Sunday, March 10, 2019

Ohio’s active drilling rigs drop by 5 and are now down by more over the past year than all other states combined

oil prices were little changed over the past week, as early optimism about a US - China trade deal gave way to renewed economic uncertainly by the end of the week... after falling 3% to $55.80 a barrel on signs of global economic weakness the prior week, prices of US crude for April delivery initially rose 79 cents to $56.59 a barrel on Monday, as the U.S. and China were thought to be near a settlement of the trade dispute that's been threatening to reduce oil demand... after continuing higher early Tuesday, oil prices came under pressure after the restart of Libya's biggest oilfield and after a Chinese forecast of slower economic growth, and ended the day's trading 3 cents lower at $56.56 a barrel...oil prices turned ​down again on Wednesday,after EIA data showed an unexpectedly large increase in crude inventories, with oil settling 34 cents lower at $56.22 a barrel...oil prices retreated again early on Thursday, after the European Central Bank cut its economic growth forecast for the continent, but rose later to close 44 cents higher at $56.66 a barrel after new data showed that OPEC had cut its February oil output to the lowest in nearly four years....oil then sold off early on Friday on weak data from China, poor jobs figures in the U.S., and news that Norway’s sovereign wealth fund was divesting from the oil sector, with oil prices ​dropping more than $2 to a 3 week low of $54.52, but then pared much of th​os​e early losses after another decline in oil-drilling rigs suggested a slowing of domestic production, and ended down just 59 cents at $56.07 a barrel, thus managing to end the week a half-percent higher than where it began...

natural gas prices also managed to end a bit higher for the week, but with even less volatility than oil, as the ongoing cold outbreak was already a given and traders were limited to reacting to nuanced changes in the forecasts...hence, after falling two tenths of a cent on Monday, rising 2.7 cents on Tuesday, falling 4.3 cents Wednesday, rising 2.5 cents on Thursday, and a tenth of a penny on Friday, natural gas for April delivery ended the week at $2.865 per mmBTU, an increase of just six-tenths of a cent for the entire week...

the natural gas storage report for the week ending March 1st from the EIA indicated that the quantity of natural gas held in storage in the US fell by 149 billion cubic feet to 1,390 billion cubic feet over the week, which meant our gas supplies ended the period 243 billion cubic feet, or 14.9% below the 1,633 billion cubic feet that were in storage on March 2nd of last year, and 464 billion cubic feet, or 25.0% below the five-year average of 1,854 billion cubic feet of natural gas that have typically remained in storage at the beginning of March....this week's 149 billion cubic feet withdrawal from US natural gas supplies was in line with the consensus forecasts, but it was 40 billion cubic feet more than the average of 109 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years.... 

natural gas storage facilities in the Eastern US saw a 43 billion cubic feet draw from their supplies over the week, well more than their average 31 billion cubic foot withdrawal during the same week over the past five years, and thus the region's gas supply deficit rose to 16.4% below average for this time of year, up from the 12.2% shortfall shown last week....meanwhile, natural gas supplies in the Midwest fell by 47 billion cubic feet, also higher than their normal 38 billion cubic feet regional pull for the date, as their supply deficit increased to 21.4% below the average for the beginning of March, up from 17.7% below normal last week...at the same time, the South Central region saw a 41 billion cubic feet drop in their natural gas supplies, well above their normal 27 billion cubic foot withdrawal, as their natural gas storage deficit increased from 20.8% to 23.5% below their five-year average for this time of year...on the other hand, only 6 billion cubic feet were pulled out of natural gas supplies in the mostly sparsely populated Mountain region, the same as the 6 billion cubic feet withdrawal during this same week over the last 5 years, but their gas supply deficit from normal still rose to 39.2%, up from 37.3% a week ago...finally, 10 billion cubic feet of natural gas were withdrawn from storage in the Pacific region, compared to the 9 billion cubic feet normally withdrawn from storage in those western states during the same week of winter, and as a result their natural gas supply deficit rose to 45.1% below normal for this time of year, up from 42.7% a week ago.... 

while the weekly report we've just reviewed obviously showed a greater than normal withdrawal of natural gas nationwide due to the colder than normal temperatures, the current week that will report next week is shaping up to be ​near ​a record for this time of year, which we can see from the graphic below:

March 9 2019 regional temperatures from Feb 22 to Mar 7

the above graphic, from the EIA's interactive natural gas storage dashboard, shows the daily average regional temperatures for each of the 5 regions covered by the storage report over the period from February 22nd through March 7th...in addition, it also color-codes each of those average daily temperatures to indicate how much above​ normal (tan)​ or below normal​ (blue)​ they are, as indicated by the legend at the bottom of the graphic...thus you can see for the week ending March 1st which we have just reviewed, average temperatures in the East ran between 38 and 49 degrees Fahrenheit, and most of those​ average​ temperatures were above normal, as indicated by the tan shading...we also see that each of the other regions other than the Pacific had two days of temperatures above during the period; February 23rd and 24th in the Midwest, February 23rd and 27th in the South, and February 28th and March 1st in the Mountain states...​so while it was colder than average nationally, there were a number of days that mitigated that cold​

however, when we look at the temperatures that have influenced natural gas withdrawals for the coming week's report, we can see that they have been much colder across the board, with the exception of the Pacific, which was still colder than normal each day nonetheless...included in that period were two days - March 4 and March 5 - in both the Midwest and South Central wherein ​average ​temperatures were more than 20 degrees below normal for those dates...in additon, temperatures in the East shift from above normal in the week to March 1st to below normal for the week following...so there's a good chance the next report will show one of the largest natural gas withdrawals on record for this late in the winter, if not the largest....

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 March 1st, indicated a big rebound in our crude oil imports from last week's 23 year low​, accompanied by​ a moderate​ly large​ drop in our oil exports, and hence there was a large​ ​surplus ​of ​oil ​left ​to ​add to ​our commercial supplies of crude....our imports of crude oil rose by an average of 1,084,000 barrels per day to an average of 7,001,000 barrels per day, after falling by an average of 1,605,000 barrels per day to a 23 year low the prior week, while our exports of crude oil fell by an average of 556,000 barrels per day to 2,803,000  barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,198,000 barrels of per day during the week ending March 1st, 1,640,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be unchanged at 12,100,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,298,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 15,990,000 barrels of crude per day during the week ending March 1st, 100,000 more barrels per day than the amount of oil they used during the prior week, while over the same period 1,008,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US.....therefore, 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 700,000 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 (+700,000) 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"....an "unaccounted for oil" figure of that magnitude means that one or more of this week's oil stats is in error by a statistically significant amount (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 6,663,000 barrels per day last week, now 11.7% less than the 7,549,000 barrel per day average that we were importing over the same four-week period last year.... the 1,008,000 barrel per day increase in our total crude inventories included an addition of 1,011,000 barrels per day to our commercially available stocks of crude oil, which was slightly offset by an initial 3,000 barrels per day withdraw​al​ from the oil stored in our Strategic Petroleum Reserve, probably front-running the administration's plan to sell 6 million barrels from the Strategic Petroleum Reserve between April and May to raise funds to modernize the facilities...this week's crude oil production was reported to be unchanged at a record 12,100,000 barrels per day because the rounded estimate for output from wells in the lower 48 states rose was unchanged at 11,600,000 barrels per day, while the 5,000 barrel per day decrease in Alaska's oil production to 486,000 barrels per day was not enough to make a difference in the rounded national total...last year's US crude oil production for the week ending February 23rd was at 10,369,000 barrels per day, so this reporting week's rounded oil production figure was 16.7% above that of a year ago, and 43.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 87.5% of their capacity in using 15,990,000 barrels of crude per day during the week ending March 1st, up from 87.1% of capacity the prior week, but still lower than before heavy Venezuelan imports were cut off....the 15,990,000 barrels per day of oil that were refined this week was still the highest on record for the first of March, but essentially little changed from the 15,935,000 barrels of crude per day that were being processed during the week ending March 2nd, 2018, when US refineries were operating at 88.0% of capacity... 

with the increase in the amount of oil being refined, the gasoline output from our refineries was also higher, rising by 299,000 barrels per day to 9,852,000 barrels per day during the week ending March 1st, after our refineries' gasoline output had increased by 64,000 barrels per day the prior week....but even with that big increase in this week's gasoline output, our gasoline production was fractionally lower than the 9,923,000 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 103,000 barrels per day to 4,919,000 barrels per day, after that output had increased by 57,000 barrels per day the prior week....after that increase, this week's distillates production was more than 7.0% above the 4,596,000 barrels of distillates per day that were being produced during the week ending March 2nd, 2018.... 

despite the increase in our gasoline production, the supply of gasoline ​left ​in storage at the end of the week fell by 4,227,000 barrels to 250,714,000 barrels ​over the week to March 1st, after falling by 1,906,000 barrels over the prior week....our gasoline supplies fell again this week in part because the amount of gasoline supplied to US markets increased by 81,000 barrels per day to 9,062,000 barrels per day, after increasing by 181,000 barrels per day the prior week, and ​because our exports of gasoline rose by 96,000 barrels per day to 911,000 barrels per day, even as our imports of gasoline rose by 82,000 barrels per day to 555,000 barrels per day...after having set a record high six weeks ago, our gasoline inventories are now fractionally below last March 2nd's level of 251,029,000 barrels, while they remain roughly 3% above the five year average of our gasoline supplies at this time of the year...

even with the increase in our distillates production, our supplies of distillate fuels fell for the 17th time in twenty-four weeks, decreasing by 2,393,000 barrels to 135,986,000 barrels during the week ending March 1st, after our distillates supplies had decreased by 303,000 barrels over the prior week...our distillates supplies decreased by more this week than last because because our exports of distillates rose by 248,000 barrels per day to 1,362,000 barrels per day, while our imports of distillates fell by 85,000 barrels per day to 246,000 barrels per day, and because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 69,000 barrels per day to 4,145,000 barrels per day...with this week's inventory decrease, our distillate supplies ended the week more than 1.0% below the 137,426,000 barrels that we had stored on March 2nd, 2018, and fell to roughly 3% below the five year average of distillates stocks for this time of the year...

finally, with the big jump in our oil imports and the moderate​ly large​ drop in our ​oil ​exports, our commercial supplies of crude oil in storage increased for the sixth time in 7 weeks, rising by 7,069,000 barrels over the week, from 445,865,000 barrels on February 22nd to 452,934,000 barrels on March 1st...with weekly increases in 17 out of the last 24 weeks, our crude oil inventories are now roughly 4% above the recent five-year average of crude oil supplies for this time of year, and more than 35% above the prior 5 year (2009 - 2013) average of crude oil stocks for the first of March, 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 generally falling until then through most of the prior year and a half, our oil supplies as of March 1st were 6.3% above the 425,906,000 barrels of oil we had stored on March 2nd of 2018, while remaining 14.3% below the 528,393,000 barrels of oil that we had in storage on March 3rd of 2017, and 7.7% below the 490,843,000 barrels of oil we had in storage on March 4th of 2016...     

This Week's Rig Count

US drilling activity slowed for the third week in a row and ​active rigs are now down 6% so far this year, as lower prices for both oil and natural gas ​and a large backlog of uncompleted wells ​continue to impact drilling decisions....Baker Hughes reported that the total count of rotary rigs running in the US fell by 11 rigs to 1027 rigs over the week ending March 8th, which was still 43 more rigs than the 984 rigs that were in use as of the March 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 fell by 9 rigs to 834 rigs this week, which was still 38 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 2 rigs to 193 natural gas rigs, which was just 5 more than the 188 natural gas rigs that were drilling a year ago, but way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

drilling activity offshore in the Gulf of Mexico was unchanged at 22 rigs this week, which is up by 9 from the 13 rigs active in the Gulf a year ago, which was at a multiyear low at that time...the count of active horizontal drilling rigs decreased by 7 rigs to 904 horizontal rigs this week, which was still 56 more horizontal rigs active than the 848 horizontal rigs that were in use in the US on March 9th of last year, but was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014.....at the same time, the vertical rig count decreased by 4 rigs to 56 vertical rigs this week, which was also down by 5 rigs from the 61 vertical rigs that were in use during the same week of last year....on the other hand, the directional rig count was unchanged at 67 directional rigs this week, which was still down from the 75 directional rigs that were operating on March 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 March 8th, the second column shows the change in the number of working rigs between last week's count (March 1st) and this week's (March 8th) count, the third column shows last week's March 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 9th of March, 2018...   

March 8 2019 rig count summary

as you can see, the 5 rig drop in Ohio's Utica shale accounted for almost half of this week's rig decrease, and it leaves Ohio down by 9 rigs from a year ago, the largest year over year decrease in drilling in any producing state, and one of only four states where drilling has decreased from a year ago...despite that Ohio drop, however, natural gas rigs were only down by ​two, ​because 3 rigs were added to those drilling in Pennsylvania's Marcellus, which is now up by 5 rigs from last year...in addition, while the Haynesville shows no net change in its rig count, one natural gas rig was added in the Haynesville in northern Louisiana, while one Haynesville natural gas rig was shut down in northeast Texas at the same time...​among oil rigs, ​the one rig drop shown for the Permian basin also masks a bit of underlying activity...Permian basin changes in Texas include the addition of 3 rigs in Texas Oil District 8, which corresponds to the core Permian Delaware, while single rigs were being pulled out of Texas Oil District 8A, which would correspond to the northern Permian Midland, and Texas Oil District 7C, or the southern Permian Midland...since Texas thus saw net addition of one Permian rig, the two rigs that were pulled out in New Mexico ​must have ​also been working the Permian Delaware...also not​e​ that other than the numbers shown above for the major producing states, Indiana also had a rig pulled out this week, but still has one remaining, up from a year ago. when there was no activity in the state....

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State bailout of FirstEnergy Solutions would raise electric prices, stymie future gas plants -- New talk of a statewide customer-paid subsidy for FirstEnergy’s old nuclear reactors, now owned by bankrupt FirstEnergy Solutions, could kill the development of new gas turbine plants burning Ohio shale gas, says a prominent power plant developer. William Siderewicz, whose companies built gas turbine power plants in Lordstown and Oregon, near Toledo, says he has all of the permits and a portion of the funding needed to build two more turbine plants next door to the plants he completed last year. But potential investors are concerned about a bailout, said Siderewicz in an interview this week. And talk among lobbyists that an FES package might also include subsidies to save Ohio’s remaining coal-fired power plants and maybe something for renewable power has only added to the concerns of gas plant investors. “Investors keep seeing this stuff about FirstEnergy wanting to turn the free market system upside down,” he said. “We are right now trying to raise $1.85 billion for the two projects.” So, are the new plants a “go” or not? “I wish I had the answer. We have the permits. But it’s really the financial community that makes that decision for us,” he explained. “If they look at the landscape in Ohio ... and see that Ohio is changing the rules ... they are going to think twice about writing the checks.”

Report: Cabot pulls the plug on drilling exploratory wells in Richland and Ashland counties - - Cabot Oil and Gas is pulling the plug on drilling exploratory wells in Ashland and Richland counties, according to a recent company conference call and media reports. On Feb. 22, Cabot President and CEO Dan Dinges said during a fourth-quarter earnings call that the company incurred dry-hole costs resulting from unsuccessful drilling results in a second exploratory area. "As a result, we do not expect to allocate any incremental capital to exploration at this time," he said. Cabot spokesman George Stark did not return multiple requests for comment.Stark confirmed to the Ashland Times-Gazette on Monday that drilling operations in Ashland and Richland counties would cease. The announcement was first reported by Natural Gas Intelligence."After further evaluation of our remaining exploration prospect, we have determined that this area is unlikely to yield results that generate long-term value creation for our shareholders," said Dinges, according to Jamison Cocklin of Natural Gas Intelligence.  Cabot first came to north-central Ohio in 2017 and sent letters to about 4,000 landowners atop Columbia Gas storage facilities in Richland, Ashland and Knox counties, as previously reported by the News Journal.

Pence to headline oil-and-gas industry event in Ohio (AP) — Vice President Mike Pence is headed to Ohio to headline a fundraiser for the oil-and-gas industry. The Republican vice president is to appear Friday at the annual meeting of the Ohio Oil and Gas Association, a trade association for companies that explore, produce and develop crude oil and natural gas resources within the state. The event is being held at a hotel in north Columbus. The appearance comes as President Donald Trump’s administration works to promote rollbacks of environmental and safety rules for the energy sector, which government projections show would deliver billions of dollars in savings to regulated companies. An AP analysis found relaxing those regulations also would increase premature deaths and illnesses from air pollution and increase climate-warming emissions, among other impacts. 

Pence promotes oil and gas interests during Ohio visit - Akron Beacon Journal — Fossil fuels are the key to Ohio and the nation's economic future, Vice President Mike Pence said during a visit Friday to Columbus. And he added that the nation must address the "crisis" at the Mexican border if it truly wants to secure that future. The former Indiana governor spoke to the convention of the Ohio Oil and Gas Association at the Hilton Columbus at Easton. He delivered a polished, half-hour speech that mostly drew polite applause, but at the end brought the crowd to its feet by saying, "America will never be a socialist country." That got an even more enthusiastic response than when Pence told the crowd that the country needs four more years of President Donald Trump. But the top of the speech was dedicated to the subject of the day: energy. "Energy is a source of prosperity for American communities and American families," Pence declared. He noted that the average oil and gas worker in Ohio and Pennsylvania makes $88,000 a year, production is growing and the United States is poised next year to become a net energy exporter for the first time in 70 years. Pence tore through a litany of measures taken by the administration that he said protect the nation's economic future. "We approved the Keystone and Dakota pipelines, withdrew the United States from the job-killing Paris Climate Accord, eliminated the hydraulic fracking rule, rolled back methane [regulations], we're ending the Clean Power Plan, scrapped the stream protection rule and now under President Donald Trump, the war on coal is over," he said.

Road brine de-icer raises concerns - Record-Courier - A Mogadore business that manufactures brine used as a de-icer on Ohio roads is under fire by environmentalists, who say the substance is radioactive. But the president of the company said his product is less radioactive than many other things, including many foods and the rock salt that road crews put on local streets. Members of the Portage Community Rights Group brought their concerns to the Portage County commissioners recently, asking them to support regulations of AquaSalina, a product manufactured in two Northeast Ohio locations, including a facility in Mogadore. A student group brought similar concerns to Kent City Council, whose Committee of the Whole is expected to discuss the issue on Wednesday. The environmental groups point to a 2017 report from the Ohio Department of Natural Resources that found high levels of radioactivity in the product. Scientists from ODNR tested samples of AquaSalina from locations in Summit County, as well as Tuscarawas, Cuyahoga and Guernsey counties. David Mansbery, president of Natures Own Source, which manufactures AquaSalina, said the ODNR study is flawed, and he’s spent $100,000 trying to get the state agency to correct its report. He describes his product as "natural ancient seawater" that melts ice better in extreme, sub-zero temperatures. Mansbery, who also owns Duck Creek Energy, an oil and gas drilling company in Brecksville, said the water comes from the drilling process. However, he said it is not "frack water," the fluid used in the hydraulic fracturing of underground rock in the controversial drilling process known as "fracking." Instead, it is the underground seawater that comes up with the oil and gas when drilling takes place. The water, he said, is filtered, and "plant-based" additives are combined with it to make it a more effective de-icer. "We don’t claim that we make it," he said. "We just make it better."

MGX Minerals and Eureka Resources Announce Joint Venture to Recover Lithium from Produced Water - MGX Minerals Inc. and Eureka Resources have signed a Letter of Intent to form an exclusive joint venture to recover lithium from water produced at non-conventional oil and gas sites across the Marcellus and Utica shale formations in the eastern United States.  Deep natural gas reserves located in the Marcellus and Utica shale account for approximately 40% of all natural gas produced in the United States. The oil and gas operations in this region also generate large volumes of produced water.  Eureka uses advanced treatment technology to convert 10,000 barrels per day of this produced water into valuable co-products, including fresh water, high-purity sodium chloride and calcium chloride. Through this joint venture, Eureka will begin extracting lithium as well.  MGX has developed a rapid lithium extraction technology that eliminates or greatly reduces the physical footprint and investment needed for large, multi-phase, lake-sized, lined evaporation ponds. Its technology also enhances the quality of lithium extraction and recovery across a complex range of brines as compared with traditional solar evaporation. This technology can be used on oil and gas produced water, natural brine, lithium-rich mine brine and industrial plant wastewater.

"Extraction of lithium from oil and gas well sources is a broad paradigm shift" - MGX Minerals and Eureka Resources are planning a joint venture to extract lithium from water produced at non-conventional oil and gas sites in eastern US.The pair signed a letter of intent to form an exclusive JV, planning to use MGX's "rapid lithium extraction technology" at Eureka's treatment plants to recover the battery material ingredient.Eureka said it converted 10,000 barrels a day of "produced water", from oil and gas operators in the Marcellus and Utica shale formations, into valuable co-products including fresh water and high-purity sodium chloride."Through this joint venture, Eureka will begin extracting lithium as well," the companies said.MGX president and CEO Jared Lazerson said the JV would not only look to install an initial rapid recovery system immediately but viewed it as "the first step in executing the strategic vision of petrolithium".  "The extraction of lithium from oil and gas well sources is a broad paradigm shift for the energy sector," he said."There may be a lot of lithium in the eastern U.S. Our clean technology unlocks this potential." Eureka president and CEO Dan Ertel said through the JV, the company could help meet the growing need for lithium while simultaneously making a positive environmental impact.

Alaska, Ohio lead rig count plunge -- Reduced drilling activity in Ohio, Alaska, North Dakota and other regions triggered a plunge last week in the number of rigs seeking oil and gas. The rig count dipped by 11 drilling rigs last week led by losses of five in Ohio, four in Alaska, and three in North Dakota, according to weekly figures compiled by the services firm Baker Hughes, a GE company. The overall rig count is down to 1,027 active rigs, including 834 rigs primarily drilling for crude oil. Texas dipped by one active rig, but is still home to 502 active rigs, nearly half of the nation's total. West Texas' booming Permian Basin, which extends into New Mexico, accounts for 465 rigs all by itself. The Permian makes up 56 percent of all the oil-drilling rigs in the country. Because of pipeline shortages in West Texas, many companies are continuing to drill Permian wells while leaving more of them uncompleted until new pipelines come online. The total count is up from an all-time low of 404 rigs in May 2016. With this week's dip, the oil rig count is down 48 percent from its peak of 1,609 in October 2014, before oil prices began plummeting. However, rigs today are able to drill more wells than before and to deeper depths to produce more oil and gas. That's largely why the U.S. is producing record volumes of crude oil and natural gas.

Utica Shale oil, natgas production expected to grow in '18 - Oil production in 2019 is expected to increase by 20% from 2018, reaching 23.4 million barrels (Mmbbl), and reversing a declining trend from 2015 to 2017, he said. Ohio’s all-time oil production record was set in 1897, at 23.9 million barrels, and Ohio is likely to smash that record very soon, Shumway said. Natural gas production is projected to increase 34% from 2017 to 2018, he said, from 1.8 trillion cubic feet (Tcf), to 2.4 Tcf in 2018. Those 2018 totals are based on production totals for three quarters and estimates for Q4 2018. In 2018, Ohio’s Belmont County had the most well completions with 98. Monroe County had 95 and Jefferson County had 42. Ohio had 408 well completions in 2018, a drop of 9% from 2017. Of that total, 336 wells were producing in 2018. In addition, a total of 493 permits were issued by the state, a drop of 47% from 2017. Of those completions, 70 were by Ascent Resources, 45 were by Gulfport, 39 by Antero Resources, 36 by Rice and 35 by Chesapeake. Antero’s wells drilled increased by 77% in 2018, while most other companies showed declines, he said. To date, Chesapeake has drilled the most Utica wells in Ohio with 688, followed by Ascent with 378, and Gulfport with 304. The most linear feet were drilled in Belmont County: 1.85 million feet. It was followed by Monroe and Jefferson counties. In 2018, energy companies drilled 6.5 million feet on 371 wells. That compares to 6.03 million feet drilled on 378 wells in 2017. The top year for linear feet drilled in Ohio was 2016 with 7.95 million feet.  Ohio has 328 wells with laterals that exceed 10,000 feet, with the greatest number in Belmont, Monroe and Jefferson counties, he said. Pennsylvania has 346 laterals that exceed 10,000 feet, with the greatest number in Washington, Greene and Susquehanna counties.

Pennsylvania natgas production sets blistering pace - Natural gas production in Pennsylvania for 2018’s final quarter and the full year featured double-digit percentage growth and, for the years 2011-2018, growth in production, production per well, and number of producing wells.The data, from the state Department of Environmental Protection (Dep), was presented Tuesday by the Pennsylvania Independent Fiscal Office.  During the final three months of last year, natural gas production from horizontal wells jumped 17.8% year-over-year, to 1.65 trillion cubic feet (Tcf), from 1.40 Tcf in the year-ago quarter. The wells were tapping primarily the Marcellus and Utica Shale plays.Combined with the small production volume via vertical wells, total fourth quarter production increased 17.7%, to 1.65 Tcf, from 1.40 Tcf. (All numbers are rounded.)  For all of 2018, total gas production from horizontal wells jumped 14.2%, to 6.12 Tcf, from 5.35 Tcf in 2017. Production from 2011 to 2018, leaped a whopping 483%, to 6.12 Tcf, from 1.05 Tcf.For the last nine quarters dating back to 2016’s fourth quarter, horizontal well production jumped 29.1%, to 1.65 Tcf, from 1.28 Tcf. There has been a quarter-over-quarter increase in horizontal well production in eight consecutive quarters.Also growing each quarter since the final three months of 2016 was average horizontal well production, the Ifo reported. From the final quarter of 2016, through the same three months of 2018, average production per horizontal well skyrocketed 57.0%, to 481 million cubic feet (Mmcf), from 307 Mmcf.The increase in average production per horizontal well from the third quarter of last year to the end of 2018, rose 49 Mmcf, or 11.3%, from 432 Mmcf, to 481 Mmcf.    Ifo reported each point in the average production per well data represents horizonal wells spud at least three quarters before the reporting period, and no earlier than 12 quarters before that date, and produced above 90,000 cubic feet per day. Looking at full-year data, in addition to strong production volume growth, average production per well likewise rose. From 2011 to 2018, volume increased at an average rate of 28.6% per year. From 2011 to 2018, volume rose to 1.67 Bcf, from 672 Mmcf. The number of producing wells also continued to rise, from 1,768 wells in 2011, to 8,736 producing wells in the fourth quarter of 2018, up 25.6% annually during the period.

