DUC well backlog falls to 6.5 months on jump in completions; oil supplies see largest draw since July

after rising to a 4 month high midweek on the largest drop in US crude supplies since July, oil prices ended the week little changed after renewed fears of economic weakness knocked prices back...after ending last week 4.4% higher at $58.52 a barrel on lower inventories and supply disruptions, prices for US crude to be delivered in April rose 57 cents to $59.09 a barrel on Monday, supported by another OPEC commitment to continue supply cuts til June, and signs of a drop in U.S. crude supplies....an early rally then stalled on Tuesday after reports of Chinese pushback in trade talks, but oil prices still held near multi-month highs as OPEC reported higher "conformity" with their production cut agreement, with US crude finishing just 6 cents lower at $59.03 a barrel...prices then slumped 70 cents early Wednesday, but rallied later to a new 2019 high, after the EIA reported the largest oil storage drop since July, with the April oil contract expiring 80 cents higher at $59.83 a barrel while the contract for May crude rose 93 cents to $60.23 a barrel...May oil prices pulled back from those mulitmonth highs on Thursday after the Fed signaled there would be no rate increases in 2019, citing concerns over global growth prospects, which could threaten energy demand...oil prices then tanked with equity markets on Friday as fears of a global slowdown spread, falling to as low as $58.28 a barrel, but recovered to finish down 94 cents at $59.04 a barrel, thus managing to eke out a third straight weekly gain, with May oil finishing up 0.4% from its week-ago finish...

natural gas prices, meanwhile, finished lower, as cold weather forecasts early in the week, which had pushed gas prices 5.5 cents higher on Monday and 2.4 cents higher on Tuesday, gave way to warmer weather models and lower natural gas prices later in the week, when prices of natural gas for April delivery fell 5.4 cents on Wednesday, rose a tenth of a cent with the storage report on Thursday, and then fell 6.8 cents on Friday, to end the week at $2.753 per mmBTU, a decrease of 1.5% from the prior week's $2.795 per mmBTU close..

the natural gas storage report for the week ending March 15th from the EIA indicated that the quantity of natural gas held in storage in the US fell by 47 billion cubic feet to 1,143 billion cubic feet over the week, which meant our gas supplies ended the period 315 billion cubic feet, or 21.5% below the 1,458 billion cubic feet that were in storage on March 16th of last year, and 556 billion cubic feet, or 32.7% below the five-year average of 1,699 billion cubic feet of natural gas that have typically remained in storage after two full weeks of March....this week's 47 billion cubic feet withdrawal from US natural gas supplies was close to the 48 billion cubic feet withdrawal that analysts surveyed by S&P Global Platts had expected, but it was less than the average of 56 billion cubic feet of natural gas that have been withdrawn from US gas storage during the same winter week over the last 5 years....

with the heating season coming to a close soon, we'll include a graphic that includes this year's and last year's weekly change in natural gas inventories, as well as the long term averages, so we can get an idea what to expect, and what it will take to bring our current natural gas supplies back into the normal range...

the above graph was copied from a blog post at Bespoke Weather that was published on Thursday of this week, shortly after the release of the natural gas storage report...on this graph, weekly withdrawals from natural gas storage in billions of cubic feet are shown below the zero line, and weekly additions to natural gas storage in billions of cubic feet are shown above the zero line; hence, the dark blue graph for 2019 shows this year's weekly withdrawals year to date, the red graph shows 2018's weekly additions and withdrawals of natural gas from storage, the green graph shows the 5 year average weekly change of natural gas in storage, and the orange graph shows the historical average weekly change of natural gas supplies in EIA data going back to 1992...

at the bottom far left corner in red you can see the record withdrawal of 359 billion of cubic feet of natural gas during the first week in January of 2018, and a withdrawal of 288 billion cubic feet during the third week of January 2018 that would have also been a record withdrawal if not for the first week; which combined lowered our natural gas supplies to 17.5% below normal to start last year, a deficit which persisted throughout the summer, despite near normal additions to storage....then, for the week ending November 16th 2018, you can see the big red spike downward that represented the largest drop in our natural gas supplies ever in mid-November, which came after our natural gas supplies had already started the winter at a 15 year low, and thus left us in an even more precarious situation...however, our supply deficit began to recover with the smallest Christmas-week withdrawal in 13 years, as you can see in the red spike higher on the far right side of the graphic, beginning a trend which persisted into January, when our withdrawals of natural gas remained well below normal, as you can see in the far left of the blue graph...

then, as you can see in the blue 2019 graph, our cold February and early March this year have more recently resulted in above normal withdrawals of gas from storage, up until this week, which have thus left our supplies 32.7% below the 5 year average of natural gas in storage, and 21.5% below last year's already well below normal levels...observed weather and forecasts indicate that the next two weeks should see withdrawals of gas from storage close to normal, before we head into April, when our natural gas needs should be able to be met out of production....nonetheless, our supplies as of this report are still 315 billion cubic feet below where they were on the same date last year, so to merely bring our supplies of gas back to the low levels that we started this past winter at, we have to add an average of 10 billion cubic feet more natural gas to storage each week this spring and summer than we did last year...on the graphic above, that would mean the blue graph would have to consistently stay above the red one through the next seven months, just to avoid going into the winter of 2020 in worse shape than we started this past winter..

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 15th, indicated a big increase in our crude oil exports and a correspondingly large withdrawal from our commercial supplies of crude....our imports of crude oil rose by an average of 186,000 barrels per day to an average of 6,932,000 barrels per day, after falling by an average of 255,000 barrels per day the prior week, while our exports of crude oil rose by an average of 846,000 barrels per day to 3,392,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,540,000 barrels of per day during the week ending March 15th, 660,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was estimated to be 100,000 barrels per day greater than last week 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 15,640,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,198,000 barrels of crude per day during the week ending March 15th, 178,000 more barrels per day than the amount of oil they used during the prior week, while over the same period 1,370,000 barrels of oil per day were reportedly being withdrawn from 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, from oilfield production, and from storage was 812,000 more barrels per day than the oil 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 (-812,000) 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"....with that large of a disparity, we have to figure one or more of this week's oil metrics 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 6,649,000 barrels per day last week, now 11.2% less than the 7,487,000 barrel per day average that we were importing over the same four-week period last year.... the 1,370,000 barrel per day decrease in our total crude inventories all came out of our commercially available stocks of crude oil, as the oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at 12,100,000 barrels per day because the rounded estimate for output from wells in the lower 48 states rose by 100,000 barrels per day to 11,600,000 barrels per day, while a 4,000 barrel per day increase in Alaska's oil production to 484,000 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 March 16th was at 10,407,000 barrels per day, so this reporting week's rounded oil production figure was 16.3% 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 88.9% of their capacity in using 16,198,000 barrels of crude per day during the week ending March 15th, up from 87.6% of capacity the prior week, but still a bit lower than before Venezuelan imports of heavy crude​ that Gulf Coast refineries are optimized to use were cut off....the 16,198,000 barrels per day of oil that were refined this week were down by 3.5% from the 16,777,000 barrels of crude per day that were being processed during the week ending March 16th, 2018, when US refineries were operating at 91.7% of capacity... 

with the increase in the amount of oil being refined, the gasoline output from our refineries was also higher, rising by 190,000 barrels per day to 9,925,000 barrels per day during the week ending March 15th, after our refineries' gasoline output had decreased by 117,000 barrels per day the prior week....with that increase in ​​the week's gasoline output, ​this week's gasoline production​ was​ little changed from the 9,932,000 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 67,000 barrels per day to 4,923,000 barrels per day, after that output had decreased by 63,000 barrels per day the prior week....after this week's increase, the week's distillates production was more than 9.3% above the 4,503,000 barrels of distillates per day that were being produced during the week ending March 16th, 2018.... 

even with the increase in our gasoline production, the supply of gasoline left in storage at the end of the week fell by 4,587,000 barrels to 241,503,000 barrels over the week to March 15th, after supplies had fallen by 4,624,000 barrels over the prior week....our gasoline supplies continued to fall again this week because the amount of gasoline supplied to US markets increased by 269,000 barrels per day to 9,409,000 barrels per day, after increasing by 78,000 barrels per day the prior week, even as our exports of gasoline fell by 272,000 barrels per day to 659,000 barrels per day, while our imports of gasoline rose by 220,000 barrels per day to 793,000 barrels per day...after having reached a record high eight weeks ago, our gasoline inventories are now fractionally below last March 16th's level of 243,065,000 barrels, even as they remain roughly 2% above the five year average of our gasoline supplies at this time of the year...

likewise, even with the increase in our distillates production, our supplies of distillate fuels fell for the 18th time in twenty-six weeks, decreasing by 4,127,000 barrels to 132,242,000 barrels during the week ending March 15th, after our distillates supplies had increased by 383,000 barrels over the prior week...our distillates supplies decreased by this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 753,000 barrels per day to 4,706,000 barrels per day, and because our imports of distillates fell by 136,000 barrels per day to 102,000 barrels per day, while our exports of distillates fell by 177,000 barrels per day to 909,000 barrels per day...but even with this week's inventory decrease, our distillate supplies ended the week 0.9% above the 131,044,000 barrels that we had stored on March 16th, 2018, but fell to roughly 4% below the five year average of distillates stocks for this time of the year...

finally, with the big jump in this week's oil exports, our commercial supplies of crude oil in storage decreased for the third time in 9 weeks, falling by 9,589,000 barrels over the week, from 449,072,000 barrels on March 8th to 439,483,000 barrels on March 15th...with that big draw, the largest since July of last year, our crude oil inventories are now roughly 2% below the recent five-year average of crude oil supplies for this time of year, but remain around 30% above the prior 5 year (2009 - 2013) average of crude oil stocks after the second full week 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 15th were still 2.6% above the 428,306,000 barrels of oil we had stored on March 16th of 2018, while falling to 17.6% below the 533,110,000 barrels of oil that we had in storage on March 17th of 2017, and 12.4% below the 501,517,000 barrels of oil we had in storage on March 18th of 2016...       

This Week's Rig Count

US drilling rig activity slowed for the fifth week in a row and is now down by 7% so far this year, as the lower prices for both oil and natural gas we've seen since year end​ combined with​ the large backlog of uncompleted wells​​ have continued to impact drilling decisions....Baker Hughes reported that the total count of rotary rigs running in the US fell by 10 rig to 1016 rigs over the week ending March 22nd, which was still 21 more rigs than the 995 rigs that were in use as of the March 23rd report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil fell by 9 rig​s​ to 824 rigs this week, which was still 20 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 1 to 192 natural gas rigs, which was just 2 more than the 190 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 down by 2 rigs to 20 rigs this week, which was still up by 7 rigs from the 13 rigs active in the Gulf a year ago, which was a multiyear low at that time...the count of active horizontal drilling rigs decreased by 7 rigs to 900 horizontal rigs this week, which was still 30 more horizontal rigs active than the 870 horizontal rigs that were in use in the US on March 23rd 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 1 rig to 53 vertical rigs this week, which was also down by 10 rigs from the 63 vertical rigs that were in use during the same week of last year....in addition, the directional rig count was down by 2 to 63 directional rigs this week, which was ​still ​up by 1 rig from the 62 directional rigs that were operating on March 23rd of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of March 22nd, the second column shows the change in the number of working rigs between last week's count (March 15th) and this week's (March 22nd) count, the third column shows last week's March 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before the equivalent weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 23rd of March, 2018...    

as you can see, half of this week's rig decrease was ​from the Permian of west Texas and New Mexico, which has now seen their uncompleted well total top 4,000, reducing the​ir​ incentive to drill more...in the Texas Permian, 3 rigs were pulled out of Texas Oil District 8, which would generally correspond to the core Permian Delaware, and one rig was removed from Texas Oil District 7C, or what would be the southern part of the Permian Midland basin...since a total of 5 rigs were pulled out of the Permian, one of them was th​erefore pulled ​out ​from the Permian Delaware in New Mexico, where there was thus also another rig shut down in another part of the state...other than the 4 rig decrease in Texas, you ​also ​see Louisiana's rig count was down by 3; those included the 2 rigs ​shut down ​in the state's Gulf of Mexico waters, and a gas ​rig pulled from the Haynesville shale in the northwest quadrant of the state...​in addition to that ​Haynesville natural gas​ rig, another gas rig was pulled out of the Arkoma Woodford in Oklahoma, while a natural gas rig was added in Ohio's Utica shale...other than those 3, all other changes this week were oil directed rigs, including the 4 rigs shut down in basins not tracked separately by Baker Hughes, which are not shown above...

DUC well report for February

Monday of the  past week saw the release of the EIA's Drilling Productivity Report for March, which includes the EIA's February data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the 11th month in a row, this report showed an increase in uncompleted wells nationally in February, even as drilling of new wells decreased ​and completions of drilled wells increased....like most previous months, this month's uncompleted well increase was largely due to an increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of western Texas and New Mexico, with modest increases of uncompleted wells in the Eagle Ford of south Texas and the Niobrara chalk of the Rockies front range also contributing...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by 93 wells, from a revised 8,483 DUC wells in January to 8,576 DUC wells in February, a 24.5% increase from the 6,887 wells that had been drilled but remained uncompleted as of the end of February a year ago...that was as 1,418 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during February, down by 14 from the 1,432 wells drilled in January, while 1,325 wells were completed and brought into production by fracking, a increase of 113 well completions from the 1,212 completions seen in January...at the February completion rate, the 8,576 drilled but uncompleted wells left at the end of the month represent a 6.5 month backlog of wells that have been drilled but not yet fracked...  

as has been the case for most of the past two years, the February DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian basin saw its total count of uncompleted wells rise by 88, from 3,916 DUC wells in January to 4,004 DUCs in February, as 574 new wells were drilled into the Permian, but only 486 wells in the region were fracked...at the same time, DUC wells in the Eagle Ford of south Texas increased by 16, from 1,527 DUC wells in January to 1,543 DUCs in February, as 208 wells were drilled in the Eagle Ford during January, while 192 Eagle Ford wells were completed...over the same period, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range increased by 8 wells to 527, as 194 Niobrara wells were drilled in February while 186 Niobrara wells were being fracked...in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region also saw their uncompleted well inventory increase by 4 wells to 211, as 57 wells were drilled into the Haynesville during February, while 53 Haynesville wells were fracked during the same period... meanwhile, DUC wells in the Bakken of North Dakota rose by 1, from 722 DUC wells in January to 723 DUCs in February, as 113 wells were drilled into the Bakken in January, while 112 of the drilled wells in that basin were completed...

on the other hand, the number of DUC wells in the Anadarko basin region centered in Oklahoma decreased by 18 to 1,053, as 145 wells were drilled into the Anadarko basin during February while 163 Anadarko wells were being fracked....lastly, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 6 wells, from 521 DUCs in January to 515 DUCs in February, as 1​27 wells were drilled into the Marcellus and Utica shales, while 1​33 of the already drilled wells in the region were fracked.....thus, for the month of February, DUCs in the five oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 95 wells to 7,850 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 2 wells to 726 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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Cleanup fund for Ohio mines could get $5 million in DeWine’s proposed budget - Gov. Mike DeWine’s proposed budget would restore $5 million to Ohio’s coal-mining reclamation fund that was raided by former Gov. John Kasich’s administration in 2017. “When there’s a change in administration, I guess you never really know what to expect. I guess I would say I’m pleasantly surprised,” said Michael Sliva, a board member on the state’s reclamation forfeiture fund advisory board, who was unaware of the budget proposal before contacted Friday afternoon by The Dispatch.At an advisory board meeting last week, members received preliminary figures from an actuarial report on the coal fund by Pinnacle Actuarial Resources.“It’s actually not as rosy as it was two years ago,” said John Wade, a consulting actuary with Pinnacle.Estimates showed that Ohio’s coal-mining reclamation fund would never recover from the Kasich administration taking $5 million from the fund for its general budget.  Five years from now, without the $5 million added back or other changes, the actuarial firm projected the fund balance would fall to $19.6 million, down from its current balance of a little more than $21 million.

ODNR Issues Six New Permits for Utica Shale Wells - – The Ohio Department of Natural Resources issued six new horizontal well permits to energy companies exploring Ohio’s Utica shale during the week ended March 16, the agency reports.Three permits were issued to Chesapeake Exploration LLC and three more to Ascent Resources Utica LLC to drill wells in Harrison County, data show.The rig count stood a 15 for the week.As of March 16, oil and gas companies have drilled 2,552 wells across the Utica, of which 2,168 are producing, according to ODNR. The agency has issued a total of 3,037 horizontal well permits since energy companies started exploring the play in 2010.Much of the exploration is centered in counties in southeastern Ohio, where wells have proven the most productive. There were no new permits in the northern tier of Ohio’s Utica, which includes Mahoning, Trumbull and Columbiana counties. Nor were there new permits issued in neighboring Lawrence or Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.

Ohio Epa sets hearing on switching brine wells - The Ohio Environmental Protection Agency has scheduled an April 15 public meeting on draft permits to allow Buckeye Brine to switch its Class 2 brine injection wells in Coshocton County to Class 1 facilities, to handle other industrial liquid wastes.The facility currently takes brine water from hydraulic fracturing at its three injection wells in Coshocton in east-central Ohio, Kallanish Energy reports. The company has been handling roughly 600,000 gallons of brine per year from Utica Shale production.The new permits, if approved, would allow Buckeye Brine to switch two of its wells to take other types of non-hazardous waste, including liquid from petroleum refining, metal production, chemical production, pharmaceutical production, commercial disposal, food production and municipal wastewater treatment.The request is the first time an operator in Ohio has sought to change from Class 2 to Class 1. There are roughly 10 Class 1 wells in the state. An informational session is set for 6 p.m. at Coshocton High School, immediately followed by a public hearing to accept public comment on the draft permits.

UPDATE: Stark County judge tosses Rover Pipeline lawsuit - A Stark County judge has dismissed the state’s lawsuit against Rover Pipeline over alleged water pollution during construction of the natural gas pipeline. In a ruling filed Monday, Common Pleas Judge Kristin G. Farmer said the Ohio Environmental Protection Agency waived its right to regulate pipeline construction under the Clean Water Act. The state had a year to act on Rover’s application seeking to discharge pollutants under the Clean Water Act, and failed to do so, the judge wrote. Instead, Ohio EPA asked Rover to resubmit its application, which was approved. The Ohio Attorney General sued Rover in November 2017, alleging environmental violations in more than a dozen counties across the state due to sediment-laden stormwater, leaks and spills of clay-based drilling fluid or the release of water used to pressure-test the pipeline. The biggest spill happened in April 2017 when millions of gallons of clay-based drilling fluid leaked into a Bethlehem Township wetland while workers bored a path for one of two main lines beneath the Tuscarawas River. The lawsuit asked the court to order Rover to comply with Ohio EPA’s orders and pay a civil penalty of up to $10,000 per day for each violation, as well as reimburse the Ohio EPA and pay the cost of the court action. Rover and subcontractors Pretec Directional Drilling, Laney Directional Drilling, Atlas Trenchless, Mears Group and B&T Directional Drilling argued they had the necessary permits. Also, they said federal law gave the Federal Energy Regulatory Commission, not state agencies, authority to enforce environmental laws during construction of intestate pipelines.

Ascent Sees 2019 as 'Inflection Point' in Ohio's Utica -- Ohio pure-play Ascent Resources LLC, the Utica Shale’s largest producer, said in a rare operational update that it expects to reach at least 2 Bcfe/d of production this year. The privately owned producer said it achieved record production of 2.4 Bcfe/d gross and 1.9 Bcfe/d net in December. This year, it forecasts net production to average 2-2.2 Bcfe/d, consisting of 90% natural gas, 7% natural gas liquids and 3% crude oil. Management said 85% of anticipated gas production and 75% of expected oil output has been hedged. “We believe 2019 will be an inflection point for Ascent as we achieve a size and scale that should allow us, at current strip prices, to reach cash flow neutrality before the end of 2019 and generate significant free cash flow in 2020 and beyond,” said CEO Jeff Fisher. The company has amassed a leading position in the Utica core of southeastern Ohio with 311,000 net acres. It was also the most active operator, drilled the most footage and had the highest average initial production rate in the state last year, according to the Ohio Oil and Gas Association’s Debrosse Memorial Report. Fischer said the company in 2018 operated 29 of the state’s 40 top gas wells and 21 of the 40 top oil wells. Ascent plans to build on those marks this year, with capital expenditures set at $1.1-1.25 billion. Of that, up to $1.1 billion is to be spent on drilling and completion, while up to $170 million would go toward land expenses. At the midpoint of its plan, Ascent said it would spud up to 100 gross wells, complete up to 110 gross wells and bring online up to 130 gross operated wells in 2019. The company also saw a significant boost in its borrowing base in 2018 to $2 billion from $925 million to $2 billion. Proved reserves were 7.6 Tcfe at the end of last year.

Study Shows Ohio Economies Not Seeing Impact of Drilling Boom – WOSU -  A new study shows that the drilling boom in south east Ohio is not contributing as much as it could to the local economy. One of the authors, Amanda Weinstein of the University of Akron, says part of this loss is because many of the workers in those drilling areas are spending their earnings elsewhere. Weinstein on why the drilling boom in southeast Ohio is not affecting the economy like it could:  “Because of this leakage, what it suggests we need to make sure that we’re not ignoring these counties, thinking these co: unties are just fine on their own," she said. "We need to make sure these counties have the funds that they need to make sure that their infrastructure is maintained.” Weinstein says the long term benefits of the oil and gas drilling industry, like investments in local businesses, school systems and roads are not being seen in the counties that are most impacted by the activity.  To see more, visit WKSU.

Marathon could build storage caverns in Harrison Co. - Marathon Pipe Line is looking to build storage caverns for ethane, butane and propane near Hopedale in northeastern Harrison County. Jason Stechschulte, the company’s commercial development manager, said Marathon Pipe Line finished taking geologic core samples at the end of last year, and felt confident the location is viable. MPLX has a gas processing plant at the Hopedale site, and Findlay-based Marathon Petroleum Corp. controls MPLX and Marathon Pipe Line. Stechschulte didn’t provide a timeline for when the project might be completed.   Several speakers discussed what to do with the heavier components of Utica Shale natural gas, also called natural gas liquids. Ethane, butane and propane contain more energy — and can be worth more — than methane, the primary component of natural gas. Besides being fuel, natural gas liquids have other uses, notably as chemical precursors in plastics production. The Utica region has pipelines and processing plants to transport natural gas liquids, but chemical plants, factories or export terminals need a reliable supply, Stechschulte said. A storage facility would increase reliability. Stechschulte said capacity of the storage caverns would depend on customer demand, but Marathon Pipe Line was considering multiple caverns hollowed out over several years. Ethane, propane and butane would be stored as liquids under pressure in the caverns. Marathon Pipe Line also is investing $150 million in two projects to increase the amount of Utica Shale butane and isobutane it can ship to users in Ohio, Illinois and Michigan. The projects include construction of two storage spheres at facilities in both East Sparta and Lima, and expansion of the 8-inch-diameter Robinson-Indiana-Ohio (RIO) liquids pipeline. The RIO expansion should be completed in about 10 days, and the butane-storage project should be finished by mid-2020, Stechschulte said.

A Fracking-Driven Industrial Boom Renews Pollution Concerns in Pittsburgh -   Although the air in Pittsburgh has dramatically improved from the days when it was one of America’s most polluted cities, it still contains high levels of hazardous pollutants, in large part because of several major steel foundries and coke works still in operation, according to the Clean Air Council. The rise of hydraulic fracturing for oil and gas, now more than a decade old, has exacerbated regional air quality problems. Allegheny County, where Pittsburgh is located, is out of compliance with federal air quality standards on fine particulate matter (PM 2.5) and sulfur dioxide. In 2018, the region barely met the federal ozone standard after falling short in years past.Now, Pittsburgh and the surrounding area are embracing a new wave of industry tied to the fracking boom in western Pennsylvania and eastern Ohio. Nothing better embodies this surge than a massive, $6 billion ethane cracker currently being built 30 miles northwest of Pittsburgh by Shell Chemical Appalachia, a subsidiary of the oil giant Royal Dutch Shell. The facility will process huge quantities of natural gas and natural gas liquids from the prolific Marcellus and Utica shales and turn them into the building blocks of plastic. The plastic pellets produced by “cracking” ethane molecules will then be sold to manufacturers producing consumer and industrial products such as plastic bags, packaging, automotive parts, and furniture. When it comes online in 2021, Shell’s ethane cracker will also add significantly to air pollution in western Pennsylvania, becoming the region’s largest source of volatile organic compounds (VOCs), which are harmful gases emitted by solids or liquids, including combusted fossil fuels. The facility will also emit substantial amounts of nitrogen oxide (NOx), sulfur dioxide (SO2), fine particulate matter, and other hazardous air pollutants, the Clean Air Council says. All of these have been linked to an increased risk of respiratory problems such as asthma, as well as to cardiovascular effects and a heightened risk of cancer.

