oil prices fell for the second week in nine this past week, largely on a selloff precipitated by the report of the biggest increase in US crude supplies yet this year, and likely exacerbated by short selling by commodity traders probably trying to take advantage of severely overextended bullish hedge fund positions...after falling 1.1% to $63.30 a barrel last week on Trump's BS to reporters, the benchmark US crude for June delivery opened lower early Monday in a continuation of Friday's Trump comment selloff and fell to as low a $62.46 a barrel, before shaking off Trump's balderdash after OPEC and Saudi sources denied that any officials spoken to Trump, and subsequently rebounded to close 20 cents higher at $63.50 a barrel...prices then opened higher on Tuesday and rose to as high as $64.75 a barrel on a coup attempt in Venezuela before paring those gains to settle just 41 cents higher at $63.50 a barrel after reports Venezuelan oil operations were not disrupted and military leaders remained loyal to Maduro...oil prices fell on Wednesday, however, as the EIA reported U.S. crude supplies rose nearly 10 million-barrels to their highest since September 2017, with US crude finishing down 55 cents at $63.36 per barrel...with supply concerns thus alleviated, that selloff continued into Thursday, with oil prices breaking through a key support level and falling as much as 4% before steadying and ending $1.81 lower at $61.81 a barrel, despite a number of geopolitical concerns....oil prices then edged back up on strong economic data on Friday, closing 13 cents higher at $61.94 a barrel, but still finished the week 2.2% lower, thus logging its second straight weekly decline...
natural gas prices, meanwhile, ended a bit lower, as a near record addition of gas to storage reported on Thursday reversed price gains logged earlier in the week...with little associated commentary, natural gas contracts for June delivery rose 1.3 cents on Monday and then fell back 1.8 cents on Tuesday before rising 4.5 cents to $2.620 per mmBTU on Wednesday on strong cash prices and cooling demand in the US South...however, a bearish EIA report knocked prices back 3.1 cents on Thursday, with momentum from that carrying into a 2.2 cent loss on Friday to end the week down half a percent at $2.567 per mmBTU, despite forecasts for unseasonably cool weather in the north-central states and above average temperatures in the southeast..
the natural gas storage report for the week ending April 26th from the EIA indicated that the quantity of natural gas held in storage in the US increased by a new April record 123 billion cubic feet to 1,462 billion cubic feet by the end of the week, which meant our gas supplies were 128 billion cubic feet, or 9.6% more than the 1,334 billion cubic feet that were in storage on April 27th of last year, while remaining 316 billion cubic feet, or 17.8% below the five-year average of 1,778 billion cubic feet of natural gas that have typically been in storage as of the fourth weekend in April in recent years....this week's 123 billion cubic feet injection into US natural gas storage exceeded analysts' expectations of a 114 billion cubic foot increase, and it was quite a bit more than the 70 billion cubic feet of natural gas that are normally added to gas storage during the fourth week of April...and as it turns out, that 123 billion cubic feet increase was also the highest ever for April, and the second highest injection in the recent history of this storage report, which we can see in the graphic below..
the above graphic is a screenshot of an interactive graphic included on the EIA's weekly natural gas storage dashboard, and as the heading indicates, it shows the weekly change, in billions of cubic feet, of natural gas in storage in the lower 48 states...the blue dots represent the weekly changes of natural gas in storage for this year up to the current report, and the dark diamonds represent the 5 year average change of natural gas in storage for each of the weeks of the year, while the shaded grey background to those markers represent the range of changes for each week of the year over that 5 year span...thus, for this week, which i have highlighted on this interactive by moving my cursor over that blue dot, you can see the 123 billion cubic feet addition for this year, the 70 billion cubic feet average for the same week over the prior 5 years, and the prior range between 51 billion cubic feet and 81 billion cubic feet of natural gas that was added to storage over the prior 5 years...
as it turns out, that 123 billion cubic foot addition of this reporting week was the second largest injection shown on the graph, topped only by the 126 billion cubic feet injection over the week ending May 31, 2015, not easily differentiated on this scale...but if you look at the blue dots over the 7 most recent weeks, you can see that they all topped the 5 year average, with 4 of the last five weeks actually establishing a short term high injection for the weeks in question...over the five most recent weeks, 355 billion cubic feet of natural gas have been added to storage in the lower 48 states; that is almost triple the 5 year historical average addition of 120 billion cubic feet over the same 5 weeks, and in sharp contrast to a year ago, when 34 billion cubic feet of natural gas had to be withdrawn from storage over the same 5 week period...
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 April 26th, showed that another increase in our oil imports on top of last week's big import jump meant that we had more surplus oil left to add to our commercial supplies of crude for the fifth time in six weeks...our imports of crude oil rose by an average of 265,000 barrels per day to an average of 7,414,000 barrels per day, after rising by an average of 1,157,000 barrels per day the prior week, while our exports of crude oil fell by an average of 70,000 barrels per day to 2,611,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,803,000 barrels of per day during the week ending April 26th, 335,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be up by 100,000 barrels per day to a record 12,300,000 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 17,103,000 barrels per day during this reporting week...
meanwhile, US oil refineries were using 16,446,000 barrels of crude per day during the week ending April 26th, 137,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that 1,342,000 barrels of oil per day were being added to the oil that's in storage in the US....therefore, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 685,000 barrels per day short of what was added to storage plus what 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 (+685,000) 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 much oil unaccounted for again this week, we have to figure that 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 rose to an average of 6,789,000 barrels per day last week, still 19.2% less than the 8,400,000 barrel per day average that we were importing over the same four-week period last year...the 1,342,000 barrel per day increase in our total crude inventories included 1,419,000 barrels per day that were added to our commercially available stocks of crude oil, which was partially offset by a 77,000 barrel per day withdrawal from the oil stored in our Strategic Petroleum Reserve...this week's crude oil production was reported to be 100,000 barrels per day higher at a record 12,300,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at 11,800,000 barrels per day, while Alaska's oil production was unchanged at 477,000 barrels per day and hence did not impact the rounded national total...last year's US crude oil production for the week ending April 27th was at 10,619,000 barrels per day, so this reporting week's rounded oil production figure was 15.8% above that of a year ago, and 45.9% 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 89.2% of their capacity in using 16,446,000 barrels of crude per day during the week ending April 26th, down from 90.1% of capacity the prior week, and below the historical refinery utilization rate for the last week of April....similarly, the 16,446,000 barrels per day of oil that were refined this week were still a bit less than the 16,561,000 barrels of crude per day that were being processed during the week ending April 27th, 2018, when US refineries were operating at 91.1% of capacity...
even with the decrease in the amount of oil being refined, gasoline output from our refineries was still somewhat higher, increasing by 146,000 barrels per day to 9,927,000 barrels per day during the week ending April 26th, after our refineries' gasoline output had decreased by 136,000 barrels per day the prior week....but even with that increase in gasoline output, this week's gasoline production was still 1.2% less than the 10,045,000 barrels of gasoline that were being produced daily during the same week last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 64,000 barrels per day to 5,128,000 barrels per day, after that distillates output had increased by 241,000 barrels per day the prior week...after this week's increase, the week's distillates production was 2.7% more than the 4,995,000 barrels of distillates per day that were being produced during the week ending April 27th, 2018....
with the increase in our gasoline production, the supply of gasoline in storage at the end of the week rose for the first time in 11 weeks, increasing by 917,000 barrels to 226,743,000 barrels over the week to April 26th, after gasoline supplies had fallen by 2,129,000 barrels over the prior week....that inventory increase came as the amount of gasoline supplied to US markets decreased by 181,000 barrels per day to 9,228,000 barrels per day, after decreasing by 397,000 barrels per day over the prior two weeks, while our imports of gasoline fell by 135,000 barrels per day to 770,000 barrels per day, and while our exports of gasoline rose by 142,000 barrels per day to 688,000 barrels per day....but after having reached an all time record high fourteen weeks ago, our gasoline supplies are still 4.7% lower than last April 27th's inventory level of 237,978,000 barrels, and remain roughly 2% below the five year average of our gasoline supplies at this time of the year...
even with the increase in our distillates production, our supplies of distillate fuels fell for the 24th time in thirty-one weeks, decreasing by 1,307,000 barrels to 125,722,000 barrels during the week ending April 26th, after our distillates supplies had decreased by 662,000 barrels over the prior week...the draw on our distillates supplies was a greater this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 419,000 barrels per day to 4,215,000 barrels per day, while our imports of distillates fell by 182,000 barrels per day to 63,000 barrels per day, and while our exports of distillates fell by 445,000 barrels per day to 1,163,000 barrels per day...but even after this week's inventory decrease, our distillate supplies were still 5.8% higher than the 118,829,000 barrels of distillate that we had stored on April 27th, 2018, even as they remain roughly 6% below the five year average of distillates stocks for this time of the year...
finally, with record oil production and higher oil imports, our commercial supplies of crude oil in storage increased for the eleventh time in 15 weeks, rising by 9,934,000 barrels over the week, from 460,633,000 barrels on April 19th to 470,567,000 barrels on April 26th...that increase left our crude oil inventories near the recent five-year average of crude oil supplies for this time of year, while they also were also about a third higher than the prior 5 year (2009 - 2013) average of crude oil stocks after the fourth week of April, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally 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 April 26th were 7.9% above the 435,955,000 barrels of oil we had stored on April 27th of 2018, but at the same time still 10.8% below the 527,772,000 barrels of oil that we had in storage on April 28th of 2017, and 8.9% below the 512,095,000 barrels of oil we had stored on April 29th of 2016...
This Week's Rig Count
US drilling rig activity was down by just one this past week, thus technically falling to another 13 month low and continuing the recent slide that has seen active rigs decrease ten out of the last 11 weeks.....Baker Hughes reported that the total count of rotary rigs running in the US fell by 1 rigs to 990 rigs over the week ending May 3rd, which was also down by 42 rigs from the 1032 rigs that were in use as of the May 4th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...
the count of rigs drilling for oil rose by 2 rigs to 807 rigs this week, which was still 27 fewer oil rigs than were running a year ago, and was barely half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 3 rigs to 183 natural gas rigs, which was also down by 13 rigs from the 196 natural gas rigs that were drilling a year ago, and 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 1 rig to 20 rigs this week, which was still 1 more rig than the 19 rigs active in the Gulf a year ago...the number of active horizontal drilling rigs was unchanged at 873 horizontal rigs this week, which was still 40 fewer horizontal rigs than the 913 horizontal rigs that were in use in the US on May 4th of last year, and well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014.....in addition, the vertical rig count was also unchanged at 47 vertical rigs this week, which was also down from the 55 vertical rigs that were in use during the same week of last year....however, the directional rig count decreased by 1 rig to 70 directional rigs this week, but those were still up by 7 rigs from the 64 directional rigs that were operating on May 4th 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 oil & gas 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 May 3rd, the second column shows the change in the number of working rigs between last week's count (April 26th) and this week's (May 3rd) count, the third column shows last week's April 26th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number 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 4th of May, 2018...
as you can see, rig removals from Texas were responsible for this week's decrease, as rigs were being added in several other states...of the 7 rigs pulled out in Texas, two rigs were again removed from Texas Oil District 8, or the core Permian Delaware, and two rigs were also pulled out of Texas Oil District 7C, or the southern Permian Midland basin, while two rigs were added in Texas Oil District 8A, or the northern Permian Midland basin...a rig was also pulled out of Texas Oil District 7B, which would include the Permian's eastern shelf in its westernmost extent, suggesting a net reduction of three Permian oil rigs in Texas while two Permian oil rigs were being added in New Mexico...
it also appears that several natural gas rigs were also pulled out of Texas, even though some don't show on the basin count, because while two natural gas rigs were pulled out of Texas Oil District 6, which would include the western portion of the Haynesville shale, and while one natural gas rig was removed from Pennsylvania's Marcellus, two natural gas rigs were added in Oklahoma's Arkoma Woodford and one was added in Ohio's Utica...thus for the national natural gas rig count to show a net decrease of 3 rigs, 3 natural gas rigs had to have been pulled out of basins not tracked separately by Baker Hughes...since Texas is the only state with gas rigs that shows a negative count for the week, we thus have to believe that some or all of those idled natural gas rigs had to have been operating in Texas...
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ODNR Issues 10 Permits in Utica Shale– The Ohio Department of Natural Resources issued 10 new permits for horizontal wells in eastern Ohio’s Utica shale last week, the agency reports. According to ODNR’s latest drilling update, five wells are targeted for Monroe County – three of them secured by Eclipse Resources and two by CNX Gas Company LLC. Ascent Resources was awarded two permits for wells in Jefferson County, Gulfport Appalachia and Rice Drilling received a permit each for wells in Belmont County, and Utica Resource Operating LLC secured a single permit for a well in Guernsey County. As of April 27, ODNR had issued 3,071 permits in the Utica shale. Of that number, 2,581 are drilled and 2,179 are in production. Permit and drilling activity has concentrated on the southeastern portion of the state, where the most productive oil and natural gas wells are located, data show. As of April 27, there were 17 rigs operating across the Utica, four more than the previous week, according to ODNR. There were no permits issued in the northern section of the Utica shale, which includes Mahoning, Trumbull and Columbiana counties. Nor were there new permits issued in the neighboring Utica region of Mercer and Lawrence counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.
Medina group worried about emissions at Nexus station - — A Medina County group that fought against the Nexus pipeline is raising concerns about emissions from the Wadsworth Compressor Station on Guilford Road. Sustainable Medina County requested Earthworks, a Washington D.C. organization, to use an infrared camera to record emissions from the station March 15. The video of unknown gases going into the air was shared on YouTube. "Looking at it should cause anyone concern. That plume is coming out of that compression station daily," said Kathie Jones, co-founder of Sustainable Medina County. "We need to know what's in there. We need to know how it's going to affect our air, our water and our environment." The 256-mile pipeline began operating last November. Mary Emhoff, a Brunswick Hills resident, fears the emissions could cause health problems for nearby residents. "When they do blowdowns, this pipeline is under 1,500 PSI (pounds per square inch). Your car tires are 35 PSI. That's a lot of compressed gas," Emhoff said. "These pipelines do have leaks. They do explode in addition to the pollution that's going out every day." Adam Parker, a spokesman for Enbridge, which shares ownership of the pipeline, said emissions from compressor station are comparable to dry cleaners, gas stations or small paint shops. "The group's news release attempts to sensationalize the operation of the station, all while acknowledging that the facility holds a permit from the Ohio EPA which went through an extensive regulatory review and public comment period nearly three years ago," Parker said. James Lee, a spokesman for the Ohio EPA, said Nexus received a permit to install and operate the natural gas compressor station in 2016. Before issuing the permit as final, Ohio EPA reviewed the application to ensure emissions would comply with state and federal pollution standards, laws and regulations, Lee said. "The regulations applicable to this natural gas compressor station do not require zero air pollution," Lee said. "The majority of emissions from gas release events are associated with routine planned operations such as startup and shutdown, reduced pressure demand events or maintenance activities," Lee said.
Oilfield company accused of bilking employees out of insurance premiums - The owner of an oil and gas trucking company that until recently was based in Chartiers Township is being sued by former employees who say he canceled their health insurance without telling them but for months continued to deduct money that ostensibly was going toward the premiums.The 16 plaintiffs named in a complaint filed Monday in Washington County Court of Common Pleas were working for Mustang Oilfield Services LLC as of Aug. 1, when the company ended the health, vision and dental coverage it had been offering.The nonunion employees allegedly continued forfeiting money for their share of the insurance premiums. Their attorney, John Egers, said he doesn’t know where that money went instead.“They were taking these deductions, and weren’t applying them to insurance,” said Egers, who’s with the Julian Law Firm in Washington. “We’re going to find out where this money went.” Egers said in an interview the deductions from his clients’ weekly paychecks ranged from $47 to $145. They’re trying to recover that money and other losses they suffered as a result of the insurance cancellation.The complaint also says eight of the former workers are still owed wages despite leaving the company at least two months ago. Along with Mustang, company president Gregory Cook is named as a defendant. Cook, who lives in Belmont County, Ohio, is the company’s only registered owner. Mustang occupied a warehouse on Alpha Drive but no longer does. It was registered in Ohio in 2013 and is still listed as active by the state.
Sunoco’s $200 million expansion at Marcus Hook terminus in Delaware County to create 1,200 construction jobs - The parent company of Sunoco Pipeline LP on Monday announced $200 million in new projects in Delaware County that will employ as many as 1,200 trade workers over the next two years at the Marcus Hook Industrial Complex, terminus of Sunoco’s contentious Mariner East pipeline project. Energy Transfer Partners (ETP), the Dallas parent of Sunoco Pipeline, said the construction projects would be scheduled under a recently signed agreement with the Philadelphia Building and Construction Trades Council, the umbrella organization that counts among its members more than 50 unions that work in the construction industry in the region. Energy Transfer held the event as a counterweight to its recent clashes with prosecutors and anti-pipeline activists over construction of its pipelines in Delaware and Chester Counties, which has been fined repeatedly by regulators and become the object of criminal investigations. The Marcus Hook complex, which housed a Sunoco oil refinery that shut down in 2011, was repurposed to store natural gas liquids like propane, produced in western Pennsylvania and Ohio, which are carried across the state in two Mariner East pipelines. The complex now receives about 200,000 barrels of gas liquids a day, according to Hank Alexander, ETP’s senior vice president of business development, surpassing the amount of petroleum products that were processed daily during its previous life as a refinery. While some of the propane and butane are sold into local markets, the complex is primarily a terminal for export to Europe. It’s designed to load large vessels such as the Corsair, a 738-foot gas liquidscarrier that was berthed Monday, receiving a shipment of propane and butane.
Sunoco buys two homes at Chester County site of Mariner East 2-related sinkhole - Sunoco Pipeline bought two homes on Lisa Drive, the Chester County development and pipeline construction site where residents have been tormented by sinkholes since late 2017, according to state and county documents obtained on Monday. The documents said Sunoco agreed to buy the homes and land of John Mattia and his next-door neighbors, T.J. Allen and Carol Ann Allen, for $400,000 each in transactions dated April 18. A Realty Transfer Tax Statement of Value filed with the Pennsylvania Department of Revenue records a “total consideration” of $400,000 for each of the properties. The home sold by the Allens is estimated with a market value of about $300,000-$330,000, according to listings by Zillow and Realtor.com. The value of the former Mattia home is estimated at about $340,000, according to Redfin, a real estate brokerage. The documents, posted on the Chester County Recorder of Deeds website, show the residents agreed to sell at a site where Sunoco has struggled to build and operate the Mariner East pipelines because of unstable limestone geology. The residents are subject to nondisclosure agreements. Two of the Lisa Drive residents, Russell and Mary March, and another nearby homeowner sued Sunoco in March 2018, claiming the company had negligently drilled through porous rock near their homes without recognizing that sinkholes would likely result, and ignoring the results of a geotechnical investigation there. The suit was settled but the terms were not disclosed. The company’s activities at Lisa Drive have been shut down twice by regulators on the grounds that public safety is endangered by construction of two new pipelines – Mariner East 2 and 2X – plus the operation of an existing natural gas liquids pipeline – Mariner East 1 – on a geologically unstable site.
KDKA Investigates: Residents Of Butler Co. Community Blame Fracking For Bad Water, But DEP Says Otherwise – The Woodlands is a tight little community of a few dozen families who live in trailers and modest homes on a 100-acre patch in rural Butler County. Folks there don’t have much money but say they once had clean water.“Water was good. Never had no trouble. Then they started fracking,” John Fair said. Eight years ago, Rex Energy began drilling for shale gas on the outskirts of the Woodlands, and people like Fair say their well water suddenly turned rancid and gave them rashes after showering.“Smelled first. It got that rotten egg smell first, and then it started getting that brown color to it,” he said. Today, people here still don’t have clean water and travel weekly to nearby White Oak Springs Presbyterian Church for cases of donated clean water. They still blame fracking and the now-bankrupt Rex Energy for contaminating their wells. “Big corporation versus little guy, so who’s going to win?” In Plum, the state Department of Environmental Protection is now investigating whether a Huntley and Huntley drill site has contaminated a private well nearby. While drilling is facing stiff opposition in the northern suburbs, the state grand jury is now taking testimony about its environmental impacts. But does shale gas drilling pose a serious threat to our water supplies? State data and two recent scientific studies seem to say that the threat may be overstated. The evidence indicates that while water contamination from drilling is possible, it is also rare. In their study, Penn State scientists reviewed data from 1,385 shale gas wells in Bradford County and found only the possibility of contamination near seven of them. In addition, Yale University installed eight monitoring wells near drill sites in Washington County, drawing samples over two years. Yale detected no groundwater impacts, and while methane levels changed, their scientists concluded these were natural variations not related to drilling. “This is a very safe industry when it comes to impact on ground water quality,” geologist Fred Baldassare said. Early on, this was not the case — most notably back in 2009, when stray methane gas polluted some 64 water wells in Dimock, Pa. It inspired the movie “Gasland,” with people igniting gas out of their faucets.
'They're exploiting a broken system': Property owners decry pipeline procurement process — Much to Gary Erb’s chagrin, a natural gas pipeline now cuts across his 72-acre homestead in Pennsylvania. To his even greater chagrin, the Conestoga Township resident remains unpaid for the 6 acres of land that were taken from him under eminent domain to build the pipeline. With the help of a Virginia-based legal group, he is petitioning the U.S. Supreme Court to end what he and his lawyers say has become a common practice in the pipeline industry: taking the land first, and paying later. “They’re making millions in profit, and we still haven’t gotten a dime,” Erb said in a phone interview. “They’re exploiting a broken system.” There have been more than 200 instances of courts granting pipeline companies immediate possession of land, while at the same time deferring the issue of how much the property owners will be paid for it, said Robert McNamara, an attorney for the Institute for Justice, a libertarian public interest law firm based in Arlington that is representing Erb and others in similar situations. Those cases have occurred in Alabama, Florida, Georgia, Illinois, Maryland, Montana, New Jersey, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Virginia, and West Virginia, McNamara said. The pipeline affecting Erb was built by Tulsa, Oklahoma-based energy company Williams, which constructed the Atlantic Sunrise project to expand its pipeline network and carry gas fracked from the Marcellus shale formation in northeastern Pennsylvania to the Mid-Atlantic region and beyond. McNamara acknowledged that federal law gives energy companies the ability to invoke eminent domain to build pipelines. But the Natural Gas Act, the law that governs the land seizures, provides no mechanism for companies to take possession of the land without first negotiating a price with the landowner.
In Some Pennsylvania Pro-Fracking Corners, Name-calling, False Claims, and Swastika-Laden Images Circulate – DeSmog - Cabot Oil and Gas is a shale drilling company that, according to state regulators, botched its shale gas extraction operations in an area around Carter Road in Dimock, Pennsylvania, about a decade ago.Cabot has for years fought liability for locals’ contaminated water supplies and has remained in legal disputes long after reaching secret settlements with many Carter Road residents that reportedly included non-disclosure agreements. More broadly speaking, the evidence linking shale industry activity to drinking water contamination is already well established, not just by the U.S. Environmental Protection Agency, but also by the U.S. Department of Justice, state regulators (documenting thousands of spills at fracked wells), and countless peer-reviewed scientific papers. Nonetheless, Stark’s claim that fracking opponents are part of some sort of scheme was picked up by a major natural gasPR shop and by a far-right industry news service, Marcellus Drilling News (MDN), which mixes a sizable dose of slurs, name-calling, and prejudice into the news clips it circulates to subscribers daily, and whose editor is friendly with Stark and with Cabot. Run by Jim Willis, MDN has compared multiple fracking critics — everyone from state attorneys general to climate scientists to a group representing 16,000 doctors and medical students — to Nazis.One of Willis’s apparent favorite images, used to accompany more than two dozen articles, shows a bright green man wearing a gas mask, surrounded by a garish rainbow, with a giant swastika on his chest. “Enviro-Nazis Say Marcellus Pipelines Equal Global Warming,” a headline to one such piece reads. Willis also used the image next to his commentary on attorneys general investigating Exxon for potentially misleading investors about risks associated with climate change — or what Willis called “[u]nbridled, Nazi-like powers against private citizens and private companies by a state run amok…”How about the Pennsylvania Medical Society, founded in 1848 and representing 16,000 doctors and medical students across the state? That’s “controlled by a small and dedicated group of radical leftists” and “shockingly stupid,” Marcellus Drilling News said in a post adorned with the swastika graphic and decrying the group’s call for a ban on fracking in Pennsylvania.
Wolf aide won’t face charges following ethics investigation - The State Ethics Commission will not charge a Wolf administration official with violating the state’s Ethics Act, citing a lack of evidence against her. Wolf’s deputy chief of staff Yesenia Bane is married to a gas industry lobbyist and was the subject of a formal ethics complaint over her involvement in natural gas projects.In an April 19 letter to Bane, commission assistant counsel Jeffery Frankenburger wrote there is “insufficient evidence of a motivated, directed action on your part to obtain a private pecuniary benefit for your husband and/or his employers.”As StateImpact Pennsyvlania first reported in 2016, Yesenia Bane’s husband, John Bane, is a natural gas industry lobbyist (then for Buchanan Ingersoll & Rooney, and now for EQT). At the time, Yesenia Bane’s daily schedule showed she was routinely involved in matters related to her husband’s gas industry clients. Shortly after the story was published, she was reassigned to work on other issues.Frankenburger wrote, “your position, coupled with the employment of your husband as an industry lobbyist, created a perception that your actions in fulfilling the Governor’s policy agenda was a way for you to financially benefit your husband and/or his employers.” He said the commission could not meet the burden of “clear and convincing proof” that Bane had violated the Ethics Act.
Top environmental official’s reconfirmation hearing delayed over pipeline concerns -A state Senate committee postponed a planned confirmation hearing for one of Pennsylvania’s top environmental officials, after a bipartisan group of lawmakers raised concerns about his agency’s involvement in controversial gas pipeline project.The Senate Environmental Resources & Energy Committee met Tuesday morning to vote on the nominations of Department of Environmental Protection Secretary Patrick McDonnell and Cindy Adams Dunn, secretary of the Department of Conservation and Natural Resources.Gov. Tom Wolf nominated McDonnell and Dunn to their cabinet positions in 2016 and 2015, respectively. They’re now being considered for reconfirmation.The Senate committee questioned Dunn on Tuesday and voted unanimously to send her nomination to the full Senate.But it postponed its hearing for McDonnell, who did not appear at the meeting.Last week, five senators from Chester and Montgomery counties wrote to committee Chairman Gene Yaw, R-Lycoming, and its ranking Democrat, John Yudichak, of Luzerne County, asking them to put McDonnell’s reconfirmation on hold while county and state officials investigate the Mariner East II Pipeline project.The pipeline started transporting natural gas across 17 counties in southeastern Pennsylvania in December 2018. That came after a two-year construction period that was prolonged by multiple regulatory shutdowns and technical problems.Sunoco Pipeline LP, which constructed Mariner East II, and its parent company Energy Transfer Partners are the subject of a joint investigation by state Attorney General Josh Shapiro’s office and the Chester County district attorney. The probe was spurred by allegations of criminal misconduct related to the pipeline’s construction.In their April 25 letter, Democratic Sens. Andrew Dinniman, Katie Muth, Tim Kearney, and Daylin Leach, along with Republican Tom Killion, said that the investigations “specifically cite state regulators” including the Department of Environmental Protection, which has granted permits for the project and levied fines against Sunoco for non-compliance with state regulations. A separate investigation by the Pennsylvania State Ethics Commission also involves McDonnell’s communication with staff in Wolf’s office, the letter says.
