oil prices ended lower for the third week in a row, as a resumption of the trade war between the US and China cast a pall over the markets and overshadowed the impact of tightening global supplies stemming from US sanctions on Iranian and Venezuelan oil exports...after falling 2.2% to $61.94 a barrel on a big build in US oil supplies last week, contract prices of US crude for June delivery initially crashed to a one month low of $60.04 a barrel on Monday morning, after Trump reignited the trade war by tweeting that tariffs on $200 billion of Chinese goods would jump from 10 to 25 percent on Friday, but rebounded later in the day and settled 31 cents higher at $62.25 per barrel after the US deployed an aircraft carrier strike group and a bomber task force to the Middle East to confront Iran...however, oil prices tumbled again on Tuesday, as the US-China trade war intensified and stoked concerns over global growth, with crude prices falling 85 cents or 1.4% to a 5-week low of $61.40....nonetheless, oil prices popped right back up on Wednesday after the EIA reported a surprise draw from US supplies and went on to finish 1.2% higher at $62.12, even as escalating U.S.-Chinese trade tensions limited oil's gains...however, oil prices fell on the trade dispute again on Thursday, despite falling inventories, tumbling to as low as $60.92 a barrel before steadying near the close to end down 41 cents at $61.70 a barrel...oil prices were then little changed on Friday, closing down 4 cents at $61.66 a barrel, even as Trump 's tariff hike on Chinese goods took effect and kept tensions high between the world's two largest economies...hence, for the week oil prices ended down just 28 cents, or less than half a percent, as tight supply factors offset the impact of the renewed US-China trade dispute..
natural gas prices, meanwhile, trended somewhat higher, with the contract for June delivery of natural gas rising 5.2 cents over the week to finish at $2.619 per mmBTU, as both the 6 to 10 day outlook and the 8 to 14 day outlook from the Climate Prediction Center continued to indicate building warmth in the Southeast and colder than normal in the Intermountain West and northern tier, which would suggest greater air conditioning demand in the former and more heating demand in the later...however, despite just such a temperature setup over the prior week, which you can see on the map of temperature anomalies for week ending May 2nd below, the injection of surplus natural gas into storage was still well above normal for this time of year...
the natural gas storage report for the week ending May 3rd from the EIA indicated that the quantity of natural gas held in storage in the US increased 85 billion cubic feet to 1,547 billion cubic feet by the end of the week, which meant our gas supplies were 128 billion cubic feet, or 9.0% more than the 1,419 billion cubic feet that were in storage on May 4th of last year, while still 303 billion cubic feet, or 16.4% below the five-year average of 1,850 billion cubic feet of natural gas that have typically been in storage as of the first weekend in May in recent years....this week's 85 billion cubic feet injection into US natural gas storage was close to the median estimate of a 87 billion cubic foot increase indicated by a Bloomberg survey of analysts, while it was somewhat more than the 72 billion cubic feet of natural gas that are normally added to gas storage during the same week of spring....this was the eighth week in a row that we've either seen injections above normal or withdrawals below normal, and concludes a 4 week period where the injections into storage have averaged just under one hundred billion cubic feet per week, unprecedented for this time, or really for any time of year...moreover, the early June weather outlook appears to show it will be a colder than normal period nationally, delaying the onset of air conditioning electric consumption, suggesting that the 100 billion cubic foot injection pace might continue well into the next month...