Fracking linked to increased hospitalizations for skin, genital and urinary issues in Pennsylvania -  Rashes, urinary tract infections, and kidney stones requiring hospital stays are more common in areas with more drilling, according to a new study The study, which will be published in the March issue of the journal Public Health, looked at hospital records in Pennsylvania's 67 counties from 2003-2014. Researchers found that the more fracking wells were in a county, the more hospitalizations the county saw for genital and urinary problems like urinary tract infections, kidney infections, and kidney stones.  "It's important point to keep in mind that hospitalizations are for acute illness or serious exacerbations of chronic illness," "So if we see strong associations with hospitalizations, it's likely that additional cases of mild symptoms for the same illnesses have been addressed at home or in an outpatient setting, or not addressed at all." The researchers observed a similar link between fracking wells and hospitalizations for skin issues like rashes caused by cellulitis and abscesses. But while the link between fracking and genital and urinary issues was clear, the many illnesses that could fall under the category of skin-related issues in hospital diagnosis codes (everything from acne and eczema to diaper rash and ulcers) make the study's findings about skin-related issues less definitive. However, "we do know from formal complaints to the Pennsylvania Department of Health related to fracking activities that these symptoms exist," Denham, said, noting that about 200 individuals filed formal complaints documenting health impacts they thought could be related to fracking from 2011 to 2014, and 40 percent of those included skin problems. The researchers compared yearly hospitalization rates for each county with the number of new fracking wells drilled, the total number of wells, and the density of wells by land area for each county by year. After correcting for demographic factors like race and income, Denham and her colleagues found that as the number of new wells and the well density in a county increased over time, there was a corresponding increase in hospitalization rates for kidney infections, kidney stones, and urinary tract infections, particularly in women ages 20-64. "[Genital and urinary] diseases are "not something that comes to mind first when we think of the potential impacts of fracking," Denham said. "We were thinking we'd see respiratory or cardiovascular issues, so our findings were surprising."

Natural gas fracking boom fuels Appalachia plastics hub— Along the banks of the Ohio River here, thousands of workers are assembling the region's first ethane cracker plant. It's a conspicuous symbol of a petrochemical and plastics future looming across the Appalachian region.More than 70 construction cranes tower over hundreds of acres where zinc was smelted for nearly a century. In a year or two, Shell Polymers, part of the global energy company Royal Dutch Shell, plans to turn what's called "wet gas" into plastic pellets that can be used to make a myriad of products, from bottles to car parts.Two Asian companies could also announce any day that they plan to invest as much as $6 billion in a similar plant in Ohio. There's a third plastics plant proposed for West Virginia.With little notice nationally, a new petrochemical and plastics manufacturing hub may be taking shape along 300 miles of the upper reaches of the Ohio River, from outside Pittsburgh southwest to Ohio, West Virginia and Kentucky. It would be fueled by a natural gas boom brought on by more than a decade of hydraulic fracturing, or fracking, a drilling process that has already dramatically altered the nation's energy landscape—and helped cripple coal. But there's a climate price to be paid. Planet-warming greenhouse gas emissions from the Shell plant alone would more or less wipe out all the reductions in carbon dioxide that Pittsburgh, just 25 miles away, is planning to achieve by 2030. Drilling for natural gas leaks methane, a potent climate pollutant; and oil consumption for petrochemicals and plastics may account for half the global growth in petroleum demand between now and 2050. Despite the climate and environmental risks, state and business leaders and the Trump administration are promoting plastics and petrochemical development as the next big thing, more than three decades after the region's steel industry collapsed and as Appalachian coal mining slumps.

A plastics hub in coal and steel country - --Considering the potential decades-long economic impact that an ethane cracker plant under construction by Shell Polymers near Pittsburgh will have, it’s surprising to me that it has received so little national media coverage. Shell’s $6-billion project that pulls natural gas from the sprawling Utica and Marcellus shale formations may soon be joined by others in Ohio and West Virginia. According to an IHS Markit report, this region is forecast to supply 37% of the nation’s natural gas production by 2040. (It should be noted that the report was commissioned by Shale Crescent USA, which promotes economic development within the tri-state region.) While much of the national media has been distracted by, shall we say, other matters, some journalists have been conducting due diligence. One article published recently in the Courier Journal out of Louisville, KY, part of the USA Today network, caught my attention. As a reader of PlasticsToday, you’ll immediately understand why just based on the headline: “Plastics may be the new coal in Appalachia. But at what cost to health and climate?”  “With little notice nationally, a new petrochemical and plastics manufacturing hub may be taking shape along 300 miles of the upper reaches of the Ohio River, from outside Pittsburgh southwest to Ohio, West Virginia and Kentucky,” writes James Bruggers of InsideClimate News. (The article was picked up by the Courier Journal.) “It would be fueled by a natural gas boom brought on by more than a decade of hydraulic fracturing, or fracking, a drilling process that has already dramatically altered the nation's energy landscape—and helped cripple coal.” My first question: Apart from the human toll in some parts of the country where coal mining provides jobs, why is crippling coal bad?  Should we mourn its passing? Bruggers, however, wonders if the climate price attached to the emergence of a plastics hub in the region is any better than what came before. “Planet-warming greenhouse gas emissions from the Shell plant alone would more or less wipe out all the reductions in carbon dioxide that Pittsburgh, just 25 miles away, is planning to achieve by 2030,” he writes. “Drilling for natural gas leaks methane, a potent climate pollutant; and oil consumption for petrochemicals and plastics may account for half the global growth in petroleum demand between now and 2050.”

New Warnings on Plastic’s Health Risks as Fracking Industry Promotes New 'Plastics Belt' Build-Out  - A new report traces the life cycle of plastic from the moment an oil and gas well is drilled to the time plastic trash breaks down in the environment, finding “distinct risks to human health” at every stage. Virtually all plastic — 99 percent of it, according to the Center for International Environmental Law (CIEL) report — comes from fossil fuels. And a growing slice comes from fracked oil and gas wells and the natural gas liquids (NGLs) they produce. The report concluded that plastics bring toxic or carcinogenic health risks to people at every stage. “Until we confront the impacts of the full plastic lifecycle, the current piecemeal approach to addressing the plastic pollution crisis will not succeed,” the report concludes. “At every stage of its life cycle, plastic poses distinct risks to human health, arising from both exposure to plastic particles themselves and associated chemicals.” People can be sickened not only when plastics are produced, in other words, but also while plastic is actively used by consumers and then again after it’s thrown out, where plastic trash often breaks down into smaller and smaller bits that can contaminate the food chain and make its way into people’s bodies. The scope of the risks requires an international response, the center said.  “No country can effectively protect its citizens from those impacts on its own, and no global instrument exists today to fully address the toxic life cycle of plastics.” In the U.S., however, a major push is underway — and attracting hundreds of billions in investment, both foreign and domestic — to move in the opposite direction and produce more plastics and other petrochemicals. The goal? To create new demand from industry for the raw materials produced by fracked shale wells.

Shale gas boom slows progress on renewables in PJM grid territory — In the contest between competing energy sources to produce electricity in the United States, select regions of the U.S. — especially in windy Texas and the Great Plains, and the sunny Pacific Coast — are tilting to renewable technologies.  But in cloudy and cold rural West Virginia counties and in the 12 neighboring mid-Atlantic and Great Lakes states served by PJM — the nation’s largest electrical transmission grid operator — the confrontation between renewable technology and fossil fuels, particularly natural gas, is a mismatch. And it’s anticipated to stay that way for at least the next two decades, maybe longer.  Of the more than 180,000 megawatts of installed generation capacity available from PJM’s members, less than 6 percent is produced by wind or solar technology. Nationally about 15 percent of generating capacity comes from these two renewable resources.  Coal-fired power, counted on a decade ago to generate over 40 percent of the power in the PJM service area, has fallen to less than a third. Natural gas, meanwhile, which was 25 percent of generating capacity a decade ago, is nearing 40 percent. Nuclear power accounts for 19 percent. PJM executives anticipate that a decade from today solar and wind capacity will still not exceed 10 percent of generating capacity. A sizable portion of that, PJM executives say, will come from distributed rooftop solar stations.Had it not been for passage of state renewable generating requirements in Delaware, Illinois, New Jersey, Ohio, Pennsylvania, Maryland and Michigan — states served all or in part by PJM — the level of wind and solar generation in the PJM service area would be even lower, executives say. According to market analysts, the reason is as straightforward and visible as the thousands of natural gas wells installed in forests and fields of the triangle of rural counties in West Virginia, Ohio and Pennsylvania drained by the Ohio River. Most of those wells reach more than a mile into the earth to tap the gas-saturated shales of the Marcellus and Utica geologic formations. With astonishing speed since the first wells were drilled and began producing in 2005, gas developers turned a region once piled with the rusting bones of obsolete industrial factories into one of the largest natural gas production fields in the world. The upper Ohio River region has become the site of billions of dollars of ongoing and planned construction for gas-fired electric stations, gas processing plants, big gas pipelines, and the development of a gas-liquids plastics and methanol manufacturing corridor downstream from Pittsburgh.

Southwestern Energy to focus on Appalachian gas, liquids, after exiting Fayetteville shale - — With the sale of its Fayetteville shale assets late last year, Southwestern Energy plans to sharpen its focus on the Appalachian Basin, balancing its drilling efforts between its extensive dry-gas and liquid-rich acreage, company officials said Friday. In its release of its fourth-quarter and full-year 2018 results, the producer reported that in 2018 it grew its total Appalachia production by 21% to 702 Bcf-equivalent (1.92 Bcfe/d) year on year, while its liquids production grew 40% to 63,100 b/d. The company reported total production, adjusted for the Fayetteville asset sale in December, of 946 Bcfe (2.59 Bcfe/d) for the year.  Company officials said that last year Southwestern improved its well performance and operational efficiencies through the use of techniques such as the drilling of extended-length laterals. "We drilled three laterals over 15,000-foot each, one being the company record of almost 16,200 feet, and all three of these wells were on time and on budget,"  Going forward, he said the producer would continue to test ultra-long laterals in 2019, pointing to an 18,000-foot lateral Southwestern drilled last month in West Virginia. The operator expects to see average lateral lengths rise from about 7,500 feet in 2018 to more than 10,000-foot on wells brought online in 2019, he said. Carrell said, during 2018, the company also brought online two water-handling projects that are expected to help lower development costs in the Appalachian Basin. "In Pennsylvania in the Tioga area, we will reduce well cost by at least $400,000 [per] well and, in West Virginia, we now expect well cost reductions from $500,000 per well to as much as $700,000 per well," he said. While focusing on exploration-and-production activities over the past several years, Southwestern also has leveraged its upstream assets to become an Appalachian gas and liquids marketing powerhouse, Way said. "More than 30% of our gas sales are tied to the premium Gulf Coast price markets this year, and 20% of our gas sales are tied to the Northeast city-gate markets, where we have the opportunity to capture elevated pricing from winter-driven demand," he said. Looking forward, Southwestern added new long-haul pipeline takeaway capacity, which is timed to come online in 2021,

Brand New Oil, Gas, and NGL production map for OH, WV, and PA (interactive) Click Layers icon on the top-left to see layers appear and you can toggle on/off gas, NGLs (PA and WV only), and oil. This is a complete inventory of monthly and/or quarterly natural gas, NGL, and oil production from 2002 to 2018 in Ohio, West Virginia, and Pennsylvania.  This map includes production data for:
1, 15,682 producing wells in Pennsylvania
2. 3,689 producing wells in West Virginia
3. 2,064 producing wells in Ohio

Chester County investigation of pipeline builder Energy Transfer now includes grand jury -  Energy Transfer, parent company of Sunoco Logistics and builder of the Mariner East natural gas liquids pipelines, is the target of a Chester County grand jury investigation.Chester County District Attorney Tom Hogan would not confirm or deny the grand jury investigation, which was reported by the Delaware County Daily Times newspaper editor Phil Heron, who had been called as a potential juror last week.Hogan announced a criminal investigation into the company’s practices building the Mariner East pipelines in December. In January, Hogan hired a former federal prosecutor to assist with the investigation.At the time, Hogan said Seth Weber’s appointment “certainly sends a message that we are taking it very seriously, and that somebody who has experience in this field is taking it very seriously.”Hogan is a former federal prosecutor himself, and has worked defending oil and gas industry clients in private practice. Grand juries are typically convened in secret in order to protect the target of an investigation in which no criminal charges have yet been filed. Prosecutors have control of a grand jury, which reviews evidence, and can vote to issue subpoenas or recommend charges be filed. “It doesn’t mean any charges are going to result from this but it’s a very serious commitment of the D.A.’s time,” Urbanowicz said. “So I don’t think it’s a decision that’s made lightly.” Construction of the Mariner East 2 pipeline has resulted in more than 80 environmental violations. Pennsylvania Department of Environmental Protection assessed more than $12.6 million in penalties against the company for drilling mud spills that damaged waterways and sensitive wetlands. In Chester County, construction of the line resulted in the loss of private drinking water wells and  sinkholes that exposed the parallel Mariner East 1 line. Regulators forced the company to shut down the Mariner East 1 line because of the most recent sinkhole. An exposed natural gas liquids line is at risk for explosion.

Pennsylvania fines Rice Midstream $1.5M for pipeline violations -- The Pennsylvania Department of Environmental Protection has fined Rice Midstream Holdings $1.5 million for pipeline violations in southwest Pennsylvania, Kallanish Energy reports.The violations occurred on the company’s Beta Trunk Pipeline in Aleppo and Richhill townships in Greene County. The violations stem from sediment discharges into waterways, unstable construction and the failure to maintain pollution controls, the state agency said.The Beta Trunk Pipeline is a 7.5-mile gathering line within a larger Beta pipeline system that moves natural gas from well pads to transmission facilities.Oct. 11, 2017, Rice reported and the DEP confirmed sediment-laden water topped numerous erosion and sediment control best management practices into Mudlick Fork and Harts Run.The erosion controls were not properly installed or maintained, DEP said. Subsequent inspections found similar violations on seven dates from January through March 2018.Rice voluntarily shut down construction of new sections of the pipeline, redirected resources to correct the problem, and had resolved the violations by April 30, 2018.In May 2018, the company reported three significant slope failures and there were erosion control failures in another area. Soil had also been improperly stockpiled in a wetland. Those violations were corrected by July 5, 2018. Last December. DEP approved a permit change to repair the slope failures. Portions of the Beta Trunk Pipeline remain in service. DEP is inspecting the portions that are under construction.

Operator of natural gas gathering pipeline in Greene County fined -- The operator of a natural gas gathering pipeline in Greene County has been fined $1.5 million for environmental violations related to erosion and sediment control.The state Department of Environmental Protection said Monday it had assessed the civil penalty against Rice Midstream Holdings LLC for violations that occurred on the Beta Trunk Pipeline in Aleppo and Richhill townships in 2017 and 2018.Although the pipeline is now owned by Equitrans Midstream Corp., the violations began prior to the acquisition of Rice in 2018.The Beta Trunk Pipeline is an approximately 7.5-mile gathering line within a larger Beta System that takes natural gas from several well pads to transmission facilities. Although portions of the line are in service pursuant to DEP permitting in 2017, portions remain under construction.Rice is required to use erosion and sediment control practices in its pipeline construction to prevent sediment pollution into water sources, the DEP said.On Oct. 11, 2017, Rice reported — and a same-day DEP inspection confirmed — sediment-laden water overwhelmed unnamed tributaries to Mudlick Fork and Harts Run. The DEP said best management practices were not properly maintained or not installed at all.Subsequent inspections revealed similar violations Jan. 21, 22, and 23, 2018; Feb. 12 and 15, 2018; and March 6 and 30, 2018, the DEP said. Rice voluntarily shut down construction of new sections of the pipeline, redirected resources to the remediation of unstable areas and resolved the violations as of April 30, 2018.However, on May 25, 2018, Rice reported three significant slope failures within and outside the Beta Trunk Pipeline’s permitted limit of earth disturbance — violations corrected as of July 5, 2018. In December, the DEP approved a permit modification to repair the slope failures.

Buffer zones debated for drilling near state's dams - Hundreds of shale gas wells are crowding close to and sometimes snaking under Pennsylvania’s many dams. That’s because there’s no risk-based setback requirements for shale gas development around dams in Pennsylvania, now the nation’s second biggest natural gas producing state, with more than 11,500 Marcellus and Utica shale gas wells drilled and fracked, another 10,000 permitted, and the potential for tens of thousands more in the future. That’s in contrast to buffer zones of 3,000 to 4,000 feet around scores of dams in other shale gas drilling states. Examples of shale gas wells near dams in southwest Pennsylvania are easy to find. CNX has drilled and fracked 17 Marcellus Shale gas wells within 2,100 feet of the Beaver Run Dam in Westmoreland County, where a few thousand feet farther from the dam, the company lost control of a Utica Shale well last month, causing pressure spikes and gas flaring at nine nearby shallow wells near the reservoir. Click on arrows to expand. Red lines denote dams, and stars denote gas wells within 4,000 feet of dams. In light of studies and analyses that suggest gas drilling could cause surface subsidence, some say that kind of encroachment is cause for concern or at least for a focused risk study to assess what could happen to dams when drilling and fracking occurs nearby.

FERC moves ahead on environmental reviews for Pennsylvania, Texas pipeline projects — The Federal Energy Regulatory Commission plans an environmental assessment for two pipeline expansions in Pennsylvania that combined would move natural gas from the Marcellus and Utica shales to markets in the Northeast and Mid-Atlantic. The decision to opt for an EA can mean a somewhat shorter review at FERC, in comparison to a full environmental impact statement.  The projects include Transcontinental Gas Pipe Line's Leidy South Project and National Fuel Gas Supply's FM100 project. Leidy South effectively expands the path of Transco's 1.7 Bcf/d Atlantic Sunrise project, moving gas from production areas in Pennsylvania along the Central Penn Line to an interconnection with Transco's mainline near the Pennsylvania-Maryland border and potentially easing prices at Atlantic Seaboard demand markets like Transco Zone 5 and Zone 6. The expansion (PF19-1) would add about 580 MMcf/d of firm capacity, which has been reserved by producers Cabot Oil & Gas and Seneca Resources. The shippers are also large stakeholders in Atlantic Sunrise.The project involves installation and replacement of several short pipeline segments, two new compressor stations, upgrades of two compressor stations and other facilities. Transco has targeted in-service in time for winter heating in December 2021. The related FM100 (PF17-10) project would add 330,000 Dt/d, fully subscribed to Transco under a proposed capacity lease to supply gas from Marcellus and Utica shale to the Leidy South project. FM100 entails 29.5 miles of 20-inch diameter pipeline, along with smaller segments and two new compressors.  In other actions advancing natural gas projects:

  • **Venture Global got FERC's go-ahead Wednesday to begin limited site preparation at its Calcasieu Pass LNG project, which recently won FERC certificate approval as well as a signoff from the Department of Energy for exports to countries that lack free trade agreements with the US.
  • **Transco won FERC's authorization to run compression associated with the Atlantic Sunrise pipeline above previously certificated levels (CP15-138).
  • **FERC issued a positive environmental assessment for Gulf South Pipeline's Willlis natural gas lateral project (CP18-525) in Texas, intended to provide nearly 200,000 Dt/d to Energy Texas' Montgomery County Power Station. The staff EA found that with mitigation measures, the project would not constitute a major action significantly affecting the environment.
  • **FERC said it plans an EA for the Lockridge Extension Pipeline project (CP19-52) proposed by Natural Gas Pipeline of America in Texas to provide 500 MMcf/d of firm service southbound to a new bidirectional Interconnect with Trans-Pecos Pipeline at Waha Hub.

PGW wins key city approval for Southwest Philly LNG venture -- Philadelphia Gas Works’ plan for a liquefied natural gas production facility won a key approval this week, moving the $60 million Passyunk Energy Center closer to groundbreaking. The proposal now needs only a final vote by City Council, which is expected by the end of March. Passyunk Energy Center will be built on PGW property, but entirely financed by Liberty Energy Trust, a Conshohocken company. Liberty will pay the city-owned utility annual fees and profits of at least $1.35 million. PGW and the gas commission have said the revenue would help reduce the need to raise customer rates. The LNG venture has stoked debate since it was first announced in September. Emily Schapira, the executive director of the Philadelphia Energy Authority, which promotes renewable energy projects for the city, says the LNG facility won’t increase carbon emissions. In fact, she says it would reduce carbon emissions, based on an environmental review commissioned by PGW. LNG is created by cooling methane to -260 degrees Fahrenheit. The process is energy intensive but useful because LNG is easier to store and transport than natural gas in other forms.

Energy company says LNG port coming to Delaware River --A New York energy company plans to build a liquified natural gas port on the Delaware River near the First State, according to a recent securities filing. It is the latest proposal for a long-controversial idea to allow cargo ships containing the condensed, liquid version of the combustible fuel to sail through Delaware Bay, past New Castle and Wilmington and under the Delaware Memorial Bridge. The company, New Fortress Energy, did not disclose the specific location for the proposed LNG port, but said it would be along the Delaware River and 195 miles from its natural gas liquifying facility northwest of Scranton, Pennsylvania. A number of ports near or in Delaware roughly match that description, including those in Wilmington and Chester and Philadelphia in Pennsylvania. But the evidence points to New Jersey. Three years ago, New Fortress Energy proposed a fuel terminal and port for a property it owns in Gloucester County, New Jersey – one that for decades had been home to a DuPont dynamite factory. At the time, environmentalists from the Sierra Club suspected that the company had plans to bring LNG ships into a port there, even though the company publicly backed away from any such idea in 2016 amid opposition from residents.

Duke Energy’s stalled Constitution Pipeline wins second hearing from regulators   A U.S. court has remanded the case of the stalled Constitution Pipeline, partly owned by Charlotte-based Duke Energy Corp., to federal regulators for reconsideration, making resurrection of the currently moribund project possible.The U.S. Court of Appeals for the Washington D.C. Circuit granted a request from the Federal Energy Regulatory Commission to remand the pipeline question for a new review. The case will be reconsidered in light of a Jan. 25 ruling by the D.C. court in an unaffiliated case that challenges FERC’s reasoning for upholding a New York state decision that stopped the 124-mile natural gas pipeline in its tracks.   Duke subsidiary Piedmont Natural Gas owns a 24% share of the pipeline. It is designed to transport natural gas from the Utica and Marcellus shale fields of New York, Pennsylvania and Ohio north to New England. The consortium that owns the proposed $900 million project is led by The Williams Cos. Inc., which will build and operate the pipeline on behalf of the partners. A year ago, Duke recognized a $42 million impairment of the value of its planned $216 million investment in the pipeline as the case remained mired in the courts. The most recent court action clears the way for FERC to hold new proceedings on whether to waive the New York action and resume Constitution’s permit process, says Piedmont spokeswoman Tammie McGee. At issue is a water quality permit the New York Department of Environmental Conservation denied for the project in April 2016. If the permit is denied, the project cannot be built.

Northern Access Pipeline won't bring energy security -- National Fuel’s Northern Access Pipeline cannot remotely be considered an essential infrastructure project for New York’s energy security. Rather, it is a destructive corporation’s desperate attempt to prepare and secure new markets for its polluting and socially harmful commodity. This is evidenced by National Fuel’s own statements that the primary purpose of the pipeline is to export fracked gas to Canada and by the fact that the company has felt the need to enlist a front group run by a Washington public relations firm to convince New Yorkers that it will be a benefit to more than just National Fuel’s high-paid executives and shareholders. More than 71 percent of the gas that would be shipped through Northern Access would go under the Niagara River to what the company calls “premium markets,” that is, where the methane from National Fuel’s fracking fields in Pennsylvania can fetch a higher price than if it were sold in the United States. These exports will boost National Fuel’s profits, which fuel exorbitant executive pay – CEO Ronald Tanski was paid more than $8 million in 2018, 98 times what the median National Fuel worker makes according to a filing with the SEC – and massive dividends to shareholders like downstate investor Mario Gabelli, who owns more than $384 million of National Fuel stock.

Pipeline opponents press bill to require more scrutiny - Proponents gathered Thursday to support legislation to make it more difficult for companies to build pipelines to transport “fracked” gas. The Maryland Senate and the House of Delegates are considering the measure. The bills are in part a response to efforts by Columbia Gas Transmission, a subsidiary of TransCanada, to build a pipeline under the Potomac River near Hancock. The Maryland Board of Public Works in January denied an easement and permission to install a natural gas pipeline under the Western Maryland Rail Trail, effectively blocking the project for now. The bills are sponsored in the House by Del. David Fraser-Hidalgo, D-Montgomery, and in the Senate by Sen. Bobby Zirkin, D-Baltimore City. The bills would require the state to conduct water-quality certification reviews, as it is authorized to do under section 401 of the Clean Water Act, for any proposed “fracked gas pipelines.” “This bill is designed to do one thing and pretty much one thing only,” Fraser-Hidalgo said, “and that is, that if a natural gas pipeline … is going to be put in inside the state of Maryland, through our waterways, that we need to do our own testing … our own research, and make sure that if this is going to happen, that this is indeed in the best interest of the citizens of the state of Maryland. “And specifically, if it’s going to happen, that we limit, as much as possible, any of the potential risks.

