and gas firm was fracking its Shaw 1G well in Washington Township on Jan. 26 when it detected a strong drop in pressure, the company told environmental regulators. It stopped fracking and found some type of obstruction in the well bore, said state Department of Environmental Protection spokeswoman Lauren Fraley. CNX also told the DEP that four conventional — that is, shallower, vertical wells — nearby showed spikes in pressure, a sign of communication between the gas in the Utica well and the four other wells in the vicinity. Neighbors described a parade of trucks and hard-hatted workers dispatched to the Shaw pad and to properties with shallow wells, some of which are being flared to relieve the pressure. Residents were on guard about the activity — and what it might mean for conventional wells on their properties. A DEP crew has been stationed at the site around the clock and will remain there until “we feel confident that the situation is under control,” Ms. Fraley said. A special well control team had been summoned from out of state to “kill” the well, a procedure that involves pumping heavy mud into the wellbore to stop the flow and keep it down. That had not yet happened by Saturday evening. The path of the well travels under the reservoir but it isn’t clear how far along that path the well had been fracked when the problem occurred. According to the well records available in DEP’s database, the Shaw 1G well plunged 13,740 feet below the surface, more than 2 miles deep, and extended some 8,000 feet horizontally. It is not yet known how the gas from it impacted the four conventional wells that are many thousands of feet shallower.

CNX says Utica well now under control, after more shallow wells saw pressure spikes. - CNX Resources Corp. reported Tuesday morning that the operation to bring its problematic Utica Shale well in Westmoreland County under control was successful. “While we continue to evaluate the cause of the initial pressure anomaly, we believe it is isolated to this well,” the company said in a statement. “As a precaution, we will continue to monitor the well for the next several days.”Containing the deep, horizontal well meant pumping very heavy mud into the wellbore, a process that began Monday afternoon. The problem began a week from Saturday, when CNX was fracking its Utica Shaw 1G well and lost pressure on it. Over the next week, the company discovered pressure spikes at nine nearby conventional wells, which it was flaring on Monday to relieve the pressure. The company has expanded the search for pressure anomalies in nearby conventional wells to a 2-mile-radius from the farthest impacted well, Department of Environmental Protection spokeswoman Lauren Fraley said Monday. “This includes the discovery of an unpermitted private gas well,” she said. This means that more wells could potentially be diagnosed as impacted, as the company works its way through the area.  It is still not clear what went wrong with the Utica well or how its problem ended up impacting wells thousands of feet away. Ms. Fraley noted that no environment damage has been reported by field staff at the agency’s oil and gas, safe drinking water and air quality departments.None of the impacted conventional wells are in the path of the Shaw 1G, which runs more than a mile in a southeast direction. Instead, the overpressured wells are to the north, west, and east of the Utica well.

Utica shale gas well in Washington Township contained - CNX Resources contained a Utica shale gas well that experienced a significant drop in pressure last week, the company said Tuesday. Well “killing” operations on Shaw 1G well in Washington Township began at about 5 p.m. Monday and were completed by 11 p.m., said Lauren Fraley, spokeswoman for the state Department of Environmental Protection’s Southwest Regional Office. Killing involves pumping heavy mud and cement into the well, essentially sealing it off. “We are still evaluating next steps for the Shaw 1G well and the other three wells on that pad,” CNX spokesman Brian Aiello said, noting well drilling was completed Jan. 5 and fracking started the next day. The Canonsburg-based company experienced a significant loss of pressure with the new well during fracking operations Jan. 26, Fraley said. The pressure decrease was accompanied by “potential communication with other nearby conventional wells,” she said. CNX has since expanded flaring to nine conventional wells in the vicinity of the Shaw 1G well, she said. The DEP describes flaring as a combustion device used to control emissions by burning off flammable gas, often to reduce pressure. In the meantime, fracking operations on the four-well Shaw pad, on the northwestern side of Beaver Run Reservoir, have been suspended while CNX investigates the cause of the incident, the company said in a statement. “We believe it is isolated to this well,” the statement said. Fracking has been occurring near Beaver Run Reservoir, source of water to about 130,000 people in northern Westmoreland County, since 2011. The seven CNX well pads on property owned by the Municipal Authority of Westmoreland County currently have 45 Marcellus wells and seven Utica wells, the company said. The municipal authority operates the George R. Sweeney Water Plant at Beaver Run Reservoir, which serves 23 communities in northern Westmoreland County and small portions of Armstrong and Indiana counties. Both CNX and the municipal authority have said there has been no impact to the reservoir and the situation is being closely monitored. 

New Penna. Utica Well Being Plugged After Disturbing Other Wells - CNX Resources Corp. has spent the past week trying to get a Utica Shale well near the Beaver Run Reservoir in Westmoreland County under control after a problem there was followed by gas pressures spiking at nearby shallow wells. The Cecil-based oil and gas firm was fracking its Shaw 1G well in Washington Township on Jan. 26 when it detected a strong drop in pressure, the company told environmental regulators. It stopped fracking and found some type of obstruction in the well bore, said state Department of Environmental Protection spokeswoman Lauren Fraley. CNX also told the PA-DEP that four conventional — that is, shallower, vertical wells — nearby showed spikes in pressure, a sign of communication between the gas in the Utica well and the four other wells in the vicinity. Neighbors described a parade of trucks and hard-hatted workers dispatched to the Shaw pad and to properties with shallow wells, some of which are being flared to relieve the pressure. Residents were on guard about the activity — and what it might mean for conventional wells on their properties. A PA-DEP crew has been stationed at the site around the clock and will remain there until “we feel confident that the situation is under control,” Ms. Fraley said. A special well control team had been summoned from out of state to “kill” the well, a procedure that involves pumping heavy mud into the wellbore to stop the flow and keep it down. That had not yet happened by Saturday evening. Ms. Fraley said at this point, the agency is not aware of any pollution or impacts to environmental resources as a result of the situation. A statement from the Municipal Authority of Westmoreland County, which operates the Beaver Run Reservoir and supplies water to more than 120,000 customers, assured that water quality has not been compromised. The path of the well travels under the reservoir but it isn’t clear how far along that path the well had been fracked when the problem occurred.

Beaver Run Reservoir gas remediations successful — CNX Resources Corporation said Monday that efforts had been successful to remediate a gas well and arrest a subsurface flow of natural gas from the Utica shale well near Beaver Run Reservoir in Washington Township, Westmoreland County. “The remediation process was successful and the well has been contained,” the energy provider based in Canonsburg, Washington County, said in a news release. “There were no injuries and no impact to the environment.” The problem was determined to be “a pressure anomaly during hydraulic fracturing operations on the Shaw 1G well,” the CNX release said. “While we continue to evaluate the cause of the initial pressure anomaly, we believe it is isolated to this well.” Still, all hydraulic fracturing operations on the four-well Shaw pad remain suspended while CNX officials assess the incident. “As a precaution,” CNX officials said they will continue to monitor the well for the next several days, as well as “existing nearby gas wells,” managing any residual gas communication with those wells. That included any impact to drinking water supplies, as the 11-billion-gallon Beaver Run facility serves approximately 130,000 Municipal Authority of Westmoreland County customers in parts of Westmoreland, Armstrong and Indiana counties, including Saltsburg, Kiskiminetas Township and Loyalhanna Township.“During the fracking stage of the Utica well, CNX experienced a significant loss of pressure and communication with four other nearby conventional wells which were flared to relieve pressure,” Fraley said. “CNX reported to DEP (Monday) that it expanded flaring to a total of nine conventional wells in the vicinity of the Shaw 1G well.” Fraley said a contractor brought in by CNX was working to “kill” the well by “pumping a thick heavy mud into the well to stop any flow of gas.” She said this was accomplished in a six-hour period Monday night. .

Sunoco pipeline easements expiring in Chester County - —Sunoco’s temporary easements related to construction of the controversial Mariner East pipeline project are expiring at sites throughout Chester County, state Sen. Andy Dinniman said. In a lawsuit filed this afternoon in Chester County Common Pleas Court, attorneys for the Hankin Group, a Chester County-based residential, commercial and retail developer, asked a judge to force Sunoco off four of its properties where it is still constructing the pipeline. The four sites identified in the filing include one at Corner Park Apartments on Boot Road in West Whiteland, one at New Kent Apartments in East Goshen, and two on Stockton Drive and Sierra Drive at Eagleview in Upper Uwchlan. Residents have raised numerous concerns about pipeline construction at these locations, including environmental, air quality and quality-of-life impacts, given their close proximity to multi-family residential dwellings. The complaint contends that Sunoco is in breach of a temporary easement agreement that has elapsed on the Corner Park and New Kent Properties in November and on the Eagleview Properties in January. In turn, the four-count complaint calls for Sunoco to immediately cease all pipeline construction activities at the sites, remove all construction equipment, pipes, machinery and related materials there, and restore the affected areas to their prior condition. In addition, Hankin Group is suing Sunoco for trespassing, breach of agreement and damages. According to the lawsuit, Sunoco’ trespass and breach of easement agreements have caused “damage to the ground caused by excavation; damage from excessive runoff caused by removal of grass and foliage; harm to the value of properties; lost rents; loss of use; and diminution in value of properties.”

PUC seeks school evacuation drills on pipeline route - The Public Utility Commission has asked Sunoco to work with county emergency officials and some school districts to plan evacuation drills in case of a leak in the Mariner East pipelines, a senior PUC official said on Thursday. Paul Metro, Manager of Gas Safety at the PUC’s Bureau of Investigation and Enforcement, told a community meeting in Chester County that there was a “communication gap” between school districts and the emergency planners who are responsible for evacuation plans. Although the PUC isn’t responsible for evacuation plans, it facilitated talks with several state agencies, and agreed to ask Sunoco to set up the plans, Metro told the meeting. “Plans are being worked out for these drills,” he said. The school districts include West Chester, whose superintendent, Jim Scanlon, said he had been in talks about holding an evacuation drill but has no immediate plans to do so. “We have discussed that with our administrative team,” he said. “We will probably pick that back up in the summer.” The plans were discussed at the latest public meeting between state and federal pipeline safety officials and residents of Philadelphia’s western suburbs who continue to seek information that might help them feel safer about the multibillion-dollar pipeline project that is now carrying natural gas liquids through their communities. About 150 people gathered in a West Chester middle school auditorium on Thursday evening to hear 10 officials from the Public Utility Commission, the Department of Environmental Protection, and the federal Pipeline and Hazardous Materials Safety Administration defend their efforts to ensure the safety of the controversial pipelines. The officials said they were doing everything they can within their jurisdictions to ensure that the pipelines are built and operated safely, but they repeatedly emphasized the limits of their powers.

Delco moves to intervene in suit vs. Mariner East pipeline project - — Delaware County is jumping into the legal battle being waged over the controversial Mariner East pipeline project. Delaware County Council Wednesday voted 4-0 to intervene in a lawsuit against the owners of the Mariner East pipeline. Council authorized county solicitor Michael Maddren to draft a petition to intervene in the suit filed by seven residents of Delaware and Chester counties. County Council Chairman John McBlain abstained since the law firm where he works has done work for Sunoco although he himself has not. In November, several residents filed a complaint with the Pennsylvania Public Utility Commission against Sunoco/Energy Transfer Partners, citing the risk associated with the Mariner East pipeline. “It’s incumbent us to at least have a seat at the table in a proceeding that has clear impact on the safety of our residents,” county Councilman Kevin Madden said. “That’s what filing a motion to intervene would allow us to do.” When Delaware County Council intervenes, they will be joining the Rose Tree Media, Downingtown Area and Twin Valley school districts and East Goshen Township in doing so. The legal maneuver comes just days after a butane leak was reported at the Marcus Hook Industrial Complex Monday..  The 350-mile Mariner East 2 pipeline has been active since December and moves ethane, propane and butane from western Pennsylvania and Ohio to the Marcus Hook facility, where the natural gas liquids are stored for distribution to local, domestic and international customers. The Mariner East 1 pipeline was shut down last month after a sinkhole exposed the 8-inch portion of the line was exposed in a backyard in West Whiteland, Chester County. It's the same neighborhood where sinkhole problems last winter caused the PUC to shut down Mariner East 1 and halt work on Mariner East 2. At the Jan. 23 Delaware County Council meeting, several residents asked council to consider intervening in the case.

Pipeline company, PUC no-shows at county meeting - Cumberland County Commissioners are scratching their heads, wondering why they had to cancel yet another public meeting with Energy Transfer Partners, the company that operates the Mariner East II pipeline with its subsidiary Sunoco. After the company canceled a July meeting to address concerns in Lower Frankford Township, commissioners asked the state's Public Utility Commission to get involved. Energy Transfer Partners and PUC representatives were invited to a meeting Thursday, but the meeting was canceled after the other parties said they would not be in attendance. Commissioner Jim Hertzler says they don't have an explanation why no one wanted to show. "The company just apparently refuses to meet with the public in various settings to discuss what it is they're doing," Hertzler said. Hertzler doesn't personally have a problem with the pipeline but says it's not right that the public can't get their questions answered. Energy Transfer Partners did not reply to requests for comment.

Pa. suspends review of permit applications for pipeline company -— State environmental regulators on Friday suspended their review of permit applications and other approvals requested by Energy Transfer LP and its subsidiaries after the pipeline company failed to comply with agency orders following an explosion in Beaver County last fall. Texas-based Energy Transfer owns both the ruptured Revolution natural gas pipeline and the controversial cross-state Mariner East gas liquids pipelines in Pennsylvania. The Pennsylvania Department of Environmental Protection said the suspension will apply to all reviews of clean water permit applications for the company and will affect the in-service date for the Revolution pipeline, which has not started operating after the explosion. The action means that any new construction on company pipeline projects that require DEP approval are on hold for now. Energy Transfer can continue work at sites where it needs no new permits. The Mariner East 2 pipeline, operated by Energy Transfer subsidiary Sunoco Pipeline LP, is flowing partially through repurposed pipelines while construction of the full project’s twin pipelines is completed. It transfers ethane, propane, and butane across the state to a facility in Marcus Hook, Delaware County. DEP said it is currently reviewing 27 approvals for Mariner East 2, all of which are now on hold. DEP Secretary Patrick McDonnell said Energy Transfer, which operates the facility in Marcus Hook, failed to comply with the agency’s Oct. 29, 2018, order to stabilize the site of the Revolution pipeline explosion, which was caused by a landslide on the steep hillside in Center Township where the pipeline was buried. “In October, DEP cited for sediment-laden discharges into waterways, improperly maintained erosion controls, and failure to stabilize disturbed areas,” McDonnell said. “Disappointingly, many of these issues persist.”

EQT Reports A 3-Mile Lateral In Pennsylvania -- February 7, 2019  - From Emergent Group today, look at this: EQT reported two completions on a multiple well pad in Washington county, Pennsylvania. Haywood Mon110H24 and Haywood Mon110H25 were completed on January 3 and tested January 7. The H24 produced 15,565 MMcf of gas on its 38 stage lateral with a vertical depth of 7,332 ft.  The H25 was drilled to 7,304 ft with a 129 stage 18,450 ft lateral length. Both wells use frac material provided by FTSI International, perforations by GR Energy Services, and drill out services by Mountain State Pressure Services. The Cogar 592747, drilled on a separate pad in Washington, Pennsylvania, produced 15,341 MMcf of gas. Its 35 stage lateral was drilled to 5,935 ft with perforations from 8,471 ft to 13,299 ft.  It has a vertical depth of 7,621 ft and a measured depth of 3,556 ft. Frac horsepower was provided by Keane and cementing by BJ Cement Services. Did you see that? A three-mile lateral? 129 stages and 18,450 feet lateral length. Actually, three miles is 15,840 feel, so this is well over three miles long.

Gas driller seeking to have man thrown in jail for contempt - A gas driller is escalating its campaign against Kemble, a Pennsylvania homeowner who's long accused the company of polluting his water, demanding that he be thrown in jail over his failure to submit to questioning as part of the company's $5 million lawsuit against him. (AP Photo/Michael Rubinkam, File)A gas driller is escalating its campaign against a Pennsylvania homeowner who’s long accused the company of polluting his water, demanding that he be thrown in jail over his failure to submit to questioning as part of the company’s $5 million lawsuit against him. Houston-based Cabot Oil & Gas Corp. sued Dimock resident Ray Kemble and his former lawyers in 2017, claiming they tried to extort the company through a frivolous federal lawsuit that recycled already-settled claims of environmental contamination. Cabot also claims Kemble violated a 2012 settlement agreement by repeatedly “spouting lies” about the company in public. In court papers filed this month, Cabot said Kemble had skipped two depositions in the case, and asked a judge to hold him in contempt and put him behind bars until he meets with the company’s lawyers. Kemble, who has said he has cancer, said he was unable to go the depositions because of his poor health. A hearing is scheduled for Monday. Kemble, who has traveled the country speaking about his experiences with the gas industry, didn’t return a phone call seeking comment. But an environmental group that has worked with him for years blasted Cabot’s aggressive posture. “To try to put a man like Ray Kemble in jail speaks volumes about the decency of this industry,” said Scott Edwards, an environmental lawyer at Food & Water Watch. “It’s an outrage.”

Decision Delayed in Cabot's Suit against Man Fighting Natural Gas Drilling ...-- There will be no jail time--at least not yet--for a man being sued for being critical of a natural gas driller in Susquehanna County. It's the latest chapter in the court battle between Cabot Oil & Gas and Ray Kemble. Kemble left the Susquehanna County Courthouse in Montrose using a walker on Monday. The man from Dimock is facing a lawsuit from the largest natural gas company in the county -- Cabot Oil & Gas. "Well, I've fired my lawyer. I'm done with him, so he's done. He's gone. We're going to get new counsel," Kemble said. Related Story Attorneys Argue Cabot Lawsuit in Susquehanna County That buys Kemble more than a month before he's agreed to a deposition with Cabot's attorneys. The Texas-based company had asked the judge to jail Kemble because he missed two previous deposition dates. "We want to have him deposed, very simply. He's quick to tell everybody else his plight. We want him to tell that plight through a deposition. You can't avoid these things, can't not show up," said George Stark of Cabot Oil & Gas. This court battle between Cabot and Kemble has been going on for quite some time now. This decision by a judge in Susquehanna County means Ray Kemble has until late March to get another attorney and then have to answer questions for attorneys in this lawsuit. Kemble originally sued Cabot, claiming the company contaminated his and others' drinking water in Dimock. Then the two parties settled. Now, Cabot is countersuing and claims Kemble is a paid activist and is in violation of the settlement agreement. "We're talking about Ray Kemble? We're talking about those folks, those type of actors. They're getting paid, getting employed," said Stark

Ban fracking waste anywhere in New Jersey: Romero - Gov, Phil Murphy’s call for a ban on fracking and the dumping of fracking waste in the Delaware River basin is a bold move to protect a clean drinking water source for millions. But if this toxic drilling waste is a danger to the Delaware, it’s a danger everywhere else. That’s why fracking waste should be banned across the Garden State. A waste ban bill passed the state Senate in November, but it remains stymied in the Assembly. It’s time for Speaker Craig Coughlin to bring this measure up for a vote. Her Millions of gallons of fluid mixture (water, sand and chemicals) are pumped underground per well. The chemical waste that flows up to the surface can combine with naturally occurring contaminants underground such as benzene, arsenic and lead. Oil and gas wells in Pennsylvania generate hundreds of millions of gallons of this leftover toxic slurry, and it has to go somewhere. And the petrochemical industry may have their sights set on New Jersey. This drilling waste creates an array of problems, from earthquakes linked to underground waste storage to the direct threat to waterways from waste spilled from trucks hauling it to treatment facilities. A recent study from Pennsylvania found evidence of chemical contamination in the shells of freshwater mussels even years after the industry had stopped dumping waste in nearby waterways. And the dangers that fracking waste pose to clean water and public health are likely more serious than we think. Fracking companies are allowed to keep the chemicals they pump into the ground a secret, which means that the toxic stew left over from drilling can wind up at conventional treatment facilities that are not equipped to treat radioactive material and other fracking-linked contaminants. This dirty business could be on its way to our state. A law passed last summer would make it easier for the Chemours/DuPont Chamber Works facility in Salem County to get permits to accept outside hazardous waste. This same facility received more than 1 million gallons of fracking wastewater between 2009 and 2010, discharging the treated water into the Delaware River. Other facilities that have accepted drilling waste in the past.

Bill to ban oil and gas drilling in New York’s coastal areas passes State Legislature -- State lawmakers today passed legislation to prohibit oil and natural gas drilling in New York’s coastal areas. The measure would prohibit the use of state-owned underwater coastal lands for oil and natural gas drilling and would prevent the Department of Environmental Conservation and the Office of General Services from authorizing leases that would increase oil or natural gas production from federal waters. It would also prohibit the development of infrastructure associated with exploration, development or production of oil or natural gas from New York’s coastal waters. Assemblyman Steve Englebright (D-Setauket), who chairs the Assembly’s Environmental Conservation Committee, sponsored the bill in that chamber. “My colleagues and I held a hearing on Long Island last year and there was unanimous condemnation of the federal government’s proposal to open up our waters to drilling for oil and gas,” Englebright said. In 2017, President Donald Trump issued an “America-First Offshore Energy Strategy” as the first step toward opening previously protected parts of the Outer Continental Shelf to oil and gas exploration. Drilling off New York’s Atlantic Coast has been off limits for decades, and as a result some of the state’s laws regulating oil and natural gas drilling have not kept pace,

14,400+ call on Cuomo to Stop the Williams Fracked Gas Pipeline  -  - Today, dozens of members of the Stop the Williams Pipeline NY Coalition gathered in Albany for a press conference before delivering more than 14,400 petition signatures calling on Governor Andrew Cuomo walk the talk on climate action and stop the Williams fracked gas pipeline.  “Stopping the Williams fracked gas pipeline is Governor Cuomo’s first major test of his commitment to a Green New Deal for New York,” said Laura Shindell of Food & Water Watch, an activist with the Stop Williams Pipeline NY Coalition. “That’s why we’re in Albany today, representing the thousands of people who've signed the petition to stop this pipeline.”This comes as reports reveal the Trump administration is considering taking action to limit states’ power to block dangerous fossil fuel projects, such as the Williams NESE fracked gas pipeline. The pipeline would be part of a Northeast Supply Enhancement (NESE) project attempting to transport fracked gas from Pennsylvania across New Jersey into New York City.“There’s no demand for this fracked gas. What we need is a just transition to 100% renewable energy. As Trump and fossil fuel cronies prop up big oil and gas interests ahead of public interest, real action on the climate crisis needs come from places like New York,” said Cata Romo of 350.org and the Stop the Williams Pipeline NY Coa lition. “After banning fracking, Cuomo needs to stop fracked gas projects like the Williams pipeline from wreaking havoc on our communities. There’s absolutely no room for fossil fuels in a Green New Deal.”

Federal court vacates NYSDEC’s pipeline certificate denial - A federal appeals court vacated the New York State Department of Environmental Conservation’s (NYSDEP) denial of a water-quality certificate to the proposed Northern Access natural gas pipeline project on Feb. 5. The US Court of Appeals for the Second Circuit remanded the matter back to the state agency with instructions to more clearly articulate its basis for denial.  Sponsors National Fuel Gas Co. and Empire Pipeline Inc. applied for a NYSDEC certification under Section 401 of the federal Clean Water Act on Mar. 2, 2016. The agency denied the application on Apr. 7, 2017 after the US Federal Energy Regulatory Commission issued the project a certificate of public convenience and Pennsylvania’s Department of Environmental Protection issued it a state water quality certification. The sponsors sued in federal court to overturn the New York agency’s action. FERC later ruled that NYSDEC waived its authority to deny the permit because it did not act within a year of receiving the interstate natural gas pipeline sponsors’ application for it (OGJ Online, Aug. 7, 2017). “Today's court decision continues the momentum for this project,” a National Fuel Gas spokeswoman said on Feb. 5. “As FERC stated in its Aug. 6 order, [NYSDEC] waived the ability to issue or deny a Clean Water Act Section 401 permit for the Northern Access project.  The Second Circuit also has now made it clear that New York's denial of the permit application failed to provide factual justification for their decision.”

National Grid presses state for new gas pipeline -- National Grid may be forced to declare a moratorium on supplying natural gas to big new projects such as the Belmont Park redevelopment if the company’s plans for a $1 billion gas pipeline don’t receive a needed state permit by May 15, a top company official said. Growing demand, including record gas sales this month, and plans to supply gas for several big development projects necessitate the pipeline, which would provide up to 400 million cubic feet a day of new gas to the region, National Grid New York president John Bruckner said. The plan awaits a critical water quality permit from New York State. But Gov. Andrew M. Cuomo’s administration last year rejected the application and has hesitated to approve new fossil fuel infrastructure projects. National Grid is seeking state approval for a 24-mile gas pipeline, which includes about 18 miles under New York Bay and connects with existing infrastructure at sea beyond the Rockaways. Bruckner addressed his concerns about adequate supply for the region and the need for the project at a meeting with the Long Island Association on Friday morning. The LIA, a business lobbying group, supports the planned gas line, called the Northeast Supply Enhancement Project.

Columbia Gas Fined $75000 For 2016 Pipeline Pressure Spike Only After Recent Explosions - Two years before homes exploded in the Merrimack Valley, the pressure in Columbia Gas pipes rose dangerously high — a violation of federal safety regulations that only recently led to a $75,000 fine and orders from state regulators for the utility to clean up its act. The Department of Public Utilities issued five violations linked to the incident and levied the previously unreported fine on Columbia Gas two months after the September explosions that killed one person, injured dozens of others and left hundreds without gas in their homes for months. The incident that led to the DPU's reprimand happened in February 2016 in Taunton. The pressure in Columbia Gas’ pipes hit alarming levels for almost a half hour, records show, violating federal pipeline safety regulations for failing to protect against accidental overpressurization or properly maintain its equipment. Gas companies are required to tell DPU when pressure in the pipes gets too high. WBUR discovered through public records Columbia Gas has a history of problems with overpressurization. The utility reported five separate incidents over a six-year period — from 2011 to 2016 — when pipeline pressure climbed beyond what’s considered safe. Any pressure that reaches over 10 percent of what the pipe is designed to handle is a violation of federal regulations. And years earlier, in 1999, Columbia Gas faced reprimands from DPU over pipeline safety standards. Pipeline experts say allowing the pressure to get that high even once is a cause for concern. Richard Kuprewicz was in the pipeline business for 40 years and now works as a consultant. He testified at the congressional hearing in Lawrence on the disaster. He's stunned by Columbia Gas’ track record. “Well you can quote me on this but, are you crazy? You just don't do that,” he said. “That would suggest a systemic issue within the company. … Exceeding 10 percent where it is required — even by a few percent — says a lot about the approach to prevent overpressure within a company culture.” During Columbia Gas’ most significant incident — the one that was the source of the fine — the pressure surged for 27 minutes after an equipment failure. Documents provided by Columbia Gas show the pressure reached more than 15 percent above what it was designed to handle. DPU didn’t explain why there was a two-year lag between the 27-minute spike in pressure and the fine over the incident.

Protesters block access where Vermont Gas line would go - Bearing banners and singing songs, several dozen protesters blocked an expected appraisal Thursday at Monkton resident Claire Broughton’s property, where Vermont Gas Systems is seeking to lay a natural gas pipeline over her objections.  The protesters waited in a cold wind for about an hour before hearing via Broughton’s lawyer that state officials had called off the visit. He said officials deemed the situation too “menacing.” Protesters say they plan to ramp up activities as the pipeline moves forward, now that a recent Public Service Board ruling in its favor has cleared the way. Vermont Gas has built 11 miles of the 41-mile project already, traversing the distance from Colchester to Williston. When complete it will extend to Middlebury. The company says it has reached voluntary agreements with nearly everyone else whose property is in the path of the pipeline. An eminent domain hearing by the Public Service Board involving Broughton’s property was to be held in late December but was rescheduled after protesters became disruptive. Broughton’s attorney, Jim Dumont, said she welcomes the appraisal but opposes the eminent domain proceeding.  “The protests going on outside are on a public road, and as far as Claire is concerned, these folks have a First Amendment right to their opinions, and that’s what they’re doing,” Dumont said Thursday. The protesters indicated they were focused on both Broughton’s situation and the wider threat from burning natural gas. “We believe climate warming is real, it’s human-caused, and it’s really a danger for the future of the world and the people on it, so saving the world is what it’s about,”  The protests will continue, organizers say.  “People are really mad, and it’s really easy to empathize with Claire in there,” said Alex Prolman, of Rising Tide Vermont, one of the groups involved in the protest. “There are opportunities to keep helping our neighbors and our friends during this process, and it’s not a difficult ask for a lot of people. They heard there was an eminent domain procedure happening, and they said, ‘When? Where? I’ll be there.’”