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 May 3rd, showed that due to a drop in our oil imports and a major shift from unaccounted for crude supply to unaccounted for demand, we had to withdraw oil from our commercial supplies of crude for the second time in seven weeks...our imports of crude oil fell by an average of 721,000 barrels per day to an average of 6,693,000 barrels per day, after rising by an average of 1,325,000 barrels per day over the prior two weeks, while our exports of crude oil fell by an average of 289,000 barrels per day to 2,322,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,371,000 barrels of per day during the week ending May 3rd, 432,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reported to be down by 100,000 barrels per day to 12,200,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,571,000 barrels per day during this reporting week...
meanwhile, US oil refineries were using 16,405,000 barrels of crude per day during the week ending May 3rd, 41,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that 690,000 barrels of oil per day were being withdrawn from oil storage in the US....therefore, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 856,000 barrels per day more than 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 (-856,000) 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 a switch in the unaccounted oil figure from +685,000 last week to -856,000 this week, we have to figure that both weeks' crude oil metrics are in error by statistically significant amounts, and that week over week comparisons are essentially meaningless... (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 still rose to an average of 6,812,000 barrels per day last week, 15.6% less than the 8,068,000 barrel per day average that we were importing over the same four-week period last year...the 690,000 barrel per day decrease in our total crude inventories included 566,000 barrels per day that were withdrawn from our commercially available stocks of crude oil, and a 124,000 barrel per day withdrawal from the oil stored in our Strategic Petroleum Reserve, part of a release from the reserves intended to blunt the Gulf crude shortage resulting from the Venezuelan oil export sanctions...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,200,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,700,000 barrels per day, while a 1,000 barrel per day decrease to 476,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total...last year's US crude oil production for the week ending May 4th was at 10,703,000 barrels per day, so this reporting week's rounded oil production figure was 14.0% above that of a year ago, and 44.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 88.9% of their capacity in using 16,405,000 barrels of crude per day during the week ending May 3rd, down from 89.2% of capacity the prior week, and below the historical refinery utilization rate for this time of year....similarly, the 16,405,000 barrels per day of oil that were refined this week were still a bit less than the 16,486,000 barrels of crude per day that were being processed during the week ending May 4th, 2018, when US refineries were operating at 90.4% of capacity...
even with the decrease in the amount of oil being refined, gasoline output from our refineries was still somewhat higher, increasing by 202,000 barrels per day to 10,129,000 barrels per day during the week ending May 3rd, after our refineries' gasoline output had increased by 146,000 barrels per day the prior week....with that increase in gasoline output, this week's gasoline production was finally 1.5% more than the 9,974,000 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) fell by 39,000 barrels per day to 5,089,000 barrels per day, after that distillates output had increased by 64,000 barrels per day the prior week...but even after this week's decrease, the week's distillates production was 1.9% more than the 4,993,000 barrels of distillates per day that were being produced during the week ending May 4th, 2018....
even with the increase in our gasoline production, the supply of gasoline in storage at the end of the week fell for the eleventh time in 12 weeks, decreasing by 596,000 barrels to 226,147,000 barrels over the week to May 3rd, after gasoline supplies had fallen by 917,000 barrels over the prior week....our gasoline supplies fell because the amount of gasoline supplied to US markets increased by 643,000 barrels per day to 9,871,000 barrels per day, after decreasing by 181,000 barrels per day the prior week, while our imports of gasoline rose by 344,000 barrels per day to a 70 month high of 1,114,000 barrels per day, and while our exports of gasoline fell by 197,000 barrels per day to 491,000 barrels per day....after having reached an all time record high fifteen weeks ago, our gasoline supplies are now 4.1% lower than last May 4th's inventory level of 235,804,000 barrels, and remain roughly 2% below the five year average of our gasoline supplies at this time of the year...
with the decrease in our distillates production, our supplies of distillate fuels fell for the 25th time in thirty-two weeks, decreasing by 159,000 barrels to 125,563,000 barrels during the week ending May 3rd, after our distillates supplies had decreased by 1,307,000 barrels over the prior week...the draw on our distillates supplies was much smaller this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 319,000 barrels per day to 3,896,000 barrels per day, and because our imports of distillates rose by 48,000 barrels per day to 111,000 barrels per day, while our exports of distillates rose by 164,000 barrels per day to 1,327,000 barrels per day...but even after this week's inventory decrease, our distillate supplies were still 9.1% higher than the 115,038,000 barrels of distillate that we had stored on May 4th, 2018, even as they remain roughly 5% below the five year average of distillates stocks for this time of the year...