Residents Say Natural Gas Production Is Marring West Virginia. And the Legislature Isn’t Doing Anything About It. Though studies recommended additional protections years ago, lawmakers have not taken action to put them in place. But when residents sued, a Supreme Court justice said it was the Legislature’s job. West Virginia Delegate Terri Sypolt says she understands how natural gas drilling has changed the look and feel of communities in the state, bringing an influx of noisy truck traffic and construction. So when she returned to Charleston for this year’s legislative session, she introduced a bill for the third consecutive year to monitor the air and noise around drilling operations, hoping her colleagues would take action to help residents.The bill didn’t make it onto a committee agenda, let alone to the floor of the House of Delegates. As natural gas booms around the Marcellus Shale, nearby residents continue to bear the burden of the industry’s growth. Many live with constant light, truck traffic, dust and noise from gas production fueled by horizontal drilling and hydraulic fracturing, or fracking, as the Gazette-Mail and ProPublica chronicled last year. Business groups and the state coal association have argued in court filings that the inconveniences are unavoidable.  With days left in the legislative session, proponents of reform have essentially given up. The deadline has passed for bills to initially clear the House, and lawmakers and groups that have pushed for protection for residents have moved on to other issues. Delegate Barbara Fleischauer, a Democrat from Monongalia County, in the northern part of the state, sponsored legislation this year to increase the distance between drilling and homes. But even early in the session, she gave it little chance of passing and said she’s now focused on legislation that would protect women from discrimination and unequal pay. Her bill would increase the “limit of disturbance” of a drilling operation from 625 feet to 1,500 feet of a home, meaning people would be farther removed from the noise, dust and light. It also would require drilling companies to set up real-time monitoring and compensate landowners for any property value decrease. She’s introduced similar bills every year since 2015, but they’ve never made it out of the House of Delegates Energy Committee. “You’re the first person to ask me about it,” she told a reporter in January. Delegate Mike Pushkin, a Democrat from Kanawha County, sponsored legislation to protect surface owners from 2015 to 2017, but he didn’t bother this year. “I’m more kind of on bills that I feel like I can get support for and get passed,” he said.

A guide to every permitted natural gas well in west Virginia (ProPublica) Since the rise of hydraulic fracturing made it possible to get to the rich layer of natural gas in the Marcellus Shale, the number of horizontal well permits — which allow producers to drill for miles underground in all directions from a single point — has increased dramatically in West Virginia. The state issued only a dozen horizontal well permits in 2006. That jumped to over 5,000 last year, according to data from the state's Department of Environmental Protection.Accessing natural gas in West Virginia's mountainous terrain is much more complicated than in flat Texas or North Dakota. To build horizontal wells, gas producers must first clear the landscape for well pads, which are large, gravel clearings over acres of continuous open space. For the first time ever, ProPublica and the Gazette-Mail used software to show as many as 1,500 well pads, located on the forested hilltops and valleys of Wetzel, Doddridge, Marshall, Harrison and a handful of other counties along the state's Marcellus belt. Here's what they look like.

To Fight a Pipeline, Live in a Tree - For almost five months, Phillip Flagg has been living in a chestnut oak tree 50 feet above the ground. His home is a four-by-eight sheet of plywood, a little larger than a typical dining room table, that is lashed to the oak’s boughs. Since going aloft on October 12, he has not set foot on the ground. Below him there’s small group of about a dozen scrupulously anonymous young people who take care of Flagg’s basic human needs. They’re all here to halt the construction of a natural gas pipeline in rural Elliston, in the Virginia highlands near Roanoke. For many of them, organizing, staffing, and supporting long-term eco-protests like this is as a way of life.  Unlike his campmates, Flagg, a 24-year-­old native of Austin, Texas, doesn’t mind revealing his identity. Before Yellow Finch, as this particular tree-sitting exercise is called, he participated in two other “action camps.”  The Yellow Finch action camp, named after a nearby road, is trying to block the proposed Mountain Valley Pipeline (MVP), a 300-­plus­‐mile underground pipeline that would transport natural gas extracted by hydraulic fracturing, or “fracking,” from shale in the Appalachian regions of Pennsylvania, West Virginia, Ohio, and New York. The natural gas is heading to southern Virginia and ports further south, for export to energy markets in the U.S. and overseas. But legal challenges mounted by groups like the Sierra Club have delayed pipeline construction, and hundreds of local landowners along the pipeline’s route have already had tracts of land seized by eminent domain when they refused to sign easements that would allow Mountain Valley to proceed. Yellow Finch is the latest in a series of tree-sits, or “aerial blockades,” of MVP, with the first beginning in February 2018. It may also be the longest ongoing blockade for this project, so far. About eight others have occurred at different sites along the pipeline route, supported by organizations such as Appalachians Against Pipelines; all have been shut down through legal processes. But Yellow Finch endures, in defiance of Mountain Valley Pipeline, LLC, and the elements. In his months in the treetops, Flagg has so far endured single-digit temperatures, snowstorms, ice, rain, and even a hurricane. He’s protected only by tarps and a rain fly, leaving him just enough room to stand up under the peak. He worries about lightning strikes, but only “in a sort of vague way,” he says. “I’ve never heard of a tree-sit being struck by lightning.”

Dominion Energy Stakes Out Plans for ACP in Spite of the Legal Landscape -  Dominion Energy and its partners in the Atlantic Coast Pipeline are looking for new ways around the 4th U.S. Circuit Court of Appeals, including a trip to the U.S. Supreme Court. The Richmond-based energy company, the lead partner in the project, said Tuesday that it “expects an appeal” to the Supreme Court within 90 days to challenge a 4th Circuit decision. The court tossed out a critical federal permit for the 600-mile pipeline to cross beneath the Appalachian Trail in the Blue Ridge Mountains along the Augusta County and Nelson County line. Dominion declared its intention after a 4th Circuit decision on Monday to dismiss the company’s request for the full appeals court to reconsider a December decision by a three-judge panel. That panel vacated the permits the U.S. Forest Service issued for the project to cross the Appalachian Trail near Wintergreen Resort and portions of two national forests. The company — anticipating the possible rejection of its request for an “en banc” hearing by the Richmond-based 4th Circuit — estimated earlier this month that the Supreme Court appeal could add $250 million to the cost of the project by delaying completion of the final segment of the pipeline until the end of 2021. The cost already has risen by $3 billion — to as much as $7.5 billion — since then-Gov. Terry McAuliffe announced it with Dominion officials in September 2014. The company already has spent $2.8 billion on the stalled project, Dominion officials said in an earnings conference call with investment analysts on February 1st. The company is preparing to split the project into two phases to allow it to first build the pipeline from Buckingham County — where it plans to build a hotly disputed natural gas compressor station at the intersection with an existing pipeline — to Lumberton, N.C. Dominion also proposes to build a 70-mile spur to serve Hampton Roads, where natural gas supplies are limited for industrial customers and economic development prospects. The company proposes to begin work on the first phase by the end of this year and complete it by late 2020.  Environmental groups are filing legal challenges to every move by Dominion and its partners — Duke Energy and Southern Company Gas — to build the pipeline, including a state permit issued in December for the Buckingham compressor station at Union Hill, a historically black community that has been the focal point of protests.

Pipelines put health and environment at risk - and we don't need them anyway - As the State Water Control Board reconsiders the Water Quality Certification for the Mountain Valley Pipeline and hopefully the AtIantic Coast pipeline, I’ve got to add “But wait, there’s more” regarding the pipelines, and government culpability. The “more” is more public risk. Both pipelines would disproportionately affect environmental justice communities like Union Hill, take property, drastically reduce property values, threaten public safety, put drinking water at risk, pollute streams, clearcut and fragment forests, scar our landscape, and exacerbate climate change, all for projects that we don’t need. But wait, there’s more. Both pipelines are coated with a fusion bonded epoxy (FBE) to reduce pipe corrosion and explosion risk. It degrades when exposed to sunlight, and is chalking off the pipes. Both pipelines chose not to add another coating that would have prevented. The National Association of Pipe Coating Manufacturers Bulletin 12-78-04 recommends that pipes coated with FBE without additional protection be stored no more than six months in the sun. The ACP admits that all of their pipes will be stored much longer than that, and even longer than the recommendation of pipe manufacturer Dura-Bond. The MVP testified in court that they were concerned about FBE loss. The pipes for the ACP have been stored outside for about three years, although the actual dates have been hidden from the public. These pipes will remain in storage indefinitely, since the project is on hold. Experts advise me the pipes are losing 1-2 millimeters of FBE coating per year, and are probably still safe at two years’ storage, but further storage makes safety questionable. But wait, there’s more.The pipeline industry, the federal Pipeline and Hazardous Materials Safety Administration (PHMSA), and the Virginia State Corporation Commission (SCC) have thrown an iron curtain of secrecy around this issue. PHMSA confirms that FBE is coming off the pipes, but states that inspections show that the ACP pipes remain safe. PHMSA won’t divulge how many of the estimated 80,000 ACP pipes have been inspected, or give any detailed inspection information. PHMSA states that no inspection results will be available until the ACP is completed in 2021. Important public safety information regarding pipe inspections, blasting records, hydrostatic tests, welding records, and backfill inspections will remain hidden until then. The SCC will divulge nothing about their involvement. But wait, there’s more. 

Prices Rise As Weather Forecasts Remain Very Bullish And Regional Cash Prices Support Sentiment - Highlights of the Natural Gas Summary and Outlook for the week ending March 1, 2019 follow. The full report is available at the link below.

  • Price Action: The now prompt April contract rose 12.0 cents (4.4%) to $2.859 on a 14.0 cent range ($2.872/$2.732).
  • Price Outlook: Despite a smaller than reported EIA storage withdrawal, prices rose as weather forecasts remain very bullish. Since early February, over 220 bcf of demand has been predicted due to the below normal weather forecasts. Due to still adequate over storage levels, price spikes on the futures, may be restrained. However, regional daily cash prices have responded with prices at the Washington/British Columbia border reaching a record $200/MMBtu with Midcontinent prices soaring above $10/MMBtu. When there is bullish weather, there is demand. CFTC data indicated a (22,671) contract reduction in the managed money net long position as longs liquidated and shorts added. The managed money net long position is the lowest since September 25, 2018. The managed money long position is the lowest since September 18, 2018 Total open interest fell (46,275)to 3.382 million as of February 19. Aggregated CME futures open interest rose to 1.188 million as of March 01. The current weather forecast is now cooler than 10 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 4.1 bcf. Cove Point is net exporting 0.8 bcf. Corpus Christi is exporting 0.694 bcf. Cameron is exporting 0.000 bcf.
  • Weekly Storage: US working gas storage for the week ending February 22 indicated a withdrawal of (166) bcf. Working gas inventories fell to 1,539 bcf. Current inventories fall (143)bcf (-8.5%) below last year and fall (444) bcf (-22.4%) below the 5-year average.
  • Supply Trends: Total supply rose 0.8 bcf/d to 83.9 bcf/d. US production rose. Canadian imports rose. LNG imports rose. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (9). Oil activity decreased (10). Natural gas activity increased +1. The total US rig count now stands at 1,038 .The Canadian rig count fell (1) to 211. Thus, the total North American rig count fell (10) to 1,249 and now trails last year by (34). The higher efficiency US horizontal rig count fell (5) to 911 and rises +64 above last year.
  • Demand Trends: Total demand rose +1.5 bcf/d to +108.5 bcf/d. Power demand rose. Industrial demand fell. Res/Comm demand rose. Electricity demand rose +895 gigawatt-hrs to 78,684 which exceeds last year by +4,892 (6.6%) and exceeds the 5-year average by 4,014 (5.4%%).
  • Nuclear Generation: Nuclear generation fell (2,918)MW in the reference week to 88,626 MW. This is (1,827) MW lower than last year and +74 MW higher than the 5-year average. Recent output was at 89,716 MW.

The heating season has begun. With a forecast through March 15 the 2018/19 total heating index is at (2,690) compared to (2,379) for 2017/18, (2,107) for 2016/17, (2,419) for 2015/16, (2,593) for 2014/15, (2,831) for 2013/14, (2,567) for 2012/13 and (2,399) for 2011/12.

Very Strong Cash Cancels Out Weekend HDD Losses - It was a case of dueling catalysts in the natural gas market today, as day ahead Henry Hub cash prices skyrocketed over $4 early this morning pulling the April gas contract higher but weekend HDD losses prevented any gains from holding. In the end the April contract settled just about flat on the day.  The largest losses were with summer gas, as winter gas was firmer on the day.  Very strong cash prices have pulled the April/May spread to flat.  Exploding day ahead prices today returned to levels that have not been seen since December.  In our Morning Update we warned that "cash should remain quite strong" but maintained a "Neutral" sentiment as saw recent GWDD losses canceling that out. The coldest days are in the short-term, as we noted, which would limit the extent to which futures would react to cash.  This verified quite well, as gas prices reversed lower through the day and the Climate Prediction Center picked up on these more pronounced warm risks in the medium and long-range.  Traders are eagerly awaiting the latest cash numbers tomorrow, as though cold will not be quite as intense Wednesday as it will be today and tomorrow it will still be quite strong..

Storage Levels Creeping Lower Keeps Gas Firm - Attention today turned to low storage levels, as a growing storage deficit to last year kept a bid in April natural gas prices, allowing the contract to settle up nearly 3 cents on the day.  The rally came in spite of much weaker cash prices today, with cash trading a full $1 under yesterday's levels.  Forward spreads tightened today as well, especially the J/V April/October spread, which progressed quite a bit higher today despite the relatively small move in the April outright contract.  The low storage concerns are exacerbated by rather tight balances thanks to extreme cold across the country the last few days. Alongside significant demand we are still seeing LNG exports near highs, too, which have helped balances run tight since exports recovered back in mid-February.  Yet some of this tightness will certainly be transitory, as temperatures will moderate quickly across the country over the next few days. Still, as we noted in our Morning Update, some cold will remain, and overnight GWDD additions clearly added support to the forward curve today.  Climate Prediction Center forecasts continue to show colder trends this afternoon too.

Weaker Cash And Briefly Warmer Models Let April Gas Retrace - The April natural contract settled down around a percent and a half as overnight weather models moderated slightly and Henry Hub day ahead cash prices plunged below $3.   After spiking over $4 to start the week Henry Hub day ahead cash traded back under $3 today.   Such cash action was enough to depress the April contract relative to the rest of the futures curve.  Thus the April/May J/K spread took a large turn down on the day.  This fit our expectations well, as we turned our sentiment "Slightly Bearish" in our Morning Update due to bearish spreads, warmer overnight model trends, and other fundamentals we saw moving in a bearish direction.  Overnight models were not all that much warmer, but GWDD losses were allowed to let the front of the curve at least retrace recent gains.  Then prices were able to bounce into the settle on colder afternoon weather model guidance, which the Climate Prediction Center showed in their Week 2 forecast probabilities as well.  Now, traders are preparing for what should be another hefty storage draw to be announced tomorrow.

Low Storage Concerns Push Gas Prices Higher - April natural gas prices ended the day up almost 1% after bouncing around in the early part of the session. Concerns over low storage levels combined with a colder than normal weather forecast were the culprit for the move up.  The gains were not confined to April prices, but extended throughout the futures curve.  We did observe some weakness early in the day, as the strongest cold is now behind us, with demand lowering into this weekend.  With temperatures moderating, cash prices were held in check, trading just over 2.90 today.  The early morning weakness was short-lived, with the market rallying ahead of expectations of a strong gas draw in today's EIA report, which came true, as we drew 149 bcf last week, much stronger than last year and the 5-year average.  We saw this number as supportive, as it was tight relative to the average over the last several weeks.  Afternoon weather models then went colder in week two, and these forecasts added additional support, allowing prices to end the day close to their session highs.   Our afternoon update dealt with all of these issues and outlined how we see natural gas price risk heading into the weekend.

Natural gas trading, prices increase on colder weather, nuclear outages— North American natural gas trading has been relatively higher the last four trading sessions as colder weather and nuclear outages increased the market's reliance on gas to meet its needs. S&P Global Platts received 8,660 physical fixed-price deals for North American gas on March 1. This was an all-time high of deals received. Platts received 7,094 deals on Monday. This was the second most deals ever received. The trend continued as Platts received 6,900 deals on Tuesday, the fourth-highest amount of deals seen. Platts received just under 6,900 deals on Thursday, according to preliminary numbers. The cash price for Pacific Gas and Electric Malin increased 22.5 cents on the day to $3.625/MMBtu as the colder weather added upward pressure. US total demand has averaged 131 Bcf the last two days, according to S&P Global Platts Analytics. Demand averaged 110 Bcf for all of February. The increased demand stemmed from the recent onset of colder-than-average weather. The US has averaged 32 heating degree days the last two days, according to Platts Analytics. The onset of the colder weather is evident across the country as the US averaged only 23 heating degree days in February. The uptick in nuclear outages across the country also increased the reliance on gas. Daily power generation replaced by natural gas due to nuclear outages increased by 105 MW, to average 11,026 MW, the highest value in the last seven days, according to Platts Analytics. Year-to-date power generation replaced has averaged 5,429 MW, 32% higher than the 1,309 MW seen last year, according to Platts Analytics. Looking forward, the most recent eight- to 14-day temperature forecast calls for slightly colder-than-average weather across much of the country, according to the US National Weather Service. Power burn demand for Midwest sat at 2.5 Bcf/d on Wednesday, but is expected to fall 831 MMcf/d to 1.67 Bcf/d by March 10, according to Platts Analytics. The backing off of the cold weather and decrease in power burn may contribute to the downward trend in deal count seen after the spike on March 1.

US oil and gas methane emissions equivalent to 14 coal-fired power plants - As Oil Change International reports, the Center for American Progress has issued a new reporton the methane emissions from the US onshore oil and gas industry for 2014. The introduction to the report notes that the oil and gas sector was responsible for 33 percent of all methane emissions in the US in 2014 and that "Methane is a supercharged global warming pollutant that is 87 times more potent than carbon dioxide over a 20-year time scale."The report reveals that methane emissions from the onshore oil and gas production sector amounted to more than 48 million metric tons of carbon dioxide equivalent (CO2e) in 2014, the equivalent of 14 coal-fired power plants over one year. The report notes that this is figure is based on the conservative and outdated methodology used by the US EPA to calculate emissions equivalency (see footnote 7). The US government website referenced by the report shows that the US government uses a multiplier (global warming potential, GWP) of 25 to convert methane to CO2e. Ireland uses the same multiplier.As the report points out, this is conservative because it measures the GWP of methane over a 100-year time frame, rather than the 20-year time frame in which methane's warming potential is the greatest (and which also coincides with the window of opportunity for addressing climate change). It is outdated because it is based on the recommendations of the fourth IPCC report. The fifth IPCC report states that over a hundred-year timescale, methane is 34 times more potent as a greenhouse gas than CO2. Over a 20-year timescale, methane's global warming potential is 86. The US National Climate Assessment published the study Methane Emissions from Natural Gas Systems in 2012, which puts theglobal warming potential of methane at 105 times that of carbon dioxide.The Center for American Progress notes that while the US EPA has recently introduced standards to regulate new sources of methane emissions from the oil and gas sector, these standards will not apply to existing sources – wells already in operation.  As this Bloomberg article reports, methane from even abandoned and plugged wells can be a problem, especially if they are located near a fracking site. Abandoned oil and gas wells in Pennsylvania have been found to be leaking methane into homes and water, as well as into the air. A 2014 study found that abandoned wells can continue to be a significant source of methane emissions for decades.

Video: Flames from natural gas pipeline rupture light up sky near Mexico, Mo. - A gas line exploded in Mexico, Mo., on Sunday, March 3. The rupture occurred nearly one mile north of the city along Highway 15, according to the Audrain County Sheriff’s Office. By @ItsRake via Storyful A huge fire from a ruptured natural gas pipeline lit up the sky near Mexico, Mo., early Sunday, a video from the Audrain County, Mo., Sheriff’s Office shows. The fire was reported early Sunday about 1 mile north of Mexico, Mo. No one was killed or seriously injured in the fire, according to the sheriff’s office. The video, taken by a member of the sheriff’s office, shows the blaze from a distance. Once the supply to the pipeline was cut, it took about 40 minutes for the fire to burn the remaining gas and extinguish itself, the sheriff’s office wrote in a statement on its Facebook page. Missouri 15 remained closed in the area while the highway was repaired and utility crews replaced several poles and lines.

Energy Transfer Gas Rupture Caps Missouri Mainline Capacity -The fiery rupture of a natural gas pipeline that lit up the early-morning sky in Missouri on Sunday will limit capacity of the Panhandle Eastern pipeline while repairs are being done, Energy Transfer LP said in a notice. Nominations to the main-line conduit will be held to 1.125 million British Thermal Units per day, according to the notice. The rupture occurred north of Mexico, Missouri, about 120 miles (193 km) from St. Louis. It didn’t cause serious injuries, but did interrupt power to several homes, the Audrain County Sheriff’s Office noted in a Facebook post. A spokesman for Energy Transfer did not immediately reply to a request for comment. The rupture took place downstream from the Centralia Compressor Station. The resulting fire was extinguished after about 40 minutes, the sheriff’s office reported. The incident is yet another bump in the road for billionaire Kelcy Warren’s Energy Transfer, whose shares have languished amid numerous legal and political challenges. In addition to wide-spread opposition to its Dakota Access oil pipeline, the pipeline giant has seen regulatory and legal challenges to its Rover natural gas conduit and the Mariner East 2 gas-byproducts line, as well as construction delays on its Bayou Bridge oil line in Louisiana. In September, the company also had a fire on a gas gathering line in Pennsylvania that led to the evacuation of nearby homes.

Pipeline company riddled with history of damage, malfunctions - — The cause of a gas pipeline rupture along MO-15, one mile North of Mexico remains unknown as of Monday.Pipeline and Hazardous Materials Safety Administration spokesperson said on Monday afternoon, an investigator has been deployed to the site of the pipeline rupture on Energy Transfer Partners’ Panhandle Eastern Pipeline in Audrain County. The PHMSA Spokesperson said the failed section of pipe will be shipped to a DNV laboratory for metallurgical analysis. PHMSA’s investigation is ongoing.Little Dixie Fire Protection District Fire Chief Steve Gentry said this isn't the first time the company has had a rupture in Audrain County."The last time this happened was in 1996," Gentry said.Panhandle Eastern Pipe Line Co. has a history of pipeline ruptures according to online documents by the Pipeline and Hazardous Materials Safety Administration.Pipeline malfunctions and ruptures are linked to the company date as far back as 1982 in Centralia. A cut pipeline and a mechanical malfunction sent natural gas surging into stove and furnace pilot lights at 120 times the normal rate, creating a blowtorch effect that started fires in at least 50 homes.

  • In 2006, an incident in Sturgeon involved the company, listing the cause as outside force damage causing $55,000 in property damage.
  • In 2008, an incident in Pilot Grove due to corrosion causing $1,046,359 in damage.
  • In 2009, an incident in Fayette caused by natural force damage, causing $722,850 in damage.
  • In 2013, an incident in Pettis County caused by corrosion causing $2,092,739 in damage. Another incident happened in 2015 due to a malfunction causing $46,332.

The last report in Missouri is shown in Johnson County caused by a malfunction causing $1,001,549 in damage.

$680 million pipeline gets green light to move natural gas from Oklahoma to Gulf Coast -  A pipeline to move natural gas from Oklahoma to destinations along the Gulf Coast and southeastern United States got the green light from federal regulators and $680 million in financing for construction.  Working in a joint venture, Houston liquefied natural gas company Cheniere Energy and Washington D.C. private equity firm EIG Global Energy Partners are moving forward with plans to build the 200-mile Midship Pipeline in Oklahoma. Federal Energy Regulatory Commission officials approved the 36-inch diameter natural gas pipeline on Wednesday. Cheniere and EIG issued a statement on Friday saying the two companies secured $680 million in financing for the project and issued a notice for contractors Strike LLC, M.G. Dyess, TRC Pipeline Services and Cenergy LLC to proceed with construction.Expected to be placed in service by the end of the year, the Midship Pipeline is designed to move 1.4 billion cubic feet of natural gas per day from Oklahoma's SCOOP and STACK shale plays to delivery point just north of the Red River near Bennington, Oklahoma. The Midship Pipeline will connect to Kinder Morgan's Midcontinent Express Pipeline and the Boardwalk Pipeline Partners-owned Gulf Crossing Pipeline, allowing natural gas from Oklahoma to move to the TexOk Hub near Atlanta, Texas and the Perryville Hub near Tallulah, Louisiana. Subsidiaries and affiliates of Cheniere, Devon Energy Corporation, Marathon Oil Corporation, and Gulfport Energy Corporation have secured commitments on the Midship Pipeline, Cheniere and EIG reported.

Calcasieu Pass LNG export terminal gets final federal authorization ahead of construction — Venture Global LNG's proposed Calcasieu Pass export terminal received US Department of Energy approval Tuesday to ship cargoes to countries with which the US does not have free-trade agreements. The milestone marks the final federal authorization the up to 10 million mt/year Louisiana project needs to move forward. While the developer has a contractor, long-term offtake agreements with shippers covering the bulk of its capacity, and plenty of market momentum, it has not yet publicly announced a positive final investment decision, which generally comes before full construction begins. The status of financing arrangements to pay for the billions of dollars in costs also has not been disclosed. A spokeswoman did not respond to messages seeking comment. The company has been the most active among developers of second wave US projects in securing commercial agreements for the LNG it plans to produce, and it has said previously that it wanted to be able to make an FID and begin construction as soon as possible so it can be up and running by the early 2020s to help meet the forecast global demand during that timeframe. When the Federal Energy Regulatory Commission announced last month that it had approved Venture Global's permit certificate for Calcasieu Pass in Cameron Parish, the developer said in a statement that it planned to "immediately commence construction activities" in coordination with regulatory agencies. Tuesday's company statement following the DOE authorization to export up to 1.7 Bcf/d of LNG to non-FTA countries said only that it was looking to "commence site works imminently," in line with an implementation plan it filed with FERC. When Venture Global announced that Kiewit had been awarded the engineering, procurement, and construction contract for Calcasieu Pass, it did not disclose how much it had agreed to pay. It also has not disclosed how much offtakers Royal Dutch Shell, Italy's Edison, Portugal's Galp, Britain's BP, Spain's Repsol and Poland's PGNiG have agreed to pay for the LNG that the terminal will produce.