Southwestern Energy Sets Record Drilling Pennsylvania Lateral 18000 Feet-Plus -Southwestern Energy Co. beat several of its own records, including those for completion stages, drilled footage and lateral lengths, during its first full quarter as an Appalachian pure-play operator. COO Clay Carrell said the company set a new pad record of 8.3 completion stages per day and drilled 8,300 feet in a 24-hour period in the first quarter. A Marcellus Shale well in Tioga County, PA, also tested at a record 39 MMcf/d. Southwestern added that an 18,683-foot lateral it drilled set a state record in Pennsylvania, while another 18,000-foot lateral it drilled during the first quarter set a company record in West Virginia. CEO Bill Way said the company’s average lateral lengths are expected to increase by 35% to over 10,000 feet this year.The company produced 182 Bcfe in 1Q2019, compared to 226 Bcfe in the year-ago period and 234 Bcfe in the fourth quarter. Southwestern sold its Fayetteville Shale assets in December, which accounted for 67 Bcf of production in 1Q2018.But in Appalachia, where the company operates in the northeastern and southwestern parts of the basin, production increased 14% year/year during the first quarter, while liquids production from the basin was up 33% to 71,740 b/d. Now one of the largest natural gas liquids (NGL) producers in the basin, Southwestern is guiding for a 20% annual increase this year in liquids production, or 75,600 b/d. To do that, the primary focus is the Southwest Appalachia division, where assets in southwestern Pennsylvania and northern West Virginia are to receive the bulk of this year’s capital budget. While the Northeast Appalachia division drove dry gas production at 1.24 Bcf/d, the Southwest Appalachia division accounted for the majority of NGLs at 71,680 b/d, thanks in large part to the area’s liquids-rich Marcellus Shale. Those assets produced 345 MMcf/d of natural gas.Management said the company continues to evaluate the Upper Devonian and Utica shales throughout its footprint, along with the Upper Marcellus interval.The company drilled its fourth Upper Devonian well during the first quarter and plans to complete it in the coming months. It also plans to drill three Upper Marcellus wells in Pennsylvania during the second quarter. After its first Utica test in 2017, management again said the company plans to continue gathering data from those wells until it builds more of the asset into its program.
New Wells to Hit Moon and Back -- More than 620,000 miles of new oil and gas wells will be drilled over the next five years, according Rystad Energy’s latest forecasts. That’s enough to get to the moon and back with distance to spare. The energy research company predicts that the number of onshore and offshore oil and gas wells drilled globally will increase to around 65,000 this year. Activity levels are then forecasted to remain around this level through 2023. “North America will be in a league of its own thanks to the shale boom. Nearly six in ten new wells on the continent will be drilled in shale basins,” Erik Reiso, head of consulting at Rystad Energy, said in a company statement. “These wells are typically longer than other supply segment wells. This helps explain why shale wells represent around 80 percent of the distance drilled in North America by 2023,” he added. Reiso also revealed that the top four offshore operators will add a quarter of new offshore wells going forward, whereas the top ten in the onshore market represent around one-third of new wells from 2019 to 2023. “[This implies] a much more diversified player landscape,” Reiso said. Earlier this month, Rystad Energy revealed that free cash flow for public exploration and production companies “skyrocketed” last year to almost $300 billion. “For these players, 2019 could turn out to be another blockbuster year,”
Gulfport Energy: Production To Rebound After Q1 2019 - Gulfport Energy saw its Q1 2019 production fall significantly compared to Q4 2018 as it didn't have many wells turn to sales during Q4 2018 and Q1 2019. Gulfport still expects that its average 2019 production will be close to its Q4 2018 production level since its completion activity is starting to ramp up. Although natural gas prices have been somewhat weak, Gulfport appears to be 101% hedged on its 2019 natural gas production (at guidance midpoint), so gas prices aren't going to meaningfully affect its cash flow for this year. The reduction in activity levels can be seen in how many net wells Gulfport turned to sales in various quarters. During each of Q2 2018 and Q3 2018, Gulfport had 15.5 net wells turned to sales for the Utica Shale. This helped contribute to Gulfport's Q3 2018 production averaging 1,427.5 MMcfe per day, around 11% above Q1 2018 levels. Gulfport's activity in Q4 2018 slowed down, with the number of net wells turned to sales around half that of Q3 2018. This contributed to Gulfport's Q4 2018 production falling around 2% from Q3 2018 levels. The drop in production from Q4 2018 to Q1 2019 was even more significant at -9% since Gulfport only turned 8.8 net wells to sales in Q1 2019, and 6.0 of those net wells barely contributed to the quarter's numbers since they started production in the last few days of the quarter. Production is expected to pick up significantly in Q2 2019 and Q3 2019 due to the large number of wells (more than in Q3 2018) that Gulfport plans to turn to sales. This may result in Q2 to Q4 2019 averaging over 1,400 MMcfe per day, over 10% higher than Q1 2019 production levels.
EPA Declines to Regulate Waste as Ohio Valley Fracking Booms - The U.S. Environmental Protection Agency last week said it will not strengthen regulations on waste created by oil and gas production, a move that could affect communities across the Ohio Valley where the oil and gas industry is booming in the Appalachian Basin. No federal agency fully regulates oil and gas drilling byproducts — which include brine, or salty water laced with chemicals and metals, as well as similarly-contaminated sludge, rock and mud — leaving tracking and handling to states. EPA’s decision released last week stems from a 2016 lawsuit filed by environmental groups, who had petitioned the agency to make new rules for how it regulates oil and gas waste. When the agency failed to respond, a federal judge required EPA to formally respond by this spring.The decision reaffirms that states are in charge of regulating the disposal of chemical-laced and often radioactive liquids and solids created by the oil and gas industry.Environmental advocates decried the move. They argue regulations for both onsite storage of waste and offsite disposal vary widely from state to state.A 2016 report from the Center for Public Integrity calls the radioactive waste stream from horizontal oil and gas operations “orphan waste” because no single government agency is fully managing it. Each state is left to figure out its own plan. Advocates say EPA rules would create a baseline for how millions of tons of liquid and solid waste should be disposed.“In a word or a sentence, the Trump administration hung out to dry communities that host oil and gas development,” said Aaron Mintzes with Earthworks, one of the group’s that pursued this issue in court.Mintzes said a loophole in the Resource Conservation and Recovery Act, a federal law that governs how solid waste should be disposed, allowed EPA in 1988 to classify waste from oil and gas operations as “non-hazardous.” This gives operators wide latitude in how to dispose of it.For example, some states allow drillers to dispose of wastewater by injecting it back into the ground, but that can lead to pollution and even earthquakes.In its decision document, EPA acknowledged that the rise of hydraulic fracturing, in which drillers go much deeper and are more likely to bring up waste products with naturally-occurring radioactivity, has changed the composition of waste. Ultimately, however the agency said state programs appear to sufficient.
Ethane storage seen as key to revitalization of Appalachia - (AP) — Plans are underway in Appalachia to create two underground facilities to store ethane, a byproduct of natural gas drilling seen as integral to revitalizing a region still struggling from the loss of industrial and manufacturing jobs decades ago. Experts say the availability of storage facilities will help the tristate region of eastern Ohio, southwestern Pennsylvania and northern West Virginia attract petrochemical plants that turn ethane into raw plastic and, the hope is, attract manufacturing companies to make products ubiquitous to modern life. Energy Storage Ventures is awaiting approval of state permits to construct an underground facility to store ethane and other natural gas liquids, said David Hooker, the Colorado-based company's president. Meanwhile, Appalachia Development Group in Charleston, West Virginia, wants to build a much larger storage facility somewhere in the tristate region. Company President and CEO Steven Hedrick said the creation of a petrochemical and plastics industry could lead to billions of dollars in investment and tens of thousands of jobs in the coming years. Technological advances in hydraulic fracturing, better known as fracking, have helped fuel an oil and gas boom in Appalachia and southwest states like Texas. It has also provided an abundant supply of ethane that is driving the expansion of the petrochemical industry in its epicenter along the Gulf Coast of Texas and Louisiana, where most ethane storage also is located. "The people of Appalachia deserve this opportunity," Hedrick said.
EQM says 'unlikely' to complete Mountain Valley natgas pipe in 2019 -(Reuters) - EQM Midstream Partners LP said Tuesday it was “unlikely” to complete the long-delayed $4.6 billion Mountain Valley natural gas pipeline from West Virginia to Virginia during 2019 due to ongoing legal and regulatory challenges.EQM, however, said in its first-quarter earnings report that the joint venture building the project “continues to target a full in-service date for the fourth quarter 2019.”EQM Chief Executive Thomas Karam told analysts on a call that the project was about 80 percent complete and the company remained confident it would get the pipeline built.When EQM started construction in February 2018, it estimated Mountain Valley would cost about $3.5 billion and be completed by the end of 2018.The 303-mile (488-km) pipeline is designed to deliver 2 billion cubic feet per day (bcfd) of gas.
MVP Start-Up This Year 'Unlikely,' but Challenges Show Pipe's Value, Says NextEra Exec - After an unfavorable federal court decision earlier this year, the Mountain Valley Pipeline (MVP) probably won’t meet its target in-service date in late 2019, but the regulatory setbacks and rising costs could serve to further demonstrate the project’s value.That’s according to NextEra Energy Inc. CFO Rebecca Kujawa, who acknowledged during a conference call to discuss 1Q2019 results that legal setbacks make it “unlikely” that MVP will enter service by 4Q2019 as previously planned.Kujawa specifically pointed to a February decision by the U.S. Court of Appeals for the Fourth Circuit to deny an en banc rehearing of an earlier ruling overturning the Atlantic Coast Pipeline’s (ACP) permit to cross the Appalachian National Scenic Trail. Backers for the 300-mile, 2 million Dth/d MVP had been watching the case closely, as their project also aims to cross the trail and could be jeopardized by the court’s ruling. “While we continue to advance MVP toward ultimate completion and we expect to ramp up construction activities in the coming months, the Fourth Circuit's decision not to pursue an en banc review on the Atlantic Coast Pipeline Appalachian Trail crossing authorization presents a challenge to both timing and cost,” she said. “Since the original court decision, we have been working with our project partners on several alternatives to address the issue, and we continue to vigorously pursue these paths. “At this point our previously announced fourth quarter 2019 target in-service date appears unlikely. We are continuing to work through options with our partners, and we'll provide a further update in the near future.” MVP is a joint venture of EQT Midstream Partners LP, NextEra US Gas Assets LLC, Con Edison Transmission Inc., WGL Midstream and RGC Midstream LLC. The greenfield project aims to cross from West Virginia into Virginia to deliver Marcellus and Utica shale gas to an interconnect with Transco (aka, the Transcontinental Gas Pipe Line) in Pittsylvania County. MVP, like the similarly routed ACP, has faced significant legal and regulatory setbacks and rising costs. As a large pipeline attempting to traverse sensitive terrain along the Virginia/West Virginia border, the project has been a prime target for environmental groups in the proxy war over fossil fuels that has figured prominently in FERC proceedings and in the courts. MVP’s sponsors have shown no signs of giving up on the project, which could prove even more valuable than previously thought given the extent of the challenges the developers will have overcome getting the pipe in the ground, according to Kujawa.
W.Va. DEP Changes State-Imposed Regs for Stream Crossing Permits - West Virginia environmental regulators have changed some state-imposed conditions to a federal permit issued for stream crossings for natural gas pipelines approved by the U.S. Army Corps of Engineers. In a letter sent to federal regulators last week, West Virginia Department of Environmental Protection (WVDEP) officials submitted a series of changes to the state-imposed onditions for the Nationwide Permit 12.The changes include the removal of a 72-hour time restriction for construction of interstate natural gas pipelines under waterways in certain cases.To cross under streams, rivers and wetlands, major pipeline projects need a permit from the Army Corps under Section 404 of the Clean Water Act. The permits detail how much sediment or debris can end up in waterways during construction of interstate pipelines, but also dams, levees and major highway projects.The Nationwide Permit 12 is one Section 404 permit. It is used to authorize utility line construction as well as to authorize the building of natural gas pipelines.Under federal law, states can add special conditions to those permits. WVDEPbegan the process of updating West Virginia's 401 Water Quality Certification standard and special conditions in August 2018.The WVDEP previously required interstate pipelines must be built under major rivers within 72 hours.This caused problems for the 303-mile Mountain Valley Pipeline. Last year, a federal court threw out the project’s Section 404 permit after environmental groups argued pipeline developers’ own planning documents showed they couldn’t meet that 72-hour waterway crossing deadline. Currently, the project is awaiting new Section 404 permits and can’t do construction under waterways.The new modifications clarify that stream crossing methods that are done when streams are flowing must be completed within 72 hours, but that stream crossings where waterways are damned, also called the "dry ditch" method, are exempt from the 72-hour requirement. Construction and access bridges and crossings on Section 10 rivers are also exempt from the 72-hour requirements, the letter states.
Pipeline Protester Arrested, Faces Felony Charge — A West Virginia official says a North Carolina man protesting the Mountain Valley Pipeline has been charged with a felony. Monroe County Circuit Court deputy clerk Andrea Preston told the Bluefield Daily Telegraph that 22-year-old Holden Dometrius was charged Thursday with threat of terrorist acts after chaining himself to a piece of equipment in the pipeline's path. He also faces lesser charges of trespassing, obstructing and tampering with a vehicle. According to the group Appalachians Against Pipelines, it is the first felony charge against a protester. The Mountain Valley Pipeline is a 300-mile (483-kilometer) natural gas pipeline that is being constructed in West Virginia, Virginia and North Carolina. It has used eminent domain to acquire project space. It wasn't immediately clear whether Dometrius has an attorney.
After Approving Enbridge Permit, Massachusetts’ Environment Secretary Lands Job with Project’s Contractor - Massachusetts’ Secretary for Energy and Environmental Affairs, Matthew Beaton, has accepted a position at a consulting firm working for oil and gas pipeline builder Enbridge on a controversial project for which Beaton’s Department of Environmental Protection (DEP) recently approved a crucial permit.Governor Charlie Baker’s administration announced on Monday that Beaton has been hired as vice president for renewable energy and emerging technology at TRC Companies, a large environmental and engineering firm working mainly for the oil and gas industry.The move comes less than four months after the DEP approved Enbridge’s controversial air permit for its planned compressor station in Weymouth, outside Boston, as part of the company’s Atlantic Bridge project. TRC Companies is Enbridge’s environmental contractor in the project and has been working on Enbridge’s pipeline projects in the Northeast for the past several years. Last year alone, Enbridge’s subsidiary, Algonquin Gas Transmission, paid TRC Companies nearly $1.8 million, recent Federal Energy Regulatory Commission filings show.The Office of Energy and Environmental Affairs did not respond to several questions from DeSmog, including when Beaton began his job negotiations with TRC.As DeSmog has extensively reported, the Atlantic Bridge project and its compressor station, which will help pump natural gas through pipelines, have been fraught with potential conflicts of interest and improprieties. In the latest revelation, DEPfailed to include in the station’s health impacts assessment unreported air samplings it conducted at the Weymouth site.Those samplings showed elevated levels for several carcinogens and other pollutants, including 1,3-butadiene and acrolein.Citizens and experts who are appealing the permit have included these revelations in their appeal, which the DEP will hear next month. Environmental activists have mixed reviews of Beaton’s record. During his tenure, the state has facilitated a massive investment in offshore wind off the coast of Martha’s Vineyard and bolstered climate adaptation and mitigation programs.
New York State Bans Offshore Oil and Gas Drilling - Governor Andrew M. Cuomo hammered home New York's vehement opposition to harmful and outdated offshore drilling Monday by signing A. 2572/ S. 2316. The legislation, sponsored by Assemblyman Steve Englebright and Senator Todd Kaminsky and passed overwhelmingly by the Legislature the first week of February, amends state law to:
- Ban oil and gas exploration, development and production in state coastal and tidal underwater land; and
- Prohibit construction of any new infrastructure in New York to transport oil and natural gas developed in the North Atlantic Planning Area, the federal government's designation for federal waters offshore the tri-state area and New England.
Governor Cuomo has made crystal clear his opposition to drilling offshore New York and this ban stands in sharp contrast to the Trump administration's extreme oil and gas leasing proposal to open virtually all ocean waters more than three miles from shore to oil and gas drilling — the entire East Coast, West Coast, Gulf Coast and Alaska. The new law drives home state opposition to offshore oil and gas development and constructs an important roadblock to any efforts to bring ashore oil drilled throughout New England and the tri-state area. But New York will also need to keep fighting the Trump administration's planned expansion of offshore drilling. While the Trump administration's revised proposal appears to be on hold for now, the administration's interest in opening our waters to more offshore drilling remains and the drilling planning process could restart at any moment.
N.Y. Bans Offshore Drilling in Effort to Prevent Trump Expansion -- New York State has banned offshore oil and natural gas drilling along its Atlantic coastal waters in an effort to block a Trump administration proposal. Gov. Andrew Cuomo (D) signed legislation (A.2572/S.2316) on April 29 that bars state agencies from granting permits for drilling or oil or gas exploration on state-owned underwater coastal lands, his office announced. The law, effective immediately, also prohibits the leasing of land that would lead to an the increase of oil or natural gas production from federal waters, according to the measure. The legislation, passed by the state Senate and Assembly in February, is in response to the Trump administration’s plans to expand offshore drilling off most U.S. coastal waters. Interior Secretary David Bernhardt in an April 25 Wall Street Journal article said those plans may be on hold indefinitely after a federal ruling upheld an Obama-era ban on drilling in the Arctic and Atlantic oceans. The drilling plan has received pushback from officials in several states, with California, Delaware, Maryland, New Jersey, and Oregon enacting laws blocking expansion of federal oil and gas leasing off their shores, according to the announcement. Other states have introduced similar measures including Connecticut, Florida, Georgia, Massachusetts, New Hampshire, and Rhode Island and South Carolina. “This bill says no way are you going to drill off the coast of Long Island and New York, because we must lead the way as an alternative to what this federal government is doing,” Cuomo said.
U.S. still processing Atlantic seismic permits despite drilling plan delay (Reuters) - The U.S. Interior Department is still processing permit applications for companies to conduct seismic testing in the Atlantic - a precursor to drilling - despite shelving its plan to vastly expand offshore drilling, a spokeswoman said on Monday. Atlantic coastal state lawmakers, businesses and conservation groups are adamant that Interior should not allow seismic testing - a process that often uses powerful air guns to map resources below the ocean floor - arguing the surveys hurt marine life, such as the endangered North Atlantic right whale. Newly confirmed Interior Secretary David Bernhardt said last week the agency’s five-year plan for oil and gas drilling on the Outer Continental Shelf (OCS) would be sidelined indefinitely after a March court ruling blocked drilling in the Arctic and part of the Atlantic Ocean. But Interior’s Bureau of Ocean Energy Management, which is responsible for managing energy development on the OCS, continues to review the applications of a half-dozen seismic testing companies awaiting permits to test for oil and gas drilling potential on the Atlantic Ocean floor. “BOEM is continuing to process the permit applications for conducting seismic surveys in the Atlantic, consistent with applicable law,” BOEM spokeswoman Tracey Moriarty said in an emailed statement on Monday..
Do oil and ice mix? Researchers study winter oil spills in the Straits --The continued operation of Line 5, which is now more than 65 years old, carrying up to 540,000 barrels of crude oil a day en route from Superior, Wisconsin to Sarnia, Ontario, is a source of concern for many in the Great Lakes region. In a survey conducted last fall through the same study program that Gunn is a part of, 44 percent of Michigan residents who were familiar with the pipeline said they were “extremely concerned” about a spill. For those in the scientific community, some of those concerns are based on the fact that there has been no comparable case study showing the potential effects of a massive oil spill into a large freshwater body. Scientific research has attempted to fill in some of those gaps, and researchers from several different universities and agencies have developed models showing possible best- and worst-case scenarios in a variety of open water conditions on the Great Lakes. Some studies have even looked into marginal ice cover conditions. But Gunn says there is still a major blind spot when it comes to a consolidated ice cover. That’s what happens to the Straits in the peak of the winter season, when water currents from Lakes Michigan and Huron converge, pushing all of the ice into a single mass that covers 90 to 100 percent of the surface. Gunn’s three-day fact finding mission is one step in an ongoing process contributing to the general body of knowledge on some of those issues. He and four other individuals are in the middle of a one-year pilot study, funded by MSU’s Institute for Public Policy and Social Research, looking into the perceived and actual risks associated with Line 5. The other researchers involved include assistant professors Doug Bessette and Michelle Rutty, associate professor Robert Richardson and professor Volodymyr Tarabara. While on the Straits, Gunn used ground-penetrating radar and global position technology to measure the depth and roughness of the ice. The general hypothesis is that the rougher the ice is, the more likely it is to trap the oil in one place; and the thicker the ice is, the less likely oil is to spread above the surface. Water currents in the Straits are less pronounced when covered in ice because they are not as influence by wind conditions, but currents still exist beneath the surface. That would also impact where the oil goes. And there are concerns that having a thick, reflective sheet of ice covering the water will make it harder to locate the oil if it were to spill.
Michigan AG: I'll move to shut oil pipeline if talks fail (AP) — Michigan’s attorney general pledged Monday to move to shut down an oil pipeline in the Great Lakes if the governor doesn’t find a “swift and straightforward” resolution to the contentious issue. Gov. Gretchen Whitmer last month halted state agencies’ work to facilitate construction of a tunnel beneath the lakebed to house a new segment of Line 5 in the channel where Lakes Huron and Michigan meet, pointing to a legal opinion from Attorney General Dana Nessel while citing concerns that her Republican predecessor’s plan would keep the existing 66-year-old pipeline in the water too long. But the Democrat said this month she was open to still building the tunnel. Her administration is in talks with pipeline owner and operator Enbridge. “I respect the Governor’s effort to find a swift and straightforward resolution to this issue, but if unsuccessful I will use every resource available to our office to shut down Line 5 to protect our Great Lakes,” Nessel, a Democrat who promised during her campaign to close the pipeline, said in a short statement. A spokeswoman later said while Nessel was reluctant to impose a specific deadline on Whitmer’s efforts with Enbridge, she was hopeful that the governor by June 1 would have a plan for decommissioning Line 5. “The Attorney General shares the Governor’s sense of urgency to remove the pipeline from the Great Lakes at the earliest possible moment,” said Kelly Rossman-McKinney. Nessel released an opinion last month saying a law enacted in December to implement former Gov. Rick Snyder’s tunnel deal is unconstitutional. As a candidate, Nessel said she would seek a court injunction to shut the pipeline by alleging that Enbridge violated a 1953 state easement. Although the federal government regulates oil pipelines, Michigan owns the lake bottom and granted the easement allowing the pipeline to go there. Line 5 carries about 23 million gallons (87 million liters) of crude oil daily between Superior, Wisconsin, and Sarnia, Ontario. The underwater segment that traverses the Straits of Mackinac is divided into two side-by-side lines.
Report warns Enbridge, DTE, part of pipeline "bubble" that could burst - A new report by an energy watchdog group says companies are betting over a trillion dollars in risky gas pipeline projects. Global Energy Monitor says these projects are hugely expensive - so the payback is over decades. Climate scientists say we need to stop burning fossil fuels completely by 2050. That means the pipelines could become stranded assets for the companies. Enbridge Energy is engaging in a particularly risky expansion, according to Ted Nace, co-author of the report. He says Enbridge, the world's third largest pipeline company, has a heavy debt load. That could leave the company at risk of needing government bailouts if global demand for natural gas stays stagnant, or falls. Nace says investors are already turning away from fossil fuel projects over concerns about climate change. That makes Enbridge Energy's plan to put its Line 5 into a tunnel under the Straits of Mackinac a risky bet, he says. "After they finish building that tunnel, will anyone be interested in the product that's going through the tunnel?" he asks. In a statement, a spokesman for Enbridge said the company has "the scale, financial flexibility and market access to be an energy leader in the gathering, processing and transporting of crude oil, liquids and natural gas across North America."
Dominion to resume work on US Atlantic Coast natgas pipe in third quarter (Reuters) - Dominion Energy Inc said on Friday it expects to resume construction of the $7.0 billion-$7.5 billion Atlantic Coast natural gas pipeline from West Virginia to North Carolina in the third quarter and complete it by early 2021, despite legal and regulatory challenges. The company still needs to resolve two major legal cases before it can complete the project, which has been on hold since late last year. Atlantic Coast is designed to carry 1.5 billion cubic feet per day of gas from the Marcellus and Utica shale in Pennsylvania, Ohio and West Virginia to the U.S. Southeast. One billion cubic feet is enough gas for about five million U.S. homes for a day. Dominion suspended construction in early December after the U.S. Court of Appeals for the Fourth Circuit stayed a permit from the U.S. Fish and Wildlife Service that authorized building the pipe in areas inhabited by threatened or endangered species. The company said oral arguments in that case will be presented on May 9, with a decision expected about 90 days later. Dominion said a positive decision would allow it to restart partial construction in the third quarter. Dominion is also seeking an order from the U.S. Supreme Court overturning a Fourth Circuit decision that invalidated the U.S. Forest Service’s authorization to build the pipe across the Appalachian Trail. That case, if the Supreme Court takes it up, would be heard in 2020, so full construction would resume after that decision, Dominion said. When the company started work on the 600-mile (966-km) Atlantic Coast in the spring of 2018, Dominion said it expected the project would cost an estimated $6.0 billion-$6.5 billion and be completed in late 2019. Since then, Dominion has upped the project costs and extended the timeline.
Piedmont Natural Gas to start soon on $250M storage project in NC, names contractor Piedmont Natural Gas has chosen Matrix Service Inc. as its principal contractor for the $250 million liquefied natural gas (LNG) storage project it proposes to build in Robeson County. Construction could start as early as the end of this month, says Piedmont spokeswoman Tammie McGee. The company now estimates that about 150 workers will be employed during construction of the facility. When the facility is completed in 2021, it will employ as many as 12 full-time employees. The project is designed to store natural gas for use during peak demand on cold winter days, particularly as a hedge against the polar-vortex events that sent temperatures to record lows in the Carolinas over the last few years. The project is being built about 15 miles northwest of where the $7.5 billion Atlantic Coast Pipeline is supposed to end near Lumberton. That pipeline is designed to transport natural gas collected in the Marcellus and Utica shale fields from West Virginia to southeastern North Carolina. The pipeline is on hold for now, with construction blocked in federal courts. But Piedmont says the projects are not related. The Robeson facility can store gas shipped by either the ACP, if it is completed, or the Transco Pipeline running through central and western North Carolina, which is currently the only interstate pipeline transporting gas here. The 1 billion-cubic-foot storage facility will cover about 60 acres of a 685-acre tract between Maxton and Red Springs already owned by Piedmont. When finished, this will be the fourth LNG facility owned and operated by Piedmont. The Charlotte-based natural gas company operates storage facilities in Huntersville and Bentonville as well as in Nashville, Tennessee.