finally, with lower oil production and falling oil imports, our commercial supplies of crude oil in storage decreased for the fifth time in 16 weeks, falling by 3,963,000 barrels over the week, from 470,567,000 barrels on April 26th to 466,604,000 barrels on May 3rd....that still left our crude oil inventories near the recent five-year average of crude oil supplies for this time of year, while they also remained about a third higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the first weekend in May, 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 May 3rd were 7.6% above the 433,758,000 barrels of oil we had stored on May 4th of 2018, but at the same time still 10.7% below the 522,525,000 barrels of oil that we had in storage on May 5th of 2017, and 8.2% below the 508,487,000 barrels of oil we had stored on May 6th of 2016...
This Week's Rig Count
the US rig count was down again this past week and hence fell to a 14 month low in continuing the recent slide that has seen drilling rig activity decrease eleven out of the last 12 weeks.....Baker Hughes reported that the total count of rotary rigs running in the US fell by 2 rigs to 988 rigs over the week ending May 10th, which was also down by 57 rigs from the 1045 rigs that were in use as of the May 11th 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 fell by 2 rigs to 805 rigs this week, which was also 39 fewer oil rigs than were running a year ago, and 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 was unchanged at 183 natural gas rigs, which was still down by 16 rigs from the 199 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 unchanged at 20 rigs this week, which was the same number of rigs that were active in the Gulf a year ago...the number of active horizontal drilling rigs was down by 1 to 872 horizontal rigs this week, which was also 46 fewer horizontal rigs than the 918 horizontal rigs that were in use in the US on May 11th 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 down by 1 rig to 45 vertical rigs this week, which was also down from the 55 vertical rigs that were in use during the same week of last year....meanwhile, the directional rig count was unchanged at 71 directional rigs this week, which was still down by 1 from the 72 directional rigs that were operating on May 11th 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 10th, the second column shows the change in the number of working rigs between last week's count (May 3rd) and this week's (May 10th) count, the third column shows last week's May 3rd 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 11th of May, 2018...
this week's major oil rig decrease was in New Mexico, and it appear that 3 of the 4 rigs that were shut down in the state had been operating in the Permian, because two Permian rigs were added in Texas, one each in Texas Oil District 7C, or the southern Permian Midland basin, and in Texas Oil District 8A, or the northern Permian Midland basin...the three rigs that were added in California were also likely targeting oil, since the natural gas rig count elsewhere balances, although we can't be sure without digging through the North America Rotary Rig Count Pivot Table (xls), which lists the details on each rig deployment individually...for rigs targeting natural gas, two were added in Pennsylvania's Marcellus, while Pennsylvania saw a natural gas rig pulled out of the Utica shale at the same time....the national natural gas rig count remained unchanged, however, because the Denver-Julesburg Niobrara chalk had a natural gas rig that had been operating in Wyoming pulled out at the same time, and all rigs remaining in the Niobrara are now drilling for oil...we should also note that in addition to the rig changes for major producing states shown above, Alabama drillers added a rig and are now operating two, also an increase from the single rig they had deployed a year ago, while Mississippi saw two rigs shut down and has two still drilling, which is down from the 3 rigs that were running in Mississippi a year ago...