Senate panel gets look at bill that would ban new oil and gas pipelines - If Democratic and Progressive lawmakers have their way, Vermont could become the first state to ban new oil and natural gas pipelines.Sen. Alison Clarkson, D-Windsor, gave the Senate Natural Resources and Energy Committee Tuesday a run-through of S.66, a bill that would prohibit new fossil fuel infrastructure. “We feel fairly strongly that investing further in the infrastructure at this point in time … would be imprudent given that we hope, as Vermonters addressing climate change — one of the greatest challenges of our time — that we will move to more energy efficient and renewable sources,” she said to the five senators on the committee.The prohibition would not apply to gas stations, fuel trucks or repairs to existing pipelines, said Clarkson.The proposal comes as part of a spate of proposals from environmental advocates to address the state’s rising greenhouse gas emissions. Heating contributes just shy of 28 percent of total emissions, with heating oil and propane accounting for 75 percent of those emissions, natural gas contributing 22 percent and wood heat contributing 3 percent. Portland, Oregon, and King County, Washington have recently enacted similar bans.The bill does not single out natural gas pipelines, but Julie Macuga of 350Vermont — a climate change advocacy group that has been pushing for this ban — said she was not aware of any other major fossil fuel infrastructure being planned in Vermont.  Environmentalists and Vermont Gas, the state’s lone natural gas utility, have squared off in recent years over the company’s plans to build a 41-mile pipeline from Colchester to Middlebury. Although the Addison County pipeline was completed in 2017, the project has been mired in an ongoing state investigation into its construction methods. Nearby residents and the state’s Department of Public Service asked Vermont’s utility regulator to look into concerns including pipeline depth and whether a professional engineer had signed off on the construction plans.

Appalachia's approaching energy boom - — Economic “game changer” is not a phrase often used in Appalachia and rarely a phrase proclaimed in unison by politicians from both parties at the same time on any subject. Yet since 2016, when Shell Chemical announced it was building a $6 billion ethane cracker plant here, an economic revolution began that is far from reaching its potential. The cracker plant in Beaver County is all about a molecular “cracking,” in which extreme heat “cracks” ethane molecules to form new ones that will eventually produce more than a million metric tons of polyethylene, a type of plastic used in all kinds of common household products. The gas found here in the Appalachian region of Western Pennsylvania, Eastern Ohio, and West Virginia is low cost and “wet,” meaning it carries highly valued natural gas liquids, or NGLs. When separated and refined, it can become different fuels, such as fertilizer or propane. The project has already created 1,000 new jobs and is expected to top out at 6,000 during the construction and preparation phases over the next decade before the plant is fully operational. The plant itself is expected to employ more than 600 people permanently, a mix of labor, engineers, and chemists, with Shell analysts predicting it will provide work for two to three times that number in its supply chain. In his annual report to Congress late last year, Department of Energy Secretary Rick Perry recommended that a new ethane storage and distribution hub be built somewhere near this plant, something that could potentially renew prosperity in the tri-state region of Pennsylvania, Ohio, and West Virginia. The DOE’s recommendation was a response to a congressional inquiry about the feasibility of establishing an additional large ethane storage and distribution hub for NGLs somewhere in the United States.  The Appalachian ethane hub would be similar to others run by private industries in Kansas, the Gulf Coast, and the Permian Basin. Perry argues that creating one in the middle of the country, surrounded by the region’s rich natural resources, would increase America’s global market share and solve long-term national security concerns about the impact of a major natural disaster by placing production at different locations around the country.

Petrochemical pros, cons: ‘Invasion’ forum counters pluses of industry in region - The 42-mile drive from Washington to Potter Township represents the proverbial scenic route as it winds through rural and wooded areas north into Beaver County. Eventually, the relative tranquility gives way to the panorama of a massive construction project: the Shell Chemical Appalachia Petrochemical Complex, taking shape on a 340-tract along the Ohio River and representing a $6 billion investment by one of giants of the oil and gas industry, Royal Dutch Shell.  The purpose of the plant is to break up molecules of ethane – a byproduct of hydraulic fracturing, or fracking – into smaller molecules as a step in the creation of plastics. By industry parlance, the process involves molecules being “cracked,” hence the common reference to cracker plants. Those in favor cite job creation as a major plus: some 6,000 workers during construction and 600 full-time employees when the plant goes into operation in the early 2020s. Further employment opportunities could arise with the development of a regional pipeline system connecting natural gas suppliers with the Shell complex and other similar plants, if built. And according to Marcellus Drilling News, Asian companies PTT Global Chemical and Daelim Industrial Co. have been exploring the possibility of building a cracker plant in Belmont County, Ohio, also along the Ohio River. “Natural gas is the biggest game changer, and everybody in the tri-state should collaborate on this,” Robbie Matesic, executive director of the Greene County Department of Economic Development, said, “We need to be as responsive as we can, as collaborative as we can, as fast as we can and as fearless as we can,” she said. “This is a global market we’re in now.” Then there’s the flipside. “The Petrochemical Invasion of Western PA: Its Environmental Consequences and What Can Be Done About It” served as the theme for a recent forum at Unitarian Universalist Church of the South Hills in Mt. Lebanon, with a variety of panelists expressing reasons to oppose the prevalence of fossil-fuel-related industries in the region.  “We still have a serious air-quality problem in Southwestern Pennsylvania, and adding to our airshed burden will only make things worse,” he told the forum’s audience. “We consistently get failing grades from the American Lung Association: three F’s several years in a row, the only place outside of California with that distinction.”

Mary Wildfire: One problem with petro storage hub everyone is missing -- Area newspapers are full of editorials and op-eds lauding the proposed petrochemical storage hub as the salvation of the Ohio Valley. Others discuss the downside: the risks of air and water pollution, the degradation of a quiet, rural landscape into an industrial zone, and the increase in drilling and fracking it would spur, with all the associated harms in the nearby gasfields of the Marcellus and Utica shales. Health threats are also mentioned, as is climate change. But I see another risk nobody seems to be talking about. If proponents have their way, scores of billions of dollars will be sunk into this complex of storage caverns, crackers and plastic plants, plus the pipelines to connect all the components. What if the complex doesn’t operate long? We will be left with an enormous, ugly mess lining the Ohio River, and likely no money and other resources left either to clean it up or to build something more practical. I see two possible reasons why this might happen. One is the possibility that the resource is not nearly as extensive as claimed. David Hughes, a Canadian geologist, produced a report a few years ago called “Drilling Deeper” in which he examined the data, well by well, for shale oil and gas in the U.S. He found that estimations by the U.S. Energy Information Administration are highly optimistic in essentially all cases; the word he used for the Marcellus was “extremely” optimistic. The report notes that drillers here, in an effort to become profitable, are concentrating on “sweet spots” — when those are exhausted, they will have to turn to less promising sections. Aren’t they profitable now? Not according to a series by DeSmog Blog, which suggests that most of the gas companies are struggling to pay creditors. The other threat to the long-term viability of the petro complex is that it will ultimately be blocked or shut down by environmental concerns — either local ones such as those mentioned above, or the global ones of climate change and plastic pollution. Key to the complex, after all, is the production of plastic. Meanwhile, renewable energy and batteries keep getting cheaper. So between the possibility of economics causing a decline of the natural gas liquids source, and people being unwilling to accept the “externalities,” an enormously expensive petrochemical complex could become a stranded asset.

Columbia Gas' Mountaineer XPress seeking to start up more facilities in West Virginia — TransCanada's Columbia Gas Transmission asked US regulators on Thursday for approval to begin service on additional segments of its Mountaineer XPress pipeline that will allow the operator to provide another approximately 250 MMcf/d of firm capacity. The 2.7 Bcf/d natural gas pipeline in West Virginia is part of a wave of new infrastructure designed to boost the flow of shale supplies from the Appalachian Basin in the US Northeast to downstream markets. The latest request to the Federal Energy Regulatory Commission covers more than 20 miles of 36-inch pipeline in Marshall and Wetzel counties and related equipment. It follows previous approvals in October, November and January for other portions of the project, which encompasses about 165 miles of greenfield pipe in West Virginia along with three compressor stations, upgrades to three existing compressor stations and construction of smaller pipeline segment. "Columbia anticipates mechanical completion of the facilities that are the subject of this request as early as February 11," the operator's in-service request states. If approved, Columbia Gas will be able to provide additional firm contracted service to THQ Marketing as an anchor shipper on Mountaineer XPress, the request states. Columbia Gas is seeking approval by February 12. The project is designed to transport growing production from the Marcellus and Utica shale plays to Columbia's TCO Pool and farther south to pooling points on Columbia Gulf Transmission. Along with Columbia Gulf's 860 MMcf/d Gulf XPress project, the expansion is projected to provide incremental capacity between the US Northeast and the Gulf Coast. The company previously hoped to have the Mountaineer XPress in full service in late 2018. But it has faced some challenges, in part due to trouble with erosion controls and land slips that added to the need for restoration. On its Columbia Gas system, TransCanada started up in the fall its 1.3 Bcf/d WB XPress pipeline, which is aimed at expanding WB mainline capacity and, among other things, will help feed Appalachian Basin production to Dominion Energy 's Cove Point LNG export terminal in Maryland.

Oil and Gas Abandoned Well Plugging Fund --This week we saw some bills related to conventional oil wells, HB 2673 – Creating the Oil and Gas Abandoned Well Plugging Fund. The bill will cut the oil severance tax on applicable wells (producing less than 60,000 cu. Ft. per day) from 5% to 0% but introduce a rate of 2.5% that goes to the newly created Oil and Gas Abandoned Well Plugging Fund. The bill passed House Energy and is on its way to House Finance. While this bill does add to moneys to plug current wells, it does not address the growing issue of more abandoned and orphaned wells. Dave McMahon of West Virginia Surface Owners Rights Organization (SORO) is working on legislation to address the 4500 current orphaned wells, and the predicted 10,000 additional orphaned wells over the next few decades. Proposed legislation will require “plugging assurance” in the form of a bond or escrow for each well rather than a blanketed performance bond. We want this assurance on new wells, wells transferred between drillers, and wells that are no longer producing in paying quantities. We expect the industry to agree to some bills that will provide money to plug a few of the orphaned wells!

Appeals court allows quick-take of land for Mountain Valley Pipeline - An appeals court has upheld the “take first, pay later” approach to building the Mountain Valley Pipeline, in which the company condemned private property in the project’s path before paying opposing landowners for their losses. The ruling Tuesday by the 4th U.S. Circuit Court of Appeals was a blow to pipeline foes, who have long decried the use of eminent domain to take parts of family farms and rural homeplaces to make way for a 303-mile natural gas pipeline. In their appeal, the landowners did not contest the laws that allowed Mountain Valley to obtain forced easements through nearly 300 parcels in Southwest Virginia. But they challenged a ruling by U.S. District Court Judge Elizabeth Dillon, who granted Mountain Valley immediate possession of the disputed land before deciding how much each property owner should be compensated. Dillon’s decision was instrumental in allowing the company to move forward with tree-cutting in February 2018. At the time, Mountain Valley officials testified that they needed to start timbering as soon as possible to keep the project on schedule and to meet a March 31 deadline for the felling of trees before they became the warm-weather habitats of protected species of bats. The company would have suffered serious financial harm if it was forced to wait to begin tree-cutting until mid-November, after the bats had gone back into hibernation, Dillon ruled in allowing Mountain Valley to take first and pay later. Two other federal judges, who preside over districts in West Virginia through which the pipeline will pass, made similar calls. All three of the decisions were consolidated into one case, with a three-judge panel ruling unanimously in Mountain Valley’s favor.

Fire at pipeline construction site under arson investigation (AP) - Authorities say heavy equipment has been set on fire at a Mountain Valley Pipeline construction site in Virginia. News outlets cite a statement from the Pittsylvania County Sheriff's Office as saying that a caller reported a vehicle on fire Saturday night in the Smith Mountain community. No one was injured. The statement says officers at the scene discovered the vehicle was a piece of earth-moving equipment located on the site of the pipeline construction right of way. There was about $500,000 in damage to the Caterpillar PL87 pipe layer. No other equipment was damaged by the fire. The sheriff's office says fire marshals have concluded that the blaze was intentionally set and are investigating it as arson. The 300-mile (480-kilometer) natural gas pipeline is also being built in West Virginia. 

Dominion delays U.S. Atlantic Coast natgas pipe, boosts costs (Reuters) - Dominion Energy Inc said on Friday the estimated cost of its Atlantic Coast natural gas pipeline from West Virginia to North Carolina has risen to $7.0 billion-$7.5 billion, adding that it has delayed the expected completion date to early 2021. The company said previously the project would cost an estimated $6.5 billion-$7.0 billion, excluding financing, and be completed in mid 2020 due to delays caused by numerous environmental lawsuits. “We remain highly confident in the successful and timely resolution of all outstanding permit issues as well as the ultimate completion of the entire project,” Dominion Chief Executive Thomas Farrell said in the company’s fourth-quarter earnings release. He noted the company was “actively pursuing multiple paths to resolve all outstanding permit issues including judicial, legislative and administrative avenues.” Earlier this week, the U.S. Fourth Circuit Court of Appeals stayed a previous court decision against U.S. Forest Service permits that allowed Dominion to build the Atlantic Coast pipeline across national forests and the Appalachian Trail. Dominion said it expects construction could recommence on the full 600-mile (966-kilometer) pipeline route during the third quarter of 2019, with partial in-service in late 2020. When the company started work on Atlantic Coast in the spring of 2018, Dominion said it expected the project would cost an estimated $6.0 billion-$6.5 billion and be completed in late 2019.

Bill to restrict Dominion pipeline costs — Legislation that could pose a serious threat to the bottom line of Dominion Energy's planned Atlantic Coast Pipeline continues to advance in the Virginia General Assembly. The bill passed a key House committee Thursday with bipartisan support despite heavy lobbying by Dominion. The legislation would add new restrictions on Dominion's ability to pass along costs of transporting gas from the ACP to its Virginia-based power stations. That could reduce the potential revenues of a project whose costs have already ballooned in the face of fierce opposition from environmentalists and land owners. Dominion said the legislation is unneeded and regulators can already protect customers from unreasonable costs. The energy company is among the most powerful forces at the General Assembly and rarely sees legislation it dislikes become law. 

Union Hill residents see link between racist Northam photo, pipeline decisions -- Democratic Gov. Ralph Northam’s racist yearbook photo speaks to a broader trend of racism and environmental injustice, members of the Union Hill community in Buckingham County said at a press conference Saturday. Held at the offices of Appalachian Voices in downtown Charlottesville, the press conference featured four members of the Union Hill community who sat quietly around a wooden table, reflecting on their efforts to combat environmental racism and Northam’s connection to it. Union Hill, a historically black neighborhood born out of the freedmen period, is the proposed site of Dominion Energy’s natural-gas compressor station, which would serve the proposed Atlantic Coast Pipeline. For four years, residents of Union Hill have been drawing attention to environmental racism and the dangers a compressor station could cause for the community. “We still have to remember that this is a Southern state and there are Southern values that are very deep-rooted,” said Paul Wilson, pastor of Union Grove Missionary Baptist Church and leader of the movement to stop the compressor station. Northam’s medical school yearbook spread, which features a photo of a man in blackface and another dressed in a Ku Klux Klan robe, is certainly shocking, said Wilson, but not to those who have been following Northam’s record. “When these things flare up, it’s hard to just move away from it because you have to look at the individual’s record,” Wilson said. “It really makes you wonder when you look over his record and his life how much of that kind of thinking was reflected in the decisions that he made.” Though he said he would not be the first to cast a stone, Wilson said it may be best for the commonwealth if Northam resigned. .

Public use and private profit: US landowners question forced purchases (Reuters - The Jones farm in Giles County, Virginia, has been in the family for 250 years. But a natural gas pipeline could soon cut a corridor through the property, despite the family’s attempts to thwart it. A pipeline company was able to take a strip of the Jones’ land with government deployment of a legal tool known as eminent domain, a constitutional mechanism reserved for use in the public good. The tool received public attention last month when President Donald Trump threatened to use “the military version of eminent domain” to build a wall along the U.S. border with Mexico. Meanwhile, the use of eminent domain for private projects that are said to fulfill some public good remains relatively new, but legal experts say it has resulted in a spate of legal battles such as the Joneses’. “Dad does not want to sell his family land at any price for any reason,” Donald Wayne Jones, the son of property owner George Lee Jones, told the Thomson Reuters Foundation. “He understands that eminent domain can sometimes be used to provide for the common good of the public.” “But he doesn’t understand how a profit-seeking, out-of-state company can be handed this privilege of taking privately owned land from U.S. citizens — an action he feels will only obtain profit for a private company and its shareholders.” The U.S. Constitution allows governments at all levels to take private property for “public use”, and eminent domain was a key mechanism to build, for instance, the railroad networks that crisscross the country.  A 2005 Supreme Court decision, however, opened up a more complex legal area: the government’s ability to take private land and give it to another private entity, such as a corporation.

Bernstein analysts say Mountain Valley, Atlantic Coast pipeline projects may not get finished - Even with 10 Bcf/d of new pipeline capacity added in the past 15 months, Appalachia’s pipeline buildout may be finished, putting the completion of late comers such as the EQM Midstream Partners LP-led Mountain Valley Pipeline LLC project and the Dominion Energy Inc.-led Atlantic Coast Pipeline LLC project in doubt, analysts at the investment management company Sanford C. Bernstein & Co. LLC told clients Jan. 24.“We had anticipated that building through [North Carolina and Virginia] would be difficult,” Bernstein’s midstream analyst Jean Ann Salisbury said in a research note. “The perfect combo of no major recent new pipelines and no state upstream benefit usually leads to problems —just ask [Williams Cos. Inc.’s Constitution Pipeline Co. LLC].” The costs of the 2-Bcf/d Mountain Valley pipeline and the 1.5-Bcf/d Atlantic Coast pipeline have grown to $4.6 billion and $7 billion, respectively, Bernstein said. These increases may force the operators to charge too high a tariff and make them uncompetitive, according to the firm. “This translates to $1.30-$2.60/MMBtu, almost certainly more than the cost differential to source from another basin,” Bernstein said. “To us this suggests that we are nearing the end of the buildout period, and even that possibly only one of these projects will ultimately get done.” Bernstein said that while producers in the dry gas portion of the Marcellus and Utica shales in northeast Pennsylvania will begin to bump up against a cap on takeaway capacity sometime this year, producers in the southwest portions of Appalachia have lots of running room. With capacity currently available out of both Appalachian regions, producers can look forward to better price realizations, Bernstein said, which is good for companies such as Cabot Oil & Gas Corp., Range Resources Corp. and Southwestern Energy Co. However, Bernstein said, there is a danger that the more Marcellus gas is on the national market, the further national prices will fall.

Atlantic Coast Pipeline delayed amid $2 billion - $3 billion price increase -  The completion of the Atlantic Coast Pipeline has been delayed amid a projected cost increase to more than $7 billion, about $2 billion to $3 billion more than initial projections. In a separate development, two research organizations released a report questioning the viability of the project. The report released Jan. 29 by the Institute for Energy Economics and Financial Analysis and Oil Change International said lower consumer demand for natural gas and the availability of affordable renewable options were casting doubt on the overall feasibility and potential profitability of the pipeline.The pipeline project has been delayed until late next year with the pipeline not expected to be in full service until 2021, according to a statement released Friday by the company working on the pipeline. Atlantic Coast Pipeline LLC, which was formed by Dominion Energy, Duke Energy and Southern Company Gas, is building the pipeline.The 600-mile pipeline is expected to run from West Virginia, through Virginia and into North Carolina, where it would end near Pembroke. The proposed route of the 36-inch pipeline runs through the northwest corner of Sampson County and near Godwin, Wade, Eastover, Cedar Creek and Gray’s Creek in Cumberland County, and St. Pauls in Robeson County.

Exaggerated Claims for ACP Pipeline Called Into Question  - Rebecca McPhail of the West Virginia Manufacturers Association, (DP-Jan.17) makes so many false and deceptive claims about the Atlantic Coast Pipeline (ACP), manufacturing in West Virginia and environmentalists, it is hard to know what to correct first.She claims West Virginia “is sitting on a gold mine of energy and economic prosperity,” but environmental activists threaten this prosperity by blocking “construction of the ACP.” She goes on to claim these activists threaten manufacturing jobs in West Virginia and that 4,500 construction jobs will be lost, if the pipeline is not completed.First, the ACP was not designed to support manufacturers in West Virginia; it was designed to move Marcellus shale gas out of West Virginia to supply already saturated markets on the Atlantic seaboard and for export. In fact, the Obama administration granted Dominion Energy, one of ACP’s stakeholders, the right to export natural gas to markets such as Japan and India in 2013.Second, McPhail’s claims about construction jobs are clearly inflated and misleading. ACP provided these numbers, and they are based on a cumulative jobs methodology that counts construction jobs as the average yearly workforce multiplied by the number of project years, in this case six, to complete the work. So, the real number is closer to 750 jobs. Many of these jobs would go to outof-state workers, and in fact the major pipeline construction companies hired by ACP are from Texas, Wisconsin and Oregon. Third, there is a broad coalition of concerned West Virginians opposed to the pipeline for legitimate reasons. Many landowners in the path of the pipeline contest ACP’s use of eminent domain for private gain, as it takes land from its rightful owners for so-called “public infrastructure.” It is clear that the ACP and its supporters make false and deceptive claims to distract from the true cost of pipeline development. Let’s do an honest and impartial assessment of those costs.

Prices Fall Despite Bitter Cold As Temperatures Are Forecasted To Rise - Highlights of the Natural Gas Summary and Outlook for the week ending February 1, 2019 follow. The full report is available at the link below.

  • Price Action: The now prompt March contract fell 33.8 cents (11.0%) to $2.734 on a 19.39 cent range ($2.923/$2.730).
  • Price Outlook: Although temperatures were bitter cold across portions of the country, temperatures in the south were not extreme and the bitter cold abated at the end of the week with temperatures projected to rise well above normal next week. While winter is not over yet, there is little possibility of any real storage issue and price increases will likely be muted for the remainder of the winter.  CFTC data indicated a (28,399) contract reduction in the managed money net long position as longs liquidated and shorts added. Total open interest fell (11,501) to 3.681 million as of December 25. Aggregated CME futures open interest rose to 1.365 million as of February 01. The current weather forecast is now warmer than 4 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 3.2 bcf. Cove Point is net exporting 0.8 bcf. Corpus Christi is exporting 0.050 bcf. Cameron is exporting 0.000 bcf.
  • Weekly Storage: US working gas storage for the week ending January 25 indicated a withdrawal of (173) bcf. Working gas inventories fell to 2,197 bcf. Current inventories rise 0 bcf (0.0%) above last year and fall (347) bcf (-13.6%) below the 5-year average.
  • Supply Trends: Total supply fell (0.2)bcf/d to 83.6 bcf/d. US production fell. Canadian imports fell. LNG imports rose. LNG exports fell. Mexican exports rose. The US Baker Hughes rig count fell (14). Oil activity decreased (15). Natural gas activity increased +1. The total US rig count now stands at 1,045 .The Canadian rig count rose +11 to 243. Thus, the total North American rig count fell (3) to 1,288 and now exceeds last year by +0. The higher efficiency US horizontal rig count fell (7) to 925 and rises +117 above last year.
  • Demand Trends: Total demand rose +4.5 bcf/d to +110.9 bcf/d. Power demand rose. Industrial demand rose. Res/Comm demand rose. Electricity demand rose +4,062 gigawatt-hrs to 83,273 which exceeds last year by +7,339 (9.7%) and exceeds the 5-year average by 4,977 (6.4%%).
  • Nuclear Generation: Nuclear generation rose 138 MW in the reference week to 94,854 MW. This is (1,250) MW lower than last year and +752 MW higher than the 5-year average. Recent output was at 93,615 MW.

The heating season has begun. With a forecast through February 15 the 2018/19 total cooling index is at (2,135) compared to (1,909) for 2017/18, (1,739) for 2016/17, (1,761) for 2015/16, (2,053) for 2014/15, (2,332) for 2013/14, (1,990) for 2012/13 and (1,968) for 2011/12.

Natural Gas Still Can't Find A Floor -The March natural gas contract continued its march lower today, settling down almost 3% as weather forecasts warmed and cash prices were even weaker today.  It was the fourth straight trading session where the March natural gas contract settled lower and the fifth in the last six sessions. Weak cash prices definitely played a role in this move lower.  Lingering concerns following a very loose EIA print last week did too.  As we noted in our Morning Update, forecasts warmed decently from Friday afternoon, with much of the warming actually coming overnight last night after only a very small gap down last evening.  Climate Prediction Center forecasts this afternoon again showed cold risks struggling to roll forward, with key regions in the South and Southeast likely staying warmer through Week 2.  This selling comes as traders shake off what should be a very large storage withdrawal to be announced by the EIA on Thursday. Severe cold swept through the Midwest pulling GWDDs significantly above average for the week.  We broke down our expectations for the draw in our Natural Gas Weekly Update today, which outlines all fundamental aspects of the natural gas market. In it we also looked at the current state of each individual storage region relative to the 5-year average.

Weather Models Keep Gas Bouncing Around - The March natural gas contract had a range of almost 7 cents today yet settled only two ticks higher as prices rallied then sold off on disagreeing weather models.  The March contract was actually the weakest on the day, as later contracts exhibited more strength and warmer early afternoon weather models took their toll at the front of the futures strip the most.  The result was a move lower in the J/V April/October spread even as prices rose.  Prices initially rallied this morning in line with our expectations, as we warned clients in our Morning Update that modest overnight GWDD additions would allow prices to bounce.  However, we also warned that weak cash prices could drag down the March contract after any initial bounce, which played out well.  Then after a second bounce the GEFS weather model guidance trended warmer in the long-range, hitting the March contract hardest (image courtesy of Tropical Tidbits).  For clients today we released our weekly Seasonal Trader Report, running through our latest gas expectations through the next few months and providing an updated seasonal forecast. In it we ran through our latest end of draw season storage number as well as other market expectations and what weather-independent modeling showed as well.

Analysts expect largest draw of US natural gas from storage of season — The EIA is expected to report on Thursday the largest natural gas draw from inventories of the season so far, but prices remained subdued across most of the US except for areas in the Pacific storage region where prices spiked on demand. The EIA is expected to report a 249 Bcf withdrawal for the week ended February 1, according to a survey of analysts by S&P Global Platts. Responses to the survey ranged for a draw of 238 Bcf to 260 Bcf.A 249 Bcf draw would be the largest draw of the season and much more than the 116 Bcf withdrawal in the corresponding week last year and the five-year average pull of 150 Bcf. A withdrawal within expectations of 249 Bcf would decrease stocks to 1.948 Tcf. The deficit against the five-year average would expand to 427 Bcf and the deficit against last year would expand to 147 Bcf.The draw looks to be stronger than the 173 Bcf draw reported last week. It shrunk inventories to 2.197 Tcf, which was 0.6% below the year-ago inventory of 2.211 Tcf, and 13% less than the five-year average of 2.525 Tcf.The mild start to the year closed some of the historic deficit to the five-year average, but frigid weather in the Midwest has pushed recent withdrawals well above normal. Incremental gains in Texas and Southeast production were a drop in the bucket compared to the jump in heating demand for the week, according to S&P Global Platts Analytics.However, NYMEX Henry Hub March futures remained low at $2.66/MMBtu Wednesday as demand has dropped precipitously for the week in progress. An early forecast for the week ending February 8 calls for a draw of only 70 Bcf, which would be 90 Bcf below the five-year average draw. While inventory in the East, Midwest and South Central regions have edged closer to the five-year average over the past month, EIA data shows the Pacific region standing more than 26% below the five-year average. Higher demand combined with curtailments have strengthened prices in the region.

US natural gas in storage falls by 237 Bcf to 1.96 Tcf: EIA— US natural gas in storage fell by 237 Bcf last week, the largest draw of the season and in history for the corresponding week, but Henry Hub futures hit year-low prices following the release as it was still below market expectations. Only a double-digit draw is forecast for the week in progress. US natural gas in storage decreased 237 Bcf to 1.96 Tcf for the week ended February 1, the US Energy Information Administration reported Thursday. The withdrawal was below an S&P Global Platts' survey of analysts calling for a 249 Bcf pull. Similar to last week, the draw was outside the range of survey responses. The lowest response expected a 238 Bcf withdrawal. The withdrawal was still much more than the 116 Bcf pull reported during the corresponding week in 2018 as well as the five-year average draw of 150 Bcf, according to EIA data. As a result, stocks were 135 Bcf, or 6.4%, below the year-ago level of 2.095 Tcf and 415 Bcf, or 17.5%, below the five-year average of 2.375 Tcf. The NYMEX Henry Hub March contract slid 7.7 cents to $2.585/MMBtu following the 10:30 am EST announcement. Demand losses in LNG feedgas and dramatically reduced heating loads weighed on both cash and futures prices this week, according to S&P Global Platts Analytics. Since last week's report, the March futures contract price has ground lower, with narrow daily trading ranges and consecutive lower settlements. On Wednesday, the March gas futures settlement was 19 cents lower than the February 27 settlement. The Henry Hub cash price, averaging $2.56/MMBtu, has fallen to levels not seen since February last year. While growing LNG exports at the end of the year may lend some support back to Henry Hub prices, the surge of availability and potential start-up of Nordstream II are likely to put EU Gas Prices and LNG prices under further pressure in the second half of the year, according to Platts Analytics. Frigid temperatures in the US upper Midwest have been unable to push Henry Hub back above $3/MMBtu after steady production growth and mild weather helped stocks build over the last month. This was the largest draw of the current heating season and was the largest pull ever reported for the corresponding week. During the polar vortex of 2014, 231 Bcf was drawn during the same week. But a Platts Analytics forecast only expects a draw of 72 Bcf for the week that will end February 8, 88 Bcf below than the five-year average.