Natgas production projected to jump nearly 1 Bcf/d: Dpr - Natural gas production from the U.S.’s seven most prolific unconventional basins/plays from March to April is projected to jump nearly 1 billion cubic feet per day (Bcf/d), the Energy Information Administration projects.EIA’s just-released Drilling Productivity Report (Dpr) for March projects March-to-April production will jump 883 million cubic feet per day (Mmcf/d), to 79.02 billion cubic feet per day (Bcf/d), from 78.14 Bcf/d. (All numbers are rounded.)Six of the seven basins/plays in the monthly survey are projected to see a March-to-April natural gas production increase, Kallanish Energy reports. The biggest jump by far is expected in the Appalachia region, which includes the Marcellus and Utica Shale plays, rising 358 million cubic feet per day (Mmcf/d), to 31.51 Bcf/d, 31.15 Bcf/d, Kallanish Energy reports.Due to its seemingly ever-increasing rise in crude production (see story elsewhere in this issue), the Permian Basin is second in terms of natural gas production. The increase is pegged at 216 Mmcfr/d, to 14.08 Bcf/d in April, from 13.86 Bcf/d in March.The Haynesville Shale is projected from March to April to increase natural gas production by 182 Mmcf/d, to 10.52 Bcf/d, from 10.34 Bcf/d, the Dpr stated.The three remaining basins/[plays the DPR projects will increase natural gas production from March to April, including the Niobrara, Eagle Ford and Bakken, will see increases of 75 Mmcf/d to 5.48 Bcf/d, 34 Mmcf/d to 6.94 Bcf/d, and 18 Mmcf/d, to 2.82 Bcf/d, respectively. One region, the Anadarko, is expected to see a 1 Mmcf/ drop in production from March to April, to 7.673 Bcf/d, from 7.674 Bcf/d.

Shale study- Marcellus to supply 45 percent of natural gas to US - The Marcellus and Utica shale formations are among the largest sources of natural gas and natural gas liquids in the world, and their production will increase exponentially in the next two decades, according to an IHS Markit study released at the World Petrochemical Conference in San Antonio, Texas.  Natural gas from the tri-state region of Ohio, Pennsylvania and West Virginia will supply 45 percent of the nation’s production by 2040, up from 31 percent this year, according to the IHS study. The production of the highly lucrative natural gas liquids ethane, propane and butane (LPG) is expected to nearly double in the same period, accounting for 19 percent of the nation’s total by 2040, up from 14 percent in 2018, the study shows.The study, “Estimated Logistics Benefits of the Shale Crescent USA Region Versus the U.S. Gulf Coast for Natural Gas and LPG” examines both production trends and the economics of petrochemical production in the region.“Research continues to drive home the myriad economic advantages for manufacturers in the Shale Crescent region when compared to other, more traditionally accepted energy and chemical hubs,” said Wally Kandel, spokesperson for Shale Crescent USA. “Investors are catching on that the Marcellus and Utica Shale formations offer unprecedented benefits. There are few other places in the world, if any, where the supply, manufacturing facilities and end users are all in close proximity.” The IHS Markit study, commissioned by Shale Crescent USA and JobsOhio, quantifies for the first time the anticipated development and production growth emerging from one of the world’s most prolific sources of natural gas and natural gas liquids. In 2018, an IHS Markit study evaluated the prospects for a world-scale ethylene and polyethylene plant based on ethane feedstock in the Shale Crescent USA region.

Ohio Valley region will supply half of US gas by 2040 - The Marcellus and Utica shale formations are among the largest sources of natural gas and natural gas liquids in the world, and their production will increase exponentially in the next two decades, according to an IHS Markit study released today at the World Petrochemical Conference in San Antonio, Texas.Natural gas from the tri-state region of Ohio, Pennsylvania and West Virginia will constitute 45% of US production by 2040, up from 31% this year, according to the IHS study. The production of the highly lucrative natural gas liquids ethane, propane and butane (LPG) is expected to nearly double in the same period, accounting for 19% of the nation’s total by 2040, up from 14% in 2018, the study shows.The study, ‘Estimated Logistics Benefits of the Shale Crescent USA Region Versus the US Gulf Coast for Natural Gas and LPG’, examines both production trends and the economics of petrochemical production in the region.“Research continues to drive home the myriad economic advantages for manufacturers in the Shale Crescent region when compared to other, more traditionally accepted energy and chemical hubs,” said Wally Kandel, spokesperson for Shale Crescent USA. “Investors are catching on that the Marcellus and Utica Shale formations offer unprecedented benefits. There are few other places in the world, if any, where the supply, manufacturing facilities and end users are all in close proximity.”The IHS Markit study, commissioned by Shale Crescent USA and JobsOhio, quantifies for the first time the anticipated development and production growth emerging from one of the world’s most prolific sources of natural gas and natural gas liquids. In 2018, an IHS Markit study evaluated the prospects for a world-scale ethylene and polyethylene plant based on ethane feedstock in the Shale Crescent USA region. The 2019 study says the region “will play a key role in satisfying America’s increasing reliance on natural gas, as well as keeping energy costs moderate. Favourable production economics place the Marcellus and Utica shale plays amongst the most cost competitive in the nation.”

Canada Pension Fund Boosts US Shale Presence with $3.8 Billion JV - The Canada Pension Plan Investment Board announced it was expanding in U.S. shale gas through a US$3.8-billion joint venture with U.S. independent energy company Williams.  The new company will be a pipeline operation and will focus on the Marcellus and Utica shale plays, which are the most prolific in natural gas production. The transactions leading to the establishment of the joint venture involve CPPIB buying a 35-percent stake in Williams’ wholly owned Ohio Valley Midstream pipeline system for US$1.34 billion and Williams buying out its partner Momentum Midstream in another pipeline system, the Utica East Ohio Midstream. “This joint venture will provide CPPIB additional exposure to the attractive North American natural gas market, aligning with our growing focus on energy transition,” a CPPIB official commented, reflecting the rising interest in investments across the shale patch This has been particularly true in shale gas-producing regions where drilling has boomed in recent years, but pipeline capacity has been slow to catch up, as Reuters notes in a report on the news. Earlier this month, this industry segment saw another large deal: Equitrans Midstream Corp. bought majority stakes in two pipelines connecting the Marcellus and Utica plays for US$1.03 billion from a Morgan Stanley-managed fund. Chances are as demand for gas continues to rise and so does production in these prolific plays, we will see more deals of this kind. Unlike oil pipelines, it seems that gas pipeline at least in this part of the United States, are not such a matter of contention between the industry and the environmentalist lobby, which makes the segment ripe for M&A activity as drilling increases. However, there is opposition from landowners in the area whose territory pipeline builders are encroaching on. A group of affected homeowners this month approachedthe U.S. Supreme Court arguing that energy companies were abusing the eminent domain rule.

CPPIB, Williams to form $3.8 bln Marcellus-Utica shale gas venture (Reuters) - Canada Pension Plan Investment Board is expanding its presence in the North American natural gas market through a $3.8 billion joint venture with U.S. energy firm Williams Cos Inc, which will hold pipeline assets in the Marcellus and Utica shale basins, the biggest gas-producing region in the United States.  Canada’s largest pension fund will invest about $1.34 billion for a 35 percent stake in the venture, with Williams holding the rest and operating the combined business, the companies said on Monday. “This joint venture will provide CPPIB additional exposure to the attractive North American natural gas market, aligning with our growing focus on energy transition,” said Avik Dey, managing director, head of energy & resources, CPPIB. Pipeline infrastructure in the Utica and Marcellus shale basins, which span Pennsylvania, Ohio and West Virginia, are attracting huge investments after a resurgence in drilling activity over the last few years led to tight pipeline capacity. A privately held company backed by CPPIB and Encino Energy last year signed a deal to buy the Chesapeake Energy’s entire natural gas assets in Ohio.  The companies said on Monday that the venture includes Williams’ Ohio Valley Midstream system in the Marcellus shale basin and the Utica East Ohio Midstream system.

Homeowners Take Fight Against Gas Pipeline Land Grab To US Supreme Court - For nearly a decade, Michelle and Gary Erb lived on a rustic, 72-acre plot of land east of the Susquehanna River in Lancaster County, Pennsylvania.  There, the couple hoped they could build a second home for their sons. But the landscape Gary once called a “deer paradise” became a construction site for a pipeline that can move 1.7 billion cubic feet of natural gas every day.  Transcontinental Gas Pipe Line Company (Transco), a wholly owned subsidiary of the $8.6 billion energy-infrastructure titan Williams, demanded access to the Erbs’ land so it could construct the Atlantic Sunrise project, a 200-mile pipeline that expands the nation’s largest natural-gas pipeline system to the Marcellus Shale. Rich in reserves, the Marcellus Shale has propelled Pennsylvania to become the nation’s second-largest supplier of natural gas, with the state accounting for one-fifth of U.S. natural gas production in 2017. At first, Transco offered to pay the Erbs for a six-acre easement. When the couple declined, Transco authorized eminent domain and forced the Erbs to hand over the property anyway. It’s now been more than a year and a half since Transco began digging up their land and yet the Erbs still haven’t seen a dime for their land.  On Wednesday, the Erbs, along with their neighbors Stephen Hoffman and Lynda Like, who also saw their land taken, filed a cert petition  urging the U.S. Supreme Court to rein in this widespread abuse of eminent domain. Representing the landowners is theInstitute for Justice, the public interest law firm that litigated on behalf of homeowners in the Supreme Court’s last major eminent domain case: Kelo v. New London.  What happened to the Erbs is not an isolated incident. In order to build natural gas pipelines, “over the past twenty years, district courts have entered hundreds of preliminary injunctions granting private companies immediate possession of thousands of acres of private land,” the Institute for Justice noted.

Higher operating pressure prompts new safety concerns over Sunoco’s Mariner East 2X pipeline - Pipeline opponents are raising new concerns about the safety of Energy Transfer/Sunoco Logistics’ Mariner East 2x natural gas liquids line, which the company says will have a maximum operating pressure much higher than that of the Mariner East 1 and 2 lines. The pressure on the Mariner East 2x had previously been reported in public documents as equal to the pressure of parallel Mariner East 2, which uses the same right-of-way. A pipeline’s “Maximum Allowable Operating Pressure,” or MAOP, is set by the Department of Transportation and, for safety reasons, is lower than what the design characteristics of the pipe can withstand.  In permit applications filed in 2016 with the Pennsylvania Department of Environmental Protection, and with the Delaware River Basin Commission in 2015, Sunoco stated the MAOP for Mariner East 2 and 2x would be 1480 psig, or pounds per square inch gauge. But a footnote in recent reports filed with the Pennsylvania Department of Environmental Protection point to a much higher number: 2100 psig. Clean Air Council attorney Alex Bomstein, who says he discovered the difference while analyzing Sunoco’s new horizontal directional drilling plans filed with DEP, said a risk assessment conducted of the pipeline project was based on a lower pressure.“Every risk assessment done on Mariner East has used the 1480 psig figure in calculating destructive potential, because that’s what Sunoco has always represented to the public and to regulators,” Bomstein said.Del-Chesco United for Pipeline Safety hired Quest Consultants to do a risk assessment on the line. Quest’s senior engineer Jeff Marx, who conducted the assessment, says the risks are greater with a higher pressure. “Something up in the 2100 psi range would be a significant increase and will increase the hazard because the release rate of material is largely driven by pressure,” Marx said.

Appeals court keeps alive Pa. attorney general's case over landowner gas royalty payments - The Pennsylvania attorney general’s case alleging that two natural gas companies misled landowners and cheated them out of royalty payments cleared an important hurdle on Friday when a state appeals court largely ruled against the companies’ efforts to get the case thrown out at its preliminary stages.In a 6-1 decision, the Commonwealth Court ruled that the attorney general can bring claims in the public interest under Pennsylvania’s consumer protection law — even though the landowners were technically sellers, not consumers, when they signed leases with companies to extract Marcellus Shale gas from under their land.Oklahoma-based Chesapeake Energy Corp. said it plans to appeal to the Pennsylvania Supreme Court. The attorney general’s office filed the case in 2015. It alleged that Chesapeake violated the state’s Unfair Trade Practices and Consumer Protection Law by inflating gas shipping costs and passing the higher costs on to landowners, whose monthly royalty checks shrank even as huge amounts of gas were pulled from their property. Landowner advocates estimate that the questionable deductions have amounted to more than $100 million in lost royalties for northeast Pennsylvania property owners. The state also accuses Chesapeake of engaging in deceptive leasing practices and colluding with Texas-based Anadarko Petroleum Corp. to split the northeastern Pennsylvania market and not compete with one another for leases there.

Federal appeals court issues stay halting PennEast pipeline project - A federal appeals court has granted New Jersey a stay, halting construction of the PennEast natural gas pipeline while it resolves issues surrounding the company’s attempt to take property in which the state has an interest. The Third U.S. Circuit Court of Appeals issued the order Tuesday in an appeal by several New Jersey state agencies that challenged the federal court’s jurisdiction to hear eminent domain actions by a private company. The agencies argued that such matters must be heard in state court. While the order bars physical construction of the pipeline, it does permit PennEast Pipeline Co. to continue surveying and testing for the 110-mile pipeline, which is planned to carry natural gas from the Marcellus Shale region of Central Pennsylvania, through Northampton County and to southern New Jersey. There are about 535 landowners along the entire route. That route, through farmland and environmentally sensitive areas, has been hotly contested in both states. Attorney Timothy P. Duggan, who represents dozens of New Jersey landowners fighting the company, said the order applies only in New Jersey. It could, however, provide support for those challenging PennEast’s legal action to build on their land, he said. “I think the lawyers in Pennsylvania are going to make sure their judges know what’s happening in New Jersey,” Duggan said. Despite the ruling, PennEast spokeswoman Patricia Kornick said pipeline officials haven’t adjusted their timeline, which calls for starting construction late this year. Article continues belowConstruction would take seven months, and the pipeline is expected to be fully operational seven months later. 

PSE&G Wants to Spend Almost $900M on Resiliency of Natural-Gas Network - Public Service Electric & Gas plans to add 14 gas pipelines to its grid to safeguard against curtailments in interstate shipments of natural gas, but critics say the lines will be seldom, if ever, used. In filings on the Newark utility’s pending $2.5 billion Energy Strong II program, the Division of Rate Counsel argued the overall project should be rejected, saying it will have significant impacts on rates if approved as proposed. But Rate Counsel director Stefanie Brand and her consultants addressed their most withering criticism to the company’s nearly $1 billion plan to strengthen the resiliency of its gas distribution system, the bulk of which ($863 million) will spent on projects designed to back up supply if interstate pipelines are disrupted. “We just don’t think we need to do this,’’ Brand said. “The contingency that they are trying to protect against has never happened. It just doesn’t feel like a wise investment for the state or ratepayer.’’ The Energy Strong proposal comes at a time when the state Board of Public Utilities is juggling various petitions that would increase utility bills by more than $12 billion, according to consumer advocates. The projects range from ratepayer subsidies for nuclear power plants, to clean energy, to requests from other utilities to upgrade their electric and gas systems.

No new natural gas hookups in New York's Westchester County, Con Ed says (Reuters) - New York energy company Consolidated Edison Inc said on Friday it still plans to impose a moratorium on new natural gas service in parts of Westchester County after March 15 despite a $250 million plan by the state to reduce energy usage. “The moratorium will still go into effect after March 15,” Con Edison spokesman Allan Drury said, noting the company needs to stop hooking up new gas customers to avoid compromising gas system reliability because of limited space on existing interstate pipelines into the region. Westchester County is north of New York City. New York State has blocked construction of new interstate pipelines for environmental reasons for years as Governor Andrew Cuomo and other state officials want utilities to focus more on renewable power sources and energy efficiency programs, instead of building more gas and other fossil fuel-fired power plants and infrastructure. Consumers, however, want access to more gas to heat homes and businesses because it is cheaper and cleaner to burn than oil. This winter, U.S. Northeast households, on average, are expected to spend $723 to heat with gas and $1,646 with oil, according to federal estimates. Drury said Con Edison has received more than 1,300 applications for new gas hookups since notifying the state of the moratorium on Jan. 17, well above the number the company normally receives during a two-month period. On Thursday, the state announced several steps totaling $250 million to reduce energy consumption and fund alternative energy programs. The state said the programs will “provide immediate relief to Westchester County businesses and residents affected by Con Edison announcement that it will put new applications for firm natural gas service on a waiting list beginning March 15.” The programs, which are estimated to reduce energy consumption equivalent to the amount of gas needed to heat over 90,000 homes, include funding for clean energy alternatives like electric heat pumps and high-efficiency appliances. The problem with those programs is they only reduce demand, not boost gas supplies.

Report: No need for gas pipeline under New York Harbor - The fight over a proposed 24-mile natural gas pipeline extension through lower New York Bay heated up Tuesday with the release of a report by an anti-global-warming organization that argues the need for the controversial project has been overstated. Alternatives, such as conservation and new technologies, have been overlooked, the report said. "False Demand: The Case Against the Williams Fracked Gas Pipeline," from the environmental group 350.org, targets claims by both utility National Grid and pipeline builder Williams Transco that the project is an environmentally sound approach to meeting rising demand for natural gas. In particular, it addresses the assertion that new projects, including the state's Belmont Park redevelopment, will not have sufficient access to natural gas without the pipeline. And it disputes claims that the project will meet a 10% increase in demand for natural gas over the next decade. "The national forecast for residential and commercial natural gas use is 'flat' because while growth has gone up, demand has gone down," the report states. "Williams' touting of a 10% increase in need over the next decade is outdated." The report also cites a recent New York state study that found the use of air and geothermal heat pumps alone could cut gas needs for the region by about a third of the amount that the Williams pipeline would deliver. In addition, it pointed out that National Grid's assertion of the need for the project "has not been subject to public review or analysis of alternatives."

U.S. natural gas production hit record high in 2018  - The United States produced more natural gas in 2018 than any year prior, breaking the previous record set in 2017, and local wells played a big part.According to a recent report form the U.S. Energy Information Administration, the nation's gas production measured as gross withdrawals averaged 101.3 billion cubic feet per day, and increase of 10 billion cubic feet per day over record-breaking production in 2017. That 11 percent increase is a record for the largest annual increase in production.  Gross withdrawals increased every month of the year, save June, and peaked in December at 107.8 billion cubic feet per day.The Appalachian region remained the top-producing natural gas region in the country, with wells in Pennsylvania, Ohio and West Virginia producing more than a quarter of the county's total output. Texas led all states in total production with 24.1 billion cubic feet per day, but Pennsylvania was not far behind as the second-biggest producer at a little over 18 billion cubic feet per day.    Exports of natural gas were also up to 9.9 billion cubic feet per day, making 2018 the fourth straight year that exports increased. For the second year in a row, the U.S. exported more natural gas than it imported. Prior to 2017, the country had been a net importer for nearly 60 years.

Cold End Of March Keeps Gas Afloat  - It was a mixed day for natural gas futures, as colder weather forecasts helped the April gas contract settle a bit less than a percent higher on the day despite looser fundamental data.  The April contract was clearly the strongest on the day, with other contracts lagging behind on looser demand data.  The result was the first positive settle of the April/May J/K spread in quite some time.  The April/October J/V spread eclipsed the recent highs set last week as well.  Much of the support at the front of the curve came from bullish overnight weather trends that were outlined in our Morning Update.  Yet out sentiment was slightly bearish on the day due to bearish fundamentals besides weather that had us see intraday price downside. This worked out well until mid-day weather model guidance (particularly the GFS ensembles) progressed in an even colder direction (images courtesy of Tropical Tidbits).  Climate Prediction Center forecasts this afternoon accordingly eliminated the bulk of what seemed like high probability warm risks yesterday. Tomorrow, traders will be weighing these recent weather changes against Thursday's expected EIA number and the latest daily balances, which we present to clients on a weather-adjusted basis. In our Afternoon Update we broke down our price and weather expectations for the week, showing how risk is skewed and what our latest weather forecast is.

Weaker Balances And Warmer Weather Models Lower Natural Gas Prices - April natural gas prices ended the day down about five cents. The market came under pressure first on weak fundamentals data.  Unlike yesterday, where the front month contracts had the most relative strength, the front of the natural gas curve was the weakest.  This resulted in a complete reversal of yesterday's move in the April / May spread, with the spread going back negative today.  The reversal was also seen in the April / October spread, almost perfectly negating yesterday's move.  We saw additional pressure on prices from some of the midday weather models, most notably the American ensemble (GEFS), which made a notable warmer change out in the 12-16 day time frame when compared with the overnight 0z run of the same model.  The end of the model run also showed a pattern that would not be conducive for colder weather in the key energy consumption areas of the U.S, with an enhanced warmer ridge in the eastern part of the nation.  We must be cautious in trusting these weather models, as they have been prone to wild changes in recent days, and often do struggle in the transitional seasons of Spring and Autumn, but the warmer, lower demand idea does fit with the longer range climate models into the first half of April.  Moving forward, these recent weather changes will have to be judged in conjunction with latest balances along with tomorrow's EIA number.

US natural gas in storage falls 47 Bcf to 1.143 Tcf- EIA - — The amount of natural gas in US storage facilities decreased 47 Bcf to 1.143 Tcf in the week that ended Friday, the US Energy Information Administration reported Thursday. The draw was slightly smaller than the consensus expectations of analysts surveyed by S&P Global Platts, which called for a 48 Bcf pull.The withdrawal was smaller than the 87 Bcf pull reported during the corresponding week in 2018 as well as the five-year average draw of 56 Bcf, according to EIA data.As a result, stocks were 315 Bcf, or 21.6%, under the year-ago level of 1.458 Tcf and 556 Bcf, or 32.7%, below the five-year average of 1.699 Tcf.The NYMEX April gas futures contract rose 0.9 cent to $2.829/MMBtu following the announcement.The EIA reported a 17 Bcf withdrawal in the East to drop stocks to 245 Bcf, compared with 276 Bcf a year ago; a 19 Bcf draw in the Midwest to cut inventories to 268 Bcf, compared with 320 Bcf a year ago; a 4 Bcf pull in the Mountain region to trim stocks to 62 Bcf, compared with 90 Bcf a year ago; a 6 Bcf withdrawal in the Pacific to drop inventories 96 Bcf, compared to 169 Bcf a year ago; and a 2 Bcf net draw in the South Central region to nudge stocks down 471 Bcf, compared with 603 Bcf a year ago.Total inventories are now 65 Bcf below the five-year average of 310 Bcf in the East, 106 Bcf under the five-year average of 374 Bcf in the Midwest, 53 Bcf lower than the five-year average of 115 Bcf in the Mountain region, 104 Bcf smaller than the five-year average of 200 Bcf in the Pacific and 228 Bcf under the five-year average of 699 Bcf in the South Central region. Only two more weeks of withdrawals are expected before the switch to injection season begins in the first week of April. Based on current forecasts, the week that will end Friday should see a 28 Bcf draw and the week after a 21 Bcf pull, reducing stocks to 1.089 Tcf, according to S&P Global Platts Analytics. It would mark the lowest volume in storage at the start of the injection season since it bottomed out at 824 Bcf March 28, 2014. Even with the low start that year, storage rebounded to 3.611 Tcf by the start of the next heating season.

Natural Gas Flat Following In-Line EIA Storage Number - It was a rather slow day in the natural gas market, with the April contract settling just a tick higher in a 4.3-cent range. Bearish daily balances were canceled out by mixed weather forecasts and an in-line EIA print, keeping prices mostly range-bound.  Later contracts along the curve were stronger through the day, with April actually being the weakest overall.  The result is that the J/V April/October spread went out to recent wide levels.  These later contracts were firm enough to help the April contract defend the $2.8 support level. Our Morning Update was "Neutral" despite slight GWDD losses overnight we we highlighted that, "it still seems hard to break below the $2.8 level..."  Then the Energy Information Administration announced a draw of 47 bcf from storage last week, which was just 1 bcf away from our estimate of 48 bcf. They also announced a 4 bcf revision lower in last week's 204 bcf draw, indicating that the draw actually should have been 200 bcf.  Despite the revision, the market did not move much after the EIA number, as it was seen generally confirming current expectations.