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Closing nuclear plants will spike pollution, regulator says | Toledo Blade -- The new chairman of the Public Utilities Commission of Ohio on Tuesday told lawmakers there’s little doubt carbon pollution in the state will spike if the state’s two nuclear power plants are decommissioned. “You would have most likely a flare-up of natural gas generation technology, because that’s technology that can be built quickly,” Chairman Sam Randazzo said. “It’s the most nimble.” A former lobbyist who represented major industrial users on utility issues, Mr. Randazzo stressed he wasn’t speaking on behalf of the commission, which decides what costs utilities can pass on to their customers. The House Energy and Natural Resources Committee is considering House Bill 6, which, when fully implemented, would create an annual pot of more than $300 million, fueled by surcharges on customers’ bills. The proceeds would be used to reward the generation of electricity that emits no or less carbon dioxide into the atmosphere. The state’s two nuclear plants on the shore of Lake Erie — Davis-Besse about 30 miles east of Toledo and Perry about 40 miles east of Cleveland — are expected to qualify for at least half of that pot. At the same time, the bill would do away with existing mandates that utilities find increasingly more of their power from renewable sources like wind and solar and reduce energy consumption overall. Critics characterize it as a consumer bailout for the nuclear plants, which have been unable to compete with cheaper and abundant natural gas. Their owner, FirstEnergy Solutions, is in bankruptcy proceedings and has said it will close both if they don’t find a buyer or some market for their more expensive power. Davis-Besse, the largest employer in Ottawa County, would stop generating power no later than May 31, 2020.
Conservatives criticize FirstEnergy nuclear bailout bill as ‘corporate welfare’ - Ohio Republicans pushing a bill to subsidize two nuclear plants are finding themselves at odds with conservative groups in the state. Substitute House Bill 6, which was advanced out of a subcommittee on May 2, would add more than $300 million to customer bills across the state once all its provisions kick in, with the lion’s share going to subsidize FirstEnergy Solutions’ Davis-Besse and Perry nuclear power plants. Other energy suppliers could also get some of those funds, including certain coal plants. A committee hearing is scheduled for 9 a.m. Tuesday, May 7. Both the Buckeye Institute and Americans for Prosperity’s Ohio chapter were among dozens of parties who offered testimony to the committee late last month along with clean energy groups, consumer advocates and other opponents. “[I]n the plain-spoken language most Ohioans prefer to use, HB 6 is corporate welfare,” said Micah Derry, Ohio state director of Americans for Prosperity. “It is cronyism on full display; in other words, a bailout.” Likewise, research fellow Greg Lawson of the Buckeye Institute called HB 6’s provisions “classic examples of government subsidies being used to prop up declining businesses — the Davis-Besse and Perry nuclear power plants operated by FirstEnergy Solutions.” And while there would be some funds that could be drawn upon by other entities, those monies risk “becoming a glorified slush fund with the real incentive being for companies to find new and creative ways to tap into that fund,” rather than risking their own capital, he added. Lawson told the Energy News Network that his organization’s opposition differs from that of environmental groups, clean energy companies or other competitors, saying that other organizations have largely focused on how the bill would affect them. “The Buckeye Institute opposes the idea of taxpayer subsidies irrespective of who benefits from being handed taxpayer dollars to support their business, and we are consistent on this point,” Lawson said.
EQT fined $330K for erosion violations in Allegheny County | StateImpact Pennsylvania - Natural gas driller EQT was fined $330,000 by the Pennsylvania Department of Environmental Protection for erosion violations at two natural gas sites in Allegheny County.The agency said sediment from two well pads in Forward Township was eroding into a tributary to Kelly Run, which flows into the Monongahela River.The problems were first spotted by a DEP inspection in February 2018, when inspectors found “sediment laden waters” were flowing over erosion control barriers at the Fetchen and Prentice well pad sites. The agency found the company built a road at the Prentice site without first getting a state permit to do so. The company was also cited for not informing the DEP of its erosion problems, which it is required to do by the conditions of its state-issued erosion control permits. The erosion problems continued until EQT corrected them in May 2018 at the Prentice site and November 2018 at the Fetchen site.“DEP expects all permittees — particularly large, longtime operators — to construct facilities and report problems in accordance with state regulations and permit conditions, but these failures demonstrate the importance of verifying compliance and enforcing the regulations,” said DEP Deputy Secretary for Oil and Gas Management Scott Perry, in a statement. EQT spokeswoman Linda Robertson said in a statement the company “takes environmental compliance seriously” but blamed abnormally wet weather on some of the companies erosion problems. Despite the company’s efforts, “EQT did not keep up with the continually changing weather and precipitation. In fact, Pennsylvania experienced unprecedented rainfall in February 2018, which resulted in challenging (erosion) conditions.” Last year was the wettest on record in the Pittsburgh region.