EIA's Reported 237 Bcf Draw Delivers TKO to Natural Gas; Widow-Maker Flips Negative - The Energy Information Administration (EIA) reported a 237 Bcf withdrawal from storage inventories for the week ending Feb. 1. The reported build fell about 10 Bcf shy of market expectations for a week that featured the coldest temperatures of the winter in key demand regions. Nymex natural gas futures prices, which were already about a nickel lower ahead of the report, fell another penny or so as the print hit the screen. By 11 a.m. ET, the March contract was trading 7.7 cents lower at $2.585, and April was trading 6 cents lower at $2.597. The flip in the March/April spread reflects no concerns about a supply crunch, and the smaller-than-expected withdrawal fueled that sentiment. “This came in bearish to market expectations and reflects a market that did not really tighten at all last week, despite severe cold across the Midwest. Modeling indicated bearish risks with the number today, though after a very surprising bearish miss last week, we were looking for an implicit revision,” Bespoke Weather Services chief meteorologist Jacob Meisel said. Instead, the gas market remains quite loose and will struggle to bounce without clear evidence of tightening in daily supply/demand balances and more bullish weather. March gas at under $2.60 “still seems cheap given lingering cold risks and plummeting imports this week, but this is certainly a bearish EIA number that will limit upside at the front of the gas strip moving forward,” Meisel said. Broken down by region, the Midwest reported an 84 Bcf withdrawal, the second largest pull ever for that region. A 79 Bcf draw was reported in the South Central and a 59 Bcf draw was reported in the East. Both the Mountain and Pacific regions reported pulls of less than 10 Bcf, according to EIA. Total working gas in storage as of Feb. 1 stood at 1,960 Bcf, 135 Bcf below last year and 415 Bcf below the five-year average. Ahead of the EIA report, most market participants had called for a withdrawal in the 240-250 Bcf range. Last year, the EIA reported a withdrawal of 116 Bcf for the same week, and the five-year average draw stands at 150 Bcf.

Another Bearish EIA Print Pushes Gas Lower - There was widespread selling of natural gas futures again today as overnight weather model guidance trended solidly warmer and the weekly EIA natural gas storage update yielded a smaller-than-expected storage withdrawal last week. At the end of the day the March contract settled down a bit more than 4%.   Losses were by far most pronounced at the front of the strip yet again, with bearish weather changes and cash prices not particularly strong in the face of cold weather tomorrow and this weekend.  The result was that the March/April H/J spread finally flipped into contango for the first time.  Much of this move was driven by the morning's EIA Natural Gas Weekly Storage Report, when the EIA announced that 237 bcf of gas was withdrawn from storage versus our expectation of 253 bcf.  This was another very loose print that confirmed we have ample production and gas headed into the tail end of winter and the spring shoulder season. Though not as loose as last week's storage number, it provided little reason to rally.  Immediately following the number we sent out our EIA Rapid Release, which outlined that we saw the number as "Moderately Bearish" for natural gas prices moving forward.  Gas prices then continued lower from there, with afternoon model guidance doing little to help stabilize prices (though European ensemble guidance did add several GWDDs). Climate Prediction Center forecasts showed more warm risks Week 2 over yesterday, which we had covered in our Morning Update.  Now traders will be attempting to position ahead of the weekend, as we've been seeing significant weather model changes each of the last few weekends that have whipped prices around.

Are Investors Finally Waking up to North America’s Fracked Gas Crisis? - The fracked gas industry's long borrowing binge may finally be hitting a hard reality: paying back investors.Enabled by rising debt, shale companies have been achieving record fracked oil and gas production, while promising investors a big future payoff. But over a decade into the “fracking miracle,” investors are showing signs they're worried that payoff will never come — and as a result, loans are drying up. Growth is apparently no longer the answer for the U.S. natural gas industry, as Matthew Portillo, director of exploration and production research at the investment bank Tudor, Pickering, Holt & Co., recently told The Wall Street Journal. “Growth is a disease that has plagued the space,” Portillo said. “And it needs to be cured before the [natural gas] sector can garner long-term investor interest.”Hints that gas investors are no longer happy with growth-at-any-cost abound. For starters, several major natural gas producers have announced spending cuts for 2019. After announcing layoffs this January, EQT, the largest natural gas producer in the U.S., also promised to decrease spending by 20 percent in 2019.  Such pledges of newfound fiscal restraint are most likely the result of natural gas producers' inability to borrow more money at low rates.

ExxonMobil says it expects to 'sanction' Golden Pass LNG export project with Qatar Petroleum  — ExxonMobil expects to advance its long-dormant Golden Pass LNG export project with Qatar Petroleum in Texas and will make a formal announcement in the near future, CEO Darren Woods said Friday. The redevelopment and conversion of the Golden Pass receiving terminal would be a significant addition to US Gulf Coast LNG export capacity, as it sits directly across the water from Cheniere Energy's Sabine Pass export facility in Cameron Parish Louisiana. US Department of Energy data shows it has not imported any gas since June 2011. At the World Gas Conference in Washington in June, a senior executive said the company was working toward a final investment decision and felt good about the project moving forward. Since then, several North American export projects have announced positive FIDs, expansions of existing facilities or have suggested that they were close to making decisions. During a conference call to discuss fourth-quarter financial results, Woods said ExxonMobil now expects to "sanction" Golden Pass. "We've also been working very closely with QP, our partner in Golden Pass, to advance that investment and look forward to announcing something here in the very near term," Woods said. He did not specify a time frame for the announcement.

Exxon Mobil and Qatar green light $10 billion project to export natural gas from Texas - Exxon Mobil and Qatar Petroleum on Tuesday announced a final decision to finance a $10 billion-plus project to export liquefied natural gas from the Texas Gulf Coast. The decision moves forward the latest export terminal fueling growing shipments of U.S. LNG, or natural gas cooled to liquid form, for overseas travel. The Department of Energy last month forecast that LNG will play a major role in the U.S. exporting more energy than it imports by 2020, a feat the nation has not achieved in nearly 70 years. The plan to export LNG from Exxon's Golden Pass terminal speaks to the renaissance in U.S. energy production. The facility was originally built to import LNG, but the surge in U.S. natural gas production over the last decade means American drillers are now looking overseas for buyers. Exxon says work to retool the terminal near Port Arthur, Texas, along the Louisiana border will begin this quarter. The oil giant expects the facility to start up in 2024 and says it will ultimately be able to produce roughly 16 million tons of LNG each year.Total U.S. LNG exports were 14.3 million tons in 2017 and climbed to 15 million tons through the first three quarters of 2018, according to Reuters. Trade in LNG reached nearly 300 million tons in 2017 and is growing, particularly in Asia, where China is switching from coal to cleaner-burning natural gas to improve air quality. The shipping channel that straddles the Texas-Louisiana border is already home to the Sabine Pass LNG terminal operated by Cheniere, the first mover in the emerging Gulf Coast export hub. Exxon's partner in the Golden Pass project, state energy company Qatar Petroleum, holds a 70 percent stake in the development. Qatar, the world's top LNG producer, recently left the oil producer group OPEC, saying it would focus on expanding its natural gas business. Exxon holds the remaining 30 percent stake in the project, part of its plan to invest $50 billion in U.S. manufacturing facilities over the next five years, with a focus on the Gulf Coast. The company expects the terminal to support 200 permanent jobs and 9,000 positions while it's under construction.

Will anything slow down the U.S. LNG juggernaut? – It is no surprise that U.S. natural gas producers have been seeking relief from domestic prices that have generally hovered between $2 and $4 per thousand cubic feet for most of this decade.Qatar Petroleum and Exxon Mobil Corp announced last week that they would be adding to investment in Texas in liquefied natural gas capacity for export from the United States, a move that was described as a response the immense volumes of gas coming from American shale deposits. With so many LNG projects being built and on the drawing board, will anything slow down the U.S. LNG juggernaut? The fight over U.S. exports of natural gas is long since over. U.S. producers now have the right—like almost all other U.S. producers of commodities or manufactured products—to sell their products to the highest bidder wherever that bidder may be in the world. U.S.-based industrial consumers of natural gas howled a bit when the federal government lifted restrictions on natural gas exports. But since then gas prices have maintained their ground-hugging trajectory.This is in part because gas associated with the production of oil produced from similar shale deposits has continued to flood the U.S. market. But with the price of oil slumping and a reduction in the pace of drilling expected, that associated gas may not be so plentiful. The irony is that falling oil prices may ultimately lead to a spike in U.S. natural gas prices. But if the pure natural gas shale plays are so productive, how can this be? The answer is quite simply that they aren't. And, that is the secret behind the next bull market in U.S. natural gas. It likely won't come as a result of demand for U.S. LNG so much as a surprise shortage of domestic gas.  It turns out that just two of the six big shale gas plays in the United States are not yet past their peak production. It's a puzzle how this translates into abundance in the long run for America. For context, for 2018 through November (the latest month for which statistics are available) total net natural gas exports amounted to 588 billion cubic feet. That's a tiny fraction of the 29.8 trillion cubic feet of U.S. marketed production during the same period. The great American export boom seems to be a ways in the future if it ever materializes. We're still using almost all of what we produce at home.

Overseas Demand Expansions Key To U.S. Ethane Export Growth -- The U.S. started exporting ethane by ship less than three years ago, first out of Energy Transfer’s Marcus Hook terminal near Philadelphia and then from Enterprise Products Partners’ Morgan’s Point facility along the Houston Ship Channel. Good news for NGL producers, right? Well yes, sort of. Because while waterborne export volumes rose through 2016, 2017 and the first seven months of last year, they’ve been flat-to-declining ever since, with further ethane-export growth hampered primarily by a lack of international demand. That demand may soon be ratcheting up — mostly in China, but also in Europe — but it won’t happen overnight. Today, we discuss ethane export trends, the Morgan’s Point and Marcus Hook marine facilities, and plans for new ethane export capacity tied directly to new overseas ethane crackers. U.S. NGL production, NGL fractionation, and the market for NGL purity products (ethane, propane, normal butane, isobutane and natural gasoline) have been frequent topics in the RBN blogosphere the past few months. Back in September, in Hotel Fractionation, we discussed how, with the production of mixed NGLs (aka y-grade) soaring, fractionators at the NGL hub in Mont Belvieu, TX — and elsewhere in Texas and in Louisiana — are running at or near capacity, and that a scramble is on to build new fractionation capacity. Then, in Seasons Change (in December), we looked at what caused most purity-product prices to dive in October and November (one factor was the sharp decline in crude oil prices). And, in our four-part series, Between Mont Belvieu and the Deep Blue Sea, we examined rising U.S. exports of propane and normal butane — the two purity products generally referred to as LPG — and the LPG export facilities in place and being planned to handle those rising volumes.

Trump Touts US as Net Energy Exporter -- President Donald Trump used his State of the Union address Tuesday night to tout “a revolution in American energy” that has made the U.S. “a net exporter” -- but some of his celebration might be premature. Although the U.S. briefly became a net petroleum exporter during one week last November, government analysts say it will be at least September 2020 before it claims that title on a steady basis, by shipping out more energy than it imports on an annual basis. The nation is already a net exporter of coal and natural gas. Trump’s brief salute to U.S. fossil fuel dominance -- one passing mention in a speech expected that lasted more than hour -- also invoked a milestone that was partially achieved before he won the White House, under former President Barack Obama. "The United States is now the No. 1 producer of oil and natural gas anywhere in the world," he said, provoking steady applause in the U.S. House chamber. The U.S. has been the world’s top natural gas producer since at least 2009, according to the Energy Information Administration. And it surpassed Russia as the world’s largest crude oil producer last year (though the U.S. has led the world when it comes to a wider array of petroleum hydrocarbons since 2013). Trump’s decision to hail fossil fuels isn’t unique in this forum. Obama touted natural gas production in his 2012 State of the Union speech, back when many environmentalists welcomed it as a cleaner-burning coal alternative that could be a bridge to a lower-carbon future. But Trump’s fossil push stands in stark contrast to the priorities of many environmentalists today -- as well as a campaign by progressive Democrats to ratchet down U.S. reliance on oil, gas and coal. A draft of the so-called Green New Deal framework developed by Democratic Representative Alexandria Ocasio-Cortez of New York and Democratic Senator Ed Markey of Massachusetts calls for drawing 100 percent of U.S. power from “clean, renewable and zero-emission energy sources.’’ 

'Fracking' ban bills to be heard in House, Senate -- With Gov. Ron DeSantis supporting the idea, proposals to ban the controversial oil- and gas-drilling technique known as “fracking” could start moving in the House and Senate. The House Agriculture & Natural Resources Subcommittee and the Senate Environment and Natural Resources Committee are scheduled Wednesday to take up bills (PCB ANRS 19-01 and SB 314) that would prohibit fracking in the state. Florida has long had oil drilling in parts of the Panhandle and Southwest Florida, but the possibility of fracking has led to repeated debates. Critics of the technique contend it could lead to water contamination. Past attempts to ban the practice have died in the Legislature, but DeSantis, who took office Jan. 8, has called for a prohibition. The bills are filed for consideration during the legislative session that starts March 5.

A School Board Says No to Big Oil, and Alarms Sound in Business-Friendly Louisiana — It was a squabble over $2.9 million in property-tax breaks — small change for Exxon Mobil, a company that measures its earnings by the billions. But when the East Baton Rouge Parish school board rejected the energy giant’s rather routine request last month, the “no” vote went off like a bomb in a state where obeisance to the oil, gas and chemical industries is the norm. The local chamber of commerce took out a full-page newspaper ad, warning of a rise of “radicalism.” The head of the Louisiana Association of Business and Industry wrote that “the anti-business crowd has had their fun,” but needed to “cool their jets.” And now, somewhat surprisingly, business-friendly Louisiana finds that it is the latest flash point in a roiling, community-by-community debate that pits liberals and local activists against defenders of the lavish tax incentives offered to woo big business. It has been a David vs. Goliath story in the Louisiana capital, where a grass-roots coalition of black and white churches, activists and ordinary citizens have successfully clamored to democratize a system that used to dole out billions in property-tax breaks without giving the local school boards, city councils and other government entities that depend on those taxes any say in the matter. The vote has also revived a vexing, and defining, Louisiana question about the deference a perennially impoverished state must show to big business. “We’ve allowed the oil and gas industry to hijack our democracy,” said Russel L. Honoré, a retired Army lieutenant general who earned acclaim for leading the military response to Hurricane Katrina, and who had urged the East Baton Rouge Parish school board to reject the exemptions. “The industry will brag about it all the time, how well we’re doing in terms of business development. Well, if we’re doing so well, why are we the second-poorest state?”

Armada of tankers with Venezuelan oil forms in U.S. Gulf: sources, data (Reuters) - A flotilla loaded with about 7 million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest U.S. sanctions on Venezuela and others whose buyers are weighing who to pay, according to traders, shippers and Refinitiv Eikon data. The Trump administration’s move to impose sanctions last week was meant to undercut support for Venezuelan President Nicolas Maduro by targeting the Latin American nation’s oil exports to the United States, the source of most of its foreign revenue. The sanctions aim to block U.S. refiners from paying into PDVSA accounts controlled by Maduro - one reason numerous tankers are waiting in limbo off Venezuela with payments unclear. The United States buys 500,000 barrels of Venezuelan crude per day. U.S. customers of Venezuela’s state-run PDVSA are required by sanctions to deposit payments into escrow accounts that have not yet been set up. The funds will be controlled by Venezuelan congress head Juan Guaido, whom the United States, the European Union and much of Latin America recognize as the country’s leader. Neither the U.S. Treasury Department nor White House responded to requests for comment. There were over a dozen tankers this week anchored in Gulf of Mexico or outside of Venezuelan waters, according to the Refinitiv Eikon data, as shippers await payment and delivery directions from buyers. Traders said some of the cargoes were used as floating storage by buyers who took advantage of PDVSA’s open market sales ahead of sanctions. Others were held by trading firms struggling to find refiners willing to take the oil due to payment difficulties related to sanctions. 

Why tapping America's oil reserve is a bad idea - President Donald Trump's crackdown on Venezuela threatens to create a shortage of heavy crude, which American refineries need to churn out gasoline, jet fuel and diesel. If prices climb in response to the administration's sanctions on Venezuela and its state-run oil company, PDVSA, the Energy Department might try to cushion the blow by releasing crude that's stored in the Strategic Petroleum Reserve (SPR). But analysts caution that tapping the SPR won't do much to ease a shortage, especially not in the long run. The problem is that not all crude is created equal. Different regions produce different grades of crude. Some of it, like what comes out of Venezuela, is so thick and heavy that it can't be put into pipelines. Other crude, like what gets pumped in Texas, is a very light and clear like gasoline. The emergency oil reserve contains crude that is mostly lighter than the 500,000 barrels per day that Venezuela had been shipping to the United States. The reserve includes some medium crude, too. The Gulf Coast refineries are not configured to use what's in the rainy-day fund. The crackdown on Venezuela is a fresh reminder that the United States, which has morphed into an energy super power lately, remains reliant on foreign oil. In the late 1990s, US oil production was believed to be in decline. Refiners could no longer count on light, sweet crude from Texas, and other US states, to churn out gasoline, diesel, and jet fuel.Refiners went through a transformation that enabled them to take in heavy, sour crudes from overseas.  Flash forward to today, US refineries regularly mix light crude from shale hotspots like the Permian Basin in West Texas with heavy crude from Saudi Arabia, Canada, Mexico, and of course Venezuela.  Refiners can't just turn on a dime when the heavy crude gets sidelined. Some refiners short on heavy crude could take medium barrels from the SPR. However, they would probably not be able to operate at maximum capacity.

EIA: Venezuela Oil Sanctions Unlikely To Significantly Impact U.S. Refiners - The U.S. sanctions on Venezuela’s oil industry and state oil firm PDVSA are unlikely to have a significant impact on the refinery runs of the U.S. refiners, the Energy Information Administration (EIA) said in an analysis this week. U.S. imports of crude oil from Venezuela have been falling in recent years, and U.S. refiners have been replacing heavy crude from Venezuela from heavy crude grades from other sources, the EIA said.Last week, the U.S. imposed sanctions on PDVSA to “help prevent further diverting of Venezuela’s assets by Maduro and preserve these assets for the people of Venezuela,” Secretary of the Treasury Steven T. Mnuchin said.Those sanctions will essentially eliminate U.S. imports of Venezuelan crude oil as the full effects of the sanctions emerge, the EIA said, but noted that it doesn’t expect “any significant decrease in U.S. refinery runs as a result of these sanctions.”Imports of crude oil from Venezuela are still a significant portion of the U.S. Gulf Coast imports, but they have been falling in recent years due to the collapsing Venezuelan oil production. Gulf Coast imports of Venezuelan crude oil fell to an average of 498,000 bpd between January and November 2018 from an average of 618,000 bpd in the first 11 months of 2017, the EIA said.Out of the 14 U.S. refineries that imported crude from Venezuela last year—12 of which in the Gulf Coast—imports in January-November declined by 129,000 bpd compared with the same period in 2017. While imports from Venezuela declined, imports from Canada and Mexico to these refineries rose by 113,000 bpd and 48,000 bpd, respectively, from 2017 levels, the EIA has estimated.“Moving forward, refineries may also choose to run lighter crude oils because transportation constraints may limit the availability of heavy crude oils,” according to the EIA.Refiners with large c apacity to process asphalt and road oils, for which Venezuela’s heavy crude is well-suited, may find it harder to procure adequate replacement, but these refiners have also cut imports from Venezuela recently, the EIA noted.  

Activists Call For Smaller-Scale Fracking Transparency - Illinois began regulating high-volume fracking in 2013, but most wells in the state aren’t large enough to fit that definition. Organizers from Illinois People’s Action and Fair Economy Illinois at a press conference Wednesday said low-volume fracking is more common, and can be kept covert. “A horizontal well could go right under your property and you wouldn’t know about it,” said William Rau of People’s Action. “There are no defensive actions you could take like, for example, getting a test on your water well.” Low-volume fracking is governed by the Oil and Gas Act of 1951. According to People’s Action, a confidentiality clause allows fracking companies to pay a few hundred dollars for a permit and then frack in secret for two years. More than 1,000 such permits were filed in 2014, Rau said, with the number dropping to around 250 the following two years. Since high-volume regulation began in 2013, the Illinois Department of Natural Resources issued just one permit, but the company never used it. The groups support legislation requiring the same oversight for all fracking. It would make two sets of information public: where fracking is happening, and what chemicals are being pumped into the ground. Two other pieces of legislation were discussed at the news conference. One would cap the amount large businesses collect from consumer sales tax through the “retailers’ discount.” Another is aimed at ending so-called offshore tax sheltering. The Illinois Chamber of Commerce issued a statement opposing the latter legislation, claiming it “attempts to fix a problem that doesn’t exist.” 

Two Pipelines Shut Down After 43 Barrels of Crude Leak into Missouri Soil - Parts of two pipelines owned by controversial Canadian pipeline companies remained shut down Thursday following the discovery of a leak near St. Louis, Missouri on Wednesday, CBC News reported.Both TransCanada's Keystone pipeline and Enbridge's Platte pipeline run parallel to each other through the area. The Keystone pipeline, which carries 590,000 barrels of crude oil a day from Alberta, has faced opposition from environmental activists in the area because it transports from Alberta's tar sands."[Leaks] are one more reason on top of climate change to show that tar sands are dangerous and should not be running through our state," Missouri Sierra Club Director John Hickey told St. Louis Public Radio. Residents are also worried the poor quality of the pipeline's steel makes leaks more likely, Hickey said.The leak was discovered by a TransCanada technician 7:14 a.m. Wednesday. The technician found crude oil covering some 4,000 square feet around the pipeline in St. Charles County, Missouri. TransCanada said it was not sure how much oil had leaked, but thought it was around 43 barrels. The company said it was not yet possible to tell if the leak came from the Keystone or neighboring Enbridge pipeline. "Until you can excavate and see the top of the pipes, you can't really determine which pipeline the release occurred from," TransCanada Public Information Officer Matthew John told St. Louis Public Radio.

Two pipelines, including Keystone, shut after oil leak in St. Charles County - Two national oil pipelines have at least been partially shut down as a result of leakage discovered Wednesday in St. Charles County, near the Mississippi River. Questions far outnumbered answers nearly 36 hours after the crude oil leak was first reported to authorities, as crews continued to work around the clock to identify which of two pipelines in the area may be the source of the spill: TransCanada Corp.’s 30-inch-wide Keystone pipeline, or another, 20 inches wide, from Enbridge Inc., called the Platte pipeline. “The release is stopped,” a Missouri Department of Natural Resources official said Wednesday night, adding that the crude oil spill occurred north of the city of St. Charles. DNR officials said Thursday that the leak was about 1,700 feet south of the river and did not threaten it. Both pipelines are buried about 8 feet below ground. Beyond trying to identify which one might have the leak, officials said they also had yet to determine when and why a rupture occurred. “There’s a lot of unknowns at this point,” said Brad Harris, chief of the DNR’s environmental emergency response section. “They’re working their way down to expose that pipeline,” he said of the vacuum trucks on the site. “As you can imagine, it’s very, very sloppy.” He said the spill was estimated to be at least “43 barrels,” or about 1,800 gallons, according to an early report to the department about what was visible at the surface. It was unclear if that estimate would change. “It’s contained in this low area,” Harris said. “I think we’ve gotten lucky. Four thousand square feet is the estimated impacted area.” A survey to determine how many wells are in the area will be done by the DNR and the company found responsible for the leak, Harris said, and samples will be taken to check for water safety. Once a responsible company is identified, he said, a proper cleanup will ensue to remove contaminated soil and water. A TransCanada spokesman said that the leak was discovered by a company technician doing a routine check at the site and that the line was shut down immediately Wednesday. The Keystone pipeline typically moves about 600,000 barrels per day through the area, while the Platte pipeline transports about 150,000 barrels per day. Enbridge’s Platte pipeline was also shut down, Harris said. That line runs 933 miles from Wyoming to Wood River, Ill.

Keystone pipeline likely source of Missouri crude spill, says TransCanada — no restart date yet - An oil leak near St. Louis, Missouri likely originated from TransCanada Corp’s Keystone pipeline, the company said on Friday, with no projected restart timetable for the portion of the line that remains shut. The leak volume is estimated at 43 barrels of crude oil on land, according to Missouri’s Department of Natural Resources. The spill and subsequent shutdown of portions of Enbridge’s Platte pipeline and the bigger Keystone line raised fresh concerns about pipeline safety, and about the already constricted flow of Canadian oil to U.S. refineries. Crews were excavating a segment of the underground pipeline on Friday, TransCanada spokesman Terry Cunha said. He said there was no threat to public safety or the environment. The 590,000 barrels-per-day Keystone pipeline is a critical artery taking Canadian crude from northern Alberta to U.S. refineries. The spill in rural St. Charles County, Missouri, on Wednesday led TransCanada to shut an arm of Keystone running between Steele City, Nebraska, and Patoka, Illinois. Brian Quinn, a spokesman for Missouri’s Natural Resources Department, said in an email that if Keystone is confirmed to be the leak’s source, it will remain closed until repairs are made. The exact quantity of oil released cannot be determined until excavation is complete and it’s unclear how long the release lasted, Quinn said. TransCanada told Keystone shippers on Thursday that it was declaring force majeure on shipments affected by the shutdown, according to a notice seen by Reuters. Force majeure is a declaration that unforeseeable circumstances prevented a party from fulfilling a contract. Canadian pipelines are congested because of expanding production in recent years, forcing the Alberta provincial government to order production cuts starting last month. Canadian heavy oil has attracted greater demand following U.S. sanctions against Venezuela’s state oil company.

Sunoco Pipeline and Mid-Valley Pipeline settle oil spill violations - In the latest joint federal-state Clean Water Act enforcement action, Sunoco Pipeline L.P. has agreed to pay civil penalties and state enforcement costs and to implement corrective measures to resolve alleged violations of the Clean Water Act and state environmental laws by Sunoco and Mid-Valley Pipeline Company stemming from three crude oil spills in 2013, 2014 and 2015, in Texas, Louisiana, and Oklahoma. The Department of Justice, the US Environmental Protection Agency (EPA), and the Louisiana Department of Environmental Quality (LDEQ) jointly announced the settlement.  Under a proposed consent decree lodged in the US District Court for the Western District of Louisiana, Sunoco will pay the United States US$5 million in federal civil penalties for the Clean Water Act violations and pay LDEQ US$436 274.20 for civil penalties and response costs to resolve claims asserted in a complaint filed this week. Additionally, Sunoco agreed to take actions to prevent future spills by identifying and remediating the types of problems that caused the prior spills. This includes performing pipeline inspections and repairing pipeline defects that could lead to future spills. Sunoco is also required to take steps to prevent and detect corrosion in pipeline segments that Sunoco is no longer using. Mid-Valley, the owner of the pipeline that spilled oil in Louisiana, is responsible, along with Sunoco, for payment of the civil penalties and state costs relating to the Louisiana spill.   “This settlement holds Sunoco and Mid-Valley accountable for the harms to the environment caused by their oil spills and requires Sunoco to improve its environmental safety compliance for the oil pipelines that it operates in Texas, Louisiana, and Oklahoma,” said Assistant Attorney General Jeffrey Bossert Clark for the Justice Department’s Environment and Natural Resources Division. “This excellent result shows how a strong federal and state partnership can bring about effective environmental enforcement to protect local communities in these states.”

Plains keeps open possibility of further Permian oil pipeline consolidation - As concerns loom about a Permian oil pipeline overbuild, Plains All American did not rule out the possibility Tuesday of teaming up with another competing project for its recently confirmed 1 million b/d pipeline to the Texas Gulf Coast. Plains is the latest midstream company to report fourth-quarter earnings in a cycle where the big question is whether the Permian is about to swing from having too little pipeline space to having a glut of it. The Wink to Webster Pipeline joint venture announced last week by Plains, ExxonMobil and Lotus Midstream will carry batched crude and condensate from West Texas to Houston starting in the first half of 2021. Plains owns a 20% stake and will be constructing the line. Asked if too many Permian pipelines were in the works, Plains CEO Willie Chiang said during a conference call on fourth-quarter earnings that the company wanted to get to the point of ordering pipe for Wink to Webster and be in a position to move forward. "What that says is we certainly haven't eliminated an opportunity to make the project stronger, and conversations continue," he said. "At the base core of it, we've got pipe ordered, and we're ready to go." The JV has ordered some 650 miles of domestically sourced 36-inch-diameter line pipe. Plains' 585,000 b/d Cactus II crude pipeline from the Permian to Corpus Christi is on schedule for partial service in late Q3 and full service by April 2020, Chiang said. Asked about the wave of crude export capacity planned for the Texas and Louisiana coasts, Chiang said Plains' strategy is to diversify options for shippers. He said the company initially looked at an integrated pipe and dock system during the open season for Cactus II a few years ago.

Frac Sand Accumulates as Demand Weakens -- Just a year after rushing into America’s busiest oil field with new mines, frac-sand producers may have overdone it. West Texas sand used in the hydraulic fracturing process will drop 19 percent this year to about $30 a ton compared to 2018, according to industry consultant Rystad Energy AS. Sand pricing is a key financial input for oil explorers because fracking is the most expensive phase in drilling an oil well. A slew of new West Texas mines close to Permian Basin drilling sites is elbowing Midwest mines that formerly dominated the frac-sand trade. Miners in and around Wisconsin that controlled 75 percent of the market in 2014 will see that diminish to 34 percent in 2020, Ryan Carbrey, Rystad’s senior vice president of shale research, told Petroleum Connection’s Frac Sand Industry Update conference in Houston on Wednesday. “We do think that things continue to be rather sloppy from a pricing standpoint in 2019,” Chase Mulvehill, an analyst at Bank of America Merrill Lynch, said in a presentation during the conference. “We’ll see if people renegotiate contracts. What we’ve heard so far is people are actually starting to do that for some in-basin contracts.” The sand oversupply has developed just as demand for fracking is taking a hit from the late-2018 slump in crude prices and more modest exploration programs by oil producers, Mulvehill said. Fracking demand is set to drop 3 percent in 2019, he said. 