Judge delays any decision on ACP-related lawsuit against the county — Plaintiffs and the Robeson County Board of Commissioners must another month before learning how a judge will rule in a lawsuit related to the Atlantic Coast Pipeline. Superior Court Judge Mary Ann Tally, out of Cumberland County, gave the plaintiffs two weeks to submit more information and documents to support their case against the approval of a conditional-use permit approved by the commissioners on Aug. 7, 2017. The permit cleared the way for the ACP’s builders to place a metering station and a 350-foot tower near Prospect that would service the 600-mile pipeline that would carry natural gas from West Virginia to a point near Pembroke. Tally issued her decision on Tuesday at the end of a hearing in Courtroom 3C in the Robeson County Courthouse, said Gary Locklear, the county government’s attorney. ally declared the hearing will reconvene April 15, and she will issue a ruling sometime afterward. “The county feels real good because of the questions she asked,” Locklear said Wednesday. “Judge Tally has a firm grasp of the issue.” Brothers Robie and Dwayne Goins filed the initial lawsuit against the permit approval in October 2017, Locklear said. Since then other area residents, environmental groups and the Tuscarora Tribe have joined the legal fight.

From tiny Cove Point on the Chesapeake, tankers take natural gas around the world. At what cost? -  In a quiet pocket of Southern Maryland where beach bungalows line dirt roads to the Chesapeake Bay, the nation’s booming natural gas industry has established an unlikely multibillion-dollar foothold. For a year now, natural gas pulled from ancient shale formations deep below the surface of Pennsylvania and other states has been piped across Maryland to a new $4.4 billion gas export terminal in the woods beyond Cove Point Beach in Calvert County.  From there, the gas is cooled through a complex industrial process to minus 260 degrees Fahrenheit, which liquefies it and makes it easier to transport. It is then piped through a tunnel to a platform a mile offshore and loaded onto massive tankers for shipment overseas — to Japan and India, the Middle East and Europe, and countries across Central and South America. Lea Callahan says the increase in tanker ships in the waters beyond her beachfront home, about 65 miles south of Baltimore, has been shocking. “All of a sudden, it was like boom,” she said. “They come in at all hours, so you wake up in the morning and you see another ship.”  The new activity makes Maryland a global gateway for natural gas extracted from the ground through hydraulic fracturing, or fracking, even though the state has banned the controversial process within its own borders. It also puts Maryland at the vanguard of a growing global trade in liquefied natural gas, or LNG, that U.S. government leaders and energy executives are feverishly working to support by building similar facilities across the country. The Cove Point terminal began operations in early 2018 as just the second large LNG export facility in the continental U.S.; Cheniere Energy’s Sabine Pass terminal in Louisiana began exporting in 2016. But more than a dozen others are in the works — each of them eager to replicate Cove Point’s success.

'It's incredibly harmful': Cape May rally against seismic testing draws crowd -  —  The widespread opposition along the Jersey Shore to planned seismic testing brought together more than 100 residents, local officials, high school students and even some inflatable dolphins at a rally outside the Cape May Convention Hall. The protest comes after the Trump administration last year issued five authorizations to advance permit applications for air gun blasting from Delaware to Florida. The Bureau of Ocean Energy Management will soon rule on the applications, which would allow oil and gas companies to shoot sound waves into the water every 10 to 15 seconds to locate deposits under the seafloor.  “Our beaches, we can’t afford to lose them. This is our lifeblood down here,”   In New Jersey, there’s been pushback from environmentalists and both political parties who say the testing — a precursor to oil drilling — would harm marine mammals and the state’s multi-billion dollar fishing industry. In Cape May alone, commercial fishing was worth about $85 million in 2017. The sound waves from seismic testing can travel thousands of miles under water, environmental groups say. The National Oceanic Atmospheric Administration has said vessels are required to alert operators if a “protected species” swims within a certain distance of the testing area. Still, some scientists and environmentalists are worried the blasts will cause fish populations to scatter and create disorientation in mammals, said Cindy Zipf, executive director of Clean Ocean Action.A 2017 study found that seismic testing increased the mortality of zooplankton off southern Tasmania.“If you’re a scallop or marine mammal that’s in the pathway of that, it’s incredibly harmful,” Zipf said.

Government: Offshore drilling prep should go on during suit - — Preparatory work for offshore drilling shouldn’t be halted while a lawsuit challenging the practice moves through the court, according to papers filed Monday by attorneys for the Trump administration. The government wants a judge to deny a preliminary injunction request filed by coastal municipalities that are suing the administration over offshore drilling tests using seismic air guns. The cities and towns want the tests halted while their lawsuit moves forward, arguing that such testing is harmful to marine life and tourism. In its filing, the government says there’s no evidence the communities or nearby wildlife would be adversely affected by the testing, which precedes the drilling itself, saying such an injunction would constitute “extraordinary relief.” Last year, the municipalities, along with environmental groups, sued to oppose the administration’s plans to conduct the tests, challenging permits for the testing. The legal challenge claims that the National Marine Fisheries Service violated the Marine Mammal Protection Act, the Endangered Species Act, and the National Environmental Policy Act in issuing the permits. South Carolina has also joined the lawsuit, which is filed in federal court in South Carolina. Gov. Henry McMaster and Attorney General Alan Wilson, both Republicans, support the state’s effort, which comes in the wake of the Trump administration’s announcement of a five-year plan to open 90 percent of the nation’s offshore reserves to private development. Drilling has stirred emotions and vocal opposition along South Carolina’s coast, with many expressing concern the proposal could cause irreparable harm to the coastal areas that are the heart of South Carolina’s $20 billion tourism industry. Some drilling supporters say it could mean an economic boon for an area increasingly reliant on tourism. The drilling issue has been difficult for McMaster, an ally of Trump. Last year, McMaster was among state executives who requested a drilling waiver, seeking the same sort of promise already given to then-Florida Gov. Rick Scott, another Trump ally. But McMaster supports Wilson’s decision to join the federal action and has repeatedly pledged to protect the state’s coastline.

Dem senators demand offshore drilling info before Bernhardt confirmation hearing - A group of Senate Democrats are calling on the Interior Department to release more details about its anticipated offshore drilling plan prior to next week’s confirmation hearing for acting Secretary David Bernhardt. The group of 17 Senators on Wednesday sent a letter to Bernhardt asking him to provide them a copy of the latest five-year plan currently being drafted by Interior, known as The 2019-2024 National Outer Continental Shelf (OCS) Oil and Gas Leasing Draft Proposed Program. Bernhardt is expected to testify in front of the Senate Energy and Natural Resources Committee next Thursday as part of his confirmation hearing. He was nominated formally by President Trump in March to replace former Interior head Ryan Zinke. “The American public and their elected representatives in Congress deserve to understand your vision for the Outer Continental Shelf (OCS) before we consider your nomination to serve as Secretary of the Interior,” the senators wrote. The letter was signed by, among others, Sens. Bob Menendez (D-N.J.), Dianne Feinstein (D-Calif.) and Jeff Merkley (D-Ore.). It specifically asked Interior to provide them with prior insight into which coastal areas will be included in the draft plan. Former Secretary Zinke first announced last spring that he was directing the agency to develop an offshore drilling plan. A majority of state governors and leaders resoundingly came out against the plan. Since the announcement states have waited anxiously to see whether their concerns have been considered by the federal government, which controls drilling rights three to nine nautical miles offshore.

Florida fracking ban to apply to only certain types of fracking methods - Some forms of fracking could soon be banned in Florida if a new bill passes. A Florida fracking ban, or at least a partial ban on the oil and natural gas exploration method, could come into effect in the near future if a new fracking bill is passed into law. The bill would result in the ban of the two most common forms of the practice, one of which being hydraulic fracturing. Fracking exploration will still be permitted with a rock-dissolving method that uses acid.The Florida fracking ban would prevent hydraulic fracturing, which injects high-pressure liquids into the ground to create fissures in rocks to let pockets of oil and gas flow freely. This method has been associated with earthquakes and has spiked fears of its waste water infecting water supplies.That being said, the bill would still allow a fracking method that was once called matrix acidizing. This method of fracking involves dissolving rock with acid and has been used for decades in the state to clean out or restore wells without reportedly contaminating water supplies or damaging the environment. “The fact is,” says Republican Senator Doug Broxson of Pensacola, according to the San Francisco Chronicle, “we have to have that production. Florida has very limited resources as far as what’s in the ground. Let’s don’t interrupt what we’ve done right.”

Bernie Sanders Pledges To Ban 'Fracking' If Elected President In 2020 - Sen. Bernie Sanders, a 2020 presidential candidate, pledged to ban the drilling technique that’s turned the U.S. into the world’s largest oil and natural gas producer. “Fracking pollutes water, degrades air quality and worsens climate change,” the Vermont Independent tweeted Tuesday. “When we are in the White House we are going to ban fracking nationwide and rapidly move to renewable energy.” Sanders was responding to Oregon state lawmakers passing legislation to ban hydraulic fracturing, or fracking. However, Sanders also voiced his opposition to fracking during the 2016 election cycle.  Sanders, who is running on the Democratic ticket, is popular among the so-called “keep it in the ground” movement, which seeks to ban fossil fuels in the name of global warming. Activists in this camp have also pressured candidates not to take fossil fuel industry campaign donations, which Sanders has pledged not to do. Environmentalists have campaigned to ban fracking for years, finding success in New York, Maryland, Vermont and some localities. Like Sanders, activists point to studies alleging links between fracking and water contamination, poor air quality, illness and even birth defects. Activists have largely zeroed in on claims fracking contaminates groundwater. Most notably, the “Gasland” film series featured faucets and even a hose catching on fire because of fracked methane getting into water supplies.

Interest ticks up in US lease sale - The latest auction for oil and natural gas leases in the US Gulf of Mexico generated $244mn in high bids today, almost double last year's total but still below amounts generated before the surge in onshore shale exploration. The lease sale resulted in 227 high bids from 22 companies — a smaller set of participants compared with the March 2018 lease sale even though the sale revenue was higher. The winning bids cover just a fraction of more than 78 million acres (316,000 km²) area offered, at 1.3mn acres. Norway's Equinor submitted the highest bid, at $24.5mn, for a Mississippi Canyon block. Shell submitted the highest number of high bids, 87, for a total of almost $85mn. US independent producers Anadarko and Hess were the next highest bidders by the dollar amount of high bids, with $24mn and $18mn respectively. BP had 23 high bids for $15.5mn, including one submitted jointly with LLOG Exploration. Total submitted two high bids for a total of $15mn. The Interior Department's Bureau of Ocean Energy Management (BOEM) offered acreage in federal waters offshore Texas, Louisiana, Mississippi, Alabama and Florida. That kept up the recent practice of offering all available acreage for offshore development, instead of holding sales separately in the western, central and eastern parts of the Gulf. The lease revenue from Gulf-wide sales remains below pre-2015 levels. The lease sale, for example, for the central part of the Gulf raised $851mn in March 2014 and $539mn in March 2015. But the drop in oil prices in 2014-16 and a shift in exploration to shale formations onshore have since tempered interest in US offshore development. BOEM said it was satisfied with today's results, noting the increase in bids compared with 2018.

U.S. Gulf of Mexico oil and gas auction generates $244 million (Reuters) - A major auction of oil and gas leases in the U.S. Gulf of Mexico on Wednesday received $244.3 million in high bids, government officials said. The revenue generated by the sale was higher than similar sales held last year. Royal Dutch Shell and Equinor were among the high bidders for the leases, officials from the Bureau of Ocean Energy Management said in a conference call with reporters following the sale. 

US Gulf of Mexico Lease Sale 252 bids focus on blocks near existing fields— Upstream operators in US Gulf of Mexico Lease Sale 252 on Wednesday focused much of their bids around existing discoveries or fields in proven productive areas, a harbinger of quicker production from that oil-prone arena and an ongoing trend in recent years. The auction, which fetched $244 million in total high bids and $284 million for all bids, was the strongest in two years in the US Gulf and featured majors, large independents and a handful of smaller companies capturing tracts across the region from offshore Alabama to ultra-deep remote areas near Mexican territorial waters.  Also, "the bidding in potential new plays shows potential growth in Gulf of Mexico [production] in the future, and the consistency of deepwater for the long term." The 30 participating companies were roughly on par with recent sales of the last couple of years, with only ExxonMobil - traditionally one of the biggest spenders in Gulf lease sales - conspicuously absent.  "It seems those left in the Gulf of Mexico are committed to the region and taking this opportunity to quietly strengthen their prospect inventory,"  The sale captured 257 bids spread over 227 blocks, higher than the 171 bids across 144 blocks in the August 2018 sale, when $178 million was placed for high bids. It also surpassed the 159 bids across 148 tracts in the March 2018 auction, which took in $125 million in high bids. Majors and large independents with deeper pockets were especially active in the auction - the first of two sales planned for 2019 - which was live-streamed from BOEM officies in New Orleans. Shell in particular was the winner by far in numbers of apparent high bids (87) - a contrast to its mere three high bids in the August 2018 sale. Sale 252 also snagged a number of multi-million dollar bids from its 30 participants, including some in the eight figures. The highest offer of the sale came from Equinor - $24.5 million for a tract in the prolific lower Mississippi Canyon area that Turner said was adjacent to W&T Offshore's operated Gladden Deep exploration prospect. "It was the most competitive block in the round, receiving four bids totaling over $37 million," he noted. Many blocks that received bids appeared to aim at shoring up existing fields, as the new acreage may hold the potential for new discoveries that can be produced through nearby production hubs. For example, Anadarko Petroleum's apparent winning seven bids in the Viosca Knoll area are sited around its Marlin and Horn Mountain platforms. Hess also was apparent winner of a block for $10.1 million in the central Mississippi Canyon area, northeast of its Tubular Bells development, and also was high bidder on another tract for $4.1 million in Green Canyon, which is about six miles north of its Stampede field that began producing last year. Total wins block near Thunder Horse France's Total - a spare bidder in Sale 252, only winning two blocks - picked up a Mississippi Canyon block for $6 million.

The oil industry continues to undermine the estimates of gulf spills - The president of Taylor Energy, the company responsible for the 14-year-old oil spill in the Gulf of Mexico, expressed concern in his March 8 letter, “Mopping up the ‘spill’ record,” that the Coast Guard “recently abandoned a decade of meticulous response actions and scientific collaboration to act recklessly.” This assertion is deeply troubling.  For six years, the public had little to no knowledge of this ongoing disaster. Since 2010, nonprofit advocates regularly have flown over Taylor Energy’s wells, often reporting oil slicks extending more than 10 miles. No camera was installed to monitor the bottom, nor has any continuous effort been made to contain the oil that is reaching the surface of the gulf. The ongoing flow of oil poses a risk to the marine life of the gulf.Taylor Energy disagrees with the Coast Guard’s current estimates of the leak. This is not the first time independent analysis revealed much larger spill rates than were reported by the industry. During the BP disaster, independent analysis of flow rates was more than 10 times that of BP’s initial estimates. Industry self-reporting can be flawed; independent science is necessary. While Taylor Energy has spent millions capping busted wells, oil is still flowing into the gulf at an alarming rate. If this is the “meticulous response” we can expect from the oil industry, it is time we rethink efforts to expand oil development in the gulf and elsewhere.

U.S. Gulf Coast refinery demand for hydrogen increasingly met by merchant suppliers - Petroleum refineries in the U.S. Gulf Coast increasingly rely on merchant suppliers, rather than their own production, to provide the hydrogen used to reduce the sulfur content of fuel. As global demand for distillate fuel oil has increased and sulfur content regulations have become more stringent, refineries have needed to use more hydrogen. Hydrogen demand is expected to continue to rise as International Maritime Organization regulations that limit the sulfur content in marine fuels take effect on January 1, 2020.   Petroleum refineries use hydrogen in downstream units, such as hydrocrackers and hydrotreaters, to meet fuel specifications for producing distillate, jet fuel, and other petroleum products. Hydrogen is particularly important in processing low-grade, sour crude slates that are rich in sulfur content. Refineries typically fulfill incremental hydrogen demand by either producing it on-site through steam reforming of natural gas or by purchasing it from merchant suppliers.  As demand for hydrogen increases, U.S. Gulf Coast refiners (those in Petroleum Administration for Defense District 3) are consuming more hydrogen from merchant suppliers than from their own production. Between 2012 and 2017, consumption of hydrogen sourced from merchant suppliers increased from about 1,750 million cubic feet per day (MMcf/d) to 2,200 MMcf/d, a 25% increase. Over the same period, on-site production of hydrogen from natural gas fell from about 475 MMcf/d to 415 MMcf/d, a 13% decrease. Merchant suppliers accounted for more than 85% of hydrogen consumed by refineries in 2017. The increased use of purchased hydrogen by U.S. Gulf Coast refineries is a response to limitations on the amount of hydrogen that can be produced on-site compared with the supply of hydrogen provided by merchant suppliers. A large share of hydrogen used by U.S. Gulf Coast refineries is supplied by a 600-mile, one billion cubic foot per day network of hydrogen pipelines stretching from Lake Charles, Louisiana, to Houston, Texas.

Planned South Texas LNG terminal gets environmental OK (AP) — Federal regulators have given final environmental approval for a South Texas liquefied natural gas and export terminal in a migratory corridor for rare animals.The Federal Energy Regulatory Commission on Friday issued its report on the proposed Texas LNG terminal at the Port of Brownsville.Critics raised concerns about habitat of the endangered ocelot, jaguarundi and aplomado falcon. The terminal would be on about 625 acres (252.934 hectares) near the Laguna Atascosa (at-uh-SKOH’-suh) National Wildlife Refuge.FERC says construction and operation would have adverse environmental impacts, but those could be mitigated through planning, design, engineering and training. Recommendations include using electric motors to reduce noise and emissions, installing barriers to control erosion, planting native vegetation and limiting construction during breeding periods. A final permit decision is expected later this year.

Buyers want certainty as much as good price from second wave US LNG developers - — As they face competitive pressure to lower the price for their offtake, developers of the second wave of US liquefaction capacity are being increasingly pressed by buyers to provide project certainty and make terms more flexible. The three export terminals preparing to start up in the coming weeks and months - Sempra Energy's Cameron LNG, Freeport LNG and Kinder Morgan's Elba Liquefaction -- have all been beset by delays, primarily resulting from construction and weather-related issues. The snags often mean higher costs for contractors, and the change in timing can impact the global supply of LNG and, thus, prices. That history, and ongoing concerns about the pace at which US regulators are approving new permits, has led buyers in Asia, Europe and Latin America to be more selective in whom they sign long-term contracts with among the next wave of projects that are expected to come online in the early to mid-2020s. None of the three projects proposed for Brownsville, Texas -- NextDecade's Rio Grande LNG, Texas LNG and Exelon's Annova LNG -- has yet to announce any firm offtake deals. "When we're talking to buyers, what's important to them is flexibility," NextDecade CEO Matt Schatzman said in a telephone interview. NextDecade expects to receive a permit decision from the Federal Energy Regulatory Commission in July. Commercial operations are targeted to begin in 2023. In the meantime, it is looking to secure a new contractor and to prove commercial viability. NextDecade has said it remains on track to announce at least one firm long-term contract by the end of March, and shore up additional contracts in the second and third quarters to support initial construction of up to three liquefaction trains. The developer also is sticking to its plan to make a final investment decision in the third quarter. The other two Brownsville projects are also trying to gain momentum in a crowded field of second wave developers.   While the three Texas projects have yet to announce binding long-term contracts, new pipeline infrastructure that Kinder Morgan and other operators are planning to connect gas from the Permian Basin with the Agua Dulce trading hub offer hope the terminals will have access to cheap feedgas, aiding talks with offtakers.

ExxonMobil is combating a fire at their Baytown plant -- Officials are still investigating the cause behind a fire at the ExxonMobil refinery in Baytown. Emergency teams are responding to the fire Saturday around 1 p.m. at the complex located 5000 Bayway Drive. ExxonMobil confirmed the fire at the facility, but we are unsure of the cause. Since then, the fire at the refinery was contained and no injuries were reported. Pollution control teams say they are continuing to monitor the air in La Porte and Clear Lake.

The U.S. Gulf Coast became a net exporter of crude oil in late 2018 --In the last two months of 2018, the U.S. Gulf Coast exported more crude oil than it imported. Monthly net trade of crude oil in the Gulf Coast region (the difference between gross exports and gross imports) fell from a high in early 2007 of 6.6 million barrels per day (b/d) of net imports to 0.4 million b/d of net exports in December 2018. As gross exports of crude oil from the Gulf Coast hit a record 2.3 million b/d, gross imports of crude oil to the Gulf Coast in December—at slightly less than 2.0 million b/d—were the lowest level since March 1986.Several continuing trends pushed crude oil exports higher and imports lower and resulted in the Gulf Coast (defined as Petroleum Administration for Defense District, or PADD, 3) becoming a net crude oil exporter in the last two months of 2018. U.S. crude oil production, particularly in the U.S. Gulf Coast region, has increased in recent years. In November 2018, U.S. Gulf Coast crude oil production set a new record of 7.7 million b/d. The increased production is mostly of light, sweet crude oils, but U.S. Gulf Coast refineries are configured mostly to process heavy, sour crude oils. This increasing production and mismatch between crude oil type and refinery configuration allows for more of the increasing U.S. crude oil production to be exported. As a result, in late 2018, U.S. gross crude oil exports reached new record highs. Because more than 90% of U.S. crude oil exports leave from the U.S. Gulf Coast, crude oil exports from the region also set a record high of 2.3 million b/d in December. In each of the last three months of 2018, the U.S. Gulf Coast exported more than 2 million b/d.

Fire Breaks Out At a Houston-Area Petrochemicals Terminal (AP) -- Some Houston-area residents have been urged to remain indoors as a fire burns at a petrochemicals terminal.The fire started Sunday morning at Intercontinental Terminals Company in Deer Park, about 15 miles (24 kilometers) southeast of Houston, and continued to burn Sunday night. Deer Park officials issued a shelter-in-place directive after the fire was reported.Efforts to extinguish the fire with foam continue.Harris County officials say the fire started at the terminal that stores petrochemical liquids and gases, including fuel oil and bunker oil. The company's website says the terminal has a storage capacity of 13.1 million barrels.The fire is the second in as many days at a Houston-area petrochemical facility. A fire at an ExxonMobil plant in nearby Baytown that broke out Saturday has been contained.

Houston-area chemical fire expected to burn for days -A raging fire at a petrochemical storage terminal near Houston spread to two more massive tanks after firefighting water pumps stopped working for six hours, the company said on Tuesday.The blaze at Intercontinental Terminals Co (ITC) in Deer Park, Texas, has been burning since Sunday when a leaking tank containing volatile naphtha ignited and quickly spread to other nearby tanks, the company said.The fire has spewed thick, acrid smoke, which is visible from dozens of miles away.The steel containers hold up to 160,000 barrels of liquid products used to boost gasoline octane, make solvents and plastics, according to the company's website.Some of the chemicals have washed into the adjacent Houston Ship Channel that links the Gulf of Mexico to Houston, the nation's busiest petrochemical port, a spokesman said. Some chemicals and water have escaped the site and flowed into a nearby waterway and into the ship channel, he said. ITC has set up containment booms to limit the liquids from spreading and to capture the chemicals. State and federal regulators have said they are monitoring the site. Samuelsen said he had no new timetable for when the blaze will be extinguished. On Monday, ITC had said the fire could burn until Wednesday.

Houston Chemical Fires to Rage for Days Until Fuel Burns Out  -- Petrochemical tank fires that covered the Houston skyline in thick, black smoke will likely burn for two more days or until the fuel runs out, first responders said. Firefighters are in “defensive mode” as they seek to contain a blaze that spread to seven tanks storing liquids used to make gasoline in Deer Park, near the city’s shipping channel, said Ray Russell, a spokesman for Channel Industries Mutual Aid, a petrochemical emergency response organization.First responders are confident that they can stop the blaze spreading beyond the affected 15-tank unit by using foam and water, he said. The facility is owned by Intercontinental Terminals Company, a division of Tokyo-based Mitsui & Co., and has a total of 242 storage tanks located near the Houston Ship Channel to the east of the city, one of the busiest ports along the Gulf Coast.“At this time we are in a defensive mode,” Russell said at a press conference held at 10 a.m. local time. “It is going to have to burn out in that tank or until we complete draining the tank.” Residents have been urged to stay inside and nearby schools and highways were closed as fumes soared up into the sky causing a black haze across the city. However, local officials lifted a “Shelter in Place” order at 5:30 a.m. after air quality was found to be below “action levels.”