State conducting criminal investigation of shale gas production - State Attorney General Josh Shapiro is pursuing criminal investigations of “environmental crimes” committed by the oil and gas industry in Washington County and possibly throughout the state.In an Aug. 16, 2018, letter to attorneys in a civil case before the Washington County Court of Common Pleas, Mr. Shapiro and his office said they already had accepted a referral and “assumed jurisdiction over several criminal investigations involving environmental crimes in Washington County.”By that time Washington County District Attorney Eugene Vittone already had discussed with and referred claims of environmental problems in shale gas development to the attorney general’s office. Three Washington County residents told the Post-Gazette that they have spoken with AG investigators and were told they could be called to testify, with a Washington County woman saying that she already presented testimony before an investigative state grand jury in Pittsburgh. Joe Grace, spokesman for Mr. Shapiro and the state Office of Attorney General, said, “We cannot confirm or deny the existence of an investigation.”The AG’s letter was introduced as an exhibit during an August court hearing on the civil case brought by Stacey Haney in 2012 against Range Resources Appalachia LLC, and specially referenced as the “Stacey Haney/Range Resources Investigation.”“It has come to our attention that one of the potential criminal investigations involves your respective clients,” said the two-paragraph letter signed by Courtney Butterfield, deputy attorney general and obtained recently by the Pittsburgh Post-Gazette from someone not involved in the case. The letter noted that a significant record of documents, statements, depositions, scientific tests and physical evidence had been compiled for the civil case. It requested that attorneys preserve that record, under penalty of law if they failed to do so.
DEP approves Adelphia compressor station in West Rockhill - At least one local environmental says the April 19 approval seemed to come out of nowhere, leaving little time for it and others to appeal.A proposed natural gas compressor station in West Rockhill might be moving forward after state approval last month, a decision that seemingly came out of nowhere for at least one local group.The state Department of Environmental Protection approved plans for a controversial compressor station on April 19 as part of a proposed Adelphia Gateway LLC pipeline through the area, a legal notice in the Pennsylvania Bulletin states.Bucks County Concerned Citizens Against the Pipeline organizer Arianne Elinich said neither her group nor area residents knew the approval was coming, giving little time to prepare an appeal.Adelphia is currently seeking Federal Energy Regulatory Commission approval for a natural gas pipeline through Northampton, Bucks, Montgomery, Chester and Delaware counties in Pennsylvania and New Castle County in Delaware. Commonly known as the Quakertown Compressor station, Adelphia proposes a 5,625-horsepower compressor station in an 8,000- to 10,000-square-foot building at a 1.5-acre site on Rich Hill Road, near the border of West Rockhill and Richland.
Chester county state representative faces backlash for bringing Nazis into pipeline debate - A Southeastern Pennsylvania lawmaker who opposes the Mariner East 2 pipeline is being criticized by unions that represent pipeline workers, and others, for a tweet one fellow House member called a “poor choice of words.”At the center of the discord was a freshmen Democratic representative and a tweet about Nazis.On Saturday, Chester County Democrat Danielle Friel Otten got in a Twitter exchange with a pro-pipeline group.She’d been supporting protesters who were using cars to block pipeline work — a reaction to Sunoco, the pipeline developer, buying nearby homes that have been affected by construction-induced sinkholes over the last few years.Friel Otten lives near those homes and was elected, in large part, based on apledge to oppose the Mariner East 2. She said she didn’t organize the protest, but that once she found out it was happening near her house, it was “really important to me to have the backs of my constituents and my neighbors, and to welcome them to sit on my patio.” During the protest, the Pennsylvania Energy Infrastructure Alliance tweeted that protesters were preventing workers from doing their jobs. In a now-deleted tweet, Friel Otten responded that “The Nazis were just doing their jobs too,” and linkeda PBS article on coercion by people in power. “What I meant by that, is that this excuse of people just doing their jobs to validate harming people is not an acceptable argument,” she said. Backlash was quick. Fellow Southeastern Democrat David heads the region’s Teamsters Union. He said he has received a lot of calls from members upset with his colleague. “It’s a poor choice of words,” the Delaware County Representative said. “It’s not a fair comparison. I mean these are working folk, these are salt-of-the-earth people.” “The word that was used is a highly offensive word, and the fact that she is a state legislator, a Democrat no less, to use that kind of language so flippantly and to not even issue some type of an apology just blows my mind.”