Exxon Streamlines Upstream to Support Growth - ExxonMobil Corporation (Exxon) has revealed it will “streamline” its upstream organization and “centralize project delivery across the company” to support previously announced plans to double operating cash flow and earnings by 2025. The reorganization will be effective April 1 and will involve the creation of three new upstream companies; ExxonMobil Upstream Oil & Gas Company, ExxonMobil Upstream Business Development Company and ExxonMobil Upstream Integrated Solutions Company. ExxonMobil Upstream Oil & Gas Company will focus on end-to-end value chain management in five global businesses – comprising unconventional, liquefied natural gas, deepwater, heavy oil and conventional – Exxon revealed. “We’re simplifying and integrating our upstream organization to better capitalize on the industry-leading portfolio we’ve assembled through acquisitions and exploration success in the U.S. Permian Basin, Guyana, Mozambique, Papua New Guinea and Brazil,” Neil Chapman, Exxon senior vice president, said in a company statement. “Our focus is on increasing overall value by strengthening our upstream business and further integrating it with the downstream and chemical segments to take advantage of our unique capabilities across the value chain. A clear example is what we’re doing in the Permian, which includes upstream, midstream and downstream investments, enabling us to maximize value unlike any of our competitors,” he added.

Chevron ties executive pay to methane and flaring reduction targets (Reuters) - Chevron Corp plans to set greenhouse gas emissions targets and tie executive compensation and rank-and-file bonuses to the reductions, the oil major said in its latest climate report released on Thursday. The move is a first for a U.S. oil major and focuses on the company’s oil fields. More investors have been pressuring San Ramon, Calif.-based Chevron and other big oil companies to reduce emissions that contribute to climate change. Chevron said that by 2023, it will reduce its methane and flaring intensity by 25 percent to 30 percent from 2016 levels, and said the goal would be added to the scorecard that determines incentive pay for around 45,000 employees. “It’s about the mindset and the culture of the company,” said Chevron Vice President Mark Nelson, noting that including most of its global workforce would “harness” ideas from all employees. Chevron, though, does not address reducing the company’s full carbon footprint, said Danielle Fugere, president of investor group As You Sow, and so “will not achieve the reductions needed to stabilize the climate and reduce growing economy wide and thus portfolio wide risk to investors.” Among other oil companies, London-based BP and France’s Total have set short-term targets on reducing carbon dioxide emissions from their own operations. Royal Dutch Shell in December announced it would link executive compensation to reducing carbon dioxide emissions starting in 2020, including Scope 3 emissions from fuels sold to customers around the world. Chevron said it does not support establishing Scope 3 targets. Exxon’s climate report, published on Tuesday, includes a goal of reducing methane emissions from operations by 15 percent and flaring by 25 percent by 2020 compared with 2016 levels. Chevron’s target aims to reduce emissions and flaring as a percentage of production, but does not set a total emissions goal - a measure activist investors prefer. The targets will apply to Chevron’s operations as well as assets it has a stake in but does not operate itself, the company said. 

Rystad Energy: Large-scale projects a factor for profitable shale drilling --As US crude oil production is set to rise substantially over the next decade, analysts still debate whether shale drilling is an actual profitable endeavor. Some skeptics claim operators overstate their well production profiles, while others say operational cash flow from shale wells will never be enough to cover corporate costs and old debt. Analysts and investors are now waiting to see fourth quarter earnings as an acid test on profitable growth in the Permian basin at lower oil prices. Quarterly results have already been published by ExxonMobil Corp., Chevron Corp., and Anadarko Petroleum Corp., of which only Chevron appeared to generate positive cash flow from operations in the Permian. ExxonMobil and Anadarko, meanwhile, seemed to still be in investment mode in the play. Rystad Energy believes net cash is now likely in the red for many smaller oil companies that focus entirely or predominantly on the Permian. A number of factors can constrict the internal diameter of wellbore casing and threaten the completion of a well. This article discusses tools and approaches to bypass restrictions and restore well viability.  Having taken a closer look at the detailed economics of the most recent 1,000 wells drilled in the most popular shale hotspot—the Wolfcamp A zone of the Permian Delaware basin—Rystad Energy can see a clear pattern emerging that favors large players.“Our conclusion is that the average well completed during 2017 and 2018, which mirrors the most likely production profile and costs, appears very profitable even at local oil prices of $45/bbl,” said Per Magnus Nysveen, Rystad Energy senior partner.“However, there are also many wells that will not be profitable at this price level, and drilling needs to be conducted on a large scale in order to secure robust cash flows even in the hottest play. Betting on a low number of wells could give more uncertain returns than rolling the dice at the nearest casino.” Operators with scaled operations and large acreage positions exposed to Wolfcamp A in the Permian Delaware should see average returns of 20%, and 3 years’ payback from new wells, even with West Texas Intermediate Midland oil prices at $45/bbl. Smaller operators, meanwhile, would face higher costs for drilling, completion, operation, and transport, and also lower realized oil prices.“These operators might struggle in the current price environment, and their best opportunity to monetize their investment could be to sell their acreage to larger operators with more efficient logistics, better infrastructure, and more negotiating power through the value chain,” Nysveen said. “Size matters, even more so when drilling for shale oil in the Permian basin.”

Hess Needs Higher Oil Prices - Hess Corporation just recently reported its fourth quarter and full-year results for 2018. Readers should note that the financial performance of Hess Corporation is consolidated with Hess Midstream Partners LP  its midstream master limited partnership. After reviewing Hess Corporation’s financial statements for 2018, it's clear that the firm needs higher oil prices to generate positive net income. Let’s dig in. In 2018, Hess reported $6.5 billion in revenue on a consolidated basis, up 20% year over year. Hess reported an enormous $4.2 billion impairment charge in 2017. When factoring that out, its operating loss came in at a whopping $1.3 billion that year, which improved to an operating profit of $0.6 billion in 2018 ($0.7 billion when excluding $0.1 billion in debt extinguishment expenses). However, Hess still reported a net loss of $0.3 billion in 2018. That is much better than its $4.1 billion net loss in 2017, but indicates a lot of work still needs to be done to fundamentally change Hess’ cost structure if it wants to perform better.  Hess notes that when including the impact of its hedging program, the firm’s average sales price for a barrel of crude oil, a barrel of natural gas liquids, and a thousand cubic feet of natural gas during 2018 came in at $60.77, $21.81, and $4.18, respectively. If Hess can’t turn a profit in a $60 WTI/$70 Brent world, that’s a problem. Its international natural gas realizations are influenced by Brent.

Analysis: SCOOP/STACK natural gas production hits record high — As natural gas production volumes in the SCOOP/STACK struck a record high this week, operators in the Oklahoma play are indicating plans to continue accelerating growth throughout 2019 despite uncertainty surrounding commodity prices. Production in the SCOOP/STACK set a new daily record of 3.53 Bcf/d on Monday, according to S&P Global Platts Analytics. Despite the Polar Vortex striking the region last week, production volumes were hardly phased by freeze-offs at wellheads. And any decline which may have occurred from the frigid weather was quickly reversed. Platts Analytics models show production dropping late last week as population-weighted temps fell as low as 8 degrees. However, it only dropped by 65 MMcf/d from the previous two-week average to 3.41 Bcf/d, which is within the bounds of normal volatility. The cold weather had much less of an impact on production in the region than in the past. For example, last January, when population-weighted temperatures in Oklahoma dipped to an average of 3 degrees, production plummeted by more than 500 MMcf/d before recovering once average temps rose to 30 degrees. A primary driver of the most recent growth in the region has been in Grady County, located over what is referred to as the SCOOP. Sample production is averaging 610 MMcf/d this month to date, which would be a new record if it continues, surpassing last month's record of 587 MMcf/d, according to Platts Analytics. Total SCOOP/STACK production is forecast to grow about 300 MMcf/d from current levels by this time next year. However, WTI's recent price decline could jeopardize this. For instance, Grady County has averaged just 23 active rigs over the past month, down from 29 over the previous six months. Across the entire SCOOP/STACK, the active rig count has averaged 104 over the past month, down slightly from the 107 rig average throughout the back half of 2018. However, producers have been able to produce more with less due to perpetual improvements in drilling and completion techniques. Also, just over a year ago, the state of Oklahoma passed a new law allowing for operators to drill longer laterals in all geologic formations. Private oil and gas producer Chaparral Energy, which operators solely in the Anadarko Basin, increased its production in the STACK during the fourth quarter of 2018 by 60% compared to the fourth quarter of 2017 while only adding one additional rig, according to its latest operational update.

US oil and gas rig count rises by one to 1114 on week — The US oil and natural gas rig count inched up by one rig week on week to 1,114, rising for the second week in a row after a relatively lengthy prior period of declines, according to S&P Global Platts Analytics data released Thursday. The basins where gas rigs rose on a net basis appeared to be largely, or somewhat largely, gas-prone -- the Marcellus Shale in Pennsylvania and surrounding states, and the DJ Basin in Colorado, which has a large cache of oil as well as gas.Most likely the small rig gains are simply the result of new budgets and activity programs, Platts Analytics analyst Taylor Cavey said."Crude prices have rallied slightly, which could justify drilling, but I would think it has more to do with producers starting to implement 2019 plans," Cavey said.WTI crude prices, which had dipped below $50/b in late December and early January, have floated above that level for several weeks. Oil, gas and total rigs are all sizably down from recent highs in mid-November. This week, oil rigs rose by eight on the week to 875, although fully 10% below that category's recent high of 976, while gas rigs declined by six to 217, in contrast to a recent high of 235.The total rig count is also nearly 10% off its recent high of 1,233, Platts data showed.A two-rig decline to 17 also was posted this week for rigs not specified for oil or gas. Regions where rigs rose included the giant gas-prone Marcellus Shale, up by two rigs this week to a net 63 and the DJ Basin, up one rig to 30, Platts data showed. Other basins showed mostly net rig losses. The Eagle Ford Shale of South Texas and SCOOP/STACK play in Oklahoma each fell by three rigs, to 91 and 100, respectively. Down two rigs each were the Permian Basin in West Texas and New Mexico, where the count fell to 472, the Williston Basin of North Dakota and Montana, which fell to 59 rigs and the Haynesville Shale in Northwest Louisiana and East Texas, to 66. Rigs in the gas-prone Utica Shale of Ohio remained unchanged at 17. While this week's rig count rose slightly, so did the number of permits approved -- just barely. The number of permits issued was just one higher than last week at 1,227 for the week that ended Wednesday. The DJ Basin, down 78 from last week to 122, showed the most variation, while the Permian fell 29 week on week to 194. Also, 15 fewer permits were issued in the Marcellus this week - at 53. But Eagle Ford permits were up 23 from last week to 65, Utica Shale permits also were up by 23 at 24, while Haynesville permits were up by 19 to 26.

'Valve turners' target oil pipeline equipment in Itasca County -- Itasca County sheriff's deputies apparently took four activists into custody Monday afternoon after they used bolt cutters to break into an Enbridge pipeline facility. The activists, who call themselves the "Four Necessity Valve Turners," are part of the Catholic Worker Movement from Texas, Wisconsin and Minnesota. They posted Facebook Live video of the incident, in which they try for several minutes to close an emergency shut-off valve on an Enbridge pipeline using a variety of tools and other objects, such as a rosary. The video ends as they are loaded into sheriff's vehicles. "This was an action to address the imminent damage and destruction that's already being done to the climate, and the fact that government and regulatory agencies have not adequately addressed that imminent and irreversible danger," said Diane Leutgeb Munson, a spokesperson for the Catholic Workers. She added the valve turners felt compelled to trespass and attempt to shut down the pipeline, and they acted "in the spirit of nonviolence" to address the danger posed by climate change. The activists said that Enbridge remotely shut off the flow of oil through its Line 4 oil pipeline after they called the company. An Enbridge spokesperson declined to elaborate on the safety precautions the company took, but said no oil was spilled because of the incident. "The actions taken to trespass on our facility and tamper with energy infrastructure were reckless and dangerous," the company said in a statement. "The people involved claimed to be protecting the environment, but they did the opposite. Their actions put themselves, first responders, neighboring communities and landowners at risk." 

4 Activists Arrested After Prompting Shutdown of Enbridge Pipeline --Four activists were arrested Monday after attempting to shut down an Enbridge pipeline near Grand Rapids, Minnesota, The Associated Press reported. The activists, who call themselves the Four Necessity Valve Turners and are affiliated with the Catholic Worker movement, said their actions were needed to address the urgent threat posed by climate change."The recent scientific study on climate change presented to the UN indicates that the threat of irreversible damage and destruction to our planet is imminent," the activists wrote on their website. "Therefore, having exhausted all legal and political avenues, and having found those avenues lethally inadequate either to curb our dependency on fossil fuels or to stop its expansion, we find it necessary to take this direct action of turning off the flow of this poisonous tar sands oil."   Michele Naar Obed, of Duluth, Minnesota; Allyson Polman, of Denton, Texas and Brenna Cussen Anglada and Daniel Yildirim of Cuba City, Wisconsin broke into a fenced-off area around noon on Monday that held shut-off valves for three Enbridge pipelines, their spokesperson Diane Leutgeb Monson told The Associated Press. After a period of prayer, they called Enbridge to inform them they would be turning off the company's line 4 pipeline, prompting Enbridge to shut it off remotely. The activists were taken into custody by Itasca County sheriff's deputies around 1:30 p.m."The actions taken to trespass on our facility and tamper with energy infrastructure were reckless and dangerous," Enbridge spokesperson Juli Kellner said in an email reported by The Associated Press. "The people involved claimed to be protecting the environment, but they did the opposite. Their actions put themselves, first responders, neighboring communities and landowners at risk."The Enbridge pipelines targeted by the protesters carry crude oil from Alberta's tar sands through Minnesota to Superior, Wisconsin. Their action also follows the controversial approval by the Minnesota Public Utilities Commission of a plan by Enbridge to replace its aging Line 3 pipeline. In addition to concerns over the need for more fossil fuel infrastructure, environmental and indigenous groups are worried about the risk of an oil spill close to land sacred to the Ojibwe. This is a concern taken up by the valve turners as well. "This act is step towards reparations for the damage that colonization has done both to the indigenous peoples of this continent and the land," Cussen Anglada said in a press release.

Trump to nominate David Bernhardt, a former lobbyist, as the next Interior secretary - President Trump tweeted Monday that he will nominate David Bernhardt, a veteran lobbyist who has helped orchestrate the push to expand oil and gas drilling at the Interior Department, to serve as its next secretary.If confirmed, Bernhardt, a 49-year-old Colorado native known for his unrelenting work habits, would be well positioned to roll back even more of the Obama-era conservation policies he has worked to unravel since rejoining Interior a year and a half ago. He has helmed the department as acting secretary since Jan. 2, when Ryan Zinke resigned amid multiple ethics probes.“David has done a fantastic job from the day he arrived, and we look forward to having his nomination officially confirmed!,” Trump tweeted.While Zinke reveled in public displays of his affinity for the outdoors — riding horseback while on the job and touting his enthusiasm for hunting — Bernhardt is the ultimate insider. A former Capitol Hill staffer who served as Interior’s top lawyer under George W. Bush, Bernhardt has made it his mission to master legal and policy arcana to advance conservative policy goals.“It’s a humbling privilege to be nominated to lead a Department whose mission I love, to accomplish the balanced, common sense vision of our president,” Bernhardt said in a statement Monday. A former partner at Brownstein Hyatt Farber Schreck, he walked into the No. 2 job at Interior with so many potential conflicts of interest he has to carry a small card listing them all. He initially had to recuse himself from “particular matters” directly affecting 26 former clients to conform with the Trump administration’s ethics pledge.

Promoting 'Another Puppet for Corporate Polluters,' Trump Picks Former Oil Lobbyist to Head Interior Department -  After President Donald Trump announced via tweet on Monday that he is nominating former oil lobbyist David Bernhardt to replace scandal-plagued Ryan Zinke as head of the Interior Department, environmental groups described Bernhardt as yet "another puppet for corporate polluters" and urged the Senate to block his confirmation.  "Trump has once again nominated a corrupt industry hack to lead a critical federal agency," Nicole Ghio, senior fossil fuels program manager for Friends of the Earth, said in a statement. "The Senate must reject Bernhardt because he will undoubtedly put his fossil fuel industry friends before the American people and our environment." "Rather than give Bernhardt a promotion, Congress should be working on exposing his numerous conflicts of interest and ethics violations, as a fossil fuel lobbyist and now as a government official," Ghio added. Bernhardt has been serving as acting Interior secretary since Zinke officially resigned from his post last month. As Public Citizen pointed out on Twitter, Bernhardt's nomination fits with a long-standing pattern the Trump White House has followed after high-profile cabinet departures: As the New York Times reports, while Zinke was "the public face of some of the largest rollbacks of public-land protections in the nation's history, Mr. Bernhardt was the one quietly pulling the levers to carry them out, opening millions of acres of public land and water to oil, gas, and coal companies."

Trump Nominates ‘Walking Conflict of Interest’ David Bernhardt to Permanently Replace Zinke as Interior Secretary - President Donald Trump officially nominated David Bernhardt—a former energy lobbyist environmental groups have described as a "walking conflict of interest"—to officially take over as interior secretary afterRyan Zinke stepped down in December 2018 following various scandals. "It's a humbling privilege to be nominated to lead a Department whose mission I love, to accomplish the balanced, common sense vision of our President," Bernhardt wrote in a tweet responding to the president's announcement, also made on Twitter Monday.As deputy secretary, Bernhardt played an active role in the Trump administration's push to open public lands to fossil fuel and mining interests, and he is expected to continue this work if he is confirmed to permanently take over the department he has been running as acting secretary following Zinke's departure, Reuters reported. In 2017, around 150 environmental groups wrote a letter to the Senate urging it to block his nomination to the position of deputy secretary, arguing that his work as a lawyer and lobbyist for oil and water interests at Brownstein Hyatt Farber Schreck gave him too much past history with entities that could stand to benefit from Interior Department decisions. Despite this, he was confirmed 53 to 43, and now famously carries around a list of all his potential conflicts of interest, as The Washington Post reported in November of 2018."David Bernhardt is a walking conflict of interest who has no business overseeing America's public lands,"Sierra Club Executive Director Michael Brune said in a statement opposing his permanent installation. "The Secretary of the Interior should be someone who respects the mission of the department and sees the value in our public lands and waters beyond their capacity to be drilled, mined, or fracked."

Weld County oil and gas spill report for Feb. 3 -  The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks.  Information is based on Form 19, which operators must fill out detailing the leakage/spill events. Any spill release that may impact waters of the state must be reported as soon as practical. Any spill of five barrels or more must be reported within 24 hours, and any spill of one barrel or more, which occurs outside secondary containment, such as metal or earthen berms, must also be reported within 24 hours, according to COGCC rules.

  • • HIGHPOINT OPERATING CORP., reported Jan. 26 a tank battery spill about 7 1/2 miles northeast of Roggen, near U.S. 34 and Weld County Road 386. Between one and five barrels of oil spilled. An LACT unit valve was left partially open.
  • • KERR MCGEE OIL & GAS ONSHORE LP, reported Jan. 24 a historical spill about 2 1/2 miles northeast of Platteville, near Weld roads 36 and 29. Less than five barrels of condensate spilled. Waters of the state were impacted or threatened. Crews found impacts while abandoning a gas sales line. About 190 cubic yards of impacted soil was removed and taken to the Kerr-McGee Land Treatment Facility. Groundwater was found in the excavation about 4.5 feet below ground surface.
  • • NOBLE ENERGY INC, reported Jan. 24 a historical tank battery spill about 4 miles southeast of Evans, near Weld roads 50 and 49. Between one and five barrels of oil, condensate and produced water spilled. Crews found impacts while decommissioning the tank battery.
  • • NOBLE ENERGY INC, reported Jan. 24 a historical tank battery spill about 1 1/2 miles northeast of Milliken, near Weld roads 48 and 25. Between one and five barrels each of oil, condensate and produced water spilled. Impacts were found during reclamation. Crews removed 100 cubic yards of impacted soil and took it to the Buffalo Ridge landfill.
  • • WHITING OIL & GAS CORP., reported Jan. 23 a tank battery spill about 5 miles northeast of Keota, near Weld roads 106 and 111. About nine barrels of produced water spilled. Crews are not certain of the exact release point, but believe it came from the produced water tank and spilled inside containment. About three barrels were recovered.
  • • NOBLE ENERGY INC, reported Jan. 22 a historical tank battery spill about 4 miles south of Kersey, near Weld roads 44 and 53. Less than a barrel each of oil, condensate and produced water spilled. Waters of the state were impacted or threatened. Crews found impacts while dismantling the tank battery.
  • • NOBLE ENERGY INC., reported Jan. 22 a historical tank battery spill about 6 miles northwest of Keenesburg, near Weld roads 30 and 49. Between one and five barrels of oil, condensate and produced water spilled. Waters of the state were impacted or threatened. Crews found impacts while dismantling the tank battery.
  • • KERR MCGEE GATHERING LLC, reported Jan. 21 a historical spill in Firestone, near Colorado River Drive and Sunset Drive. Less than five barrels of oil, condensate and produced water spilled. Crews found impacts while removing a meter run and the associated piping.
  • • KP KAUFFMAN COMPANY INC, reported Jan. 20 a historical flowline spill in Frederick, near Little Bell Drive and Copper Drive. More than five barrels of oil and produced water spilled. As part of a relocate agreement with the land developer, the contractor is removing an abandoned flowline and identified impacts.

Commerce City considers proposal to install 160 wells on fracking sites — Battle lines are being drawn again in Colorado over fracking. Extraction Oil & Gas is proposing expansion into Commerce City amid criticism from protestors concerned about the environment, health and safety. Protestors gathered in the lobby of Commerce City’s city hall Monday as city decision makers headed to a closed-door executive session meeting concerning fracking. “I don’t think you can put a price on the safety of our neighborhood,” resident Sean Cuevo said. Commerce City says Extraction Oil & Gas— a company well known in Broomfield— has proposed 160 wells on 6 pads across the northern suburb. Fears of soil and water contamination, fires and cancer have residents insisting their city council members find a way to say “no” to the development. But legally, it’s not so easy, officials warn. The city says it is still weeks away from any potential operating agreement. Council members are, for now, gaining legal advice from city attorneys. The city is attempting to create a focus group for resident feedback and is determining a negotiation strategy on fracking. “There is always room for that public comment period as this process continues to move forward,” said city spokeswoman Jodi Hardee. Organizations advocating for responsible energy development argue stopping development all together is the wrong way to go. Instead, finding a compromise of what works best is the answer. But, Commerce City residents like Cuevo say wells simply don’t belong within city boundaries. The city says, if an agreement does move forward, there will be a 21-day public comment period. 

Investors question Anadarko on political risk to Colorado drilling — Executives from Anadarko Petroleum on Wednesday fielded a persistent line of questioning from institutional investors and analysts about the company's oil and gas assets in Colorado's DJ Basin, where community activists continue to pressure the state government for tougher regulations on the industry. On the company's fourth-quarter earnings call, questioners pushed President and CEO Al Walker for his view on the risks that potential state regulations could pose to Anadarko's Colorado assets. Although only a fraction of Anadarko's production portfolio is located in Colorado, a regulatory change there could jeopardize nearly 4.1 Bcf/d in natural gas production and over 450,000 b/d in crude oil output that comes from the state's Denver-Julesburg, Piceance, San Juan and Anadarko Basins. Walker was somewhat dismissive of investor and analyst concerns, saying that he sees Colorado as having a "constructive environment" relative to the company's position there, and the industry would have to adopt a wait-and-see approach for now. Questions remain, though, about how the investment community might adjust their portfolio allocations with respect producers that operate in states with higher perceived political risk, like Colorado, with one investor even asking if Anadarko had any "big thoughts about restructuring." In the November 2018 election, the resounding defeat of Proposition 112, which would have required that new drilling permits observe a 2,500-foot setback from occupied structures and vulnerable areas, was a notable victory for Colorado's oil and gas industry. The November ballot measure, though, hasn't marked an end to the nearly decade-long battle over the state's oil and gas industry. In the battle over drilling along Colorado's Front Range, which sits at the heart of the highly productive DJ Basin, that last salvo from community activists has come in the form of proposed regulation that could effectively ban drilling in the state. In December, a group of homeowners in Broomfield sued the state to end forced pooling--a practice that's become essential to hydraulic fracturing, especially in locations with multiple mineral rights owners, like the DJ Basin. The case challenges the state constitutionality of pooling, which allows producers to organize multiple mineral rights holders into a single pool. As long as a certain percentage of the people in the pool agree to the terms of the lease, the project can move forward, even without unanimous consent.

Crew injured, diesel fuel spilled into river when train derails in remote Wyoming canyon -- A coal train collision on Monday sent two locomotives partially into the North Platte River, potentially contaminating the waterway with thousands of gallons of diesel in a remote canyon north of the Guernsey Reservoir, according to state officials. Two of the company’s employees, an engineer and a conductor, suffered non-life threatening injuries from the incident, which involved one loaded coal train rear-ending another north of Wendover near Little Cottonwood Creek. The collision resulted in three derailed locomotives and four derailed cars, said Amy McBeth, a company spokeswoman. None of the spilled coal reached the river, but two of the derailed, diesel-fueled locomotives did. From engines that were flipped on their sides, as much as 6,000 gallons of diesel could have spilled, according to Joe Hunter, emergency response coordinator for the Wyoming Department of Environmental Quality. That’s a worst-case scenario,” Hunter said. “ I don’t have a good idea of how much went into the river, but it is a significant amount.” The collision happened in a remote area where the tracks skirt the southern edge of the North Platte as it passes through steep terrain. County officials headed to the scene Monday afternoon were unable to reach the actual derailment site because of the narrow canyon, said Terry Stevenson, emergency management coordinator for Platte County. BNSF transported the two injured employees out of the canyon via a company vehicle that can drive on train rails. Cleanup of the diesel in the river could be completed by the end of the week, according to Hunter, who said the agency and the company were exploring multiple remediation options. That work is currently being hampered by the location of the crash. The tracks and overturned locomotives lie at the base of a 300- to 400-foot cliff face, Hunter said.

Dakota Access criminal cases wrapping up in North Dakota (AP) — Hundreds of state-level criminal cases stemming from the prolonged protest in North Dakota against the Dakota Access oil pipeline are mostly wrapped up, and an organization of volunteer attorneys that formed to aid protesters is shifting its focus to other potential battles, including the Keystone XL pipeline and President Donald Trump’s southern border wall. “Whenever the next struggle heats up and takes off, then we will swell our ranks to meet the demand,” said Frances Madeson, spokeswoman for the Water Protector Legal Collective . “Water protector” is what many pipeline opponents called themselves because they fear a spill could contaminate water supplies. Thousands of Native Americans and others who feared environmental harm from the $3.8 billion pipeline built by Texas-based Energy Transfer Partners came to southern North Dakota in 2016 and 2017 to protest, resulting in hundreds of arrests over a six-month span and nearly 850 criminal cases in state court. The pipeline that ETP maintains is safe has been moving North Dakota oil to Illinois since June 2017. The nonprofit legal team, which formed in a tent at a protest camp, grew to 31 attorneys from around the country who donated tens of thousands of hours over the past 2 ½ years to help defendants in those cases, most of which have been dismissed or resolved through plea agreements.

Produced water spilled in Stark County - A produced water spill resulting from a tank overflow in Stark County has been reported to the North Dakota Department of Health. The tank is located on an oil pad owned by Scout Energy Management LLC. The incident occurred about 2 miles west of Dickinson on Sunday, and it was reported the next day. Initial estimates indicate about 450 barrels of produced water were released and impacted agricultural land. Health department personnel have inspected the site and will continue to monitor the investigation and remediation.

Leak spills 10,300 gallons of brine at Williams County well — A valve or piping connection leak is being blamed for a spill of nearly 10,300 gallons of saltwater at a well in Williams County. The state Oil and Gas Division says Oasis Petroleum North American LLC on Wednesday reported the spill of 245 barrels of brine at the well about 7 miles southeast of Williston. Brine, or saltwater, is a byproduct of oil production. The spill was contained on-site and was being cleaned up. A state inspector visited the site and is monitoring cleanup.

Company gets water permit for refinery near national park (AP) — A company facing opposition from environmentalists and landowners as it works to build an $800 million oil refinery near Theodore Roosevelt National Park in western North Dakota has cleared another hurdle by obtaining a state water permit, though the matter could still end up in state court.State Engineer Garland Erbele on Thursday followed the recent recommendation of an administrative law judge and issued a permit to Meridian Energy Group allowing the company to draw water from an underwater aquifer for the Davis Refinery, State Water Commission spokeswoman Jessie Wald said Monday.The agency was prepared to issue the permit last summer but three landowners challenged it, citing concerns over how they might be affected and how much of the water would be wasted. Landowner attorney JJ England also argued that Meridian’s plans for treating and using the water were vague and at times conflicting.Administrative Law Judge Tim Dawson held a hearing in November and issued his recommendation Jan. 8, concluding “there is no realistic harm to the public interest” should the permit be issued.England did not immediately respond to requests for comment on whether his clients will appeal. They have about a month to decide under state law.A separate challenge in state court by three environmental groups of the refinery’s state air quality  permit recently failed. A state judge ruled in late January that the Health Department had effectively supported its position that the refinery will not be a major source of pollution that will negatively impact the park just 3 miles (5 kilometers) away.