Texas petrochemicals blaze blankets Houston area in black smoke - The ongoing fire at a petrochemicals storage terminal in Deer Park, Texas, intensified overnight, blanketing parts of the Houston area in dramatic clouds of black smoke on Tuesday.The blaze ripped through the Intercontinental Terminals facility for a third day, worsening after a drop in water pressure hampered attempts by first responders to contain the fire. By Tuesday morning, flames had engulfed 10 of the facility's 242 tanks, though two were empty.Additional fire-fighting staff arrived on site on Tuesday, Intercontinental Terminals said. Local authorities say the fire could burn for at least another day, the NBC News affiliate in Dallas-Fort Worth reported.The fire broke out on Sunday morning in a storage tank containing naphtha, a super light oil used to make high-grade gasoline, jet fuel and petrochemicals. It later spread to tanks containing another gasoline component and a chemical used to make nail polish remover and glue.Despite the stunning images of smoke billowing from the facility, air monitoring continues to show readings are well below hazardous levels, Intercontinental Terminals said in a press release on Tuesday. The company also said no injuries have been reported.Intercontinental Terminals said there is little chance of an explosion, but it's taking precautions by pumping naphtha, which is combustible, out of tanks. The city of Deer Park initially advised residents to shelter in place, but lifted the warning on Monday. The blaze temporarily shut Highway 225, which runs from the city of Houston east to the Houston Ship Channel, where the Intercontinental Terminals facility is located.

Toxic Chemical Inferno Threatens Houston as Black Plume Extends for Miles — The petrochemical fire that has been raging out of control at an oil storage facility in Deer Park, Texas since Sunday is now impacting the greater Houston area by what’s been described as a “plume of thick, black smoke [which] for a third day intensified overnight as pungent fumes pervaded neighborhoods more than 20 miles away,” according to Bloomberg and local reports.The fire which has consumed highly flammable chemical tanks at the Intercontinental Terminals Company oil plant about 15 miles (24 kilometers) southeast of Houston remains “uncontrolled” according to local officials.The petrochemical fire had triggered a “shelter-in-place” warning for area residents on Sunday, who were further advised by Deer Park city officials to close air ventilation systems in their homes and close all windows. "Last night was really bad. Hard to breathe." A thick cloud of toxic smoke is stretching for miles as the result of a massive chemical plant fire near Houston. @TVMarci reports from Texas.https://t.co/W1vUNMab63 pic.twitter.com/fBIcrmMlMh Disturbingly, a black plume has settled over downtown Houston and has now reportedly made its way to the city’s northside. Bloomberg cited one local woman who noted, “You can really smell and taste it now.”According to prior local reports, the initial chemical tanks that caught fire were known to contain a highly flammable liquid hydrocarbon mixture called naphtha, which is often used as a raw material for production and conversion to gasoline.Bloomberg further described: “…in residential neighborhoods on the city’s north side, a chemical odor descended Tuesday morning on an otherwise clear day.”  Naphtha is classified as “Extremely flammable” and a dangerous irritant to humans if encountered in “high vapor concentration”. According to its chemical safety fact sheet it is “Irritating to eyes and respiratory system. Affects central nervous system. Harmful or fatal if swallowed. Aspiration Hazard.” Now a total of eight storage tanks are reported to be on fire after firefighters dealt with a drop in water pressure while attempting to extinguish the fire Monday evening.

Fire impacts operations at key oil products storage facility in Texas — Operations at the Deer Park tank farm operated by Intercontinental Terminal Company in Texas, United Sates, have been impacted due to a fire at tanks containing refined and petrochemical products, the company said Monday. ITC said that the fire took place on Sunday morning at tanks containing naphtha and xylene and has now affected other storage units. The company said no-one was hurt. The fire could provide support for the gasoline and naphtha markets, both of which have been weak due to surplus supply and tepid demand. "The fire at ITC Deer Park facility has spread to five additional tanks [containing gasoline and base oil blendstocks] adjacent to the tanks already involved in the fire," ITC said in a statement. "All personnel are accounted for and there have been no injuries reported as a result of this incident," it said. The storage facility has a capacity of 13.1 million barrels across 242 tanks, according to its website. It stores all kinds of petrochemical liquids and gases, as well as fuel oil, bunker oil and distillates. The terminal has five tanker docks and 10 barge docks, rail and truck access, as well as multiple pipeline connections. Residents in Deer Park were instructed to remain indoors and shelter because of the ITC fire. "Emergency responders continue to work on controlling the fire using foam and are working to prevent the fire from spreading further," ITC said.

After Earlier Assurances Over Air Quality, Benzene From Petrochemical Fire Triggers ‘Shelter in Place’ Order for Texas City - Despite assurances early in the week from top local officials that air quality was not a threat to public health, residents in the city of Deer Park, Texas are now under a shelter in place order due to elevated and dangerous levels of benzene caused by a mass petrochemical fire in the area. The City of Deer Park remains under Shelter-in-Place orders following reports of elevated benzene levels in the area surrounding the Intercontinental Terminals Company (ITC) Deer Park site — City of Deer Park (@DEERPARKTXGOV) March 21, 2019  The fire started last weekend at an oil refinery plant for Royal Dutch Shell at the Intercontinental Terminals Company in Deer Park, a city of just over 32,000 that's 21 miles east of Houston.Since Sunday, a plume of black smoke has been omnipresent in Deer Park skies and air quality has gone from bad to worse, despite assurances from local officials. On Tuesday, Harris County Public Health appeared to downplay the risks posed by the fire in a statement. "Based on current air monitoring reports, there continues to be a low risk to the community because the smoke is several thousand feet above the ground," said the county. That prompted frustration from observers, who feel the city isn't doing enough for its people during the chemical fire crisis. Benzene is notorious for causing many types of leukemia and even aplastic anemia where all the bone marrow dies. It’s unconscionable the government said everything was ok until finally ordering Deer Park residents to shelter in place. People should’ve been evacuated much earlier.— Eugene Gu, MD (@eugenegu) March 21, 2019Harris County Judge Lina Hidalgo told residents the county was monitoring the situation. "It's understandable why people would be scared," Hidalgo said.   The fire is now technically extinguished, but dangerous chemicals are still becoming airborne. County firefighters are working to spray foam over the tanks to stop vapors from escaping, according to the city.

National Guard called into Houston after chemical fire, residents told to stay inside — National Guard troops have been called in and residents were told to stay inside after elevated levels of benzene were detected early Thursday near a Houston-area petrochemicals storage facility that caught fire this week.Harris County officials said the Guard and hazardous materials teams have established perimeters around the Intercontinental Terminals Company in Deer Park, which is about 15 miles southeast of Houston.The Texas Environmental Protection Agency said Wednesday that benzene levels near the facility didn't pose a health concern. But authorities issued a shelter-in-place order Thursday following "reports of action levels of benzene or other volatile organic compounds" within Deer Park, according to the city.Several school districts also canceled classes for the day, citing "unfavorable air quality conditions."The fire started Sunday, sending a huge, dark plume into the air for several days before crews extinguished the blaze on Wednesday. The fire spread to storage tanks holding components of gasoline and materials used in nail polish remover, glues and paint thinner.Environmental groups said residents who live near the facility have experienced various symptoms, including headaches, nausea and nose bleeds. According to the Centers for Disease Control, long-term exposure to the highly flammable chemical causes harmful effects on the blood, including bone marrow.The state Environmental Protection Agency conducted air quality tests throughout the Houston area, both on the ground and from a small airplane, and "measured no levels of hazardous concentrations," agency official Adam Adams said Wednesday. But some residents who live near the storage facility said they didn't have confidence in the air quality test results.

Houston petrochemical fire put out after it re-ignites, had added to shipping woes - (Reuters) - A petrochemical fire was quickly put out after it had re-ignited Friday at a fuel storage facility outside Houston, which had compounded the danger from a containment wall breach earlier in the day that spilled chemicals and halted ship traffic in the nation’s busiest oil port. The fire in multiple giant tanks of fuel at Mitsui & Co.’s Intercontinental Terminals facility in Deer Park, Texas, was put out by emergency workers at the scene about an hour after it began. But lingering smoke and leaking toxic chemicals prompted the U.S. Coast Guard to halt vessel traffic from the ITC site near Tucker Bayou to Crystal Bay, near the mouth of the channel. Police also halted traffic on a busy highway for a time amid the smoke and air pollution worries. Hundreds of people showed up Friday to be checked at a medical clinic in Deer Park after air monitors a day earlier showed a spike in benzene, a cancer-causing chemical contained in the tanks of gasoline. Friday’s fire erupted on the West side of the facility and engulfed several of the 11 tanks damaged earlier in the week. The tanks contained fuels used to make gasoline and plastics. Each can hold up to 3.3 million gallons. There were no worker injuries reported on Friday, a spokesman for Intercontinental Terminals said. There were about 100 workers at the site on Friday, pumping chemicals from damaged tanks and trying to close a breach in the six-foot-tall containment wall surrounding the site. A portion of the wall suffered a collapse earlier in the day. The chemicals leak prompted the facility to call for a shelter-in-place order for the local area for the third time this week. ITC said emergency workers set up booms to halt the spread of the chemicals spilling from the site. The spill led the U.S. Coast Guard to halt ship traffic along most of the Houston Ship Channel, creating a bottleneck of vessels looking to enter or leave terminals on a key industrial waterway that connects Houston to the Gulf of Mexico. Movement was initially halted on a five-mile stretch between Tucker Bayou and Ship Channel light 116, said Coast Guard Vessel Tracking Service Watch Supervisor Derby Flory, and later expanded. The breach occurred as emergency workers were pumping pyrolysis gasoline from one of the 11 tanks destroyed or damaged during a fire that started Sunday and took more than three days to extinguish. Fumes from the exposed fuels triggered elevated benzene readings on Thursday at an air monitor located near the site. The company said the benzene likely came when the fuels were exposed to the air.

Oil majors rush to dominate U.S. shale as independents scale back (Reuters) - In New Mexico’s Chihuahuan Desert, Exxon Mobil Corp is building a massive shale oil project that its executives boast will allow it to ride out the industry’s notorious boom-and-bust cycles. Workers at its Remuda lease near Carlsbad - part of a staff of 5,000 spread across New Mexico and Texas - are drilling wells, operating fleets of hydraulic pumps and digging trenches for pipelines. The sprawling site reflects the massive commitment to the Permian Basin by oil majors, who have spent an estimated $10 billion buying acreage in the top U.S. shale field since the beginning of 2017, according to research firm Drillinginfo Inc. The rising investment also reflects a recognition that Exxon, Chevron, Royal Dutch Shell and BP Plc largely missed out on the first phase of the Permian shale bonanza while more nimble independent producers, who pioneered shale drilling technology, leased Permian acreage on the cheap. Now that the field has made the U.S. the world’s top oil producer, Exxon and other majors are moving aggressively to dominate the Permian and use the oil to feed their sprawling pipeline, trading, logistics, refining and chemicals businesses. The majors have 75 drilling rigs here this month, up from 31 in 2017, according to Drillinginfo. Exxon operates 48 of those rigs and plans to add seven more this year. The majors’ expansion comes as smaller independent producers, who profit only from selling the oil, are slowing exploration and cutting staff and budgets amid investor pressure to control spending and boost returns. Exxon Chief Executive Darren Woods said on March 6 that Exxon would change “the way that game is played” in shale. Its size and businesses could allow Exxon to earn double-digit percentage returns in the Permian even if oil prices - now above $58 per barrel - crashed to below $35, added Senior Vice President Neil Chapman. Exxon’s 1.6 million acres in the Permian means it can approach the field as a “megaproject,” said Staale Gjervik, the head of shale subsidiary XTO Resources, whose headquarters was recently relocated to share space with its logistics and refining businesses. The firm also recently outlined plans to nearly double the capacity of a Gulf Coast refinery to process shale oil.  

Exxon Plans for $15 per Barrel Permian Costs  | Rigzone -- Exxon Mobil Corp. plans to reduce the cost of pumping oil in the Permian to about $15 a barrel, a level only seen in the giant oil fields of the Middle East. The scale of Exxon’s drilling means that it can spread its costs over such a big operation that the basin will become competitive with almost anywhere in the world, Staale Gjervik, president of XTO Energy, the supermajor’s shale division, said in an interview. Development, operating and land acquisition costs will be “in and around $15 a barrel,” he said on the sidelines of the CERAWeek Conference by IHS Markit in Houston. West Texas Intermediate futures traded at almost $59 on Thursday. “The way we are approaching it is very unique compared to most, if not really everybody out there, as far as the scale," he said. The shale revolution has made the Permian into the world’s largest shale field, with production topping 4 million barrels a day, almost as much as Iraq, OPEC’s second-biggest member. But the rapid growth has often meant that producers burn cash flow to reinvest in the expansion, prompting investors to call on them to focus more on returns in 2019. Exxon plans to deploy 55 rigs in the Permian this year, by far the most of any driller, as it aims to increase output in the region fivefold to about 1 million barrels a day by 2024. Its strategy also includes building its own takeaway infrastructure from separation tanks to pipelines, and it’s even joining a giant conduit project to make sure its oil doesn’t get stuck in bottlenecks that have depressed prices in West Texas. Some analysts raised their eyebrows over Exxon’s ambitious plan for the Permian, but Gjervik -- a Norwegian who joined Exxon in 1998 and has worked in Angola, Nigeria and the North Sea -- argues that it’s exactly that kind of massive scale that will help the company generate $5 billion of cash flow from the region by 2023. “Part of this is to get sufficient scale to get capital efficiency out of this,”   Exxon’s Permian expansion pits it against U.S. rival Chevron Corp., which is also aiming for strong growth there. The San Ramon, California-based company announced plans last week for 900,000 barrels a day by 2023.

One Last Warning For The U.S. Shale Patch -  Arthur Berman -  Oil price lost 44% of its value late last year. That price collapse was a signal to tight oil companies to stop over-producing. The message will be repeated until action results.  From October 3 to December 24 2018, WTI fell from $76.41 to $42.53 (Figure 1).  Since then, WTI has recovered to nearly $60/barrel and Brent to about $68. Market observers seem to have largely forgotten the scale of price collapse just a few months ago. Although the magnitude of that collapse was not as great as in 2014-2015, the rate of decline was greater. That is because it occurred more quickly. In 2018, WTI price fell an average of -$0.42 per day for 81 days. In 2014-2015, it fell -$0.29 per day for 218 days (Figure 2).   Analysts are making fairly aggressive calls for 2019 average Brent price of $74 and $83 in 2020. I hope those calls are right but I am less optimistic. That is because the world remains over-supplied with oil. The balance between world oil production and consumption moved from a deficit of -0.24 million barrels per day (mmb/d) in 2017 and early 2018 to a surplus of +0.44 mmb/d beginning in the third quarter of 2018 (Figure 3). Source: EIA STEO and Labyrinth Consulting Services, Inc. It is likely that the production surplus will persist through 2019 and possibly 2020 based on EIA forecasts for production and consumption. EIA’s forecast for quarterly WTI price is below $65 per barrel through 2020. The global supply and demand outlook is similar. World oil supply-demand balance reached an over-supply of +1.6 mmb/d in the 4th quarter of 2019. It has fallen to around +0.6 mmb/d today (Figure 4). Forecasts based on EIA supply and IEA demand suggest that the surplus will rise to +1 mmb/d in the second quarter and then, decline through the rest of the year. Market sentiment has turned bullish since OPEC+ cuts were announced late last year even though concern remains about the strength of the global economy and the status of U.S.-China trade talks. I am less concerned about those demand-side issues than about the ongoing over-production in the world generally and in the Permian basin in particular. Despite talk of fiscal restraint by shale companies and more limited capital supply from credit markets, production continues to increase. I share Khalid Al-Falih’s concerns that world inventories are moving in the wrong direction for a sustainable price recovery beyond recent gains. Some analysts seem to forget that world oil prices have been on OPEC+ life support since late 2016 and apparently need even stronger measures in 2019.

US oil and gas production outlook for 2019: Permian, Bakken, Appalachian – podcast - S&P Global Platts senior gas writer J. Robinson talks with Platts Analytics senior oil and gas analyst Taylor Cavey about some of the biggest trends in upstream production for 2019, with a look at Permian Basin supply growth and constraints, Bakken flaring, and the looming slowdown in drilling across the Appalachian Basin.

For second year in a row, Enbridge Energy spends the most in Minnesota on lobbying - Enbridge Energy Partners spent just over $11 million lobbying Minnesota state government in 2018 — almost all of it advocating before the Public Utilities Commission — according to data released this week by the Minnesota Campaign Finance and Public Disclosure Board.Enbridge also topped the list last year, when it spent $5.3 million. For the past several years Enbridge has advocated before the PUC for the highly contentious Line 3 oil pipeline, a $2.6 billion project to replace a corroding pipeline across northern Minnesota with a larger pipe along a different route. The commission approved the project last summer.Many of the other largest spenders were also energy companies and utilities that advocated before the PUC, including Xcel Energy, CenterPoint Energy and Freeborn Wind Energy. Altogether, those companies, along with unions, nonprofits and other groups, spent more than $15 million on legal fees and other expenses at the Public Utilities Commission.

EIA Mar '19 Drilling Report: Numbers Tweaked, Record Gas - Yesterday our favorite government agency, the U.S. Energy Information Administration, issued our favorite monthly report, the Drilling Productivity Report. The DPR is a forecast of oil and gas production in the country’s seven major shale plays for the coming month, made by the expert number crunchers at EIA.The latest DPR shows that the Marcellus/Utica region (called Appalachia in the report) will go up by another 358 million cubic feet of natural gas production per day (MMcf/d) next month, in April. However, we have to be cautious with these numbers. Last month EIA said that this month, in March, Appalachia would produce 31.6 billion cubic feet per day (Bcf/d) of gas. Yet this month’s report says Appalachia will produce 31.5 Bcf/d in April, down a bit. How can our output go “up 358 MMcf/d” yet be less than the month before? Here’s how: EIA revises their numbers in each month’s report. They have revised March output from a previously-predicted 31.6 Bcf/d (made last month), to now saying March will be more like 31.1 Bcf/d. Gotta watch those revisions!Overall, natural gas production across all seven major shale plays will hit yet another all-time high record: 79.0 Bcf/d in April (if the numbers hold). The Marcellus/Utica will also hit a new record high: 31.5 Bcf/d (if the numbers hold). Below are the three charts the EIA doesn’t include in the official PDF of the report (for whatever reason). We think these are the three best charts they issue each month. Note to EIA: these charts need to be in the PDF! Below is a copy of the full, official March 2019 DPR, which estimates production volumes for the coming month of April 2019. Note that as actual numbers roll in, EIA updates the numbers from previous monthly reports, as they have done with this one. The March numbers in this report are tweaked, quite a bit, from last month.

U.S. oil drillers cut rigs for fifth week in a row- Baker Hughes - (Reuters) - U.S. energy firms this week reduced the number of oil rigs operating for a fifth week in a row to its lowest in nearly a year as independent producers follow through on plans to cut spending on new drilling with the government cutting its growth forecasts for shale output. Drillers cut nine oil rigs in the week to March 22, bringing the total count down to 824, the lowest since April 2018, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. That is the first time the rig count has declined for five weeks in a row since May 2016 when it fell for eight consecutive weeks. More than half the total U.S. oil rigs are in the Permian basin, the nation’s biggest shale oil field, where active units fell by six this week to 459, the lowest since May 2018. The U.S. rig count, an early indicator of future output, is still a bit higher than a year ago when 804 rigs were active after energy companies boosted spending in 2018 to capture higher prices that year. Drilling this year has slowed with the rig count contracting for the past three months as independent exploration and production companies cut spending as they focus on earnings growth instead of increased output with crude prices projected to decline in 2019 versus 2018. U.S. oil output from seven biggest shale formations, the nation’s major producing regions, was expected to rise by 85,000 barrels per day (bpd) in April to a record 8.59 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report on Monday. The increase, however, would be the smallest monthly increase since May 2018, continuing a pattern of shrinking growth. The EIA last week already forecast total crude production was expected to grow slower than previously expected in 2019 but still average a record high 12.3 million bpd, from the all-time high at 11.0 million bpd in 2018. U.S. crude futures rose over $60 a barrel this week for the first time in four months due to supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies and U.S. sanctions on Iran and Venezuela.

Wastewater – private equity’s new black gold in U.S. shale - (Reuters) - Mike Christensen strides among rows of gleaming steel tanks, pointing to pipelines that arrive from miles around to this corner of former farmland near Midland, Texas, the heart of the largest oil patch in the United States. His company is one of dozens opening sites like this one that handles, not the lucrative oil, but the shale industry’s dirty secret: wastewater. While U.S. oil production has reached record levels on account of the shale revolution of the last decade, much of the supporting infrastructure has failed to keep up, including how to transport the large quantities of water used in the hydraulic fracturing process and the water that is produced from wells alongside oil and gas. Once managed individually by energy producers, the job of supplying, collecting and disposing of water is a rising cost, and has spawned a $34 billion a year business in the U.S. that has lured investors including TPG Capital, Blackstone Energy Partners LP and Ares Management Corp to back these firms. Oil production in the Permian basin that spans West Texas and southeastern New Mexico is expected to rise to rise 35 percent to 5.4 million barrels of per day (bpd) by 2023, requiring even more water supply and disposal, said analysts. In two New Mexico counties, firms produced 505 million barrels of oil from 2016-2018, and five times that in water, a Reuters analysis of state production data showed. “You can’t bring production online until you have a solution for the water,” There are 5,500 Permian wells to be drilled, requiring 2.75 billion barrels, or 115 billion gallons to complete, a Morgan Stanley report estimated. While much of the water in the Permian is transported for high fees by trucks, which also exacerbate traffic congestion around production sites, midstream companies build and use pipelines which energy producers pay to utilize. Christensen’s company, On Point Oilfield Holdings, owns a water disposal network that this year will take up to 375,000 bpd of wastewater. Some of that water will be recycled, but millions of gallons will eventually be sunk deep underground in West Texas. “Water was always an afterthought for producers,” said Christensen, who stretches him arm and draws a 360-degree arc to show the locations of lines carrying oilfield bilge to the site. “Now it’s a business plan in itself.”

This State Wants Oil Companies to Treat and Recycle Fracking Waste Water – --Fracking requires a huge amount of water, a major concern in dry Western states that otherwise welcome the practice. But New Mexico thinks it can mitigate that problem by pushing oil companies to treat and recycle fracking waste water for use in agriculture — or even as drinking water.State officials, with the help of the U.S. Environmental Protection Agency, are still working out the details. If they move forward with the strategy, other arid states may follow New Mexico’s lead.“Oil and gas in New Mexico provide over a third of our general fund,” said Ken McQueen, who heads the New Mexico Department of Energy, Minerals and Natural Resources. “We have to be concerned we’re doing what’s necessary into the future to make sure this industry continues to be alive and vibrant.”In addition to keeping a vital industry going, McQueen thinks the reclaimed waste water could be a boon to New Mexico farmers and ranchers who need water for their crops and herds. Factories could use it, and it might help revive parched wildlife habitat, he said. And even though the waste water is filled with salt and other minerals, it might even be treated and used for drinking. In a typical month, the amount of waste water generated by the fracking process in New Mexico, the country’s third-largest producer of oil, would be enough to fill Elephant Butte, the state’s largest lake. But even in the nation’s fifth-driest state, where water is as precious as crude, environmentalists are skeptical of a strategy many state leaders view as a greener approach to dealing with waste water. Even after it is treated, they argue, the water can be tainted by harmful metals or chemicals used in fracking, creating long-term risks for people and the environment. “If they go without challenge, these plans will forever change New Mexico’s water,” the Red Nation, a Native American advocacy group, said in a statement released in advance of a protest at a recent oil and gas industry conference in New Mexico. The new regulations would “guzzle up the region’s scarce and sacred freshwater resources for fracking and then ‘re-introduce’ dirty water back into the hydrological cycle.”

Oil spill in San Juan River reaches Sand Island - Crews are working to cleanup an oil spill in the San Juan River near the Sand Island boat ramp in Bluff. The U.S. Environmental Protection Agency (EPA) said three or four barrels of the oil reached the San Juan River when a leaking transmission pipeline was found at a wellhead gathering facility near Montezuma Creek in an area adjacent to the Navajo Nation. Other sources now site that more than 25 barrels (more than 1,000 gallons) of oil have spilled, but the EPA has not posted any updated documents or information about the spill to its website since March 3. [Photo courtesy of EPA]

Forest Service Rejects Oil, Gas Leasing in Nevada's Ruby Mountains — The U.S. Forest Service today rejected an earlier plan to lease public lands for oil drilling and fracking in Nevada’s iconic Ruby Mountains. The Trump administration proposal to auction off 54,000 acres of the Rubies was met with overwhelming public opposition in Nevada. “This is a resounding victory for the Rubies and the wildlife that call them home,” said Patrick Donnelly, Nevada state director at the Center for Biological Diversity. “It’s a testament to the power of the people to resist the Trump administration’s destructive frack-anywhere agenda.”  The Ruby Mountains, in the Humboldt-Toiyabe National Forest, are famous for the state’s largest mule deer herd, world-class skiing and breathtaking vistas. Rising 7,000 feet above the floor of the Great Basin desert, the Rubies are a majestic sky island harboring robust populations of Nevada’s most cherished wildlife. The Forest Service’s original plan to auction off the Rubies prompted Sen. Catherine Cortez Masto (D-Nev.) last month to introduce the Ruby Mountains Protection Act (S. 258) to permanently ban oil and gas leasing on 450,000 acres. The fracking plan also brought more than 13,000 comment letters in opposition, concerns from the Nevada Department of Wildlife and efforts from the Nevada State Legislature Public Lands Committee to protect the Rubies from leasing and fracking. 