Dominion CEO says will take Atlantic Coast Pipeline fight to Supreme Court -- Dominion Energy, fighting to resume construction on the $7.8B Atlantic Coast Pipeline, plans to take its case all the way to the U.S. Supreme Court, CEO Tom Farrell says.The regulatory process has been "very frustrating" but the company will not back down from the project as planned, which would pump fracked natural gas from West Virginia through Virginia and into North Carolina, Farrell says.But environmentalists - represented in court by the Southern Environmental Law Center - also say they will not back down, but SELC attorney Greg Buppert notes the Supreme Court takes less than 1% of cases presented to it and typically hears cases involving constitutional issues or conflicts between lower courts."Neither of those issues are present here... So I think Dominion has a very steep hill to climb," Buppert says. "From a reasonableness standpoint, it never made sense to build an interstate gas pipeline through two national forests, a national park and some of the steepest mountains in Virginia and West Virginia," Buppert says. "The company has stubbornly stuck to that route," adding that its problems "are entirely self-inflicted."
Atlantic Coast Pipeline defends U.S. Fish and Wildlife permit under scrutiny — The U.S. Fish and Wildlife Service defended a permit issued to allow work on the Atlantic Coast Pipeline. The Charleston Gazette-Mail said that environmental lawyers argued that the building of the pipeline could endanger the Rusty Patched Bumble Bee, an endangered mussel known as the Clubshell, the Indiana Bat and a threatened crustacean called the Madison Cave Isopod. D.J. Gerken, attorney at the Southern Environmental Law Center, told judges on the 4th Circuit Court of Appeals in Richmond on Thursday that Fish and Wildlife had ignored information indicating that there was a threat to these species. An Incidental Take Statement from Fish and Wildlife was vacated by judges in May of 2018, ruling that the permit was too vague. A permit from the National Park Service was also vacated, and a stop-work order was put in place by the Federal Energy Regulatory Commission, The Charleston Gazette-Mail reports. The Incidental Take Statement that is being contested now is the second issued by Fish and Wildlife, and was released in a revised Biological Opinion in September of 2018. The most recent Biological Opinion from Fish and Wildlife, which included an Incidental Take Statement, along with a new permit from the National Park Service, led to FERC lifting the stop-work order, The Charleston Gazette-Mail reports. The Charleston Gazette-Mail reports that Virginia Department of Conservation and Recreation informed Fish and Wildlife that there were Rusty Patched Bumble Bee populations near the project, and the SELC has argued that the appropriate amount of research has not been done to understand what could happen to the bee population if the project goes through the area. Fish and Wildlife consulted an expert concerning the bees, but Judge Stephanie Thacker disputed the opinion, because the expert had said that all she had was a "wild guess."