SoCalGas asks customers to curb nat gas use during California cold snap - Sempra Energy's (NYSE:SRE) SoCalGas urges customers to use less natural gas until further notice to avoid straining its system as colder weather covers its service area.  Overnight temperatures in Los Angeles are expected to drop as low as 39 degrees F during Monday-Wednesday, ~10 degrees below normal at this time of year, before rising to near normal levels later in the week. Gas supplies have been tight in Southern California this winter because of limitations on several SoCalGas pipelines and reduced availability of the Aliso Canyon storage field following a massive leak three years ago.  The utility says it has been pulling gas from Aliso to avoid removing too much fuel form its other storage facilities.

Oil Pipeline Firm Tells Investors Spills Happen – A federal judge in Houston was correct to call pipeline spills unremarkable and investors should take them as no surprise either, an attorney for a pipeline company told a Fifth Circuit panel Wednesday. “It is not an industry that you’re not going to have spills, or leaks in, and in fact, Plains makes that very clear in their filings,” attorney Michael Holmes, a partner in shareholder litigation and enforcement at Vinson & Elkins in Dallas, told the three-judge panel. A class of retirement funds led by IAM National Pension Fund appealed a Houston federal judge’s dismissal of the securities portion of their lawsuit against Plains All American Pipeline LP after a California jury last year found the company guilty of criminally negligent conduct for a May 2015 pipeline rupture that sent tens of thousands of gallons of oil into the Pacific Ocean. The securities lawsuit alleged the pipeline company “falsely claimed to have a comprehensive, effective environmental and regulatory compliance program to prevent oil spills” and said the company “repeatedly violated regulatory mandates” all the while having a compliance program that “was close to non-existent.” U.S. Circuit Leslie H. Southwick, an appointee of George W. Bush, appeared skeptical Wednesday during Holmes’ arguments about the inevitability of spills. “I don’t think that’s what Judge Rosenthal had in mind,” Southwick said, referring to U.S. District Judge Lee Rosenthal’s dismissal of the securities violations claims.   “There is no recklessness here,” Holmes said. “I think that’s how Judge Rosenthal was looking at it.” Holmes went on to say that in looking at a shareholder contract with a pipeline, the investor can’t simply interpret the terms as they wish because the statements in such contracts are actually for underwriters. Judge Southwick still appeared unconvinced. Holmes continued, “It isn’t that there aren’t any regulatory violations” made by Plains All American, but “there are no regulatory violations that could be reasonably expected to lead to a material adverse effect.”

Pipeline work destroyed salmon habitat, puts orcas at risk, scientists say   - Shoddy work on a section of the Trans Mountain pipeline in Chilliwack, British Columbia has “degraded” a local coho and chum salmon habitat, says a BC-based biologist with more than 30 years’ experience. The biologist, Mike Pearson, says the work is a warning sign of what might happen with future pipeline developments, and could have greater downstream impacts on other wildlife, such as orcas, if Trans Mountain adopts similar methods for other stream systems. Pearson undertook an assessment of Stewart Creek in December 2018 and filed it to the National Energy Board (NEB) later that month. The report found that the fix (placing concrete blocks and crushed gravel on top of a exposed pipe) made the stream unsuitable for salmon. The smooth concrete blocks meant most of the gravel was washed away just months after it was added, leaving no places for salmon to hide or bury their eggs, or for the salmon’s food source (aquatic invertebrates) to grow. “No consideration is given to restoring or mitigating impacts on habitat,” Pearson told me over the phone, adding that he’s seen a lack of consideration for wildlife habitats at other Trans Mountain project sites as well. He says the site is highly visible to the public and logistically simple compared to other stream systems, so there was no excuse for not getting it right. “If under those circumstances sufficient care isn’t going to be taken...then I’m concerned,” Pearson told Motherboard. Pearson says that salmon populations, and the orcas that rely on them as as a food source, could be at risk in the future if other streams receive the same treatment if the pipeline expansion gets the go-ahead.

US Military Fuel Tanks Threaten Aquifer In Hawaii - The North Korean missile scare in Hawaii a year ago was alarming. But that fear has abated. Once again the greatest perceived threat to the island of Oahu comes from our own U.S. military. A massive complex of 20 U.S. military storage tanks is buried in a bluff called Red Hill that overlooks Honolulu’s primary drinking water supply, 100 feet below. The walls on the 75-year-old jet fuel tanks are now so thin that the edge of a dime is thicker. Each of the underground tanks holds 12.5 million gallons of jet fuel; 225,000,000 gallons in total. In 2014, 27,000 gallons of jet fuel leaked through a weak spot on a tank that had been repaired with a welded patch. The welding gave way and the fuel entered the the water supply. An Ohau beach. Drinking water is currently safe to drink, but traces of petroleum chemicals are being detected in the groundwater near the tanks. Leaks have been going on for years. Studies have documented them since 1947. The continued corrosion of the tank liners constantly risks a catastrophic fuel release. Concerned citizens on the island have for decades been trying to get the U.S. Navy to remove the tanks. The military’s position is that the fuel tanks are of strategic importance to U.S. national security and are being maintained as well as 75-year old tanks can be. 

Trump Administration Drills Down on Alaska’s Arctic Refuge - The Trump administration is barreling ahead with plans to drill for oil in Alaska's Arctic National Wildlife Refuge, the largest refuge in the country and an area of global ecological importance. Many refer to the coastal plain of the Arctic Refuge—the very place where oil drilling is being planned—as the "American Serengeti." A home for grizzly bears, wolves, musk oxen and a host of other species, the area is famous as the birthing ground for the enormous Porcupine caribou herd, which each spring floods across the refuge's coastal plain in the tens of thousands, arriving in time to raise newborn calves amid fresh tundra grasses. The coastal plain is also the annual destination for millions of migrating birds, who come from nearly every continent on Earth to raise the next generation of swans, terns and more than 200 other species. In late summer these avian visitors disperse to backyards, beaches and wetlands across the planet. Drilling on the Arctic Refuge has long been opposed by most Americans. Among the staunchest opponents of drilling are indigenous people in northern Alaska and the Canadian Arctic, whose cultures and diets are entwined with the Porcupine herd. They include the Gwich'in people of northern Alaska, who have lived in the Arctic for millennia and reside alongside the Arctic Refuge. Their name for the coastal plain is Iizhik Gwats'an Gwandaii Goodlit, or "the Sacred Place Where Life Begins," a name reflecting the shared destiny of the caribou and the people. For the Gwich'in and others, fighting against drilling is a cultural imperative and a civil-rights issue. When Eisenhower's order protected the area's "unique wildlife, wilderness and recreational values," it marked the first time federal law specifically protected a thing called wilderness. As Roger Kaye describes in his book The Last Great Wilderness, the move was a precursor to the 1964 Wilderness Act, which the Muries also helped shape and which remains among our bedrock conservation laws. Later, in 1980, Congress affirmed the national significance of the Arctic Refuge by nearly doubling its size.

Activists air grievances about drilling in Alaska refuge (AP) — Activists pushing against oil development in Alaska’s Arctic National Wildlife Refuge dominated a Bureau of Land Management public meeting in Fairbanks. The open house format meeting on plans for lease sales on the refuge’s coastal plain was quickly interrupted by protesters Monday, the Fairbanks Daily News-Miner reported . The meeting was planned to provide information about the project to the public to inform their comments, said Joe Balash, the assistant secretary for land and minerals management. But protesters used it to aired grievances about the meeting style, its short notice and the lack of consultation with Alaska Natives during the drafting process for the environmental impact statement. Jody Potts, head of the Village Public Officer Program for the Tanana Chiefs Conference, spoke out against the meeting’s organization, noting that testimony needs to be able to be heard by the public while also being recorded. “My people, the Gwich’in, will be the most affected by this,” Potts said. “And our government that is supposed to represent all of us equally and freely is preventing us from properly commenting, and I think that needs to be justified.” Balash said he feels the majority of Alaska residents still support drilling in the section of the refuge, but opponents are vocal. “Public sentiment in Alaska for a long time has been largely in favor of leasing and exploring in the coastal plain and ANWR,” Balash said Monday. “But the people who are opposed are incredibly passionate about it and feel very strongly, and I think we’re seeing that here tonight.”

Interior: No 3D seismic exploration in ANWR this winter - —An Interior official has confirmed that there will be no 3-D seismic exploration in the Arctic National Wildlife Refuge this winter. Steve Wackowski, Interior’s senior adviser for Alaska affairs, made the announcement at a public meeting earlier this week in Kaktovik. That means although Interior still aims to hold an oil lease sale in the refuge’s coastal plain this year, companies will have less information about where the most promising acreage might be. Originally, a company called SAExploration had applied to conduct seismic work across the refuge’s entire coastal plain, encompassing 2,600 square miles. The company had partnered with Arctic Slope Regional Corp. and Kaktovik Inupiat Corp., two Alaska Native corporations on the North Slope. Seismic exploration can only be done in winter, and the company needed approvals from Interior to do the work. Originally, the agency had hoped to get the project permitted last summer. But in November, top Interior official Joe Balash acknowledged the agency was pressed for time to complete the approvals. He said it was taking time for the company to work with the U.S. Fish and Wildlife Service on compliance with the Marine Mammal Protection Act. And according to a report in the Anchorage Daily News, the government shutdown further delayed the work. Before the shutdown started, the Bureau of Land Management had yet to publish a notice on its environmental review on the seismic program, which would have kicked off a weeks-long public comment period before the final approval could be issued. However, that process is proceeding. “The status of the application is still pending,” an Interior spokesperson said in a text message. “The applicant has asked us to amend both permits to reflect a December 2019 start date, and it should be coming out in the coming weeks.” 

US keeps arctic leasing date despite seismic delay - President Donald Trump's administration is sticking with plans to open the Arctic National Wildlife Refuge to development this year despite a delay in gathering new seismic oil and gas survey data. The US Interior Department's senior adviser for Alaska affairs, Steve Wackowski, at a public meeting this week announced there would not be any seismic testing in the Alaska refuge this winter, the only season when the tundra is frozen enough to support the heavy equipment needed to conduct the surveys.  That means plans to gather three-dimensional seismic data that would indicate which parts of the refuge's coastal plain are most likely to hold oil and gas will not be ready until 2020 at the earliest. If a lease sale is still held this year, it would force producers to rely mostly on less detailed two-dimensional seismic data gathered more than 30 years ago.Interior said it would still hold a lease sale this year so long as it is able to finalize an environmental impact statement (EIS) that it released in draft form in December. The coastal plain has long been targeted for development because it holds an estimated 5.7bn-10.4bn of technically recoverable crude and is close to existing infrastructure in Prudhoe Bay.   The companies called for deploying on the tundra a dozen rubber-tracked seismic trucks, each weighing 90,000 pounds, along with personnel carriers, worker camps and a temporary airfield. But Interior assistant secretary for land and minerals management Joe Balash in December said regulators were waiting on permits for polar bears, which build hard-to-spot dens in the snow that could be crushed during surveying. The 35-day government shutdown delayed work on the permits and in seeking comment on the draft EIS. Taxpayer groups say the plans to lease with out-of-date seismic data make it even less likely that a lease sale will raise the $2bn the Republican-controlled US Congress said it would when opened the refuge to drilling through a 2017 tax cut bill. If every tract in the 1.56mn-acre were leased, it would require an average price of nearly $1,400/acre to generate that amount of revenue.

US government appeals ruling that blocked Keystone pipeline (AP) — The Trump administration is appealing a court ruling that blocked the Keystone XL oil pipeline. Justice Department attorneys on Friday appealed the November ruling from U.S. District Judge Brian Morris that blocked a construction permit for the 1,184-mile (1,900-kilometer) pipeline. The line sponsored by Calgary-based TransCanada would begin in Alberta and shuttle as much as 830,000 barrels a day of crude through a half dozen states to terminals on the Gulf Coast. It was rejected by former President Barack Obama in 2015. That decision was reversed in 2017 by President Donald Trump, who has promoted the $8 billion project as part of his effort to boost American energy industries. After environmental groups sued, Morris said the administration had not fully considered potential oil spills and other impacts and that further reviews were needed. 

Alberta Amends Oil Curtailment to Pacify Companies - Alberta is gradually chipping away at its own oil curtailment program to placate energy companies that have grown unhappy with the mandated cuts. The oil-rich Canadian province amended the curtailment rules on Wednesday to allow some oil sands producers, and companies that pump crude from land with freehold mineral rights, to produce more than their quota. That decision came the same day the provincial government announced it would raise the production limit for March by 75,000 barrels to 3.63 million barrels a day. The rule changes will exempt “only a few thousand barrels of production,” Michael McKinnon, government spokesman, said in an email. “We anticipate only a small amount of companies will need to use the regulation change.” The curtailment, announced in early December, was designed to ease a glut caused by a shortage of pipeline space. Since taking effect, the measure has reduced inventories by 5 million barrels, the government said Wednesday. They also caused local oil prices to surge, with Western Canadian Select falling to a discount of less than $10 a barrel to West Texas Intermediate futures, after the gap narrowed last month from $50 in October. Prices have also been supported by U.S. sanctions on Venezuela that have cut supplies of heavy crude to some U.S. refiners. The cuts from Alberta and how they are being administered has grown increasingly contentious since taking effect in January. Even Canadian Natural Resources Ltd., a supporter of the reductions, warned service companies it would have to shut its ECHO oil pipeline following a previous rule change in December, according to two people who saw the notice. The government’s decision to ease curtailment will allow the company to continue operating the pipeline that links Western Alberta oil fields to the Hardisty oil hub, Canadian Natural said Friday. Husky Energy Inc., which opposed curtailment from the start, said the new limits didn’t go far enough. “It’s a modest step forward, but the bottom line is we’re still going to have to curtail more barrels in February than we did in January,”

Suncor calls for early end to Alberta oil cuts because 'rail economics are severely damaged' - Shipping crude by rail into the United States is no longer financially sustainable — Suncor Energy Inc. is calling on the Alberta government to make an earlier-than-planned exit from the oil curtailment program it enacted on Jan. 1 because of its “unintended consequences.” CEO Steve Williams says the program designed to draw down crude storage and free up space on export pipelines has worked too well, reducing local price discounts to the point that shipping crude by rail into the United States is no longer financially sustainable. The same charge was levelled last week by Imperial Oil Ltd. CEO Rich Kruger, who said his firm would cut its crude-by-rail shipments to near zero this month, a major setback in oil movements as it had been responsible for about half of Canada’s rail shipments in December. On a conference call to discuss Suncor’s fourth-quarter results, Williams said the production cuts are also having a long-term negative affect on investor confidence in Canada. The criticism came as Suncor reported a $280-million net loss in the fourth quarter of 2018, in part due to the very price discounts the curtailments were designed to reduce.

Trudeau paid ‘sticker price’ for pipeline, budget watchdog says - Canada’s government purchased Kinder Morgan Inc.’s Trans Mountain pipeline at the higher range of its valuation, according to the nation’s budget watchdog.The Parliamentary Budget Office, in a report published Thursday in Ottawa, estimated that the 710-mile pipeline and proposed expansion had a combined value of between C$3.6 billion ($2.7 billion) and C$4.6 billion. It warned, however, that regulatory delays could further erode the value of the project.Justin Trudeau’s government bought the pipeline last year for C$4.4 billion as Kinder Morgan threatened to abandon the expansion project. The purchase price also included related assets, like terminals, that the budget watchdog didn’t include in its valuation, because it considered their value to be almost entirely tied to whether the expansion is completed or not.“If it was a car, we’d say they paid sticker price,’’ Parliamentary Budget Officer Yves Giroux said. If there is a delay that raises the cost and reduces potential revenues, he said it would then be “quite clear to us the government will have overpaid.’’The watchdog estimated that baseline total construction costs for the expansion will be C$9.3 billion. Regulatory and political hurdles, however, hurt the value of the project. A one-year delay in construction completion would reduce the value by about C$700 million, the PBO projects.Kinder Morgan, when the sale was finalized to the government, estimated an in-service date of Dec. 31, 2021. But a court ruling in August sent the government back to the drawing board on the project. The PBO used that date as its baseline, but there’s ample downside risk to the construction timeline, meaning most signs point to added costs from construction, Giroux said.

Oil Supermajors Smash Analyst Estimates -- The world’s biggest oil companies are pumping out cash like crude’s at $100 a barrel again, and investors love it. Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp. and BP Plc smashed analysts’ earnings estimates for the fourth quarter, giving investors assurance that their dividends and buybacks are secure even with oil trading near $60. Those companies together generated close to $43 billion of cash flow from operations, the highest in more than four years. They achieved this despite a deep slump in crude prices at the end of the year, maintaining returns by keeping a tight grip on spending and squeezing more out of projects at lower prices. "The 12-month rolling cash flow continues to point upwards, and I think that’s what’s important,” said Oswald Clint, an analyst at Sanford C. Bernstein Ltd. “It isn’t just refining-led improvements, it isn’t just an upstream oil price, it’s widespread across the businesses.” Clint expects the sector to generate record free cash flow in 2019, the second year in a row. BP surged the most in almost three years after its profit beat even the most optimistic analyst estimate. Shell’s B shares gained 3.6 percent when it reported earnings on Jan. 31, while Exxon and Chevron increased by a similar amount on Feb. 1. France’s Total SA, the fifth member of the oil-supermajor group, reports earnings Feb. 7. The group’s strong performance comes at a crucial time. They need to remain attractive for shareholders who stuck with them through a years-long downturn because of the reliability and size of their dividends. Shell’s cash payout of almost $15.7 billion was the largest in the world, besting its Big Oil rivals and other corporate giants such as Apple Inc. and AT&T Inc. Beyond the dividend, major oil companies need to demonstrate they can maintain share buybacks, increase production, and still invest to grow. Shell’s Chief Financial Officer Jessica Uhl said the company can “do it all.” BP can curb debt, repurchase shares and invest with oil at $50 a barrel, CFO Brian Gilvary said. Chevron gave the market a pleasant surprise with a $25 billion stock-buyback pledge. Exxon surpassed analysts’ forecasts with the biggest refining bonanza in six years and Permian Basin crude output that almost doubled. Exxon Chief Executive Officer Darren Woods said he would ramp up both spending and asset sales this year as the company plows billions into new drilling and refinery expansions. ‘

Drilling recovery to spur more oil, gas finds this year: Wood Mac — Global discoveries of conventional oil and gas could jump to 20 billion barrels of oil equivalent this year as an industry-wide recovery in exploration activity continues to ramp up, research group Wood Mackenzie said Monday. In 2018, exploration drilling discovered at least 10.5 billion boe in conventional resources, of which 40% was oil and 60% was gas, according to the UK-based consultancy. Although still the lowest for "several decades", Wood Mac said it expects the 2018 figure to increase due to further disclosure and appraisal drilling, noting that historic resource "creep" from initial year-end estimates has averaged around 40% over the last decade. But with a number of key exploration wells targeting new plays and large volumes in 2019, Wood Mac is expecting global discoveries this year to add around 15 billion-20 billion boe of new conventional resources. "We are seeing a long-overdue recovery in the sector," Wood Mac's vice president for global exploration Andrew Latham said in a note. "Last year conventional exploration returns hit 13% -- the highest calculated in more than a decade. As 2018's discoveries are appraised and projects move through the development cycle, we expect these economics to improve further." Since the 2014 oil price slump, most oil majors have slashed upstream spending and directed more capex to develop quick-return US shale plays. As a result, fewer conventional wells are being drilled with companies much more selective with their drilling targets. Meanwhile, cheaper rig rates has meant offshore drilling costs have fallen sharply since 2014, making them more competitive with US tight oil plays. Helped by the lower industry costs, exploration activity is recovering slowing with global exploration and appraisal spending this expected to remain close to its 2018 level of just under $40 billion, Latham said. "A stronger oil price, lower cost base, refocused portfolios and greater drilling success in 2017-2018, and a healthy inventory of new quality acreage have cheered up the industry," Latham said, "It is using more efficient rigs at lower rates, and avoiding technical complexity." He said corporate upstream spending is not about to "burst open" however, with financial discipline and prudence meaning companies will continue to focus on their best prospects.

In squeezed oil industry, some rethink hunt for new barrels (Reuters) - New partnerships are emerging in the global hunt for oil discoveries, with some explorers essentially offering an outsourcing service for the riskiest part of the energy business. Central to this new strategy are efforts to find an ally earlier in the process of discovering new fields, and on a larger scale, in order to save money as budgets remain tight after the oil price slump of 2014. While giants such as Total and Eni revamp exploration in-house, BP and Royal Dutch Shell have been more open to having partners do the heavy lifting of exploration in certain geographies. Kosmos Energy and BP, for example, joined forces to hoover up exploration licenses in the northern part of the African Atlantic, rather than competing against each other. In October, Kosmos entered a similar partnership with Shell to search for new oil off southern Africa. “Having a built-in partner with a supermajor from the beginning is very different and allows us to share cost and share risks from the inception of a project,” said Kosmos’ exploration chief Tracey Henderson. “That differs from what used to be a traditional model where a company like Kosmos would pick up acreage in frontier and emerging basins and take more risk upfront ... Then we would spend a year and a half identifying and maturing that prospectivity and then go through a farmout process (to sell a stake).” In such partnerships, responsibilities are clearly defined. Kosmos is in charge of exploration and BP of developing discoveries into producing fields. BP gets a nimble partner with a proven frontier-basin track record in Kosmos, which employs around 350 people. This compares to BP’s 74,000 employees in hundreds of sites around the globe, all vying for budget allocation and embedded in complex decision-making structures.

US oil heads to China, but it's too early to declare victory in the trade war - The first U.S. oil shipments to China in months will reach their destinations just days from now, punctuating a pledge by President Donald Trump in December that China would begin buying more American products despite an ongoing trade battle. The shipments, which left ports in Texas in late December, are not a clear sign of U.S. victory, however. They are among a handful bound for China or points near it currently as a March negotiating deadline on a new trade deal draws near. And the amount of U.S. oil being shipped to China is well below what it was a year ago, when the trade war erupted. The U.S. sent the equivalent of 500,000 barrels per day to China in 20 shipments during the months of February, March and April, according to data from Genscape, the world's largest vessel monitoring company. There was only one shipment from the U.S. to China last fall before the two that left in December. Those final two held an average shipment equivalent to 100,000 barrels a day, about one-fifth the size of the spring peak. "So while the oil deliveries are promising, the fact no subsequent ships are set to arrive after the tariff deadline shows you the pace of the trade discussions," said Hillary Stevenson, director of oil markets and business development at Genscape. "We just have to wait and see. China is buying U.S. crude again but not at its old pace." Two ships, The Manifa and The Jag Lakshya, are estimated to arrive in China in the middle of February. Genscape can track their movement across the ocean using marine radar technology that shippers use to avoid running into each other on the open water. The journey from Texas to Asia takes about a month and a half, and ships often mark their destination as Singapore when they are really only refueling there before traveling another five days to China.

Britain's richest man blasts designer over opposition to fracking - Britain's richest man has launched a blistering attack on Dame Vivienne Westwood over her opposition to fracking. Chemicals tycoon Sir Jim Ratcliffe – who is worth £21billion – said the designer did not care about the jobs it would create, and accused her of living in a London bubble. Dame Vivienne, 77, hit back, calling Sir Jim, 66, a liar bent on destroying the environment. His firm, Ineos, is a key player in the dash for shale gas. The fuel is extracted through fracking – a controversial process in which high-pressure water, sand and chemicals are blasted into rocks deep underground to release trapped fossil fuels. Critics claim the process causes earthquakes and increases pollution. Dame Vivienne, a pioneer of 1970s punk fashion, has been a vocal campaigner against fracking, which she wants to be banned. But Sir Jim – whose company has been granted the rights to look for shale gas in North and South Yorkshire, Cheshire and the East Midlands – said she was standing in the way of progress. ‘It’s ridiculous we’re not allowed to do the science to find out if we’re sat on decent shale gas deposits,’ he said. ‘There are a lot of people in the North of England who are not very well off and they’re not going to have jobs and there’s no investment. So it’s all very well the politicians who live in Chelsea and Knightsbridge pooh-poohing shale, and Vivienne Westwood [wanting to show] a film every fashion show about how she’s anti-shale ... but she doesn’t have to live in the North of England and she isn’t without a job.’ 

Tests at Cuadrilla's British fracking site show substantial gas flows (Reuters) - Tests of the first shale well at Cuadrilla’s site in northwest England show a rich reservoir of high quality and recoverable gas, the British firm said on Wednesday, adding that rules that have constrained its testing work should be eased. Cuadrilla is using a technique called hydraulic fracturing that involves injecting water and chemicals at high pressure to break up rock and extract gas. The practice, known as fracking, can cause tremors and environmentalists oppose the development. The company repeatedly stopped operations last year at its Preston New Road site in Lancashire because of minor seismic events. British regulations demand work be suspended if seismic activity of magnitude 0.5 or more is detected. Cuadrilla said it could only partially test the horizontal shale well because of the operating limits. It said it fully fractured 2 out of 41 stages along the horizontal well and less than 14 percent of sand was injected. “Nonetheless the natural gas still flowed back from the shale at a peak rate of over 200,000 standard cubic feet (scf) per day and a stable rate of some 100,000 scf/day,” Chief Executive Officer Francis Egan. Scaling up the results suggested a flow range of between 3 million to 8 million scf/day for a 2.5 km (1.6 miles) section once all stages were hydraulically fractured, Cuadrilla said. “We have also confirmed that the Bowland shale formation fractures in a way that, from U.S. experience, is typical of an excellent shale gas reservoir,” Egan said. Fracking techniques were pioneered in the United States, which has turned from an importer of gas to a net exporter. Cuadrilla said more production data was needed to refine the preliminary results and this could only be done if seismicity limits are lifted to allow more effective fracturing. The firm has asked the regulator to review rules on seismic activity to allow more thorough testing of exploration wells. Depending on the outcome, Cuadrilla plans to complete fracking its first well at Preston New Road, start a second and carry out flow testing of both later this year. 

The Guardian view on fracking- the end can't come soon enough - Editorial - Less than four months after what was supposed to be a new beginning for fracking in England, when Cuadrilla resumed operations at its Preston New Road site in Lancashire, it appears increasingly unlikely that there is a future for this industry in the UK at all. Minor earthquakes rapidly halted fracking at Preston New Road, and led to a row about whether the legal limit for underground seismic activity, set at 0.5-magnitude after earthquakes in 2011, is unrealistically low. Now Jim Ratcliffe, chairman of petrochemicals firm Ineos and the UK’s richest man, has launched his own attack both on the 0.5 limit and on the planning system that has seen all three of Ineos’s applications to frack rejected by local authorities – although two were later granted on appeal. The government’s refusal to change the law in the industry’s favour, he said, means that it is “shutting down shale by the backdoor”. Having watched the success of the shale gas industry in the US since 2000, Mr Ratcliffe and politicians including former chancellor George Osborne decided that fracking should become a UK industry too.  They were wrong. The UK is unsuited to fracking, for political and geological reasons that have become clearer over the past few years, and all the money (Ineos alone has spent £150m) and effort expended on trying to foist a new and dirty industry on communities who do not want it has been thrown away. Fracking was always a bad idea, because of climate change. Cutting carbon emissions means reducing our reliance on fossil fuels. To develop a new gas industry is to do the opposite, and arguments that shale gas is needed to “bridge” a gap in energy supply when existing nuclear power stations are decommissioned, and before they are replaced, are largely spurious. The idea that the UK’s energy security is threatened is similarly unfounded. Unlike eastern European countries that rely on gas from Russia, our imported gas comes mostly from Norway. The government’s most recent assessment concluded that supplies are resilient. Dramatic recent falls in the cost of renewables have greatly strengthened the case against fracking, as well as providing one of the few glimmers of hope in a darkening global climate picture.

Over 67,000 Signatures Against Proposed Fracked Gas LNG Terminals in Germany -  With the existing Nord Stream pipeline, Gazprom is able to bring Russian gas directly to Germany through the Baltic Sea, allowing Moscow to bypass European transit countries such as Poland, Belarus, and crisis-hit Ukraine. Germany and Gazprom are now heavily pushing in favour of the construction of a second pipeline, Nord Stream II, which would double the current Russian gas influx capacity, from 55 to 110 bcm per year. But instead of stopping the project or starting a debate about the real need for gas in Germany, the country is additionally investing public money in counter-projects of Nord Stream 2 such as the Southern Gas Corridor. It also welcomes the propopals for the construction of the first LNG terminal in Germany, and provides a budget for fracked gas LNG import terminals. Bowing down to pressure from the Trump administration, Germany’s Economy Minister, Peter Altmaier, has invited US LNG export companies to a conference in Berlin on February 12th.  Despite their otherwise expressed support for the shale gas fracking ban in Germany,  German politicians at both the national and federal state levels are all of a sudden overly excited about importing fracked US LNG for petrochemicals and fertilizers. But people have definitely enough of this ongoing hypocrisy and opposition is growing throughout the country. Food & Water Europe found in October the support of over 20 environmental NGOs and grassroots groups for a first official statement against the proposed LNG terminal at Brunsbüttel. A first expert discussion organized by the Greens gave us the opportunity topresent our arguments on November 19 in the parliament of Schleswig-Holstein in Kiel and forced the investor to open up a public dialogue with several events to come in February 2019. In the early hours of January 31, we surprised politicians and industry officials (who met for a so-called parliamentary breakfast to celebrate themselves and the proposed LNG terminal at Brunsbüttel) with a protest action in the front of the permanent representation of the federal state of Schleswig-Holstein in Berlin. Our unexpected protest action was picked up by the local media. We also made use of the presence of the prime minister of Schleswig-Holstein and handed out a petition against the proposed LNG terminals in Germany – signed by over 67,000 people by the end of January.