US Oil & Gas plc continues in permitting process as it seeks to frack Nevada well - US Oil & Gas told investors that dialogue is continuing with regulatory agencies regarding its permit application for the hydraulic fracturing of the Eblana-3 well in Nevada.The explorer added that it has undertaken a comprehensive study of local water resources, requiring multiple samples be collected over an extended period and be independently analysed.A report has been submitted to the authorities, and additional data is now being collected.“The company wishes to emphasise that the implementation of the fracking plan and the associated operational timetable is contingent on regulatory approvals,” it said in a statement released on Friday. “Every effort is being made by the company to satisfy requirements, but no timescale can be offered for the completion of the process.”USOG also told investors that volumes of data collected in the previous Eblana-3 drilling phase are currently being integrated with all other data sets/ It added: “The company views the results of these latest studies as highly encouraging, supporting the belief that its Hot Creek Valley lease area features a major oil system analogous to that in Railroad Valley. “Highly prospective targets are clearly emerging from these studies and will form the basis of a multi-well development proposal now being prepared.”

Colorado’s tougher approach to oil and gas advances in House as Democratic lawmakers weigh climate change push - State lawmakers’ attempt to re-focus Colorado’s regulation of the $10 billion fossil-fuel industry gained momentum Monday after scores of supporters and opponents packed a first committee hearing in the House on the proposed oil and gas legislation. The House Energy and Environment committee approved Senate Bill 181 by a 7-4 vote following a marathon hearing that lasted late into the night. The oil and gas bill next goes to the House Finance committee.Democratic lawmakers also are looking at a more aggressive approach to climate change with a bill to be introduced this week that would adopt theParis climate agreement’s goals, possibly as mandates, for reducing greenhouse gas emissions — linked to global warming — as part of Colorado law.“It is a shift. We’re not going to be promoting” oil and gas extraction, House Speaker KC Becker, D-Boulder, said of the oil and gas legislation. “But they (state regulators) are still going to be providing permits” for new drilling.These efforts to reform how Colorado handles fossil fuels “are related” to efforts to step in, along with other states, where President Donald Trump has stepped out in fighting global warming, Becker said, calling climate change a critical issue.Colorado still relies on coal, a major source of heat-trapping carbon dioxide, for more than half of the electricity that the state’s residents use, according to U.S. Energy Information Administration data. “It affects Colorado particularly because of our geography,” Becker said. “We have a responsibility in this state to step forward … We’re going to see more catastrophic weather events. All we can do is our part to contain it.” Industry leaders who are engaged with the oil and gas legislation are accepting requirements that companies control methane, a potent heat-trapping gas linked to global warming. Becker praised this, saying industry leaders “are recognizing their own role and stepping forward on addressing methane emissions.”  Behind the scenes, the 33-page draft bill has been tweaked to insert the words “reasonable” and “necessary” as checks on local power, a compromise for the industry. These legislative “guardrails” are aimed at making sure local governments and state regulators do not overreach in regulating industry operations. Even without that language, however, government agencies cannot legally take arbitrary or capricious action against companies.

Trump administration lifts protections on federal land, opens leases to energy industry - Walking back a 2015 regulation under President Obama, the Trump administration on Friday finalized a move to lift protections on nearly 9 million acres of federal lands for the greater sage grouse, with the aim of expanding leases for the oil, gas and mining industry, reports the Washington Post. Also this week, the Interior Department spelled out plans to keep the Atlantic coast in its program to expand offshore oil-and-gas leasing despite criticism. Per WaPo: “In pursuit of that agenda over the past two years, the administration has sought to reverse dozens of regulations aimed at making oil platforms safer, reducing carbon dioxide and methane released into the atmosphere, and protecting the habitats of endangered animals and those on the verge of an endangered status.”

Obama-Era Oil Leases Broke the Law by Not Assessing Climate Impact, Judge Rules - — The Obama administration violated federal law by failing to adequately take into account the climate change impact of leasing public land for oil gas drilling in Wyoming, a federal judge ruled Tuesday.But the decision by the United States District Court for the District of Columbia could also present a legal threat to President Trump’s agenda to quickly expand oil and gas drilling and coal mining across the nation’s public lands and waters. That’s because the decision amounts to a road map that could be used to challenge hundreds of Trump administration leases as well.However, experts said that, while the decision could lead to legal delays for the drilling expansion envisioned by Mr. Trump by tangling them in litigation, it was unlikely to halt it entirely. Tuesday’s decision by Judge Rudolph Contreras, which applied specifically to an Obama-era plan by the Interior Department’s Bureau of Land Management to lease several thousand acres of land for drilling in Wyoming, also concluded that the agency was legally required to consider the climate impact of all such lease sales for fossil fuel development.“This is the first court ruling that specifically tears apart the Interior Department’s failure to take into account the climate change of impact on drilling, on a national scale,” said Jeremy Nichols, the climate change and energy program director for WildEarth Guardians. In his decision, Judge Contreras wrote that, under the National Environmental Policy Act of 1970, federal agencies are required to consider and quantify the effect of the possible planet-warming emissions associated with the fossil fuels to be extracted from the sales of such leases. Already, that law requires the federal government to consider the on-site environmental effects of oil and gas drilling, such as water pollution and the effects on plants and animals of road construction.  “What this decision says is, in evaluating the environmental consequences of the lease, an agency has to look not just at the consequences of the impacts immediately surrounding the lease but also the consequences down the road of burning the fuel once it’s extracted,” said Richard L. Revesz, an expert on environmental law at New York University. “That’s enormously important.”The Bureau of Land Management protested that it “would be required to identify any past, present, or reasonably foreseeable greenhouse-emitting projects worldwide,” an “impossible” scope of analysis. Judge Contreras wrote that the agency was correct in that the law “does not require the impossible.” But he wrote, “In short, BLM did not adequately quantify the climate change impacts of oil and gas leasing.”

US judge halts hundreds of drilling projects in groundbreaking climate change ruling -In the first significant check on the Trump administration’s “energy-first” agenda, a US judge has temporarily halted hundreds of drilling projects for failing to take climate change into account. Drilling had been stalled on more than 300,000 acres of public land in Wyoming after it was ruled the Trump administration violated environmental laws by failing to consider greenhouse gas emissions. The federal judge has ordered the Bureau of Land Management (BLM), which manages US public lands and issues leases to the energy industry, to redo its analysis. The decision stems from an environmental lawsuit. WildEarth Guardians, Physicians for Social Responsibility, and the Western Environmental Law Center sued the BLM in 2016 for failing to calculate and limit the amount of greenhouse gas emissions from future oil and gas projects. The agency “did not adequately quantify the climate change impacts of oil and gas leasing”, said Rudolph Contreras, a US district judge in Washington DC, in a ruling late on Tuesday. He added that the agency “must consider the cumulative impact of GHG [greenhouse gas] emissions” generated by past, present and future BLM leases across the country.The decision is the first significant check on the climate impact of the Trump administration’s “energy-first” agenda that has opened up vast swaths of public land for mining and drilling. Environmental advocates are praising the move, with Jeremy Nichols, WildEarth Guardians’ Climate and Energy Program director, calling it a “triumph for our climate”. “This ruling says that the entire oil & gas drilling program is off the rails, and moving forward illegally,” said Nichols.

U.S. judge blocks drilling over climate change, casting doubt on Trump agenda (Reuters) - A U.S. judge has blocked oil drilling planned in Wyoming because the government failed to adequately consider its impact on global warming - a decision that could complicate President Donald Trump’s broader efforts to expand oil, gas and coal output on America’s public lands. The ruling, by Judge Rudolph Contreras of the U.S. District Court for the District of Columbia, was issued late on Tuesday, according to court documents. It blocked drilling on more than 300,000 acres (121,400 hectares) in Wyoming until the Interior Department’s Bureau of Land Management conducts further analyses about how the development would impact climate change. “Having reviewed the record and the relevant law, the Court concludes that - withholding judgment on whether BLM’s leasing decisions were correct - BLM did not sufficiently consider climate change when making those decisions,” Judge Contreras wrote in the order. A spokesperson for the Department of Interior would not comment on ongoing litigation. Conservation groups - including WildEarth Guardians which jointly launched the lawsuit in 2016 - said the decision marked an important precedent that could force the Trump administration to put the brakes on its pro-fossil fuels agenda. “While the judge’s ruling relates to lands that were leased for fracking in Wyoming, the judge made clear the Interior Department and its Bureau of Land Management have to start accounting for the impacts of oil and gas development on a regional and national scale,” Jeremy Nichols, climate and energy program director for WildEarth, said in an email. 

One of America's biggest oil companies wants to be 'carbon neutral' -- eventually - Occidental Petroleum, one of America's most aggressive drillers of oil, is trying to figure out a way to wipe out its vast carbon footprint. Vicki Hollub, Occidental's CEO, told the Financial Times that she wants her oil company to eventually be "carbon neutral." Occidental, a leading shale oil producer and the No. 5 US oil company by market valuation, is experimenting with ways to capture greenhouse gases equivalent to the emissions released by its operations. "I'm thinking about the long term for our shareholders," Hollub told the FT. "We want to be the company that's producing the last barrel of oil." A spokesman for Occidental confirmed the accuracy of the remarks attributed to Hollub, but declined to comment further. The pledge could help make Occidental an environmental leader among US oil companies, which are grappling with a backlash over the environmental impact of drilling activities. "It's the largest American oil company to set the goal of becoming carbon neutral," said Pavel Molchanov, an energy analyst at Raymond James. Occidental's push to use carbon capture technology may have a dual-pronged benefit. It could save the company money while simultaneously quieting pressure from shareholders who are worried about climate change. "It's a very elegant solution. It's environmentally friendly and there is an economic value to it," said Molchanov.

Tank leak causes brine, oil spill in Divide County, ND -- A tank leak caused a brine and oil spill at a well in Divide County earlier this month, but it wasn’t reported until several days later, according to the North Dakota Oil and Gas Division.Future Acquisition Co. reported that 300 barrels, or 12,600 gallons, of brine and 10 barrels, or 420 gallons, of oil spilled on March 6 at a well about 4 miles southwest of Fortuna. The spill was verbally reported to a state inspector on March 11, and a spill report was filed on Monday, said Katie Haarsager, spokeswoman for the Oil and Gas Division.North Dakota regulations require spills to be reported within 24 hours. The brine and oil have been recovered and were contained within the diking on the well site, according to the Oil and Gas Division.

Oil spill being cleaned up at McKenzie County well site (AP) — A spill of 12,600 gallons of oil is being cleaned up at a well site in McKenzie County.The state's Oil and Gas Division says Oasis Petroleum North America reported the Monday spill at the well 8 miles north of Watford City and cited a valve leak as the cause. The spilled oil was contained on-site and most had been cleaned up by Wednesday afternoon. A state official inspected the site and is monitoring cleanup.

Saltwater and oil leak at Divide County well recovered (AP) — A leak of about 12,600 gallons of saltwater and 420 gallons of oil has been recovered at a well in Divide County. The state Oil and Gas Division says Future Acquisition Company on Monday reported the March 6 spill at a well about 4 miles southwest of Fortuna. The company said a tank leak was to blame. All of the oil and saltwater was contained by on-site diking. A state official inspected the site and will monitor any additional cleanup.

Keystone XL construction still banned following appeals court ruling - The $8 billion Keystone XL Pipeline, blocked by a U.S. District Court judge in Great Falls after construction began last fall, remains in limbo while the legal tussle over its construction continues following a key decision last week. Calgary-based TransCanada, which is building the oil pipeline, asked the San Francisco-based 9th Circuit Court of Appeals to overturn an injunction on the pipeline's construction previously issued by U.S. District Judge Brian Morris, who is seated in Great Falls. On Friday, the higher court denied a motion by TransCanada to overturn Morris' work stoppage. "The record shows that the district court carefully considered all applicable factors in denying the stay of its injunction," a two-judge panel of the 9th Circuit Court of Appeals said in its decision. "We see no abuse of discretion in refusing to stay the order. The district court has previously narrowed the scope of its injunction." Friday's order leaves in place a ban on construction while the 9th Circuit Court of Appeals considers an appeal by TransCanada and the State Department of Morris' original order overturning the pipeline's permit.

Firefighters knock down blaze at Carson oil refinery  - A fire erupted Friday night at an oil refinery in Carson but was knocked down after about three hours. Television footage showed a section of the Phillips 66 refinery in the 1500 block of East Sepulveda Boulevard engulfed in large flames and plumes of black smoke spewing into the sky. After almost three hours battling the fire, Los Angeles County fire officials said in a tweet that the blaze had been knocked down. One person was being treated at the scene for an unspecified injury, fire officials said. Three of the facility’s four crude oil pumps were involved in the fire, which started about 7:45 p.m., according to county fire officials. The pressurized pumps were shut down to cut off the flow of oil that was fueling the blaze, the department said in a tweet. Fire crews could be seen on the television footage drenching large pipes and two tanks in the area of the flames. Several storage tanks farther away were not at risk, fire officials said. There were no orders given for people in the area to evacuate or warnings about health risks caused by the smoke. 

Oregon House approves 10-year fracking ban - The Oregon House on Monday voted by a large margin to approve a 10-year ban on fracking in the state, according to a report by The Oregonian. The state house voted 42-12 in favor of outlawing the practice, in which pressurized liquid is injected into deep-rock formations to allow oil and natural gas to escape. There are no current fracking operations in Oregon but developers have long eyed the Willamette Valley as a potential site for methane fracking, according to The Oregonian. The vote makes Oregon the fourth state to ban the practice after New York, Vermont and Maryland. Florida and New Mexico are also considering bans or restrictions.Ban advocates claim the practice pollutes groundwater and contributes to earthquakes. The bill next heads to the state senate, which Democrats also control by about the same margin.“Oregon’s natural beauty should be cherished and protected,” said bill sponsor Rep. Rachel Prusak in a press release. “This legislation is a common sense proposal to ensure that no one engages in this potentially destructive practice while we work to better understand its long-term impacts.” “I am pleased that this legislation received bipartisan support today,” said Rep. Ken Helm (D), who co-sponsored the bill. “When it comes to protecting this state, we all have a vested interest in being thoughtful about how we regulate new industries that could have significant long-term impacts.”

Major Pipeline Delays Leave Canada’s Tar Sands Struggling - March has brought a string of setbacks for Canada's struggling tar sands oil industry, including the further delay of two proposed pipelines, a poor forecast for growth and signs that investors may be growing wary.  On Friday, a federal appeals court in California refused to lift a lower court order that blocks construction of the Keystone XL pipeline until a thorough new environmental assessment is completed. The decision likely pushed back by a year the start of major work by TransCanada, Keystone XL's owner, to complete the project. The same day,  ExxonMobil affiliate Imperial Oil said it was delaying a new tar sands project in Alberta, likely by a year.Those setbacks followed an earlier announcement by Enbridge, another pipeline operator, that it would delay the completion of its Line 3 expansion through northern Minnesota by a year, to late 2020. That project is one of two other major pipelines planned to carry oil out of Canada's tar sands, also called oil sands. While western Canada's production grew slowly but steadily in recent years, companies struggled to complete new pipelines. Opposition from climate activists and indigenous groups, slow regulatory processes and volatile oil prices have led to a series of delays and cancellations.The effect has been to weaken the prospects of future growth in tar sands production and to drive away investors. Last year, the provincial government in Alberta—home to nearly all of Canada's tar sands—said it would curtail production this year in an effort to steady the market. By constraining supply, government officials hoped to boost prices that had been pushed down as companies struggled to export their oil. The government said the move was temporary, and at the time it expected Enbridge's Line 3 to ease pressure in late 2019. With that project's start date now pushed back by a year, and with Keystone XL likely delayed too, investors are growing jittery about Canada's oil sector. "For oil sands, we're seeing the lowest investment in 15 years."

Is Canada's Arctic Drilling Ban Hurting Its Oil Industry-?   Canada is lagging behind other oil producers in tapping its offshore oil and gas resources because of the moratorium on drilling in its Arctic waters in place since 2016 and up for review in 2021, according to Paul Barnes, Atlantic Canada and Arctic director for the Canadian Association of Petroleum Producers (CAPP). In December 2016, Canada’s Prime Minister Justin Trudeau announcedthat Canadian Arctic waters are indefinitely off limits to new offshore oil and gas licensing, and this ban would be reconsidered every five years through a science-based review.The recent moves by the U.S. Administration to re-open Arctic Alaska to drilling means that Canada faces “lost opportunities” in exploring its own Arctic waters, The Canadian Pressquoted CAPP’s Barnes as saying.The Arctic drilling moratorium creates uncertainties in the Canadian oil industry and deprives the country of the chance to compete for investment in exploration, according to Barnes.Yet, Canada’s Northern Affairs minister Dominic LeBlanc says that the ban is necessary to allow extensive consultations and ensure development that respects environment, The Canadian Press reports.Just yesterday, CAPP said in a new report that Canada’s abundance of natural resources can help the country’s economy, but only if Canada overcomes the current market challenges by building new pipelines and other energy infrastructure. The shortage of oil pipelines and liquefied natural gas (LNG) infrastructure “are crippling our ability to compete for global market share,” CAPP said.

Husky working to retrieve subsea connector linked to largest oil spill in N.L. history - Work is underway to recover the faulty flowline connector believed to be responsible for an oil spill off the coast of Newfoundland last fall. Husky Energy says subsea operations to retrieve the connector and plug the flowline began Friday at the offshore site of the SeaRose production vessel as a window of good weather opened up. Once retrieved, the connector will be inspected for insight into the November incident that saw 250,000 litres of oil leaked into the ocean. A statement says 47.5 litres of residual oil was released from the flowline during Saturday’s operations, observed as a “light sheen” on the water that a spokesperson says was “managed” following the company’s spill response plan. The company says Saturday’s oil release was anticipated and reported no seabirds spotted on the water at the time. Operations were paused on Sunday due to weather-related complications and are expected to continue on Monday. 

Canada's Alberta increases crude output limit for May and June (Reuters) - The Canadian oil-producing province of Alberta will increase crude production limits by 25,000 barrels per day in May and a further 25,000 bpd in June, the government said on Monday. The increases mean that by June, oil companies will be limited to 3.71 million bpd of production. Alberta mandated production cuts this year to ease congestion on export pipelines that resulted in crude getting bottlenecked in storage and the discount on Canadian heavy crude widening to record levels. “This temporary policy has been critical to reducing the oil price differential while we move ahead with our medium-term plan to ship more oil by rail and lead the long-term charge for new pipelines as we fight to get full value for the resources owned by all Albertans,” Premier Rachel Notley said in a statement. The government said the increase in production limits comes as warmer weather reduces the amount of diluent needed to help oil sands bitumen flow through pipelines, increasing capacity. Diluent is any ultra-light hydrocarbon mixed with viscous bitumen to enable it to flow. The government said giving production limits two months in advance gives the energy industry and markets greater certainty when making decisions. Some producers like MEG Energy (MEG.TO) supported curtailments because the move boosted prices, but it was criticized by integrated producers including Suncor Energy (SU.TO) and Imperial Oil (IMO.TO) whose refining operations were benefiting from cheap crude. Critics also blasted the government for making crude by rail shipments uneconomic and adding to volatility in the Canadian crude market. On Friday, Imperial canceled a $2.6 billion oil sands project in northern Alberta, blaming the uncertainty caused by government intervention in the market. Alberta is leasing 4,400 rail cars to ship 120,000 bpd of crude out of the province and ease pipeline congestion, with the first shipments due to begin in July. 

Mexico's Pemex plans to triple oil well drilling this year to boost output (Reuters) - Mexico’s national oil company Pemex plans to triple the number of wells it will drill this year, the company’s chief executive said on Monday, in a bid to grow crude output and reverse more than a decade of declining production. The government-funded plan involves drilling 506 new wells spread across 20 recently-discovered fields, according to a presentation from Pemex CEO Octavio Romero. That would be more than three times the number of wells Pemex drilled in 2018. The plan should yield more than 300,000 barrels per day (bpd) in new oil output by 2022, according to the presentation, which would mark a new record for Pemex, formally known as Petroleos Mexicanos. “In Petroleos Mexicanos’ entire history, it has perhaps never developed 20 new fields in one year,” he said at President Andres Manuel Lopez Obrador’s regular news conference. Romero said oil output was running at 1.68 million bpd. “We can expect this level of production to be maintained and that it will begin to grow from this year,” he said. By the end of Lopez Obrador’s six-year term in 2024, Pemex’s crude production was expected to average nearly 2.5 million bpd, he said. Last year, its output averaged 1.8 million bpd. Romero said Pemex’s production plan this year also includes building 13 new offshore platforms to service 16 shallow water projects, all clustered around the southern tip of the Gulf of Mexico. The offshore projects will be serviced by 14 new underwater pipelines covering some 109 miles (175 km) to move the expected new streams of production. Separately, Romero added, three new drilling platforms will be built to service four nearby onshore discoveries, as well as the expansion of nine others. Thirteen new onshore pipelines will also be built, covering 55 miles (88 km). 

Pemex stabilizing crude oil production, expects to increase drilling by 200%- CEO— Pemex has stabilized its crude oil production at 1.68 million b/d in March and expects to raise it by the end of the year as the state-owned Mexican oil company boosts drilling activity by 200% year on year in 2019, according to CEO Octavio Romero Oropeza. "According to the company's technical team, we have stopped our [oil production] decrease ... and we can expect an increase [in output] starting this year," Romero said Monday at the commemoration of Mexico's nationalization of its oil industry. Pemex will drill 506 wells in 2019, compared with 80 wells in 2018, which would be its highest level since 2014, he added. The company expects to post average oil production of 1.72 million b/d in 2019, Romero said. The company is currently developing 20 onshore and shallow water fields to boost production. Pemex's production has been on a continual decline since it peaked at 3.4 million b/d in 2003 as major offshore fields like Cantarell enter their last few years. These areas will reach a combined peak production of 320,000 b/d by 2022, according to a presentation by Romero. Four of these fields are onshore, and the other 16 are in shallow waters. To develop the shallow water projects, Pemex ordered the construction of 13 production platforms and 175 km of offshore pipeline. It will also tie these areas to eight existing production facilities. Pemex is going to drill 72 offshore and 44 onshore wells to develop the 20 areas. About 80% of the work has been awarded so far using integral service contracts, Romero said. By using this development scheme, Pemex saved over Peso 15.6 billion ($820 million) in expenditure compared with 2018 reference prices, he added. On Monday, Lopez Obrador urged private companies holding exploration and production contracts to expedite their investments and increase production, adding that he will honor upstream contracts signed by the previous administration. During Lopez Obrador's term, Mexico will find which model is better: awarding more areas to private companies or assigning them directly to Pemex for their development. "We are going to compete against these private contracts, and we are going to show that Pemex can be more efficient than private companies." Lopez Obrador said, adding: "That is our challenge."

Colombia shelves ConocoPhillips, Canacol requests fracking licenses: sources (Reuters) - Colombia has shelved two environmental licensing requests made by oil companies ConocoPhillips and Canacol Energy Ltd for fracking projects in northern Cesar province, two sources with knowledge of the matter said on Wednesday. Colombia does not yet allow hydraulic fracturing, known as fracking, but the government says use of the technique could nearly triple Colombia’s oil and gas reserves. An expert commission convened by the government to study non-conventional exploration methods has recommended strict monitoring of three pilot projects to determine whether the techniques should be widely used. The companies did not meet minimum conditions for the Piranga project, a source from the licensing authority said, while the Plata project raised possible water protection concerns. U.S.-based ConocoPhillips and Canada’s Canacol can request to re-open the licensing process for the projects in the future, the source said, adding the decision is not a definitive no. ConocoPhillips had an 80 percent stake in the projects and Canacol the remaining 20 percent. ConocoPhillips said it was reviewing the decision. A source at Canacol said the company was doing the same. Several other companies, including state-run Ecopetrol, have applied for fracking licenses. 