In late January, Gulf Coast gasoline crack spreads reached their lowest levels since 2014 - U.S. Gulf Coast gasoline crack spreads had been declining since mid-2018 and briefly went negative in January and early February 2019 before rising, while distillate crack spreads remained relatively stable. The gasoline crack spread is the difference between the spot prices of gasoline and crude oil. EIA attributes relatively low gasoline crack spreads to more costly crude oil inputs and high gasoline inventories.   Crack spreads in U.S. Gulf Coast petroleum product markets are typically among the world’s highest because, among other factors, Gulf Coast refineries have upgraded their equipment to refine lower-cost heavy crude oils into more valuable refined products, such as gasoline. Their complexity also facilitates relatively high yields of higher value products such as distillate and jet fuel and low yields of lower value residual fuel oil compared with simpler refineries. Since December, prices of medium and heavy crude oils with higher sulfur content have increased relative to prices of light, sweet crude oils. This price increase is likely because of the reduction in output from producers within the Organization of the Petroleum Exporting Countries (OPEC) and Canada and the threat of production disruptions in Venezuela. These countries tend to produce medium and heavy grades of crude oil with higher sulfur content, so a large share of the global oil supply reductions since January has been of this quality.  Because U.S. Gulf Coast refineries have upgraded equipment such as cokers, they typically process crude oils that have lower API gravities (meaning they are relatively dense and heavy) and have higher sulfur content, which are typically less expensive than light, sweet crude oils. Based on a five-day moving average, the price spread between the price of Mars—a medium, sour crude oil produced in the U.S. Gulf of Mexico—and the price of Light Louisiana Sweet (LLS) crude oil narrowed to within $1 per barrel in late January after trading between $3 to $4 per barrel less than LLS for most of 2017 and 2018.

The U.S. is trying to end the longest oil spill in history. And this company is fighting against it in court. - As the longest offshore oil spill in U.S. history creeps toward its 15th year, the federal government is preparing to launch a determined effort to contain the oil and cap the leaking wells.   But the energy company responsible for cleaning up the spill has gone to court to stop efforts to fix a leak that is sending hundreds of barrels of oil into the Gulf of Mexico.  Taylor Energy of New Orleans recently filed four lawsuits against the Interior Department, U.S. Coast Guard and a private contractor to contest their assessment that the spill is catastrophic and to shut down plans to cap more than two dozen leaking wells.  The wells were torn open in 2004 when Hurricane Ivan triggered powerful currents that collapsed the walls of a deepwater canyon. The tumbling walls slammed into an oil production platform that Taylor Energy operated 12 miles off the Louisiana coast, burying most of its 25 wells. According to one estimate, up to 700 barrels of oil per day are flowing into the Gulf, rivaling the catastrophic 2010 BP Deepwater Horizon spill. The estimate is based on an analysis by Oscar Garcia-Pineda, a specialist in remote sensing of oil spills, which the government accepted but Taylor Energy disputes.  The BP disaster leaked 4 million barrels over five months. If Garcia-Pineda’s estimate is correct, the Taylor spill amounts to 1.5 million barrels to 3.5 million barrels in more than 14 years.  A day after The Washington Post revealed Garcia-Pineda’s analysis, the Coast Guard issued Taylor Energy an ultimatum: hire a company to build a device to contain the oil or face a fine of up to $4,000 per day. When the energy company failed to negotiate a contract, the Coast Guard took over the cleanup effort.  On Wednesday, during oral arguments for Taylor Energy’s case against Couvillion Group, the private contractor hired by the Coast Guard to contain the spill, U.S. District Judge Ivan Lemelle wanted to know why the company is seeking to block efforts to clean it up. Taylor Energy’s attorney said the company believes the plan won’t work and could make the problem worse.  Lemelle asked the Coast Guard’s lawyer why the cleanup is taking so long. “This occurred in 2004. How long does it take the government to decide what to do?” The attorney, Erica Zilioni, said new data shows that three leaks are ejecting more oil into the environment than previously thought. Before now, the government had relied almost solely on reports from contractors hired by Taylor Energy to estimate the size of the spill.

Perry wants new FERC regulators to push through LNG export applications - Dive Brief:

  • Secretary of Energy Rick Perry called on President Trump Thursday to quickly nominate regulators to the Federal Energy Regulatory Commission to help approve new export facilities for liquefied natural gas (LNG).
  • Perry praised FERC's approval of the Calcasieu Pass LNG export facilitylast week, but said having a full contingency of five regulators would help push through 12 more LNG applications pending at the commission. Senior DOE officials previously expressed optimism that the compromise reached on Calcasieu could be applied to the pending applications.
  • The White House is considering nominating NRG Energy executive David Hill to fill a vacancy on the commission, Politico reported this week, but the chair of the Senate Energy Committee, which oversees FERC confirmations, said she and Perry have not been notified of a nomination by the White House.

Dive Insight: Perry's statements on LNG Thursday reflect a broad effort from the Trump administration to boost natural gas exports as part of its "energy dominance" strategy. Last week, DOE officials celebrated the approval of Calcasieu Pass, the first LNG facility cleared in two years, saying the climate change compromise reached among FERC regulators could provide a "roadmap" for the 12 remaining applications.  FERC's swing vote on the LNG issue, however, pushed back on those comments the next day, saying the statements from DOE officials and FERC Chairman Neil Chatterjee may appear to "prejudge" the other applications. "We just reached an agreement on Calcasieu Path," Commissioner Cheryl LaFleur told Utility Dive. "Yes, we do operate by precedent, so that's now a case in the books, but we have to look at every case individually. That's what we do in all areas of our work." At a Thursday morning press conference with the head of the International Energy Agency (IEA), Perry said he "didn’t see any connection" between Calcasieu and the rest of the applications. "What I saw was we made this decision and we're going to look at each one of these as an individual project and let them stand on their own," he told reporters. More important than the compromise on climate, he said, is that the White House nominate two FERC regulators — one to fill a current vacancy, and one to replace LaFleur when she steps down later this year.

Sinopec may ink 20-year LNG deal with Cheniere when trade spat ends (Reuters) - China Petroleum and Chemical Corp plans to sign a 20-year liquefied natural gas (LNG) supply agreement with Cheniere Energy once China and the United States end their trade dispute, two sources with knowledge of the matter said on Wednesday. Cheniere and China Petroleum and Chemical, known as Sinopec, reached a consensus in late-2018 on commercial terms after months of negotiations, but the signing of the deal was held back by the ongoing trade friction between the world’s top two economies, one of the sources, who has direct knowledge of the matter, told Reuters. “Without the trade spat, the deal should have been signed some time ago,” the source said, declining to be named because the matter is not public. In recent weeks, Beijing and Washington appear to have moved closer to a deal to end a bruising eight-month dispute that has seen the countries slap tariffs on billions of dollars worth of the other’s good. A resolution is widely expected to include stepped-up Chinese purchase of U.S. goods. Sinopec intends to buy close to 2 million tonnes a year of LNG from Houston-based Cheniere starting 2023, the two sources added, without giving a deal value. Cheniere may start delivering some supplies before 2023, said the second of the two sources. Based on the delivered cost of U.S.-sourced supplies into east China in January at $8.30 per million British thermal units given by Chinese customs, the 20-year deal would amount to roughly $16 billion. Sinopec and Cheniere both declined to comment on the status of a deal. The Wall Street Journal reported on Sunday that as part of a trade deal with the United States, China would buy $18 billion worth of natural gas from Cheniere. Officials from Cheniere visited Beijing in late February, said a third source, who was also familiar with the matter. Sinopec, a late comer to China’s LNG scene compared to domestic rivals China National Offshore Oil Corp (CNOOC) and PetroChina, has said it wants to more-than double its receiving capacity over the next six years to around 41 million tonnes annually, by building three new terminals along China’s east coast and expanding existing facilities. China, the world’s second-largest LNG buyer after Japan, imported just over 2 million tonnes of the super-chilled fuel in the first nine months of 2018 from the United States, according to Chinese customs. 

Trump administration offshore drilling plan due 'in coming weeks': official (Reuters) - The Trump administration’s revised five-year program to expand offshore drilling in most federal waters will be released “in the coming weeks,” an Interior Department official said on Wednesday, after months of opposition from coastal state lawmakers opposed to exposing their shorelines to oil and gas exploration. Walter Cruickshank, acting director of the Interior’s Bureau of Ocean Energy Management, said at a House hearing that the agency is finalizing its proposed five-year Outer Continental Shelf (OCS) oil and gas leasing program for 2019 to 2024 but declined to say whether certain states would be exempt. BOEM last year proposed to open up over 90 percent of coastal waters in the outer continental shelf to oil and gas drilling, offering 47 lease sales, including areas like California that had not been offered since the 1980s. The proposal drew concern from Republican and Democratic lawmakers in most coastal states, and sharp criticism in public comments to the plan last year. California Congressman Jared Huffman pressed Cruickshank at the House natural resources hearing on whether the revised plan would reflect the strong opposition reflected in the public comment period. Cruickshank said the agency acknowledged that the bulk of public comments from California, for example, was opposed to offshore drilling but said they were just one factor that BOEM will consider in drafting the revised proposal. “Public input certainly informs those factors but by law it is not and cannot be the only thing we consider,” he said. U.S. curbing program for abused migrant kids California and Washington threatened to block permits for transporting oil from new offshore rigs through their states. 

Massachusetts AG Maura Healey moves to block seismic testing for offshore oil and gas — Massachusetts on Tuesday joined eight coastal states in a legal effort to temporarily block seismic testing for oil and gas reserves beneath the floor of the Atlantic Ocean. The U.S. Bureau of Ocean Energy Management proposes to vastly expand offshore lease sales for oil and gas drilling, including off the coast of New England. Seismic testing for exploration purposes was approved by the Trump administration in November. A coalition of environmental groups sued, saying the sound blasts would take a massive toll on marine wildlife, including whales, dolphins, and porpoises. A federal court last month allowed the states to join the lawsuit. This week's effort asks a judge to halt the testing until that lawsuit is heard. Attorney General Maura Healey joined her peers in Connecticut, Delaware, Maine, Maryland, New Jersey, New York, North Carolina, and Virginia to file a supporting brief. The overarching federal lawsuit, filed in December, names U.S. Secretary of Commerce Wilbur Ross and the National Marine Fisheries Service, and seeks to completely stop the seismic testing plan. false Nine states seek to stop seismic testing for oil and gas exploration on the East Coast. “Approving these blasting tests paves the way for the Trump administration to open up the Atlantic coast to drilling and poses a severe threat to our coastal communities, our fishing industry, and the health of the ocean,” Healey said at the time. The federal fisheries service has authorized the "incidental take" of marine life when the acoustic surveys are conducted. Any actual testing would need a permit from the Bureau of Ocean Energy Management.

A Trump official said seismic air gun tests don’t hurt whales. So a congressman blasted him with an air horn. -- A hearing on the threat seismic testing poses to North Atlantic right whales was plodding along Thursday when, seemingly out of nowhere, Rep. Joe Cunningham (D-S.C.) pulled out an air horn and politely asked if he could blast it. Before that moment at a Natural Resources subcommittee hearing, Cunningham had listened to a Trump administration official testify, over and over, that firing commercial air guns under water every 10 seconds in search of oil and gas deposits over a period of months would have next to no effect on the endangered animals, which use echolocation to communicate, feed, mate and keep track of their babies. It’s why the National Oceanic and Atmospheric Administration gave five companies permission to conduct tests that could harm the whales last year, said the official, Chris Oliver, an assistant administrator for fisheries. As committee members engaged in a predictable debate along party lines — Republicans in support of testing and President Trump’s energy agenda, Democrats against it — Cunningham reached for the air horn, put his finger on the button and turned to Oliver. “It’s fair to say seismic air gun blasting is extremely loud and disruptive ... is that correct?” the congressman asked. “I don’t know exactly how loud it is. I actually never experienced it myself,” Oliver replied. So Cunningham gave Oliver a taste of the 120-decibel horn. An earsplitting sound filled the small committee room. An audience of about 50 gasped and murmured. “Was that disruptive?” Cunningham asked. “It was irritating, but I didn’t find it too disruptive,” Oliver said. Cunningham, who represents Charleston and other coastal cities, pressed on. What if it happened every 10 seconds for days, weeks and months, he said. He asked Oliver to guess how much louder commercial air guns are than his store-bought air horn. When Oliver didn’t bite, he told him the sound from air guns is 16,000 times that of his air horn.

Russian oil imports surge in US as Venezuela’s slow to a trickle - Only two ships carrying 766,000 barrels of crude oil from Venezuela arrived in the United States last week in the wake of debilitating oil sanctions lodged against the state-run oil company, PDVSA, according to investment bank Caracas Capital Markets, which tracks Venezuelan oil shipments.Russian companies, meanwhile, sent nine ships carrying more 3 million barrels of crude oil and petroleum products, according to a review of the U.S. Bill of Ladings database by Caracas Capital.That import data is clear evidence that Russia is profiting off the geopolitical battle, selling into the U.S. market while helping to prop up the Caracas leadership that Washington is aiming to replace, said Russ Dallen, a managing partner at the investment bank who advises U.S. officials on Venezuelan matters.   “The amazing thing is that Russia is replacing Venezuela in the U.S. markets,” Dallen said. “They’re taking advantage of the incompetence of Venezuela and expanding into the United States market.” In late January, the Trump administration slapped new sanctions on Venezuela’s state-owned oil company, PDVSA, in its latest effort to push out Venezuelan leader Nicolás Maduro and install new leadership under National Assembly chief Juan Guaidó.Venezuela’s oil sector accounted for as much as 70 percent of the Maduro government’s income.The last time Russia sent more than three million barrels of oil to the United States was in 2011 before the U.S. imposed sanctions over Russia’s annexation of Crimea.Those sanctions, imposed in 2014, prevented U.S. companies from financing or send U.S. technology for the Russian industry. But they did not block the purchase of oil from Russia.While U.S. refiners can continue to buy Venezuelan oil for the next couple months, any proceeds paid for the oil must be directed to a special account controlled by the U.S. Treasury. Without a way to collect payment, Venezuelan oil executives have started to self-embargo oil exports to the United States.

Enbridge says Line 3 pipeline project in Minnesota to be delayed a year - A new timeline for Minnesota's permitting process will push the project back, the Canadian company says. The controversial replacement and expansion of Enbridge’s Line 3 crude oil pipeline will be delayed about a year because the Minnesota permitting process will take longer than expected, the Alberta company announced this weekend. The project, previously slated to start shipping crude by the end of 2019, is now expected to enter service in the second half of 2020, Enbridge said in a news release late Friday. Construction is being pushed back because the Minnesota permitting process won’t be complete until November, and the ensuing federal permits won’t be received until as long as 60 days after that. “We now have a firm schedule from the state on the timing of the remaining permits for our Line 3 Replacement project,” Enbridge CEO Al Monaco said in the news release.  Last June, the Minnesota Public Utilities Commission unanimously approved the $2.6 billion pipeline, a replacement for Enbridge’s aging and corroding Line 3. But Enbridge still needs the other, more technical state permits, primarily from the Minnesota Pollution Control Agency and the Department of Natural Resources. It also needs a key water-crossing permit from the Army Corps of Engineers. Meanwhile, environmental groups, two Indian tribes and the state Department of Commerce have all filed appeals in court to overturn the PUC’s decision. Gov. Tim Walz has said he will continue the state’s appeal, which was started last year under his predecessor, Mark Dayton.

Walz calls Enbridge timeline 'optimistic' after Line 3 project delay - -- Minnesota Gov. Tim Walz said Enbridge Energy's goal of getting work started on the Line 3 oil pipeline project before year's end was aggressive and optimistic.The comment came Monday, March 4, days after the energy company announced it would delay construction on the project by a year. Enbridge officials had hoped to get the project started before the end of the year. But on Friday, March 1, officials announced the company would postpone the proposed start date to late 2020 due to holdups in state and local permitting.Walz made the assessment just after he announced he would aim to get the state to 100 percent clean energy by 2050. Part of that initiative would require energy companies to transition replacement or new power generation projects to fossil-free energy sources unless those prove to be unreliable or unaffordable.  The Democratic-Farmer-Labor governor said the state's "goalposts" for approving a project are based on science and protection of natural resources and they can't be moved.“Our process has not changed, our process was clear what it would take to go through the MPCA process, the DNR process and then the Corps of Engineers with the water crossing permit that needed to be in there,” Walz told reporters. “I think Enbridge had a fairly aggressive optimistic timeline in place."The Minnesota Public Utilities Commission in 2018 unanimously approved the Line 3 replacement project. It was a key step for the company, but additional permitting requirements remain before Enbridge can break ground in Minnesota. Enbridge officials last week said they expect Minnesota’s permits will be finalized in November and that federal permits will wrap up 30 to 60 days after that.

Enbridge's Line 3 Pipeline Expansion Delayed In Latest Major Blow To Canadian Energy Industry - Enbridge Inc. is delaying the date when it expects its replacement Line 3 crude oil pipeline to be in expanded service, in what is being called a "major blow" to the oil industry in Canada. According to Bloomberg, the project had previously been set to begin shipping crude in Q4 2019. But now the company is pushing back construction due to slow permitting in Minnesota.Enbridge expects the pipeline to begin service in the second half of 2020 now, as its Minnesota permits won't be complete until November of this year. Federal permits won't be received until as long as 60 days after that.  This pipeline was of importance because the government of Alberta was planning on using it to end mandated production cuts that were implemented to deal with a supply glut of crude oil. The glut has been a result of a lack of pipeline space, making it difficult to ship supply to refineries. The Line 3 expansion is set to cost $6.8 billion and help add 370,000 barrels of daily shipping capacity. Its delay is the latest of several blows for the Canadian energy industry, including the stalled Keystone XL pipeline and the stalled Trans Mountain expansion. In addition, the industry has suffered from the cancellation of TransCanada's Energy East pipeline and the Canadian government's rejection of the Northern Gateway conduit, which was also proposed by Enbridge.This delay flies in the face of the company's expectation of having the Line 3 expansion finished this year, a timeline that Enbridge reiterated as recently as February 15. The expansion would help ship crude along a 1031 mile route from Alberta's oil hub to Superior, Wisconsin, where construction is already completed.

Deadly pipelines, no rules — Delaney Tercero, 3, was sitting on her family's couch with her father and sister that summer day. Her mother was doing laundry. They didn't know a pipeline with a dime-sized hole a few yards from their front door was filling their mobile home with raw natural gas.Delaney's mother opened the dryer. The house blew up. Men pulled Delaney from the rubble. A neighbor wrapped her in a scarf, trying to comfort her. Others rubbed burn cream on her sister's burns. Witnesses told responders her mother was burned "head to toe." A helicopter whirled Delaney to a burn unit in Lubbock, but she died two days later, 100 miles from home. Her mother, father and sister were badly burned in the Aug. 9, 2018, explosion, but they lived (Energywire, Sept. 10, 2018). That still amazes their next-door neighbor, Ronnie Littlefield."Those poor people there," Littlefield said on a recent Sunday afternoon, looking over their fence at the debris field where the family's home once sat. "I don't know how anybody survived."The state dispatched inspectors, and they found the pipe's anti-corrosion coating had been "compromised." They also found it had been leaking for "an undetermined length of time."But Targa Resources Corp., the $9.6 billion Houston company that owns the line, will face no penalty from state or federal officials for the explosion. Targa didn't violate any rules, because for this type of pipeline, there are no rules.They're called "gathering lines," generally small pipelines carrying oil and gas from wellheads to processing sites. The Targa pipe was connected to a battery of tanks near the two homes in the pumpjack-studded farm fields outside Midland. Targa did not respond to repeated requests for comment.It was a small part of a network of thousands of miles of pipes underlying the frenzied oil and gas development in the Permian Basin. Nationally, more than 450,000 miles of such gathering lines snake underground from wells, and reports of death and injury have emerged from Texas to Pennsylvania. It's not known how many fatalities have occurred, because the federal government doesn't keep records on explosions from rural gathering lines. Neither do most states.

Permian oil output seen doubling to 8 million barrels in four years, boosting US exports --As if stuck in a partially clogged drain, oil from the hottest U.S. shale play has been caught in a bottleneck due to a lack of pipeline capacity.But the transportation tie-up at the Permian Basin is about to ease up, and a new network of pipelines will help U.S. producers unleash more crude into the Gulf Coast and then onto the world market."There's a lot of shale capacity being prepared. There's a lot of pipeline capacity. We're going to triple pipelines going into the market from 3 to 9 million in three years, from last year to late 2021," said Francisco Blanch, head of commodities and derivatives at Bank of America Merrill Lynch.Much needed pipeline capacity is being added to take Permian crude from the heart of Texas down to the Gulf Coast, to oil refineries but also to Texas ports that are making plans for more and larger ships to carry oil exports from the U.S. to customers in Asia and elsewhere. The Permian Basin covers an area of more than 75,000 square miles in western Texas and southeastern New Mexico. Citigroup energy analyst Eric Lee said Permian output at just under 4 million barrels a day is up about 1 million barrels from a year ago and should be a million more, or 5 million a day, a year from now, in early 2020. The Permian has benefited from consistent improvements in technology, which increasingly have been capable of extracting more oil from the shale formation.

Exxon and Chevron just announced big plans to surge oil and gas output from top US field - Exxon Mobil and Chevron on Tuesday said they both plan to surge oil and natural gas output from America's top shale field in the coming years, a strategy that the energy giants say will yield significant returns.As early as 2024, Exxon believes it can increase output from the Permian Basin to 1 million barrels per day of oil equivalent, a measure that blends crude oil and gas production. That represents an 80 -percent increase, the company said in a news release a day ahead of its meeting with investors.Meanwhile, Chevron aims to more than double its oil and gas output to 900,000 boepd by the end of 2023. Chevron sees Permian production hitting 600,000 boepd by the end of next year, the company said at its meeting with analysts on Tuesday.The Permian is the epicenter of the U.S. shale boom, which has made the nation the world's top producer of oil and natural gas. Drillers in the region underlying western Texas and southeastern New Mexico use advanced techniques like hydraulic fracturing to coax oil and gas from shale rock formations.Once the domain of independent frackers, the shale drilling process is being industrialized by large international oil companies. The oil majors are stitching together large swaths of land and drilling multiple horizontal wells from a single location, making the expensive method more efficient. "The big thing that I think has changed is the shale game has become a scale game, and so people that can do things at large scale and bring the capabilities to bear that a company like Chevron has are the ones that really can take this to the next level," Chevron Chairman and CEO Michael Wirth told CNBC's "Closing Bell"on Tuesday. Chevron's output from the Permian hit 377,000 boepd last quarter, an 84 percent increase from a year ago. The company says it plans $19 to $22 billion in capital spending per year from 2021 to 2023. Exxon's Permian production surged 93 percent in the final quarter of 2018 from the year-ago period.

Shale oil moderating as long-cycle output in fast decline- Hess — Long-cycle oil production remains on "life support," while shale output's future climb will likely be more moderate than many analysts expect, John Hess, CEO of Hess Corporation, said Friday. "Shale is not the next Saudi Arabia," Hess said during a Center for Strategic and International Studies event. Hess said the resource base of shale is not as strong as that of Saudi Arabia, and the US cannot sustain its current growth rate. Still, shale will make up as much as 11% of the world's oil supply by the middle of next decade, up from 6% now, Hess said. US oil production averaged nearly 10.95 million b/d in 2018, a new record and up from about 6.5 million b/d of oil output averaged throughout 2012, the US Energy Information Administration reported Thursday. EIA expects that US oil output crossed the 12 million b/d threshold in January. Nearly all of that growth has been fueled by shale, particularly in the Permian recently, EIA said. But Hess said Friday that investors, who have pumped $50 billion in public equity and $20 billion in private equity into production projects, are now pushing producers to slash costs, likely preventing a surge in output. "It's gone from drill baby drill to show me the money," Hess said. "The focus was on production growth, now it's on financial returns." Hess said that the lack of investment in long-cycle production could also complicate the future supply picture. He said oil company leases in deepwater Gulf of Mexico blocks fell to about 2,500 this year, down from 8,800 in 2004 while global exploration budgets have plummeted.

Striking it Rich: Money managers get more, children get less - Houston Chronicle - A little more than a decade ago, lawmakers gave an obscure board the power to invest the state's oil and gas revenue — money designated to benefit Texas schoolchildren — with outside fund managers. Then fracking boomed, pumping billions in royalties into the coffers of the Texas School Land Board. Big-name businessmen showed up quickly, hoping to be chosen to handle the investments and to gather the fees that came with the duty.And the campaign contributions flowed. Big donors received lucrative partnership agreements. Investment managers charged hundreds of millions in fees.Lines were blurred, and in some instances, crossed.Since the land board started investing with outside fund managers on behalf of the state's K-12 endowment in 2006, it has committed or invested nearly $3.7 billion with companies run by friends, business associates or campaign donors.Those donors together have given more than $1.4 million since 2006 to board members or elected officials with the power to appoint them, a Houston Chronicle investigation reveals. Texas Land Commissioner George P. Bush has recused himself four times since he took office in 2015, citing “personal relationships.” And they've since charged the fund more than $218 million in fees, records show. While the fees climbed during the past decade, the amount of money the $44 billion Texas Permanent School Fund sends to schools has declined, in real dollars, compared with the two decades prior.

Texas drivers are hitting a key road hazard that has proven deadly in some cases - Driving home one rainy evening, Michelle Gilmartin swerved off a two-lane street to avoid hitting a car that stopped in front of her. She struck a gas meter in front of a house instead. As leaking natural gas hissed, Gilmartin helped her twin 9-year-old boys out of her SUV and rushed them to safety. After that 2017 accident in Keller, the gas company moved the meter farther from the road, behind a fence. But many other meters in that area — and throughout Dallas-Fort Worth — still stand near streets and alleys with no barriers to protect them, posing a risk. In Texas, motorists have damaged gas meters more than 3,600 times since 2010, The Dallas Morning News found in a joint investigation with NBC5. More than 800 of those crashes happened in North Texas. In a worst-case scenario, such crashes can be deadly. In 2006, a woman was killed in Central Texas in an explosion that was triggered when she accidentally backed over a gas meter near the edge of a driveway. The majority of these accidents don’t result in fire, death or injury — just jangled nerves and damaged property. But experts say unprotected gas meters — many installed decades ago — near roads and alleys are an invitation for trouble, and that gas companies and agencies that regulate them should do more to identify and remove the hazards. “These absolutely need to be moved — this is silly,” said Brigham McCown, former administrator of the federal agency that oversees pipeline safety, the Pipeline and Hazardous Materials Safety Administration. “At some point you have to say we have an issue here, we have a problem,” McCown said.