Bills Bans 2 of 3 Forms of Oil, Gas Fracking in Florida (AP) — Two forms of fracking for oil and natural gas exploration would be banned in Florida under a bill that cleared state House and Senate committees Tuesday, leaving in place a third technique opponents say would still threaten water supplies and the state's fragile environment.The House Appropriations subcommittee on agriculture and natural resources voted 10-2 for the bill, which would permit a rock-dissolving technique called matrix acidizing but ban two other common forms of fracking. Later Tuesday, the Senate Innovation, Industry and Technology Committee voted 6-4 for a similar bill.Environmental groups call that a loophole, putting underground aquifers at risk of contamination from potentially dangerous chemicals. The petroleum industry also opposes the bill because it would halt use of other fracking techniques.But legislators who voted in favor called the measure a major step forward in curbing the practice in Florida."Is it completely perfect? Is it everything we want? No, it's not," said Democratic Rep. Kristin Jacobs of Coconut Creek. "We have to do something. The idea that we're not going to act because it isn't perfect, I reject."The Senate version also leaves in place the matrix acidizing fracking procedure."If you don't ban that you don't ban fracking," said Democratic Sen. Oscar Braynon of Miami Gardens.Only New York, Vermont and Maryland have enacted total bans on fracking, which uses high-pressure liquids to create cracks in underground rock, allowing pockets of oil and gas to flow freely. Nationwide, fracking has been credited with dramatically increasing U.S. oil and natural gas production, with about two-thirds of the nation's active wells using fracking techniques. Yet critics have long been concerned about environmental issues, including a sharp increase of earthquakes in Oklahoma, possible water and air contamination and use of deep ground injection to dispose of waste.In Florida, environmental groups say the state's porous limestone rock makes fracking an even greater threat, particularly since most of the state's drinking water comes from underground aquifers. And that, they say, includes the chemical-laden matrix acidizing procedure that oil industry officials say is most commonly used to clean and maintain wells. "From our perspective it's not a fracking ban unless all forms of fracking are banned," said Kim Ross of Rethink Energy Florida.
Seismic Blasting Permits Move Forward Even as Plans for Offshore Drilling are Paused - The Trump administration has temporally halted plans to open most of the nation’s coast, including the Atlantic continental shelf, to offshore drilling, but seismic airgun blasting may still happen.According to the Bureau of Ocean Energy Management (BOEM), permitting for seismic surveys in the Atlantic Ocean continues to move forward.Seismic surveys involve the use of undersea airguns to search for fossil-fuel deposits buried deep beneath the seafloor. The blasts can occur for days and weeks, using multiple cannons that can be heard for thousands of miles. The sound damages and disorients sea life such as whales, dolphins, and sea turtles and destroys food sources like fish eggs and larvae.The National Marine Fisheries Service has issued incidental harassment authorizations (IHAs) to five companies, which allow them to harm sea life while conducting surveys between Delaware and Florida. The companies await final permits from BOEM.According to a business group representing the five companies — ION GeoVentures, based in Houston; Spectrum Geo Inc. of England; TGS-NOPEC Geophysical Company of Norway; WesternGeco of England, a division of Schlumberger; and CGG, based in Paris — they all intend to continue seeking the permits.According to Oceana, seismic airgun surveys in the Atlantic Ocean could injure 138,000 whales, including the endangered North Atlantic right whale.
Trump Admin Maps the Ocean for Industry Exploitation - As part of its Blue Economy initiative, the Trump administration has developed a map to provide oceanindustries information on areas ripe for oil rigs and floating factory farms.The map brands these areas as "ocean neighborhoods." Though that sounds pretty cozy, it is nothing close to reality. What's in store for these "neighborhoods?" Massive rigs and other infrastructure, increased vessel traffic and noise, the inherent risk of dirty oil spills and blowouts and unavoidable toxic discharge. Although the map touts "a fountain of data for use by industry," it ignores several components of the ocean ecosystem and certain coastal communities that are already struggling and need increased protections — not increased development. Users can view the migratory pathways of sharks and fish — but not other migratory species like seabirds and turtles. You can see critical habitats designated pursuant to the Endangered Species Act, but not the habitats for every threatened or endangered species (not all species receive critical habitat protection). Finally, feeding areas for cetaceans (whales, dolphins and porpoises) are shown, but what about breeding areas for these struggling species? And, where are the other species protected under the Marine Mammal Protection Act: sirenians (manatees and dugongs) and marine carnivores (like seals, otters, walrus and polar bears)? Trump's new industry-focused map does not include this vital information.While we're at it, what about coastal communities throughout the Gulf of Mexico that are already bearing the brunt of extensive offshore drilling? Thanks to offshore drilling, they are struggling with basic needs like drinkable water and breathable air. But, the map doesn't pay them any credence. Trump must not see them as a priority in determining where to develop next. Since taking office, Trump has prioritized rolling back decades of progress in ocean protection policy. Both former presidents George W. Bush and Barack Obama took steps toward establishing a strong foundation for healthy oceans with protections for marine mammals, the creation of sanctuaries and monuments, improving U.S. fisheries and crafting policies to shield massive swaths of our waterways from dirty drilling activities. Trump has attempted to abolish much of that progress. This map is just one more Trump handout to Big Oiland others in the booming business of ocean industrialization.
Trump loosens safety rules for offshore drilling - Tougher safety standards for offshore oil and gas drilling put in place after the 2010 Deepwater Horizon explosion will be loosened under a regulatory overhaul announced by the Interior Department Thursday. The Trump administration has sought to rollback offshore regulations as a means to increasing production in the Gulf of Mexico and other offshore regions, estimating the changes will save the industry $824 million over the next decade. "The rule eliminates unnecessary regulatory burdens while maintaining safety and environmental protection offshore," Interior Secretary David Bernhardt said in a statement. "Under President Trump's leadership, America is a leader on energy resulting in greater security and economic prosperity."The announcement comes as a victory for oil companies, which have lobbied for changes to the Well Control Rule since it was created in 2016 following the recommendations of a bipartisan commission on offshore oil drilling safety. "The 2016 Well Control Rule, while well-intentioned, was flawed with technical problems that actually detracted from the goal of safe operations," National Ocean Industries Association President Randall Luthi said in a statement. "The oil and gas industry and federal regulators share a common goal: safe, efficient and environmentally responsible development of energy resources." Environmentalists have fought to stop the rollback since a draft proposal was released in late 2017, arguing the rule changes gave oil companies too much slack and risked a repeat of the Deepwater Horizon incident, in which 11 people were killed and more than 3 million barrels of crude spilled into the Gulf of Mexico. Among the changes activists are objecting to is the removal of a requirement that oil and gas drillers hire a third party to test safety equipment like blow out preventers and weakening of a regulation requiring companies to maintain real-time, onshore monitoring stations to make sure wells are being drilled safely.
'Recipe for Disaster': Trump Guts Offshore Drilling Rules Put in Place After Deepwater Horizon Spill - Just two weeks after the nine-year anniversary of the BP Deepwater Horizon disaster—the largest ocean oil spill in U.S. history—the Trump administration on Thursday moved to dismantle offshore drilling regulations aimed at preventing another catastrophic leak. "These rollbacks are a hand out to oil company CEOs at the cost of endangering the lives of their workers and heightening the risk for another environmental catastrophe."—Chris Eaton, EarthjusticeThe White House's revised Well Control Rule—which could save the fossil fuel industry close to a billion dollars over the next decade—was unveiled by Interior Secretary David Bernhardt, a former oil lobbyist who advocacy groups have described as a "walking, talking conflict of interest."Diane Hoskins, campaign director at Oceana, called the Trump administration's move "a major step backward in offshore drilling safety.""Gutting the few offshore drilling safeguards established in wake of the BP Deepwater Horizon disaster is reckless and wrong," Hoskins said in a statement. "More drilling and less safety is a recipe for disaster. We should be implementing new safety reforms, not rolling back the few safety measures currently in place."The rule will go into effect 60 days after it is published in the Federal Register, which could happen as early as Friday.According to the New York Times, one of the major components of the Trump administration's plan "is a significant reduction in the requirement for oil companies to test fail-safe devices called blowout preventers, which are intended to be a last line of defense against disasters like Deepwater Horizon."The White House's revisions also included slight tweaks to the language of existing regulations that environmentalists warned could have massive effects. As the Washington Post reported: "Safety-bureau regulators removed a key word from language describing the level of down-hole pressure the agency requires operators to maintain in a given well to avoid an accident. The word it removed is 'safe.'"
Company to pay $3.5M after Mississippi, Alabama oil spills — An oil company has agreed to pay federal and Mississippi regulators $3.5 million in penalties and do more to prevent oil spills under a legal settlement filed last week. Federal and state regulators sued Denbury Resources of Plano, Texas, on Thursday, and filed a proposed consent decree at the same time. Members of the public have 30 days to comment on the settlement. The lawsuit , filed at the behest of the U.S. Environmental Protection Agency and the Mississippi Department of Environmental Quality, documents oil spills in nine oil fields in central and southern Mississippi, plus one in Citronelle, Alabama, between 2008 and 2015. The EPA says Denbury dumped about 7,000 barrels of oil or mixtures of oil and water. The lawsuit also alleges Denbury failed to submit required facility response and spill prevention and control plans. Denbury isn't admitting fault, but under the consent decree it would agree to enhanced reporting responsibilities as well as a "mechanical integrity program" that calls for surveying and inspecting operations and making repairs to pipelines, tanks and machinery based on how severe an oil spill threat each problem poses.
Republicans Coax Trump to Scrap U.S. Ship Waiver Plan - President Donald Trump pledged he wouldn’t waive requirements that American vessels be used to transport natural gas among U.S. ports, Republicans defending the mandates said after a White House meeting on the issue Wednesday. The lawmakers from Alaska and the shipbuilding Gulf Coast states of Mississippi and Louisiana said Trump ruled out relaxing mandates under the Jones Act in order to facilitate shipments of liquefied natural gas to Massachusetts and Puerto Rico. “He’s not going to make any changes to the Jones Act,” said Senator John Kennedy, a Republican from Louisiana. “The president’s not one to beat around the bush. He was pretty categorical.” The pledge marks a rapid reversal in White House thinking -- and a victory for U.S. shipbuilding interests and their allies on Capitol Hill. The president was said to be leaning in favor of some kind of waiver after an Oval Office meeting on the issue last week. “The president gave his word,” said Senator Bill Cassidy, a Republican from Louisiana. “Every senator who walked out of that room felt confident” he would “oppose any changes to the Jones Act and any waivers of the Jones Act,” Cassidy said. In addition to Kennedy and Cassidy, the lawmakers pressing Trump in Wednesday’s meeting included Alaska Republican Senators Lisa Murkowski and Dan Sullivan; Mississippi Republican Senators Roger Wicker and Cindy Hyde-Smith; and the No. 2 Republican in the House, Representative Steve Scalise of Louisiana.
Enterprise's Lumberjack pipeline to expand Haynesville gas takeaway. The Texas natural gas market is rapidly evolving, in large part due to burgeoning Permian production but also due to gas production gains in East Texas driven by strong returns on new wells in the Haynesville and Cotton Valley plays. Most of this supply growth is looking to make its way to the Gulf Coast, where close to 5 Bcf/d of LNG export capacity is operational and plenty more is under construction. The combination of fast-rising supply and demand is straining the existing gas pipeline infrastructure across Texas, creating the need for more capacity. The Permian has been grabbing the headlines for its extreme takeaway constraints and depressed, even negative supply-area prices, and all eyes are trained on the announced pipeline projects that will eventually provide relief to the region. But pipeline constraints also are developing between the Haynesville and the Texas coast. Today, we discuss the latest solution for the intensifying Haynesville-area supply congestion.
Prices Post New Weekly Low Before Rebounding On Bullish Weather Forecasts -- Highlights of the Natural Gas Summary and Outlook for the week ending April 26, 2019 follow. The full report is available at the link below.
- Price Action: The now expired May contract rose 7.6 cents (3.1%) to $2.566 on a 14.1 cent range ($2.580/$2.439).
- Price Outlook: Prices posted a new weekly low before rebounding and ending higher on the week. The market pushed lower as the EIA reported another weekly record injection, not absolute injection, and inventories rose above last year while continuing to reduce the deficit to the 5-year average. Prices were able to end higher on the week as weather forecasts were considered bullish. Still, with triple digit injections projected for the next weeks, further upside may be limited. CFTC data indicated a (35,674) contract reduction in the managed money net long position as longs liquidated and shorts added. This is the lowest net long position since July 31, 2018. Total open interest rose 71,215 to 3.393 million as of April 23. Aggregated CME futures open interest fell to 1.230 million as of April 26. The current weather forecast is now cooler than 9 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 4.0 bcf. Cove Point is net exporting 0.7 bcf. Corpus Christi is exporting 0.766 bcf. Cameron is exporting 0.105 bcf.
- Weekly Storage: US working gas storage for the week ending April 19 indicated an injection of +92 bcf. Working gas inventories rose to 1,339 bcf. Current inventories rise 58 bcf (4.5%) above last year and fall (372) bcf (-21.7%) below the 5-year average.
- Storage Outlook: The EIA weekly implied flow was (1) bcf from our EIA storage estimate. This week’s storage estimate returned to within our tolerance. Over the last five weeks, then EIA has reported total injections of +200 bcf compared to our +205 bcf estimate.
- Supply Trends: Total supply fell (0.3) bcf/d to 85.2 bcf/d. US production rose. Canadian imports rose. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (21). Oil activity decreased (20). Natural gas activity decreased (1). The total US rig count now stands at 991 .The Canadian rig count fell (3) to 63. Thus, the total North American rig count fell (24) to 1,054 and now trails last year by (52). The higher efficiency US horizontal rig count fell (13) to 873 and falls (28) below last year.
- Demand Trends: Total demand fell (1.2) bcf/d to +72.4 bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand rose. Electricity demand fell (1,526) gigawatt-hrs to 66,853 which trails last year by (2,337) (-3.4%) and trails the 5-year average by (1,514)(-2.2%%).
- Nuclear Generation: Nuclear generation rose 271 MW in the reference week to 80,984 MW. This is +2,347 MW higher than last year and +2,927 MW higher than the 5-year average. Recent output was at 80,362 MW.
The cooling season is beginning. With a forecast through May 10, the 2019 total cooling index is at 4 compared to 57 for 2018, 30 for 2017, 6 for 2016, 13 for 2015, 41 for 2014, 26 for 2013, 36 for 2012 and 20 for 2011.
Weekly Gas Storage- Another Large Build - The EIA released its weekly Natural Gas Storage Report today, outlining how national natural gas stocks have changed in the last week. In total, the EIA reports natural gas stocks rose by 123 Bcf last week, increasing to 1,462 Bcf from 1,339 Bcf. This is 9.6% above the 1,334 Bcf that was in storage at this point last year and is 17.8% below the five-year average of 1,778 Bcf. This week’s storage build slightly exceeded expectations, as analysts predicted a build of 114 Bcf. All regions saw a build this week, with the largest in the South Central region, where stocks increased by 50 Bcf. Stocks in every region are below the five-year average. Gas in storage in the Mountain region is the farthest below the five-year average.
Bearish EIA Report Smacks Natural Gas Prices - Natural gas prices returned into the red today, with the June contract closing just over three cents lower on the day. The main culprit was a bearish EIA report, showing a large build of 123 bcf for the week ending 4/26. Despite the large number, it was actually indicative of a slightly tighter supply/demand balance when compared to the prior two weeks. It certainly was not "tight" by any means, as it remained much looser than the same gas week in prior years. Prices did rebound off their lows, however, after being down as much as 5.5 soon after the release of the number. Power burns have been more impressive this week thanks to some heat in the southern states, and we have another burst of early heat in the Southeast on the horizon for next week, as seen in the current 6-10 day forecast from the GEFS. This shows up in our forecast demand chart quite easily, with another bump up in GWDDs mid to late next week. This raises the possibility that we will continue to see some strength in the burns into next week as well, likely one factor that helped us to rebound somewhat today, as the market was forced to weigh this information against the bearish EIA report.
United States has been a net exporter of natural gas for more than 12 consecutive months - U.S. net natural gas exports in February 2019 totaled 4.6 billion cubic feet per day (Bcf/d), marking 13 consecutive months in which U.S. natural gas exports exceeded imports. The United States exports natural gas by pipeline to both Canada and Mexico and increasingly exports liquefied natural gas (LNG) to several other countries.Although U.S. LNG exports have grown in recent years, most U.S. natural gas exports are sent by pipeline to neighboring Canada and Mexico. Natural gas exports to Canada tend to be seasonal, increasing in the winter months because of Canada’s use of natural gas as a heating fuel in its more populous eastern provinces. In contrast, U.S. natural gas exports to Mexico are steadier, reflecting Mexico’s use of natural gas for over half of its power generation and for industrial purposes.U.S. exports by pipeline to Canada have risen since November 2018, when the second phase of the Rover pipelineand the NEXUS pipeline entered service. These two projects bring natural gas from the Marcellus and Utica plays in the Appalachian Basin to the Dawn Hub in Ontario, Canada, near the St. Clair border crossing northeast of Detroit, Michigan. U.S. natural gas exports to Canada were 3.3 Bcf/d in February 2019, the highest on record. Overall, exports of natural gas by pipeline to Canada averaged 2.3 Bcf/d in 2018. U.S. pipeline exports of natural gas to Mexico in 2018 averaged 5.2 Bcf/d, up from 4.2 Bcf/d in 2017. Much of the recent growth is attributed to increased U.S. exports out of the Permian Basin in western Texas as new pipelines were installed and as natural gas-fired power plant projects in Mexico entered service. Several existing pipeline expansions in southern Texas were completed during the past 12 months as well, increasing cross-border capacity.U.S. LNG exports averaged 3.0 Bcf/d in 2018 and recently hit a high of 4.1 Bcf/d in January 2019. The volume of U.S. LNG exports rose steadily during 2018 as three new liquefaction units, called trains, entered service:
- March: A single train at the Cove Point terminal in Maryland
- November: Train 5 at the Sabine Pass terminal near the Louisiana-Texas border
- December: Train 1 at the Corpus Christi terminal in southern Texas
These three trains have a combined capacity of 1.9 Bcf/d, bringing total U.S. LNG export nameplate capacity to 4.3 Bcf/d as of the end of 2018. LNG export volumes are expected to continue to rise in 2019 as an additional 4.0 Bcf/d of liquefaction capacity is brought online by the end of the year. EIA’s Short-Term Energy Outlook (STEO) forecasts that U.S. net natural gas exports will average 4.7 Bcf/d in 2019 and 7.5 Bcf/d in 2020, with most of the growth attributable to increases in LNG exports. However, pipeline exports of natural gas are also increasing. In three months of 2018 (September through November), the United States exported more natural gas than it imported by pipeline, in part because of the October 9, 2018 explosion on the Westcoast pipeline in British Columbia that led Canada to restrict natural gas imports into Sumas, Washington. According to STEO forecasts, the United States will become a net exporter of natural gas by pipeline on an annual basis in 2019.
$200B in the LNG Project Pipeline - Declaring that the “boom is back” for liquefied natural gas (LNG), Wood Mackenzie predicts that capital spending on LNG plant and upstream infrastructure will total more than $200 billion from 2019 to 2025. In fact, a new Wood Mackenzie study anticipates that nearly 90 million tonnes per annum (mmtpa) of LNG capacity should take final investment decision (FID) and start construction in the next two years alone. Engineering, procurement and construction (EPC) contractors and others along the LNG supply chain should get a “major boost” as a result, the consultancy finds. To be sure, Wood Mackenzie points out that the LNG industry is “notorious” when it comes to cost overruns and project delays. The firm points out that only 10 percent of all LNG projects have been constructed under budget and 60 percent have encountered delays. “The many projects jostling for FID right now have low headline costs, but in light of the historical reality of LNG construction, some project delays are likely,” Liam Kelleher, senior global LNG research analyst with Wood Mackenzie, said in a written statement emailed to Rigzone. “While there is a risk that current low LNG prices may see some proposed projects cancelled, Wood Mackenzie believes the risk to new LNG supply development is low and we see considerable upside supply potential.” Kelleher also noted that, in Wood Mackenzie’s high case, the firm projects that an additional 70 mmtpa of capacity could be sanctioned in the next three years. “Should even some of that materialize, construction would be stretched beyond the height of the 2010-14 boom,” said Kelleher, adding that the upcoming construction cycle will not necessarily be a replay of the last. According to Kelleher, a number of factors have changed. “Firstly, the global spread of projects will mean that the local inflation pressure, particularly in terms of manpower, which hit Australia and the U.S. in previous cycles is lessened,” Kelleher said. “Secondly, developers are also being more cautious about LNG development solutions, opting for modularization and capex phasing. This, coupled with renewed caution with investment programs across the upstream sector, should help limit global upstream inflation.” Furthermore, Kelleher pointed out that cheaper raw materials costs – notably subsiding global steel prices – and the entrance of new EPC players translate into strong competition for construction contracts.
Catch A Wave, Part 3 - More U.S. LNG Export Projects Moving Toward FID - The cascade of LNG export project news continues. In the past week, yet another “second-wave” U.S. LNG export project — NextDecade’s Rio Grande LNG — cleared FERC’s environmental review process. That follows news of three other projects that received their environmental approvals this month; plus two other projects — Tellurian’s Driftwood LNG and Sempra’s Port Arthur LNG — got final FERC authorization to construct their facilities, should they make the financial commitment to proceed; and, finally, plans for a brand new export terminal, Venture Global’s Delta LNG, were unveiled. All in all, there are more than 20 announced projects totaling 235 MMtpa (~35 Bcf/d) that are looking to catch the second wave of U.S. LNG exports in the next decade. The timing of their regulatory approvals and final investment decisions will determine, in part, when this next wave — or shall we say tsunami — of export demand will materialize. Today, we wrap up our second-wave LNG project update series with a look at the progress made by some of the remaining projects that we’re tracking. In Part 1, we looked at the regulatory, financial and contracting milestones that make up the years-long, capital-intensive process for bringing liquefaction and export facilities across the finish line. In Part 2, we began our project-by-project update with a look at the first of the stateside second-wave projects to be greenlighted — ExxonMobil and Qatar Petroleum’s (QP) three-train, 15.6-MMtpa (~2-Bcf/d) Golden Pass Products(GPP), proposed to be built at the site of what is a legacy import terminal located in Jefferson County, TX. GPP took FID in early February (2019) and has since also received approval to proceed with initial site preparation, with the first of the three trains due for completion in early 2024. Then there’s Venture Global LNG’s Calcasieu Pass, an 11-MMtpa (~1.4-Bcf/d) project sited in Cameron Parish, LA, that has all but reached FID; the project, whose capacity is just about fully contracted, received its FERC authorization on February 21, its DOE non-FTA authorization two weeks later and already has begun initial construction activity. Next, we shift our focus to some of the other, smaller-scale projects that are targeting FID this year. Across North America, there are about a dozen LNG export projects that fall into that bucket, and eight of those are along the Gulf Coast, including the three pre-FID terminals we discussed above. Among those Gulf Coast projects, there are also two others that hit key milestones in recent months; specifically, they secured critical FERC authorizations, bringing them a step closer to reaching FID:.
Tellurian begins booking capacity on two proposed pipeline projects - Houston liquefied natural gas company Tellurian has started booking capacity on two proposed pipeline projects that will support the growing LNG industry in southwest Louisiana. Tellurian's $1 billion Haynesville Global Access Pipeline will connect natural gas pipelines and production facilities in DeSoto Parish to those in Calcasieu Parish. Once complete in 2023, the 42-inch natural gas and 160-mile pipeline will move up to 2 billion cubic feet of natural gas per day. Recommended Video A separate $1.4 billion project named the Delhi Connector Pipeline will move natural gas from the Perryville/Delhi Hub in Richland Parish to Calcasieu Parish. Once complete in 2023, the 42-inch and 180-mile pipeline will move another 2 billion cubic feet of natural gas per day.
North America's oil and gas pipeline boom could signal meltdown - A report published by Global Energy Monitor cautions that upbeat building spree of US oil and gas pipeline systems may stand on a frail financial fundament, which could see previous turmoil return while bearing considerable risk for investors’ rate-of-return as climate-change consciousness and regulation is expected to increase pressure on fossil fuels. North American overexpansion of oil and gas systems would bear “high leverage and unrealistic expectations”, the authors of the report say, warning that signs of increased risk are looming on the horizon of the present building boom systems. The pace of the global pipeline building is stated to have tripled since 1996. The US is one of the most aggressive builders of oil and gas pipelines systems and its pace appears unprecedented: worldwide it owns 51.5 per cent of all projects in pre-construction or construction stages. The report argues that investors in the booming expansion of oil and gas infrastructure would steer for a similar shock (as experienced some years earlier in the coal mining sector) as “boom-fueled optimism runs into climate realities and fiscal limits”. Ted Nace, co-author of the report and executive director at Global Energy Monitor points out that “enthusiasm [is] spilling out of the fracking boom [and] has fostered unrealistic expectations of expansion in midstream oil and gas infrastructure. Investors are setting themselves up for disappointment”. One reason experts are so worried is that the previous shock would carry much weight pointing towards signs for imminent turmoil within a similar-functioning energy market than coal mining: “The combination of high leverage and expectations for growth based on ever-increasing Asian demand set the stage for investor disappointment and losses”. In the context of the previous crisis “[it] is not just hypothetical: it is exactly the combination of elements that created the coal mining meltdown of 2008 to 2014”. Three areas would be particularly vulnerable in the US to present pipeline expansion concentration, including ‘Permian Basin of Texas and New Mexico’, ‘the Marcellus and Utica shale formations in Appalachia and the Midwest’, and the ‘Canadian tar sands of Alberta’. The decision by the Canadian government last year, to commit C$5bn (£2.9bn) to acquire the Trans Mountain Pipeline would add extra fuel to the fire.
American Refiners Clean Up Their Act-- Oil refiners in the U.S. are using more light crude to fill the gap from the sludgy, sulfurous stuff they used to get from OPEC. Crude shipments from the 14-member cartel to American ports dipped to a 33-year low in February in part because of the pact between OPEC and allied producers to curb output and forestall a global glut. Chronic issues with Venezuelan output and U.S. sanctions barring most purchases have further strained availability of the heaviest types of oil. Starved of OPEC supplies, American refiners in February processed the least-dense crude in data going back to 1985. The so-called oil slate refined that month was just 1.25 percent sulfur -- the cleanest in more than 20 years. U.S. refiners aren’t likely to see OPEC cargoes returning soon. Saudi Arabia, the de facto leader of the Organization of Petroleum Exporting Countries, has indicated they’re eyeing an extension of the cuts for the rest of 2019. That comes just days before the last U.S. exemptions allowing purchases of Iranian crude will expire, which will mean stiffer competition for barrels of heavy crude.
After Houston chemical fires, Texas Senators eye storage tank regulations -- Weeks after a massive fire at a Houston-area petrochemical storage facility garnered national attention, a panel of state lawmakers heard dueling testimony Monday night on a bill that would strengthen state oversight of above-ground tanks that hold petroleum products and hazardous chemicals.Freshman state Sen. Nathan Johnson, D-Dallas, authored Senate Bill 1446. It would require Texas’ environmental regulatory agency to develop and enforce standards for the design and operation of larger storage tanks in areas vulnerable to flooding and hurricanes to ensure that they don’t float away or otherwise fail.Government regulation of storage tanks came roaring back into the spotlight last month when a leak at a Deer Park tank farm owned by Intercontinental Terminals Company sparked a massive fire that spread to almost a dozen more holding drums. There are thousands in the Houston area alone — all sizes, usually made of steel plates welded together. State lawmakers already had been studying oversight of tanks after Hurricane Harvey, when at least 15 drums holding crude oil, gasoline and other hydrocarbons ruptured or malfunctioned. (A Texas Tribune investigation published a year before Harvey detailed research on the vulnerability — and patchy government oversight — of storage tanks.) A December report by the Senate Natural Resources and Economic Development Committee didn’t make explicit recommendations but said lawmakers should move to ensure “that storage tank designs along the Texas coast are protective of human health.”