Brazil's Petrobras to sell $10 billion in assets by end of April- CEO -— Brazilian state-led oil producer and refiner Petrobras expects to ramp up its divestments in the near term, with a series of deals expected to close by the end of April, according to Chief Executive Roberto Castello Branco. "An asset-sales program already exists, but now we have a much more aggressive divestment program," Castello Branco said during an event Friday at the private Getulio Vargas Foundation, or FGV. "I believe that in the first four months of the year, we're going to carry out $10 billion in divestments and we intend to do much more than this going forward." Petrobras currently is targeting $26.9 billion worth of sales in the 2019-2023 period, according to the company's most recent five-year investment plan. But the company announced last week it would expand the sales to additional onshore and shallow-water mature oil and natural gas fields, midstream and downstream assets. The fresh assets are part of the company's new resiliency plan, Petrobras said. While the sales target appears aggressive given Petrobras' failure to meet its 2017-2018 divestment goal and pending legal challenges to the sales, the company has enough assets currently in the binding phase of negotiations to quickly make good on Castello Branco's forecast. The biggest asset up for sale is gas pipeline operator Transportadora Associada de Gas, which is expected to fetch more than $7.5 billion. Last week, Petrobras reopened bidding for interested parties that have not yet participated in the sales process and want to submit a binding offer. Petrobras previously was in exclusive talks to sell 90% of TAG to France's Engie. TAG operates more than 4,505 km of pipelines across 10 states in Brazil's north, northeast and southeast, with 10 compressor stations and 91 access points. Petrobras is also in the binding phase of talks to sell two fertilizer plants to Russia's Acron.

How Russia Gets To Build Its Most Controversial Pipeline - Moscow and Berlin are holding talks on the future of the Nord Stream 2 gas pipeline, yet again, despite the fact it is already under construction. Whatever these talks bring, the overarching picture is that this highly controversial project is now all but sure to go ahead, and on time at that. Understanding why and how this played out provides insight into how Russian energy projects can defy sizeable political risks by securing buy-in from key capitals and corporations.  The pipeline has faced myriad challenges. First and foremost from the US government, which also opposed the original Nord Stream pipeline linking Germany and Russia’s gas networks. The first pipeline was inaugurated in November 2011. And right from its launch, Gazprom and a consortium of European energy firms announced plans for second link, despite it taking another six years for the first to approach full capacity. US efforts against the pipeline escalated after Russia’s annexation of Crimea in 2014. Sanctions on Russia’s energy industry came quick on the heels of annexation. Gazprom and the project, however, were not directly targeted. The fraying of relations between Russia and the West was not limited to the US. Warsaw also significantly escalated its efforts to block Nord Stream 2. It employedPoland’s antitrust regulator to try and block the project. The reason for Poland’s animosity? Nord Stream 2, if completed, will be a game changer for Russian gas exports to western and central Europe. It will allow Moscow’s gas deliveries to bypass not only Ukraine, but also most eastern European nations. A series of Russian-Ukrainian gas spats between 2005 and 2009 caused an intermittent shortage of supplies as far downstream as Switzerland. Yet the completion of Nord Stream 2 and the ensuing ability to transfer up to 55 billion cubic meters of gas annually via Germany would give the Kremlin a largely free hand in cutting off supplies to gas-dependent eastern European nations without risking such a backlash.

Italian oil and gas company will plant forests to make up for polluting - Eni SpA committed to eliminating all carbon dioxide emissions from its oil and gas exploration and production operations by the end of the next decade, in part by planting forests on a large scale.The Italian giant’s plan, which entails planting 20 million acres of forest in Africa, is the latest example of major oil companies bowing to pressure to do more to prevent runaway climate change. Its European peers Total SA and Royal Dutch Shell Plc have also set targets to reduce the carbon emitted from their own operations.“Our objective is to achieve net zero emissions in our upstream business by 2030,” Chief Executive Officer Claudio Descalzi said in the company’s strategy update on Friday. “We will accomplish this by increased efficiency to minimize direct upstream CO2 emissions and offsetting residual upstream emissions through large forestry projects.”The forests planted in South Africa, Zimbabwe, Mozambique and Ghana should be removing about 20 million tons a year of CO2 from the atmosphere by 2030, Eni said. That would offset residual emissions from the company’s upstream business, which it also plans to reduce through greater operational efficiency and minimizing waste. Eni will spend about 1 billion euros ($1.1 billion) on “circular economy” initiatives such as these over the next four years.Beyond forests, Eni has been investing in converting two of its crude oil refineries in Italy -- Gela and Venice -- to instead use vegetable oils. Venice is the first refinery in the world converted from processing traditional fossil fuels to biofuels, the company said.  Unlike Shell and Total, Eni didn’t offer any plans to target emissions from the products they sell to consumers, the biggest portion of these companies’ impact on the climate. Eni also announced on Friday that it will reward investors with a four-year share buyback and an increase in its dividend.

Analysis- South Korea slashes LNG taxes for power producers by 75%, boosting LNG potential— The South Korean government Tuesday gave its final approval to lower taxes on LNG used for power production by 75%, and raise those on thermal coal by 28% from April 1, in a move likely to boost downstream gas consumption. The decision is likely to boost LNG demand from the world's third-largest LNG importer. South Korea imported 42.7 million mt of LNG in 2018, up 15% from a year earlier, according to S&P Global Platts Analytics. The decision is driven by the government's efforts to reduce the country's heavy reliance on coal and increase the use of natural gas and renewables amid growing air pollution concerns. South Korea's energy tax regime has traditionally triggered criticism that it does not do enough to cut coal demand and increase competitiveness of LNG prices. "Currently, total taxes on LNG are Won 91.4/kg, much higher than taxes on coal at Won 36/kg, said an official with the Ministry of Trade, Industry and Energy. "But through the tax rate changes from next month, total taxes on LNG will be lowered to Won 23/kg, compared with Won 46/kg on coal." The tax benefit, however, is applicable to LNG used in electricity generation, not city gas households and businesses, the official said. Taxes on LNG for power production, which comprise consumption tax, import surcharge and import tariff, will be lowered to Won 23/kg ($0.02/kg) from Won 91.4/kg currently. Consumption tax will be reduced to Won 12/kg from Won 60/kg, import surcharge will be lowered to Won 3.8/kg from Won 24.2/kg, and imports tariffs will remain unchanged at Won 7.2/kg. Import surcharge and tariffs are used to fund the country's energy projects, according to the ministry official. Consumption tax on thermal coal will increase to Won 46/kg from Won 36/kg currently, after rising from Won 30/kg in April 2018. There are no import surcharge or import tariffs on coal. "The tax measure would reduce the country's fine dust production by 427 mt/year," the official said. In an additional measure to reduce coal consumption, the country has closed four coal-fired power plants aged over 30 years from March through June 2018. The government is also pushing to reduce operations at the other coal-fired power plants during the off-peak spring seasons, the official said.

Massive gas reserves close to being tapped – Alice Springs News -- “If two percent of that becomes economic, that’s INPEX.”As Parliament debated gas legislation today Alister Trier (at left), Chief Executive of Department of Primary Industry and Resources, was addressing some 250 mining personnel at the AGES conference in Alice Springs, the biggest in six years.He was talking about the estimated gas reserves in the Beetaloo Basin, between Tennant Creek and Katherine.INPEX, of course, is the Japanese company that has just finished building the biggest commercial complex in Darwin, to handle gas from the Timor Sea and ship it out.The onshore gas Mr Trier was talking about is “right next-door to a pipeline”.He named his Powerpoint file “implementation” and he maintained his low key while speaking about an issue that had nearly torn the NT apart.The word fracking did not pass his lips. It is “hydraulic fracturing” that is now entering the phase of “preparing for exploration,” according to the conference program. Mr Trier ended his speech on a sober note – like the rest of it: “With the concerns of the community, and the issues floating around, there have always been some tensions around these activities.

Russia will be fully compliant with OPEC-led supply cuts by April, energy minister says - Russian Energy Minister Alexander Novak said on Sunday that Moscow will be fully compliant with OPEC-led supply cuts over the coming weeks. "As far as the meeting is concerned we, of course, discussed the situation with the execution of the agreement (and) we stressed once again that Russia is discharging its obligations in accordance with the agreement to smoothly achieve the target output," Novak told CNBC's Dan Murphy in Baku, Azerbaijan, according to a translation. "As for the target output level that forms part of the signed agreement, we plan to reach those figures by the end of March (or) beginning of April. This is earlier than in the same period two years ago by about one month." His comments come three months into a fresh round of production cuts from the so-called OPEC+ alliance. The producers meet in mid-April to review their oil supply cut agreement, which is scheduled to last through the first-half of 2019. The Middle East-dominated group, alongside non-OPEC allies such as Russia, agreed to reduce output by 1.2 million barrels per day (b/d) for six months. OPEC's share is 800,000 b/d, to be delivered by 11 members — with Iran, Venezuela and Libya exempt from cuts. When asked whether Russia would support an extension to the cuts, Novak replied: "It is a little premature to talk about this. The deal after all covers the first six months of the year so any extension will be discussed in May or June this year." Saudi Arabia's Energy Minister, Khalid al-Falih, said on Sunday he was "optimistic" about the prospect of continued commitment to the OPEC-led production cuts.

OPEC scraps April meeting but keeps oil cuts in place (Reuters) - Oil producer group OPEC on Monday scrapped its planned meeting in April and will decide instead whether to extend output cuts in June, once the market has assessed the impact of U.S. sanctions on Iran and the crisis in Venezuela. A ministerial panel of OPEC and its allies recommended that they cancel the extraordinary meeting scheduled for April 17-18 and hold the next regular talks on June 25-26. The energy minister of OPEC’s de facto leader, Saudi Arabia, said the market was looking oversupplied until the end of the year but that April would be too early for any decision on output policy. “The consensus we heard ... is that April will be premature to make any production decision for the second half,” the Saudi minister, Khalid al-Falih, said. “As long as the levels of inventories are rising and we are far from normal levels, we will stay the course, guiding the market toward balance,” he added. The United States has been increasing its own oil exports in recent months while imposing sanctions on OPEC members Venezuela and Iran in an effort to reduce those two countries’ shipments to global markets. Washington’s policies have introduced a new level of complication for the Organization of the Petroleum Exporting Countries as it struggles to predict global supply and demand. “We are not under pressure except by the market,” Falih told reporters before the Joint Ministerial Monitoring Committee (JMMC) meeting in the Azeri capital, Baku, when asked whether he was under U.S. pressure to raise output. U.S. President Donald Trump has been a vocal critic of OPEC, blaming it for high oil prices. Trump’s sanctions policies have been the key factor behind a price rally, many OPEC members say, having removed more than 2 million barrels per day (bpd) of Iranian and Venezuelan crude from the market. Brent oil prices hit a 2019 peak above $68 per barrel last week. Saudi Arabia needs a price of around $85 per barrel to balance its budget. OPEC and its allies agreed in December to cut output by 1.2 million bpd - 1.2 percent of global demand - during the first half of this year in an effort to boost prices. The JMMC, which also includes non-OPEC Russia, monitors the oil market and conformity with supply cuts. Asked if he had been updated on whether Washington would extend its waivers for buyers of Iranian crude, which are due to end in May, Falih said: “Until we see it hurting consumers, until we see the impact on inventory, we are not going to change course.” 

Saudi-Russia Oil Alliance Shows Signs of Strain -  The partnership at the heart of the OPEC+ alliance showed further signs of strain after Russia pressured the Saudi-led group to delay a decision on the future of their production cuts. The unusual recommendation to cancel next month’s scheduled meeting means the group probably won’t decide whether to prolong its supply curbs until late June, just days before they expire. At talks in Baku, Azerbaijan, on Monday, Russian Energy Minister Alexander Novak convinced the committee overseeing the output cuts that the scheduled April meeting would be too soon to agree to an extension. Khalid Al-Falih, the Saudi energy minister who had initially been in favor of making a decision at that time, acquiesced, saying “April will be premature.” For now, the supply curbs that have buoyed Brent crude by 25 percent this year are secure, and the nations present in the Azeri capital said they will go beyond their pledged cuts in the coming months. Still, the cancellation is the latest in a number of disagreements between the two largest and most powerful members of the 24-nation coalition. While there’s general backing within the Organization of Petroleum Exporting Countries for an extension, with members including Iraq voicing support behind closed doors, Novak remains opposed, according to one delegate, who asked not to be named because the talks were private. If that difference can’t be resolved in the coming months, it sets up a high-stakes meeting in Vienna on June 25 to 26 that could give oil traders very little time to adjust to a major shift in supply. "The need for close ties between Saudi and Russia has diminished," "The delay of the OPEC meeting seems to point to a Russia reticence to commit to more cuts and to leave any decision as late as possible before committing further."

Trump grants Iraq a new 90-day sanctions waiver to buy Iranian energy — The Trump administration is granting Iraq a renewed 90-day waiver exempting it from U.S. sanctions on Iran, a State Department official told CNBC on Tuesday.The waiver, last issued in December and which expired on the morning of March 19, will allow Iraq to continue buying electricity from its neighbor even as the White House pledges a maximum pressure campaign against Tehran. “While this waiver is intended to help Iraq mitigate energy shortages, we continue to discuss our Iran-related sanctions with our partners in Iraq," the official said on condition of anonymity to discuss the matter.Despite being OPEC's second-largest producer of oil, years of war and lack of investment have left Iraq dependent on Iranian natural gas plants for up to 45 percent of its electricity.The Trump administration reinstated sanctions on Iran last year after withdrawing from the Joint Comprehensive Plan of Action, which lifted economic restrictions on Iran in exchange for curbs to its nuclear program. The White House is carrying out a "maximum pressure" campaign against the Islamic Republic in an effort to counter what it deems its "malign and destabilizing activity" around the world.Iraq is a special case, putting the administration in an awkward position as putting too much pressure on Iran — Baghdad's third-largest trading partner — could lead to destabilization in Iraq. Iraq imports some 28 million cubic meters of Iranian natural gas daily, which powers up to 1 million Iraqi homes, but the country still faces severe power shortages thanks to its outdated power infrastructure and frequent failure to pay its bills. Without continued sanctions exemptions, Iraq could lose more than a third of its power overnight, energy analysts say. Already burdened by failing infrastructure, pockets of ISIS activity and poor public service provision, the scenario makes Iraq a "ticking time bomb," according to Michael Stephens, a regional expert at the Royal United Services Institute in London.

U.S. aims to cut Iran oil exports to under 1 million bpd from May - sources (Reuters) - The United States aims to cut Iran’s crude exports by about 20 percent to below 1 million barrels per day (bpd) from May by requiring importing countries to reduce purchases to avoid U.S. sanctions, two sources familiar with the matter told Reuters. U.S. President Donald Trump eventually aims to halt Iranian oil exports and thereby choke off Tehran’s main source of revenue. Washington is pressuring Iran to curtail its nuclear program and stop backing militant proxies across the Middle East. The United States will likely renew waivers to sanctions for most countries buying Iranian crude, including the biggest buyers China and India, in exchange for pledges to cut combined imports to below 1 million bpd. That would be around 250,000 bpd below Iran’s current exports of 1.25 million bpd. “The goal right now is to reduce Iranian oil exports to under 1 million barrels per day,” one of the sources said, adding the Trump administration was concerned that pressing for a complete shutdown of Iran’s oil in the short-term would trigger a global oil price spike. Washington may also deny waivers to some countries that have not bought Iranian crude recently, the sources said. The U.S. reimposed sanctions in November after pulling out of a 2015 nuclear accord between Iran and six world powers. Those sanctions have already halved Iranian oil exports. To give time to importers to find alternatives and prevent a jump in oil prices, the U.S. granted Iran’s main oil buyers waivers to sanctions on the condition they buy less in the future. The waivers are due for renewal every six months. “Zeroing out could prove difficult” one of the sources said, adding a price of around $65 a barrel for international benchmark Brent crude was “the high end of Trump’s crude price comfort zone.” Brent crude settled at $67.55 a barrel on Wednesday. Both sources said they were briefed by the Trump administration on the matter but were not authorized to speak publicly about it and asked for anonymity. 

Iran just struck a hoard of deals with Iraq, and Washington isn't happy -- Iranian president Hassan Rouhani has returned from his first-ever trip to Iraq with a raft of agreements for expanded trade, cross-border infrastructure, and pledges of greater cooperation with Baghdad. Leaders of both countries embraced strengthening ties — something Washington has been watching closely. Iran is upping its game in Iraq as U.S. influence recedes, deepening ties with its war-weary neighbor and betting on bilateral economic activity to help offset tough sanctions imposed by the Trump administration. Iraq is "another channel for Iran to bypass America's unjust sanctions ... this trip will provide opportunities for Iran's economy," a senior Iranian official on the trip was quoted as telling Reuters last week. The Trump administration reinstated sanctions on Iran last year for what it deemed "destabilizing and malign activities around the world," and the country's economy has since been in a tailspin. With a massive shared border and religious and cultural ties — and the major role of Iranian-backed paramilitaries in Iraq's defeat of the Islamic State — the Islamic Republic's influence in Iraq is entrenched. Rouhani and Iraqi Prime Minister Adel Abdul-Mahdi signed memorandums of understanding across sectors including trade, oil, health, mining, visa-free travel, and perhaps most significantly a railway that would connect Iraq's southern oil-rich city of Basra to Iran's border.  U.S. officials see Iran's growing inroads into Iraq, and they don't like it. "Iran's actions are aimed at subverting Iraqi sovereignty and making Iraq dependent on Iran," a senior State Department official told CNBC on Monday. He echoed Secretary of State Mike Pompeo's recent charge that Tehran wanted to turn Iraq into a "vassal state."

U.S. warns it can act against people helping Iran evade energy sanctions (Reuters) - The United States reserves the right to take action against any person helping Iran evade U.S. sanctions on energy shipments, a State Department official said on Friday. The official, who spoke on condition of anonymity, was responding to a request for comment on a Reuters report this week that at least two tankers have sent Iranian fuel oil to Asia in recent months despite U.S. sanctions against such shipments. “The United States, in cooperation with our allies and partners, is closely monitoring efforts by the Iranian regime to evade U.S. sanctions,” said the official. Washington “reserves the right to designate any person engaging in or facilitating these activities in accordance with our laws.” President Donald Trump last year abandoned a 2015 nuclear agreement between Iran and six world powers. In November, his administration reimposed sanctions on Iran’s energy exports to cut off the country’s main source of revenue. Trump aims to use the sanctions to pressure Iran over not only its nuclear program, but now also its ballistic missile program and backing of militants in Syria and other Middle Eastern countries. The shipments in question were loaded onto tankers with documents showing the fuel oil was Iraqi. But three Iraqi oil industry sources and Prakash Vakkayil, a manager at United Arab Emirates (UAE) shipping services firm Yacht International Co, said the papers were forged. The shipments show how some traders have revived tactics that were used to skirt sanctions against Iran between 2012 and 2016. A State Department official recently told Voice of America, a news organization funded by the U.S. government, that the Trump administration would go after anyone conducting off-coast ship-to-ship transfers of Iranian oil and is working with foreign governments to monitor the behavior. David Peyman, the deputy assistant secretary of state for counter threat finance and sanctions, said U.S. authorities will take actions against ship owners, managers, insurance providers and mortgagees linked to ships involved. “If you are engaged in evasive action, which is really the worst kind of violation when it comes to U.S. sanctions, we will hold you accountable,” Peyman told the VOA.

US sanctions are an 'attempt against our lives,' Venezuela's petroleum minister says - Venezuelan Petroleum Minister Manuel Quevedo has denounced U.S. sanctions against Caracas as a "direct attack" on its citizens. His comments come at a time when the oil-rich, but cash-poor, country is suffering the Western Hemisphere's worst humanitarian crisis in recent memory. "The powers of the United States are out in front of this attack," Quevedo told CNBC at the Joint Ministerial Monitoring Committee Meeting (JMMC) in Baku, Azerbaijan on Monday. "With a political objective, they are trying to economically choke our country, our people, and appropriate our petroleum wealth." The U.S. imposed targeted crude sanctions against Venezuela's state oil firm Petroleos de Venezuela, S.A. (PDVSA) and resources sector in January, choking a critical source of revenue for President Nicolas Maduro's embattled government. Quevedo, a former National Guard official who also serves as the head of the state oil company, has been personally sanctioned by the U.S. Treasury Department for his involvement in funding the regime through PDVSA. "It affects all Venezuelans when they attack PDVSA, when blackouts happen like the one that happened in our country," Quevedo said, referring to last week's vast power failure that plunged millions of its citizens into almost complete darkness and put some essential services to a stop. "People in hospitals died because of this blackout – that was an attack. For what? To impact the petroleum industry. So, it is no longer a purely economic attack, but an attempt against our lives," he said. A failure at the Guri hydropower plant earlier this month pitched most of the South American country into darkness for days. The outage crippled the OPEC member country's oil exports and left millions of citizens struggling to find food and water. Power was eventually restored to much of Venezuela, but many areas remain without electricity. It is widely expected that normal services may not resume for weeks.

U.S. ‘’Oil Weapon’’ Could Change Geopolitics Forever - In a dynamic that shows just how far U.S. oil production has come in recent years, the U.S. Energy Information Administration (EIA) said on Monday that in the last two months of 2018, the U.S. Gulf Coast exported more crude oil than it imported.  Monthly net trade of crude oil in the Gulf Coast region (the difference between gross exports and gross imports) fell from a high in early 2007 of 6.6 million b/d of net imports to 0.4 million b/d of net exports in December 2018. As gross exports of crude oil from the Gulf Coast hit a record 2.3 million b/d, gross imports of crude oil to the Gulf Coast in December—at slightly less than 2.0 million b/d—were the lowest level since March 1986. U.S. oil production hit a staggering 12.1 million b/d in February, while that amount has been projected to stay around that production mark in the mid-term then increase in the coming years. The U.S. is the new global oil production leader, followed by Russia and Saudi Arabia, while Saudi Arabia is still the world’s largest oil exporter – a factor that still gives Riyadh considerable leverage, particularly as it works with Russia, and other partners as part of the so-called OPEC+ group of producers. However, Saudi Arabia’s decades-long role of market swing producers has now been replaced by this coalition of producers, reducing Riyadh’s power both geopolitically and in global oil markets. In short, what Saudi Arabia could once do on its own, it has to do with several partners. Evidence of growing American energy clout was evident last week when Secretary of State Mike Pompeo urged the oil industry  to work with the Trump administration to promote U.S. foreign policy interests, especially in Asia and in Europe, and to punish what he called “bad actors” on the world stage. Pompeo made his remarks at IHS Markit’s CERAWeek conference in Houston, where U.S. oil and gas executives, energy players and OPEC officials usually gather annually to discuss global energy development. Pompeo’s added that America’s new-found shale oil and natural gas abundance would “strengthen our hand in foreign policy.” He added that the U.S. oil-and-gas export boom had given the U.S. the ability to meet energy demand once satisfied by its geopolitical rivals. This is the first time, in at least recent history, that American officials have considered using oil production and exports for geopolitical advantage. Moreover, Pompeo’s comments can be viewed as a reversal from the so-called oil weapon that Arab producers have used on the U.S. and its western allies for decades, including both the unsuccessful 1967 Arab oil embargo and the 1973 Arab oil embargo that brought the U.S. and its allies to their knees, driving up the price of oil four-fold and contributing to severe economic headwinds for the West and a geopolitical and economic shift that still persists to the current.

$60-$70 oil is the 'pain threshold' for the US and OPEC, JPMorgan says - An oil price of between $60 and $70 per barrel is both a "sweet spot" and "pain threshold" that rival oil producers in the U.S. and OPEC can tolerate when it comes to the price of oil and production, according to the head of EMEA Oil & Gas Research at JPMorgan."$60-70 is the pain threshold that works both for the U.S. (and OPEC)" JPMorgan's Christyan Malek told CNBC on Monday. "Above $65 and you saw oil being released from (the U.S.') strategic (oil) reserves and we saw tweets from Trump (criticizing OPEC's production cuts). Equally, $65 to $70 is a level where Saudi and OPEC can manage in the context of their fiscal oil break-even (price per barrel). They'd ideally like higher but it does feel like the sweet spot," he said.Brent crude futures are trading at $67.26 Monday and West Texas Intermediate (WTI) is trade at $58.46. Malek said that the trouble with cutting production -- and the corresponding rise in oil prices -- is that it encouraged more output from U.S. shale producers as the price per barrel becomes more attractive. More production from U.S. shale producers could affect supply and demand dynamics, putting downward pressure on oil prices if supply outweighs demand. "The issue, however, is that at that (price) level you are seeing more U.S. shale production, more non-OPEC non-U.S. production, meaning that what you could end up seeing is a transient period of tightness but just a continuation of this oversupply that continues to recur over the next 6-12 months so you never actually see a tight market."