A new battle over oil and gas drilling just broke out in Colorado - Colorado drillers are gearing up for a fight after Democratic lawmakers proposed overhauling the state's oil and gas commission and reforming regulations that could create new roadblocks to fossil fuel development. Two of the state's top Democrats introduced the legislation late Friday. They are calling Senate Bill 181 — Protect Public Welfare Oil and Gas Operations — "the most meaningful changes to oil and gas regulations Colorado has seen in over 60 years." The move comes just months after the Colorado oil and gas industry celebrated the defeat of new restrictions on drilling in a referendum in November. The legislation could curtail drilling in one of the nation's top oil and natural gas producing states, where advanced technology like hydraulic fracturing has sparked a production boom over the last decade. That could affect Colorado-focused frackers and larger drillers with a footprint in the state, like Anadarko Petroleum and Noble Energy. The bill would give cities and counties more influence over regulation, including inspecting oil and gas facilities and imposing fines over spills. It would also change the mission of the Colorado Oil and Gas Conservation Commission from fostering the development of the state's fossil fuels to regulating the industry. The lawmakers also propose overhauling the powerful commission's makeup, cutting the number of members required to have industry experience from three to one. They would require at least one member of the commission to have training in several fields, including wildlife and environmental protection, soil conservation and public health. Another measure would raise the threshold for the number of mineral rights holders that would need to give their approval before drillers can tap a shared pool of oil and gas, making it potentially more difficult to develop some reserves.

The Next Major Flashpoint For US Shale - Colorado is overhauling the laws governing how the oil and gas industry operates in the state.  The legislation seeks to put more protections on public health, safety and the environment as it relates to oil and gas development. Colorado has emerged as a major source of shale drilling in recent years, and as new fracked wells proliferate, they have encroached upon denser populations, particularly around the suburbs north of Denver.  Last year, a public referendum on increasing the required setback distance for shale wells from homes and schools became a huge flashpoint. The industry poured money into the vote, vastly outspending proponents of greater setbacks. Expanding setback distances would have put a lot of drilling off limits, so much so that the industry said it threatened to grind oil and gas production to a halt. The vote went down in defeat, and the shale industry breathed a sigh of relief. But the same election also delivered victories for proponents of more regulation. The new governor is less of an ally of oil and gas interests than the former governor, and Democrats scored gains in the legislature. That brings us to today, where the legislature is looking to overhaul oil and gas regulations, which the industry sees as a threat to its operations.The bill would do several things.First, it would grant more authority to cities and counties to regulate drilling operations in their jurisdictions. This has been a perennial fight in Colorado. Several years ago, a series of bans on fracking in individual cities set off legal battles. The Colorado Supreme Court shot down those prohibitions and drilling accelerated across key parts of the state. The new legislation would give local communities more say on siting, inspections and other matters – a more modest proposal than the fracking bans and moratoria of years past. Currently, the state’s interest in developing oil and gas supersedes local interests. The state regulator can, by itself, approve the siting of a drilling operation. Under the proposed changes, drillers would need local permits for siting. The legislation would also restrict the use of “forced pooling,” which allows a company to drill in an area that has multiple landowners so long as just one of the landowners approves. They can drill even if other landowners in that “unit” are opposed. The proposed changes under consideration would require at least 50 percent of landowners to offer their consent. Royalty rates would also increase slightly. As it stands, non-consenting landowners receive a 12.5 percent royalty rate. That would rise to 15 percent “It all but guarantees the industry could not operate in certain jurisdictions,” Tracee Bentley, executive director of the Colorado Petroleum Council, told a state senate committee. The bill would send the message that “Colorado is closed for business.”

Utah oil spill reaches San Juan River - A pipeline break discovered March 1 in southeast Utah spilled a mixture of oil and produced water that reached the San Juan River near Montezuma Creek, according to the Environmental Protection Agency. A broken wellhead-gathering line operated by Elk Operating Services spilled about 28 barrels, or 1,176 gallons, into Bucket Wash and the San Juan River, according to an EPA incident report. One barrel equals 42 gallons. The source of the leak has been isolated and secured. The spill flowed 3.5 miles down Bucket Wash with an estimated 3-4 barrels reaching the San Juan River. It flowed downstream to Sand Island Campground and boat launch, near Bluff, where cleanup crews were stationed. Spill recovery is wrapping up, said Katherine Jenkins, community involvement coordinator for EPA Region 8.Booms were placed in the San Juan River at the confluence of Bucket Wash and at Sand Island to prevent the oil slick from traveling farther downstream. Skimmers and vacuum trucks were deployed to remove the fluids. Cleanup was also done in Bucket Wash.  The cause of the pipeline break is under investigation, Jenkins said, and whether the company will face penalties has not been determined. The impacts of the oil spill on the environment also are being investigated.  The site of the release was on land managed by the Bureau of Land Management and upstream of the Navajo Nation lands.

Noem offers bills aimed at possible Keystone XL protests  (AP) — South Dakota Gov. Kristi Noem said Monday that she’s proposing a new framework for oil pipeline construction before building starts on the Keystone XL pipeline, introducing legislation that would require companies behind such projects to chip in on protest-related expenses and create a way to go after the money of those who fund destructive demonstrations.Noem said she wants make sure there’s enough funding so local governments don’t bankrupt themselves during construction. She also wants officials to be able to aggressively pursue people who financially back violence and gain access to those funds as well.The push comes late in the state’s 2019 legislative session, timing that critics panned.   “To the best of our knowledge, this type of approach has not happened anywhere in the nation before, and this next-generation pipeline construction model was developed to directly address issues caused by out-of-state rioters funded by out-of-state interests that have attacked nearby projects,” Noem said. “The current model for developing major energy infrastructure projects clearly needed to have an update.”Noem’s bills come after opponents of the Dakota Access oil pipeline staged large protests that resulted in 761 arrests in southern North Dakota over a six-month span beginning in late 2016. The state spent tens of millions of dollars policing the protests. Officials are working hard to make sure disruptive and violent protests don’t happen in South Dakota with Keystone XL, Noem said. The American Civil Liberties Union of South Dakota said the legislation could infringe on free speech rights. One bill would tap a pipeline developer, among other sources, to fund expenses in areas such as law enforcement that arise from pipeline protests. Approved claims from the state, cities or counties would be billed to the pipeline developer, which could contest the claims. The other bill would create an avenue for the state to seek money from people who engage in “riot boosting.” Under the bill, individuals or groups would be liable if they encouraged people in a riot to be violent.

Potential North Dakota oil tax misallocation blamed on 'ambiguous' state law, but treasurer disagrees -- A North Dakota legislative leader said Monday he expects to decide this week how to address what the state’s land commissioner described as a misallocation of millions of oil tax dollars.The issue involves the state's share of oil extraction tax money generated by activity on the Fort Berthold Indian Reservation. Land Commissioner Jodi Smith said she discovered that two constitutional funds have been shorted more than $120 million in roughly the past decade, and money has instead flowed to other state funds.The two potentially shorted funds are the Common Schools Trust Fund and the Foundation Aid Stabilization Fund, which benefit all public schools in the state. Smith said the Water Resources Trust Fund could be affected as well.Smith, who was chosen as the new head of the state Department of Trust Lands in late 2017, said she came across the discrepancy by being "inquisitive" about agency issues. Her department is responsible for managing permanent educational trust funds and sovereign mineral acres, among other duties. "We just continued to kind of look into it and look into it," she said, adding that "a lot of people were under the assumption that we did receive that."

Judge finds law defining mineral ownership under Lake Sakakawea constitutional -- — A new North Dakota law better defining oil and gas ownership under Lake Sakakawea is constitutional but requires the state to refund too much money, a judge ruled Wednesday, Feb. 27. East Central Judicial District Judge John Irby issued a 25-page order in the lawsuit from Rep. Marvin Nelson, D-Rolla, former governor candidate Paul Sorum and others that challenged legislation approved by lawmakers in 2017. The taxpayers argued they were seeking to prevent the state Board of University and School Lands from “giving away” up to $2 billion in oil and gas mineral rights in coming years, challenging the law as unconstitutional. Attorneys representing North Dakota said the law is not a giveaway, but a process to define the boundary of the state’s mineral interests. The legislation sought to clarify ownership of minerals under Lake Sakakawea through a review of the historic ordinary high water mark of the Missouri River as it existed before the Garrison Dam. Irby ruled in favor of the state, finding the law itself is constitutional. Irby wrote the law “codifies the state’s policy of not making any claims to the minerals above the ordinary high water mark of the historic Missouri River channel.” But a second portion of his ruling fell in favor of the taxpayers. Irby wrote he is “troubled” with the implementation provisions of the law, which were estimated to reduce state revenues by $205 million by refunding oil royalty, rent and bonus payments.

Tribes accuse Corps of withholding pipeline study records— Tribes battling the Dakota Access oil pipeline in court are accusing the Army Corps of Engineers of withholding dozens of documents that could bolster their case that the pipeline could unfairly impact them. Many of the records that attorneys for the four Sioux tribes allege are missing relate to the pipeline’s crossing beneath the Lake Oahe reservoir on the Missouri River in the Dakotas, which the tribes rely on for drinking water, fishing and religious practices. Fears of a spill into the river sparked prolonged protests in 2016 and early 2017 that drew thousands of pipeline opponents from around the world to southern North Dakota. The Corps, which permitted the $3.8 billion pipeline that began moving North Dakota oil to Illinois in June 2017, “produced a fragmented and incomplete record designed to defend a flawed agency action, one that omits key documents important to the tribes’ legal challenge,” attorneys for the Standing Rock, Cheyenne River, Yankton and Oglala Sioux tribes wrote in a Wednesday court filing. They implored U.S. District Judge James Boasberg to order the Corps to turn over the requested documents. The Justice Department, which represents the Corps, declined comment. Boasberg in June 2017 ruled that the Corps “largely complied” with environmental law when permitting the pipeline built by Texas-based Energy Transfer Partners, but he ordered more study on tribal impacts. The Corps in August 2018 said it had finished more than a year of additional study and that the work substantiated its earlier determination that the pipeline does not pose a higher risk of adverse impacts to minorities. The tribes are challenging the assertion, hoping to persuade Boasberg to shut down the pipeline.

U.S. will soon surpass Saudi Arabia in petroleum exports: Rystad - The United States' surging oil and gas production will soon allow the country to surpass Saudi Arabia in liquid petroleum exports. While Saudi Arabia will remain the top crude oil exporter, the U.S. is destined to usurp the kingdom as soon as late 2019 when it comes to overall liquid petroleum exports, including fuels and some natural gas liquids, according to a new report from the Norwegian research firm Rystad Energy. "Increasingly profitable shale production and a robust global appetite for light oil and gasoline is poised to bring the U.S. to a position of oil dominance in the next few years," said Rystad Energy senior partner Per Magnus Nysveen.The U.S. is producing a record high of more than 12 million barrels of crude oil a day, including about 5 million barrels daily from Texas alone, according to the U.S. Energy Department. The country is exporting more than 8 million barrels of petroleum liquids per day, including about 3 million barrels of commercial crude oil. The other petroleum liquids include gasoline, jet fuel, natural gas liquids like propane, other oils and distillate fuel oil, which is used to make diesel and heating oils. That compares to Saudi Arabia exporting 9 million barrels of liquid petroleum products a day, including 7 million barrels of commercial crude. RELATED: Oil slides on economy fears, stuck in tightest range since 2017 "The political and economic impact of this shift in global trade has already been dramatic, and will be even more pivotal within the next five years," Nysveen added. "The U.S. trade deficit will evaporate and its foreign debt will be paid quickly thanks to the swift rise of American oil and gas net exports," he said. "The tanker shipping industry will see the boom of the millennium, as the excess fossil fuels from America will find plenty of eager buyers in fast-growing Asia." U.S. crude production should exceed 13 million barrels a day by the end of the year, including about 4 million barrels of crude exports daily.

Bethany McLean: Saudi America & The Truth About Fracking - For years now we've been covering the false promise of the American shale oil "miracle". Yes, it has extracted a lot more oil out of American soil that most thought possible. But at an economic loss. And at great environmental cost.If the shale drilling companies can't make any profit, either when oil prices are high or low -- why are we still pursuing shale deposits so aggressively?To shed further light on this paradox, this week we welcome journalist Bethany McLean to the program. McLean is editor-at-large at Fortune Magazine and a contributing editor for Vanity Fair and Slate magazines. She is also author of the excellent book: Saudi America: The Truth About Fracking And How It's Changing The World. McLean warns that the hype, the hucksterism, and the geological shortcomings of the deposits themselves, are setting up both investors and American society for tremendous disappointment: The real catalyst of the shale revolution was the Great Financial Crisis and the era of unprecedentedly-low interest rates that followed. And that had two effects. One was that it made debt cheap. So these companies that are heavily dependent on being able to raise capital could raise debt at low prices. And without that, I’m not sure there would’ve been a shale revolution because they needed such immense amounts of capital to fund their drilling. But it had a second impact, which is that when pension funds were no longer able to earn a return in traditional fixed income markets, they’ve increasingly put their money into riskier assets like hedge funds that invest in credit and private equity firms. Those entities, in turn, have increasingly invested in shale. Now there’s a lot of money that believes believes the story that technological improvements are going to make this industry profitable in the long run. But there are lots of ways that private equity firms and other investors can make money even if the companies themselves don’t. And what I mean by that is that for a long time, a shale company that was publicly traded was valued not on its profits but rather, on a multiple of its production or its reserves.

US energy secretary warns anti-OPEC bill could bring oil price spike - US Energy Secretary Rick Perry said Thursday that anti-OPEC legislation under consideration in Congress could lead to an oil price spike by preventing the world's producers from managing supply. Perry essentially defended OPEC's role of balancing oil supplies and delivered a critique of the proposed bill for which President Donald Trump has repeatedly expressed support, although not since taking office. The White House, which did not respond to a request for comment on Perry's remarks, has not said whether Trump would sign the bill if Congress passes it. The House Judiciary Committee on February 7 unanimously approved the No Oil Producing and Exporting Cartels Act, clearing it for a vote by the full House of Representatives. A similar bill introduced in the Senate has not received a vote. Versions of the so-called NOPEC legislation have been introduced for two decades without going anywhere. "I think we need to be really careful before we pass legislation that may have an impact that goes way past its intended consequence," Perry said during a press conference at the Department of Energy headquarters, joined by International Energy Agency Executive Director Fatih Birol. Perry said the global oil market still needs supply management. "I'm for stable pricing which is directly related to supply," he said. "If you remove that, and there is no coordination of supply to the market, you could have a massive amount of energy supply come into the marketplace and impact producers." Perry said that would push some producers out of the market, leading to underinvestment, lower production and an eventual price spike.  IEA's Birol testified to Congress later Thursday that global refiners are preparing for the implementation of IMO's 0.5% sulfur cap on marine fuels. Birol said there was initially a "bit of panic" in the oil industry about the rules, but now refiners are adjusting to the impending regulations. "There may be some temporary price spikes for diesel and jet fuel prices, but we think the market will adjust and we don't expect those price spikes will be long-lasting and big," he said.

Shale Companies In Turmoil As Newer Wells Drink Their Milkshake - US shale companies' decision to drill thousands of new wells closely together - and close to already existing wells - is turning out to be a bust; worse, this approach is hurting the performance of wells already in existence, posing an even greater threat to the already struggling industry. In order to keep the United States as an energy supplying powerhouse, shale companies have pitched bunching wells in close proximity, hoping they would produce as much as older ones, allowing companies to extract more oil overall while maintaining good results from each well.These types of predictions helped fuel investor interest in shale companies, who raised nearly $57 billion from equity and debt financing in 2016 – up from $34 billion five years earlier, when oil was over $110 per barrel. In 2016, oil prices dipped below $30 a barrel at one point.And now - surprise – the actual results from these wells are finally coming in and they are quite disappointing. Newer wells that have been set up near older wells were found to pump less oil and gas, and engineers warn that these new wells could produce as much as 50% less in some circumstances. This is not what investors - who contributed to the billions in capital used by these companies back in 2016 - want to hear.  Making matters worse, newer wells often interfere with the output of older wells because creating too many holes in dense rock formations can damage nearby wells and make it harder for oil to seep out. The "child" wells could also cause permanent damage to older "parent" wells. This is known in the industry as the "parent-child" well problem.  Billionaire Harold Hamm, who founded shale driller Continental Resources, said last year: "Shale producers across the country are finding you can get a lot of interference, one well to the other. Laying out a whole lot of wells can get you in trouble.”Some of the biggest names in shale, including Devon Energy, EOG Resources and Concho Resources, have already disclosed that they are suffering from this problem. As a result, they and many others could be forced to take massive write-downs if they have to downsize their already optimistic estimates from drill sites.

Be Wary Of Unrealistic Shale Growth Expectations - U.S. shale drillers are facing a serious problem: Their wells are not producing as much oil and gas as they had anticipated. When facing shareholder scrutiny, shale drillers have countlessly hyped the litany of technological breakthroughs, efficiency gains and innovative drilling techniques.  But the hype has slammed into reality on a few fronts.   First, after years of bankrolling the shale industry in hopes of juicy profits, Wall Street is starting to lose patience. Some companies turn a profit, but the industry on the whole has been losing money since its inception in the mid-2000s.  A second – and no less damning – development is starting to occur on the operational side of things. Shale companies are finding that the returns on pushing their drilling practices to evermore intense frontiers are beginning to fizzle. For years, drillers increased the length of their laterals, injected more and more sand and water underground, and packed wells closer and closer together. These techniques of intensification promised to produce more oil and gas for less money.Suddenly, there is evidence that the industry is running into a wall. The Wall Street Journal reported that shale wells placed too close together are starting to report unexpectedly disappointing results. The thinking is that the wells are interfering with each other. Adding more wells seems to be reducing the productivity of all the wells situated in close proximity. This so-called “parent-child” well problem, in which additional wells (the “child” wells) undercut the performance of the original well (the “parent”), may be the beginning of a larger problem with the shale industry.The WSJ says that some of the newer wells are producing as much as 50 percent less than the parent wells. Ultimately, when all is said and done, adding more wells may actually result in less oil and gas recovered since the pressure drops and the reservoir suffers damage. Not only are child wells less productive than the parent, but they actually cannibalize production from the parent wells by sapping reservoir pressure and in some cases flooding the parent well with fracking fluids from the child well. For instance, wells placed 375 feet apart may produce 28 percent less than wells produced 600 feet apart, the WSJ analysis finds. The figures grow worse the more the wells are packed tightly together – placing them only 275 feet apart results in a 40 percent decline in output relative to those placed 600 feet apart.But companies can’t simply space out the wells and still achieve the same production targets. They have finite acreage, sometimes carved up in a patchwork, so it’s not always possible to simply stretch out the same number of planned wells over longer distances. In other words, the parent-child well problem may mean that companies will have to drill fewer wells than they had anticipated. That means that they could be facing “an industrywide write-down if they are forced to downsize the estimates of drill sites they have touted to investors, some of which promised decades’ worth of choice spots,” the WSJ concluded.

Sumas gas prices set US record as Arctic blast descents. - Natural gas spot prices at Sumas, WA, on Friday went as high as $200/MMBtu, a record price not only for the Pacific Northwest spot gas market, but for the U.S. That level surpassed even the highest price seen in the premium Northeast market in the pre-Shale Era. Other Western prices also rose Friday but not to anywhere near Sumas, with intraday highs at the other hubs mostly staying below $10/MMBtu. This is just the latest instance of turmoil in the Pacific Northwest gas market since last fall, when a rupture on Enbridge’s Westcoast Energy/BC Pipeline system (on October 9) disrupted Canadian gas exports to Washington State at the Sumas border crossing point. Ongoing testing on the Westcoast system and the resulting capacity reductions for deliveries to Sumas, along with reduced deliverability at the region’s largest storage facility, Jackson Prairie, over the past month have made the Pacific Northwest more of a demand “island” than ever, especially as those issues coincide with this week’s polar-vortex weather. Sumas prices for today’s flows re-entered the stratosphere, averaging just under $16/MMBtu, but remained the highest price in the country. Today, we review the market conditions contributing to the sky-high prices.

Analysis: Alberta natural gas storage inventory decline points to upside for AECO this summer — As natural gas storage inventories in Alberta plunged compared with the five-year average due to the frigid temperatures seen over the past month, which are expected to continue in March, the increased demand for injections required later in 2019 is expected to drive AECO hub's summer basis higher, according to S&P Global Platts Analytics.Temperatures in Calgary started off relatively warm this winter, averaging 5 degrees Fahrenheit above normal from November 1 through January 31. However, frigid temperatures entered the picture in February, with Calgary seeing average temperatures 24 F below normal. As a result, demand on the NOVA Gas Transmission (NGTL) system in Alberta averaged 7 Bcf/d in February, 27.3% above the 5.5 Bcf/d five-year February average and 11.1% higher than the 6.3 Bcf/d average in January, according to Platts Analytics data. As demand was surging, production dropped 0.5 Bcf/d month on month in February, due to freeze-offs and NGTL maintenance.The increase in demand and decrease in output has boosted AECO considerably, the cash premium for which climbed to $1.13/MMBtu above Henry Hub in trading last week. On Monday, it was down only 1 cent at $1.12/MMBtu premium. In January, cash AECO averaged a $1.71/MMBtu discount to Henry Hub. In February 2018, cash AECO averaged a 28 cent deficit to Henry Hub.  Since the cold weather moved in early February, withdrawals on NGTL's storage system, which serves as a proxy for Alberta storage as a whole, accelerated to average 2 Bcf/d, an increase of 0.7 Bcf/d compared with January, according to Platts Analytics. The higher demand looks set to linger into March and maybe even April. The two-week forecast calls for the cold temperatures to persist, while Canadian government forecasts are calling for the cold snap to continue through April. If withdrawals continue at a clip roughly 20% above the five-year average through the end of March, Alberta storage levels would be down to 240 Bcf by month's end. If this happens, in order to reach end-of-summer 2018 levels of 380 Bcf, average summer injections must average 0.65 Bcf/d, according to Platts Analytics data. The average daily injection would have to rise 80.6% compared with last summer's 0.36 Bcf/d.

Fracking connection probed in 4.6-magnitude earthquake near Red Deer - The Alberta Energy Regulator is working to determine if a fracking operation caused an earthquake near Sylvan Lake and Red Deer on Monday.Natural Resources Canada said a 4.6-magnitude earthquake rocked parts of central Alberta just before 6 a.m. The federal department’s website said the tremor was classified as a light earthquake.The AER has confirmed Vesta Energy had been fracking in the area just prior to the quake, which was detected by the company’s private seismic monitoring devices around 12 kilometres south of Sylvan Lake at a magnitude of 4.16.The AER said the earthquake was reported to them by the company at 6:20 a.m.“We are currently reviewing the events to determine if the incident is due to hydraulic fracturing activities or natural causes,” said Natalie Brodych, spokeswoman with the AER.The regulator said Vesta has stopped work at the site while the AER investigates whether fracking led to the quake.Earthquakes Canada initially had trouble pinpointing the earthquake, locating it first northeast of Red Deer, then south of the city. The most recent update has placed it 19 kilometres west of Red Deer, near Sylvan Lake. The earthquake occurred about a kilometre below the surface.

Fracking Suspended At Vesta Energy Ltd. Site Linked To Red Deer, Sylvan Lake Earthquake — The Alberta Energy Regulator has ordered a company to suspend fracking operations at a well site linked to an earthquake that was felt in the communities of Red Deer and Sylvan Lake. Natural Resources Canada says the 4.6 magnitude earthquake occurred in central Alberta around 5:55 a.m. on Monday.The regulator says Vesta Energy Ltd. must suspend hydraulic fracturing operations at the site.It says Calgary-based company must submit a report of all seismic activity in the area since April and specific fracturing data for the well site from Jan. 29 to Monday.The regulator has also ordered Vesta to file a plan to eliminate or reduce future seismic activity from fracturing.Hydraulic fracturing involves pumping chemicals and sand underground to break up rocks to help get oil and natural gas flowing. "A Vesta representative contacted the AER through the 24-hour emergency response number at 06:20 a.m. on March 4, 2019, and informed the AER that seismic activity of magnitude 4.32 was detected due to Vesta's fracturing at the site, and that Vesta had shut down the fracturing operation," the regulator said in a release Tuesday."All operations at the site are suspended immediately unless otherwise directed in writing by the director."There were no immediate reports of damage but the community of Sylvan Lake said the power went out in most of the town Monday morning.

Enbridge files $29.5 million suit over 2017 pipeline spill near Edmonton - Pipeline giant Enbridge has filed a $29.5-million lawsuit against four companies over a 2017 spill it says was caused by construction on another pipeline nearby. Enbridge’s Line 2A pipeline east of Edmonton breached on Feb. 17, 2017, causing nearly 1,000 cubic metres of crude oil condensate blend to spill into the surrounding construction site, west of Anthony Henday Drive near 92 Avenue. Enbridge filed a statement of claim against the four companies on Feb. 15, claiming they played a role in puncturing the pipeline. The claim names four defendants: Grand Rapids Pipeline GP Ltd., Ledcor Pipeline Limited, Jay-Nart Directional Drilling Ltd., and Alberta Hot-Line Ltd. Statements of claim contain allegations that have not been proven in court. According to the claim, Grand Rapids — owned by TransCanada and PetroChina Canada — sought permission in 2016 to run a pair of pipelines above and below eight Enbridge lines east of Edmonton. Enbridge allowed the crossing, but set out strict rules for how construction would take place near its pipelines. To install Grand Rapids’ 20-inch pipeline, contractors were to perform an open cut excavation around three Enbridge pipelines, including Line 2A. However, Enbridge’s claim alleges the defendants instead opted to install the pipeline by boring horizontally across the entire Enbridge corridor, a technique that was “different and more risky than what was contemplated under the crossing agreement.” Enbridge claims the project was “behind schedule and over budget” at the time. The defendants allegedly began boring west to east on Feb. 17, 2017, to create a hole for the pipeline. At around 3 p.m., Enbridge says a 28-inch reamer used to drill the hole struck Line 2A, spilling 988 cubic metres of oil. According to the Transportation Safety Board, the oil was contained to an excavated area on the construction site, which was on land owned by Shell Canada. Most of the oil was recovered. The agency found a “lack of field measurements” to confirm the locations of buried pipelines along the route contributed to the breach. Enbridge’s claim asks for $29.5 million to cover lost product, cleanup costs, business interruptions, repairs and ongoing environmental consultations, assessments and reclamation work.