EU Won't Block Controversial Nord Stream 2 Pipeline -  As The European Union and the US struggle to block the controversial international pipeline project Nord Stream 2, a 760-mile pipeline that would allow Russia to export natural gas directly to Germany - depriving Ukraine of badly needed gas transit fees along the current route for Russian supplies - France on Friday officially announced its opposition to the project, revealing that it would vote with a bloc of EU nations seeking to torpedo the project.Earlier reports suggested that the opposition in Paris is rooted in the fear that the pipeline would confer too much "strategic power" on Moscow, potentially complicating its relationship with Brussels. Reuters has previously reported that Paris's vote against the project could rob Germany of the blocking minority it needs to move the project forward. But later on Friday, German Chancellor Angela Merkel said a deal had been reached on Nord Stream 2. A vote is expected to be held next week on an amendment to the EU's gas directive that could allow the European Commission to cancel the pipeline project, according to Sputnik. The project itself has been spearheaded by Gazprom and five European energy companies, and engineers for Gazprom said recently that the raw pipeline could be finished as early as later this year. Following reports that France would effectively kill the controversial Nord Stream 2 pipeline, EU officials including German Chancellor Angela Merkel affirmed on Friday that an agreement has been reached which will allow construction of the pipeline to move forward - handing a major victory to Germany and Russia (and a stunning defeat for President Trump). At a meeting in Brussels on Friday, EU diplomats advanced a draft gas-market law, initially proposed in late 2017, while greatly cutting back a provision that would have effectively blocked the pipeline. The deal will allow negotiations with the European Parliament on a final version of the legislation to begin. Both sides are aiming for an official agreement as soon as next week, and no later than the end of May.

Mexico investigates 3 officials from state oil company (AP) — Mexico President Andres Manuel Lopez Obrador said Thursday that three management-level officials at Mexico’s state-controlled petroleum company will be asked to resign as investigations proceed into suspicious contracts awarded to universities for technical expertise. “We can’t tolerate anything that has to do with corruption or even accept suspicions,” he said. Mexico comptroller Irma Erendira Sandoval said that the Pemex officials, including the current head of exploration and production, had signed off on 25 suspicious contracts since 2012. The contracts for technical assistance were subcontracted various times, despite language barring the practice, Sandoval said. The result was higher costs to the company for services that did not meet its needs. The three Pemex officials, as well as people close to them, were also found to be partners in some of the subcontracted firms. Other firms appeared to be empty fronts, she said. Investigators have dubbed the fraud a “master scam.” The investigations continue and findings will be turned over to federal prosecutors, Sandoval said. Previous audits at Pemex had raised flags about the contracts, but Sandoval said her predecessor in the administration of former President Enrique Pena Nieto had cleared them and not followed up. The government is also analyzing the employees’ property. Lopez Obrador has made rooting out government corruption his administration’s priority and speaks regularly about cleaning up Pemex, once the pride of Mexico but now a company that suffers from falling production and massive debt.

US issues new threats of war for oil against Venezuela -- President Trump, Vice President Pence and National Security Advisor John Bolton escalated threats to launch a war against Venezuela, as large pro- and anti-government demonstrations filled Venezuela’s streets on Saturday.  In an interview with CBS’s “Face the Nation” program that aired before the Super Bowl yesterday, Trump reiterated that military intervention “is an option.” Pence assured a crowd of far-right Venezuelan exiles in Miami on Friday that “this is no time for dialogue, it is the moment for action, and the time has come to end the Maduro dictatorship once and for all… Those looking on should know this: all options are on the table.”  Bolton, who helped author the playbook that was used to launch the 2003 invasion of Iraq, issued a blunt threat Friday that the US would kill or jail and torture Venezuelan President Nicolas Maduro if he did not resign. Comparing Maduro to Nicolae Ceaușescu and Benito Mussolini—both of whom were killed—Bolton told right-wing radio host Hugh Hewitt: “The sooner he takes advantage of that [i.e., resignation], the sooner he’s likely to have a nice quiet retirement on a pretty beach rather than being in some other beach area like Guantanamo.”  Self-proclaimed “interim president” Juan Guaidó, the US and their allies in South America and Europe are preparing a new provocation aimed at forcing the Venezuelan military to abandon Maduro, with Guaidó announcing that the US will deliver aid at three locations along the Venezuelan border in the coming days.  While Maduro and the Venezuelan military leadership have said they will refuse the aid, the US hopes that images of crowds gathering to receive food and medication will either provoke the military to defect to the opposition and help distribute the aid or provide valuable propaganda footage justifying the need for a “humanitarian” intervention.

These Are the US Companies Backing the Venezuelan Coup Attempt - At present, there are only two American major oil and oil service companies with a significant presence in Venezuela – Chevron and Halliburton. However, Chevron is by far the leading American investor in Venezuelan oil projects, with Halliburton having written off much of its remaining business interests in the country just last year — losing hundreds of millions of dollars as a result.These two companies have long been “historic partners” and have had a solid business relationship between them for decades. In addition, both have reaped the benefits of past U.S. interventions abroad — such as the Iraq War, where the U.S. government “opened” that country’s nationalized oil industry to American oil companies with military force.Now with Venezuela’s nationalized oil industry in the crosshairs, Chevron and Halliburton are again set to benefit from Washington’s regime-change policies abroad. Furthermore, as Bolton’s recent statements suggest, these companies are also the top corporate sponsors of the current U.S.-backed coup to topple the government in Caracas. Chevron’s history in Venezuela is long and storied, as its presence in the country dates back more than a century. Over that time, Chevron’s presence in Venezuela has remained a constant despite the rule of drastically different governments, from military dictatorships to the socialist Chavista movement.For much of its history in Venezuela, Chevron has had to deal with the Venezuelan government’s laws regarding oil production, particularly a 1943 law that held that foreign companies could not make greater profits from oil than they paid to the Venezuelan state. A few decades later in the 1960s, foreign corporations were made to manage their oil extraction projects in Venezuela by working closely with the Venezuelan Oil corporation, which later gave way to the current state oil company PDVSA, created in 1976. It was around this period that Halliburton first began work in Venezuela. However, foreign corporations — particularly American ones — disliked having to settle for minority stakes in PDVSA projects and longed for the early days of Venezuela oil extraction when companies like Rockefeller-owned Standard Oil made wild profits off their Venezuelan oil assets.

U.S. cracks down on foreigners dealing in Venezuela oil (Reuters) - U.S. sanctions will sharply limit oil transactions between Venezuela and other countries and are similar to but slightly less extensive than those imposed on Iran last year, experts said on Friday after looking at details posted by the Treasury Department. https://www.reuters.com/article/us-venezuela-oil-sanctions/u-s-sets-deadline-for-foreigners-dealing-in-venezuela-oil-idUSKCN1PQ4PB Treasury’s notice makes more explicit that the sanctions restrict foreign entities from doing business with Venezuela using the U.S. financial system or U.S. brokers after April. With most oil transactions conducted in dollars, that is expected to sharply curtail off Venezuela’s efforts to seek buyers around the world. U.S. officials imposed sanctions on state-owned Petroleos de Venezuela, or PDVSA, this week, seeking to cut off President Nicolas Maduro’s primary source of foreign revenues. Most of the Western Hemisphere has thrown its support behind opposition leader Juan Guaido after Maduro was re-elected in a contest last year widely seen as fraudulent. “On one hand, the sanctions aren’t as severe as on Iran yet. We don’t ban any country that does business with Venezuela from doing business in the U.S.,” said Robert McNally, president of Rapidan Energy, a Washington D.C. consultancy. “On the other hand, the goal of regime change is explicit and very clear.” Venezuela sells oil to buyers around the world, including India and Europe, and the country has been seeking buyers elsewhere to replace the roughly 500,000 barrels a day it sells to the United States. Even before Friday’s notice, European buyers had pulled back on taking shipments from Venezuela due to concerns about how to make payments. Europe may also join the sanctions, experts have said, further constraining options for transporting the crude. 

US gives non-US firms three months to wind down PDVSA deals - The US Treasury Department said Friday that transactions between non-US firms and PDVSA, Venezuela's state-owned oil firm, which involve the US financial system or US commodity brokers would be prohibited after April 28. In a series of answers to "Frequently Asked Questions," Treasury's Office of Foreign Assets Control clarified that these non-US entities had three months to wind down these transactions with PDVSA, indicating US sanctions on Venezuela's oil sector may be more extensive than many analysts initially thought. But these sanctions are not secondary sanctions, explicitly prohibiting oil and product trade between PDVSA and foreign firms, sources said. "While it superficially looks like secondary sanctions, my understanding is that it means third parties can't use dollars, not that they can't trade in non-dollar currencies," said Kevin Book, a managing director with ClearView Energy Partners. "It wouldn't surprise me, however, if Treasury wrote it this way as sort of a high inside pitch for those who might be looking for an end-around." In the FAQ document Friday, Treasury's OFAC also explicitly prohibited swap transactions, under which US refiners would buy Venezuelan crude sold by PDVSA through a third party. "It is certainly clarifying that this category of trade cannot occur," said Elizabeth Rosenberg, a former senior sanctions adviser at the Department of the Treasury. "I don't think this was a loophole more than it was an area of enormous confusion for the last couple of days." But Treasury Friday did not provide additional clarity on US shipments of diluent, which were subject to an immediate prohibition Monday. PDVSA uses naphtha from the US to thin its heavy crude so it can be shipped. Several US shippers had diluent shipments in process to Venezuela when sanctions were announced Monday, and those shipments have been left in limbo since

Guaido plans Citgo leadership shakeup, new Venezuela hydrocarbons law: sources — Venezuela's self-declared interim president, Juan Guaido, will announce plans to revamp the board of Citgo Petroleum to give the embattled refiner fresh leadership and ease political pressures on the company, sources close to the opposition leader told S&P Global Platts. The announcement could come as soon as today, the sources said, as Guaido aims to build momentum behind his move to oust President Nicolas Maduro following violent protests Wednesday that left 13 dead. Citgo is the US-based refining subsidiary of Venezuelan state-owned oil company PDVSA, with units in Louisiana, Texas and Illinois. Current Citgo President Asdrubal Chavez is barred from entering the US after the White House revoked his visa. Just under half of the refiner has been leveraged as collateral to Russia's Rosneft to cover a $1.5 billion loan to the Venezuelan government, and other creditors have laid claims to the company over unpaid debts. Guaido, the opposition leader who was recently named head of Venezuela's National Assembly, declared himself the country's interim president on Wednesday and was quickly recognized by the US, Canada and several other countries. Mexico, Russia and Cuba, however, have said they will stand by Maduro, who said he would break diplomatic and political relations with the US. In addition to reshaping the leadership of Citgo, Guaido plans to introduce a new national hydrocarbons law that establishes flexible fiscal and contractual terms for projects adapted to oil prices and the oil investment cycle, as well as enact an anti-corruption law aimed at PDVSA, sources said. A new hydrocarbons agency would be created to offer bidding rounds for projects in natural gas and conventional, heavy and extra-heavy crude, the sources added. Guaido has not settled on any appointments for oil minister or PDVSA chief yet, "but they will be people with experience," one source said. The current oil minister and head of PDVSA is Manuel Quevedo, a former brigadier general in the National Guard with no previous oil experience before being tapped to his position by Maduro in late 2017. Quevedo, in his capacity as Venezuela's top OPEC representative, currently holds the rotating OPEC presidency for 2019, which involves chairing meetings, calling any extraordinary meetings and serving as the organization's main ministerial spokesman..

Juan Guaidó Promises Oil Deals for US Gas Giants if He Takes Power – Making the empires ambitions clear, US stooge Juan Guaidó has promised Venezuelan oil to US corporations.The US-backed Venezuelan “government” of Juan Guaidó has said there will be plenty of money to be made for Wall Street under a government without the current President, Nicolas Maduro.According to reports, this offer was made during a meeting between US officials and delegates of the Guaidó cabinet in Washington. Apparently, Guaidó has promised that if he should take control of the actual levers of state power in Venezuela he would end the control over Venezuelan oil projects currently given to the state oil company, PDVSA.The current law in Venezuela states that any projects involving Venezuelan oil that PDVSA must have, at least, a 51% stake. According to the delegates in Washington, this is the best way to reinvigorate Venezuelan oil production.In an interview following their official meetings in Washington, one Guaidó envoy, Carlos Vecchio, explained this strategy as a part of a broader policy “to go to an open economy.” Vecchio then went on to say that this “openness” would be what brings the oil sector back and reassured US speculators that “the majority of the oil production that we want to increase will be with the private sector.”While this is obviously the reason backs the Guaidó “government” it is stunning to hear it so openly. Vecchio was just as brazen when asked about whether PDVSA’s North American subsidiary, Citgo would go bankrupt or not. Vecchio explained that Guaidó “wants to keep the operation running” which likely reflects on recent moves by Guaidó and his cheerleaders to try to hand control of Citgo’s US assets and profits to the fraudulent president. This has been a common measure proposed by many analysts to try to create a slightly less-illegal-looking way to steal Venezuelan money. Yet now that we have confirmation that Guaidó does, in fact, intend to immediately begin selling off rights to Venezuela’s resources if he should ever get power, we know exactly where Citgo’s profits will go in the future. Guaidó may desperately want to control some Citgo and PDVSA assets for now, but he is also all too willing to sell them to Wall Street should he get the chance.This idea that selling off PDVSA to companies like Exxon – one of the oil giants kicked out of Venezuela by Hugo Chavez – will somehow make things better for average citizens of the country, is obviously ridiculous. Beyond the sheer stupidity and obvious theft, however, this narrative put forth by Guaidó and the US media totally whitewashes what is, for all intents and purposes, a US economic blockade of Venezuela and the host of sanction on the nation’s oil industry.

US-backed Venezuelan opposition leader Guaido will name a new Citgo board, Sen. Rubio tells the WSJ --In a bid to block Venezuelan President Nicolas Maduro from the country's lucrative oil business, opposition leader Juan Guaido will name a new governance board for the country's Citgo Petroleum, U.S. Sen. Marco Rubio told The Wall Street Journal on Wednesday.This comes after Guaido, supported by the U.S. President Donald Trump and several European nations, declared himself to be the country's interim president in January. The U.S. has since placed sanctions on Venezuelan oil to weaken Maduro's government and wrestle assets over to the opposition.In an interview with the Journal, Rubio said the new board — which he said will be named "as early as today or tomorrow" — will be backed by the U.S. as Citgo's controlling legal entity."We are aware that there may be new members elected to the Citgo Petroleum Corp. board of directors. In corporate governance, as with all matters, we will follow the laws of the United States," a company spokesman told the Journal in a statement.The Journal said it had yet to receive comment from Guaido's officials, the U.S. Treasury and the White House. The Commerce Department has declined to comment.  Read more about Rubio's remarks in The Wall Street Journal's report.

Chevron, Halliburton Cheer On US Venezuelan Coup - For much of the past twenty years, critics of U.S. foreign policy have noted that it is often countries with sizeable oil reserves that most often find themselves the targets of U.S.-backed “humanitarian” interventions aimed at “restoring democracy.” Analysis of the nearly two-decades-long U.S. effort aimed at regime change and “democracy promotion” in Venezuela has long linked such efforts to the fact that the South American country has the world’s largest proven oil reserves. However, the current U.S. effort to topple the government led by Chavista politician Nicolás Maduro has become notable for the openness of the “coup architects” in admitting that putting American corporations – Chevron and Halliburton chief among them — in charge of Venezuelan oil resources is the driving factor behind this aggressive policy. Last week, Senator Marco Rubio (R-FL) – a key player in the Trump administration’s push for regime change in Caracas – tweetedBiggest [American] buyers of Venezuelan oil are Valero Energy & Chevron. Refining heavy crude from Venezuela supports great jobs in Gulf Coast. For the sake of these U.S. workers I hope they will begin working with administration of President [Juan] Guaidó & cut off illegitimate Maduro regime.”  In January, the U.S. government recognized Juan Guaidó of the U.S.-funded and CIA-linked Popular Will Party as the “legitimate” president of the country.  Biggest buyers of Venezuelan oil are @ValeroEnergy & @Chevron. Refining heavy crude from #Venezuela supports great jobs in Gulf Coast.  For the sake of these U.S. workers I hope they will begin working with administration of President Guaido & cut off illegitimate Maduro regime. — Marco Rubio (@marcorubio) January 24, 2019   A few hours after Rubio’s tweet, National Security Adviser John Bolton — who actively supported the U.S.-backed failed Venezuela coup in 2002  — appeared on Fox News and told host Trish Regan the following: “We’re looking at the oil assets. That’s the single most important income stream to the government of Venezuela. We’re looking at what to do to that.”

Pompeo: US Military Obligated to “Take Down” the Iranians in Venezuela  — As a U.S.-backed effort to overthrow Venezuelan President Nicolás Maduro continues,U.S. Secretary of State Mike Pompeo said late Wednesday that Hezbollah “has active cells” in Venezuela—a claim that was immediately scrutinized and compared with the second Bush administration’s lies to justify the 2003 invasion of Iraq.  Hezbollah, a political and militant Shi’ite Muslim group based in Lebanon, has been on the U.S. State Department’s “Designated Foreign Terrorist Organizations” list since 1997. In the interview with Fox Business, Pompeo, who previously served as President Donald Trump’s CIA director, also charged that Iran and Cuba are strongly influencing the country.  “The Cubans invaded Venezuela. The Cubans have been controlling the security apparatus, protecting Maduro, and destroying the way of life for the Venezuelan people for an awfully long time,” he said. “People don’t recognize that Hezbollah has active cells—the Iranians are impacting the people of Venezuela and throughout South America. We have an obligation to take down that risk for America.”  @SecPompeo confirms to me exclusively that #Hezbollah is active in #venezuela – WATCH: pic.twitter.com/kQm37SIhep — Trish Regan (@trish_regan) February 7, 2019   Pompeo’s latest claims on Wednesday were met with sarcasm, skepticism, and concern for how they may be used to justify further American intervention—including military action that hasn’t been authorized by Congress—in a country already enduring political and economic crises:

China and Russia loaned billions to Venezuela — and then the presidency went up for grabs -  Venezuela is in the middle of a power struggle at the highest level, and that could mean trouble for its two biggest foreign allies: China and Russia.The socialist petrostate is home to the largest oil reserves on the planet, but endemic corruption has devastated its economy. Beijing and Moscow have helped the country stave off collapse by repeatedly extending financial lifelines — to the tune of tens of billions of dollars over the last decade.For the most part, those oil-for-debt swaps were good for all parties involved. But that may be changing. With the United States and others backing opposition leader Juan Guaido as the country's legitimate president over dictator Nicolas Maduro, it could take longer for Russia and China to get their money back. And in the case of some loans, they may not get anything back at all. "I don't think they like regime change. I don't think they like the idea that the U.S. is seemingly declaring somebody president," says Helima Croft, global head of commodity strategy at RBC Capital Markets. "Both Xi and Putin would be horrified if the U.S. got any ideas about trying to do this in any of their countries, or countries that they view as satellite states." Guaido has said all lawful agreements approved by Venezuela's National Assembly will be honored, a statement widely seen as an olive branch to China. Thus far, Beijing is still publicly backing Maduro.

This Russian Oil Giant Is Driving Putin Toward Showdown With Trump In Venezuela -- “Russia is now so deeply invested in the Maduro regime that the only realistic option is to double down,” writes senior fellow at the Carnegie Moscow Center Alexander Gabuev.He details in a Financial Times op-ed that Moscow-based state oil giant Rosneft owns two offshore gas fields in Venezuela and further has "stakes in assets boasting more than 20m tonnes of crude." But as embattled President Nicolas Maduro faces US-led efforts to oust him in favor of opposition leader Juan Guaido, billions are on the line for Moscow making its interest in preserving the regime run deep. In total Caracas owes Rosneft $3 billion, according to Gabuev, which could lead to "a new sort of proxy conflict in America’s backyard," which is at once economic, political, and could increasingly turn to proxy military intervention. Indeed the Kremlin has already accused the US of "meddling" in the affairs of a sovereign country in order to foster a "slow motion coup"."Any solution to the internal political crisis in Venezuela is possible only by Venezuelans themselves," Kremlin spokesman Dmitry Peskov said on Monday. "Imposing any solutions or efforts aimed at legitimizing the attempt of usurping power is, in our view, just direct and indirect meddling in Venezuela’s internal affairs," Peskov said. "This does not contribute in any way to the peaceful, effective and vital settlement to the crisis, which Venezuelans are enduring and who should, as we believe, pull through it on their own," the Kremlin spokesman noted. This comes after a significant weekend development in which US National Security Adviser John Bolton promised that the United States will begin humanitarian aid shipments into Venezuela via Brazil and Colombia, despite Maduro denying acceptance of such aid. Guaido, considered "Interim President" by Washington has "authorized" such aid. But as Gabuev suggests in FT, Rosneft's powerful Chief Executive Igor Sechin's involvement in decision-making on Venezuela means Moscow's foreign policy is “increasingly driven by a combination of corporate interests and ambitions” led by Putin's oligarchic inner circle. Sechin is “arguably the most powerful man in Putin’s entourage” and oversees Russia's energy sector.

Global deepwater oil output set to top 10 million b/d in 2019: Rystad— Global deepwater oil production was expected to grow 700,000 b/d this year to hit a record high of more than 10 million b/d, according to estimates by Norwegian research group Rystad. With a number of large fields starting up in Brazil and US Gulf of Mexico, deepwater liquid production will reach 10.3 million b/d in 2019, Rystad said Friday. In addition to Brazil and the US, Angola, Nigeria and Norway will continue to be the largest deepwater producers, Rystad said. Deepwater projects have attracted nearly half of global exploration investment over the past decade and have delivered a similar share of new production volumes. As global oil production from maturing shallow water areas such as the North Sea declines, new offshore volumes were expected to become increasingly reliant on flows from deepwater fields. The International Energy Agency has estimated that the share of deepwater in total offshore production will rise to 30% in 2040, from 23% currently. Brazil will be by far the largest source of future deepwater growth, the IEA estimated, by nearly doubling its current output by 2040. Last month, UK energy consultancy Wood Mackenzie predicted that total annual deepwater capital expenditure would rise to nearly $60 billion by 2022 from around $50 billion currently. Most of the new deepwater spending will be directed at major projects in Brazil, Guyana and Mozambique, Wood Mac said. It said, however, that the expected rising spend on deepwater projects could accelerate a return to cyclical cost inflation in the offshore sector. Rig day rates, for example, could double by the early 2020s, according to Wood Mac, as deepwater rig capacity was expected to fall.

Fuel oil spills into Namibia’s Windhoek’s sewerage system – The purification of water at the Windhoek’s sewerage system has been placed on hold after a spill of fuel oil into the system, the Namibian Sun has reported.Ohlthaver and List Group spokesperson, Roux-ché Locke, disclosed that the spill of somewhere between 4 000 and 6 000 litres of heavy fuel oil occurred yesterday morning at the Namibia Dairies factory in Avis after a technical problem was experienced with a pipeline“We took immediate action when we became aware of the spill. Along with stakeholders, including the City of Windhoek, we worked to halt any further damage and pollution,” she said adding that an investigation into the scope of the spill is currently under way.According to Locke, the Namibia Diaries has taken on the full responsibility to ensure that all aspects of environmental pollution and damage are being treated in the most responsible manner. The polluted water cannot be treated and purified by the Gammams plant as it would damage the systems.

Saudis and allies reportedly trying to extend oil cooperation with Russia - Russia's Energy Minister Alexander Novak, Saudi Arabia's Energy Minister and OPEC conference president Khalid al-Falih, and OPEC Secretary General Mohammad Barkindo attend a meeting of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producing countries in Vienna, Austria, May 25, 2017.Saudi Arabia and a group of OPEC members are reportedly trying to commit Russia and other oil-producing nations to continue managing supply for up to three more years.The so-called OPEC+ coalition reached a historic deal in 2016 to slash output in a bid to end a punishing oil price downturn. The group of two dozen producers briefly lifted the caps last year, but agreed to fresh production cuts in December after a three-month collapse in oil prices.OPEC Secretary General Mohammed Barkindo and some oil ministers have long sought to make the alliance permanent, but Russia essentially nixed that idea in December.Now, some OPEC nations including Saudi Arabia and the United Arab Emirates are trying to lock their allies into another several years of coordination, the Wall Street Journal reports. Some of the nations are expected to debate the proposal when they meet in Vienna later this month, according to the Journal."It is an effort to put a formal framework around an ad hoc relationship," Helima Croft, global head of commodities strategy at RBC Capital Markets, told CNBC. She said OPEC clearly does not want Russia to abandon them.An OPEC spokesperson was not immediately available to comment.

OPEC Proposes Formal Oil-Production Alliance With Russia - Even as the US brought sanctions against Venezuela's state-run oil company, oil prices have slumped over the past week, erasing some of a January rebound that saw crude prices rebound alongside equities. But oil bulls who worried that Saudi Arabia and Russia's tandem production cuts wouldn't be enough to finally wedge a floor under crude prices can relax: Because if a plan reported Tuesday by the Wall Street Journal pans out, OPEC might recover the price-setting power it is in fear of ceding to the US as the shale boom continues to...well...boom. With the US having cemented its new position as the biggest oil producer in the world thanks to shale, and President Trump exerting pressure on Saudi Arabia to drive oil prices lower, WSJ reports that Saudi Arabia and its Gulf allies in OPEC have proposed a formal alliance with a 10-nation group of petroleum producers led by Russia - and alliance that would "transform the cartel" (which has recently suffered speculation that it has lost its relevance after Qatar announced its plans to leave the bloc). However, Iran and some of its allies within the cartel have opposed the tighter partnership, fearing it could lead to Saudi Arabia and Russia dominating the organization.The proposal would formalize the loose union between members of the Organization of the Petroleum Exporting Countries and the group led by Moscow, which includes some former Soviet republics and other countries. The two groups have increasingly worked together in recent years, including in December when they agreed on a deal to curb production.Iran and other producers have opposed a tighter partnership, fearing it could be dominated by Saudi Arabia and Russia, according to officials in the cartel. Riyadh and Moscow are the world’s top two oil exporters. A Russian energy ministry spokeswoman didn’t respond to a request for comment.Given that Saudi needs oil back at $80 a barrel to balance its national budget, the alliance would likely be geared toward Saudi and Russia achieving the goal of higher prices. To achieve higher prices, they need more leverage against the US.To be sure, it's not like this level of collusion between OPEC and non-OPEC producers would be unprecedented. The two groups have been increasingly working together in recent years. As recently as December, the 14-member OPEC and the 10-member bloc led by Russia struck a deal to cut production in a bid to lift prices after global oil prices shed more than one-third of their value during the month of October. According to a proposal detailed by WSJ, once formalized, the deal - which would function like a non-legally-binding, informal arrangement, wouldn't be all that different than the process that led to the December agreement.

Saudi Arabia pumps 10.21 mil b/d crude oil in Jan, eight-month low: Platts survey — OPEC pumped the fewest barrels since March 2015 in January, with crude output plunging to 30.86 million b/d, a fall of 970,000 b/d from December as new supply quotas went into force, according to an S&P Global Platts survey of industry officials, analysts and shipping data. The month-on-month fall was the biggest since December 2016, the survey found, with Saudi Arabia and the UAE leading the group in production discipline, while Libya kept its largest oil field offline due to security risks. The 11 OPEC members obligated to reduce oil output under the agreement signed late last year achieved 76% of their required cuts in January, with their production falling 619,000 b/d from October, the benchmark month from which the quotas were determined, except for Kuwait, which is using November. At the last OPEC meeting in Vienna, the members agreed to slash output by 812,000 b/d, with Russia and nine other non-OPEC allies committing to a cut of 383,000 b/d for the first six months of 2019. Venezuela, Iran and Libya were exempted from the deal, and those three countries contributed to 25% of OPEC's production decline for January. Saudi Arabia has backed up the strong words of its energy minister Khalid al-Falih, with January production falling to 10.21 million b/d. That is below its allocation of 10.31 million b/d under the deal, as crude exports declined by around 500,000 b/d to 7.20 million b/d in January, Platts trade flow software cFlow showed. It is also the lowest output figure since May 2018 when the kingdom produced 10.01 million b/d. The UAE, which has recently emerged as OPEC's third-largest producer, pumped 3.07 million b/d in January, down 180,000 b/d from December, in line with its quota. Sanctions-hit Iran saw its output fall to its lowest level in over six years to 2.72 million b/d, a fall of 80,000 b/d from the previous month. Production in Libya plunged to 850,000 b/d, the lowest since July as its largest oil field Sharara remains shuttered since armed forces occupied it in early December. Venezuelan production dropped 10,000 b/d to 1.16 million b/d in January as the country's political crisis worsened, with key Western nations endorsing opposition leader Juan Guaido as the country's legitimate president. Nigeria produced 1.87 million b/d, a fall of 30,000 b/d from the previous month but output remains well above its quota of 1.69 million b/d. Nigeria's ministry officials insist some of the country's crude should be categorized as condensate, which is not subject to production limits.