Trump's sanctions and OPEC supply cuts are about to push oil prices higher: Morgan Stanley - OPEC's supply cuts and U.S. sanctions against Iran and Venezuela will push the oil market into undersupply and boost the cost of crude in coming months, Morgan Stanley forecasts.  The investment bank previously said oil prices were more likely to fall after Brent crude topped $65 a barrel last month. But Morgan Stanley now sees the international benchmark for oil prices rising to $75 by the third quarter.Analysts at Morgan Stanley say they changed their minds after last week's CERAWeek by IHS Markit energy conference in Houston. They are now more convinced that OPEC has the determination and capability to drain oversupply from the oil market."Conversations with several OPEC officials left us with the impression that Brent in the mid-$60s is not where the cartel would like to see it," Morgan Stanley global oil strategists Martijn Rats and Amy Sergeant said in a research note Tuesday."We assume that OPEC will extend – or even deepen – production cuts to support the oil market at the next meeting in June." OPEC and its partners aim to keep 1.2 million barrels per day off the market. On Monday, the alliancecanceled an April meeting intended to review the supply deal, leaving the output cuts in place until the June gathering. Members of the pact believe the market will remain oversupplied through the first half of the year, making the April meeting unnecessary.

Oil dips on weak economic outlook, but OPEC-led cuts still support - (Reuters) - Oil prices dipped early on Monday, weighed down by concerns that a global economic downturn may dent fuel consumption.However, crude markets remain broadly supported by supply cuts led by producer group OPEC and by aggressive sanctions bythe United States against Iran and Venezuela.Brent crude oil futures LCOc1 were at $67.03 per barrel at0053 GMT, down 13 cents, or 0.2 percent, from their last close,but not far off the $68.14 per barrel 2019-high reached lastweek.U.S. West Texas Intermediate (WTI) futures CLc1 were at$58.37 per barrel, down 15 cents, or 0.3 percent, from their last settlement, and also not far off their 2019-high of $58.95from the previous week."The greatest downside risk to our oil price view is demand weakness on slower economic growth. Our base case is that global oil demand will increase by 1.3 million barrels per day (bpd) in2019... A synchronized global slowdown in growth could push global demand growth to below 1 million bpd," analysts at Bernstein Energy said on Monday.Despite this, oil prices have gained around a quarter since the start of the year amid U.S. sanctions against Iran and Venezuela, and as the Organization of the Petroleum ExportingCountries (OPEC) and non-affiliated allies like Russia - known as OPEC+ - have pledged to withhold 1.2 million bpd in supply toprop up prices.Top crude exporter and OPEC's de-facto leader Saudi Arabiasaid on Sunday balancing the oil market was far from done as inventories were still rising, signalling it may need to expand output cuts into the second half of 2019. Russia also said production cuts would stay in place atleast until June.

Middle East sour crude trading picks up as summer requirements emerge - — Trading activity in the Middle East sour crude spot market for cargoes loading over May is expected to accelerate this week now that allocations from producers and feedstock requirements from refineries have been largely determined for the month. The market structure for benchmark Dubai crude spreads has remained rangebound, with the M1/M3 cash Dubai spread hovering within the 60-cents/b band for most of last week. The structure picked up a notch on Friday, rising to 70 cents/b at the close of trading in Asia for the week, but dipped to 67 cents/b in mid-morning trading hours (0300 GMT) on Monday. The majority of spot market trading for May loading cargoes is expected to be concluded in the days ahead, now that refineries have concluded feedstock requirements, while term customers of Middle East producers have now received confirmation on allocated volumes to be loaded. Most recently, Iraq's SOMO was heard to be offering several million barrels of its Basrah Light and Heavy crude grades for April loading via private tenders this week. Thailand's PTT was also seen on the market with a buy tender for sour crudes, while Petroleum Brunei is offering two 600,000-barrel cargoes of Malaysia's middle distillate rich Kimanis crude in a separate tender. More tenders will continue to emerge as the week wears on, traders said on Monday. Last week, Qatar Petroleum's tenders for Al-Shaheen crude and low sulfur condensate proved as forebears for the market, with participants using award levels to gauge sentiment, they said. QP sold three 500,000-barrel clips of medium sour Al-Shaheen crude to various buyers in Asia, at premiums averaging around 92 cents/b over Platts front-month Dubai crude assessments on a FOB basis. The state-owned entity also sold two 500,000-barrel cargoes of its low sulfur condensate to South Korean refiners at discounts of around $3.50/b to Dubai, trade sources told S&P Global Platts. There were no deodorized field condensate cargoes offered in the QP condensate tender as the grade is fully committed to term buyers, according to company sources. Full subscription of term volumes has been a key theme for Asian refiners this month, as summer demand for distillate-rich grades ramps up alongside relatively firm buying sentiment for medium and heavy sour crudes yielding fuel oil.

Oil closes in on four-month highs on OPEC cuts, U.S. stock draw (Reuters) - Oil prices rose to near four-month highs on Monday, supported by the prospect of extended OPEC-led oil supply curbs and signs of inventory declines in U.S. crude stockpiles. Brent crude futures settled at $67.54 a barrel, rising 38 cents, or 0.6 percent. The international benchmark held near its 2019 peak of $68.14 reached on Thursday. U.S. West Texas Intermediate crude settled at $59.09 a barrel, adding 57 cents, or 1 percent, after hitting a four-month high at $59.23. “We will leave open the likelihood of fresh Brent highs especially with OPEC+ reaffirming their commitment to cut production further via the past weekend’s ministerial session,”  The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, met in Azerbaijan this weekend to monitor their crude supply reduction pact, where they said they would exceed commitments in the coming months. The group also canceled their April meeting, meaning the producer group will not meet again until June. Saudi Arabia on Sunday signaled producers may need to extend the 1.2 million barrels per day of curbs past June into the second half of 2019. The kingdom has in general been cutting more dramatically than some other nations, while Russia, the largest non-OPEC member in the pact, is less enthused about continuing production cuts. “As long as the levels of inventories are rising and we are far from normal levels, we will stay the course, guiding the market toward balance,” said Saudi minister Khalid al-Falih. Exports from OPEC’s biggest producer fell to 7.3 million bpd in January from 7.7 million bpd in December, official data showed. Signs of falling crude inventory levels at the U.S. storage hub in Cushing, Oklahoma also supported futures, market participants said. Crude stockpiles at Cushing, the delivery point for WTI, fell 1.08 million barrels in the week to Friday, traders said, citing data from market intelligence firm Genscape. Overall U.S. crude inventories were forecast to have drawn down last week, the second consecutive weekly decline, a preliminary Reuters poll showed.

Oil Price Rally Hits Resistance - Oil prices held onto gains at the start of the week, keeping WTI and Brent at four-month highs. OPEC’s assurances that cuts will remain in place for the next few months – including potentially over-compliance – firmed up prices. When OPEC announced the production cuts last December, it said that it would review the next steps at a meeting in April. Now, it appears that the group will push off a decision until the June meeting, at which point there will be more clarity on the Iran sanctions waivers and the impact of the production declines in Venezuela. American officials said that the global oil market can withstand the removal of all Iranian oil exports this year, according to Bloomberg. No decisions have been made on waivers yet. Refining margins have been poor for gasoline, but strong for distillates. That trend will continue ahead of the IMO regulations in 2020 that will reduce sulfur content in marine fuels, raising demand for distillates. Bloomberg reports that refiners are likely going to reduce planned maintenance periods, or front-load them in the first half of 2019, in anticipation of a strong period leading up to the implementation of the IMO rules.  A potential meeting between Trump and Xi Jingping that could put an end to the trade war has been pushed off until June, back from a proposed meeting later this month or for April. ExxonMobil’s Baytown refinery caught fire over the weekend. The facility’s gasoline hydrofiner, which removes sulfur from fuel, caught fire and was billowing smoke. Separately, Phillips 66’s (NYSE: PSX) shut a crude unit on Friday near Los Angeles after it caught fire. The incidents could put pressure on gasoline stocks and prices. The Phillips 66 unit could have a bigger impact since California does not have interconnections with the rest of the country’s refining system. The impact on petrochemical production is so far unclear.  A U.S. court had previously ordered TransCanada to halt construction on the Keystone XL pipeline while an environmental review played out. TransCanada appealed the decision but last week lost that appeal in a subsequent court ruling.

WTI Rebounds After Second Weekly Surprise Crude Draw - Oil's gains were capped today as China trade talk headlines spoiled the party. “China has been the real driver behind oil demand globally for the last decade and if that is turned off, it is going to make people very nervous,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. API

• Crude -2.133mm (+1.75mm exp)
• Cushing -317k
• Gasoline -2.794mm
• Distillates -1.607mm

After a surprise crude draw last week, expectations were for a build but API reported a surprise 2.133mm crude draw (and draws across all products and at Cushing). WTI faded back after attempting to tag $60 intraday ahead of the API print, kneejerked down to $59 the figure, before bouncing higher after the print. “There was some technical trading, trying to get that push up toward the big round number psychologically at $60, and it failed just short of it,” said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy.

Oil prices hit 2019 highs on OPEC cuts and U.S. sanctions (Reuters) - Oil prices held close to four-month highs on Tuesday on expectations that OPEC would continue production cuts through the end of the year and ahead of official weekly U.S. crude inventory data. Brent crude oil futures settled 7 cents higher at $67.61 a barrel, the global benchmark’s highest settlement since November 2018. U.S. West Texas Intermediate (WTI) futures touched its highest since November at $59.57 a barrel but finished at $59.03 a barrel, falling 6 cents. Prices inched up in post-settlement trade after data from the American Petroleum Institute (API), an industry group, showed a surprise draw-down on crude inventories. Crude stocks fell by 2.1 million barrels in the week to March 15, to 446.8 million, compared with analysts’ expectations for an increase of 309,000 barrels, the data showed. [API/S] Official Energy Information Administration (EIA) figures are expected on Wednesday. [EIA/S] Oil prices have rallied more than 20 percent since the Organization of the Petroleum Exporting Countries and its allies began to curb supplies at the start of the year. After a short gathering in Azerbaijan, the producer group on Monday scrapped its planned meeting in April and will decide instead whether to extend output cuts in June, once the market has assessed the impact of U.S. sanctions on Iran and the crisis in Venezuela. Some analysts expressed concern that the cancellation was related to tension between Saudi Arabia, the de facto head of OPEC, and Russia, the largest producing non-member of the group that agreed to production cuts last year. The move to cancel the meeting favored Russia over Saudi Arabia, which originally wanted to use the meeting to extend output curbs until the end of the year, Commerzbank said in a note. OPEC will next meet in June. Both benchmarks weakened after Bloomberg reported U.S. officials were concerned Beijing was pushing back against Washington’s demands during trade talks, lowering hopes for a resolution to the tariff war that has threatened global oil demand.

Why This Oil Price Rally Has A Limit - The crisis in Venezuela threatens to disrupt the global oil market, but OPEC has a much stronger base of spare capacity that offers a “supply cushion,” according to a new report from the International Energy Agency (IEA). “Although there are signs that the situation is improving, the degradation of the power system is such that we cannot be sure if the fixes are durable. Until recently, Venezuela’s oil production had stabilised at around 1.2 mb/d,” the IEA said in its March Oil Market Report. Independent analysts have estimated that Venezuela’s oil exports may have temporarily plunged as low as 500,000 bpd after ports and other oil operations went offline due to the blackout. The electricity losses have been mitigated somewhat in recent days, and a key oil export terminal recommenced operations, but the threat to supply is significant. Nevertheless, for the global oil market, the disruption does not present an apocalyptic scenario because OPEC has plenty of oil sitting on the sidelines to handle any lengthy outages from Venezuela’s 1.2 mb/d of production. “Due to the cuts, OPEC members are sitting on about 2.8 mb/d of effective spare production capacity (Iran and Venezuela are excluded from the calculation), with Saudi Arabia holding two-thirds of it.” By backing out 1.2 mb/d of production, OPEC has tightened up the market. But it also rebuilt spare capacity. So, while the oil market is tightening, and a deficit is looming, the spigot can be turned back on. It’s the exact opposite scenario of last summer, when OPEC was producing flat out, helping to add barrels onto the market, but burning through spare capacity.Moreover, as the IEA notes, the quality of production that is being held on the sidelines by Saudi Arabia and its Gulf allies is similar to that of the heavy oil in Venezuela. “Therefore, in the event of a major loss of supply from Venezuela, the potential means of avoiding serious disruption to the oil market is theoretically at hand,” the IEA said. Even so, the market has been tightening. Demand has been “solid” at a time when OPEC has been keeping barrels off of the market. The IEA sees a surplus in the first half of 2019, but a deficit of about 0.5 mb/d in the second half.

Oil beats retreat from four-month high on fears for US-China trade progress - Oil prices fell on Wednesday, retreating from four-month highs struck in the previous session. Crude futures have drawn support this week from ongoing supply cuts led by producer club OPEC and U.S. sanctions against Iran and Venezuela. However, analysts said concerns over economic growth are weighing on the market and capping gains. International Brent crude oil futures were down 30 cents at $67.31 a barrel around 8:35 a.m. ET (1235 GMT). Brent on Tuesday touched its highest since Nov. 16 at $68.20 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 57 cents, or 1 percent, to $58.46 per barrel. WTI on Tuesday reached its highest level since Nov. 12 at $59.57 a barrel. Crude prices have risen by almost a third this year, pushed up by a move led by OPEC to withhold around 1.2 million barrels per day (bpd) of supply as well as by U.S. sanctions against oil exporters Iran and Venezuela. "The shaky supply outlook with regard to Venezuela and Iran, as well as the petro-nations' output restrictions are top of mind in the oil market," said Norbert Ruecker, head of economics at Swiss bank Julius Baer. But analysts said an economic slowdown could soon dent fuel consumption, holding back crude somewhat.

WTI Spikes Above $60 After Huge Inventory Draws -  WTI’s post-API surprise crude draw rally stuttered this morning as uncertainty over the status of trade negotiations between the U.S. and China stoked concerns over global economic growth.  “The energy complex is on the back foot as it takes its cues from a pullback on global stock markets,” Stephen Brennock and Tamas Varga, analysts at PVM Oil Associates Ltd., wrote in a report. “This is in spite of a bullish API report.” DOE:

• Crude -9.59mm (+1.75mm exp, Whisper +66k) - biggest since July 2018
• Cushing -468k
• Gasoline -4.587mm
• Distillates -4.127mm - biggest since Dec 2018

After last week's broad-based inventory declines, expectations were for a rebound build this week (API, however, reported a surprise draw). But DOE reported a massive crude draw (9.59mm barrels), the biggest since July 2018, along with draws in products and at Cushing.  Crude inventories in Europe’s Amsterdam-Rotterdam-Antwerp region fell by 1.2 percent last week, Genscape data show.Bloomberg notes that Crude unit outages at refineries are set to be significantly higher for the rest of March than they were in the last two years. That should help to further whittle down gasoline inventories, which are still well above the seasonal average. Crude Production rose modestly on the week but looks set to slow as US rig counts fall notably...

U.S. oil prices rise above $60 a barrel on tightening supply (Reuters) - U.S. crude prices rose on Wednesday to a four-month high above $60 a barrel after U.S. government data showed tightening domestic oil supplies, but gains were capped by concerns over global economic growth due to the ongoing U.S.-China trade war. The front-month U.S. West Texas Intermediate (WTI) crude futures contract, which expired Wednesday, gained 80 cents, or 1.36 percent, to settle at $59.83 a barrel. It hit a session high of $60.12 a barrel, the highest since Nov. 12. The more-active second-month WTI benchmark gained 94 cents, or 1.6 percent, to settle at $60.23 a barrel. International Brent crude rose 89 cents, or 1.32 percent, to settle at $68.50 a barrel. Prices rose after the U.S. Energy Information Administration posted a large and unexpected drop in crude inventories due to strong export and refining demand. [EIA/S] Stockpiles fell 9.6 million barrels last week, compared with analysts' expectations for an increase of 309,000 barrels. The draw was the largest since July 2018 and brought stockpiles to their lowest since January. Gasoline and distillate inventories both fell by more than expected. Gasoline stocks fell by 4.6 million barrels, while distillate inventories fell by 4.1 million barrels. "The report is bullish due to the large crude oil inventory drawdown, which was a function of low import levels and high export volumes," said John Kilduff, a partner at Again Capital LLC in New York. "The across-the-board inventory declines in crude oil and refined products highlights the tightening market." Crude prices have risen almost a third this year, pushed up by supply cuts among the Organization of the Petroleum Exporting Countries and its allies including Russia, as well as U.S. sanctions against oil exporters Iran and Venezuela.

Oil eases from four-month high on global growth worries - Oil edged lower on Thursday but held near 2019 highs, supported by a sharp tightening of global stocks, OPEC production cuts and U.S. sanctions on key producers Iran and Venezuela. International Brent crude oil futures were down 21 cents at $68.29 a barrel around 9:20 a.m. ET (1320) GMT, having hit their highest since Nov. 13 at $68.69 earlier in the session. U.S. West Texas Intermediate crude futures were at $60.08 per barrel, down 15 cents. WTI reached its highest since Nov. 12 earlier in the day, at $60.33 per barrel. Crude prices have been pushed up by almost a third since the start of 2019 by supply cuts led by OPEC, as well as sanctions enacted against Iran and Venezuela by the United States. The drop in production has led to a tightening in global inventories. Vienna-based consultancy JBC Energy estimated stocks had run down by a "solid" 40 million barrels since mid-January. That followed a nearly 10-million-barrel fall in U.S. crude stocks last week, the largest drop since last July, boosted by strong export and refining demand, according to the U.S. government's Energy Information Administration. The rapid decline in inventories comes despite many refineries undergoing seasonal maintenance work ahead of peak summer demand. However, global trade tensions remain a worry. "Why are oil prices not rallying through the roof? We suspect the sword of Damocles hanging over the market is currently called U.S.-Chinese trade talks,"

Oil prices pull back from multimonth highs to end lower for the session - Oil futures pulled back on Thursday from the mulitmonth highs they saw a day earlier, with the U.S. benchmark settling below the key $60 mark as global crude prices suffered their first loss in four sessions. Prices for both benchmark had climbed by more than 1% Wednesday after U.S. government data showed an unexpectedly large fall in domestic crude inventories. On its first full session as a front-month contract, West Texas Intermediate crude for May delivery CLK9, -1.68% on the New York Mercantile Exchange fell 25 cents, or 0.4%, to settle at $59.98 a barrel after tapping a high of $60.39. May Brent crude LCOK9, -1.15% lost 64 cents, or 0.9%, to $67.86 a barrel on ICE Futures Group. U.S. benchmark WTI remains up by nearly 2% for the week and losses for crude Thursday were modest. Oil may have seen some support from risk-on sentiment, with U.S. equities headed broadly higher as investors digested the conclusion of a Federal Reserve meeting a day earlier that saw policy makers signal they would deliver no rate increases in 2019. The central bank, however, cited concerns over global growth prospects, which could threaten energy demand. The Energy Information Administration on Wednesday said U.S. crude inventories fell by an unexpected 9.6 million barrels last week, while supplies of gasoline dropped 4.6 million barrels and distillates declined by 4.1 million barrels. On Nymex, April gasoline rose 0.2% to $1.920 a gallon, while April heating oil as off 1.1% to settle at $1.987 a gallon. “Stocks normally increase at this time of the year, which makes the substantial inventory reduction all the more remarkable,” wrote analysts at Commerzbank. “U.S. crude oil stocks meanwhile are slightly below the five-year average. The sizable inventory overhang that had still been in place until recently was thus eradicated completely. The U.S. oil market is no longer oversupplied, in other words, which should benefit WTI and result in further price convergence” with Brent futures, they said.

Oil declines from 2019 highs but set for third weekly gain - Oil fell further from 2019 highs on Friday, but was set for a third straight week of gains due to supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela. Brent crude futures were at $67.39 per barrel at 0942 GMT, 47 cents below their last close. Brent hit a four-month high of $68.69 on Thursday. The benchmark has risen by just under a third since the beginning of January, when OPEC started to cut production. U.S. West Texas Intermediate (WTI) futures were at $59.53 per barrel, down 45 cents from their last settlement. WTI marked a 2019 peak in the previous session at $60.39. Both contracts were on course for their third consecutive week of increase. "For all the recent chatter of positive vibes and faithful oil bulls, the $70 barrier has so far proved a tough nut to crack for the European benchmark," PVM analysts wrote. "A sense of hesitancy has taken hold across the energy complex. Market players are waiting for a bullish catalyst to spark a decisive upside breakout. The most obvious contender would be a conclusive trade agreement between the U.S. and China." As economic growth has slowed across Asia, Europe and North America, potentially denting fuel consumption, no breakthrough has emerged in the trade stand-off between Washington and Beijing, at least before meetings scheduled on March 28-29. Three in four Japanese companies expect U.S.-China trade frictions to last until at least late this year, a Reuters poll found. A jump of more than 2 million barrels per day in U.S. crude oil production since early 2018 to a record 12.1 million bpd has made the United States the world's biggest producer, ahead of Russia and Saudi Arabia. This has resulted in increasing exports, which have doubled over the past year to more than 3 million bpd. The International Energy Agency estimated that the United States would become a net crude oil exporter by 2021.

Oil pulls back, but U.S. prices tally a third straight weekly gain - Oil futures declined on Friday, pressured by concerns about global energy demand, but U.S. prices managed to tally a gain for the week, their third in a row, as OPEC output cuts and U.S. sanctions on Venezuela and Iran look to further tighten supplies. Crude prices continued to retreat from their four-month highs on Friday “due to lingering concerns of weakening future energy demand,” said Balint Balazs, global commodity analyst at Schneider Electric, in a note. Data Friday showed the IHS Markit flash purchasing managers index for manufacturing in March fell to a 21-month low, with the U.S. flash manufacturing PMI at 52.5 in March from 53 a month earlier. The purchasing-managers-index readings for the eurozone also came in much weaker than expected. The data as well as a slump in Treasury yields — and an inversion of the yield curve — underlined worries over global growth prospects—and energy demand.  West Texas Intermediate crude for May delivery on the New York Mercantile Exchange fell 94 cents, or 1.6%, to settle at $59.04 a barrel. The front-month contract ended higher for the week, up 0.4% from the week-ago finish, according to Dow Jones Market Data.May Brent crude lost 83 cents, or 1.2%, to $67.03 a barrel on ICE Futures Group, for a 0.2% weekly decline.Prices pared some of their losses shortly after data from Baker Hughes on Friday revealed a fifth consecutive weekly decline in the number of active U.S. oil rigs, suggesting a slowdown in oil drilling activity. The number fell by nine to 824 this week.

Saudi crown prince allegedly stripped of some authority - The heir to the Saudi throne has not attended a series of high-profile ministerial and diplomatic meetings in Saudi Arabia over the last fortnight and is alleged to have been stripped of some of his financial and economic authority, the Guardian has been told. The move to restrict, if only temporarily, the responsibilities of Crown Prince Mohammed bin Salman is understood to have been revealed to a group of senior ministers earlier last week by his father, King Salman.The king is said to have asked Bin Salman to be at this cabinet meeting, but he failed to attend.While the move has not been declared publicly, the Guardian has been told that one of the king’s trusted advisers, Musaed al-Aiban, who was educated at Harvard and recently named as national security adviser, will informally oversee investment decisions on the king’s behalf.The Saudi embassy in Washington has declined multiple requests for comment since the Guardian approached it on Tuesday. The relationship between the king and his son has been under scrutiny since the murder of Saudi journalist Jamal Khashoggi, which was alleged to have been ordered by Prince Mohammed and provoked international condemnation of the crown prince. This has been denied by the Saudi government.Experts on the Middle East are divided over whether the murder, and concern over the kingdom’s role in the conflict in Yemen, have led to tension at the heart of the notoriously secretive royal court.But while most observers expect Prince Mohammed to accede to the throne, there are some signs that the king is seeking to rein in his controversial son at a time when Saudi Arabia is under the spotlight.The Guardian has been told Prince Mohammed did not attend two of the most recent weekly meetings of cabinet ministers, which are headed by the king.The crown prince has also not attended other high-profile talks with visiting dignitaries, including one last week with the Russian foreign minister, Sergey Lavrov. Prince Mohammed also wasn’t present at a meeting with senior economic and finance officials earlier this week, a meeting between the king and the grand mufti, a meeting with the head of the World Health Organisation, and meetings with the prime minister of Lebanon, and ambassadors from India and China.