SeaRose spill results in $70-million deferred revenue for budget 2019 - November’s oil spill from the SeaRose FPSO will result in $70-million in deferred revenue in Budget 2019. Finance Minister Tom Osborne says the $70-million is not lost, but rather deferred because the oil is still in the ground, and at some point they will get the revenue. Osborne says he would have preferred to have the revenue in this year’s budget, as it would’ve helped to ensure forecasts remain on track. The Finance Minister says deferred oil production will impact the 2018-19 Budget. Osborne says production and price of oil are both affected. At this stage, he says the cost of oil is above $70 a barrel on an annual basis, and they budget for $63. Opposition Leader Ches Crosbie is raising the alarm following revelations that the area of November’s spill from the SeaRose FPSO had reached the size of Fogo Island on the surface of the water. Crosbie questioned Natural Resources Minister Siobhan Coady in the House of Assembly this afternoon. He wanted to know if the Minister was aware of the area of the ocean covered by the spill. Minister Coady says within hours of the spill, the amount of oil spilled—250,000 litres—was known. The spill occurred as officials were in the process of resuming production following a shutdown caused by one of the most intense storms in the offshore in decades. Sea states were still high at the time. Production has yet to resume on the SeaRose. Minister Coady says Husky is awaiting an appropriate weather window to recover the failed connector and plug the flowline. She says the situation is being monitored and Husky is still waiting on a four-day weather window.

Delays of Mexico oil, gas auctions will slow revenue, production growth: commissioner — Mexico's decision to delay auctions on new oil and gas development until at least 2021 will result in billions of dollars in revenue losses and significantly stymie new production over the next decade, a member of the country's National Hydrocarbon Commission said Tuesday. "Every year you don't have a bidding, it's going to cost you $1 billion," said CNH Commissioner Hector Moreira Rodriguez during an event at the Wilson Center's Mexico Institute in Washington. Moreira estimated that by delaying auctions, Mexico's oil output may reach roughly 2.7 million b/d within a decade, up more than 1 million b/d from current production levels, but roughly 300,000 b/d below where output could be if auctions were held as originally planned. Delaying "has a cost," Moreira said. "Let's hope we can convince them to start earlier." Production growth could be further slowed if additional auctions are delayed, he said. In December, new Mexican President Andres Manuel Lopez Obrador announced that Mexico would halt its hydrocarbon auction rounds by three years, a decision expected to complicate the president's pledge to boost oil production to 2.4 million b/d by 2024. According to a transition report issued by the outgoing administration of Enrique Pena Nieto in December, a two-year delay in auctions would cause oil output to reach 2.46 million b/d by 2027, compared with 3.07 million b/d if the auctions were held as originally planned. Similarly, if auctions continue, Mexico would produce 7 Bcf/d of natural gas by 2028, 640 MMcf/d more than if the lease sales are shelved for two years, according to the report. But even with auctions proceeding as planned, infrastructure constraints, declines in existing oil fields, mounting Pemex debt, concerns from investors and Lopez Obrador's push towards energy nationalism, panelists at Tuesday's event dismissed any forecast calling for significant oil output growth in Mexico.

Recent fuel shortages in Mexico accelerating private imports, BP joins Total and Repsol — Fuel shortages experienced in Mexico earlier this year are incentivizing major oil companies to rely less on Pemex's supply logistics system, market observers said Friday. BP will join a limited group of major fuel wholesalers that are importing gasoline and diesel to Mexico later this year, the company announced Tuesday. Repsol and Total made similar announcements earlier this year, joining ExxonMobil, Glencore and Marathon Petroleum as Mexico's only private gasoline importers. In the second quarter, BP will begin trucking 15,000 b/d of gasoline and diesel from Texas and later rail it into northern, central and western Mexico by the second half of 2019, the company said in a statement. BP plans to develop 10 new terminals within five years in the country and imports fuel from Ohio, Texas and Washington state, Alvaro Granados, BP Mexico's downstream director, told news agency AFP on Thursday. Despite this, Granados said BP would continue working with Pemex as a strategic partner. "This won't be an alternative supply chain ... We don't want to skip Pemex nor break what is for us a strategic alliance," he added. The company has only announced participating at one terminal to date, IEnova's 500,000-barrel Baja Refinados storage and distribution terminal in Northwestern Mexico. BP contracted half of the terminal's capacity, which is expected to be operational in 2020. The anti-fuel theft strategy implemented by President Andres Manuel Lopez Obrador in December affected major fuel retailers like BP that depended on Pemex to supply their retail stations, Gonzalo Monroy, director of Mexico City-based energy consultancy group GMEC, told S&P Global Platts. During the height of fuel shortage crisis in mid-January, according to Mexican federal consumer protection agency Profeco, 70% of retail stations it visited during the weekend across 11 states in Mexico's western and central regions were closed due to lack of fuel.

Sheffield takes tough stand against fracking - The Star - Sheffield has taken a formal stand against fracking with a new council policy that automatically opposes it. The council will write into its planning policies a ‘presumption’ against any request to drill for shale gas – which means it will take an automatic stand against fracking. It was a surprise win for the Liberal Democrats who came up with the suggestion and were pleased to see it approved by all parties at full council. Sheffield now joins the ten local authorities that make up Greater Manchester who have all adopted a region-wide policy of opposition to fracking. Lib Dem Leader Coun Shaffaq Mohammed said: “Fracking is old fashioned, we need to move away from old technologies and move towards renewable energy if we are serious about tackling climate change. “Fracking in the United States has decimated areas and communities here in the UK are up in arms and don’t want it.” Daniel Carey-Dawes, infrastructure policy manager at the Campaign to Protect Rural England, welcomed Sheffield’s policy but warned the Government could still overrule it. He said: “As yet another sizeable local authority joins the long list of those firmly against fracking, the question remains why the Government seems intent on overruling local democracy with its latest fracking proposals. “Councils who are on the doorstep of fracking locations – current or potential – have a duty to represent the serious concerns of their local electorate about their countryside and environment, but this ability will be ripped away if the Government ploughs ahead regardless.” 

Fracking: Government guidance 'unlawful' rules High Court -- New government guidance on fracking is unlawful, the High Court has ruled. Campaign group Talk Fracking argued that the government had not considered the latest scientific evidence when formulating its policy. Ministers have been advising councils that gas from fracking in their area would help combat climate change. But a judge found that the government had failed to consider the latest evidence. Justice Dove ruled that "material from Talk Fracking, and in particular their scientific evidence as described in their consultation response, was never in fact considered relevant or taken into account" when formulating the revised policy. He also ruled that the government had unlawfully failed to carry out a lawful public consultation when the policy was revised. The judgment applies to England only. Claire Stephenson, who brought the claim on behalf of Talk Fracking, said: "We are delighted that the court has agreed in part with our arguments that the government's policy on fracking is unlawful. "The government have continually sought to ignore public opinion on fracking, despite the overwhelming opposition on a national level. Planning guidance issued by the government last year says local councils should "recognise the benefits of on-shore oil and gas development ... for the security of energy supplies and supporting the transition to a low-carbon economy." It adds that planning authorities should "put in place policies to facilitate their exploration and extraction." Following the ruling, a spokeswoman from the Department of Housing, Communities and Local Government said: "We note the judgment in the case brought by Talk Fracking, and will now consider our next steps."

World's largest sovereign wealth fund to scrap oil and gas stocks - Norway's trillion-dollar sovereign wealth fund plans to dump oil and gas companies from its benchmark index, the finance ministry announced on Friday.The move, initiated by Norges Bank which manages the fund, is designed to make the Norwegian government's wealth less exposed to a lasting drop in oil prices."The Government is proposing to exclude companies classified as exploration and production companies within the energy sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy," the finance ministry said in a statement published on its website.The exclusion will affect companies that explore and produce oil and will not impact integrated oil and gas companies such as BP and Shell. The Norwegian government also said that the companies to be excluded are those belonging to FTSE Russel's Index sub sector called exploration and production. According to the government, the value of 134 stocks to be excluded from fund amounted to NOK 70 billion ($7.9 billion), Reuters reported.Shortly after the announcement, energy stocks worldwide extended losses on Friday morning.International benchmark Brent crude traded at around $65.18 on Friday, down around 1.7 percent, while U.S.West Texas Intermediate (WTI) stood at around $55.78, more than 1.6 percent lower.Energy stocks are notoriously volatile. Brent crude collapsed from a near four-year high of $86.29 in early October down to $50.47 in late December — marking a fall of more than 40 percent in less than three months. Norway's government said on Friday that the fund would still be allowed to invest in oil and gas firms so long as they were committed to activities concerning renewable energy.

US sanctions on Venezuela creating strong pull for HSSR from Europe to USGC - — A strong pull from the US Gulf Coast for high sulfur oil products has emerged amid US sanctions on Venezuela, drawing heavy flows of high sulfur straight run cargoes from the Baltic and Northwest Europe across the Atlantic. The sanctions against Venezuela's state-owned oil company PDVSA, introduced on January 28 and expected to remain in effect until Venezuelan President Nicolas Maduro leaves office, have forced US Gulf Coast refiners to scramble for new sources of heavy crude and cut off flows of US refined products and diluents to Venezuela. Displaced heavy crude barrels mean there are less heavy byproducts being produced by refineries in the US that would typically run Venezuelan crudes. Consequently, refineries in the USGC have turned to HSSR to process in their crude distillation units. HSSR is used as alternative to crude when medium to heavy sour crude prices are high. In parallel, the Urals crude market has maintained strength, with Urals NWE last assessed at forward Dated Brent minus 75 cents/b on Tuesday, compared with minus $2.7/b this time last year. An increase in Urals differentials would typically boost the feedstocks market, particularly high sulfur feedstocks such as HSSR. The arbitrage from the Baltic Sea was said to be workable by numerous sources, with many attributing it to the counterseasonal strength in the high sulfur fuel oil crack amid falling supply from Russia, a strong pull for product from Singapore, and ongoing refinery upgrades globally in preparation for the International Maritime Organization's sulfur cap, which will require sulfur content in marine fuels to be cut to 0.5% from next year from 3.5% currently. The front-month fuel oil crack was last seen trading on ICE Wednesday at minus $3/b, compared with minus $10.72/b this time last year. The front month fuel oil crack reached the narrowest discount on February 13 at $2.6/b, since the assessment began in June 2006. HSSR is currently trading below the HSFO crack, one source said, providing more of an incentive to work the arb for HSSR, a cheaper alternative, from the Baltic ports to the USGC.

Germany Plans To Directly Regulate Russia-led Nord Stream 2 Gas Pipeline - Germany will be looking to regulate the controversial Russia-led Nord Stream 2 natural gas pipeline project using its national sovereignty, a senior German energy official said on Monday in comments implying that only the EU section of the pipeline would fall under the recent changes in the European Union’s gas directive. “We would like to say that we will be implementing this compromise directly, and do not see any need for a further mandate,” S&P Global Platts quoted German parliamentary state secretary at the federal energy ministry, Thomas Bareiss, as saying at the EU energy ministers’ council in Brussels on Monday.Germany is the end-point of the controversial Nord Stream 2 pipeline project, which will follow the existing Nord Stream natural gas pipeline between Russia and Germany via the Baltic Sea. Germany supports Nord Stream 2 and sees the project as a private commercial venture that will help it to meet rising natural gas demand.  Several European companies—ENGIE, OMV, Shell, as well as Germany’s Uniper and Wintershall—are partners of Russia’s gas giant Gazprom in the Nord Stream 2 project.United States, however, has long opposed the Gazprom-led Nord Stream 2 gas pipeline and has hinted that it could impose sanctions on companies involved in the project.Several EU member states, including Poland and Lithuania, also see the new pipeline project as a threat to Europe’s energy diversification and as boosting Russia’s grip on European gas supplies even more. “We are...glad that gas pipelines will be covered by the sovereignty of the member states through whose territory or seas they go through, and will be the responsibility of that member state’s competent authorities,” Germany’s Bareiss said on Monday. According to Platts, the comments of the German official imply that Germany would not be seeking an inter-governmental agreement with Russia on the entire pipeline, but will instead focus on regulating the EU section of the project covering 12 nautical miles from the German coast.

Australia planning to import LNG: What's next? Coals to Newcastle? (Reuters) - Australia is on the verge of becoming the biggest exporter of liquefied natural gas, with dozens of tankers a week carrying fuel to North Asia. It could also soon be importing LNG as supply sources in its southern states run out. Five LNG import projects are vying to start up between 2021 and 2022, possibly forcing gas users in New South Wales, South Australia, Tasmania and Victoria into more direct competition with Asian buyers for gas from northern Australia. Those states represent a yearly market of 420 petajoules (PJ), equivalent to 7.8 million tonnes of LNG worth about $3 billion. That represents just 2 percent of global LNG trade, but import proponents say the terminals would be another key outlet for spot cargoes of the fuel, especially during periods of low demand in the northern hemisphere. Piping gas from Queensland in northern Australia to southern markets is expensive, making LNG imports potentially viable. Credit Suisse analyst Saul Kavonic says, though, if final investment decisions are delayed into 2020, the case for imports will weaken as pipeline tariff reforms are likely by then. “Based on the five proposals to date, Australia now appears to be planning to overbuild LNG import capacity in response to an overbuild of LNG export capacity,” Kavonic said. 

When insanity makes sense. Australia's best option is LNG imports: Russell (Reuters) - Australia has painted itself into a corner with its natural gas industry and faces the stark reality that there are no easy choices to alleviate the dual problem of a looming supply crunch and the associated higher prices. Australia is far from the first country to find itself with an energy issue, but it is unusual insofar as the country is about to become the world’s largest exporter of liquefied natural gas (LNG), and still it can’t get its policy settings right to ensure domestic supplies. It sounds counter-intuitive and somewhat bizarre, that a country that in 2019 will export nearly 80 million tonnes of LNG finds that the best solution to its domestic supply crunch is to start importing cargoes of the same super-chilled fuel. There was grudging acknowledgement at this week’s Australian Domestic Gas Outlook (ADGO) conference that LNG imports were likely the “least worst option”, as one of the delegates put it. In tracing the story of how Australia reached this point, a tale emerges of poor policymaking, overly ambitious LNG projects and a failure of natural gas users to realise that the market dynamics were permanently shifting. Much of the blame for the domestic natural gas problem is settled on three LNG plants built in Queensland state over the past seven years that tripled the amount of gas needed in the eastern Australia market. These three plants, with a combined capacity of about 25 million tonnes a year, were planned and executed on the basis that they would use their own reserves as feedstock. These reserves themselves were somewhat controversial, being based on coal seams, and while nobody doubts the engineering achievement of building three LNG plants based on a new type of natural gas, many now question the wisdom. The three ventures were built more or less at the same time and didn’t engage in any cooperative sharing of infrastructure, partly because of the difficulty in aligning the interests of so many various partners and partly because the authorities believed in a competitive gas industry. The net effect was that while the three projects were responsible for developing a massive new natural gas resource, they also sucked up the skills, capital and appetite from the rest of the industry to explore for gas for the domestic market. 

Asian LPG premiums surge on supply tightness, Houston shipping delays — Asian LPG premiums have ballooned amid supply tightness in the region for March and April deliveries, market sources said Wednesday. The spread for H1 April CFR Japan physical propane to the FOB Saudi Arabia CP April propane swap has averaged $18/mt to date this month, S&P Global Platts data showed. This is sharply higher than the whole month average spread for March CFR Japan physical propane to the FOB Saudi Arabia CP March propane swap of $12.83/mt, according to Platts data. The H1 April CFR Japan physical propane premium was $20/mt above the propane FOB Saudi Arabia CP April swap Tuesday, Platts data showed. Demand for Middle East LPG barrels was high not only because of the ongoing US-China trade tensions, a lack of Iranian cargoes due to sanctions and petrochemical end-users allocating more feedstock ratio to LPG, but also because buyers in Northeast Asia were seeking alternative barrels due to fog delays in Houston, sources said. "The Middle East market is tight, there is no doubt about it, and March [calendar trading] is tight because of delivery delays due to fog in Houston," a Singapore-based trader said. "Because of the delay, the cargoes that were supposed to reach in H2 March were delayed into H1 April, and so on. Because of the disruption, the market is stronger and April should have more cargoes, but the [physical] trade does not show that." In the spot physical market Tuesday, SK bid for a 23,000 mt propane cargo for H1 April delivery at FEI April plus $20/mt. This was higher than its best bid on Monday for the same requirement at FEI April plus $17/mt. South Korean trader E1 also bid for a H1 April delivery propane cargo Tuesday, at FEI plus $18/mt. 

Nuclear reactor restarts in Japan displacing LNG imports in 2019 -In 2018, Japan restarted five nuclear reactors that were shut down after the 2011 Fukushima accident. As those reactors return to full operation, the resulting increase in nuclear generation is likely to displace generation from fossil sources, in particular natural gas. Because Japan imports all of its natural gas in the form of liquefied natural gas (LNG), increased nuclear power production is likely to reduce Japanese imports of LNG in the electric power sector by as much as 10% in 2019. Japan now has nine operating nuclear units with a total electricity generation capacity of 8.7 gigawatts. Electricity generation produced by natural gas-fired plants in Japan has been declining annually from its peak in 2014 and is likely to decline further in 2019, while generation from nuclear units will likely increase. In response to the 2011 Fukushima accident, Japan suspended operations at all nuclear reactors for mandatory safety inspections and upgrades, leaving the country with no nuclear generation from September 2013 to August 2015. Existing coal-fired power plants were already operating near full load; therefore, utilities had to import large volumes of LNG to meet electricity demand. As the five nuclear reactors were gradually restarted in 2018, they began to offset natural gas-fired generation, and as a result, LNG imports decreased as the reactors reached full operation. In 2019, their first full year of operation, EIA estimates that the restarted nuclear reactors will further displace Japan’s LNG imports by about 5 million metric tons per year (MMmt/y), or 0.7 billion cubic feet per day (Bcf/d) of LNG. This amount is equivalent to 10% of Japan's power sector natural gas consumption and 6% of Japan’s LNG imports in 2018.  Consumption of crude oil and petroleum products by power plants also increased between 2011 and 2013, with utilities spending about $30 billion each year for additional fossil fuel imports in the three years following the Fukushima accident. Generation from crude oil and petroleum products returned to pre-Fukushima levels by 2014 mainly as a result of relatively high crude oil prices, and it has since declined further.

'Devastating' Impacts Feared as Oil Spill Threatens UNESCO Heritage Site in Pacific - An oil spill in the Pacific Ocean's Solomon Islands after a mining company's cargo ship ran aground is threatening an endangered environmental gem. "The impact of this oil spill will have a devastating effect on the surrounding environment, including potentially on a protected UNESCO World Heritage Site, as well as the livelihood of the people of Rennell," Australia's High Commissioner to the Solomon Islands Rod Brazier said in a statement. The ship, which was chartered by Indonesian mining company Bintan Solomon Islands, was carrying a load of bauxite — a stone used in aluminum production — when it ran aground on Rennell Island Feb. 5. Since then, oil has slowly leaked out of the ship into the surrounding waters. The disaster is unfolding next to the southern third of the island, known as East Rennell Island, which makes up the United Nations Educational Scientific and Cultural Organization (UNESCO) World Heritage Site. "East Rennell was inscribed on the World Heritage List in 1998 and is the largest raised coral atoll in the world,"  UNESCO said in a Feb. 20 statement on the spill.   Bintan has abdicated any legal responsibility for the spill, claiming that it was only the chartering company and thus had no liability for the crash. The ship's operator, King Trader Ltd., sent a team to salvage the ship,according to the Associated Press.  Yet Bintan has continued loading operations in the bay where the ship ran aground, stirring up the oil and making the problem worse, The Guardian reported.  "Bauxite extraction and loading is continuing in the bay," a source in the islands told the paper. "That is further churning up the oil."  New Zealand and Australia sent teams to help with the cleanup and salvage operations. Press reports said that 75 tons of fuel have spilled into the ocean already while 600 tons of oil remain on board.

Australia sends more help for Solomon Islands oil spill - Australia is sending more help to the Pacific nation of the Solomon Islands to stop oil from a grounded cargo ship destroying a World Heritage-listed marine sanctuary, Australia’s foreign minister said on Sunday. At least 75 tons of heavy fuel oil has spilled from Hong Kong-flagged bulk carrier Solomon Trader since Cyclone Oma drove it onto a reef at Rennell Island on Feb. 5, Reuters reported. The ship was carrying 700 tons of oil when it ran aground and there are fears the remaining fuel will spoil Rennell Island, the world’s largest raised coral atoll and home to many species found nowhere else. “Australia remains extremely concerned by the ongoing risk of a major oil spill,” said Foreign Minister Marise Payne in a release on Sunday. “Up to 75 tons of heavy fuel oil from the ship has dispersed across the Island’s sea and shoreline, contaminating the ecologically delicate area. “Given escalating ecological damage, and a lack of action by commercial entities involved, the Solomon Islands government has requested Australia’s assistance.” Payne said in response, Australia was sending equipment, vessels and experts under the leadership of the Australian Maritime Safety Authority. The eastern half of Rennell Island was the first natural property to be inscribed on the World Heritage List with customary management, and is home to 1,200 Polynesians who live by subsistence farming, hunting and fishing, the United Nations Educational Scientific and Cultural Organization website showed.

‘We cannot swim, we cannot eat’- Solomon Islands struggle with nation’s worst oil spill - On a normal weekend, the waters of Kangava Bay would be busy with children playing or collecting clam shells and villagers heading out to catch reef fish to eat. But last Sunday the bay was quiet. Locals can no longer cool off in the neon blue waters of Rennell Island, a tiny dot in the vast South Pacific that lies at the southern tip of the Solomon Islands. They can no longer spot parrotfish swimming in the shallows, picnic on the sand or fetch fresh water from streams and springs near the sea. The reason lies just yards offshore. It is hard to miss. Four weeks ago the huge Hong Kong-flagged bulk carrier MV Solomon Trader, carrying 700 tonnes of oil, ran aground on Kongobainiu reef after becoming loosed from its mooring. Now dead fish float in the bay. The tide is black. A thick oily blanket of tar covers the surface of the water and coats beaches, rockpools, logs and leaves. The coastal villages of Matanga, Vangu, Lavangu and Kangava have been the hardest hit by the oil spill. Paul Neil, who lives in Lavangu village, told the Guardian that children had been told not to swim in the sea and that fishing had been banned for the foreseeable future. With no way to find their own food, the villagers were now depending on deliveries from the capital Honiara, 150 miles away. Neil said the slick had changed the local way of life.“Now we cannot use our sea and reef to do fishing and find shells to eat. We really suffered from it,” he said. Steward Seuika, whose family live close to Kangava Bay, said residents had been forced to drink rainwater after fresh water collected from springs near the shore became contaminated with oil. “The oil slick affects our corals and marine life. It also contaminates our water which comes out from the stones on the land near the beach. So now we run out of clean water to drink.” As well as the food shortages, some locals have reported being burned after coming into contact with the oil while trying to clean it up. There were also reports that others were struggling to sleep because of the smell.

NNPC Denies pipeline explosion in Bayelsa -The Nigeria National Petroleum Corporation (NNPC) says it has no record of pipeline explosion in Nembe, Bayelsa State, as being reported in some quarters. No fewer than 50 people were reported to be missing after a leaking oil pipeline exploded and caused stampede in Nembe Kingdom in Bayelsa, according to the spokesperson of the community’s council of chiefs, MrNengi James-Eriworii.He said the blast which happened in the early hours of Friday caused massive oil spillage in the community. “It is not our pipeline, it is Aiteo that was mentioned, which ordinarily they are supposed to be on joint venture with NNPC.“I have cross-checked with our downstream unit that manages our pipeline and they said that they didn’t have such records,” he said.But, Aiteo Exploration Ltd, operator of the 97 kilometres Nembe Creek Trunk Line (NCTL), confirmed that there was an explosion at the creek which burned till Saturday.Public Relations Manager of Aiteo, Mr Ndiana-Abasi Mathew, confirmed the incident to newsmen in a phone message on Saturday.Spokesperson of the Nembe Chiefs Council, Chief Nengi James–Eriworio, also confirming the incident, said the explosion caused massive destruction of the area with air and water heavily polluted.“People have deserted the area and the company has refused to respond in spite of series of emergency calls to report the incident to them“As at early morning of Saturday, the fire is still raging. And with gas and crude leak flowing freely, you can then imagine the fate of our people. “The poor response of Aiteo to this incident is not acceptable and questionable. The people are traumatised and their health put at risk,” James-Eriworio said.

Unlikely twins and differing fortunes: Malaysia's Petronas & Indonesia's Pertamina (Reuters) - On the southernmost edge of the Asian landmass and on the shores of the busy shipping lanes of the Singapore Strait, Malaysia’s Petronas is starting up a state-of-the art petroleum processing hub, called RAPID. The huge complex in Malaysia’s Johor province is currently testing its systems, running crude oil through its fuel processing units and labyrinth of pipes and producing large exhaust gas fires from its flare tower. The flames are clearly visible for miles around, including on Indonesian islands just across the narrow strait. The 300,000 barrels-per-day (bpd) RAPID or Refinery and Petrochemical Integrated Development will come onstream around May. Among other customers, it will sell fuel to Indonesia, shining a spotlight on the contrast between Petronas and its Indonesian peer Pertamina. Both are state-owned oil companies that dominate the energy sector in their own nations. But their fortunes have markedly diverged because Malaysia has allowed Petronas to follow its own growth path, while Pertamina is hobbled by Indonesian government intervention and bears the burden of a subsidy program. “Lots of people see Petronas and Pertamina as twin companies. But that’s not really the case. Petronas is very much a commercial company, almost like an independent oil company while Pertamina is driven more by government policy and agenda, a national oil company,” said Andrew Harwood, research director for Asia/Pacific upstream oil and gas at energy consultancy Wood Mackenzie. For Petronas, RAPID marks a milestone as it prepares for a future with less crude oil output while serving the region’s booming fuel demand. RAPID, being built in collaboration with Saudi Aramco, has cost around $15 billion and is one of Petronas’ biggest ever investments. It is part of an even bigger Pengerang Integrated Complex (PIC) being developed by more than 50,000 workers at an estimated cost of more than 100 billion ringgit ($24.61 billion), and which will eventually also include a deep-water oil and a liquefied natural gas (LNG) import terminal. 