Pipeline Protesters Could Face 20 Years in Prison Under Bill in Texas House - Under a proposal being considered in the Texas House this week, activists who engage in civil disobedience to stop or delay construction on pipelines would be charged with the same level of felony as attempted murderers. House Bill 3557, by state Representative Chris Paddie, R-Marshall, would increase the penalties and fees for intentional acts that “impede, inhibit or interfere” with the operations of “critical infrastructure,” including electric power facilities, water treatment plants and oil and gas facilities. The bill would go beyond the state’s definition of critical infrastructure to include equipment and projects under construction. Alleged violators would be charged with second-degree felonies, which carry up to 20 years in prison, under HB 3557. Additionally, individuals would face a fine of up to $10,000 and organizations accused of violating the law would face a fine of $1 million. Violators would also be liable for damages.So-called critical infrastructure, specifically at oil and gas pipeline easements, has been the target of protests across the state in the last several years. Environmental activists have delayed construction on pipelines including the southern leg of the Keystone XL in East Texas in 2012 and the Trans-Pecos in far West Texas in 2016 and 2017. Denton protesters also took action to delay operations at a fracking site in 2015 after nearly 60 percent of voters approved a fracking ban that was later invalidated by the Texas Legislature. The new proposal “is criminalizing conscientious, caring people who are the canaries for their communities,” said Lori Glover, co-founder of the Big Bend Defense Coalition, an activist group that mobilized against the Trans-Pecos Pipeline. She and other critics say the measure is unnecessary because laws to protect private property are already on the books.
US total oil, gas rig count adds 18 on week to 1084- S&P Global Platts Analytics - — The US active rig count bounced back this week as operators deployed an additional 18 oil and natural gas rigs to lift the total to 1,084 in the week that ended Wednesday, according to S&P Global Platts Analytics. The number of rigs targeting gas rose by nine to 224, while the oil-directed rig total increased by 11 to 857.While the rig count rose in multiple basins, Oklahoma's SCOOP-STACK added the most at four, increasing to 87. The Bakken Shale's count rose by one to 61 rigs, while Colorado's Denver-Julesburg Basin increased by two to 30.Click here for full-size image The Permian Basin also added two rigs to reach 464. The Eagle Ford proved to be the only oil-rich play to shed a rig, dropping by one to 83.In the gas-rich plays, the Haynesville Shale slid two rigs to 61, while the Marcellus Shale added one rig to reach a total of 63. Rig activity in the Utica Shale remained flat at 15.Oil prices have strengthened over the past year while gas prices have struggled. In late December, the spot WTI crude price fell as low as $44.48/b. However, it averaged around $65/b in April, prompting more activity by producers. However, the spot Henry Hub gas price has reversed course. After averaging more than $3/MMBtu during the first month of 2019, it averaged $2.65/MMBtu in April, due in large part to low domestic demand in the ongoing shoulder season.
The Fastest-Growing U.S. City Is Scrambling to Survive the Shale Boom -- In a state known for its oil-based booms and busts, Jerry Morales is convinced Midland, Texas, the unofficial capital of the Permian Shale Basin, has a chance to break from the pattern. In the Permian, "we don’t say boom anymore," "We’re very sustainable. The boom-and-bust era is over." Midland is using a $100 million bond to fix overused roads, and accessing a $180 million regional fund from a new coalition of 20 drillers for other advances, he said. A $50 million water tower has been approved to serve expanding neighborhoods, and a $3 million animal adoption center is in the works for pets left homeless by apartment-dwelling oil workers. Meanwhile, four drillers led by Chevron Corp. have funded a new childcare facility that opened last week. "I don’t want Midland to be known as a big mancamp," Morales said. "We are having to think outside the box and truly be urban planners, creating a city and an environment that’s inviting for everyone." The Permian rose from the dead with the advent of fracking a decade ago to become a market beast, producing about a third of U.S. oil as it grew to become one of the world’s most prolific oilfields. In the process, though, local resources were stretched beyond their limits. Now, Morales and others say the region may be settling into adulthood. Employers still struggle to fill jobs in competition with the oilfields, roads are jammed, schools overflow and home prices are sky-high. But local leaders say they have plans and resources set to secure a long-term future.
US Oil Output Drops - U.S. crude oil production dropped from January to February this year. U.S. crude oil production dropped 1.6 percent from January to February this year, according to the Energy Information Administration’s (EIA) latest monthly numbers, which were released on Tuesday. Total U.S. crude oil output was 11.683 million barrels per day (MMbpd) in February, compared to 11.870 MMbpd in January, the EIA revealed. February production was 14 percent higher than the same period last year, which registered 10.248 MMbpd. The top crude oil producing area in February was Texas with 4.890 MMbpd. Texas’ crude oil production was up 1.3 percent month on month and 21.8 percent year on year. The Federal Offshore Gulf of Mexico had the second highest crude oil producing figure in February with 1.719 MMbpd. This marked a 9.8 percent decrease month on month and a 0.8 percent increase year on year. North Dakota registered the third highest crude oil output rate at 1.312 MMbpd, which was a 4.6 percent decrease month on month and a 14 percent increase year on year. U.S. natural gas production was at 108.569 billion cubic feet per day (Bcf/d) in February, which marked a 0.5 percent increase month on month and an 11.6 percent rise compared to February 2018. The top natural gas producing areas in February were Texas with 26.500 Bcf/d, Pennsylvania with 18.608 Bcf/d and Alaska with 9.554 Bcf/d. The EIA forecasts that U.S. crude oil production will average 12.4 MMbpd this year and 13.1 MMbpd in 2020, according to the organization’s latest short-term energy outlook, which was released earlier this month. The organization projects that dry natural gas production will average 91 Bcf/d in 2019, up 7.6 Bcf/d from last year.
US oil output decelerates in response to lower prices- (Reuters) - The second U.S. shale oil drilling boom has started to cool as a decline in oil prices since the end of the third quarter of 2018 filters through to lower well boring and completion rates. The first boom ended when prices plunged in the second half of 2014; something similar is happening now, albeit on a milder scale corresponding to the smaller fall in prices. The number of rigs drilling for oil in the United States has fallen by more than 9 percent from its cyclical peak in November, according to oilfield services company Baker Hughes (“North America rotary rig count”, April 26). And crude output is down by almost 300,000 barrels per day (bpd) from its cyclical peak in December, the U.S. Energy Information Administration says (“Petroleum Supply Monthly”, April 30). Much of the recent output decline is attributable to the Gulf of Mexico, where offshore production is often volatile, so it needs to be interpreted with care (https://tmsnrt.rs/2WjeKfd). But onshore output from the Lower 48 states is also now growing more slowly, a sign the drilling boom is beginning to cool. Lower 48 output was up by 1.6 million barrels per day in the three months from December to February compared with a year earlier. Growth is down from more than 1.8 million bpd in August-September and is slowing significantly for the first time since 2016.
The number of drilled but uncompleted wells in the United States continues to climb - The number of drilled but uncompleted wells in seven key oil and natural gas production regions in the United States has increased over the last two years, reaching a high of 8,504 wells in February 2019, according to well counts in EIA’s Drilling Productivity Report (DPR). The most recent count, at 8,500 wells in March 2019, was 26% higher than the previous March.Drilled but uncompleted wells, also known as DUCs, are oil and natural gas wells that have been drilled but have not yet undergone well completion activities to start producing hydrocarbons. The well completion process involves casing, cementing, perforating, hydraulic fracturing, and other procedures required to produce crude oil or natural gas.The number of DUCs has generally increased since the end of 2016. A high inventory of DUCs may be attributable to economic factors or resource constraints. For example, a low oil and natural gas price environment may postpone well completion activities in areas where the wellhead break-even price is too high relative to the current market price. Another example may be the lack of available well completion crews to perform hydraulic fracture activities in areas of high demand. Takeaway capacity, or the ability to transport hydrocarbons through pipelines away from the resource, may also place additional constraints when pipeline networks are insufficient to accommodate supply. Most of the recent increase in the DUC count has been in regions dominated by oil production, especially the Permian region that spans western Texas and eastern New Mexico. As of March 2019, nearly half of the total DUCs included in the DPR were in the Permian region. The Permian Basin experienced takeaway constraints in the second half of 2018, but recent pipeline capacity additions in the region have reduced some of the takeaway constraints. Other pipeline projects are planned or currently under construction. In contrast to oil-directed regions, the number of DUCs in natural gas-dominated DPR regions such as the Appalachian and Haynesville regions has decreased by nearly half over the past three years, from 1,230 wells in March 2016 to 713 wells in March 2019. New pipelines in these regions have increased the ability to transport natural gas to demand centers in the Northeast and Midwest.
Anadarko to resume deal talks with Occidental, says bid could be 'superior' to Chevron's offer - Anadarko Petroleum said Monday it will restart negotiations with Occidental even though it struck a $33 billion deal earlier this month with Chevron to sell its business. The announcement comes after its board unanimously determined that Occidental Petroleum’s rival bid, launched last week, could reasonably lead to a proposal that is superior to Chevron’s previously announced deal to buy Anadarko. Occidental has offered $76 a share for Anadarko, while Chevron has put $65 a share on the table. The board’s determination allows Anadarko and its advisers to resume talks with Occidental under the terms of the Chevron deal. The agreement with Chevron remains in effect, and Anadarko’s board reaffirmed its support for the deal for the time being. Anadarko would have to pay Chevron a $1 billion breakup fee if it decides to sell to Occidental. The announcement is the latest development in a rare bidding war in the oil and gas sector. At the heart of the battle are the crown jewels of Anadarko’s portfolio: a significant footprint in the Permian Basin, the top U.S. shale oil field. Both Chevron and Occidental are seeking to expand their presence in the Permian, which stretches across western Texas and southeastern New Mexico. Occidental CEO Vicki Hollub told CNBC that Anadarko’s Permian assets represent about 75 percent of the deal value.
Anadarko Deal Would Put Occidental Next to Conoco - Occidental Petroleum’s proposed Anadarko Petroleum deal would put the company alongside ConocoPhillips in a peer group of two as a “super-independent”, according to Zoe Sutherland, a corporate analyst at Wood Mackenzie (WoodMac)."If the deal goes through, it would give the company ExxonMobil or Chevron-like Permian scale and set them up to join the million barrels of oil equivalent per day Permian club in the late 2020s, according to our base case,” Sutherland said in a statement sent to Rigzone."The deal highlights that diversity is still valued by U.S. independents and would mark Occidental's entry into deepwater Gulf of Mexico and LNG," Sutherland added. Occidental made a proposal to acquire Anadarko on Wednesday. On April 12, Chevron revealed that it had entered into an agreement to buy Anadarko.In a company statement released on its website yesterday, Occidental said it believed its proposal is “superior both financially and strategically for Anadarko’s shareholders”. Anadarko confirmed on Wednesday that it had received an unsolicited proposal from Occidental. The company said its board of directors will “carefully review Occidental's proposal to determine the course of action that it believes is in the best interest of the company's stockholders”.
Berkshire Hathaway to invest in Occidental Petroleum for Anadarko takeover - Warren Buffett is getting involved in a rare bidding war unfolding in the energy industry. Berkshire Hathaway has committed a $10 billion preferred stock investment in Occidental Petroleum contingent on the company completing its proposed takeover of Anadarko Petroleum. Last week, Occidental made a rival bid for the oil and gas driller, challenging Chevron’s $33 billion buyout of Anadarko. Shares of Occidental fell 4% on Tuesday, while Chevron’s stock popped nearly 3%. A company’s stock price often falls when investors believe it is about to acquire a company. Anadarko’s shares fell about 1.5%. The capital injection from Berkshire could make Occidental a more formidable suitor. In pursuing Anadarko, Occidental is going toe to toe with an oil major with a much bigger balance sheet and whose market capitalization is nearly five times its value. Several analysts initially downgraded shares of Occidental following its bid, with many saying the buyout would carry more risks than Chevron’s proposed takeover of Anadarko. Achieving the benefits of the deal depends in part on Occidental’s successful divestment in $10 billion-$15 billion in assets and achieving $3.5 billion in savings from the tie-up. Berkshire’s involvement suggests the company believes Occidental is best positioned to wring value out of Anadarko’s portfolio. Occidental is focused on Anadarko’s acreage in the Permian Basin, the U.S. shale oil region stretching across western Texas and southeastern New Mexico. Occidental CEO Vicki Hollub has pitched Occidental as a high-performing Permian driller that can enrich Anadarko shareholders by squeezing more oil and gas from the drillers’ wells at lower costs.
Chevron Backs Its Anadarko Deal - Chevron’s signed agreement with Anadarko provides the best value and the most certainty to Anadarko’s shareholders.That’s what Chevron believes, a company spokesperson said in an emailed statement sent to Rigzone late Wednesday.Chevron revealed on April 12 that it had entered into an agreement to buy Anadarko. Following this agreement, Occidental announced on April 24 that it had made a proposal to acquire Anadarko.In a company statement released on its website on April 24, Occidental said it believed its proposal is “superior both financially and strategically for Anadarko’s shareholders”.Anadarko announced on April 29 that it intends to resume negotiations with Occidental in response to its proposal to acquire the company. On April 30, Occidental revealed that Berkshire Hathaway Inc has committed to invest a total of $10 billion in Occidental if the company enters into and completes its proposed acquisition of Anadarko.In a research note sent to Rigzone on Monday, Jefferies representatives put the chances of Chevron raising its offer for Anadarko at 75 percent.“If they do raise it will be into the low $70's per share. Taking the $1b break fee and walking away is an acceptable option,” the representatives said in the research note. Chevron’s deal to acquire Anadarko would shake up the U.S. upstream sector, creating a company that rivals ExxonMobil domestically, according to GlobalData. Occidental’s proposed Anadarko deal would put the company alongside ConocoPhillips in a peer group of two as a “super-independent”, according to Zoe Sutherland, a corporate analyst at Wood Mackenzie.
U.S. oil-storage industry fines soar on air, water violations (Reuters) - Fines for violations of air, water and waste regulations by U.S. petroleum storage facilities so far this year have exceeded all of last year - even without including two major Houston-area disasters in the last month still under investigation - according to a Reuters analysis of federal data. Federal and state fines of storage-tank operators totaled $5.2 million as of April, from $4.1 million for all of 2018 and $2.5 million in 2017, according to data on federal and state penalties analyzed by Reuters from the U.S. Environmental Protection Agency. U.S. petroleum storage operators have added millions of barrels of capacity since 2015 when the United States lifted a 40-year ban on crude exports. The nation is now shipping as much as 3.6 million barrels per day (bpd) overseas, and cheap natural gas prices have fueled a boom in petrochemical production that also necessitates more storage, particularly on the U.S. Gulf Coast. With that, however, have been more air and water quality incidents. “There have been some accidents and an awful lot of expansion,” This year, the average penalty is $218,000, up from $52,000 in 2018. The total number of actions for violations of Clean Air and Clean Water Act regulations was 24, up from 17 by this time last year, the data showed. That figure does not include two incidents in Texas for which federal and state investigations are underway, but no fines have yet been assessed. A March fire at a Houston-area petrochemical storage facility raged for days, sending millions of pounds of carbon monoxide and other gases into the air, and leaking thousands of gallons of fuel and toxic foam into waterways. The blaze at a site along the Houston Ship Channel in Deer Park, Texas, started when a leak from a tank containing volatile naphtha ignited and spread to others in the same complex. Those tanks hold tens of thousands of barrels of products used to boost gasoline octane, and make solvents and plastics. Weeks later, a blast and fire at a separate plant north of Houston that makes an aviation fuel component killed one worker and injured two others. Crude storage capacity is up 17 percent across the nation to 573.6 million barrels since 2015, according to the U.S. Energy Information Administration.
DNR declines to re-issue permit for controversial frac sand mine; case likely to be decided in court After a nearly yearlong review, the Wisconsin Department of Natural Resources has declined to reinstate a wetland permit for a controversial Monroe County frac sand operation.In a decision signed Tuesday, DNR Secretary Preston Cole closed his department’s review without taking any action on a decision by Administrative Law Judge Eric Defort to revoke a permit allowing Meteor Timber to fill 16.25 acres of wetlands.The decision leaves the Georgia company without the permit it says it needed to complete the $75 million processing and loading facility that would serve two nearby mines on land the company acquired when it purchased nearly 50,000 acres of Wisconsin forest.Cole said the issue would be best resolved by mutual agreement or in the courts, where a parallel case is currently on hold.Despite finding that the project would result in “permanent and irreversible” impacts and the loss of 13.4 acres of “exceptional quality” imperiled habitat, the DNR granted the Georgia company a permit in May 2017 that included dozens of conditions and questions. The agency issued a final permit five months later with some of those questions unanswered.Clean Wisconsin and the Ho-Chunk Nation challenged the permit, which they said would open the door to the destruction of more rare wetlands.Defort revoked the permit in May 2018 after a weeklong hearing, ruling that the DNR didn’t have all the information required by state law.On May 24, former DNR Secretary Dan Meyer, who was appointed by Gov. Scott Walker, agreed to Meteor’s request to review the judge’s decision.The company also challenged Defort’s ruling in court, but a Monroe County judge put that case on hold pending the DNR review. Clean Wisconsin and the Ho-Chunk sued, claiming the agency did not have the authority to review itself, but a Monroe County judge dismissed that case.
Pipeline closure will force southern Utah company to flare its natural gas, costing it revenue and polluting the air - Across Utah, many oil wells produce natural gas that can’t get to market because the infrastructure is not in place to gather it. This so-called “residue” gas is often flared or vented into the atmosphere, thus wasting a valuable resource, erasing tax revenue for rural areas and polluting the air.To curtail such waste, Fidelity Exploration and Production Co. laid miles of pipe across Big Flat, a recreation hot spot outside Utah’s Dead Horse Point State Park in 2014, and built the Blue Hills gas processing plant near the Canyonlands Field airport. The project cost the company up to $70 million and left an extensive industrial footprint on public lands used for mountain biking and camping. At least the flaring stopped at the many wellheads, now operated by Fidelity’s successor, Kirkwood Oil & Gas, in Grand County’s most productive oil field.But now the flaring is expected to resume after the Utah Public Service Commission lost patience with the company that operates a connected transmission pipeline. Pacific Energy and Mining Co. has been fined $100,000 and ordered to shut down its Paradox pipeline, the 16-inch-diameter steel tube that connects Kirkwood’s gas plant with the interstate Northwest pipeline 14 miles away, because of the Reno, Nev.-based firm’s persistent failure to comply with various safety and training standards.In response, Kirkwood officers say they will seek emergency permission from the Utah Division of Oil, Gas and Mining, or DOGM, to flare the company’s natural gas production, estimated at 750,000 cubic feet per day, worth about $2,000 at today’s volatile but depressed gas prices. The company said some of the 30 wells served by that pipeline cannot be shut in without risking damage.“The wells might not come back to their earlier level of production,” said Kirkwood official Steve Degenfelder.In its filings with the PSC, Pacific denies its pipeline is out of compliance, arguing the agency’s inspectors were not qualified and blamed the need for flaring on regulators. Company officials downplayed the alleged violations, saying the regulations at issue have little to do with safety and more to do with record-keeping.DOGM Director John Baza said his agency will look for ways to minimize the waste resulting from the closure of Pacific’s pipeline, but public safety and the integrity of Kirkwood’s oil wells take precedence.
Groups Warn Against Trump Effort to Unleash 'Fracking Frenzy' by Unlocking Million+ Acres of Public Land for Drilling - Over 1 million acres of California land will be opened to fracking if Donald Trump has his way according to a plan released just hours after his administration shelved efforts to expand offshore drilling. The president announced the plans in a draft released by the administration on Thursday afternoon. The proposal calls for opening 1,011,470 acres of public holdings in California to oil drilling and fracking. The new proposal comes on the same day as the administration pulled out of a controversial plan to expand offshore drilling was thrown out by a federal judge in Alaska. In a statement, Natural Resources Defense Council legislative director for the Nature Program Alexandra Adams said that the program should be completely ended. "President Trump's wildly unpopular and risky offshore drilling plan needs to be more than sidelined," said Adams. "It should be deep-sixed permanently." Yet the California rule proposal is the kind of decision that could have disastrous effects on the environment, said Clare Lakewood, senior attorney for the Center for Biological Diversity. "Trump's plan would unleash a fracking frenzy that puts California's people and wildlife in harm's way," said Lakewood. "This administration is dead set on letting oil and gas companies dig up every last drop of dirty fuel." The decision, if it goes through, would be the first time in six years that the Bureau of Land Management (BLM) issues a land lease since a judge ruled the agency's issuance of fracking certificates violated the National Environmental Policy Act. "Californians don't want fracking on our beautiful public lands any more than President Trump wants fracking on the greens of his Mar-a-Lago golf course," said Earthjustice attorney Greg Loarie. "There's no place for this backwards plan in California's clean energy future."
The Slow Death Of Californian Oil & Gas --Entrepreneurs in California were pioneers of the American oil industry in the 19th and the beginning of the 20th century. That, however, has changed due to declining production. Since its peak in 1985, production has plunged almost 60 percent to 460,000 barrels per day. Next to this, the Golden State’s oil reserves have declined 25 percent to 2.2 billion barrels. This reversal doesn't only impact the state’s economic situation, but also its position towards foreign producers who are increasingly required to supply the necessary oil. California’s demise as an essential producer of hydrocarbons is especially staggering due to the transformation of the American fossil fuel industry. The shale revolution has propelled the North American country into becoming one of the world's largest producers of fossil fuels. U.S. crude oil production has soared to record heights, rising 140 percent in a couple of years to 12.1 million bpd. North Dakota has become the second oil producing state in the U.S. due to the shale revolution. Fracking technology has unlocked previously unreachable resources which have doubled U.S. oil reserves to 45 billion barrels. Ironically, California is the second biggest consumer of oil in the U.S. after Texas. Approximately, 40 million gallons of gasoline, 8 million gallons of diesel, and 20 percent of the country’s jet fuel are consumed in the Golden State each day. Notably after Alaska’s production decreased significantly over the years, California has become more dependent on Middle Eastern oil due to stringent environmental rules. The Low Carbon Fuel Standard (LCFS) has hampered the prospect of using heavier crude which is produced locally and in Canada. Instead, lighter oil that is supplied by OPEC’s member states, for example, makes up for 37 percent of California’s oil imports. The state’s predominantly Democratic electorate and leadership generally opposes pipelines that could pump high-quality, lower cost shale oil from other U.S. states. California does hold some promising shale formations in its central and southern parts which could hold at least 20 billion barrels of recoverable oil and gas. Current Governor Gavin Newsom, however, is not supportive of the shale industry.
Judge fines pipeline company $3.3 million for 2015 Santa Barbara oil spill – On April 25, Santa Barbara Superior Court Judge James Herman Plains sentenced Plains All American Pipeline, L.P. to pay $3,347,650 in total fines and penalty assessments for the massive 2015 Refugio Oil Spill in Santa Barbara County that killed marine mammals, protected sea birds, and other marine life and temporarily closing fishing and other recreation along the pristine coast. Santa Barbara County District Attorney Joyce E. Dudley and environmental groups were disappointed that the Judge did not grant the DA’s request to impose a larger fine of $1.2 billion on the company. “While the Court made findings including that Plains knew or should have known their pipeline would rupture, stating that ‘[i]t was not a matter of if, but a matter of when,’ Judge Herman denied the People’s request to impose probation and for a significantly larger fine,” according to a statement from the DA’s Office. The Court retained jurisdiction over restitution for victims, and the next hearing on that issue will be held on July 10, 2019. Missing from the press releases from the Santa Barbara County DA’s Office, Attorney General’s Office and environmental groups and the superficial press coverage of the spill, the investigation, the jury trial and sentencing is one of the biggest and most ironic stories regarding the Refugio Oil Spill. In a classic example of the deep regulatory capture that pervades what passes for “marine protection” in California, the head of the oil industry trade association, the Western States Petroleum Association (WSPA), that lobbies for the Plains All American Pipeline corporation happens to be the very same “marine guardian” who chaired the panel that created the so-called "marine protected areas" that were fouled by the spill.
State slaps company with $15 million fine for orphaned gas wells - Environmental regulators are trying to scrape together enough money to plug a portion of 40 orphaned natural gas wells in northwest South Dakota after assessing a $15.494 million penalty — with dubious prospects for payment — against the former operator of the wells. The wells were drilled beginning in 2006 in the Buffalo area by Spyglass Cedar Creek, a company in Houston, Texas, that initially boasted of $22 million in financing. But the wells eventually fell idle as the company’s prospects disintegrated under the strain of falling natural gas prices, a lender’s bankruptcy, at least four lawsuits, and a tax-fraud indictment against a business partner. After several years of hoping the company would right itself and put the wells back into production, the South Dakota Board of Minerals and Environment revoked the company’s permits in January. Because someone associated with Spyglass cashed out a $20,000 bond without the knowledge of state regulators in 2015, the only money now available to plug the orphaned wells is a separate bond for $9,850 also posted by the company. The state Department of Environment and Natural Resources has estimated that the total cost to plug the wells will be $887,700. At a March 21 meeting in Pierre, the Board of Minerals and Environment, a nine-member citizen panel appointed by the governor, imposed a maximum civil penalty of $500 per well, per day on Spyglass for violations of state regulations related to the condition of the wells. The total penalty is $15.494 million. Extracting any money from Spyglass could prove challenging, based on past indications. Earlier this year, for example, the company failed to stave off the revocation of its permits when it was unable to post a $200,000 cash or surety bond requested by the Board of Minerals and Environment.
ONEOK to construct $100 million pipeline in North Dakota - ONEOK on Thursday announced plans to invest nearly $100 million to construct a 75-mile natural gas liquids pipeline lateral on the northern portion of its Bakken NGL pipeline. The project will connect its Bakken NGL pipeline with a third-party natural gas processing plant in eastern Williams County, North Dakota, officials said. The lateral is expected to be complete in the fourth quarter of 2020 and is supported by long-term natural gas liquids production, including a minimum volume commitment. It is expected to provide NGLs to ONEOK’s Elk Creek Pipeline. The lateral will provide access to the raw feed NGL pipeline in an area with historically limited transportation options. The pipeline will also provide connectivity with key NGL market centers.
The Latest: North Dakota promises suit over oil train rules (AP) — North Dakota intends to sue Washington if that state’s governor signs legislation requiring oil shipped by rail to have more of its volatile gases removed.Proponents of the bill say it would boost safety. The volatility of oil trains drew widespread public attention following several explosive derailments, including one in 2013 in Quebec that killed 47 people.North Dakota officials worry the bill could hamper the nation’s No. 2 oil producer. About one-tenth of North Dakota’s daily oil production is shipped to Pacific Northwest refineries.North Dakota’s Industrial Commission believes the bill is an unconstitutional violation of interstate commerce law. The regulatory group is comprised of the governor, attorney general and agricultural commissioner. Washington Gov. Jay Inslee is still reviewing the bill but indicated to The Associated Press that he’s likely to sign it.
Exxon agrees to $1 million penalty for Montana oil spill — Exxon Mobil Corp. agreed to pay a $1.05 million penalty to settle alleged federal water pollution violations from an oil pipeline break into Montana’s Yellowstone River, according to court documents filed Friday. Approval of the agreement by U.S. District Judge Susan Watters would resolve the last outstanding federal enforcement case against the oil giant stemming from the 2011 accident that spilled 63,000 gallons (238,474 liters) of crude. Terms of the settlement were detailed in a consent decree filed in federal court in Billings. It’s subject to a 30-day public comment period. The spill near the town of Laurel, about 15 miles (24 kilometers) west of Billings, came after flooding along the Yellowstone scoured the river bottom and exposed the buried pipeline, causing it to break and release crude directly into the waterway. The accident occurred downstream of Yellowstone National Park along a stretch of river popular among fishers, boaters and other recreational users. About 140 people were temporarily evacuated because of health and safety concerns. Exxon previously paid $12 million in natural resource damage compensation and $2.6 million for pipeline safety and state pollution violations. The Irving, Texas-based company also spent an estimated $135 million on a months-long cleanup and repairs. The latest penalty stems from violations of the Clean Water Act. Oil swept downstream by the raging river entered tributaries and nearby wetlands and fouled more than 14 square miles (36 square kilometers) of riverfront, according to court documents. Exxon spokesman Jeremy Eikenberry said the settlement “provides for an acceptable outcome that avoids protracted litigation between the parties.” The company on Friday reported earnings of $2.35 billion during the first quarter of 2019, down by roughly half from the same period a year earlier. The 12-inch (30-centimeter) Silvertip pipeline had been installed just a few feet beneath the riverbed, sparking a national discussion over the adequacy of safety rules for thousands of pipelines crossing beneath waterways.