Saudi Arabia – an absolutist tyranny - "The Rapid Intervention Group also appears to have been involved in the detention and abuse of about a dozen women’s rights activists, who were detained last spring and summer. The activists, who had campaigned for lifting the kingdom’s ban on driving by women, included several well-known figures: Loujain al-Hathloul, who had been jailed for trying to drive her car into the kingdom from the United Arab Emirates; Aziza al-Yousef, a retired computer science professor; and Eman al-Nafjan, the linguistics lecturer.  At first, the women were not held in a prison, but were detained informally in what appeared to be an unused palace in the Red Sea port city of Jidda, according to Ms. al-Hathloul’s sister, Alia. Each woman was locked in a small room, and the windows were covered. Some of the women were frequently taken downstairs for interrogation, which included beatings, electric shocks, waterboarding and threats of rape and murder. In an Op-Ed article for The New York Times, Alia al-Hathloul wrote that Mr. al-Qahtani was “present several times” when her sister was tortured, and that he threatened to kill her and throw her body in the sewer.  The treatment was so harsh that Ms. al-Nafjan tried to commit suicide, according to a United States intelligence assessment.  The women were later moved to the Dhahban Prison in Jidda, where the physical abuse stopped and their relatives were allowed to visit, Ms. al-Hathloul said. Their trial opened in Riyadh on Wednesday, but journalists and diplomats were not permitted to attend, and the government did not announce the charges against them."  

Iraq Prepares to Evict US Troops From the Country — In the wake of the ISIS War in Iraq, Pentagon officials will tell you what they’ve been saying all along, that America’s intention is to stay in Iraq, and that there is no consideration being given to leaving. It’s not clear the US has spoken to the Iraqi government about this, however.While many Iraqis accepted the offer of help in the more desperate moments of the ISIS War, the US military has quickly worn out its welcome. Across a number of major political blocs in Iraq, there is growing consensus that the US, and indeed all foreign military forces, need to go.This has been brewing for months. The Iraqis saw Trump’s visit to Iraq, during which he didn’t meet the Iraqi PM, as a sign of disrespect. That the Pentagon keeps insisting they’re staying in Iraq, without asking the Iraqis, only adds to the sense that the US isn’t really an invited guest in any real sense.Hawks are already trying to spin this, as with everything else that doesn’t go America’s way in Iraq, as Iran’s fault. Iraq’s political scene is dominated by Shi’ite parties, and US officials have plenty of practice pretending that Shi’ite is just a fancy word for “Iranian” these days.Yet this underpins one of the major reasons the US is on the outs with so much of the Iraqi parliament. US hostility toward Iran has meant practical hostility toward Iraqi Shi’ite militias who fought against ISIS and enjoy strong support from the Iraqi government. US ultimatums to disarm militias that are practically part of the Iraqi government have always come with the implied threat of the US leaving, when they never had any intention of doing so. And now, when hostility to the Shi’ite militias has turned parliament against them, US hawks are still trying to spin this as proof of an Iran problem, In reality, the US and Iran have been backing the same parties in Iraq since 2003, and US discomfort with that fact has been consistently undermining their goals.

Empire Of Chaos Crumbles As Iran Outflanks US In Iraq & Beyond - Iran has successfully navigated the first phase of its resistance to U.S. sanctions pressure. The U.S. State Department has admitted it’s goal of reducing Iran’s oil exports to zero is not feasible.The goal now is a 25% drop to 800,000 barrel per day. And that is no joke. It’s a big drop from where Iran was looking to produce in the coming years under the auspice of the JCPOA.The U.S. will not stop until all avenues have been exhausted or Trump fires his current cabinet.Iran’s total non-oil exports have suffered as well, since gas condensate exports have also dropped along with the crude oil numbers.But Iran is finding friends in other places. They are currently finalizing a free trade agreement with the Eurasian Economic Union (EAEU) with Belarus leading the talks at the 15th meeting between their Joint Economic Committee.Iran’s non-oil exports, however, are still just one-fifth of their peak exports. Like Russia it is working quickly with regional partners to change that dynamic.It won’t be enough to overcome the U.S.’s economic pressure in the short term.But as I always say if it survives the initial onslaught then market forces open up opportunities for change. Things like INSTEX, the EU special purpose vehicle for getting around U.S. sanctions, is a perfect example. Bilateral trade outside of the U.S. dollar is another.

Exclusive- How Iran fuel oil exports beat U.S. sanctions in tanker odyssey to Asia (Reuters) - At least two tankers have ferried Iranian fuel oil to Asia in recent months despite U.S. sanctions against such shipments, according to a Reuters analysis of ship-tracking data and port information, as well as interviews with brokers and traders. The shipments were loaded onto tankers with documents showing the fuel oil was Iraqi. But three Iraqi oil industry sources and Prakash Vakkayil, a manager at United Arab Emirates (UAE) shipping services firm Yacht International Co, said the papers were forged. The people said they did not know who forged the documents, nor when. The transfers show at least some Iranian fuel oil is being traded despite the reimposition of sanctions in November 2018, as Washington seeks to pressure Iran into abandoning nuclear and missile programs. They also show how some traders have revived tactics that were used to skirt sanctions against Iran between 2012 and 2016. (reut.rs/2NF1fTK) “Some buyers...will want Iranian oil regardless of U.S. strategic objectives to deny Tehran oil revenue, and Iran will find a way to keep some volumes flowing,” said Peter Kiernan, lead energy analyst at the Economist Intelligence Unit. While the United States has granted eight countries temporary waivers allowing limited purchases of Iranian crude oil, these exemptions do not cover products refined from crude, including fuel oil, mainly used to power the engines of large ships. Documents forwarded to Reuters by ship owners say a 300,000 tonne-supertanker, the Grace 1, took on fuel oil at Basra, Iraq, between Dec. 10 and 12, 2018. But Basra port loading schedules reviewed by Reuters do not list the Grace 1 as being in port during those dates. One Iraqi industry source with knowledge of the port’s operations confirmed there were no records of the Grace 1 at Basra during this period. Reuters examined data from four ship-tracking information providers - Refinitiv, Kpler, IHS Markit and Vessel Finder - to locate the Grace 1 during that time. All four showed that the Grace 1 had its Automatic Identification System (AIS), or transponder, switched off between Nov. 30 and Dec. 14, 2018, meaning its location could not be tracked. The Grace 1 then re-appeared in waters near Iran’s port of Bandar Assaluyeh, fully loaded, data showed. The cargo was transferred onto two smaller ships in UAE waters in January, from where one ship delivered fuel oil to Singapore in February. Shipping documents showed about 284,000 tonnes of fuel oil were transferred in the cargoes tracked by Reuters, worth about $120 million at current prices. 

U.S. accuses Iran of plotting to restart nuclear weapons program - U.S. officials on Friday accused Iran of plotting to restart work on its nuclear weapons program, despite Tehran agreeing in a 2015 accord to not pursue such weapons. The charges were made as the Treasury and State Departments announced a new round of sanctions against 14 individuals and 17 entities linked to the Iranian Ministry of Defense unit responsible for nuclear weapons development, senior administration officials said Friday. Story Continued Below ..Iran’s Organization of Defensive Innovation and Research, also referred to by the acronym SPND, maintains technical experts and critical ties to Iran’s previous nuclear efforts — notably to Mohsen Fakhrizadeh, head of Iran’s pre-2004 nuclear weapons program, officials said. They added that Tehran-based SPND may not currently be working to develop nuclear weapons, but that the connections to Iran’s previous nuclear programs increase the threat of the country developing weapons of mass destruction. Iran has long claimed to have no interest in developing nuclear weapons, but the United Nations in 2015 uncovered a secret program that lasted until at least 2009. The sanctions are the latest step the U.S. has taken to ramp up economic pressure on Iran after President Donald Trump pulled out of the 2015 nuclear pact, in which the country's Islamist regime agreed to abandon any nuclear ambitions in exchange for economic sanctions relief. The other parties in the agreement — including several European countries, China and Russia — have all remained in the deal, and international organizations say Tehran has complied with the agreement. Trump has bashed the the international pact for not doing enough to stop Iranian efforts to build nuclear bombs. Since leaving the accord, his administration has leaned on other countries to cut off their interactions with Iran.

Iranian human rights lawyer sentenced to 38 years in prison, her family says - Prominent Iranian human rights lawyer Nasrin Sotoudeh has been sentenced to 38 years in prison and 148 lashes, according to her family. Sotoudeh is well known for representing human rights defenders, dissidents and women who protested against the compulsory wearing of a headscarf in Iran. According to IRNA, Iran's state-owned news service, the human rights lawyer was convicted of "gathering and colluding to commit crimes against national security" and for "insulting the Supreme Leader". A Facebook post by her husband Reza Khandan said the ruling sentenced her to 33 years and 148 lashes. He added that the punishment brings her prison time to 38 years. In 2016, she was sentenced in absentia to five years, according to Khandan. But state media said that Sotoudeh was sentenced to seven years in prison, citing the judge in the case, Mohammad Moghiseh. The reasons for the discrepancy in the reports was not immediately clear.

The US is pushing Lebanon into the arms of Iran and Russia - Lebanon is expecting the visit of US Secretary of State Mike Pompeo this week at a time when the Lebanese economic-political map is being redrawn and while Lebanon is suffering its most serious economic downturnin recent history. Reasons for the deterioration of the local economy include not only the corruption of Lebanon’s political leadership and lower level administration but also US sanctions imposed on Iran. The latest sanctions are the harshest ever imposed. They will also dramatically affect Lebanon so long as President Donald Trump is in power if Lebanon does not follow US policy and dictates. If, as anticipated, Washington declares economic war on Lebanon, the sanctions will leave Lebanon few alternatives. They may force Lebanon to fall back on Iranian civilian industry to overcome US economic pressure, and to rely on the Russian military industry to equip Lebanese security forces. This will be the result if Pompeo insists on threatening Lebanese officials, as his assistantshave done on previous visits to the country. The consistent message from US officials has been: you’re either with us or against us. Politically, Lebanon is divided between two currents, one pro-US (and Saudi Arabia) and another outside the US orbit. The economic situation may well increase internal division to the point that the local population reacts angrily in order to exclude the US and its allies from influence in Lebanon. Such a scenario may still be avoided if Saudi Arabia injects enough investment to reboot the agonising local economy. Nevertheless, Saudi Arabia fears that those who are not aligned with its policies and those of the US could benefit from its support. To date, Riyadh has not fully understood the internal Lebanese dynamic and what it is possible or impossible to achieve in Lebanon. The kidnappingof the Prime Minister Saad Hariri was the most flagrant indication of Saudi ignorance of Lebanese politics. The Saudis’ lack of strategic vision in Lebanon will likely prevent any serious support to the failing economy and may lead the country into serious instability.  

Russian Warplanes Rain Hell On Idlib -  On March 13, warplanes of the Russian Aerospace Forces delivered a series of airstrikes on infrastructure of Hayat Tahrir al-Sham in the city of Idlib and in its southeastern countryisde. According to reports, at least 16 strikes hit weapon depots, HQs and a jail belonging to the terrorist group.  Opposition sources said that hundreds of prisoners, including dozens persons allegedly linked with the Syrian and Russian intelligence managed to escape the prison after the airstrike. Hayat Tahir al-Sham responded with a wide-scale security operation to trace and capture these people. This operation is still ongoing with varying results. The Russian Defense Ministry confirmed the strikes in Idlib and said that they were coordinated with Turkey. According to the Russian side, the strikes hit depots in which the terrorist group was storing armed unnamed aerial vehicles. The eliminated UAVs were reportedly prepared for an attack on Russia’s Hmeimim airbase.  Despite comments about the coordination with Turkey, in the following days Turkish pro-government and state media released multiple reports accusing the Russians and the Assad government of causing casualties in Idlib. On March 13, the Israeli Defense Forces (IDF) claimed that they had uncovered an alleged Hezbollah network in the Golan Heights. The network named by the IDF as “the Golan File” was reportedly led by Hezbollah operative Ali Musa Daqduq on the Syrian side of the contact line in order to prepare attacks on Israel. The IDF stressed that Daqduq has been a Hezbollah member since 1983. During this period, he reportedly occupied various important posts and was even involved in an attack on a US military base in Iraq’s Karbala in 2007. The IDF described the alleged Hezbollah network as a serious threat and threatened both Damascus and the Lebanese party with consequences.  Regardless of real facts besides these claims, this series of reports looks as a coordinated media campaign. According to experts, its main goal is to justify further Israeli military actions against supposed Iranian targets in Syria and to continue the militarization of the occupied Golan Heights.

Was UK Paying White Helmets To Produce Syria "Chemical Weapon" PR As Cover For Jaish Al Islam? --As controversy rages over the alleged April 2018 Douma “chemical weapon attacks” that signaled the end of Jaish Al Islam’s occupation, life in the Syrian city gradually returns to peace and stability. The Organization for the Prohibition of Chemical Weapons’ (OPCW) interim report and final report have thrown the Western media community into disarray. Already scrambling to salvage their loss of face after the “no sarin” conclusions were drawn by the OPCW in July 2018, they are now trying to convert an inconclusive OPCW report into a definitive claim regarding chlorine use, in order to reassert their declining narrative supremacy.A “chemical weapon” narrative that has effectively sustained the criminalization of the Syrian government and thus the continued unlawful aggression, direct and through Takfiri proxies, by the US coalition against Syria.“Reasonable grounds that the use of a toxic chemical as a weapon took place” is transformed into “OPCW confirms chlorine gas used in attack on Douma by Syrian government” by the state media revisionists across the Western media echo chambers.A retraction for the Western media’s earlier certainty that Sarin was used is above their pay grade, presumably. An apology to the Syrian people for enabling the unlawful bombing of Syrian territory by a rapacious FUKUS alliance is clearly not within their moral remit. Putting aside the almost unassailable evidence that the NATO-member-state-financed White Helmets staged the now notorious hospital scenes that were universally distributed by NATO-aligned media outlets and incredulity that a yellow cylinder could be dropped from a helicopter through the roof of an apartment and then bounce from the floor and onto an undamaged bed, what is largely being ignored by the West and the OPCW is the context of the attack.

US Military Now Planning to Keep 1,000 Troops on the Ground in Syria — The US military is now making plans to keep almost 1,000 troops in Syria, officials said, a shift that comes three months after President Donald Trump ordered a complete withdrawal, the Wall Street Journal reported on Sunday, citing unidentified US officials.Talks with Turkey, European allies and US-backed Kurdish fighters have so far failed to secure an agreement to create a safe zone in northeastern Syria, part of Trump’s plan for leaving Syria, the Journal said.The US now plans to keep working with Kurdish fighters in Syria, despite Turkish threats to cross the border and attack the Kurds, the US officials said. The proposal may keep as many as 1,000 American forces, spread from the north of Syria to the south, they said.Once the last bastion of the Islamic State (IS) group is seized, the US may shift its focus towards withdrawing hundreds of American forces, in keeping with what Trump had originally ordered.The evolving discussions represent a shift away from Trump’s December directive to get all Americans out of Syria.His original decision to withdraw all of the more-than-2,000 US troops from Syria triggered the resignation  of Pentagon chief Jim Mattis and drew widespread concern that America was leaving the fight against IS before it was finished. Trump initially stood by his decision, but members of his national-security team urged him to secure assurances that Turkish President Recep Tayyip Erdogan wouldn’t attack the US-backed Kurdish fighters once America withdrew, the WSJ said. Turkey has refused to do so.

Trump Gives Netanyahu Part of Syria to Boost Israeli Leader’s Flagging Reelection Campaign - WITH A TWEET posted on Thursday, President Donald Trump dismissed five decades of international consensus on the status of the Golan Heights, Syrian territory seized by Israel in 1967 during a preemptive war, declaring that the United States would recognize Israel’s annexation of the region.Offered without explanation, the move looked to many Israeli, Palestinian and American observers like a transparent attempt to boost the reelection prospects of Trump’s embattled ally, Prime Minister Benjamin Netanyahu, who faces corruption charges and could be defeated at the polls next month.In reply to Trump’s tweet, Mohamed ElBaradei, the former head of the International Atomic Energy Agency, suggested that the American president “might want to consult with your international lawyers.” Trump’s declaration, ElBaradei noted, flies in the face a United Nations Security Council resolution adopted unanimously in 1967, which called for the “Withdrawal of Israel armed forces from territories occupied” in that summer’s conflict — including the Golan, as well as the West Bank, East Jerusalem and Gaza — and emphasized, “the inadmissibility of the acquisition of territory by war.”It was not lost on some analysts that U.S. recognition of Israel’s right to annex territory it seized by force would also seem to pave the way for Trump to recognize Russia’s annexation of Crimea.Calling Trump’s declaration, “a brazen violation of international law,” which “doesn’t change protections occupied Syrians of Golan have,” Omar Shakir, the Israel and Palestine director of Human Rights watch,observed that “moves like this only isolate the U.S. further from international consensus and make its voice even more irrelevant.” Standing alongside Secretary of State Mike Pompeo, who was in Israel for the announcement, a beaming Netanyahu described Trump’s gift to his reelection campaign as “a miracle of Purim,” the Jewish holiday celebrated this week.

Watch the film Labour MPs didn’t want you to see - The official online debut of the new film WitchHunt has arrived, and you can watch the entire thing in the video above.The film has faced severe censorship, including a bomb threat which successfully canceled one preview. It tells a story about Israel’s alliance with the global far-right that Israel’s supporters would rather you not hear. Acclaimed British directors Mike Leigh and Peter Kosminsky have praised WitchHunt.Leigh said it “exposes with chilling accuracy the terrifying threat that now confronts democracy.”Kosminsky said it “packs a powerful punch” and is “telling a story we just aren’t hearing at the moment.”  Last month, left-wing member of Parliament Chris Williamson was suspended as a Labour Party member – after a long campaign by Israel lobby groups against him.  Williamson had booked a room in Parliament on behalf of the group Jewish Voice for Labour so that WitchHunt could be screened.  But it was canceled after the Labour leadership came under severe pressure by right-wing and pro-Israel Labour MPs.  Unless Williamson’s Labour suspension is reversed before the next election, the move will make it hard for him to return as an MP.  A source in Parliament told The Electronic Intifada that the ringleader of much of the outrage against Williamson was Ruth Smeeth.  Smeeth is a former professional Israel lobbyist who, since becoming an MP, has continued to receive donations from prominent Israel lobby funders.

US Killing Civilians With ‘Impunity’ in Hidden War on Somalia: Report— A human rights group is accusing the United States of waging a shadow air war in Somalia that is killing civilians with abandon. Amnesty International issued its findings on the African war Tuesday evening in a report titled The Hidden US War in Somalia (pdf). The U.S. has been covertly engaging in conflicts in Somalia for decades, but in April 2017, the Donald Trump administration upped airstrikes and attacks targeted at the rebel group Al-Shabaab. The human rights advocacy group studied five of more than 100 strikes on Somalia over the past two years and found that 14 civilians were killed in the attacks. Eight others were injured, the report says. “These five incidents were carried out with Reaper drones and manned aircraft in Lower Shabelle,” Amnesty said in a press release, “a region largely under Al-Shabaab control outside the Somali capital Mogadishu.” The U.S. military denied to Amnesty that any civilians have been killed as a result of American operations in Somalia. However, Amnesty’s report claims its methodology is sound and that the evidence is overwhelming. “The attacks appear to have violated international humanitarian law,” the organization said, “and some may amount to war crimes.” In comments provided to the media, Brian Castner, the group’s senior crisis advisor on arms and military operations, claimed that the continued airstrikes are also a sign of the Trump administration’s aggressive use of military action across the world. “The civilian death toll we’ve uncovered in just a handful of strikes suggests the shroud of secrecy surrounding the US role in Somalia’s war is actually a smokescreen for impunity,” Castner said.

Who Are the Private Contractors Fighting in Iraq and Afghanistan?  - The debate on privatizing the war in Afghanistan is heating up yet again, with Democratic lawmakers pledging to end so-called “forever wars.” The public is slowly recognizing the war’s hidden costs and global scale.In 2016, 1 in 4 U.S. armed personnel in Iraq and Afghanistan was a private contractor. This means that the war is already being outsourced, yet scholars, the media and the general public know almost nothing about it. Because contractors operate in the shadows, without effective public oversight, they allow policymakers to have their cake and eat it too – by appearing to withdraw, while keeping proxy forces in theater. Who are the contractors who actually execute American policy? Are they equipped to succeed in this important task? What risks is the U.S. asking them to take? The simple truth is that there is little reliable data about this industry. Without this data, scholars cannot ask even the most basic questions of whether using contractors works better than the alternative, namely military personal or local forces – or, indeed, whether it works at all.   It’s hard to get data about private military contractors, mainly because of the proprietary business secrets. Despite the fact that those companies act as proxies of the state, they are not legally obligated to share information with the public on their actions, organization or labor force. Given how centrally private military companies feature in American foreign policy debates lately, Americans may assume that their policymakers are working from a detailed understanding of the contractor workforce. After all, the point is to weigh the contractors’ merits against uniformed service members, about whom the public have excellent information.But this does not appear to be the case. There isn’t a detailed account of the private military industry’s practices, workforce, misconducts or contracts. Noticing this gap, in 2008, Congress instructed the Department of Defense to start collecting data on private security personnel. However, this data is limited, as security contractors comprise just 10 to 20 percent of DOD contractors in Afghanistan and Iraq. The rest provide mission essential functions, such as engineering, communication and transportation and many others. Those roles take place in conflict areas and place those contractors at similar risk level as the soldiers.

100 Afghan Soldiers Said to Flee Across Border, Chased by Taliban — At least 100 Afghan soldiers abandoned their posts and fled imminent capture by the Taliban by crossing the country’s border into neighboring Turkmenistan, only to face immediate expulsion, Afghan officials said on Saturday.It was the latest in a series of insurgent attacks in the hotly contested Bala Murghab district, where an entire Afghan Army company was killed or captured on Monday. By Saturday, its defenders said the district had mostly fallen into Taliban control.Afghan officials gave varying accounts of what happened Saturday, with some saying the soldiers would be returned to safety by Turkmenistan, and others that they had been forced back by the Turkmenistan Army into a no man’s land, a 500-yard-wide strip between border fences. And some said the soldiers had been forced back into Taliban hands by day’s end. Saleh Mohammad Mubarez, the commander of the Afghan local police in the district, said that 140 soldiers from the Afghan Border Police, a military unit, had fled toward Turkmenistan after two days of Taliban attacks on bases in the Morichaq area.

US exit from Afghanistan could spark wider conflict --The proposed US withdrawal from Afghanistan is poised to be a repeat of what happened after then-president Barack Obama decided to pull US troops out of Iraq in 2012.  Recent announcements of US withdrawals from Syria and Afghanistan signal an attempt to achieve an honorable exit from a failed strategy, while at the same time saving the enormous financial costs of war in both countries, estimated at around US$15.3 billion in Syria and $45 billion in Afghanistan this year alone.  Afghanistan is currently not only a safe haven for Taliban leadership but is also a sanctuary for a complex nest of extremist outfits in the war-torn country. It is evident that terror outfit al-Qaeda, in cooperation with the Taliban, has been operating in the region.  ISIS, too, has clearly established a manageable command and control structure with the collaboration of the Pakistani Taliban, Lashkar-e-Jhangvi, Ahrar-ul-Hind, the Islamic Renaissance Party (IRP) in Tajikistan and the Islamist movement in Uzbekistan.  Currently, the Pentagon has stepped up air strikes and special operations raids in Afghanistan to the highest levels, which Defense Department officials have described as a coordinated series of attacks on Taliban leaders and fighters. This war strategy has been deployed in order to gain leverage in the ongoing negotiations with the Taliban. Soon after the US’s withdrawal from Iraq, the world witnessed the worst type of violence in the shape of ISIS. Now we see a power struggle among extremist outfits in Afghanistan, meaning there is a huge possibility of chaos in the region. Some experts even speculate that a ferocious civil war could affect the Kabul government and weaken its army, which would give the opportunity to warlords to forge new power. That, in turn, could open the way to a new refugee crisis and cuts in international aid, which would cripple the standing of the Afghan military. Ahead of what they foresee as a potential paradigm shift in regional stability, Pakistan, Iran, China and Russia have welcomed the prospect of a US withdrawal from the region. These four states’ proactive role in bringing the Taliban to the negotiating table was due to the “common enemy” factor, as both the Taliban and these four powers opposed the increasing power of ISIS and its allied groups in Afghanistan.