Saudi Oil Output Cuts Exceed OPEC Pledge-- OPEC crude output fell the most in two years last month as the group implemented almost 80 percent of its new production cuts deal. Top exporter Saudi Arabia cut deeper than pledged, while its close allies the United Arab Emirates and Kuwait also made sizable reductions. Those deliberate curbs were compounded by involuntary output drops in Iran, targeted by U.S. sanctions, and Libya, both of which were exempt from the group’s agreement. Output from the Organization of Petroleum Exporting Countries’ 14 current members fell by 930,000 barrels a day last month to 31.02 million, according to a Bloomberg survey of officials, analysts and ship-tracking data. OPEC’s 15th member, Qatar, left the group at the end of December. OPEC and its allies renewed their production cuts accord in December after a 40 percent plunge in crude prices, prompted by record American shale flows and doubts about the strength of demand. The group, which is known as OPEC+ and includes Russia, agreed to remove 1.2 million barrels a day from the market, compared to October levels, during the first six months of 2019. OPEC’s share of the cut is 800,000 barrels a day, to be delivered by 11 members excluding Iran, Libya and Venezuela. Those 11 nations implemented 79 percent of their pledged cuts in January, the survey found. That means they would need to cut about another 170,000 barrels a day to fully implement the agreement. Saudi Arabia followed through on its pledge to make a quick and early start to the agreement. It cut production by 450,000 barrels a day from December to reach 10.2 million, about a third deeper than required under the terms of the deal. This is a huge reduction from record output of 11.1 million barrels a day in November. Energy Minister Khalid Al-Falih said he expects to reduce oil output “well below” the kingdom’s target and promised deeper cuts in February. Its voluntary limit under the OPEC+ accord is 10.3 million barrels a day. Iraq, which among major OPEC producers had the worst record of implementing the previous round of output cuts agreed in 2016, pumped 4.69 million barrels a day last month, above its agreed target of 4.51 million. As is often the case with OPEC, a big portion of the curbs were involuntary. Iran’s output fell by 150,000 barrels a day to 2.74 million as customers were discouraged by U.S. sanctions. Production is down 39 percent since Trump announced in May he was abandoning a nuclear accord with the Islamic Republic. Libya, plagued by clashes and unrest since the fall of former leader Moammar Qaddafi in 2011, pumped 900,000 barrels a day in January, a drop of 100,000 and the lowest since July. The country’s biggest oil field, Sharara, remains shut after being occupied by an armed group for almost a month. The nation’s exports have also been hampered by the repeated closure of oil terminals due to bad weather. Although Venezuela posted a small production increase of 50,0000 barrels a day to 1.27 million last month, its industry remains vulnerable. The U.S. imposed sweeping sanctions against its state oil company, which could turn out to be a de facto oil embargo unless President Nicolas Maduro bows to pressure from the Trump administration and steps aside.

Oil bears sent back into hibernation by economic optimism, OPEC cuts and Venezuela sanctions (Reuters) - Hedge funds are becoming steadily less bearish towards oil as OPEC output cuts and U.S. sanctions on Venezuela remove large volumes of crude from the market amid increasing confidence a global recession can be averted. Hedge funds and other money managers were net buyers of another 30 million barrels of Brent crude futures and options in the week to Jan. 29, according to position data from ICE Futures Europe. Fund managers have been net buyers in seven of the last eight weeks and have increased their position by 96 million barrels since Dec. 4 (https://tmsnrt.rs/2Bfloe4 ). In common with previous weeks, fund managers mostly closed out old bearish short positions (-18 million barrels) rather than opening new bullish long ones (+12 million). Bearish short positions have fallen by more than 60 percent from a peak of 122 million barrels on Dec. 11 to 48 million as fund managers have become convinced that the fourth-quarter sell-off is over. In contrast, bullish long positions have risen by just 27 million barrels over the same period, as portfolio managers remain cautious. However, weekly increases have started to accelerate, in a sign of growing confidence. Funds now hold almost 6 bullish long positions for every bearish short one, up from a ratio of 2:1 in mid-December, and the most bullish overall position since mid-October. OPEC’s early and aggressive output reductions have removed some of the downside supply risk to oil prices even as traders remain uncertain about the risk of recession and the potential hit to consumption growth in 2019. U.S. sanctions on Venezuela’s national oil company PDVSA, since broadened to include third-country purchasers of Venezuela’s heavy crude, are also likely to reduce global oil supplies.

Trump can't count on Saudi Arabia to keep oil prices stable from Venezuela sanctions -  President Trump likely won’t be able to count on Saudi Arabia to help defray the impact of his Venezuela oil ban, which could cause prices to rise. Saudi Arabia’s medium sour grade of oil is a good enough substitute for the sludgy, heavy product from Venezuela, which is rare and craved by U.S. Gulf Coast refiners built to process it. But Saudi Arabia has little incentive to help after Trump successfully prodded the kingdom to boost exports last year to offset his oil sanctions on Iran, only to see the president later grant exemptions to eight countries, allowing them to continue buying Iranian oil because he feared higher prices, thereby creating oversupply. In reaction, the Saudis began implementing an OPEC pact with Russia in January to cut production in order to raise low prices — a deal the Saudis say they are committed to carrying out, despite complaints from Trump. As a result, the Saudis are not predisposed to aid Trump, even though Treasury Secretary Steven Mnuchin, announcing the sanctions on Monday at the White House, leaned on them to help prevent an oil market mess, saying, "Many of our friends in the Middle East will be happy to make up the supply as we push down Venezuela's supply."“Although Saudi barrels are a good candidate to replace Venezuelan supply, Saudi caution is understandable after they were burned in November when the Trump administration very publicly bullied them for more oil, only to grant a slew of Iran sanctions waivers at the last minute,” said Antoine Halff, a senior research scholar with the Center on Global Energy Policy at Columbia University. The oil market so far has barely responded to the the Trump administration sanctions against Venezuela’s state-run oil company PDVSA, an effort to kill the main source of revenue for the regime of Nicolas Maduro and empower opposition leader Juan Guaido. The sanctions divert the proceeds of U.S. purchases of the country’s oil to a blocked account, preventing the Maduro regime from receiving it.

BP CEO Bob Dudley makes his prediction for oil prices in 2019 --Oil market conditions should improve over the coming months, BP CEO Bob Dudley told CNBC on Tuesday.His comments come at a time when energy market participants expect U.S. sanctions on crisis-stricken Venezuela, as well as OPEC-led production cuts, to offset a potential supply glut this year."As we look it, it feels like the markets will be firmer," Dudley said, when asked for his energy market forecast for 2019. "I couldn't predict the oil price but we are planning BP between $50 and $65," he added.Brent crude, the international benchmark for oil prices, was trading at $62.22 a barrel Tuesday afternoon, down 0.4 percent, while West Texas Intermediate (WTI) stood at $54.30, down 0.5 percent.OPEC and its allied producers, including Russia, agreed to impose output cuts from the beginning of January in order to prevent a global supply overhang.The Middle East-dominated group began capping supply in partnership with Russia and several other nations in January 2017 to end a punishing downturn in oil prices."I think there's a lot of uncertainty (in oil markets) we're looking at a high volatility for this year," Joseph Gatdula, head of oil and gas at Fitch Solutions, told CNBC's "Squawk Box Europe" on Tuesday.  "All that uncertainty is based on a few known events that we have, the Iranian sanctions waivers and the Venezuelan sanctions but also the OPEC-plus cuts, those are expected to go for the first six months of the year — and then it's uncertain what's going to happen," he added.

Oil prices slide after hitting 2019 highs on tighter supply outlook - Oil hit a two-month high near $64 a barrel as OPEC-led supply cuts and U.S. sanctions against Venezuela's oil exports brightened the supply outlook, but prices fell back on uncertainty about prospects for the global economy. Brent crude oil, the global benchmark, hit $63.63 a barrel, the highest since Dec. 7, before turning negative. Brent slipped 82 cents, or 1.3 percent, to $61.93 around 10:50 a.m. ET (1550 GMT). U.S. West Texas Intermediate crude hit a 2019 high of $55.75, its best intraday price since Nov. 21. WTI was last down $1.36, or 2.5 percent, at $53.90. The slump appears to be tied to U.S. dollar strength, which makes oil more expensive to holders of other currencies, and pipeline movements that suggest a potentially big increase in crude stockpiles at the Cushing, Oklahoma delivery hub, where WTI is priced, said Edward Morse, global head of commodities research at Citigroup. OPEC and its allies began a new round of supply cuts in January. These curbs, led by Saudi Arabia, have been compounded by involuntary losses that the Venezuelan sanctions could deepen. "You have the sanctions on Venezuela, on top of the reduced supply from Saudi Arabia," "There's no sign of overhang in the crude oil markets." OPEC supply fell in January by the largest amount in two years, a Reuters survey last week found. That offset limited compliance with the output-cutting deal so far by non-OPEC Russia. The U.S. sanctions on Venezuela will limit oil transactions between Venezuela and other countries and are similar to those imposed on Iran last year, some analysts said after examining details announced by the government. Underlining the lack of excess supply, Jakob cited a rapidly clearing West African crude market and the structure of Brent crude futures, in which the first-month contract is trading near the price of the second month. While OPEC and its allies are cutting output, the United States is expanding supply. Nonetheless, figures on Friday showed a drop in the number of U.S. oil rigs to their lowest in eight months, lending prices some support.

Oil slides on disappointing U.S. data after hitting two-month high (Reuters) - Oil prices fell on Monday after disappointing U.S. factory data sparked fresh concerns about a slowdown in the global economy, but losses were limited as OPEC-led supply cuts and U.S. sanctions against Venezuela pointed to tighter supply. Brent crude futures dropped 24 cents, or 0.38 percent, to settle at $62.51 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 70 cents, or 1.27 percent, to settle at $54.56 a barrel. Weighing on oil markets, U.S. government data showed new orders for U.S.-made goods unexpectedly fell in November, with sharp declines in demand for machinery and electrical equipment. “In a market that’s looking for direction, there’s concern that any slowdown in the manufacturing sector would slow down demand. Because the number was a little disappointing, it played into the slowing demand scenario,” said Phil Flynn, oil analyst at Price Futures Group in Chicago. Prices also dipped after data showed U.S. crude inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, rose by more than 943,000 barrels in the week to Feb. 1, traders said, citing data from market intelligence firm Genscape. Crude futures earlier posted around two-month highs. Brent reached $63.63 a barrel, the highest since Dec. 7, while WTI climbed to $55.75 a barrel, the strongest since Nov. 21. Prices have been buoyed by a new round of supply cuts from the Organization of the Petroleum Exporting Countries and its allies that began in January. OPEC supply fell last month by the largest amount in two years, a Reuters survey last week found. Russia has been in full compliance with its pledge to gradually cut its oil production, Russian Energy Minister Alexander Novak said in a statement on Monday, adding that production decreased by 47,000 barrels per day (bpd) in January from October. 

Oil prices wobble as poor US factory data offset tighter supply - Oil prices struggled for direction in choppy trading on Tuesday, a day after data showing a decline in U.S. factory orders dragged both benchmarks down from 2019 highs. Despite the slide, investors expect U.S. sanctions on Venezuela and production cuts led by OPEC to head off a glut this year, buoying prices. U.S. West Texas Intermediate futures were down 4 cents at $54.35 per barrel around 10:15 a.m. ET (1515 GMT), after earlier falling more than 1 percent to $53.62. WTI touched its highest in more than two months at $55.75 the previous day. International Brent crude futures were up 12 cents at $62.63 a barrel, bouncing from a session low at $61.72 and off Monday's two-month high of $63.63. Trading proceeded at lower volumes in parts of East Asia due to the Lunar New Year holiday. "Disappointing U.S. factory data sparked fresh concerns over a slowdown in the global economy, although losses were limited as OPEC cuts and U.S. sanctions on Venezuela continued to point to a tighter supply picture," Cantor Fitzgerald Europe said. The Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to production cuts effective this month to forestall an overhang. The oil industry generally believes the curbs will help balance the market in 2019. "You'll see OPEC disciplined and therefore prices look fairly robust around where they are", BP CFO Brian Gilvary told Reuters, adding that he expected demand growth of 1.3 to 1.4 million bpd in 2019 -- similar to 2018. Analysts said U.S. sanctions on Venezuela had focused market attention on tighter global supplies.

Oil Rally Halts On Economic Concerns - Outages in Venezuela is pushing crude higher, but some profit-taking, along with a few weak economic indicators on U.S. factory orders, kept prices in check. Press reports suggest that Venezuela is having difficulty finding buyers for its oil, with U.S. sanctions encircling the country. Satellite imagery shows several tankers idling off the coast of Maracaibo, the country’s second largest city. Meanwhile, Reuters reports that a “flotilla loaded with about 7 million barrels of Venezuelan oil has formed in the Gulf of Mexico, some holding cargoes bought ahead of the latest U.S. sanctions on Venezuela and others whose buyers are weighing who to pay.” U.S. sanctions are biting much harder than first expected, and a sizable chunk of Venezuela’s oil exports could be in jeopardy.  The Wall Street Journal reports that Saudi crown prince Mohammed bin Salman has faced internal resistance to his idea of launching a public offering of state-owned Saudi Aramco. The Saudi bureaucracy slow-walked the IPO plans, and ultimately convinced MbS to delay the offering until 2021 at the earliest, the WSJ reports. Moreover, many officials are intent on preventing the IPO from ever happening because they feel it will expose the company’s internal workings, open up the company to legal blowback abroad, and also cost the country economically. Related: Oil Prices Drop After Touching 2019 High  The oil majors posted impressive earnings for the fourth quarter and full-year in 2018, despite the collapse of oil prices. The five largest oil companies posted a combined $84 billion in profits last year, up from just $10 billion four years ago, according to the Wall Street Journal. The majors, by and large, are focusing on increasing returns to shareholders. Chevron, for instance, announced a $25 billion share repurchasing program. . Bank of America Merrill Lynch sees oil demand growing slowly over the coming decade before peaking in 2030. Demand growth slows from 1.2 mb/d in 2019 to just 0.6 mb/d by 2024. By 2030, annual growth falls to zero.

Oil fumbles on global economic worries, dollar strength (Reuters) - Oil prices slipped on Tuesday, falling from two-month highs as concerns over a global economic slowdown crept back into the market, and a stronger dollar also weighed. Prices sagged after a survey showed euro zone business expansion nearly stalled in January. That, coupled with disappointing U.S. factory orders data a day earlier, stoked worries about softer demand, analysts said. Brent crude futures fell 53 cents to settle at $61.98 a barrel. They touched their highest level in more than two months at $63.63 the previous day. U.S. crude futures dropped 90 cents to settle at $53.66 a barrel, or down 1.7 percent. Futures held lower after the close, when the American Petroleum Institute said U.S. crude stocks rose by 2.5 million barrels last week, more than analyst expectations. Oil also felt pressure from a strengthening dollar, which rallied for a fourth straight session, which makes crude more expensive for non-U.S. buyers. “It really seemed to be a dollar influence here today,”  Investors were shifting assets into equities and away from markets more sensitive to Washington-Beijing trade relations and movements in the dollar,   “Oil is just not in favor today, and they are going after the equity markets,” he said. Wall Street was slightly higher on Tuesday. U.S. sanctions on Venezuela have been viewed as supportive of prices by helping tighten global supplies. Numerous tankers are currently in the water off the Venezuelan coast, unable to move because state-owned PDVSA is demanding payment, which would run afoul of U.S. sanctions. The Organization of the Petroleum Exporting Countries and its allies, including Russia, agreed to production cuts effective from last month to beat back supply growth. A Reuters survey found that supply from OPEC states had fallen the most in two years. Concerns about the pace of global economic growth were fanned by a weak start for the year for euro zone businesses. A Tuesday survey showed demand declined for the first in over four years. New orders for U.S.-made goods fell unexpectedly in November, according to data released a day earlier. 

U.S.-China talks dominate oil outlook: Kemp (Reuters) - The deadline for the United States and China to reach a trade deal before U.S. tariffs increase on $200 billion worth of Chinese imports (scheduled for March 2) is the most important date in the calendar for oil traders. The deadline will probably have more impact than the next OPEC+ joint ministerial monitoring committee (March 18), OPEC’s extraordinary meeting (April 17-18) or even the White House review of Iran sanctions waivers (May 4). The outcome of trade talks will have a decisive influence on the oil consumption outlook for the rest of the year since the threat of tariffs and associated uncertainty are proving the largest drag on global economic growth. Because the trade deadline comes first, the outturn will shape the subsequent strategic choices made by OPEC and its allies over oil production and the White House on how far to toughen Iran sanctions. Uncertainty about the outlook for global trade has already pushed the world economy close to the brink of recession, judging by a range of business surveys and statistics on trade volumes (https://tmsnrt.rs/2TyUPrn ). China’s manufacturers reported a fall in business activity in December and January, and the official purchasing managers’ index has fallen to its lowest level for three years. Global manufacturers have reported declining export orders for five months now, according to the new export orders component of the JPMorgan Global PMI, with new business falling at the fastest rate since 2016. Freight flows through Hong Kong International Airport, the world’s busiest air cargo hub, are also falling at the fastest rate since 2016, according to government statistics. The only significant exception to the global slowdown has been the United States itself, where manufacturers report a continued widespread upturn, albeit more slowly than the frenzied rates in late 2017 and early 2018. In the rest of the world, the slowdown has taken a toll on current and prospective oil consumption growth, pushing the global market towards surplus and causing prices to fall sharply in the fourth quarter. The biggest impact of the slowdown is being felt in the consumption of middle distillates such as diesel and jet fuel used in trucking, shipping, railroads and airlines as well as by manufacturers, miners and farmers. Given distillate’s predominant use in freight transport and industry, distillate consumption and prices have been closely correlated with the business cycle at U.S. and global levels in the last 50 years. 

WTI Bounces But Inventory Builds Spark Glut Alarm Bells - WTI has extended losses following last night's broad inventory builds reported by API, briefly dropping to a $52 handle.“The API set a bearish tone after reporting builds across the board,” PVM Oil Associates analysts including Stephen Brennock wrote in a report.“All in all, these figures will do little to silence the U.S. glut alarm bells,” Brennock said in a separate note.Bloomberg Intelligence's Senior Energy Analyst Vince Piazza noted that turmoil in Venezuela is behind the recovery in WTI prices after a December swoon in a crude market driven by geopolitics. We remain skeptical, based on a recent drop in Asian demand and concern that trade tensions will slow growth in developed economies. U.S. termination of waivers for sanctioned Iranian barrels this year is a key risk for balances. Resilient domestic production and a healthy backlog of almost 8,600 uncompleted wells informs our more cautious stance.  API

  • Crude +2.514mm (+1.5mm exp)
  • Cushing +889k (+400k exp)
  • Gasoline +1.731mm (+1.5mm exp)
  • Distillates +1.141mm (-2mm exp)

DOE:

  • Crude +1.263mm (+1.85mm exp)
  • Cushing +1.441mm (+400k exp)
  • Gasoline +513k (+1.5mm exp)
  • Distillates -2.257mm (-2mm exp)

With refinery maintenance season perhaps upon us, crude inventories rose for the 3rd week in a row (and gasoline stocks also rebounded)...

Oil prices rise as US crude stockpiles rise, distillate stocks fall - Oil prices reversed losses on Wednesday after weekly government data showed a drop in inventories of some fuels and a smaller rise in U.S. crude stockpiles than industry figures suggested. Benchmark Brent crude was up 60 cents, or 1 percent, at $62.58 a barrel around 11:10 a.m. ET (1610 GMT), after rallying about 15 percent in January. U.S. crude rose 44 cents to $54.10. U.S. crude inventories rose by 1.3 million barrels last week, according to the Energy Information Administration. That compared to the 2.5 million-barrel increase reported by industry group the American Petroleum Institute on Tuesday afternoon. Meanwhile, gasoline stockpiles rose by about half a million barrels, while stocks of distillates, which include diesel and heating oil, fell by 2.3 million barrels. Crude futures fell earlier on the API report and as concerns faded over the impact of U.S. sanctions against Venezuela on global oil supplies. The U.S. announced the sanctions on Venezuela's state oil company last week, a move which could further curb supplies, although the development has yet to result in steep price gains. "It would seem that the market is really not too worried yet about the potential loss of Venezuelan barrels," said analysts at JBC Energy in a report. "This is either because the market assumes that the size of the impact will not be large, or at least it will be of short enough duration," they wrote. Worries about weaker global economic growth and the trade dispute between the United States and China have also weighed on the market. Oil fell on Tuesday after a survey showed euro zone business expansion nearly stalled in January. In his State of the Union address, U.S. President Donald Trump said a trade deal was possible with China. Senior U.S. and Chinese officials are poised to start another round of trade talks next week.

Oil rises 1 pct on signs of tightening global oil supply (Reuters) - Oil prices rose about 1 percent on Wednesday, boosted by signs of strong U.S. demand for distillate products and tightening global crude supply, but gains were capped by a rising U.S. dollar and ongoing concerns about a global economic slowdown. Brent crude futures gained 71 cents, or 1.15 percent, to settle at $62.69. The benchmark earlier fell to a session low of $61.05. U.S. government data on Wednesday showed that domestic crude inventories rose less than expected last week even as refineries hiked output. Stocks increased 1.3 million barrels in the week ended Feb. 1, compared with analysts' expectations for an increase of 2.2 million barrels. Gasoline stocks increased by 513,000 barrels, less than anticipated, while distillate stockpiles fell a greater-than-expected 2.3 million barrels. "Distillate demand increased sharply last week due to the extreme cold weather, which contributed to the declining distillate stocks," Commerzbank analyst Carsten Fritsch said. "All in all this report is bullish for crude oil and refined product prices." Market participants have focused on signs of tightening global crude supply after the Organization of the Petroleum Exporting Countries (OPEC) and allies began an agreement in January to cut output. The producers known as OPEC+ started cutting production by 1.2 million barrels per day (bpd) from last month to avert a new supply glut, and OPEC has delivered almost three-quarters of its pledged cuts already, a Reuters survey showed last week. U.S. sanctions on Venezuela's state oil company could also lift prices, though they have yet to trigger any sharp increase.

U.S. oil prices dip on rising crude inventories, record output - (Reuters) - U.S. oil prices dipped on Thursday after U.S. crude inventories rose and as production levels in the country stayed at record levels, but OPEC-led supply cuts and the crisis in Venezuela supported markets. U.S. West Texas Intermediate (WTI) crude futures were at $53.82 per barrel at 0036 GMT, down 19 cents, or 0.35 percent, from their last settlement. International Brent crude oil futures had yet to trade. U.S. crude oil inventories C-STK-T-EIA climbed by 1.3 million barrels in the week that ended Feb. 1, to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday. Meanwhile, average weekly U.S. crude oil production remained at the record 11.9 million barrels per day (bpd) C-OUT-T-EIA it reached in late 2018. Countering the rising U.S. crude output and inventories are voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market and propping up prices. Meanwhile, U.S. sanctions against Venezuela’s oil industry are expected to knock out at least 500,000 bpd of crude exports. “We expect the oil price to rise in the first-half of 2019 on tightening supply conditions and decline in the second-half on weakening economic activity and an increase in U.S. crude exports to international markets,” said French bank BNP Paribas. It added that it saw average 2019 prices for Brent at $68 per barrel and for WTI at $61 per barrel, both down by $8 from its previous outlook.

Oil falls as US maintains record output, inventories climb - Oil prices fell on Thursday after U.S. crude inventories rose and the country's production held at record levels, but OPEC-led supply cuts and Washington's sanctions against Venezuela supported markets. U.S. West Texas Intermediate (WTI) crude futures were at $53.66 per barrel at 0744 GMT, down 35 cents, or 0.7 percent, from their last settlement. International Brent crude oil futures fell 39 cents, or 0.6 percent, to $62.30 per barrel. U.S. crude oil inventories climbed by 1.3 million barrels in the week that ended Feb. 1 to 447.21 million barrels, data from the Energy Information Administration (EIA) showed on Wednesday.Meanwhile, average weekly U.S. crude oil production remained at the record 11.9 million barrels per day (bpd) it reached in late 2018. The United States is currently the world's largest oil producer, ahead of traditional top suppliers Russia and Saudi Arabia.There are also concerns that an economic slowdown could soon weigh on growth in fuel demand, with German industrial output unexpectedly falling in December for the fourth consecutive month. Despite the overall rise in U.S. supply, traders were watching how long a partial closure of the Keystone oil pipeline would last after the discovery of a possible leak in the area of St Louis, Missouri.Providing global markets with price support are supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) aimed at tightening the market."The key supply story remains the ongoing OPEC production cuts," U.S. bank Goldman Sachs said on Wednesday.  Meanwhile, U.S. sanctions against Venezuela's oil industry are expected to freeze sales proceeds of Venezuelan crude exports to the United States."Around a third of Venezuela's exports head to the U.S. As such, we expect Venezuelan exports to quickly fall by 300,000 barrels per day (bpd) to around 700,000 bpd," ANZ bank said on Thursday.  "The risks are rising that this political standoff will deepen the fall in output as funds dry up and mass defection of workers accelerates."

US crude falls 2.5%, settling at $52.64, as US-China trade dispute weighs on demand outlook -- Oil prices tumbled on Thursday as the market confronted concerns that global demand growth would lag in the coming year. A rebound from late December lows seemed to stall amid worries that a trade war between the U.S. and China would continue, weighing on demand. The market also contended with the possibility that oil producers would not adhere strictly to cuts agreed to last year. Crude futures fell with the stock market. The Dow Jones Industrial Average droppedmore than 250 points after a senor administration official told CNBC a meeting between President Donald Trump and President Xi Jinping is highly unlikely to take place before a critical March deadline to avoid higher U.S. tariffs on Chinese goods. U.S. West Texas Intermediate (WTI) crude futures settled $1.37 lower at $52.64 a barrel for a or 2.5 percent loss. International Brent crude oil futures fell $1.05 a barrel, or 1.7 percent, to $61.64 around 2:30 p.m. ET.  "There seems to be uncertainty about what is going to happen with the trade talks, with global economic growth and demand in the coming year," he said. In particular, he said, the market is worried about whether demand is sufficient to absorb growing crude production from the U.S. "Supply fundamentals have increasingly been turning supportive in recent weeks, but against this the market still worries about the yet-to-be-realized if at all impact on demand from weaker macroeconomic fundamentals," . Though the United States published robust jobs data last week, global markets remain nervous after China reported the lowest annual economic growth in nearly 30 years in January. That focuses yet more attention on the outcome of U.S.-China talks to end the trade war between the world's top two economies.

$80 Brent Acceptable for All -- $80 per barrel Brent is an acceptable level for all to live with. That’s according to Mohammed Ali Yasin, chief strategy officer at Al Dhabi Capital Ltd (ADCL), who expressed the view in a television interview with Bloomberg on Wednesday. “I think there’s a consensus … across the world, even for the United States. An $80 Brent or maybe around the $64 WTI [West Texas Intermediate] is an acceptable level for all to live with,” Yasin stated in the interview. The ADCL representative told Bloomberg that his company is “a bit more bullish” now in terms of Brent prices. “I think now we’re looking more towards … $75 on average,” he said in the interview. “We don’t think that the supply in the market is that huge and … OPEC … and Russia what they’re doing is reacting immediately to any surplus in the market and they’re lowering and they will continue to lower until they get their prices,” he added. Last month, analysts at Fitch Solutions Macro Research forecasted that the price of Brent will average $75 per barrel in 2019. According to Wood Mackenzie’s latest price forecast, Brent will average $65 per barrel this year. ADCL is the asset management company of Al Dhabi Investment. Yasin is part of the top management of ADCL. 

Bank Of America: Oil Demand Growth To Hit Zero Within A Decade - By 2030, oil demand could hit a peak and then enter decline, according to a new report. For the next decade or so, oil demand should continue to grow, although at a slower and slower rate. According to Bank of America Merrill Lynch, the annual increase in global oil consumption slows dramatically in the years ahead. By 2024, demand growth halves, falling to just 0.6 million barrels per day (mb/d), down from 1.2 mb/d this year.But by 2030, demand growth zeros out as consumption hits a permanent peak, before falling at a relatively rapid rate thereafter. The main driver of the destruction in demand is the proliferation of electric vehicles. Bank of America did offer a few caveats and uncertainties. The growth of EVs hinges on a handful of key metals. Lithium, for instance, is mined and produced in large concentrations in a few Latin American countries.  But cobalt looms as a larger concern for some automakers. Roughly 62 percent global cobalt output is found in the Democratic Republic of Congo. An executive from Ford said recently that automakers might feel compelled to invest directly in cobalt production over fears of securing adequate supply. “I fully anticipate we’re going to keep a lot of pressure on that cobalt production,” Ted Miller, head of energy storage strategy and research at Ford, said at a mining event in South Africa.  The DRC just held a divisive election, and although the transfer of power has been mostly peaceful, the country has historically suffered from political instability. “Any major disruption to cobalt today would likely curb EV proliferation in the early 2020s, in turn supporting long dated crude oil prices,” Bank of America Merrill Lynch warned. There are alternatives to cobalt, but that would merely put pressure on other materials. “Car producers may gradually substitute from cobalt to nickel over the next two decades. In turn, this shift may lead to soaring demand for nickel, creating another supply squeeze as mine expansion plans are limited,” BofAML analysts wrote in their report. There are a long list of other uncertainties that complicate such medium- and long-term forecasting. A brewing economic downturn, which may or may not hit in the next year or next few years, could linger into the 2020s. That would alter oil demand forecasts, but in complicated ways. Slower economic growth would put a dent in oil prices via lower demand, but a lower price itself could keep consumers hooked.