Not so fast: Trump's Alaska drilling study slammed by U.S. wildlife regulator - (Reuters) - The Trump administration failed to adequately consider oil spills, climate change and the welfare of polar bears in its expedited study of proposed drilling in Alaska’s Arctic National Wildlife Refuge, according to comments published by the U.S. Fish and Wildlife Service this week. The unusually harsh criticism from federal wildlife regulators could deal a blow to one of the most high-profile items in President Donald Trump’s energy agenda, and reflects the pitfalls of the administration’s drive to speed up big projects with quicker, shorter environmental studies. The Interior Department wants to hold its first lease sale of at least 400,000 acres in ANWR, America’s largest wildlife sanctuary, later this year, but could face lawsuits if its permitting process is flawed. The Fish & Wildlife Service said the ANWR Coastal Plain draft environmental impact study (EIS) failed to include oil spill response plans, analyze the effects of climate change on the Arctic, or ensure that surveys of polar bear denning habitats are required. The Interior subagency also listed dozens of other information gaps in its 59 pages of comments and implied that the Interior Department’s Bureau of Land Management wrote the study without properly consulting wildlife regulators. “The Service has managed the Arctic National Wildlife Refuge and its resources for several decades and has information and expertise that is valuable in formulating a final EIS that can withstand the scrutiny of legal sufficiency,” the agency’s Alaska director Gregory Sikanie wrote. The Fish & Wildlife Service declined to provide further comment. The Interior Department said its Bureau of Land Management had received thousands of comments on the draft study, all of which would be considered. “BLM has an obligation to consider all of these comments -including those from its sister agency (Fish & Wildlife) - and anticipates they will inform the Final EIS inmultiple ways,” spokeswoman Molly Block said in an email.
Grounded barge leaks oil on Kodiak Island - A long-derelict barge near the U.S. Coast Guard base on Kodiak Island may be leaking petroleum, and the USCG has contracted with Global Diving and Salvage to conduct an assessment and abatement process.The barge has been resting on the shore in Womens Bay, Kodiak Island for several years. On Thursday, the Coast Guard received a report of a possible petroleum leak near the barge. Pollution investigators documented a 300-yard long by one-yard wide rainbow-colored sheen coming from the vicinity of the barge, and containment boom has been placed around the site to minimize its spread. The Coast Guard opened the Oil Spill Liability Trust Fund for $150,000 to help address the pollution, and contractors were scheduled to begin pumping product off the barge on Saturday afternoon. The maximum potential for fuel and oily waste remaining on the barge is unknown, and the barge's owner has not been identified. "Our job is to ensure the potential for pollution in this situation is mitigated," said Coast Guard Chief Petty Officer Emily Clore. "The sheening so far is relatively light, and seems to be discharging intermittently, at a slow rate. But protecting the pristine maritime environment surrounding Kodiak Island is our top priority here."
Canadian Oil Driller Abruptly Shuts Down, Abandons 4,700 Wells - A junior Canadian gas E&P company has shut down abruptly, leaving as many as 4,700 wells behind, CBC reports, quoting the Alberta Energy Regulator, which said it had sent Trident Exploration Corp. an order to manage its wells, to which the company did not respond.Trident closed two days ago and announced it would not be returning any money to shareholders or holders of unsecured bonds, adding it had well abandonment and reclamation liabilities of US$244.78 million (C$329 million) to deal with.According to the Alberta Energy Regulator, these 4,700 wells add to more than 3,000 abandoned wells in Canada’s oil heartland that are currently awaiting remediation. The regulator also said it had been working with the company to smooth its exit from the industry and had ordered it to decommission the wells or transfer them to another company. Trident failed to comply with the order, the AER said.“Trident does not have the funds to operate its infrastructure or enter into creditor protection. As a result, they have decided to walk away, leaving more than 4,400 licensed sites, many of them active, without an operator,”the watchdog told CBC.Data from the Alberta Energy Regulatorsaysthere are some 170,000 abandoned wells in the province, most of these sealed and taken out of service or reclaimed. The number represents more than a third of the total well count in Alberta, with the watchdog noting in its overview on the topic that even their abandonment, the wells remain the responsibility of the company that owns them. Two years ago, think tank C. D. HowewarnedAlberta was facing a well cleanup and reclamation bill of US$5.95 billion (C$8 billion) and needed to change the way it made companies take financial charge of the abandonment and reclamation of their wells. Since then, this figure has grown.
Diesel traders anticipate shortage, but not just yet: Kemp - (Reuters) - Gasoil traders expect the middle distillates market to stay well supplied until almost the end of 2019 before swinging into deficit with the introduction of new maritime fuel regulations.Calendar spreads for low-sulphur gasoil delivered to Europe's Amsterdam-Rotterdam-Antwerp hub are currently in contango through until October before shifting to backwardation from November onwards (https://tmsnrt.rs/2WgXabR).In futures markets, contango structures, where future contract prices are higher than front-month prices, are associated with expectations of adequate or rising inventories. The reverse structure of backwardation tends to indicate a drawdown in stocks.The current structure suggests the market will be plentifully supplied through the northern hemisphere's summer and autumn before shifting to a shortage with the onset of winter and introduction from Jan. 1 of new fuel rules by the International Maritime Organization (IMO). In most cases, the new rules will force shipowners to switch from burning high-sulphur residual fuel oil to low-sulphur distillate-type fuels. If they don't change fuel, they must install exhaust-gas cleaning systems commonly called scrubbers.Refinery crude processing is expected to reach record rates in the third quarter, especially in the United States, as refiners try to rebuild depleted gasoline stocks, which will swell gasoil stocks as a by-product.But as refiners cut back on crude processing and gasoline production in the autumn, distillate markets are expected to tighten with winter heating demand and the entry into force of IMO bunkering rules.As a result, spreads for the fourth quarter of 2019 and the first half of 2020 have been marching steadily towards or deeper into backwardation, while the spread for June-September 2019 has stayed in contango (https://tmsnrt.rs/2XV1i1E). The market dynamics are consistent with reports that physical traders have started putting excess gasoil and other middle distillates, such as heating oil and road diesel, into storage in anticipation shortages later in 2019. Contango structures help offset some, or all, of the cost of storing and financing distillate stocks in the next few months before the barrels are sold at the end of the year or in 2020, potentially at a higher price. Recent reports have suggested traders are chartering vessels to act as floating storage near gasoil delivery hubs or key bunkering ports, and filling them with gasoil and other middle distillates. Extra distillate inventories accumulated during 2019 should help ameliorate shortages in 2020 and ease the transition to the new bunkering regulations. Before then, the gasoil market is set to remain in surplus through the third quarter, which likely explains why most hedge funds are maintaining a relatively neutral position on near-term distillate prices. The bottom line is that traders expect the distillate market to tighten, but not until the U.S. summer driving season is over and the IMO regulations get much closer.
U.S. Pricing Dominates Physical Natural Gas Market Transactions in Mexico, MGPI Survey Says - The first survey of buyers and sellers of natural gas in Mexico conducted by NGI's Mexico GPI shows that U.S. price indexes are involved in the majority of transactions in Mexico.The survey received 29 responses from natural gas buyers and sellers in Mexico, one short of the 30-sample size generally considered by statistical theory as needed to approach the population mean, and so a fairly good measure of current realities in the market.There was also ample representation of both buyers and sellers in the survey. Ten respondents were marketers, eight represented industrial end-users in Mexico, and five were gas producers.Respondents said on average 34% of the gas they buy or sell within Mexico and/or at the U.S.-Mexico border is based on a differential to a U.S. index.Meanwhile, 23% of natural gas transactions within Mexico and/or at the U.S.-Mexico border were tied to the Petróleos Mexicanos (Pemex) First Hand Sales pricing mechanism (VPM), which is derived from various Texas indexes.
Britain's LNG Flows Hit a Record -- Britain’s appetite for natural gas usually declines in the summer, but this season is different with a record number of LNG tankers due to land this month. The incoming cargoes show no sign of slowing, and will keep the pressure on benchmark prices already trading below their five-year seasonal average. That’s good news for factories and households as Brexit clouds the nation’s economic outlook. “We can expect a significant pressure on prices this summer,” said Murray Douglas, a research director for European gas at Wood Mackenzie Ltd. “The global LNG market is strong, we will still have a lots of LNG turning from the Asian to the European markets and we still see lots of LNG deals” and approvals for new projects. Cargoes are heading to the U.K. and other northwest European nations because thanks to the extensive infrastructure and traded hubs they can absorb any global surplus as well as handle a growing worldwide production boom. Britain is still taking imports of the super-chilled commodity even after its gas export pipeline shut for repairs this month. LNG prices in Asia, the biggest consumer of the fuel, have also been too low to spur traders to ship cargoes east. Cooler weather is also supporting demand in the U.K. While Asian LNG spot prices have regained their traditional premium over European hubs, Atlantic basin suppliers such as the U.S. and west Africa are still sending most of their cargoes to Europe, their nearest liquid market. Longer term, more plants are due to start producing LNG and a number of projects from Mozambique to Russia are nearing investment decisions this year. U.S. President Donald Trump may use Europe’s increased appetite for LNG to promote his country’s fuel in the region when he visits the U.K. in June, according to Leslie Palti-Guzman, president and founder of consultant GasVista LLC in New York. In addition, the European Union and the U.S. will hold a forum in Brussels on May 2 to discuss bringing natural gas originated from shale fields in the U.S. to nations from Germany to Greece. U.K. shipments are mainly sourced from the biggest exporter Qatar, as well as countries such as Nigeria and Norway, but the U.S. is becoming a bigger supplier. Britain is now among the top-10 importers of American LNG this year. “This surge in U.K.-U.S. trade flow will bode well with the June visit of President Trump to the U.K., who has repeatedly used U.S. LNG as a tool in trade negotiations,” Palti-Guzman said by email. “The U.K. will be able to trumpet the increase in U.S. LNG imports to reinforce its trade relationship with the U.S., especially post-Brexit.”
Fracking tsar quits after six months and blames eco activists - The government’s fracking tsar has quit the post after just six months, claiming policy relating to the controversial process means there is “no purpose” to her job.Natascha Engel told the business secretary, Greg Clark, that developing the industry would be “an impossible task” despite its “enormous potential”. In her resignation letter, she said environmental activists had been “highly successful” in encouraging the government to curb fracking.Engel, a former Labour MP, wrote the letter following two weeks of protests by the Extinction Rebellion group, which brought parts of London to a standstill with demands to cut emissions to zero by 2025.She wrote: “A perfectly viable and exciting new industry that could help meet our carbon reduction targets, make us energy secure and provide jobs in parts of the country that really need them is in danger of withering on the vine – not for any technical or safety reasons, but because of a political decision.” Engel complained that a traffic light system that halts fracking when a tremor with a magnitude of 0.5 is recorded “amounts to a de facto ban”. “The UK could be on the cusp of an energy revolution the like of which we have not seen since the discovery of North Sea oil and gas,” she wrote. Engel’s resignation letter said: “The UK is currently spending £7bn a year on importing gas – money that is not being used to build schools, hospitals or fix the potholes in our roads. Developing our own shale gas industry would mean money going into the Treasury rather than out.”
Government's fracking tsar quits after six months and accuses ministers of caving in to the 'small but loud' group of eco warriors led by Greta Thunberg - Britain's fracking tsar has quit after just six months – saying developing the industry had become an impossible task.Natascha Engel claims the Government has caved in to the powerful environmental lobby, meaning there is 'no purpose' to her job.She told her boss, Business Secretary Greg Clark, that the shale gas industry has 'enormous potential'. But in her resignation letter, she said eco activists had been 'highly successful' in encouraging ministers to curb fracking – which she said can create jobs and provide a cleaner alternative to coal and biomass.She has also accused ministers of listening more to environmental campaigners such as 16-year-old Swedish schoolgirl Greta Thunberg than to those involved in the fracking industry.Last night Miss Engel told The Sun: 'It's fine listening to people like Greta and the Extinction Rebellion but they don't have any answers.'The Government are paying more attention to them than the very people wanting to invest and develop new energy reserves or even local communities.'Miss Engel, 52, resigned following two weeks of protests by Extinction Rebellion which brought parts of London to a standstill. The group is demanding that carbon emissions are cut to zero by 2025. But the former Labour MP argued that ending fracking will cause higher, not lower, greenhouse gas emissions because Britain will be more reliant on imported gas.
UK Fracking Commissioner Admits to Deleting Correspondence With Industry --The British government's recently-departed shale gas commissioner admitted to routinely deleting correspondence and throwing away notes from meetings with fracking companies in a move that may have violated transparency requirements. In response to an Unearthed freedom of information request sent earlier this year, Natascha Engel — who resigned this weekend after just 6 months in the role — said: "I tend to deal with everything on the day and delete what has been done to avoid any huge build-ups or risk of duplication. "The same is true of the few notes I take in meetings which I review in the evenings, action and throw away." The failure to take notes and systematic destruction of information in this manner could be in breach of the Environmental Information Regulations 2004 (EIR). The original request was for all email communications with the UK's two leading fracking firms: INEOS – for which Engel has previously done paid work — and the Lancashire-based operator Cuadrilla. Unearthed initially wrote to the Department for Business, Energy and Industrial Strategy (BEIS), which employs Engel for a fee of £500 a day, for the information but were told to apply directly to Engel herself who was described as "separate from BEIS." Following Engel's response, Unearthed has requested an internal review of the handling of the request. However, it is not clear if the review will continue to be processed following Engel's exit and, if so, who will conduct it, as Engel carried out the initial response and guidance from the Information Commissioner's Office states that review of this nature should be "carried out by someone senior to the person who dealt with the original request" or, if that is not possible, "someone trained in, and who understands, the Environmental Information Regulations." Though Engel did provide a handful of emails in response to the request, there were no communications covering Oct. 5, when she first entered the role, and Dec. 30.
Greenpeace activists climb aboard oil rig in Norwegian Arctic - Greenpeace activists on Monday climbed on board the West Hercules oil rig, owned by deepwater drilling company Seadrill, in the Norwegian Arctic to protest against new oil drilling. Four climbers had ascended the oil rig, four people were at the base in kayaks and others were protesting from the shore holding banners saying "ban new oil" and "people versus oil." "We in Greenpeace, together with another youth NGO, Nature and Youth, are here to protest against new oil drilling, especially from oil fields in the Arctic, which is a vulnerable area," Greenpeace Norway's Communications Manager Aud Hegli Nordo told DW. The activists hailed from Norway, Sweden, Denmark and Germany. The West Hercules oil rig is currently anchored off the Norwegian town Hammerfest, continental Europe's northernmost town, and has been commissioned by Norwegian multinational energy giant Equinor to drill at the site of its liquefied natural gas plant, Snoehvit. But the oil rig is due to drill oil from the Korpfjell Deep well in the Barents Sea after receiving permission from the Petroleum Safety Authority earlier this year. It is the most northern license to ever be granted for drilling in Norway, Nordo told DW. "We have found more oil and gas in the world than we can afford to burn if we are to reach our climate goals, so going and exploring for new oil and gas does not make sense," she added. German Greenpeace activist Laura Breitkreutz attended the demonstration on Monday and said she was protesting to save the planet for future generations. "[According to] the latest climate catastrophe report published in October [by the UN Intergovernmental Panel on Climate Change] we only have 11 years left to become as carbon neutral as possible to prevent climate change getting worse," Breitkreutz said.
Trump's Unrealistic Rhetoric on US LNG Exports to Baltic States - Europe appears keen to reduce its reliance on Russian natural gas imports. Alongside Poland, those making the loudest noises are the Baltic states of Estonia, Latvia and Lithuania. All three are current NATO and European Union members, but were once part of the erstwhile Soviet Union. Their energy dependency on Russian gas imports – a hangover from a bygone era and geographical proximity – didn’t enter political discourse until recently, when in 2014 Russia annexed Crimea from Ukraine, and spooked much of the old continent. If that was a wake-up call, the Lithuanians in particular smelt the coffee. Their Klaipeda LNG import terminal was conceived to serve not just Lithuania, but Estonia and Latvia too. By June 2017, Lithuanian state-owned trader Lietuvos Duju Tiekimas inked a deal with a unit of Cheniere Energy, for its first direct import of LNG from the U.S. On August 21, 2017, history was made when an LNG tanker from Sabine Pass, U.S. docked at Klaipeda. At no point was the U.S. government involved in the deal; but tell that to President Donald Trump. Quick to jump in on news of the shipment, and that of an earlier dispatch of U.S. LNG to Polish state-owned trader PGNiG, the President expressed hope for “many more shipments” of natural gas “as we have plenty of it.” Lithuanian Energy Minister Zygimantas Vaiciunas said: “We are happy to reach a point where importing gas from U.S. is not only politically desirable but also commercially viable.” The latter point is debatable as cargoes from the U.S. have ebbed and flowed since. However, if you thought political hot air had subsided and that Trump’s attention span for any given issue is usually a short one, then think again.
Russia to restore oil pipeline supplies to Europe in two weeks - (Reuters) - Russia plans to restore oil supplies via its key Druzhba pipeline to Europe in two weeks, after joint talks with Belarus, Ukraine and Poland on Friday in Minsk. Poland, Germany, Ukraine and other countries suspended imports of Russian oil via the pipeline this week due to contamination. Halting those supplies has knock-on effects further along the network. After joint talks in the Belarus capital on Friday, Russia’s Deputy Prime Minister Dmitry Kozak said in a statement that the four countries had agreed on joint measures to eliminate the effects of the contamination. “This would allow us, as earlier planned, to supply... (clean) oil to the border with Belarus by April 29 and to restore the pipeline (to stability) in two weeks,” Kozak said in the statement on Friday. Pavel Sorokin, Russia’s deputy energy minister, told reporters in Minsk after the talks that one of the options for supplying clean oil was to mix the contaminated product with regular supply. Russia’s pipeline monopoly Transneft said on Friday that the contamination which led to the suspension of the oil flows to Europe could be deliberate, Interfax news agency reported. The problem arose last week when an unidentified Russian producer contaminated oil with high levels of organic chloride, which is typically used to boost oil output but which must be separated before shipment as it can destroy refining equipment.
Clean Russian oil has reached Belarus via key pipeline, Moscow says (Reuters) - Clean Russian oil had reached the border with Belarus by midday on Monday, a Russian official said, five days after European refineries suspended imports because of contamination in the Druzhba pipeline. Poland, Germany, Ukraine, Slovakia and other countries on the network suspended oil imports via the Druzhba pipeline after finding contaminants that can damage refinery equipment. “As planned, at 1200 (0900 GMT) on April 29 oil ... has reached ... the Druzhba pipeline’s Unecha border station,” Ilya Dzhus, spokesman for Deputy Prime Minister Dmitry Kozak, said in a statement. Belarus had earlier said that clean Russian oil had yet to reach its borders via the pipeline — a major source of oil supply across Europe — after tainted crude prompted several importers to halt flows last week. State-run oil company Belneftekhim said that Belarusian refineries were still running at reduced capacity, though Moscow had said it would start pumping clean crude through the Druzhba network from Monday. Negotiations with Moscow over Belneftekhim’s oil supply will continue, one of its deputy chairmen, Vladimir Sizov, told Reuters as he left talks at the Russian Energy Ministry on Monday..
How Russia contaminated $2.7 billion of oil exports to Europe (Reuters) - The letter was from the state pipeline company in Belarus, Gomeltransneft, telling oil refiners and pipeline operators in Poland, Ukraine, Hungary, Slovakia and the Czech Republic that the crude heading toward them from Russia down the 5,500 km (3,400 mile) Druzhba pipeline network was heavily contaminated. For the next 10 days, refiners and oil firms in Europe cut purchases of Russian oil by up to a million barrels a day - or 10 percent of European oil imports - in a major disruption to supply from the world’s second largest oil exporter. The disruption sent oil to a six-month high above $75 a barrel, tarnished Russia’s reputation as an exporter at a time of rising competition with U.S. oil sales and triggered a Russian probe into whether the pipeline had been sabotaged. As the crisis entered its 11th day on Tuesday, oil buyers had yet to hear directly from Russian pipeline monopoly Transneft, the owner of the network that exported the tainted oil, 10 sources at Western oil firms and trading houses said. The oil was contaminated with organic chlorides, compounds used in the industry to boost extraction from oilfields by cleaning oil wells and accelerating the flow of crude. The compounds must be removed before oil enters pipelines as they can destroy refining equipment or, at high temperatures, create the poisonous gas chlorine. Tests by Belarus on oil from Druzhba showed organic chloride levels of 150-330 parts per million (ppm) between April 19 and 22, according to Gomeltransneft documents seen by Reuters, well above the maximum 10 ppm allowed by Transneft. Contaminated oil has been found in Belarus, Poland, Germany, Ukraine and the Baltic port of Ust Luga, all of which are served by the Druzhba network, said multiple sources involved in trading Russian oil said. “This oil is not sellable. You cannot just dump the price and sell it at a discount. No one wants this oil,” a second source at a Western oil company said. “This will take months and Russian exports and even production may have to fall,” said Sen at Energy Aspects, adding that European countries might have to tap strategic oil stocks if the outage lasts longer. Last week, the world’s biggest oil trader, Vitol, refused to take a cargo from Ust Luga saying it was contaminated, forcing the port to shut down for 24 hours, according to several sources at Western oil companies and trading houses. For now, there is no explanation as to how the oil was tainted. The scale of the contamination suggests corrupted crude could have been pumped into the pipeline for days, if not weeks. Belarus said on Tuesday that the volume of contaminated crude could be as high as 5 million tonnes - equivalent to a month’s exports via Druzhba of about 1.2 million barrels a day and worth $2.7 billion at current prices. In a news briefing on Friday, Igor Dyomin, an aide to Transneft’s Tokarev, told Russian media “the contamination was intentional”. He did not name the producers and said investigators were searching several private companies in the Samara region. Putin said the crisis had caused very serious economic, material and reputational damage. Putin said on Saturday that law enforcement agencies could step in if Transneft’s internal investigation failed to provide enough answers.
The Logistical Nightmare of Cleaning Up Russia’s Tainted Oil - How do you get millions of barrels of dirty Russian oil out of the pipelines? Eastern European nations are working on an unprecedented logistical operation to do just that. Russian crude flows to Europe are said to have been suffering from high levels of organic chloride since at least April 21. About 30 million barrels -- enough to fill 15 supertankers -- could have been contaminated, according to Energy Aspects analyst Christopher Haines. The range of solutions involved will include drip feeding the tainted barrels into clean crude supplies in order to dilute down the contaminant and deploying thousands of railcars to move the crude to other locations in Russia. In addition to the release of strategic oil reserves, crudes will probably be pulled from other parts of the world in order to keep refineries running. “This is a huge logistical issue,” Haines said by phone from London. “It is on the biggest oil pipeline that comes into Europe. There could be anywhere between 20 and 50 million barrels of this crude, we’re estimating it’s probably around 30 million.” While the impact of the disruption has so far been largely unfelt in crude futures markets, governments in Poland and Hungary released strategic oil reserves to keep their refineries going. Some of the contaminated crude is thought to contain up to several hundred parts per million of organic chloride -- an element that’s corrosive and can damage both pipelines and refinery units. Transneft, which operates the Druzhba pipeline, has a limit of ten parts per million, while a normal value would be between one and three parts per million, Haines said. One thread of the twin pipeline will be freed up by moving about 400,000 tons of substandard crude to farms in Hungary, Slovakia and Ukraine, in an effort to resume oil flows. That should mean clean oil can reach European Union countries by May 18, Ukraine’s national pipe operator said. At the same time, Russian Railways is helping take some of the oil out of Belarus by train. Despite the attempt to use rail capacity, there aren’t enough carriages to take sufficient oil away from the pipeline, according to Dora Polgar, senior analyst at Facts Global Energy, adding that the pipeline may have to be reversed in order to clear some of the flows. “Railway takeaway capacity is limited,” she said. “We are talking about all of Druzhba and the pipeline that goes to Ust-Luga, and they don’t have the equivalent capacity, not even close to it, with railway.” More immediately, the governments of Russia’s customers have been releasing emergency reserves. The International Energy Agency said on Tuesday that Poland is using inventories to maintain normal operations at two refineries. At the same time, Hungary has released 400,000 tons, or 60 percent of its stockpiles, to compensate for supplies halted due to contamination.
Oil spill threatens to pollute water sources in Makueni - The Kenya Pipeline Company (KPC) has started cleaning up an unknown amount of diesel in Makueni County which spilled from a punctured section of the new Sh48 billion Mombasa-Nairobi oil pipeline. It is not clear for how long the new pipeline had been leaking before the spillage was detected three weeks ago. The affected area is tucked in a forested area at the source of the seasonal River Kiboko. “We did not expect a leak on this pipeline since it is only one year old. This was an accident. We suspect that the punctured spot was weakened by a boulder dropped by an excavator during the laying of the pipeline,” acting KPC managing director Hudson Andambi said on Monday. KPC technicians have since repaired the pipeline but multiple trenches sunk around the affected area show that the underground water in the area has been contaminated with oil, to the chagrin of local water users and environmentalists. “Be assured that no more oil will percolate because we have sealed the pipeline. We have embarked on establishing the extent of the leakage and that is why we have sunk the inspection trenches. A contractor will soon come over to map the extent of the oil spillage and the concentration of the oil in the soil and the water sources using specialised technology. We shall then remove all the contaminated soil to Makindu pump station because we don’t want it to remain there to continue causing more trouble,” said Mr Andambi.
Warp factor: Asia's LNG markets distorted by oil price surge - The price gap between LNG traded in the spot market and term cargoes linked to benchmark Brent crude oil has stretched to its widest in about 8 years, driving some buyers locked in to term deals to try to delay shipments or look to adjust contracts. That comes as record supplies of LNG keep spot prices low, while prices under term contracts rise in tandem with oil. Brent hit highs so far for 2019 after Washington stepped up sanctions on Tehran and as the Organization of the Petroleum Exporting Countries (OPEC) continued to withhold crude supply to bolster markets.[O/R] “Anyone buying on a Brent basis and selling on a (spot) basis, for example, is losing money in a big way,” said Jason Feer, global head of business intelligence at Poten & Partners, an LNG tanker brokerage and consultancy. Brent-indexed LNG costs around $10.50 per million British thermal units (mmBtu) at the moment, while the spot price is just above $5 per mmBtu. Measured by a single cargo on a large LNG tanker, an oil-linked delivery currently costs as much as $120 million, while the same product delivered into the spot market could be available for around $60 million. “(The wide price spread) is a good example of the risks that are emerging as the LNG market becomes more globalized and commoditized,” Feer said, adding that pricing had become increasingly diversified. Oil-linked term cargoes make up around two-thirds of supply in Asia, the world’s top LNG-consuming region. Long-term LNG contracts are typically linked to oil prices as there are no uniform global prices for gas.