China's Feb crude oil imports rise 21.6% on year to 10.27 mil b/d — China's crude oil imports in February climbed 21.6% year on year to 10.27 million b/d, preliminary data from the General Administration of Customs showed Friday. This was the fourth time China's monthly crude imports breached 10 million b/d, marking an increase of 2% from 10.07 million b/d in January.GAC releases data in metric tons, which S&P Global Platts converts to barrels using a 7.33 conversion factor.The country's crude imports in February totaled 39.23 million mt, compared to 42.6 million mt in January, the preliminary GAC data showed.February fuel oil imports were 1.22 million mt, up 11.7% on year.Meanwhile, China's oil product exports rose 9.2% year on year to 3.81 million mt in February, GAC data showed. On a daily basis, the volume went up 2.2% from 130,000 mt/day in January.As a result, net oil product exports grew 67% on year to 1.46 million mt in February, the data further revealed.

South Sudan urges China's CNPC to boost crude output, explore for more oil - South Sudan's oil minister, Ezekiel Lol Gatkuoth, said China's state-owned China National Petroleum Corporation should increase oil production from its key blocks in the country, helped by new exploration in the concessions. In a meeting with CNPC and its subsidiaries in Beijing during a five-day trip to China last week, Gatkuoth's priority was on talks for the optimization of oil production and water management at the producing block 3/7, the oil ministry said. CNPC is the largest shareholder in blocks 3/7 and blocks 1/2/4, which contain South Sudan's Upper Nile and Unity oil fields respectively. China dominates South Sudan's oil industry with CNPC operating the country's Dar Petroleum Operating Company (DPOC) and Greater Petroleum Operating Company (GPOC) consortia which are producing all the country's oil. "South Sudan is building a sustainable oil sector that makes investment in our oil and gas blocks more appealing," Gatkuoth said in a statement. "The resources are recognized to be world class and we invite new partners to work with us to add to the great work already done by CNPC and its partners in South Sudan." Militancy and tribal strife in South Sudan -- which gained independence from Sudan in 2011 after a bloody civil war -- have largely thwarted hopes of restarting its main fields, which previously produced over 350,000 b/d. Together with some 130,000 b/d of Dar blend crude from Blocks 3/7 in the northeastern Upper Nile state and 4,000 b/d from Block 5A operated by Malaysia's Petronas, the country is pumping about 165,000 b/d. Gatkuoth also discussed with CNPC the resumption of oil production from the Unity blocks 1/2/4, helped by "exploring for new oilfields." Last year, CNPC signed a Memorandum of Understand to consider expanding its current upstream footprint in the country, increase existing production and train local engineers. Gatkuoth told S&P Global Platts in September he hope CNPC would explore and develop two large oil blocks, B1/B2, after long-running talks with French oil major Total collapsed in early 2018.

Bahrain seeks to reach deal with US firms over tight oil - Bahrain is speaking to U.S. oil firms with shale oil expertise about developing a vast oil and gas field revealed in 2018, and hopes to have an interested firm by the end of the year, the kingdom's oil minister stated. Last April Bahrain emphasized that it had revealed its largest oil and gas find since 1932 off its west coast, assessed to cover at least 80 billion barrels of tight oil. The first test well is being drilled now, Oil Minister Shaikh Mohammed bin Khalifa Al Khalifa informed Reuters in an interview. "We should have it flowing ... maybe by the end of April." Tight oil is a kind of light crude oil held in shale deep underneath the earth's surface that is take out with hydraulic fracturing, or fracking, using deep horizontal wells.

OPEC likely to defer output policy decision until June: sources (Reuters) - OPEC and its partners are unlikely to decide on their output policy in April as it would be too early to get a clear picture of the impact of their supply cuts on the market by then, three OPEC sources said on Monday. The sources said the production policy by the so-called OPEC+ alliance is expected to be agreed on in June with an extension of the pact the likely scenario so far, but much depends on the extent of U.S. sanctions on both OPEC members Iran and Venezuela. “So far the likely decision is to extend the agreement in June. Nothing much is planned for April, just to discuss the OPEC and non-OPEC (cooperation pact),” one OPEC source said. OPEC and its allies meet next in Vienna on April 17-18 and delegates say another gathering is scheduled for June 25-26. Another OPEC source said the most likely outcome of the June meeting was “a rollover” of the current oil supply cuts. “But production by the exempt countries is already more than 700,000 bpd below the October level. Maybe there will be some adjustment,” the second source said. On Jan. 1, the Organization of the Petroleum Exporting Countries and its allies began new production cuts to avoid a supply glut that could soften prices. OPEC, Russia and other non-members — the OPEC+ alliance — agreed to reduce supply by 1.2 million barrel per day for six months. OPEC’s share is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela, which are exempt from cuts. The baseline for the reduction was in most cases their output in October 2018. 

Triton is the world’s most murderous malware, and it’s spreading - As an experienced cyber first responder, Julian Gutmanis had been called plenty of times before to help companies deal with the fallout from cyberattacks. But when the Australian security consultant was summoned to a petrochemical plant in Saudi Arabia in the summer of 2017, what he found made his blood run cold. The hackers had deployed malicious software, or malware, that let them take over the plant’s safety instrumented systems. These physical controllers and their associated software are the last line of defense against life-threatening disasters. They are supposed to kick in if they detect dangerous conditions, returning processes to safe levels or shutting them down altogether by triggering things like shutoff valves and pressure-release mechanisms. The malware made it possible to take over these systems remotely. Had the intruders disabled or tampered with them, and then used other software to make equipment at the plant malfunction, the consequences could have been catastrophic. Fortunately, a flaw in the code gave the hackers away before they could do any harm. It triggered a response from a safety system in June 2017, which brought the plant to a halt. Then in August, several more systems were tripped, causing another shutdown. The first outage was mistakenly attributed to a mechanical glitch; after the second, the plant's owners called in investigators. The sleuths found the malware, which has since been dubbed “Triton” (or sometimes “Trisis”) for the Triconex safety controller model that it targeted. In a worst-case scenario, the rogue code could have led to the release of toxic hydrogen sulfide gas or caused explosions, putting lives at risk both at the facility and in the surrounding area.

Hedge funds carry on buying oil despite Trump intervention: Kemp - (Reuters) - Hedge funds continued to boost their bullish position in crude and fuels last week despite a call from U.S. President Donald Trump for OPEC to "relax and take it easy". Hedge funds and other money managers were net buyers of an extra 16 million barrels of Brent crude futures and options in the week to Feb. 26, according to ICE Futures Europe. Fund managers have been net buyers of 155 million barrels of Brent futures and options since Dec. 4, increasing their net long position in 11 out of the last 12 weeks (https://tmsnrt.rs/2C7ehEZ ). Funds were net buyers in the week to Feb. 26 despite the president's intervention a day earlier, which strongly suggests buying was even higher before his message on Twitter. Portfolio managers seem increasingly convinced the United States and China will reach a trade deal and the global economy will avoid a prolonged and deep slowdown. At the same time, production cuts by Saudi Arabia as well as U.S. sanctions on Iran and Venezuela are expected to curb the growth in oil production in 2019/2020. Fund managers now hold more than six bullish long positions for every bearish short one, up from a ratio of 2:1 in early December, and the most bullish ratio for four months. 

Will Trump Take Action Against OPEC? -  Brent is creeping back up towards the high-$60s per barrel, prompting a scolding of OPEC by President Trump via tweet earlier this week.Trump’s irritability with high oil prices is well-known, but the tweet suggests that he sees oil prices getting too close to dangerous political territory once again. He wants more supply to lower prices, but OPEC is much less likely to heed his warning this time around, having been burned by him last year following the surprise waivers issued on Iran sanctions, which helped crash the market.Trump told OPEC to “relax and take it easy,” and in response, Saudi oil minister Khalid al-Falih said: “We are taking it easy; 25 countries are taking a very slow and measured approach.”Al-Falih’s comments suggest that OPEC will not back down in the face of pressure from the U.S. government.The standoff is unfolding at a time when the U.S. Congress is pushing forward on the “NOPEC” legislation, which would open up OPEC members to antitrust regulation by the U.S. Justice Department. Legislation targeting OPEC has floated around Washington for years, but the momentum and odds of passage into law have never been higher. A confluence of events have come together in favor of the bill, including Democrats in the House of Representatives, an erosion of Saudi support on Capitol Hill, and a mercurial President that likes to rhetorically beat up on OPEC.  At a minimum, the possibility of the NOPEC bill becoming law grants President Trump significantly more leverage in his demands for OPEC to lower oil prices. So far, at least publicly, he has refrained from using that threat, most notably in his February 25 tweet calling on OPEC to “relax.” “The effect of President Trump’s comment would likely have been greater had he explicitly mentioned the [NOPEC bill],” Standard Chartered analysts wrote in a note. The investment bank noted that the sharp fall in oil prices that day may have been a result of the market interpreting the tweet as a veiled threat to OPEC regarding the NOPEC bill. However, Standard Chartered said that may not have been the case. “Trump has not up to now been known to specialise in veiled threats; he tends to be explicit.”

Why US oil producers don’t want Congress to go after OPEC - Capitol Crude Podcast - On this early edition of Capitol Crude, we predict the top themes of next week's CERAWeek, the mega-conference where US shale producers, US government officials and OPEC ministers rub elbows. Listen now...

Oil prices rise on trade deal hopes, OPEC supply cuts - Oil prices rebounded on Monday, buoyed by OPEC output cuts and reports that the United States and China are inching closer to a deal on a tariff row that has slowed global economic growth. International benchmark Brent crude futures were up 64 cents, or 1 percent, at $65.71 a barrel around 8:15 a.m. ET (1315 GMT), rebounding from Friday's 1.5 percent. Brent fell 3 percent last week. U.S. West Texas Intermediate crude futures were up 55 cents, or 1 percent, at $56.35 per barrel. WTI fell 2.5 percent on Friday, matching the weekly loss for the U.S. benchmark. The United States and China appear close to a deal that would roll back U.S. tariffs on at least $200 billion worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs on U.S. goods, a source briefed on negotiations said on Sunday in Washington.Hopes of an end to the trade spat between the two world's biggest economies added support to a market that has been rallying for the past two months on cuts to production.Supply from OPEC fell to a four-year low in February, a Reuters survey found, as top exporter Saudi Arabia and its allies over-delivered on the group's supply pact while Venezuelan output registered a further involuntary decline. The Reuters survey is one of several estimates ahead of OPEC's official production figures, which will be released next week in its monthly report. In the United States, there are signs that the oil production boom of the past years, which has seen crude output rise by more than 2 million bpd since early 2018 to more than 12 million bpd, may slow down.U.S. energy firms last week cut the number of oil rigs looking for new reserves to the lowest in almost nine months as some producers follow through on plans to cut spending despite an increase of more than 20 percent in crude futures so far this year. Hedge funds and other money managers raised their net long, or bullish, positions on Brent crude by 15,887 contracts to 291,336 in the week to Feb. 26.

Oil rises on U.S.-China trade deal hopes, OPEC's ongoing supply cuts (Reuters) - Oil prices rose about 1 percent on Monday as the United States and China appeared closer to ending a trade war that has slowed global economic growth while OPEC ally Russia said it would ramp up its crude supply cuts. Gains were tempered by a drop in equity indexes, which weakened sentiment on oil markets. Brent crude futures settled at $65.67 a barrel, up 60 cents or 0.9 percent. U.S. West Texas Intermediate (WTI) crude futures ended 79 cents, or 1.4 percent, higher at $56.59 a barrel. Washington and Beijing were close to reaching a trade deal that would roll back U.S. tariffs on at least $200 billion worth of Chinese goods as China pledges to make structural economic changes and end retaliatory tariffs, a source briefed on negotiations said on Sunday. “The bottom line is the optimism surrounding the trade situation,” “Comments from oil minister Novak that he was going to get to his level by the end of March also bid the market,” Yawger said. Russia, the biggest non-member ally of the Organization of the Petroleum Exporting Countries, plans to speed up crude output cuts this month, Energy Minister Alexander Novak said. OPEC and its partners, known as OPEC+, will likely decide on a new output policy in June instead of during the group’s April meeting in Vienna, OPEC sources told Reuters. OPEC+ is expected to extend supply cuts at its June meeting, but much depends on the extent of U.S. sanctions on OPEC members Iran and Venezuela, the sources said. Crude supply from OPEC hit a four-year low in February, a Reuters survey found, as top exporter Saudi Arabia reduced production more than it had agreed to, and as U.S. sanctions on Venezuelan oil took effect.

Oil wobbles as OPEC supply cuts offset restart at Libya's biggest field -  Oil prices struggled for direction on Tuesday as OPEC-led efforts to tighten supply offset the restart of Libya's biggest oilfield and the prospect of weaker demand. Supply curbs by OPEC and its allies have helped to drive oil prices more than 20 percent higher this year. Russia plans to speed up its output cuts this month, the energy minister said on Monday.Brent crude, the international benchmark, fell 19 cents to $65.48 a barrel around 11:05 a.m. ET (1605 GMT), off a session low of $65.04.U.S. West Texas Intermediate crude were down 10 cents at $56.49, after dropping as low as $56.09.To prop up the market, OPEC and its allies, an alliance known as OPEC+, have been cutting output by 1.2 million barrels bpd since the start of the year.The actual cut has exceeded the pledged amount because of U.S. sanctions on Iran and Venezuela, plus unrest in Libya that had prompted the closure of El Sharara, giving additional tailwind to prices.OPEC+ is likely to achieve its goal of draining oversupply from the market by next month, Jeff Currie, global head of commodities research at Goldman Sachs, told CNBC on Monday."It appears that Saudi Arabia and Russia would be happy with crude oil prices of between $60 and $70 for the rest of this year," said Ole Hansen of Saxo Bank.

Bulls Battle Bears As Oil Prices Stall OilPrice.com - Oil started off the weak on a soft note, but was firming up by mid-day Tuesday.  The Wall Street Journal reported that the U.S. and China are close to a trade deal that would consist of China lowering tariffs and restrictions on American farm, chemical, auto and other products while the U.S. would remove most or all tariffs put on Chinese goods last year. Obstacles remain and both sides face domestic pressure not to concede too much. The deal could include an $18 billion purchase for LNG from Cheniere Energy. Meanwhile, Reuters reportsthat China will probably make some concessions in the trade negotiations in order to give the U.S. a face-saving win, but Beijing will not fundamentally alter the way it conducts trade in the way that the U.S. government wants. The U.S. Department of Energy said last week that it was offering up six million barrels of light sweet oil from the strategic petroleum reserve (SPR). The sale was the result of previously signed legislation although it could be fortuitously timed for the spring as the oil market begins to tighten. The OPEC+ coalition is likely to defer a major policy decision until its June meeting in Vienna, rather than make an early decision in April as was thought to be possible. Sources told Reuters that as of now an extension of the production cuts is the most likely scenario.  Libya’s largest oil field, the Sharara field, is in the process of restarting. The 300,000-bpd field has been shut since December, so its restart will undercut global oil prices. “The main development has been the restart of El Sharara,” Olivier Jakob, analyst at Petromatrix, told Reuters. “It’s a new input which is on the bearish side.”  In a blockbuster report, the Wall Street Journal reported that the U.S. shale industry is encountering disappointing results by packing shale wells too closely together. The “parent-child” well problem is only starting to become known, but a growing body of evidence suggests that additional wells situated in close proximity to the original well can cannibalize overall production. The WSJ found that wells placed just 275 feet apart can produce as much as 40 percent less than wells placed 600 feet apart. The results call into question years of hype about intensifying drilling operations. 

OPEC can declare mission accomplished on price-boosting oil output cuts by April: Goldman Sachs - OPEC and its allies will probably achieve their goal of draining oversupply from the oil market and boosting prices by next month, says Jeff Currie, global head of commodities research at Goldman Sachs.The 14-nation producer group and its allies led by Russia set out to balance the market after oil prices plunged more than 40 percent at the end of last year. To do that, they aim to keep 1.2 million barrels per day off the market in the first six months of the year."OPEC is pursuing a shock and awe strategy" by slashing output at the start of their production-cutting deal, Currie said on Monday. He noted that OPEC is throttling back output faster than Goldman expected, while Venezuelan supply continues to tank and Russia says it will accelerate its production cuts."This market is likely to be rebalanced by April," he told CNBC's "Closing Bell."That will force OPEC to lay out its plans for lifting the production curbs by May or June, he said. Currie believes that by telegraphing its exit strategy, OPEC can dissuade U.S. drillers from turning on the taps, thereby preventing another price-crushing oil glut. However, OPEC's "shock and awe" policy, combined with robust oil demand, could easily push Brent crude oil back to $70 to $75 a barrel in the near term, up from current prices in the mid-$60 range, Goldman forecast last week.

WTI Extends Losses As EIA Confirms Major Crude Build - WTI extended losses overnight after API reported a massive increase in U.S. crude stockpiles, raising oversupply concerns. Piling on the downside risk, OECD cut its outlook for global economic growth again amid trade tensions and political uncertainty.“The message is clear: the U.S. remains well-supplied and will continue to do so as oil production inches further into record territory,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. API:

  • Crude +7.29mm (+1.45mm exp)
  • Cushing +1.1mm (+1.63mm exp)
  • Gasoline -391k
  • Distillates -3.1mm

DOE

  • Crude +7.07mm (+1.45mm exp)
  • Cushing +873k (+1.63mm exp)
  • Gasoline -4.23mm
  • Distillates -2.393mm

Confirming API's surprise, DOE reported a much bigger than expected crude build of 7.07mm barrels (+1.45mm exp) but sizable draws on gasoline and distillate stocks offset some pessimism. Bloomberg Intelligence's Energy Analyst Fernando Valle noted that last week's draws helped ease oversupply worries, but gasoline remains a worry in the short term. A recovery in exports could ease concerns, but with Mexico still struggling with transport disruptions, there is limited scope. We are still constructive on diesel, with domestic demand showing no signs of a slowdown.US Crude production looks set to slow if the lagged reaction function of oil rig counts upholds its historical relationship... Bloomberg's Sheela Tobben notes that U.S. sanctions on Venezuela continue to take a toll on the country's crude flows to the U.S. Shipments fell to just 83k b/d last week, smallest in data going back to 2010. WTI was well down from pre-API levels overnight ahead of the official DOE data. After an initial pop - presumably on the product draws - crude prices extended losses...

Oil falls on rising US production, stockpile build  - Oil prices fell to session lows during mid-morning trade, extending earlier losses on a reported build in weekly U.S. crude stockpiles that was confirmed on Wednesday by government figures.  U.S. crude inventories rose by 7.1 million barrels in the week ending March 1, the U.S. Energy Information Administration reported, roughly matching data from the American Petroleum Institute released on Tuesday.The surge compared with analysts' expectations for a modest increase of 1.2 million barrels in a Reuters poll.International Brent crude futures were down 42 cents at $65.44 per barrel around 10:30 a.m. ET (1530 GMT), from their last settlement. U.S. West Texas Intermediate crude futures were down 85 cents, or 1.5 percent, at $55.71 per barrel.Crude stocks at the delivery hub at Cushing, Oklahoma rose by about 800,000 barrels, EIA said.Somewhat offsetting the surge in crude stockpiles, the nation's gasoline inventories fell by 4.2 million barrels and stocks of distillate fuel including diesel were down 2.4 million barrels. "An increase in U.S. crude inventories is weighing on oil prices and in the long term, concerns over rising oil production in the Permian region is keeping a lid on prices," EIA will also issued its latest estimate on weekly U.S. oil production on Wednesday. The preliminary figures showed American output at 12.1 million barrels per day, matching last week's record. Chevron Corp and Exxon Mobil Corp released rival Permian Basin projections on Tuesday pointing to increased shale oil production.If realized, the increases would cement the pair as the dominant players in the West Texas and New Mexico field, with one-third of Permian production potentially under their control within five years. The rise in North American production undermines the ongoing supply cut efforts led by OPEC.

Oil retreats as equities slump on weaker European growth outlook -- Oil prices retreated towards session lows on Thursday, tracking a slump in equity marketsafter the European Central Bank cut its economic growth forecast for the continent. Crude futures rose earlier on Thursday on the back of ongoing OPEC-led supply cuts and U.S. sanctions against exporters Venezuela and Iran. However, gains were capped by record U.S. crude output and rising inventories. Brent crude futures were down 5 cents at $65.94 per barrel around 10 a.m. ET (1500 GMT). The international benchmark for oil prices earlier rose as high as $67. U.S. West Texas Intermediate crude futures rose 15 cents to $56.37 per barrel, off the session peak at $56.99. Europe's central bank slashed its growth estimate to 1.1 percent, down from its last forecast for 1.7 percent expansion. That followed another forecast for weaker economic growth from the Organisation for Economic Co-Operation & Development on Wednesday. The OECD said the world economy would grow 3.3 percent in 2019, down 0.2 percentage points from its last set of forecasts in November. Prices are being supported by efforts led by OPEC and other countries — a grouping known as 'OPEC+' — to withhold around 1.2 million barrels per day of oil, a strategy aimed at tightening markets. "In our view, OPEC's strategy is to rebalance the market as quickly as possible and exit the cuts by the end of June in order to grow production alongside shale producers in the second half of this year," U.S. investment bank Goldman Sachs said in a note on Wednesday. U.S. sanctions against the oil industries of OPEC members Iran and Venezuela have also had an impact, traders said. Venezuela's state-run oil firm PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil amid the sanctions.

Oil edges up on Venezuela and Iran sanctions, OPEC supply cuts(Reuters) - Oil prices edged higher on Thursday, supported by OPEC-led supply cuts and U.S. sanctions against exporters Venezuela and Iran, but gains were capped by falling stock markets and renewed concerns over demand growth. Brent crude futures gained 31 cents, or 0.47 percent, to settle at $66.30 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 44 cents, or 0.78 percent, to settle at $56.66 a barrel. “The big picture is that short-term fundamentals are very strong,” said Phil Flynn, analyst at Price Futures Group in Chicago. “There’s still some nervousness about supply.” The Organization of the Petroleum Exporting Countries and allies such as Russia this year have aimed to cut output and tighten oil markets, which has supported prices. U.S. sanctions against the oil industries of OPEC members Iran and Venezuela have also supported futures, traders said. Venezuela’s state-run oil company PDVSA this week declared a maritime emergency, citing trouble accessing tankers and personnel to export its oil due to sanctions. When the United States reimposed sanctions against Iran in November, Washington granted waivers to eight Iranian oil buyers, allowing them to buy limited amounts of crude for another 180 days. Washington has put pressure on these governments to gradually cut their imports of Iranian oil to zero, but importers remain in talks over potential extensions. India wants to keep buying Iranian oil at its current level of about 300,000 barrels per day (bpd), as it negotiates with Washington about extending a sanctions waiver past early May, two sources in India said. Signs of strong demand for refined products from U.S. Energy Information Administration data on Wednesday also buoyed prices. However, prices were pressured by concerns surrounding Europe’s economy, which pushed Wall Street lower and fueled worries about global oil demand.

Oil prices drop as ECB warns on weaker economy, US supply soars --Oil prices fell more than 2 percent on Friday on a worsening global economic outlook after the European Central Bank warned of continued weakness and fresh data showed Chinese imports and exports slumped last month.  Crude futures extended losses after U.S. government data showed the country added just 20,000 jobs in February, compared with estimates for a gain of 180,000 positions.International benchmark Brent crude futures lost $1.73, or 2.6 percent, to $64.57 a barrel around 8:52 a.m. ET (1352 GMT). U.S.West Texas Intermediate crude futures were down $1.51, or 2.7 percent, at $55.15.  Financial markets, including crude oil futures, took a hit after comments on Thursday from ECB President Mario Draghi, saying the European economy was in "a period of continued weakness and pervasive uncertainty."Europe's economic weakness comes as growth in Asia is also slowing.So far oil demand has held up, especially in China, where imports of crude remain above 10 million barrels per day. Yet a slowdown in economic growth is likely to dent fuel demand and pressure prices at some point.China's dollar-denominated February exports fell 21 percent from a year earlier, representing the biggest drop in three years and far worse than analysts had expected, while imports dropped 5.2 percent, official data showed on Friday.On the supply side, crude oil has been receiving support this year from output cuts led by OPEC. But these efforts are being undermined by soaring U.S. crude oil production, which has increased by more than 2 million bpd since early 2018 to an unprecedented 12.1 million bpd. That makes America the world's biggest producer, ahead of Russia and Saudi Arabia.