Oil falls on economic slowdown, but OPEC output cuts offer some support - Benchmark oil prices were choppy on Friday, but remained on track for a weekly loss, pulled down by worries about a global economic slowdown.OPEC-led supply cuts and U.S. sanctions against Venezuela provided crude with some support.International Brent crude futures had erased earlier losses around 9:55 a.m. ET (1455 GMT), gaining 19 cents to $61.82 per barrel. On the week, they are set for a loss of about 1.5 percent. U.S. West Texas Intermediate crude futures stood at $52.59 per barrel, down 5 cents and looking at a nearly 5 percent weekly slump, their steepest this year. Weighing on financial markets were concerns that a trade dispute between the United States and China would remain unresolved, denting global economic prospects.U.S. President Donald Trump said on Thursday that he did not plan to meet Chinese President Xi Jinping before a March 1 deadline set by the two countries to strike a trade deal.Adding to demand concerns, the European Commission sharply cut its forecasts for euro zone economic growth due to global trade tensions and an array of domestic challenges.Another factor weighing on oil prices this week was a strong dollar."It seems that macro risk still prevails over constructive supply fundamentals in the oil market," Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas, told the Reuters Global Oil forum.Supply cuts led by the Organization of the Petroleum Exporting Countries lent support. OPEC kingpin Saudi Arabia reduced its output in January by about 400,000 barrels per day to 10.24 million bpd, OPEC sources said. Another risk to supply comes from Venezuela after the implementation of U.S. sanctions against the OPEC member's petroleum industry in late January. Analysts expect this move to knock out 300,000-500,000 bpd of exports. For the time being, though, the sanctions impact on international oil markets has been limited.

What Is Keeping Oil Prices Subdued? - Oil prices have been flat for several days, weighed down by concerns about the health of the global economy, plus the potential return of supply from Libya. “Growing economic concerns, falling stock markets and emerging doubts that the trade conflict between the US and China will be resolved are putting oil prices under pressure,” Commerzbank wrote in a note on Friday.  U.S. sanctions on Venezuela threaten to shut in a major portion of the country’s oil production. Not only do sanctions bar Venezuelan oil from flowing to the U.S., but crucially, it also prohibits U.S. diluents from heading to Venezuela. Without diluents, Venezuela cannot process its heavy crude and would be forced to shut down output. However, Russia’s Rosneft is reportedly sending some oil products to Venezuela to keep production from collapsing, according to the New York Times. As a result, Venezuela’s oil production may not utterly collapse, which could keep Maduro in power a little while longer. However, U.S. sanctions could still lead to mass starvation, exploding the already terrible humanitarian crisis. More than 20 tankers loaded with 9.6 million barrels of oil from Venezuela are sitting idle in the U.S. Gulf Coast, according to Reuters, unable to make delivery because of sanctions. There are other cargoes sitting off the coast in Europe and in the Caribbean.   President Trump said he would not meet Chinese President Xi Jingping before the March 1 trade deadline. A meeting of the two, experts suggest, would be an indication that the U.S. and China were close to reaching a sweeping trade deal. Trump has promised to hike tariffs on $200 billion worth of Chinese imports from 10 to 25 percent. White House economic advisor Larry Kudlow said that there is a “pretty sizable distance” to go on the trade talks. The Wall Street Journal reported that U.S. business titans are urging Trump to make a deal.  Legislation that would give the U.S. Justice Department authority to sue OPEC members over antitrust violations is progressing through the U.S. Congress. However, major international oil companies are lobbying against it, fearing blowback on their operations. The legislation has bipartisan support in the Congress, although it’s not clear where President Trump stands. “We are just a tweet away from Nopec becoming law,” Bob McNally at consultancy Rapidan Energy told the FT.

Oil Rig Count Rises As Oil Prices Stabilize -Baker Hughes reported an increase in the number of active oil and gas rigs in the United States this week.The total number of active oil and gas drilling rigs rose by 4 rigs, according to the report, with the number of active oil rigs increasing by 7 to reach 854 and the number of gas rigs decreasing by 3 to reach 195.The oil and gas rig count is now 74 up from this time last year, 63 of which is in oil rigs.Oil prices were mixed earlier on Friday as signals indicated there may be no resolution to the China trade deal prior to the March 1st deadline that China and the United States set for sealing a deal. This, mixed with tightening supplies from Venezuela, Libya, and OPEC in general—particularly Saudi Arabia whose January production fell 400,000 from December levels—as well as the prospect of unfavorable economic conditions going forward, including slower oil demand growth, culminated in sending WTI lower and Brent higher.Shortly after data release, WTI was trading down $2 per barrel week on week, while the Brent benchmark was trading essentially flat week on week. Canada’s oil and gas rigs decreased by 3 rigs this week. Canada’s total oil and gas rig count is now 240, which is 85 fewer rigs than this time last year.The EIA’s estimates for US production for the week ending February 1 shows an increase at an average rate of 11.9 million bpd­—a record for the US—for the fourth week in a row. By 1:09pm EDT, WTI had dipped 0.06% (+$0.03) at $52.61 on the day. Brent crude was trading up 0.42% (+$0.26) at $61.89 per barrel.

Conflict erupts for control of Libya’s largest oil field - Fighting has broken out over the future of Libya’s largest oil field, as forces loyal to the UN-recognised Tripoli-based government battle Libyan National Army (LNA) forces led by Field Marshal Khalifa Haftar, the leading figure in fractured Libya’s east. Al-Sharara field, 560 miles south of Tripoli, is capable of producing 315,000 barrels of crude a day – about a third of Libya’s total current output. But it has been closed by the Libyan National Oil Corporation (NOC) since December when the installation was seized by local tribes demanding the Tripoli government did more to lift the area out of poverty. The fighting has the potential to disrupt the UN’s long prepared plans to convene a national conference, possibly next month, that is supposed to lead to either parliamentary or presidential elections and a new constitution. No date or venue for the conference has been set by the UN, which is still trying to win an agreement on those attending the meeting and the broad agenda. Haftar forces, already in control of large tracts of Libyan oil including in the “oil crescent” in the north, moved south last month in what was billed as an operation to push out terrorists and militias. An LNA spokesman, Lt Gen Ali Suleiman Muhammad claimed on Wednesday that Haftar’s forces had seized al-Shara oil fields largely without a fight, in conjunction with the forces that had previously controlled the field. This was later contradicted by other local reports that suggested five people had been killed and 16 injured in the fighting.

OPEC's Oil Princes Are Fighting For Survival -  The already strained relationship between U.S. lawmakers and two of President Trump’s staunchest supporters, Saudi Crown Prince Mohammed bin Salman and Abu Dhabi’s Sheikh Mohammed bin Zayed, seems to be worsening. In recent days, reports have indicated that a growing number of U.S. congressmen and women is expected to pass a resolution which will end U.S. involvement in Yemen’s civil war. This resolution would represent a direct challenge to President Trump, who would then have to consider using a presidential veto. While Trump’s Middle East strategy may lack clarity, it is undeniable that both MBS and MBZ are pivotal to his influence in the region. The hostility between Republicans and Democrats in the U.S. Congress has been particularly intense under the current president. The ongoing support by the Trump Administration of the Saudi-led military coalition fighting against the Houthi rebels in Yemen has become the latest focal point of this tension. U.S. media sources have indicated that a group within congress is considering reproducing a version of the resolution that passed the Senate 56-41 last month to rebuke the White House and Saudi Arabia following the Khashoggi murder. In the Middle East more broadly, Trump’s strategy is failing to instill confidence in the two Arab leaders at the center of this struggle. The ongoing threat of a full withdrawal of U.S. troops and the abandonment of Kurdish forces in Syria has sent shivers down the spines of both MBS and MBZ. The two young leaders, currently heavily engaged in transforming their own societies and economies, are aware that Washington’s support for these two key U.S. allies could be changed by one tweet.  Riyadh and Abu Dhabi are increasingly worried that U.S. support is wavering, with even Secretary of State Mike Pompeo being unable to quell growing fears. The continuation of anti-OPEC or anti-Saudi oil strategy tweets by Trump are failing to address the fears of these two key OPEC figures.

Exclusive Report: Sold to an ally, lost to an enemy – Saudi Arabia and its coalition partners have transferred American-made weapons to al Qaeda-linked fighters, hardline Salafi militias, and other factions waging war in Yemen, in violation of their agreements with the United States, a CNN investigation has found.The weapons have also made their way into the hands of Iranian-backed rebels battling the coalition for control of the country, exposing some of America's sensitive military technology to Tehran and potentially endangering the lives of US troops in other conflict zones.Saudi Arabia and the United Arab Emirates, its main partner in the war, have used the US-manufactured weapons as a form of currency to buy the loyalties of militias or tribes, bolster chosen armed actors, and influence the complex political landscape, according to local commanders on the ground and analysts who spoke to CNN.By handing off this military equipment to third parties, the Saudi-led coalition is breaking the terms of its arms sales with the US, according to the Department of Defense. After CNN presented its findings, a US defense official confirmed there was an ongoing investigation into the issue.The revelations raise fresh questions about whether the US has lost control over a key ally presiding over one of the most horrific wars of the past decade, and whether Saudi Arabia is responsible enough to be allowed to continue buying the s ophisticated arms and fighting hardware.  Previous CNN investigations established that US-made weapons were used in a series of deadly Saudi coalition attacks that killed dozens of civilians, many of them children.  The developments also come as Congress, outraged with Riyadh over the murder of journalist Jamal Khashoggi last year, considers whether to force an end to the Trump administration's support for the Saudi coalition, which relies on American weapons to conduct its war.

CNN Catches Saudi Arabia Providing US Weapons to Al-Qaeda in Yemen  — Bolstering the already overwhelming case for cutting off U.S. military support for Saudi Arabia’s years-long assault on Yemen, a “bombshell” CNN investigation published late Monday found that the Saudis have sold or freely “passed on” American weapons to al-Qaeda fighters and other militia groups that have helped create the world’s worst humanitarian crisis. According to CNN, Saudi Arabia and the United Arab Emirates (UAE) have for years been transferring “American-made weapons to al-Qaeda-linked fighters, hardline Salafi militias, and other factions waging war in Yemen… as a form of currency to buy the loyalties of militias or tribes, bolster chosen armed actors, and influence the complex political landscape.”Citing analysts and local commanders on the ground in Yemen—where an estimated 14 million people are on the brink of famine due to the U.S.-backed Saudi assault—CNN reported that “terror groups have gained from the influx of U.S. arms, with the barrier of entry to advanced weaponry now lowered by the laws of supply and demand.”“Militia leaders have had ample opportunity to obtain military hardware in exchange for the manpower to fight the Houthi militias,” CNN‘s exclusive report found. “Arms dealers have flourished, with traders offering to buy or sell anything, from a U.S.-manufactured rifle to a tank, to the highest bidder.Watch CNN‘s segment on its findings:The Department of Defense told CNN that “the Saudi-led coalition is breaking the terms of its arms sales with the U.S.” by handing weapons to al-Qaeda, and confirmed that there is an “ongoing investigation into the issue.” Stephen Miles, director of Win Without War, called CNN‘s report “example number 7,439” of “how backwards and counterproductive our bipartisan obsession with arming the world is.” In the southwestern Yemeni city of Taiz, an undercover CNN reporter discovered a market in which U.S.-made pistols, hand grenades, and assault rifles were on sale next to women’s clothing and sweets. “The American guns are expensive and sought after,” one weapons trader told CNN‘s undercover journalist. As CNN notes, “these shops don’t just take individual orders, they can supply militias—and it’s this not-so-hidden black market that in part is driving the demand for hi-tech American weapons and perpetuating the cycle of violence in Yemen.”And the Saudis are not just selling and transferring pistols and assault rifles.In October 2015, CNN reported, militia forces “boasted on Saudi- and UAE-backed media that the Saudis had airdropped American-made TOW anti-tank missiles on the same frontline where [al-Qaeda in the Arabian Peninsula] had been known to operate at the time.” Additionally, CNN found that the Abu Abbas brigade, which is linked to al-Qaeda, “now possesses U.S.-made Oshkosh armored vehicles.”

Saudi female activists face jail conditions akin to torture, say UK MPs - Saudi Arabia is detaining female activists in cruel and inhumane conditions that meet the threshold of torture under both international and Saudi law, a cross-party panel of three British MPs has found. The conclusions indicate growing unease among western allies over alleged rights abuses under Crown Prince Mohammed bin Salman, the kingdom’s de facto leader, who is already facing opprobrium over the murder of the journalist Jamal Khashoggi last year. The ad hoc panel had sought access to eight jailed women to assess their welfare, but received no response from the Saudi ambassador Prince Mohammed bin Nawwaf bin Abdulaziz. The panel includes Crispin Blunt, the former Conservative chair of the foreign affairs select committee and one of the staunchest defenders of the Gulf monarchies. It was thought his background might lead to cooperation from the kingdom, which protects its justice system from scrutiny. The panel’s report concludes that the detainees – female activists arrested last spring – had been subjected to cruel and inhumane treatment, including sleep deprivation, assault, threats to life and solitary confinement. Theeir treatment is likely to amount to torture and if they are not provided with urgent access to medical assistance they are at risk of developing long-term health conditions, the report says. Culpability rests not only with direct perpetrators but also those who are responsible for or acquiesce to it, it says. “The Saudi authorities at the highest levels could, in principle, be responsible for the crime of torture.” The detained activists were strong supporters of women’s right to drive – a demand to which the Saudi government acceded last year, but seems determined to ascribe solely to the leadership of Prince Mohammed. On their arrest, the women were labelled as traitors in the official Saudi press, and there have been persistent reports of maltreatment. They have been accused of suspicious contact with foreign entities.

Iraq Fires Back at Trump for Saying US Troops Will Stay to “Watch Iran”Baghdad is firing back on Monday with calls to potentially boot U.S. troops out of Iraq in response to President Donald Trump’s comments that he wants to keep them there to “watch Iran.” Speaking to CBS‘s “Face the Nation” in an interview that aired Sunday, Trump said he wants the continued military presence because I want to be able to watch Iran. We have an unbelievable and expensive military base built in Iraq. It’s perfectly situated for looking at all over different parts of the troubled Middle East rather than pulling up. And this is what a lot of people don’t understand. We’re going to keep watching and we’re going to keep seeing and if there’s trouble, if somebody is looking to do nuclear weapons or other things, we’re going to know it before they do.But U.S. troops have no right to do that, said Iraqi President Barham Salih, adding that Trump’s comments were “surprising.”“Trump did not ask us to keep U.S. troops to watch Iran,” Salih said at a forum in Baghdad. The agreement between Washington and Baghdad is for the troops to combat terrorism, he said, and doing otherwise would be “unacceptable.”“The Iraqi constitution rejects the use of Iraq as a base for hitting or attacking a neighboring country,” he said.“The U.S. is a major power … but do not pursue your own policy priorities, we live here,” he stated, and added, “It is of fundamental interest for Iraq to have good relations with Iran” and its other neighbors.According to NPR, Trump’s comments also sparked the ire of Iraq’s main militias, who said they could push for a vote in parliament to kick out U.S. troops. The outlet also noted a “growing sentiment” held by Iraqis that U.S. troops should go. In addition, Agence France-Pressse reports: Sabah al-Saadi, a member of parliament in the bloc led by influential anti-American Shiite cleric Moqtada Sadr, has proposed a bill demanding a U.S. pullout. Deputy speaker of parliament Hassan Karim al-Kaabi, also close to Sadr, said they were a “new provocation,” weeks after the U.S. president sparked outrage in Iraq by visiting U.S. troops at Ain al-Asad without meeting a single Iraqi official.

Baghdad: Calls to Expel US Troops from Iraq after Trump said They spy on IranTrump’s assertion that he intends to keep US troops in Iraq to spy on Iran has produced a firestorm of protest and controversy in Baghdad. Trump also committed the faux pas of saying the US had constructed an enormous military base in Iraq, which contradicts the Iraqi government’s line that the US merely uses *Iraqi* bases. Leaders of powerful Shiite militias that have become political parties with substantial representation in parliament demanded that US troops immediately withdraw. There were also Shiite militia threats against US military personnel. That is, Trump’s bumbling ineptitude has painted a big red X on the backs of American troops in Iraq. If US forces aren’t gathering intelligence on Iran, then Trump has smeared them and deeply endangered them with a falsehood. If they are, it was a covert operation and Trump has revealed classified information to the enemy and should be charged with treason.  President Barham Salih, a seasoned politician of Kurdish heritage who in the past has been favorable to the US, rejected Trump’s statement out of hand. According to al-Zaman (The “Times” of Baghdad), , Salih said, “The Iraqi constitution prohibits taking Iraq as a base to strike or engage in aggression on neighboring countries.” He added, “The existence of American forces is within legal frameworks and by an agreement between the two countries, and any operation outside this agreement is unacceptable.”  Member of parliament Sabah al-Saedi, from the Sa’irun Bloc of Shiite cleric Muqtada al-Sadr, said that “A law expelling the American forces from Iraq has become a national necessity after Trump’s statements.”

EU powers set up firm to thwart Trump’s Iran sanctions The EU's effort to thwart U.S. President Donald Trump's Iran sanctions is open for business. France, Germany and the U.K. — the European guarantors of the Iran nuclear accord — announced Thursday that they have officially established a corporate "special purpose vehicle," registered in Paris, to help European companies that want to continue doing business with Iran despite Trump's renewed sanctions. The corporate vehicle will facilitate business deals with Iran without using the dollar or the U.S. financial system and will essentially structure sales as indirect transactions — steps that the Europeans believe will technically avoid violations of the U.S. sanctions. The special purpose vehicle is called INSTEX, for Instrument in Support of Trade Exchanges. It had been in development for months, since shortly after Trump last May declared the unilateral U.S. withdrawal from the nuclear accord, called the Joint Comprehensive Plan of Action (JCPOA). The official announcement was made by French Foreign Minister Jean-Yves Le Drian, German Foreign Minister Heiko Maas and British Foreign Secretary Jeremy Hunt in Bucharest, Romania where they were attending a meeting of EU foreign and defense ministers. The establishment of the special purpose vehicle is the most visible and substantive rebuke of Trump's foreign policy by European allies that have disagreed with many of the American president's decisions, including his withdrawal from the Paris climate accords and his relocation of the U.S. Embassy in Israel to Jerusalem from Tel Aviv.

European Companies Won't Dare Use SWIFT Alternative To Send Money To Iran - The launch of INSTEX — "Instrument in Support of Trade Exchanges" by France, Germany, and the UK this week to allow "legitimate trade" with Iran, or rather effectively sidestep US sanctions and bypass SWIFT after Washington was able to pressure the Belgium-based financial messaging service to cut off the access of Iranian banks last year, may be too little too late to salvage the Iran nuclear deal. Tehran will only immediately press that more than just the current "limited humanitarian" and medical goods can be purchased on the system, in accordance with fulfilling the EU's end of the 2015 JCPOA something which EU officials have promised while saying INSTEX will be "expansive" while European companies will likely continue to stay away for fear of retribution from Washington, which has stated it's "closely following" reports of the payment vehicle while reiterating attempts to sidestep sanctions will "risk severe consequences".  As a couple of prominent Iranian academics told Al Jazeera this week: "If [the mechanism] will permanently be restricted to solely humanitarian trade, it will be apparent that Europe will have failed to live up to its end of the bargain for Iran," said political analyst Mohammad Ali Shabani. And another, Foad Izadi, professor at the University of Tehran, echoed what is a common sentiment among Iran's leaders: "I don't think the EU is either willing or able to stand up to Trump's threat," and continued, "The EU is not taking the nuclear deal seriously and it's not taking any action to prove to Iran otherwise... People are running out of patience." But Iranian leadership welcomed the new mechanism as merely a small first step: “It is a first step taken by the European side... We hope it will cover all goods and items," Iranian Deputy FM Abbas Araqchi told state TV, referencing EU promises to stick to its end of the nuclear deal.

US State Department's Hook tells Japan not to expect new Iran sanctions waiver— Iran's oil customers should not expect new waivers to US sanctions in May, a top US State Department official said during a visit to Japan, which just restarted Iranian crude imports. Despite the latest comment by Brian Hook, US special representative for Iran, many analysts still expect the US to grant fresh waivers when the current exemptions expire May 4. They predict oil prices will ultimately determine the extent of those waivers. Iran's top oil buyers including China, India, Japan, South Korea and Turkey received six-month "significant reduction exemptions" in November allowing them to continue oil deals with Tehran, in return for promising to cut their reliance on Iranian crude. Japan's largest refiner JXTG Nippon Oil & Energy is set to resume loading Iranian crude this week, three months after the US reimposed sanctions and granted the waivers. The cargo is expected to be loaded on the VLCC Eneos Breeze, which is heading to Iran's Kharg Island, according to S&P Global Platts trade flow software cFlow. A JXTG Nippon Oil & Energy spokesman confirmed Monday that it is resuming its Iranian crude oil loading in February but declined to comment on the schedule. Hook said during an interview with Japanese public broadcaster NHK on Monday that the November waivers were designed to prevent a spike in oil prices. He said there appears to be enough oil supply to satisfy demand this year. Hook reiterated the State Department's message that it aims to "get to zero imports to Iranian crude as quickly as possible." 

US Warplanes Attack Syrian Military Base Along Syria-Iraq Border — US warplanes attacked a Syrian military position along the border with Iraq at Abu Kamal late Saturday. Syrian state media reported the attack as “US aggression,” which reportedly wounded two soldiers and destroyed a stationary artillery piece.Exactly what happened that led to this rare US attack on Syrian military targets is uncertain. The US-led coalition claimed that it involved their “inherent right to self defense,” and that some “partner forces were fired upon” by the artillery.That’s a very non-specific allegation, and also seems unlikely. The only “partner forces” for the US anywhere near Abu Kamal are the Iraqi military, which is allied with Syria’s government, and the Kurdish SDF, which is also in the process of making a deal with the Syrian government to resist a Turkish invasion. In the past, the US has referred to the “self defense” argument when forces were even perceived to be “too close,” though again, this doesn’t make a lot of sense if the US intends to withdraw from Syria, and the US partner forces are also effectively partner forces for the Syrian military.

Trump’s Palestinian aid cuts means thousands lose access to food and healthcare - Tens of thousands of Palestinians are no longer getting food aid or basic health services from America, U.S.-funded infrastructure projects have been halted, and an innovative peace-building program in Jerusalem is scaling back its activities.The Trump administration's decision last year to cut more than$200 million in development aid to the Palestinians is forcing NGOs to slash programs and lay off staff as the effects ripple through a community that has spent more than two decades promoting peace in the Middle East.The U.S. government's development agency, USAID, has provided more than $5.5 billion to the Palestinians since 1994 for infrastructure, health, education, governance and humanitarian aid programs, all intended to underpin the eventual creation of an independent state.Much of that aid is channeled through international NGOs, which were abruptly informed of the cuts last summer and have been scrambling to keep their programs alive.U.S. President Donald Trump says the USAID cuts are aimed atpressuring the Palestinians to return to peace talks, but Palestinian officials say the move has further poisoned relations after the U.S. recognized Jerusalem as Israel's capital last year. The aid groups, many of which have little or no connection to thePalestinian Authority, say the cuts hurt the most vulnerablePalestinians and those most committed to peace with Israel. "If you want to maintain the idea of the peace process, you have to maintain the people who would be part of the peace process," said Lana Abu Hijleh, the local director for Global Communities, an international NGO active in the Palestinian territories since 1995.

It’s Time to Trust the Taliban - In the peace process now underway with the Afghan Taliban, one-and-a-half significant U.S. interests are at stake. The “half” is the only real hang-up to signing a deal and bringing home American troops right now. For Afghans, of course, the stakes in the present war are different and infinitely higher than for Americans, for whom the only vital interest is also the easiest to achieve: a Taliban agreement not to host international terrorists themselves and to do their utmost to prevent Afghanistan from once again being used as a base for terrorism against the West in general and the United States in particular. One can be confident that the Taliban would not only agree to this but also follow through on the agreement. It’s not just because Taliban supporters and interlocutors, in public statements and private conversations (including my own), have almost universally, if grimly, acknowledged that hosting al Qaeda in the run-up to 9/11 was a dreadful mistake that cost them their rule over Afghanistan. It’s also because the Taliban are now engaged in a bitter fight with the forces of the Islamic State (who most certainly are anti-Western international terrorists) for control of parts of Afghanistan. The Taliban’s role as an enemy of the Islamic State (as well as prudent preparation for the possible collapse of the U.S.-backed order in Kabul) has led Russia and China to launch talks with the Taliban. Finally, while the Pakistani military has backed the Afghan Taliban as a client movement against Indian influence in Afghanistan, it has absolutely no interest in encouraging a repeat of 9/11 and the disasters that followed for Pakistan. And if Pakistanis did have any such intention, their Chinese backers (with their own worries about Islamist extremism in Xinjiang) would deter them very strongly. The second real U.S. interest in the process is what is called in Washington “credibility” but which is better known by its older and more honest name, “prestige”—in this case, the avoidance of obvious and humiliating defeat, which would undermine respect for U.S. strength and embolden U.S. enemies elsewhere. As a U.S. general told me a decade ago, he and his colleagues could not say what victory would look like in Afghanistan, but they could all say what defeat would look like. 

British Army Permitted Shooting of Unarmed Civilians in Iraq and Afghanistan - — The British army operated rules of engagement in Iraq and Afghanistan that at times allowed soldiers to shoot unarmed civilians who were suspected of keeping them under surveillance, a Middle East Eye investigation has established. The casualties included a number of children and teenage boys, according to several former soldiers interviewed by MEE. Two former infantrymen allege that they and their fellow soldiers serving in southern Iraq were at one point told that they had permission to shoot anyone seen holding a mobile telephone, carrying a shovel, or acting in any way suspiciously. The rules were relaxed, they say, in part because of concerns that unarmed individuals were acting as spotters for militants, or were involved in planting roadside bombs. Separately, a former Royal Marine says that one of his officers confessed to his men that he had been responsible for the fatal shooting of an Afghan boy, aged around eight, after the child’s father carried his body to the entrance of their forward operating base and demanded an explanation. Another ex-soldier who spoke to MEE alleges that a cover-up was mounted after the fatal shooting of two unarmed teenage boys, which he says he witnessed in Afghanistan. One ex-soldier says he witnessed the fatal shootings of significant numbers of civilians in Basra, and does not believe that all the victims were keeping British troops under surveillance. He claims that the relaxing of the rules of engagement resulted in “a killing spree”. He and his fellow soldiers were promised that they would be protected in the event of any investigation by military police, he says. “Our commanders, they would tell us: ‘We will protect you if any investigation comes. Just say you genuinely thought your life was at risk – those words will protect you.’”

Anger in Iraq at Revelation of British Shoot-to-Kill Policy Against Unarmed Civilians — For Iyad Salim, revelations that British forces had in some circumstances allowed soldiers to fire at unarmed civilians during their occupation of the southern Iraqi province of Basra hardly came as a surprise. “It’s all true,” he told Middle East Eye. “The British harmed us a lot.” On Monday, MEE revealed that the British army had implemented rules of engagement in Iraq – as well as Afghanistan – that at times had allowed soldiers to shoot unarmed civilians who were suspected of keeping them under surveillance.The report, based on the testimonies of former soldiers, has further cast a shadow on the legacy of the British forces’ conduct during the occupation of Basra, which lasted between 2003 and 2007 and saw numerous allegations of abuse against the province’s residents.Salim, who still lives in Basra, said he experienced the impact of British violence against civilians first hand soon after the arrival of the occupying force in the aftermath of the US-led invasion that toppled Saddam Hussein. “I was one of the people who were targeted while I was walking in Al-Zubair Bridge area in Basra. They targeted passersby with bullets,” he said. “There were a lot of civilians in the area which is near [the station].“This was in April 2003. The British were killing anyone who was just walking around.”Former military personnel told MEE that the rules of engagement had at times been relaxed during operations in Basra and other British-occupied southern provinces, in part due to concerns that unarmed individuals had been acting as spotters for militants, or were involved in planting roadside bombs. Two former soldiers told MEE that in 2007, at a time when British forces were frequently coming under attack or being targeted by roadside bombs, they had been told that they could shoot anyone holding a phone, carrying a shovel, or acting in any way suspiciously.

Turkey condemns two top female Kurdish politicians to 14, 15 years in jail - - Turkish judicial authorities on Friday sentenced the country's two top female Kurdish politicians to a combined total of 29 years and three months of imprisonment. They are Gultan Kisanak, the elected Mayor of Diyarbakir Province, and the Co-chair of the Democratic Regions Party (DBP), Sebahat Tuncel. A Turkish court in the neighboring Kurdish city of Malatya ruled that both politicians were guilty of "membership in a terror organization" and "terrorist propaganda" for their speeches and political activities spanning several years. Kisanak received a sentence of 14 years and three months whereas Tuncel was handed 15 years of jail time. Lawyer Cihan Aydin, who defended Kisanak, said in a tweet that the Turkish court changed judges 16 times over 12 hearings in the trial against the duo. He added that Kisanak, who has been in detention for over two years, appeared before the court for the first time on the day of sentencing, noting also the "Tuncel, who is on a hunger strike, has not been given such a chance even once." The administration of President Recep Tayyip Erdogan removed Kisanak from her elected post along with the other Co-mayor of Diyarbakir, Firat Anli, in November 2016. They were arrested shortly thereafter.