Saudi Aramco Sees Shale Gas As Kingdom's Next Energy Bonanza -- - The world’s biggest oil exporter is ramping up efforts to develop natural gas with plans for a 15-fold boost in output from unconventional deposits of the fuel. Saudi Aramco is building facilities to tap shale gas in the kingdom’s oil-rich eastern region and is making “a lot of progress” toward this goal, Chief Executive Officer Amin Nasser told reporters in Dammam, Saudi Arabia. Plans include a plant to desalinate seawater that Aramco can then inject underground to frack for gas. “We are looking to take our unconventional gas within the next 10 years to 3 billion standard cubic feet a day of sales gas,” Nasser said on Sunday. Aramco currently produces more than 190 million cubic feet of unconventional gas daily, all of it in the remote north. Known officially as Saudi Arabian Oil Co., the state-run company is expanding its search for gas as a potential export to help reduce the nation’s reliance on sales of crude. Saudi Arabia also wants to use gas at home as fuel in power stations and as feedstock for the production of petrochemicals, a high-priority industry for the government in its strategy to diversify the economy. Earlier attempts to find and develop Saudi gas, together with international partners including Exxon Mobil Corp. and Royal Dutch Shell Plc, met with lackluster results. Now, with improved technology, Aramco is seeking unconventional gas at the South Ghawar and Jafurah deposits in eastern Saudi Arabia, Nasser said. It plans, for example, to build a reverse-osmosis desalination plant to treat Persian Gulf seawater for injection into the Jafurah basin to dislodge shale gas. Jafurah is located between Ghawar, the world’s largest oil field, and the Gulf, near the hub of the Saudi energy industry. The water-treatment facility is in the planning and design phase and could be in operation in four to five years, Mohammed Al Qahtani, Aramco’s senior vice president for upstream, told reporters in Dammam. Aramco plans to double its total gas production to 23 billion cubic feet a day over the coming decade, Nasser has said.
Massive Oil Discovery in Pakistan: Hype vs Reality – video - Prime Minister Imran Khan has recently raised Pakistanis' hopes of ExxonMobil and ENI being on the verge of a massive discovery of offshore oil and gas reserves in Pakistan. Is this real? Or mostly hype? What is the size of these reserves? Will it be more than sufficient to meet Pakistan's current needs of over 200 million barrels of oil per year? Will Pakistan become a net exporter of oil and gas like major OPEC nations? Why is it taking so long to get confirmation from the companies involved? What are the technical issues in getting confirmation of these huge reserves? Why is there such a big concern about blow-out? Is it because the 1.5 billion barrels pre-drill estimate of Kekra-1 well in block G of the Indus basin off the Karachi coast? Could such a large reserve cause a major blow-out accident like the one British Petroleum had in Gulf of Mexico near Louisiana in the United States? How long will it take to fix the blow-out preventer (BOP) and complete drilling of the remaining 600-800 meters of the total depth of over 5,500 meters deep in the Arabian Sea? Azad Labon Kay Sath host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com) https://youtu.be/02oKLNPmUdk
Donald Trump’s Iran oil sanctions may severely damage India’s economy (and the world’s) --The United States has unnerved the world oil market by ramping up the pressure in its long-running dispute with Iran. It has announcedthat, after May 1, it will not renew the exemptions given to eight countries that enable them to buy Iranian oil. Those affected, including China, India, Japan, Italy and South Korea, will face sanctions from Washington if they do not comply. The move will likely squeeze global oil supply at a time when it is already struggling from disruptions inVenezuela, Libya and Nigeria. Indeed, the Brent crude price has already risen on the back of the announcement to $74 per barrel, the highest since last November.President Donald Trump has said he is confident that a supply crunch can be avoided thanks to extra output from Saudi Arabia and the United Arab Emirates, but traders and Asian petrochemical firms are sceptical that these countries will fully comply. In recent months, Saudi Arabia and other members of the Organization of the Petroleum Exporting Countries have cut supply dramatically to redress their fears that hefty US shale oil output and declining global energy demand could cause a supply glut that would batter prices.In December the oil cartel, along with Russia and other allies, agreed toreduce output by 1.2 million barrels per day, cutting the global total volume by more than 1%. They have since exceeded those benchmarks, with Saudi Arabia alone reducing supply by 8,00,000 barrels a day. In March, the kingdom slashed production to a four-year low of 9.82 million barrels a day, making up the majority of OPEC’s reduction of 2,95,000 daily barrels for the month to 30.3 million barrels per day.No one ever forgets when the Saudis famously went against Western interests in the Arab Oil Embargo of 1973, in response to US policies with similarly global consequences: President Richard Nixon had scrapped the gold standard, heavily devaluing the US dollar, and then backed the Israelis in the Yom Kippur war against Egypt. Inflation-adjusted oil prices nearly doubled during the embargo from around $26 per barrel in 1973 to over $46 per barrel the following year, sending economic shockwaves around the world.
The US Must Not Be Allowed to Strong-Arm India-Iran Ties - The use of military power to influence hostile countries and attain foreign policy objectives is not a practical option anymore. This is especially true for powerful, developed countries like the US. Given the severe financial repercussions and weakening domestic support for such costly endeavours, the US is increasingly making a case for the use of economic sanctions as a policy tool.Economic sanctions are not new, but under the Trump administration, it seems to be the preferred alternative to deal with both friends and foes. The US Department of Treasury has an increasingly long list of individuals, corporations and countries on whom restrictions are being imposed. The measures can range from a simple set of tariffs to a full-blown economic blockade. These measures can sometimes be unfair.Last year, the US had a change of mind and decided to ignore the 2015 Iran nuclear accord that it signed with its longtime foe after much deliberation. The historic pact sealed during Obama’s tenure ensured that in exchange for lifting the crippling economic sanctions, Tehran would give up a bulk of its nuclear programme and would also submit itself to extremely invasive inspections from time to time. It was signed by the US along with other members of the UNSC, Germany and the EU. The US now wants to renegotiate the deal and has reimposed sanctions on Iran. To increase pressure on Tehran, a few days ago, secretary of state Mike Pompeo announced the cancellation of sanctions waivers. This was done to bring Iranian exports down to ‘zero’. Eight countries, including India, that were allowed to buy Iranian oil have also now been barred from doing so and will face secondary sanctions if they refuse to comply. The deadline to stop the imports from Iran is May 2. And although India has indicated acceptance, the question remains – should it comply with the US’s directive?India is the world’s third largest oil importer, and a large share of that comes from Iran (23.5 million tonnes in 2018-9). Not only is Iran India’s third largest supplier (vs just 3% of oil imports from the US), it does so on very sweet terms – with 60-day credit, free insurance, free on board (FOB) basis and a barter-of-goods arrangement.India and Iran have a deeply historical and cultural relationship, especially important in the fractious Middle East. Stopping imports will hurt. International crude prices have already jumped – oil is over $74 a barrel. As consumers, we have been lucky so far, as it has not been reflected in the domestic prices of fuel, because of the Lok Sabha elections. But chances are that after May 19, the oil marketing companies will swing into action, resulting in a spurt of petrol and diesel prices.
A New Mega Cartel Is Emerging In Oil Markets - China and India—two of the world’s largest oil importers and the biggest demand growth centers globally—are close to setting up an oil buyers’ club to have a say in the pricing and sourcing of crude oil amid OPEC’s cuts and U.S. sanctions on Iran and Venezuela, Indian outlet livemint reports, citing three officials with knowledge of the talks.This is not the first time that the two major oil importers are working to create such an oil club.India and China have discussed creating an ‘oil buyers’ club’ to be able to negotiate better prices with oil exporting countries and will be looking to import more U.S. crude oil in order to reduce OPEC’s sway, both over the global oil market and over prices, India’s Petroleum Ministry said in June 2018.“With oil producers' cartel OPEC playing havoc with prices, India discussed with China the possibility of forming an 'oil buyers club' that can negotiate better terms with sellers as well as getting more US crude oil to cut dominance of the oil block,” a tweet from the Petroleum Ministry’s Twitter account said in the middle of last year, when oil prices were rising ahead of the return of the U.S. sanctions on Iran’s oil industry.According to the officials cited by livemint, China and India have exchanged senior-level visits several times since then and have made progress on “joint sourcing of crude oil.”Reports of the strengthened Chinese-Indian cooperation in potentially forming an oil buyers’ club come just as the U.S. sanction waivers for all Iranian oil customers expire this week.China is Iran’s number-one customer, while India is the second-largest buyer of Iranian oil, so the end of the U.S. waivers will mostly affect refiners in those two oil importers who will be scrambling to source crude from other sources or risk secondary U.S. sanctions. “China and India should do so to grab more bargaining power to make oil prices more sustainable,” Jawaharlal Nehru University Professor Srikanth Kondapalli told the Global Times in a recent interview, commenting on the benefits of an oil buyers’ club.
$1 Billion In Iranian Crude Is Stranded At A Chinese Port - It's no secret that Beijing has chafed at American audacity to try and dictate whom Chinese refineries can and can't buy oil from. And in the latest example of just how aggravating the decision to end waivers for Iranian crude imports has been for the world's second-largest economy, Reuters reported that some 20 million barrels of Iranian crude have been languishing at the northeastern port of Dalian for months, but because of the US's decision to re-impose sanctions on Iran back in November, nobody wants to touch the oil. Even when the waivers were in effect, Chinese refineries couldn't secure financing and insurance that would allow them to purchase the oil because of the uncertainty surrounding the future of the waivers. Iran sent the oil to China via the National Iranian Tanker Company before the sanctions were imposed as Iran struggled with a backlog of oil that had exhausted the country's domestic storage capacity. So Beijing, the largest buyer of Iranian oil, allowed the NTCC to store some oil in so-called bonded storage tanks situated in the Dalian port. The oil has yet to go through Chinese customs.China filed a formal complaint with the US over its decision to end the waivers, but the US has refused to consider any exceptions to its plans to reimpose full sanctions. As one analyst told Reuters, no Chinese company will touch the oil unless specifically instructed to do so by the Chinese government. The oil is being held in so-called bonded storage tanks at the port, which means it has yet to clear Chinese customs. Despite a six-month waiver to the start of May that allowed China to continue some Iranian imports, shipping data shows little of this oil has been moved. Traders and refinery sources pointed to uncertainty over the terms of the waiver and said independent refiners had been unable to secure payment or insurance channels, while state refiners struggled to find vessels. The future of the crude, worth well over $1 billion at current prices, has become even more unclear after Washington last week increased its pressure on Iran, saying it would end all sanction exemptions at the start of May. "No responsible Chinese company with any international exposure will have anything to do with Iran oil unless they are specifically told by the Chinese government to do so," said Tilak Doshi of oil and gas consultancy Muse, Stancil & Co in Singapore. To be sure, Reuters says, some of the oil was apparently purchased by a Sinopec refinery. But the bulk of the stock remains untouched. The headache for Beijing will likely only get worse, because shipping data show more Iranian crude is heading for Chinese ports.
U.S. sanctions on Iran, Venezuela set up crunch for heavier oil (Reuters) - Tighter U.S. sanctions on Iranian oil planned for May are adding to a wealth of factors curbing global supply of heavy-medium crude, driving up prices for scarcer barrels and setting up a stand-off between buyers and sellers. The new curbs on Iranian exports come on top of Washington’s earlier ban on Venezuelan crude and output snags in Angola, another big producer of the dense crude grades that best yield lucrative refined products like jet fuel. U.S. officials say overall global oil supply will remain plentiful despite its sanctions, not least from the boom in U.S. shale. But much of the profusion in supply, led by the United States, Saudi Arabia and Russia, is in lighter grades. The price for heavier crudes like Norway’s Grane and Heidrun has been firming over the last few months, a North Sea trader said. Over April, the price of Grane rose from around dated Brent plus 10 cents to close to dated Brent plus $1.00 a barrel. This month Iraq’s SOMO sold 2 million barrels of Basra Heavy crude to China’s Unipec at a premium of over $2 a barrel to its official selling price (OSP), the highest in months, sources said. Refiners are also seeking more of the heavy sweet crude Iran and Venezuela once provided in abundance to produce low-sulfur fuel oil ahead of new shipping emissions rules due next year. JBC cited price assessments from Argus that premiums for Australian heavy, sweet grades Pyrenees and Van Gogh versus North Sea dated rose by $2 per barrel to a record $9 per barrel. Price offerings for several Angolan streams, an approximate alternative to Iranian and Venezuelan crude, were at their highest ever, traders said. State oil company Sonangol was said to have sold a cargo of one of its heaviest grades, Dalia, over the last week for $2 a barrel above dated Brent, a $7 increase from two years ago. Typically, the grade trades at a discount of $1 or more. While some clients are prepared to buy at elevated prices, others are holding back. “We’re resisting it as much as possible,” one potential buyer said. Some of Sonangol’s regular customers balked at the mark-ups, prompting the company to offer the crude to other buyers instead as spot cargoes. These have sold quickly, trading sources said. The current stand-off between buyers and sellers comes down partly to uncertainty over just how much Iranian crude may still flow, crucially to top consumer China, after the May 1 deadline the U.S. has imposed for importers to halt purchases. Analysts expect China may flout the restrictions, especially since Washington may be loath to sanction Chinese companies importing Iranian crude which are at the same time key buyers of U.S. oil and liquid natural gas.
US Ability to Offset Iran Oil Losses Has Limits-- When the U.S. vowed to stop any sales of Iranian crude, Secretary of State Mike Pompeo trumpeted America’s ability to help offset supply losses. Maybe, but it would be a stretch. Oil condensate from the Eagle Ford shale basin in Texas is similar, though a bit heavier than Iran’s light South Pars condensate. But the Eagle Ford produces only about 150,000 barrels a day of its product, compared with Iran’s daily output of 600,000 barrels in 2017. It won’t be "like for like" replacement, said Sandy Fielden, an analyst at Morningstar Inc., by telephone. And "buyers may not be very confident." Meanwhile, American refiners hard-pressed to replace lost supply from Venezuela, Mexico and Canada are lined up for the heavier, high-sulfur oil produced in the U.S. that would be the closest alternative to other types of heavy crude produced in Iran. This week, the Trump administration said it won’t renew waivers that let countries buy Iranian oil without facing U.S. sanctions. Pompeo said the U.S., Saudi Arabia and the U.A.E. will work directly with Iran’s former customers to offset their losses. If the U.S. pulls off its stated intent to push Iran oil sales to zero, the waivers could affect as much as 800,000 total barrels a day of supply.
Iran says intends no closure of Hormuz Strait for int’l shipping —(Xinhua) -- Iran's top military commander said on Sunday that the Islamic republic does not intend to close the Strait of Hormuz for the international shipping. Tehran wants the Strait of Hormuz to remain open with sustained security, Chief of Staff of Iran's Armed Forces Major General Hossein Baqeri was quoted as saying by Tasnim news agency. The Iranian oil and commodities are being freighted through the strait just like the shipments of other countries, Baqeri said. The Iranian Armed Forces are in charge of security of the Strait of Hormuz and "if anybody is to make the Strait of Hormuz unsafe, we will certainly counter it." However, "if the hostility of enemies reaches a point that there is no other choice, that day, we will be fully capable of closing the strait," Baqeri said, referring to the conflict between the United States and Iran over Washington's sanctions against Tehran over its oil sales. "If our oil is not to be shipped over through the Strait of Hormuz, then the oil of others will not go through the strait either," he pointed out.
Iran sees oil above $100/b, repeats threat of Strait of Hormuz closing - A top Iranian military official repeated a threat to shut the Strait of Hormuz if the country's oil shipments are blocked by US sanctions, at the same time an official in parliament warned crude prices could top $100 a barrel, according to reports Sunday by state television news agency iribnews.ir. The threat to close the strait, the world's busiest oil transit chokepoint, was also made April 22 when the US announced it would end sanctions waivers for all buyers of Iranian crude. US President Donald Trump showed Friday he remains focused on domestic gasoline prices as he said in comments to reporters and separately in a tweet that he spoke with OPEC producers and asked them to increase supply to lower prices. "If our oil is not to pass the Strait of Hormuz, oil of others will certainly not pass through this strait either," Mohammad Bagher, chief of staff of the armed forces, said. Meanwhile, a member of Iran's parliament warned that oil prices will skyrocket following the decision to end the waivers. The Trump administration has announced it will end waivers on crude purchase granted to Iran's primary oil buyers in a bid to push Tehran oil sales to zero. The waivers currently issued for China, Greece, India, Italy, Japan, South Korea, Taiwan and Turkey expire on May 2. "Trump is struggling to win the next [presidential] elections" in 2020, Fereydoun Hasanvand, head of the parliament energy committee, said, according to iribnews.ir. He said Washington's plans to "take over Venezuela, cause trouble in Libya, establish martial law in Sudan" are intended to boost support for US sanctions against Iran. "Not extending the oil waivers of some countries is another side of the US measures against Iran. But if Iran's oil is fully sanctioned, oil price will go higher than $100 per barrel," Hasanvand said. ICE June Brent settled $2.20/b lower at $72.15/b, and NYMEX June WTI crude settled $1.91/b lower at $63.30/b at Friday's close. The 21-mile Strait of Hormuz at the mouth of the Persian Gulf handles roughly 40% of global crude trade. "If something happens [to] commercial vessels and oil tankers, the US will be obliged to respond to the questions of the Islamic Revolution Guards Corps., which is in charge of security in the Strait of Hormuz," Bagheri said. He also stressed that Iran will not initiate any move to escalate the tension between Washington and Tehran. "Of course, this doesn't mean shutting down the Strait of Hormuz and we don't have the intention to close the Strait of Hormuz. Unless the enemy or enemies push us to a limit until the day that we can close the Strait of Hormuz," Bagheri said.
What Oil at $100 a Barrel Would Mean for the World Economy - Surging crude prices are posing another headwind for the world economy after President Donald Trump’s “zero” pledge on Iran oil sales. Brent crude has risen about 33 percent this year and is close to the highest in six months. While higher prices due to strong demand typically reflects a robust world economy, a shock from constrained supply is a negative. Much will depend on how sustained the spike proves to be. Exporting nations will enjoy a boost to corporate and government revenues, while consuming nations will bear the cost at the pump, potentially fanning inflation and hurting demand. Ultimately, there comes a point where higher prices may be damaging to everyone. Rising oil prices will hurt household income and spending and it could accelerate inflation. As the world’s biggest importer of oil, China is vulnerable, and many countries in Europe also rely on imported energy. Seasonal effects will also impact. For a sustained hit to growth, economists say oil would need to hold above $100. It also depends on dollar strength or weakness, given crude is priced in greenbacks. Analysis by Oxford Economics found that Brent at $100 per barrel by the end of 2019 means the level of global gross domestic product would be 0.6 percent lower than currently projected by end-2020, with inflation on average 0.7 percentage points higher. An upending of global oil trade around the Iran-Trump spat could continue to have a sizable impact on financial markets, as the affected supply is as much as 800,000 barrels a day. Uncertainties around availability have already whipsawed oil markets. And the political sensitivities of these developments have other markets bracing for volatility. Emerging economies dominate the list of oil-producing nations which is why they’re affected more than developed ones. Winners include Saudi Arabia, Russia, Norway, Nigeria and Ecuador according to analysis by Nomura. Those emerging economies nursing current account and fiscal deficits run the risk of large capital outflows and weaker currencies, which in turn would spark inflation. Nomura’s losers list includes Turkey, Ukraine and India.
Oil prices stumble as hedge funds become overextended: Kemp - (Reuters) - Hedge fund managers added even more bullish long positions in crude oil and refined fuels last week, but positions showed signs of becoming stretched, setting prices up for a setback. Hedge funds and other money managers were net buyers of another 46 million barrels of futures and options in the six major petroleum contracts in the week to April 23, according to exchange and regulatory data. Funds were net buyers of Brent (+16 million barrels), NYMEX and ICE WTI (+24 million) and European gasoil (+8 million) but smaller sellers of U.S. gasoline (-3 million) and left U.S. heating oil positions unchanged. Portfolio managers have been net buyers of petroleum for 15 consecutive weeks, raising their net long position by a total of 609 million barrels since Jan. 8 (https://tmsnrt.rs/2DDsTwq ). Fund buying has been remarkably consistent and persistent, with small additions to net long positions week after week, and a progressive rise in prices, without any of the usual reversals. Nonetheless, there were signs positions were becoming stretched by April 23, so the subsequent tumble in prices should not have been surprising. In absolute terms, fund managers had amassed a bullish net long position of more than 900 million barrels, the largest since oil prices started to slump at the start of October 2018. Fund long positions in petroleum outnumbered short positions by a ratio approaching 9:1, nearing levels that triggered sharp price reversals in the past, most recently in October 2018 and April 2018. Fund positioning in crude hit a ratio approaching 11:1, the most lopsided since oil prices peaked at the start of October 2018, while positioning in gasoline remained near record levels at more than 35:1.
Oil prices steady after Trump says he pressed OPEC to offset Iran sanctions - Oil prices edged higher on Monday, as the market attempted to resume a weeks-long rally that was halted on Friday when U.S. President Donald Trump demanded that producer club OPEC raise output to soften the impact of U.S. sanctions against Iran. Brent crude futures were up 12 cents at $72.27 a barrel around 1:55 p.m. ET (1755 GMT). U.S. West Texas Intermediate crude futures lost 21 cents to $63.51. Both benchmarks fell around 3% in the previous session, after Trump told reporters that he had called OPEC and told the cartel to lower oil prices, without identifying who he spoke to, or if he was speaking about previous discussions with OPEC officials. However, analysts and market participants have downplayed the comments as details were unclear.Sources denied that several high-level OPEC and Saudi officials spoke to Trump. “No representative of OPEC or the Saudi government has come forward to acknowledge any discussion in this regard,” said Jim Ritterbusch, president of Ritterbusch and Associates. “This obvious effort to push gasoline prices down has been attempted previously by Trump and while forcing an initial price decline, such pullbacks have been followed by fresh price highs, sometimes within a matter of days.” Trump’s remarks initially triggered a sell-off, putting a temporary ceiling on a 40 percent price rally since the start of the year. The slide was exacerbated by technical factors including an excessive speculative long position in U.S. crude, analysts said. Speculators raised their combined futures and options net long positions in New York and London by 24,078 contracts to 326,818 during the week to April 23, the highest level since early October. That was the ninth consecutive increase.
Oil Gains as Saudis Signal Readiness to Extend Cuts - Oil edged higher, trading near $64 a barrel in New York, as Saudi Arabia reportedly signaled that OPEC and its allies could extend supply curbs to the end of the year. West Texas Intermediate futures added 1.1 percent. Saudi Energy Minister Khalid Al-Falih said that the Organization of Petroleum Exporting Countries and its partners remain focused on reducing oil inventories, according to an interview by RIA Novosti published on Tuesday. Last week U.S. President Donald Trump said Saudi Arabia and others had agreed to raise production while he tightens sanctions on Iran. Oil climbed to a six-month high last week after the White House announced tougher measures to choke off exports from Iran, ending a series of waivers that currently shields some buyers of Iran crude from American sanctions. While the Saudis pledged to assist any customers lacking supplies, the kingdom also remains committed to a pact with Russia and other producers to keep a lid on output. “In our opinion, OPEC+ will extend its cooperation and supply management for the remainder of 2019,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London. WTI for June delivery rose 72 cents to $64.22 a barrel on the New York Mercantile Exchange as of 10:40 a.m. in London. The contract closed 0.3 percent higher on Monday, snapping a three-session drop. Brent for June settlement, which expires Tuesday, gained 85 cents to $72.89 a barrel on the London-based ICE Futures Europe exchange. The contract, which slipped 0.2 percent on Monday, was at a premium of $8.37 to WTI. The more-active July contract added 74 cents. The producers’ group will try to reduce commercial inventories and focus on “global oil output, trying to correct it via our OPEC+ agreement, maybe from July to the end of the year,” Al-Falih told RIA in Riyadh. Most ministers involved in the current cuts agreement favor an extension, he said. Saudi Arabia is facing a tricky task to balance the market at it needs to revive its economy, while trying to placate Trump, who wants lower prices. International Monetary Fund data show the kingdom needs crude at about $85 a barrel -- well above current levels -- to balance its budget this year.
Oil ends mixed; uncertainty surrounds OPEC's next move after Trump's latest call for output boost - Crude-oil futures ended on a mixed note Monday, with U.S. prices managing to recoup a small portion of last week's loss, but global benchmark prices failing to hold on to modest gains. Uncertainty surrounds OPEC's next move in the wake of U.S. President Donald Trump's latest call on the Saudis and their allies to boost crude production. The Saudis may have some difficulty in finding an incentive to raise output, however. The Saudis need an oil price of about $85 a barrel to balance its budget this year, up from a forecast of $73 in September, Bloomberg reported Monday, citing data from the International Monetary Fund. Marshall Steeves, energy markets analyst at Informa Economics, told MarketWatch that the $85 figure seems "rather high," but Saudi Arabia's "main incentive to increase production is to stop losing market share to unconventional U.S. producers, while maximizing their own revenues." "They may well decide along with Russia to increase production quotas at their late June meeting, but that is a matter for another day," he said. For now, the modest rebound in U.S. prices "looks like a technical snapback after June WTI failed to retest Friday's low." U.S.-based West Texas Intermediate crude for June delivery rose 20 cents, or 0.3%, to settle at $63.50 a barrel. Prices tumbled 2.9% to settle at $63.30 a barrel on the New York Mercantile Exchange Friday to post a loss of 1.2% for the week, following seven consecutive weeks of gains, according to Dow Jones Market Data. In contrast, June Brent crude , the global benchmark, fell by 11 cents, or 0.2%, to settle at $72.04 a barrel after brief move higher. The contract, which expires at Tuesday's settlement, fell 3% on Friday. Trump has "repeatedly tried to influence OPEC's decision making when it comes to output but there's been no evidence that it's been in any way successful," said Craig Erlam, senior market analyst at Oanda. "So why are markets paying so much attention now? They're not really. Oil prices were looking very overextended to the upside and Trump's comments -- intentionally or not -- provided the perfect opportunity to cut exposure and allow the market to correct," he said, in a daily note. That led to recent losses. Oil contracts closed off their worst levels on Friday after OPEC's Secretary-General Mohammed Barkindo said he hadn't spoken with Trump, and The Wall Street Journal reported that Saudi Arabia's energy minister Khalid al-Falih wasn't part of those talks either. Trump later tweeted that he had spoken to Saudi Arabia.
Oil rises on Venezuela turmoil, Saudi support for OPEC cuts - Oil prices on Tuesday as Venezuela’s opposition leader called on the military to back him to end Nicolas Maduro’s rule and after Saudi Arabia said a deal between producers to withhold output could be extended beyond June to cover all of 2019. The situation in Venezuela, an OPEC member whose oil exports have been hit by U.S. sanctions and an economic crisis, was fluid on Tuesday. The government promptly dismissed any suggestion of a military insurrection. The statements by Saudi energy minister Khalid Al-Falih came despite pressure by U.S. President Donald Trump to raise output to make up for a supply shortfall expected from tightening U.S. sanctions against Iran. “There was an uptick even without Venezuela due to Falih’s comments,” said analyst Olivier Jakob at Petromatrix Brent crude futures were up $1.10, or 1.5%, $73.14 per barrel around 8:30 a.m. ET (1230 GMT). U.S. West Texas Intermediate crude futures rose $1.04, or 1.6%, $64.54 per barrel. Brent hit a six-month high above $75 last week because of tightening global markets amid U.S. sanctions on Iran and Venezuela coupled with Russian oil export problems stemming from a contaminated pipeline. Prices had come under downward pressure earlier on Tuesday after data on China’s factory activity weighed on financial markets, including crude oil futures, as it suggested Asia’s biggest economy is still struggling to regain traction. Despite a shaky global economy, oil prices have surged by about 36%-42% since January, lifted by supply cuts led by the Middle East-dominated producer club of OPEC as well as by U.S. sanctions on producers Iran and Venezuela.