Oil Prices Sink On Negative Economic Data - Oil prices sold off on Friday on weak data from China, poor jobs figures in the U.S., and news that Norway’s sovereign wealth fund was divesting from the oil sector. Weak economic data in China dragged down crude oil in early trading on Friday. “The trade surplus shrank unexpectedly sharply in February because exports slumped by more than 20% year-on-year. Imports were down year-on-year for the third month in a row. All of this fuels new fears about the economy in China and the world,” Commerzbank wrote in a note. “That said, Chinese crude oil imports appeared unaffected by any of this in February: according to the Chinese customs authorities, they soared by 22% year-on-year to 10.23 million barrels per day – their third-highest level ever.” China is already the world’s largest market for electric vehicles, and EVs could translate into peak demand – at least in China – as early as 2025. That conclusion comes from Morgan Stanley, which sees a peak coming much sooner than most analysts. “China will no longer be the growth driver of global crude demand,” Andy Meng wrote in March 5 report. “We believe the refiners and petroleum stations are the largest potential losers, while the battery companies are likely to become the key winners.” Demand for gasoline and diesel are slowing in China, but crude oil imports have been steadily rising. Refiners are processing crude into refined products and exporting them, exacerbating the global oversupply of gasoline. Bloomberg says even more refining capacity is opening this year, which could drag down the entire sector. The Wall Street Journal reports that Kimmeridge Energy Management, a private equity firm, is using its 5 percent stake in PDC Energy to push for changes to executive compensation, a dividend for shareholders, exploration of potential deals with rivals and a reduction of administrative costs. The move highlights the increasing pressure on shale companies to demonstrate profitability and shareholder returns.  Rosneft sent cargoes of naptha to Venezuela to help PDVSA process its heavy crude, a lifeline for President Maduro who is suffocating under U.S. sanctions. Without diluents, PDVSA’s oil production would collapse, so the shipments could prevent such a catastrophe. Meanwhile, PDVSA has lost control of several key refineries in the Caribbean. 

Oil drops as U.S., China data feed global growth worries, still logs a weekly gain -- Oil futures finished lower Friday as a downbeat employment report from the U.S. and trade data from China reinforced worries about global economic growth and energy demand. Prices, however, pared much of their earlier losses to score a gain for the week as a third-consecutive weekly decline in U.S. oil-drilling rigs pointed to a potential fall in domestic production activity. Output stood at a record 12.1 million barrels a day last week. Active U.S. rigs drilling for oil fell by nine to 834 this week, according to data Friday from Baker Hughes. Against that backdrop, April West Texas Intermediate crude declined by 59 cents, or 1%, to settle at $56.07 a barrel on the New York Mercantile Exchange after dropping earlier to as low as $54.52. Prices rose 0.5% for the week, according to Dow Jones Market Data. Global benchmark May Brent crude lost 56 cents, or 0.8%, to $65.74 a barrel on ICE Futures Europe, but still saw a weekly rise of 1%. U.S. equities declined Friday, fueling risk-off sentiment, as data revealed that the U.S. added just 20,000 new jobs last month, the smallest gain since September 2017. Asian markets also saw a sharp retreat after China reported that exports fell by a much larger-than-expected 20.7% in February, compared with the prior year. Weak economic data raise concerns of a slowdown in energy demand. “Recent downward revisions to European and global growth estimates by central banks and consensus estimates continue to test the sustainability of the current multi-year bull market” for equities, said Fraser. The European Central Bank on Thursday slashed its 2019 forecast for gross domestic product growth to 1.1% from a previous 1.7% and earlier this week, China lowered its economic growth target this year to between 6% and 6.5%.

Rumours grow of rift between Saudi king and crown prince - There are growing signs of a potentially destabilising rift between the king of Saudi Arabia and his heir, the Guardian has been told. King Salman bin Abdulaziz Al Saud and Crown Prince Mohammed bin Salman are understood to have disagreed over a number of important policy issues in recent weeks, including the war in Yemen. The unease is said to have been building since the murder in Turkey of the dissident Saudi journalist Jamal Khashoggi, which the CIA has reportedly concluded was ordered by Prince Mohammed. However, these tensions increased dramatically in late February when the king, 83, visited Egypt and was warned by his advisers he was at risk of a potential move against him, according to a detailed account from a source. His entourage was so alarmed at the possible threat to his authority that a new security team, comprised of more than 30 hand-picked loyalists from the interior ministry, was flown to Egypt to replace the existing team. The move was made as part of a rapid response, and reflected concern that some of the original security staff might have been loyal to the prince, the source said. The king’s advisers also dismissed Egyptian security personnel who were guarding him while he was in Egypt, the source added. The friction in the father-son relationship was underlined, the source said, when the prince was not among those sent to welcome the king home. An official press release listing the guests at the airport in Riyadh confirmed Prince Mohammed was not among them, adding to speculation it was intended as a pointed snub to the crown prince. The crown prince, who was designated “deputy king” during the Egypt trip, as is customary, signed off two major personnel changes while the king was away. They included the appointment of a female ambassador to the US, Princess Reema bint Bandar bin Sultan, and that of his full brother, Khalid bin Salman, to the ministry of defence. The latter appointment has further centralised power in one branch of the ruling family. Although the changes had been mooted for some time, the source said the announcement was made without the knowledge of the king, who was especially angered by what he believed was a premature move to elevate Prince Khalid to a more senior role. 

Google, siding with Saudi Arabia, refuses to remove widely-criticized government app which lets men track women and control their travel.  - Google has declined to remove from its app store a Saudi government app which lets men track women and control where they travel, on the grounds that it meets all their terms and conditions. Google reviewed the app — called Absher — and concluded that it does not violate any agreements, and can therefore remain on the Google Play store. The decision was communicated by Google to the office of Rep. Jackie Speier, a California Democrat who, with other members of Congress, wrote last week to demand they remove the service.  Google did not respond to a request for comment on the decision.  INSIDER last month reported how Absher — an all-purpose app which Saudis use to interact with the state — offers features which allow Saudi men to grant and rescind travel permission for women, and to set up SMS alerts for when women use their passports.  Rep. Speier and 13 colleagues in Congress wrote to Google CEO Sundar Pichai and Apple CEO Tim Cook on February 21, demanding that the app be removed.  They gave a deadline of Thursday 28 February to explain why the app is hosted on Google Play.

‘Traitor’ Is the New ‘Infidel’ as Nationalism Grips Saudi Arabia -- Muna AbuSulayman was relaxing in bed last month when her phone pinged with news that the grand mufti, Saudi Arabia’s religious leader, had died. After checking that the alert appeared to originate from an official source, the former talk show host shared it with 544,000 Twitter followers. It was a misjudgment that pitched a woman who loves her country deep into an ugly struggle over what it means to be Saudi as the kingdom forges a new identity under its young crown prince. The story about the mufti was fake. AbuSulayman deleted her post and apologized within minutes, but the damage was done. For several nights, she watched as tweet after tweet claimed she was “scum,” “impure” -- she’s from the ethnically diverse western region -- and a foreign-funded “traitor” who should be stripped of her citizenship.     Saudi Arabia’s undergoing an aggressive nationalist rebranding, downplaying an austere religious doctrine associated abroad with terrorism, and promoting veneration of de facto ruler Crown Prince Mohammed bin Salman as he pursues an economic overhaul. Amid efforts to maintain domestic support while redesigning the contract between state and citizen, traitors, not infidels, are the enemy. Many Saudis seem to have taken their lead from official rhetoric. Accusations of betrayal are lobbed online, printed on threatening notes and trumpeted in red letters on newspaper front pages. Anyone perceived as showing the kingdom in a bad light can be targeted, even comedians poking fun at its idiosyncrasies. “If a person is neutral or stands with the enemy against this country, it’s our right to call him a traitor,” Abdullah Al Fozan, a member of the consultative council, said in a televised diatribe that went viral late last year. The risk is that baiting people to turn on fellow citizens under the guise of patriotism might rupture a society already under strain from the costs imposed by Prince Mohammed’s “Vision 2030” reforms, and deter the foreign investors and visitors he wants to attract.

Report: Jamal Khashoggi's Body Incinerated In Oven At Saudi Home -- The body of murdered Saudi journalist Jamal Khashoggi was never recovered because it was incarnated in a large outdoor oven at the Saudi consulate general's residence in Istanbul, Turkey, a new Al Jazeera report revealed. The 2-minute special debuted Monday on Al Jazeera Arabic and showed pictures of the large oven in the courtyard of the Saudi consulate general's residence. Al Jazeera spoke with the builder of the oven who said it "had to be deep and withstand temperatures above 1,000 degrees Celsius — hot enough to melt metal." Cremation of a dead body occurs at temperatures reaching between 1400 to 1800 degrees Fahrenheit. The extreme heat reduces the body to its basic elements and dried bone fragments. The process usually takes place in a cremation chamber, but in this case, could have taken place in a Saudi outdoor oven. According to the Al Jazeera report, Turkish authorities monitored the body burning from outside the residence. They recorded large suitcases, thought to contain Khashoggi’s dismembered body, carried inside. They said the cremation took place over three days.On the third day, the cover-up began: “Large quantities of barbeque meat were grilled in the oven after the killing in order to cover up the cremation," Turkish authorities told Al Jazeera.

None Of Their Business - Qatar Blasts Saudi Objections To Possible Russian S-400 Purchase - Russia and Qatar appear to be getting closer to striking a landmark deal for transfer of the S-400 anti-missile defense system to Doha, considered the most advanced anti-air system of its kind, and lately the result of tensions with the West wherever it is present, whether in Syria or Turkey.  Russian Foreign Minister Sergey Lavrov stated at a press conference Monday while standing alongside Qatari Foreign Minister Mohammed bin Abdulrahman Al-Thani that Moscow is "ready to consider Doha’s requests for weapons delivery, if such requests appear," according to TASS news agency.  "Our military-technical cooperation with Qatar is regulated in a bilateral manner, 18 months ago we signed an intergovernmental agreement on military-technical cooperation," Lavrov said. "Today, we reaffirmed the need to follow this agreement.""When our Qatari partners send us requests for delivery of Russian military products, we will consider them," the Russian FM added. Al-Thani confirmed earlier on Monday that Doha is currently holding negotiations with Moscow on the purchase of S-400 missile systems, but that no decision has been reached. This brings up two pressing and potentially explosive issues: the ongoing diplomatic and economic war between Qatar and Saudi Arabia, and the fact that Qatar hosts the largest US military base in the Middle East at Al Udeid air base.  Over the past year Saudi Arabia has routinely leveled the charged that Qatar is a state-sponsor of terror and thus should be prevented by global powers from purchasing advanced weapons, a charge that Qatar denies. In its corner Saudi Arabia also has other Gulf Cooperation Council (GCC) states like the UAE that have long sought to isolate Doha. But since Saudi-led GCC states initiated a blockade against tiny but oil and gas rich Qatar staring in 2017, ties between Doha and Moscow have actually improved and grown. Qatari FM al-Thani addressed the continuing GCC crisis by saying: With regards to Saudi or other countries, it is none of their business, it's a sovereign decision by Qatar.

Iran's Khamenei doubted Europe could help Tehran against U.S. sanctions (Reuters) - A closed-door speech last year by Iran’s Supreme Leader voicing doubt about the Iranian government’s diplomatic overtures to Europe was released on Monday in a sign of feuding over foreign policy that led to a short-lived resignation by the foreign minister. The address by Ayatollah Ali Khamenei in mid-2018 appeared to forecast difficulties European countries would have in honoring pledges to protect trade with Iran from new U.S. sanctions after Washington abandoned a 2015 nuclear deal between Tehran and world powers. The speech showed that while President Hassan Rouhani was trying to save the nuclear deal with European powers, who remained committed despite the U.S. exit, Khamenei was not optimistic. The publication of the comments eight months afterward presented Khamenei as viewing the situation as unchanged. Khamenei, an anti-Western hardliner, was quoted as saying by his official website that the Europeans would naturally say they are protecting Iranian interests with their package but the Iranian government “should not make this a main issue”. He said the nuclear deal did not resolve “any of the economic problems” of Iran. He predicted that a mechanism proposed by the EU to shield business with Iran against the U.S. sanctions would also be no panacea for Iran’s economic hardship. “(The Europeans) are bad. They are really bad. I have a lot to say about the Europeans; not because of their current policies, but their mischievous nature over the last few centuries,” said Khamenei. His comments, made in a meeting with the cabinet, were published a week after Rouhani rejected the resignation of Foreign Minister Mohammad Javad Zarif, a U.S.-educated veteran diplomat who championed the nuclear deal. Khamenei’s comments cast doubt on the efficacy of Zarif’s past and current efforts to keep the agreement alive. 

Netherlands Recalls Iranian Ambassador In Tit-For-Tat; Follows EU Charges Of Iran Terror Plots - In a diplomatic tit-for-tat the Netherlands on Monday recalled its ambassador to Iran after members of its diplomatic staff at its embassy in Tehran were expelled, Foreign Minister Stef Blok announced on Monday. "[We] Have decided to recall the ambassador in Tehran for consultations," Blok said in a tweet. "The decision follows the expulsion of two Dutch embassy staff. That is unacceptable." Though the immediate reasons for this latest spat between the two countries remains unclear, tensions have heightened after the European Union first began accusing Iran of "assassination attempts" and state-sponsored "terrorist plots" in Europe. Last month Iran slammed EU charges as "groundless" — charges which Dutch officials had helped push into the open in tandem with other European leaders. Earlier, the Danish Security and Intelligence Service (PET) publicly leveled accusations against Iran's intelligence service of planning an assassination operation against an Iranian separatist and opposition group member in Denmark. The Dutch Foreign Minister led efforts to bring Iran to account for plotting violent acts on European soil. Stef Blok alongside Interior Minister Kajsa Ollongren said in January when the issue came to a head that they had "strong indications" that Tehran was behind assassinations of two Dutch nationals of Iranian origin in 2015 and 2017.

US maritime security in the shale age – Platts Capitol Crude Podcast - Have record US oil production and crude exports changed the US role in global maritime security? How can oil flows calm the brewing feud between the US and China? Is the closure of the Strait of Hormuz a credible threat? Listen now...

Israeli Navy Prepared To Block Iranian Oil Transit, Netanyahu Threatens - Short of last month's incident wherein Israeli Prime Minister Benjamin Netanyahu declared via Twitter that he's seeking "war with Iran", new comments issued this week represent the most aggressive declaration of how far Israel is willing to go to thwart Iran in the region.Echoing the Trump administration's desire to bring Iranian exports to zero through sanctions, Netatyahu said on Wednesday that he's considering ordering Israel's Navy to target Iranian oil tankers to prevent them from selling oil abroad. This as a number of other signatories to the P5+1 nuclear deal have vowed to continue buying despite US sanctions and threatened repercussions from Washington.“Iran is trying to circumvent the sanctions through covert oil smuggling over maritime routes, and to the extent that these attempts widen, the navy will have a more important role in blocking these Iranian actions,” Netanyahu said.Of course what the Israeli prime minister calls "covert oil smuggling" Iran would see simply as its right to conduct valid and legal shipping as a sovereign economic power. But given the tightening economic noose and expansive US naval presence in international waters, Iran has reportedly been switching off location transponders on its ships as well as other measures to conceal its maritime traffic (using "ghost ships" to flout US sanctions), including even altering names of ships or flag registries. Netanyahu continued, as reported by Reuters, “I call on the entire international community to stop Iran’s attempts to circumvent the sanctions by sea, and of course, by any (other) means.”  It appears Netanyahu could be setting the stage for some kind of Israeli escalation against Iranian assets abroad and on the water, though as Reutersspeculates, "It was not clear how Israel would stop such shipping activities or whether it would risk direct confrontation at sea with Iranian vessels." Especially as "The Israeli navy, whose largest vessels are missile corvettes and a small submarine fleet, is mostly active in the Mediterranean and Red seas."

Trump Move on US Troops In Syria Does Not Bode Well For US-Turkey Relations -- News recently that President Trump has once again done a U turn on his Syria policy – and will keep US forces in the north with their SDF (mainly Kurdish) allies – couldn’t have been more felt than in Turkey. Trump’s decision to listen to his military advisors and even titans in Congress like Lindsey Graham to keep a contingent of US troops in the north with the SDF and in the south east at Al Tanf is hugely important in that it keeps other allies there – namely France and the UK – on board and retains America’s barrier to Iran taking the east of the country as a key corridor all the way to Lebanon. It also keeps Saudi Arabia and Israel happy who were particularly vexed by the hasty decision which would have dramatically changed the Syria War chequers board. But the decision, which is believed to involve 400 troops staying and not 200 as reported – comes with a high price: it looks as though it will alienate Turkey once and for all.Just recently, the tumultuous relations between Trump and Erdogan took a turn for the better and, since the release of a US pastor, improved quickly, which helped the Turkish economy and signaled better cooperation in the future over arms procurement and possibly even the extradition of clergy Gulen, which Ankara believes is the brainchild behind the attempted coup in the summer of 2016.The decision initially announced by Trump to pull out altogether from Northern Syria played well for Ankara which was able to plan on how to go about hitting the YPG element of the SDF, build a security corridor and generally throw its weight around in Syria with little worry of troubling Washington. There was though always a question hanging over the decision of what to do if Assad would strike a deal with the Kurds and Trump’s repeated statements resonating the same message over and over again – that the Kurds would always be the ally of the US and that Washington would not abandon them – rang hollow. Pulling out US soldiers from the SDF belt would have created a lot of confusion as enemies would have become friends and a new Syria war would have emerged between Turkey and the Kurds – who, to complicate things further at one point, looked as though they were poised to get the support of both the Assad regime and its enemies Israel and Saudi Arabia at the same time.

Erdogan Says If US Can't Haul Its Weapons Out Of Syria, Turkey Should Get Them -- "If US is to take weapons out of Syria, they can, but if they won't, give them to Turkey, not terrorists," President Recep Tayyip Erdogan said during a Turkish TV interview on Wednesday. It's the latest moment wherein Turkey's president has lashed out at Washington, and comes amidst tensions over the United States objecting to Russian S-400 anti-air defense systems being transferred to Turkey. Of that contentious debate, for which the US has held up delivery of F-35 stealth jets purchased previously by Turkey, Erdogan said emphatically, "this is over". He affirmed the Russian deal had already been inked with the first delivery expected in July. "We are an independent Turkey, we are not slaves," he said to Turkish broadcaster Kanal 24. Thus it appears the imminent transfer of the S-400s is a done deal, perhaps also sealing future years of permanently damaged US-Turkey relations, especially as at the same time Turkey rejected the recent US offer to sell American-made Patriot defense systems.  The advanced Russian-made S-400 air defense system purchased by Turkey has been seen as a threat by the United States, given the potential for compromising the F-35 advanced radar evading and electronics capabilities.  The main argument for blocking the F-35 transfer is the fear that Russia would get access to the extremely advanced Joint Strike Fighter stealth aircraft, enabling Moscow to detect and exploit its vulnerabilities. Russia would ultimately learn how the S-400 could take out an F-35.Meanwhile, the chief of US European Command, Army General Curtis Scaparrotti, told Congress on Tuesday that delivery to Turkey of Lockheed Martin's F-35 Joint Strike Fighter should ultimately be cancelled if Turkey moves ahead with buying the S-400 systems from Russia. But it appears Erdogan's "this is over" comment was directed at the continued congressional debate. "We're done, this is over," Erdogan said during the interview. "The deal has been finalized."

Watch: US-Led Forces Drop Banned White Phosphorous on East Syria — According to Middle East news source Al Masdar News, the U.S. Coalition dropped internationally banned white phosphorous on the last tiny Islamic State enclave in eastern Syria during intense operations on Saturday evening. American warplanes specifically dropped the white phosphorous on ISIS positions inside the Baghouz camp, which coalition statements have described as the last holdout to the “most hardened” militants, numbering in the hundreds, in Abu Kamal District of Deir Ezzor governate near the Iraqi border. Amidst intense fighting led on the ground by US-backed Syrian Democratic Forces (SDF), civilians have continued to pour out of the town to escape the fighting. Sky News has put the number of people that have left the ISIS enclave over the past three months at about 40,000. Al Masdar reports the video footage of the IUS white phosphorous attack on the Islamic State’s positions was originally captured by ‘Ayn Al-Firat (Eye of the Euphrates) news organization on Saturday:  A number of Middle East analysts also confirmed the controversial munitions’ use over the weekend. Last year Russia accused the United States and its allies of repeatedly using white phosphorous in eastern Syria, which the Pentagon has denied. Use of the munition in civilian areas is banned under the 1949 Geneva Conventions and is considered by many countries a dangerous and brutal chemical weapon.

Israeli army, settlers 'routinely harass' Nablus students - Al Jazeera-   School principal Mohammad Jaser presses a button to open the intercom system and makes a routine announcement.  "The Israeli army has been spotted near the premises," Jaser says, his voice blaring from speakers and into the classrooms of the al-Sawiyeh al-Lebban school near Nablus in the northern West Bank last month. "Stay inside your classrooms, away from the windows, and lock the doors," he instructs the students. "Prepare for an evacuation."The students and teachers at the mixed school, located between the villages of al-Sawiyeh and al-Lebban, have been trained to respond to incidents like this.The school is often the target of Israeli army activity in the area and has faced numerous incidents of armed settlers entering the premises and threatening students.Due to the high frequency of violence at the school, emergency drills and training have been implemented to teach students how to respond to the incursions."Now, when we spot Israeli soldiers or settlers around the school, students know exactly what to do," Jaser said.Students, for instance, receive training on how to lessen the effects of tear gas and some are trained to provide first aid to their injured peers during confrontations, he says.  'They like to point their weapons at the students' The al-Sawiyeh al-Lebban school serves about 500 students, including 20 girls, from the sixth grade until the 12th.

Poverty-Stricken Afghanistan Donates $1 Million in Aid for Palestinians -- — Afghanistan donated $1 million in financial aid for Palestinian refugees at an event in Istanbul, Turkey’s commercial capital, on Sunday. Afghanistan’s ambassador to Turkey Abdul Rahim Sayed presented the aid to Pierre Krahenbuhl, commissioner-general of the UN Relief and Works Agency for Palestine Refugees (UNRWA), at a ceremony also featuring Turkish Foreign Minister Mevlut Cavusoglu. Cavusoglu praised the Afghan government and people for their help for the Palestinian people, coming in the wake of President Recep Tayyip Erdogan’s call for Organisation of Islamic Cooperation (OIC) states to support the Palestinians.More than a decade and a half after a US-led campaign that toppled the Taliban in 2001, Afghanistan has been battling abject poverty. A joint study by the European Union and Afghanistan’s Central Statistics Organisation in May 2018 showed that Afghanistan’s povery rate was at 55% in the year 2016-17 – that’s more than half of it’s population living on less than one dollar per day.  “The Afghan people have greater need than the Palestinians of the $1 million due to the conditions in which they live – terror and other challenges in particular,” said Cavusoglu, adding:  He further added: “This contribution and aid that the Afghan people gave will never be forgotten. The Palestinians will never forget the aid and support they were given.”

Official- Taliban target army corps, killing 23 soldiers - (AP) — Taliban insurgents targeted an Afghan army corps at their camp in the southern Helmand province, killing at least 23, officials said Saturday. Omar Zwak, spokesman for the provincial governor, said 20 other troops were wounded in the attack that began Friday and ended Saturday evening after a 40-hour battle in the Wahser district. The death toll could rise after a final assessment, added Zwak. As many as 40 security forces may have been killed, according to a provincial official who spoke anonymously as he was not authorized to brief the media. Zwak added that military vehicles and offices were damaged by blasts and shooting in the attack. Qari Yusouf Ahmadi, a Taliban spokesman, said in a statement that the insurgent group was responsible for the attack, which came even as Taliban negotiators met for talks with a U.S. peace envoy in the Middle Eastern state of Qatar. He said Taliban fighters engaged both Afghan and foreign forces inside the camp and killed “scores.” Zwak said U.S. advisers were present in the base, but in a separate area. “The foreign forces present at the base were all safe as the Taliban could not reach that part of the compound,” he said. Zwak said the attack began when a suicide bomber detonated his explosives at Shorab camp. He said three other suicide bombers also blew themselves up as gunmen followed behind them. Zwak said 22 Taliban gunmen were killed in the fighting. In recent years, the Taliban and the Islamic State group have carried out near-daily attacks in Afghanistan, mainly targeting the government and its security forces. The Taliban control several district centers in Helmand, which is a major source of the world’s illegal opium supply. Camp Shorab was previously a British air base known as Camp Bastion.

China won't judge you: Why Saudi Arabia's crown prince is betting billions on Asia - Saudi Arabia is aggressively expanding its international relationships, and that will have inevitable consequences for the United States and its influence in the country.A high-profile tour by Crown Prince Mohammed bin Salman last month culminated in pledges of $20 billion worth of investment in longtime partner Pakistan, $28 billion in economic accords with China and an open-ended goal to invest $100 billion in India, along with promises of increased trade and security cooperation.In a post-Khashoggi world — where Riyadh's longtime bond with its foremost security ally, Washington, faced its biggest crisis in years over human rights issues — the kingdom is working to ensure it has a range of options at its disposal.Saudi Arabia also needs a survival strategy: With falling oil prices and a highly fossil-fuel dependent economy, it's racing against the clock to diversify its revenue streams and bolster partnerships with larger powers to secure trade and security alliances. This pursuit is set to continue with help from the U.S., but it will also foster greater engagement with the East — both for economic and geopolitically strategic aims.Sharply heightened scrutiny and criticism from the West means that "Saudi Arabia needs the buy-in from major Asian economic powers now more than ever," Ian Bremmer, president of the Eurasia Group, recently wrote in Time Magazine. Numerous European and American policymakers have sought to blame the crown prince for his alleged role in the October murder of Saudi journalist Jamal Khashoggi, a charge the monarchy denies. The governments of Pakistan, India and China, by contrast, haven't uttered a peep about the killing.

Saudi crown prince defends China's right to put Uighur Muslims in concentration camps - Saudi Arabia’s crown prince Mohammed bin Salman defended China’s right to use concentration camps for Muslims on Friday, saying it was Beijing’s “right” according to the Telegraph newspaper. “China has the right to carry out anti-terrorism and de-extremization work for its national security,” Salman said while in China signing multi-million dollar trade deals much to the chagrin of the country’s Western allies. Chinese leader Xi Jinping told Salman that the two countries must strengthen international efforts to “prevent the infiltration and spread of extremist thinking,” the report said. The Uighur are an ethnic Turkic group that practices Islam and lives in Western China and parts of Central Asia. A surveillance regime has been instituted after allegations that the minority in the Western Xinjiang region supports terrorism. The groups have previous appealed to Salman to take up their cause, as the kingdom, despite being criticized for its lack of support for Palestinians and other oppressed citizens in the Middle East, has nevertheless defended the rights of certain Muslim groups worldwide. In contrast, Recep Tayyip Erdogan, the president of Turkey, recently condemned China, calling its treatment of the Uighur population “a great cause of shame for humanity” last month and asking it to close the “concentration camps.”

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