Oil traders eye Saudi Arabia's response in a critical juncture for crude - Global oil markets sit at a critical juncture, with risks to supply being balanced against rising prices and questions over whether major producers will now turn on the taps. Brent crude touched $75 per barrel last week for the first time this year, helping the benchmark to log a fifth positive week in a row and add to the year’s near 40% gain. “This is definitely something we have to monitor,” UBS APAC Chief Investment Officer Adrian Zuercher told CNBC’s “Squawk Box Asia.” “It will remain volatile,” he added. “We expect Brent to remain between 70 and 80 U.S. dollars at this point.” WTI also moved above $65 a barrel, even as rising U.S stockpiles and surging U.S production slowed some of the recent price momentum. Renewed U.S. efforts to curb Iranian output, escalating tensions in Libya, supply outages in Nigeria and the ongoing crisis in Venezuela have created a complex and uncertain outlook for crude. The week ahead will be another major test, with Iranian sanction waivers officially expiring in early May, and the U.S decision to cancel all concessions raising new questions about how Saudi Arabia and other major producers will respond. “We now know that OPEC has that spare capacity,” Goldman Sachs’ Head of Commodities Research Jeff Currie told CNBCs “Power Lunch,” reiterating his Brent forecast of $70-75 barrel for the second quarter of 2019. “They ramped it up, they took it back down, and we think the (Iran) shock is roughly 900,000 barrels per day, and we just saw OPEC, at least core OPEC, taking 1.8 million barrels per day off the market,” Currie added. The decision to end the waivers could remove 1.3 million barrels per day of Iranian exports, according to S&P Global Platts. OPEC has about 3.3 million barrels per day of spare production capacity, according to the International Energy Agency, of which about 2.2 million barrels per day is held by Saudi Arabia.
Russia, Saudi Arabia Defy Trump's Push for Lower Oil Prices - Russia and OPEC members appear reluctant to support U.S. President Trump's push for lower prices. Total oil output worldwide should remain steady in at least the near term, analysts say as Russia and OPEC members appear reluctant to support U.S. President Trump’s push for lower prices. On one hand, Russia agreed to cut output with OPEC member countries in December. On the other hand, Saudi Arabia, amid increased tensions with the U.S. in the wake of the murder of Saudi journalist Jamal Khashoggi, has so far not agreed to boost output. Meanwhile, President Trump has vociferously called on OPEC and its allies to take actions to lower oil prices. According to a recent article in “The Wall Street Journal,” Russia has also begun to align itself behind OPEC, by agreeing to cut oil production (if Iran was allowed to continue output) and has become an unofficial yet influential partner with OPEC. However, Russia’s influence on OPEC member countries in its obvious deference to President Trump’s push to boost output, is not on the same scale as that of Saudi Arabia’s. "It is important to stress that the relationship between Russia and Saudi Arabia is not symmetric in the sense that it is Saudi Arabia that usually does the heavy lifting in terms of output cuts (like what happened since December),” “Of course, from a Saudi (and Russian) perspective, it is useful to coordinate efforts and send a consistent signal as this helps stabilize market expectations, but this power mainly comes from the influence that Saudi Arabia has on the market. So the idea that OPEC now needs Russia for it to function is a bit over-stretched." In a paper entitled “OPEC Policy in the Age of Trump,” Fattouh recently wrote “extrapolating” Saudi Arabia’s moves in 2018 and in 2019 are “risky.” “The assumption that Saudi policy will reverse its current strategy under Trump’s pressure does not reflect the shift in Saudi thinking and the current uncertainties and weaknesses engulfing the oil market,” Fattouh wrote. The fact also remains that “oil demand is steady and the market is tightening,” Fattouh said. “Last year, we had many volatile movements induced by events, especially in 2018,” Fattouh said. “So, what I’m trying to say is that those events are unlikely to play out in the same way they did.” Saudi Arabia’s official line is it will “look at the situation but are not going to take a preemptive action, until what they see what happens in the market,” Fattouh said.
Oil Prices Rebound As Saudis Reassure Markets -- Oil rebounded on Tuesday after two days of declines, pushed higher by turmoil in Venezuela and the insistence by Saudi officials that the OPEC+ production cuts would be extended in the second half of 2019. Saudi oil minister Khalid al-Falih told the Russian press that OPEC+ should maintain production cuts in some form through the end of the year. Oil prices bounced on the news. As of Tuesday morning, opposition leader Juan Guaidó had reportedly launched an attempted military coup. “The definitive end of the usurpation started today,” said Guaidó, according to Argus Media. “The National Armed Forces, today, brave soldiers, patriots loyal to the constitution, have heeded our call.” The reports suggest that some generals in the armed forces have ordered their troops to back the coup. At the time of this writing, it was unclear how successful the campaign would be. The U.S. Fish and Wildlife Service said that the Trump administration’s plan to open up the Alaska National Wildlife Refuge (ANWR) for drilling did not adequately consider the impacts of oil spills, climate change and the welfare of polar bears. The Interior Department is hoping to hold a lease sale later this year in ANWR, but Fish & Wildlife (which is housed within Interior) said ExxonMobil is interested in making more acquisitions in the Permian, according to the FT. A senior VP at Exxon told analysts on an earnings call last week that he “would be surprised if over time we did not pick up more Permian acreage.” The comments come in light of the battle between Chevron and Occidental Petroleum for Anadarko Petroleum. Whoever wins that bidding war will substantially increase their presence in the Permian.
Overly Bullish Hedge Funds Set The Stage For Oil Price Drop - For more than ten weeks, portfolio managers have been consistently amassing bullish bets in the most important petroleum futures contracts, as market fundamentals were pointing to OPEC over-delivering on the production cuts, Venezuela’s supply crashing, and potential losses from conflict-torn Libya, amid resilient global oil demand growth.Last week, oil prices jumped on Monday on the news that the U.S. is ending the sanction waivers for all Iranian oil buyers. And hedge funds continued to bet on higher prices and a tightening oil market. However, the net long position—the difference between bullish and bearish bets—in WTI and Brent begins to look too stretched to the bullish side, making oil prices vulnerable to declines now if (or rather, when) money managers decide to do some profit taking and liquidate some of their bets on rising oil prices, analysts say. According to data compiled by Reuters market analyst John Kemp, as of April 23, the latest available exchange data, hedge fund and other money managers held long positions in Brent Crude and WTI Crude that outnumbered shorts in a ratio of 11:1—the most lopsided bullish positioning since October 2018, when oil prices started crashing to lose 40 percent until the end of 2018.Portfolio managers have now closed out nearly all short positions that they had started to open at the end of August last year, Kemp says.Hedge funds have been continuously amassing bets on rising WTI Crude prices for the past nine weeks, the longest bullish-building trading sentiment since 2006, according to data from the U.S. Commodity Futures Trading Commission compiled by Bloomberg. The number of long positions in WTI Crude increased by 1.7 percent in the week to April 23, while the number of short positions slumped by 18 percent.
Oil Prices Finish Higher -WTI and Brent futures edged upward Tuesday. West Texas Intermediate (WTI) and Brent crude oil futures finished higher Tuesday. June WTI futures added 41 cents Tuesday, settling at $63.91 per barrel. The U.S. benchmark peaked at $64.75 and bottomed out at $63.30. Brent crude oil for July delivery gained 52 cents and ended the day at $72.06 per barrel. “Looks like the Saudis didn’t get the phone call from Trump,” Barani Krishnan, senior commodities analyst with Investing.com, told Rigzone. Krishnan was referring to reports that Trump said he had called OPEC and demanded that the cartel take action against escalating prices. He added that efforts by Trump and the Saudi Arabian government to influence oil price movements appear to be intensifying. “The ‘you-squeeze-me, I-squeeze-you’ game in oil is heightening with the Saudis giving the U.S. President a little payback for their near-$40 per barrel misery from last winter,” said Krishnan. “Saudi Energy Minister Khalid al-Falih’s clear disregard of Trump’s attempt to corner OPEC into another production hike via a phone call supposedly placed to a mysterious source at the cartel tells the market that Riyadh is digging its heels in for a fight with the White House on who’s really the boss of world oil prices.” Krishnan added that the Saudis conveyed the message just a day after Russian President Vladimir Putin relayed to the Kingdom a “gentle reminder … that it was the Great Russian Bear, not the mighty American Eagle, that came to their rescue last year when OPEC was floundering.” Moreover, Krishnan observed that it makes sense for Falih to seek common ground with his Russian counterpart, Alexander Novak. “Putin’s stance itself is quite mystifying as Russia’s sovereign wealth fund chief Kirill Dmitriev and oil giant Rosneft’s head Igor Sechin have warned him in recent months that production cuts were costing their nation lost market share to U.S. crude,” said Krishnan. “These Russian oligarchs are openly pushing for more production to foster healthy competition in the world oil market.” Meanwhile, Saudi Arabia has “the best of both worlds” because it gets $70-plus oil and watches its enemy Iran struggle amid sanctions on exports of its crude oil, he said.
WTI Slides After Big Surprise Crude Build - Oil prices rallied on the day amid a sliding dollar and increased protests in Venezuela adding to concerns about supply (despite a slowdown in China PMI potentially questioning demand).“The market is currently witnessing the largest number of barrels subject to potential outage in many years, between Venezuela, Iran, Nigeria, Algeria and Libya,” said Leo Mariani, a KeyBanc Capital Markets Inc. analyst. API:
- Crude +6.81 mm (+1.5mm exp)
- Cushing +1.353mm
- Gasoline -1.055mm (-1.5mm exp)
- Distillates -2.058mm (-1mm exp)
After a surprise crude build last week, expectations were for another small stock rise and yet another gasoline drawdown and API did not disappoint with a large 6.8mm crude build... This is the 11th weekly draw in gasoline (and 7th weekly draw in distillates) in a row... “We have to keep in mind that with more than 12 million barrels being produced, until we ramp back those refineries up, we will probably see crude stocks build,” Gene McGillian, manager of market research at Tradition Energy, saysWTI hovered around $64 ahead of the API print and kneejerked lower after the print. The developments in Venezuela triggered a spate of buying early on Tuesday, but that could reverse just as quickly if the opposition’s chances look shaky, said Michael Hiley, head of OTC energy trading at LPS Futures in New York. In the longer term, Maduro’s ouster could lower prices, he said. “They have some of the best reserves in the world and you would just need the proper capital investment to crank that up again,” Hiley said. “It will ultimately end up with more oil on the market, but short-term the knee-jerk movement for prices is still up.”
Oil prices fall as US crude stockpiles surge by 9.9 million barrels - Oil prices fell on Wednesday as U.S. crude stocks rose last week to the highest since Sept. 2017, while gasoline stockpiles increased and distillate inventories fell.An intensifying crisis in Venezuela along with tightened U.S. sanctions on Iran partly offset the impact of the unexpected rise in U.S. crude inventories. Crude inventories rose by 9.9 million barrels in the last week to 470.6 million, the U.S. Energy Information Administration said on Wednesday. That compared with analysts’ expectations for an increase of 1.5 million barrels.Gasoline stocks rose by 917,000 barrels, compared with analysts’ expectations in a Reuters poll for a 1 million-barrel drop. Distillate stockpiles, which include diesel and heating oil, fell by 1.3 million barrels, versus expectations for a 193,000-barrel drop, the EIA data showed.Brent crude oil futures were down 21 cents at $71.85 per barrel around 10:40 a.m. ET (1440 GMT). U.S. crude futures fell 55 cents at $63.36 per barrel. Trading was thin as May 1 is a holiday in many markets.Markets also keenly watched Venezuela, where opposition leader Juan Guaido called for an uprising against President Nicolas Maduro. Many observers fear this could lead to escalating violence and further disruptions to crude supply.The unrest adds to a range of fluid geopolitical factors which have been affecting oil prices in recent months. “There have been wild cards aplenty for the oil markets. The seemingly perennial U.S.-China trade spat, the extent of Venezuela’s supply woes and the Iran factor are just some,” “Yet these are shaking off their wildcard status and instead are transitioning into known-knowns”, Brennock added, citing widespread hopes that the two largest economies will soon resolve their dispute and a view that U.S. sanctions on Iran and Venezuela were “largely baked into prices.” Oil markets have already tightened this year due to supply cuts led by OPEC as well as the sanctions on Venezuela and Iran.
WTI Slides After Huge Crude Build, Record Production WTI slid lower overnight amid signs of a sharp increase in U.S. crude inventories from API and concerns over the strength of economic growth in China, but rebounded back to pre-API level ahead of this morning's official inventory data as the dollar tumbled.Prices also slid as an attempted uprising against President Nicolas Maduro in OPEC member Venezuela appeared to fizzle. “The market is currently witnessing the largest number of barrels subject to potential outage in many years, between Venezuela, Iran, Nigeria, Algeria and Libya,” said Leo Mariani, a KeyBanc Capital Markets Inc. analyst. DOE:
- Crude +9.93mm (+1.5mm exp) - highest since Nov 2018
- Cushing +265k
- Gasoline +917k (-1.5mm exp)
- Distillates -1.307mm (-1mm exp)
US crude inventories rose for the 5th week in the last 6 with a 9.934mm build - the biggest since November. At the same time, the 10-week streak of draws in gasoline inventories is over as stocks rose 917k last week... “Amid this host of bullish catalysts is one deepening pocket of weakness -- U.S. oil stocks are swelling due to an upswing in crude inventories,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London. “Glum alarm bells are ringing louder in the U.S.”US Crude production rose to a new record high, bucking the lower rig count trend...
Oil prices drop as U.S. crude supplies post biggest weekly climb of the year - U.S. oil prices finished lower on Wednesday after a U.S. government report revealed a nearly 10 million-barrel rise in domestic crude supplies — the biggest weekly climb of the year so far. Global benchmark prices for oil, however, ended the session modestly higher, finding continued support from risks to global supplies. The latest move for prices follows gains seen in April as Saudi Arabia looked to defy President Donald Trump’s request to pump more oil to keep down prices, and as a fresh uprising in Venezuela fed uncertainty over the country’s output. On Wednesday, U.S.-based West Texas Intermediate crude for June delivery CLM9, +0.15% lost 31 cents, or 0.5%, to settle at $63.60 a barrel on the New York Mercantile Exchange. Front-month contract prices notched an April rise of 6.3% — their fourth straight monthly gain, according to Dow Jones Market Data. WTI prices saw some support, paring a bit of their earlier losses, as the U.S. dollar weakened further in the immediate wake of the Federal Reserve’s decision Wednesday to hold policy steady. The dollar then moved back up just as oil futures settled. The latest U.S. supply data “could continue to put pressure on crude prices in the short term,” said Tariq Zahir, managing member at Tyche Capital Advisors. “Of course, the situation in Venezuela is still quite fluid.” “We will also have to watch how much and when Saudi Arabia or Russia adds oil production to the market,” following the Trump administration’s decision to end U.S. sanctions waivers on Iranian oil, he said. The waivers expire on Thursday. Read: Here’s what the expiration of waivers on Iran crude sanctions will mean for oil prices Also read: The end of Iranian oil waivers and what it means for the OPEC-led output cut pact Global benchmark July Brent crude LCON9, +0.03% which is now the front month, added 12 cents, or 0.2%, to $72.18 a barrel on ICE Futures Europe. Front-month contract prices were up about 6.5% for last month. Brent hit a six-month high above $75 as recently as last week before drifting mostly lower since. The Energy Information Administration on Wednesday reported that U.S. crude supplies rose by 9.9 million barrels for the week ended April 26. That surpassed the rise of 1.4 million barrels expected by analysts polled by S&P Global Platts. Data from the American Petroleum Institute on Tuesday had shown an increase of 6.8 million barrels, according to sources.
OPEC oil output hits four-year low in April on Iran, Venezuela: Reuters survey (Reuters) - OPEC oil supply hit a four-year low in April, a Reuters survey found, due to further involuntary declines in sanctions-hit Iran and Venezuela and output restraint by top exporter Saudi Arabia. The 14-member Organization of the Petroleum Exporting Countries pumped 30.23 million barrels per day (bpd) this month, the survey showed, down 90,000 bpd from March and the lowest OPEC total since 2015, the Reuters survey showed. The survey suggests that Saudi Arabia and its Gulf allies are maintaining even larger supply cuts than called for by OPEC’s latest deal, shrugging off pressure from U.S. President Donald Trump. On Friday, Trump said he had called OPEC to tell the group to bring down prices. Crude oil is trading above $73 a barrel and hit a six-month high above $75 last week, boosted by Saudi supply restraint and curbs in Venezuela and Iran, which face U.S. sanctions that are limiting their exports. “The Iran sanctions come on top of already fragile supplies and raise concerns about tightening markets,” Norbert Ruecker of Swiss bank Julius Baer said. OPEC, Russia and other non-members, an alliance known as OPEC+, agreed in December to reduce supply by 1.2 million bpd from Jan. 1. OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members - all except Iran, Libya and Venezuela. In April, the 11 OPEC members bound by the agreement achieved 132 percent of pledged cuts, the survey found, compared to 145 percent in March, due to higher production in Nigeria and small increases in Saudi Arabia and Iraq. Lower supply in two of the exempt producers, Iran and Venezuela, more than offset gains elsewhere. Iran posted OPEC’s biggest supply drop this month of 150,000 bpd, the survey found. In Venezuela, supply fell by 100,000 bpd due to the impact of U.S. sanctions on state oil company PDVSA and a long-term decline in production, according to the survey. Venezuela was once a top-three OPEC producer. Top exporter Saudi Arabia raised output slightly in April from March, although Riyadh continued to deliver larger cuts than required under the supply deal, as did Gulf allies the United Arab Emirates and Kuwait. Saudi Arabia has said it would replace losses in Iran and Venezuela but is wary of pumping more unless there is customer demand. Energy Minister Khalid al-Falih on Tuesday said the kingdom will not rush to boost supply to make up for Iran. OPEC’s biggest production gain occurred in Nigeria, where Total’s Egina field has helped boost output. Libya, the third producer exempted from making voluntary curbs, also boosted output. Nigeria says the Egina field produces condensate, a type of light oil excluded from the OPEC cuts. The survey includes the field based on Total’s listing of it as a crude producer. Smaller producers Congo, Ecuador and Gabon also pumped above their targets, the survey found. April’s output is the lowest by OPEC since February 2015, excluding membership changes that have taken place since then, Reuters surveys show.
Oil prices tumble 3% despite tighter sanctions on Iran and Venezuela turmoil - Oil prices fell as much as 3% on Thursday, breaking through a key support level and threatening to tumble even further. Crude futures declined despite a wave of geopolitical concerns, including turmoil in Venezuela and the launch of new American measures aimed at driving Iran’s crude exports to zero. Brent crude oil futures, the international benchmark for oil prices, fell $1.64, or 2.3%, to $70.54 per barrel around 10:25 a.m. ET (1425 GMT). U.S. West Texas Intermediate crude fell $1.97, or 3.1% to $61.63. “The $62 level is an important level. If you break through it you could trade down to 58 pretty quickly,” said John Kilduff, founding partner at energy hedge fund Again Capital. The drop was partly due to the overhang from Wednesday’s weekly report on U.S. crude stockpiles, which showed inventories surging by 9.9 million barrels. The data also showed U.S. oil production ticking up to a record 12.3 million barrels per day. Reports that Asian refineries are asking Saudi Arabia for more crude oil are also weighing on prices, said Kilduff. Any sign that the Saudis will answer those calls will push prices lower, he said. Washington on Thursday stopped issuing waivers that allow several countries, including China and India, to purchase Iranian oil. The Trump administration restored sanctions on Iran’s energy industry in November. President Donald Trump is largely relying on Saudi Arabia to fill the gap left by Iranian supplies. Saudi Arabia has not explicitly committed to hiking output, but says it will respond to the market’s needs. “Saudi Arabia, the UAE, and Russia will likely fill the supply gap in the coming months, increasing the U.S. incentive to strictly enforce compliance and pressure Iran,” Paul Sheldon, chief geopolitical adviser at S&P Global Platts Analytics said in an email briefing. Saudi Arabia, its fellow OPEC members, and other producers including Russia have been limiting supply since January. The so-called OPEC+ alliance meets at the end of next month to discuss whether to extend the six-month deal beyond June.
US launches plan to choke off Iran's energy exports, casting uncertainty over oil prices -The United States sharply tightened energy sanctions against Iran on Thursday, seeking to cut the Islamic Republic’s exports to zero and ushering in a new era of uncertainty for the oil market.President Donald Trump restored Obama-era sanctions against Iran last year but granted waivers to eight nations, allowing them to import limited quantities of Iranian crude. Last week, his administration surprised the market by announcing it would not extend the waivers.Investors and analysts expected Trump to tighten the waivers every six months, allowing China, India, Turkey and other importers to gradually wind down purchases of Iranian crude.The sudden move to cut off Iran’s exports threatens to wipe out much of the shipments, which have recently totaled more than 1 million barrels per day, or roughly 1% of global consumption. To fill that gap and prevent fuel costs from spiking, Trump has turned to his allies in Saudi Arabia, the world’s top oil exporter. But the Saudis have not made firm commitments and continue to consider extending a six-month deal to limit output with OPEC and other producers. That is raising concerns about a period of tighter supply and higher oil prices.“President Trump’s decision to zero out waivers for importers of Iranian oil on May 2 represents an audacious act of oil brinkmanship as the strategy of keeping prices contained now rests almost exclusively on Saudi Arabia’s willingness to open the taps amid accelerating global supply outages,” Helima Croft, global head of commodity strategy at RBC Capital Markets, said in a recent research note.Oil prices initially jumped to six-month highs after Trump announced the waivers would be revoked, with international benchmark Brent crude hitting $75.60 and U.S. crude rising to $66.60. Prices were trading around $71 and $62, respectively, on Thursday. Analysts said the tighter sanctions alone will not cause a supply shock, but they make the oil market more vulnerable to a shortage that sends fuel costs higher. That is in part because oversupply in the oil market is draining, and supply and demand are coming into balance. Some analysts even think the market is slightly undersupplied.
US crude sinks 2.8% to one-month low, settling at $61.81, as supply concerns ease - Oil prices fell as much as 4% on Thursday, breaking through a key support level, as rising U.S. crude stockpiles helped offset concerns about a supply crunch. Crude futures declined despite a wave of geopolitical concerns, including political turmoil in Venezuela and the launch of new American measures aimed at driving Iran’s crude exports to zero. U.S. West Texas Intermediate crude settled $1.81 lower at $61.81 on Thursday, tumbling 2.8% to its weakest closing price since April 1. WTI plunged 4% to a session low at $60.95 earlier in the session. “The $62 level is an important level. If you break through it you could trade down to $58 pretty quickly,” said John Kilduff, founding partner at energy hedge fund Again Capital. Brent crude oil futures, the international benchmark for oil prices, fell $1.43, or 2%, to $70.75 per barrel. Brent fell as low as $69.68 earlier in the session. The drop was partly due to the overhang from Wednesday’s weekly report on U.S. crude stockpiles, which showed inventories surging by 9.9 million barrels. The data also showed U.S. oil production ticking up to a record 12.3 million barrels per day. U.s. crude stockpiles have risen in five of the last six weeks, helping to ease the market’s concern that global oil supplies are getting tight. “The market is a little bit spooked that we might have a repeat of last year, where there are all these bullish factors on the supply side globally, but U.S. shale [oil] is just this big behemoth in the background,” ns.
Has The Oil Rally Reached Its Limit? - The oil price rally ended this week, with rising U.S. inventories and production scaring away the bulls. Crude stocks soared by 10 million barrels and U.S. production rose to 12.3 mb/d in the last week of April. “Even with deep losses in supply from Iran and Venezuela, as well as a few other countries around the world, OPEC+ will still need to hold back production to balance the market,” SEB analyst Bjarne Schieldrop said in a note Iran’s oil minister said that OPEC may fall apart. “Iran is a member of OPEC for its interests and any threat from member states won’t go unanswered,” Bijan Namdar Zanganeh said, referring to Saudi Arabia’s apparent coordination with the U.S. on Iran sanctions. “I told [OPEC Secretary-General Mohammad] Barkindo that OPEC is in danger by the unilateralism of some members and the organization faces the risk of collapse.” Last year, Qatar quit OPEC, but it would be a much more significant development of Iran were to exit. ExxonMobil said that it would move forward on a $2 billion expansion of its Baytown, TX chemical facility. The investment is the latest in the company’s “Growing the Gulf” campaign, a $20 billion 10-year spending spree on chemical and petrochemical projects on the Gulf Coast. The increase in crude inventories by 10 million barrels last week helped spark an oil price selloff on Thursday. “Amid this host of bullish catalysts is one deepening pocket of weakness - U.S. oil stocks are swelling due to an upswing in crude inventories,” said Stephen Brennock, an analyst at PVM Oil Associates Ltd. in London, according to Bloomberg. “Glut alarm bells are ringing louder in the U.S.” Phillips 66 saw its profits fall to just $204 million in the first quarter, less than half of the $524 million it earned in the same quarter a year earlier. The company said that outages and low refining margins ate into the bottom line. Shell reported a minor decline in first quarter earnings to $5.4 billion, exceeding forecasts. Its trading and LNG unit helped mitigate the poor market conditions, and allowed Shell to outperform its peers.
Oil sinks 2.2% this week, settling at $61.94, as US stockpiles rise and supply fears fade - Oil prices edged up on Friday, as strong U.S. economic data boosted demand sentiment and as production losses in sanctions-hit Iran and Venezuela tightened the market. Still, oil futures posted weekly declines on a jump in U.S. crude inventories reported this week. U.S. West Texas Intermediate crude futures settled 13 cents higher at $61.94 per barrel, after sinking 2.8% on Thursday. WTI fell 2.2% this week, logging its second straight weekly decline. Brent crude oil futures rose 10 cents to $70.85 per barrel. The international benchmark for oil prices slumped 2% in the previous session and ended the week 1.8 percent lower, for its first weekly loss in five weeks. A U.S. jobs report that showed growth surging in April and the unemployment rate dropping to a more than 49-year low of 3.6%, increased the expectation that crude demand would stay strong, said Phil Flynn, senior analyst at Price Futures Group in Chicago. “After the strong jobs report, the market is kind of putting that big build this week into perspective,” Flynn said. Equities rallied and the U.S. dollar weakened following the report, which also supported oil futures. Oil prices tend to follow moves in equities, and demand for the U.S. dollar-linked commodity often increases when the greenback slips. Gains in the oil market, however, were limited by a spike in U.S. crude inventories reported this week and rising oil production, which hit a record 12.3 million barrels per day last week. Exports of U.S. crude broke through 3 million bpd in November for the first time and hit a record 3.6 million bpd earlier this year, according to data from the Energy Information Administration. U.S. energy firms this week increased the number of oil rigs operating for the first time in three weeks even as crude output decelerates with the rig count dropping five months in a row due to spending cuts.Companies added two oil rigs in the week to May 3, bringing the total count to 807, lower than the 834 rigs active this time last year, Baker Hughes energy services firm said in its closely followed report on Friday.
Saudi oil output may rise in June, but U.S. may not get the extra exports it wants (Reuters) - Saudi Arabia’s oil output may edge up in June, sources familiar with the kingdom’s policy said, but the extra crude may be used for domestic power generation rather than providing the boost to exports that Washington has been seeking. The sources said any rise in Saudi output would still be within its output quota in a pact on supply cuts agreed between OPEC and its allies, a group known as OPEC+. Production from the world’s top crude exporter in May is expected to be around 10 million barrels per day (bpd), slightly higher than April but still below its quota under the OPEC-led pact of 10.3 million bpd, industry sources said. Riyadh often lifts output in the hot summer months to fuel oil-fired power plants and meet rising electricity demand, which means exports do not necessarily rise. One of the sources said the May output rise was not related to Washington’s push for more OPEC oil after it ended waivers granted to buyers of Iranian oil. The waivers had allowed them to purchase crude from Iran despite U.S. sanctions. U.S. President Donald Trump said last week he had called Saudi Arabia and OPEC and told them to lower oil prices, but he did not say who he spoke to or when the conversations took place. Oil prices rose to a six-month high last week above $75 a barrel, partly due to concerns about falling Iranian supplies. Brent was trading around $70 on Thursday. “The Saudis want oil prices to stay at current levels at least for a month or two. They don’t want to raise their production above the 10.3 million bpd, because they are part of the OPEC+ pact, but they are also being pressured by the U.S. to increase their output,” one of the sources said. “One thing for sure is that if customers asked for more oil they (the Saudis) will then raise output,” the source added.
IMF warns of slowing growth and rising unrest across the Middle East - Slowing global growth and elevated tensions in trade and geopolitics are posing economic challenges for countries in the Middle East, according to the International Monetary Fund’s latest report. “Global developments are affecting the outlook for this year, namely the slowdown in growth especially on trade, the volatility in the oil price, as well as also the global financing conditions, in additional to a certain number of country specific issues,” Jihad Azour, the IMF’s director of the Middle East and Central Asia, told CNBC on Sunday. The Regional Economic Outlook report — published each spring by the IMF’s Middle East and Central Asia Department — also highlighted how volatile oil prices are negatively affecting some countries, while others are grappling with rising public debt. “For oil-importing countries where debt is high, it’s very important to tackle it and to reduce the level of deficit. That will allow those countries to reduce their debt burden over GDP,” Azour added. Growth for oil exporters is projected to dip slightly in 2019 to 0.4 percent, from 0.6 percent the previous year, driven by an economic contraction in Iran following the renewal of sanctions. For oil-importing countries in the region, growth is expected to slow, declining from 4.2 percent in 2018 to a projected 3.6 percent this year. However, that figure is expected to rebound to 4.2 percent from 2020 to 2023. “Despite the current increase in prices, the medium-term price projections of oil remain in the corridor of the mid-$60s,” Azour said. “Therefore it’s very important for countries to pursue and accelerate their diversification strategies and at the same time, maintain their pace of fiscal adjustment that will allow them to reduce their dependence, in terms of revenues on oil,” he added.
Iran's recession is driving a growth slowdown among region's oil exporters, IMF says The impact of U.S. sanctions on Iran’s economy is dragging on the broader region’s activity, according to the latest economic health check from the International Monetary Fund (IMF). The organization predicts a 1.7% contraction in the output of goods and services for non-Gulf Cooperation Council (GCC) oil exporters, after already having shrunk by 1.1% last year. “This is mainly driven by developments in Iran, where the recession is expected to deepen, reducing projected growth by almost 10 percentage points during 2018–20, ” the IMF reported in its 2019 Regional Economic Outlook: Middle East and Central Asia Update, published Monday. Iran’s economy is expected to shrink by 6% this year, after having contracted 3.9% last year, the IMF says. By contrast, it clocked 3.8% growth in 2017, before the Trump administration re-imposed economic sanctions after withdrawing from the 2015 nuclear deal that offered the Islamic Republic relief from prior sanctions. Economists say the combination of hard-hitting sanctions, particularly on the country’s oil exports that began last November, as well as years of economic mismanagement have led to skyrocketing inflation, rising unemployment and a frantic rush to buy dollars. Inflation could exceed 40% Inflation in Iran could reach as high as 40% or higher this year, a senior IMF official said on Monday. “Clearly the re-imposition of sanctions and the removal of the waivers will have additional negative impact on the Iranian economy both in terms of growth and in terms of inflation, where inflation could reach 40 percent or even more this year,” Jihad Azour, the IMF’s Middle East and Central Asia director, told Reuters. This assessment, Azour said, was made before the U.S. announced the end of sanctions waivers for eight of Iran’s largest oil buyers. In 2017, Iran’s inflation rate was just over 9%. For oil exporters in the wider Middle East and North Africa region including the GCC, a slowdown is projected and is still to some extent linked to Iran, the report said. “Growth in MENAP oil exporters is projected at 0.4 percent in 2019,” down from 0.6% in 2018, the lender wrote, using an acronym that includes Afghanistan and Pakistan. “This mainly reflects a sharp decline in Iran’s economic activity (of 6 percent), oil production cuts (in line with the December 2018 OPEC+ agreement), and tighter domestic financial and monetary conditions in some countries.”
OPEC is 'likely to collapse,' warns Iran's oil minister - Iran’s oil minister is warning that OPEC is “likely to collapse” because some members of the 14-nation group are working against their fellow producers.The comment appears to be a thinly veiled reference to Saudi Arabia and theUnited Arab Emirates. The Trump administration tightened energy sanctions against Iran on Thursday, and the White House says the Saudis and Emiratis will work with the U.S. to offset the anticipated drop in Iranian oil supplies.“Iran is an OPEC member just for its interests and if certain OPEC members want to threaten and endanger Iran, Iran will not refrain from responding to them,” Iranian Oil Minister Bijan Zangeneh told Shana, the ministry’s news agency, following a meeting with OPEC Secretary General Mohammed Barkindo in Tehran on Thursday.“I told Mr Barkindo that OPEC is being threatened due to unilateralism by certain members and this organization is likely to collapse,” Zangeneh said.U.S. sanctions, imposed in November, have already cutIran’s oil exports by about 1 million barrels per day. On Thursday, the Trump administration stopped granting sanctions waivers to some of Iran’s biggest customers. Analysts now expect the Islamic Republic’s exports to fall by another several hundred thousand barrels per day.Saudi Arabia has not explicitly committed to hiking output to fill the gap. After the U.S. announced it would end the sanctions waivers, Saudi Energy Minister Khalid al-Falih said the kingdom would consult with producers and consumers “to ensure a well-balanced and stable oil market.”OPEC and its oil market allies, including Russia, are scheduled to meet on June 25-26 in Vienna to decide whether to extend their deal to limit oil supply, which has been in place since January and expires at the end of June. Saudi Arabia can lift output and still abide by the deal because it is currently pumping about 500,000 bpd below its quota.
Here's Why Taking Iran Oil Exports To Zero Is Likely Impossible - Many analysts believe a US-Israeli war on Iran and Lebanon is likely despite the lack of evidence of preparations for such a war. Although forces could be quickly mobilized after a political decision to go to war, all indications point to a non-military war situation for the simple reason that the US “strangulation war” is not costly to the US establishment and fits perfectly with the objectives of its main Middle Eastern ally, Israel. Nevertheless, menacing letters are being exchanged among involved parties who are, nonetheless, prepared for the worst-case scenario. As far as Iran goes, the “zero oil exports” – the US wants to impose on the 1stof May – may be impossible to achieve. It will not be easy for OPEC members to compensate the two million Iranian barrels of oil daily (out of 3.45 million of total daily production), as President Donald Trump would like. The US objective is to curb Iran’s will and force it to the negotiation table to dictate elements necessary for the security of Israel in the Middle East. A goal no US establishment has ever managed to achieve since the “Islamic Revolution” took power in Iran in 1979, notwithstanding the sanctions imposed over four decades. Iran has land borders with Pakistan, Iraq and Turkey. It is logistically easy to supply these countries with Iran’s high-quality light crude oil at a cheaper price than the market price. During the Bush and Obama eras, Iran never stopped exporting its oil and exchanging it for hard currency or gold, despite sanctions. Moreover, China needs its 650,000 bpd. Several Chinese companies offer technology and industrial services and commerce their expertise and products with Iranian companies in exchange for oil, and these companies are not willing to stop this trade. This alone will be enough to cause the failure of the US establishment’s objective of “zero exports” without necessarily meaning that such a breakdown will lead to a military confrontation. This US administration, like previous ones, will likely fail to curb Iran’s will despite the severe sanctions it has imposed. Nor will it succeed in forcing Iran to stop support for its partners in the Middle East (i.e. Lebanon, Iraq, Syria, Afghanistan and Yemen). The support of Iran to state and non-state actors in the region is a self-imposed obligation cited in many articles in the Iranian constitution. Moreover, Iran will never agree to open its missile industry to inspection or to halt its missile production, as requested by the US establishment. Iran’s missiles represent its main efficient weapon to maintain a balance of forces sufficient to dissuade all its potential enemies. And last, Iran and its Middle Eastern partners will not abandon the Palestinian cause until the last Palestinian group decides to abandon its territory to Israel. Therefore, Trump should be content – as the achievement of his first mandate – with the “gifts” he has given to Prime Minister Benjamin Netanyahu: Jerusalem and the occupied Syrian Golan Heights.
Yemen war dead could hit 233,000 by 2020 in what UN calls ‘humanity’s greatest preventable disaster’ - The death toll from a devastating war in Yemen could soar to nearly a quarter of a million by the end of 2019, the United Nations (UN) has warned, calling the conflict one of the “greatest preventable disasters facing humanity”.In a 60-page report, the UN Development Programme (UNDP) said the fighting between the Gulf-backed Yemen government and the Houthi rebels could also set the country back a generation in terms of development.It warned that if a proper ceasefire is not brokered by the end of the year, the total number of dead could rise to 233,000, with 60 per cent of the deceased being children under the age of five.The UN’s projected count includes 102,000 killed in combat and 131,000 who will die due to a lack of food, health services and infrastructure in the war. It represents a significant increase on the latest death toll, compiled by global mapping group the Armed Conflict Location and Event Data Project (Acled), which said last week 70,000 people have died in the war since 2016.British parliamentarians, meanwhile, urged the UK to halt weapons sales to a Saudi-led coalition fighting in the country, fearing it was contributing to the humanitarian crisis and numbers of deaths. “The current conflict in Yemen is one of the greatest preventable disasters facing humanity,” the damning UNDP report said. “If that war continues it will continue to disproportionately kill children, mostly due to a lack of access to food, health services and infrastructure. It is already placed among some of the worst conflicts since the end of the Cold War.”
Elite US Navy SEAL facing war crimes charges for killings in Iraq - Stabbing a teenage prisoner to death, picking off a young girl and an old man with a sniper rifle and firing a heavy machinegun into a residential area: these are some of the charges facing an elite US Navy SEAL on trial for war crimes while deployed in Iraq. Special Operations Chief Edward Gallagher, a decorated 39-year-old veteran of combat missions in Iraq and Afghanistan, is still a hero in the eyes of many Americans and the rightwing Fox News channel -- and his case may even become a factor in next year's presidential elections. Around 40 Republican members of Congress have written an open letter demanding Gallagher -- who denies the charges against him -- be set free until he stands trial. One has even called on President Donald Trump to step in and have the case dismissed. Trump has weighed in on the case on Twitter, saying that he had intervened to ensure that Gallagher -- who was nominated for the Silver Star for his service -- "will soon be moved to less restrictive confinement while he awaits his day in court." Trump said the move was made "in honor of his past service to our Country." Gallagher, a platoon commander of SEAL Team 7, will face a military tribunal at a Navy base in San Diego on May 28. He was arrested last September and has been held at the base ever since. He was arrested after men under his command in the elite Navy unit were so horrified by his actions that they complained to their superiors, but were warned that their accusations could damage their careers, according to reports in The Navy Times and The New York Times this week.
It's 2019, Guess Who's Back In Iraq- It's 2019, over 15 years since the US invaded Iraq... so of course the racked with scandal mercenary group Blackwater is back in Iraq. Or rather, Erik Prince's latest among many incarnations of the infamous private contractor firm is back, now Frontier Services Group (FSG), based in Hong Kong. Dubai-based Frontier Logistics Consultancy DMCC, a subsidiary of Prince’s controversial FSG (given its coziness with the Chinese government and gulf monarchies), has been registered as a foreign company with Iraq’s Ministry of Trade, Buzzfeed reported based on new Iraq government documents it obtained. He never goes away. In 2017 he pitched the idea to become "Viceroy" over a "privatized" war in Afghanistan in a WSJ op-ed. And where else would the corporate mercenary foot soldiers of empire be based but Basra, located in Iraq's oil-rich south? Notably it's also close to the border with Iran, in a Shia heartland which last summer saw mass unrest due to electricity shortages and lack of services, blamed on government corruption and "foreign" presence of oil companies. Blackwater had been previously banned from Iraq after contractors opened fire on and killed unarmed civilians in Baghdad in what became known as the Nisour Square massacre. But according to the below document obtained by BuzzFeed, Prince is back, but under a different company name:
US-Led Bombing Campaign in Syria Left Raqqa Most Destroyed City in Modern Times – Study -- An "unprecedented" new study released on Thursday revealed that the U.S.-led bombing campaign on Raqqa, Syria in 2017 — which one military commander at the time claimed was the "most precise air campaign in history" — killed an estimated 1,600 innocent civilians while leveling the city on a scale unparalleled in recent decades.The research collated almost two years of investigations into the assault on Raqqa, the groups said in a statement, and "gives a brutally vivid account" of the enormous number of civilian lives lost as "a direct result" of thousands of coalition air strikes and tens of thousands of US artillery strikes in Raqqa from June to October 2017. The report—"Rhetoric vs. Reality: How the 'Most Precise Air Campaign in History' Left Raqqa the Most Destroyed City in Modern Times"—is detailed on the interactive website created by investigative news organization Airwars and the human rights group Amnesty International-USA which carried out what they call the "most comprehensive investigation into civilian deaths in a modern conflict."The findings confirm that the U.S.-led coalition has admitted to just a fraction of the civilian carnage it has caused in Syria, even as it has boasted of the care it's taken in avoiding such casualties and the precision of the Raqqa offensive.According to the report:US, UK and French forces also launched thousands of air strikes into civilian neighborhoods, scores of which resulted in mass civilian casualties.In one tragic incident, a Coalition air strike destroyed an entire five-story residential building near Maari school in the central Harat al-Badu neighborhood in the early evening of 25 September 2017. Four families were sheltering in the basement at the time. Almost all of them – at least 32 civilians, including 20 children – were killed. A week later, a further 27 civilians – including many relatives of those killed in the earlier strike – were also killed when an air strike destroyed a nearby building. "I saw my son die, burnt in the rubble in front of me," Ayet Mohammed Jasem, one of the few survivors of the later attack, told the investigators. "I've lost everyone who was dear to me. My four children, my husband, my mother, my sister, my whole family. Wasn't the goal to free the civilians? They were supposed to save us, to save our children."
How the U.S. Miscounted the Dead in Syria - United States dramatically underestimated the number of civilians killed in the U.S.-led coalition’s assault on the self-proclaimed capital of the Islamic State two years ago, according to the research of two leading human rights groups. During the four-month campaign to oust the Islamic State from the Syrian city of Raqqa in 2017, some 1,600 civilians died as a result of coalition airstrikes and bombing, Amnesty International and Airwars wrote in a new report. The United States put the civilian death toll in Raqqa at 318, according to a spokesman for the U.S. campaign to defeat the Islamic State. The report, drawing on nearly two years of research, also concluded that the U.S.-led coalition was responsible for a significantly higher number of civilian casualties throughout its four-year campaign to destroy the Islamic State caliphate in Syria and Iraq than it had reported. The U.S. military estimated in February that it unintentionally killed 1,257 civilians in the fighting, which began in 2014. But Donatella Rovera, the Amnesty researcher who led the investigation, estimated that the real number was about 10 times higher. She described the level of destruction in Raqqa as “unparalleled in modern times.” Amnesty and Airwars used open-source data, on-the-ground interviews, and satellite imagery to investigate claims of civilian deaths. Their report underscored the challenge U.S. and coalition forces faced in trying to oust dug-in fighters who used civilians as human shields. But it also questioned whether the air campaign needed to be so aggressive and raised the possibility that the airstrikes might have undermined the U.S.-led coalition’s own goals in Syria and Iraq.
US Troops In Syria For Long Haul Atop A Lot Of Oil Resources - Pentagon Official - A high level Pentagon official has admitted that US forces will be in Syria for "the long haul" and coupled his statement by declaring the territory contains “a lot of the oil resources and arable land.”The unusually frank remarks were made this week by Michael Mulroy, Deputy Assistant Secretary of Defense for the Middle East, while addressing a conference at the D.C. based Center for a New American Security (CNAS), months after President Trump appeared to have caved to his advisers, reversing course earlier this year from his stated goal of a full and rapid US troop exit from Syria. Mulroy said “we have a very capable partner” — in reference to the primarily Kurdish Syrian Democratic Forces (SDF) — and quickly noted the US-trained SDF happens to occupy key regions in eastern Syria with "a lot of the oil resources and arable land," and added that, "we are there with them".The Pentagon official further vouched for the think tank's new feature policy recommendations on Syria which call among other things for continuing to "maintain a presence in over one-third of the country." Referencing the CNAS' new policy report entitled “Solving the Syrian Rubik’s Cube,” regional Iraqi media outlet Kurdistan 24 reported: Nicholas Heras, one of the study’s co-authors, spoke with Kurdistan 24. He explained that of the six scenarios considered in the report, “The option that we supported is that the United States should continue to maintain a presence in over one-third of the country” and “should invest more, both in terms of financial resources and personnel to stabilize” that region of Syria. U.S. is in Syria for the long haul, says Michael Mulroy, Dep Ass Sec for Def. The US is “not in a bad situation” in Syria, Mulroy said, the country has “ a very capable partner,” & the territory contains “a lot of the oil resources & arable land.” https://t.co/X4ajRef49t — Joshua Landis (@joshua_landis) April 30, 2019 Earlier this month the SDF and western coalition forces declared total defeat over ISIS after fully securing the last ISIS holdout town of Baghouz.
Yazidis to accept ISIL rape survivors, but not their children Children born to Yazidi women raped by Islamic State of Iraq and the Levant (ISIL or ISIS) fighters will not be permitted to join the community in northern Iraq, the minority sect's faith leaders have said. In a statement late on Saturday, the Yazidi Supreme Spiritual Council said an earlier declaration stating "all survivors" of ISIL crimes and their children would be accepted in the community did not, as widely interpreted, "include children born of rape, but [instead] refers to children born of two Yazidi parents". Children born of rape by ISIL forces have been the subject of fierce debate in the insular community, which once numbered about 500,000 people and only recognises children as Yazidi if both their parents hail from the sect. It had also long considered any women marrying outside the sect to no longer be Yazidi. But in 2015, a year after ISIL fighters stormed the Yazidi heartland in Iraq's Sinjar region - massacring men and imprisoning thousands of women as sex slaves - Yazidi spiritual leader Baba Sheikh issued a decision welcoming those women back home. And last week, Hazem Tahsin, head of the Supreme Faith Council, issued what appeared to be a landmark shift, publishing an order "accepting all survivors [of ISIL crimes] and considering what they went through to have been against their will". The decision was hailed as "historic" by Yazidi activists, who understood it to mean that children born of rape would be allowed to live among their Yazidi relatives. But the council clarified its position late on Saturday, blaming the misunderstanding on "distortion" by the media. Ali Khedhir Ilyas, a Yazidi official, said on Sunday the council encourages the women to return with their children, no matter the parentage, but added that they "cannot force the families to accept" those born of rape. Human Rights Watch has condemned the council's Saturday decision.
ISIS Releases First Video of Leader Baghdadi Since 2014 — ISIS leader Abu Bakr al-Baghdadi may not have a caliphate anymore, but he’s still got a video camera. The reclusive leader of the group has shown up in a new video message released Monday. It is the first time Baghdadi has been seen in a video since 2014. Baghdadi sought to emphasize that, despite his effective defeat in Syria and Iraq, the group remains active. He promised to see that the group would remain active and fighting until “Judgment Day.” While Baghdadi tried to play up his group being active, not everyone is convinced that the group retains anywhere near the clout it once had. Defense Priorities Policy Director Benjamin H. Friedman issued a statement in response saying: “Abu Bakr al-Baghdadi’s new propaganda video is evidence that he is alive. It is not evidence that ISIS is thriving or that U.S. troops should stay in Syria or Iraq to fight its remnant. “No true military mission is left for U.S. troops in Syria. Baghdadi does not operationally control the so-called affiliates around the world. And ISIS’ losses make others less likely to affiliate in name or to try to travel to Syria or Iraq to fight. The U.S.-led war on ISIS undercut the allure it needs to recruit, inspire, and terrorize. “The U.S. does not need to be at the front of the already-long anti-ISIS line. Baghdadi and ISIS are hidden and hunted by an array of actors: the Kurds who did the hard fighting against them already, the Syrian government, Russians, Iran-backed militias, Iraq, and tribes who were abused by ISIS in its prime. The Pentagon, of course, has been trying to play up the ISIS threat to justify a permanent presence in Syria, and ISIS themselves are trying to ensure that US presence for the sake of their own status as a global terror group of note. It’s an arrangement that benefits US hawks and ISIS, but not much of anyone else.
Jewish-American Activists Beaten and Detained by Israeli Soldiers in West Bank - — Several Jewish-American activists were beaten and forcefully detained by the Israeli army alongside Palestinian and Israeli activists on Friday morning while working to repair a road linking Palestinian villages in the South Hebron Hills.Those forced to the ground and dragged into military vehicles included several who appeared to be rabbis, and several elderly members of the group.The activists were part of a delegation of 42 diaspora Jews from the US and Canada who are on a two-week tour of the West Bank organised by the US-based Center for Jewish Nonviolence (CJNV) to promote Jewish and Palestinian co-existence and to resist the ongoing Israeli military occupation. On Friday morning, the group were participating in a road rehabilitation project alongside Palestinian activists and members of local village councils, and activists from All That’s left, an Israeli anti-occupation campaign group.Almost 100 activists dressed in matching maroon shirts with “End the occupation” written in Arabic, English and Hebrew, were taking part in the activity, which involved filling in trenches and breaking up large stones which had rendered the main road linking 16 villages, an unsurfaced gravel track, virtually unusable.After less than an hour, Israeli military and border control agents arrived on the scene, encircling the group and blocking entry and exist to the road.A 10-minute notice was verbally declared by the military notifying the activists that the road they were working on was now a closed military zone and they must leave or else be arrested.As the activists continued to work after the 10-minute mark, soldiers ran down the hill, targeting the Palestinians activists first.The closest group of international allies immediately formed a circle, locking arms to protect the targeted Palestinians, chanting “Diaspora Jews say end the occupation”.Soldiers then started grabbing activists by their arms, legs and clothes, attempting to pull them away from the huddled circle.Two sound grenades were also thrown towards the group in an effort to make them disperse.The violence lasted for about 30 minutes, resulting in about 10 Jews, three Palestinians and two journalists being grabbed and dragged along the rocky ground and held in military vehicles. Middle East Eye understands that those detained were arrested and taken to Kirat Arba, a settlement near Hebron.
Israel Protests Being Called an 'Apartheid State' -Israel on Tuesday summoned France’s ambassador Helene Le Gal to protest comments by outgoing French envoy in Washington Gerard Araud in which he described Israel as an “apartheid state”. “We strongly protested these words,” Foreign Ministry spokesperson Emmanuel Nahshon said. Earlier this month, Araud described Israel as an “apartheid state” during an interview with the Atlantic magazine. He said Israel was “extremely comfortable” with the status quo “because they have the cake and eat it. They have the West Bank, but at the same time they don’t have to make the painful decision about the Palestinians, really making them really, totally stateless or making them citizens of Israel.” “They won’t make them citizens of Israel. So they will have to make it official, which is we know the situation, which is an apartheid. There will be officially an apartheid state. They are in fact already,” Araud said. Araud had served as the French ambassador to Israel from 2003 to 2006.
Air raids trap civilians in Libyan capital Tripoli - Libyan officials have said that eastern-based forces loyal to renegade military commander Khalifa Haftar have intensified their air attacks around Tripoli over the past two days. Haftar's self-styled Libyan National Army (LNA) launched an operation to take the capital from the UN-recognised Government of National Accord (GNA) on April 4 and has been engaged in fighting with its militias in and around the city. LNA attacks on Monday targeted the Nawasi brigade in the Abu Salim district, located roughly 7km from central Tripoli, officials, who wished to remain anonymous, told The Associated Press news agency. The Nawasi brigade is one of several militias allied with the internationally recognised GNA. The towns of Khallet al-Forjan, Ain Zara and al-Twaisha along the city’s southern outskirts were also targeted. Residents said that fighting continued overnight Sunday in residential areas a few kilometres south of Tripoli. Both sides have used heavy artillery and air attacks, they said. "We cannot move because of the shelling from both sides. Our homes have been damaged. We are trying to leave the area to a safer place," said Mohammed al-Trapoulsi, a 41-year-old father of three from Abu Salim. Reporting from Tripoli, Al Jazeera's Mahmoud Abdelwahed said the LNA had advanced closer to the city centre on Monday. "Forces loyal to Khalifa Haftar have advanced towards Al Sidra neighbourhood, about 15km away from Tripoli's city centre. Eyewitnesses there say they have seen Haftar's forces engaging against forces loyal to the UN-recognised GNA in the streets and in densely populated areas," he said. "In the past two weeks, Haftar's forces were losing ground and the GNA's forces were pushing them back. After they lost ground, Haftar's forces intensified air strikes. The situation remains very tense, especially for civilians living in or near the fighting areas."On Sunday, GNA forces fought house-to-house battles with the LNA, pushing Haftar’s troops further away from the capital.
Taliban Appears To Be Winning Against US-backed Kabul, Finds Pentagon Watchdog - It should come as no surprise to most that the United States' over 18-year long war in Afghanistan is a continual nightmare wrought with endless difficulties, earning America's lengthy post 9/11 quagmire the moniker of "the forever war".But a new Pentagon inspector general report has confirmed the situation to be even worse than commonly perceived: the war to roll back the Taliban is not merely stalled, but there's indicators suggesting jihadist insurgents are actually winning. The report finds Afghan national forces backed by the US have seen a 31% surge in casualties in recent months. The Pentagon watchdog concluded the following, according to Bloomberg: Casualties among Afghan National Defense and Security Forces rose 31 percent from December 2018 to February 2019 over the same period a year earlier, while troop levels fell short again of authorized strength for the first quarter of this year.Further alarming is that after the US-led NATO and western coalition forces have spent nearly two decades attempting to stabilize the country under the government in Kabul, massive swathes of the country are still under Taliban rule, with about 35% of the nation's population still not under the Afghan national government. The assessment by the Special Inspector General for Afghanistan Reconstruction found further that from November 2016 through October 2018, “the Afghan government controlled or influenced between 64 percent and 66 percent of the population.” The dour data points from the assessment come just as the Trump administration is engaged in uneasy negotiations with the Taliban, through special envoy on Afghan reconciliation, Zalmay Khalilzad, hosted in Qatar. Crucially, the report highlights that the US-supported side is not entering talks from a position of strength, but instead Afghan national forces are taking “more casualties as they seek greater leverage at the negotiating table.” “If negotiators fail to secure a peace agreement, the ANDSF will be hard pressed to increase its control over Afghanistan’s population, districts, and territory,” the inspector general said, referring to the the Afghan National Security Forces.
US military stops releasing Afghanistan war information – (AP) — Amid a battlefield stalemate in Afghanistan , the U.S. military has stopped releasing information often cited to measure progress in America's longest war, calling it of little value in fighting the Taliban insurgency.The move fits a trend of less information being released about the war in recent years, often at the insistence of the Afghan government, which had previously stopped the U.S. military from disclosing the number of Afghans killed in battle as well as overall attrition within the Afghan army. The latest clampdown also aligns with President Donald Trump's complaint that the U.S. gives away too much war information, although there is no evidence that this had any influence on the latest decision.A government watchdog agency that monitors the U.S. war effort, now in its 18th year, said in a report to Congress on Wednesday that the U.S. military command in Kabul is no longer producing "district control data," which shows the number of Afghan districts — and the percentage of their population — controlled by the government compared to the Taliban. The last time the command released this information, in January, it showed that Afghan government control was stagnant or slipping. It said the share of the population under Afghan government control or influence — a figure that was largely unchanged from May 2017 to July 2018 at about 65 percent — had dropped in October 2018 to 63.5 percent. The government's control or influence of districts fell nearly 2 percentage points, to 53.8 percent.
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