Feds warn companies on landslide hazards - Federal regulators are reminding pipeline companies of the dangers posed by erosion and landslides. The Pipeline and Hazardous Materials Safety Administration (PHMSA) has issued an "advisory bulletin" about the hazards, which have been dogging pipeline builders and operators as they try to move natural gas and other products through the mountainous Appalachian region. Landslides, subsidence, floods and other geological hazards can bend pipelines beyond the breaking point, causing ruptures, spills and explosions. "Owners and operators of gas and hazardous liquid pipelines are reminded that earth movement, particularly in variable, steep, and rugged terrain and with varied geological subsurface conditions, can pose a threat to the integrity of a pipeline if those threats are not mitigated," Among other measures, the bulletin suggests monitoring lines with strain gauges, which measure movement of the pipes. PHMSA could use the bulletin to strengthen its case in future enforcement actions if geologic hazards such as landslides cause explosions or other accidents. The bulletin could make such an action less vulnerable to appeal by establishing that pipeline operators should be aware of the hazards and rules. Pipeline industry representatives say they already have detailed, established methods to avoid damage to their lines from landslides and other movement. Pipelines in Appalachia have been plagued in the past year by landslides and other problems resulting from land movement. The landslides have often been linked to unusually heavy rains. Heavy rains have also caused problems for construction of the Atlantic Coast and Mountain Valley pipelines through Virginia and West Virginia (E&E News PM, Dec. 7, 2018). The notice cited seven explosions and spills as "notable." Most were in Appalachia, such as a Jan. 29 rupture near Lumberport, W.Va., caused when a landslide moved an Equitrans Midstream Corp. pipeline about 10 feet. But it also cited a 2016 spill in North Dakota caused by a landslide and a 2016 explosion on a 22-inch gas transmission line in Montecito, Calif., as the region battled flooding and mudslides. It does not mention a January explosion in southeastern Ohio linked to land movement. The explosion on the 30-inch Texas Eastern Transmission pipeline injured two people and damaged two homes (Energywire, April 3). But it does refer to another explosion a year earlier 5 miles away on a different pipeline, the Rockies Express.
Crews clean up roughly 75-125 gallons of fuel from spill - (WWBT) - The Virginia Department of Environmental Quality (DEQ) estimates 75-125 gallons of number 2 fuel oil spilled throughout a Lakeside neighborhood Sunday. Henrico County Fire crews responded to Cedar Croft Street just before noon Sunday for a report of oil in the waterway. Hazmat crews were able to contain the spill that had already traveled 0.8 miles along the ditch into a nearby creek. “We received a statewide alert regarding the fuel spill,” said Steve Tubman with Virginia DEQ. More than 24 hours after the spill there was still a faint odor in the air, but crews with First Call Environmental were there all day Monday cleaning up the mess. "It started where the new fence is, and it runs the length of the ditch,” Tubman said. “It then goes underground for several feet and comes back out into a spring fed creek." At this point how the spill happened remains under investigation, however, originally fire officials said a contractor accidentally leaked fuel in a ditch. "At this point we don't have that information," Tubman said. The roughly 75-125 gallons of fuel spilled is a type of fuel used to heat homes. Neighbors said many of the houses in the area have these oil tanks in their basement, but most aren’t used anymore. In an effort to clean up the spill, crews excavated the ditch; removing any soil that may have soaked up the fuel. Booms were also used and will remain in the neighborhood.
Potential gas pipeline expansion to run adjacent to Haw River - Residents of Alamance County have been working hard to fight against a potential pipeline extension that would run through much of their land and propose a threat to the environment around them. The extension of Mountain Valley Pipeline "Southgate" is set to be decided by 2020. Until then, community activism is set to continue.MVP proposed its "Southgate" project in May 2018, an extension of the preexistingMVP pipeline that currently spans 73 miles from southern Virginia to central North Carolina.The 73-mile extension would expand into southern Virginia and cross into central North Carolina in Rockingham County and end in Alamance County.The pipeline will transport vast amounts of natural gas supply from the Marcellus and Utica shale production (located in New York, Pennsylvania, Ohio and West Virginia) to markets in the mid- and south-Atlantic regions of the United States, according to MVP. Much of community concern derives from the notion that the pipeline extension would be a gas-fracking system. Caroline Hansley, an organizer for the Sierra Club — the largest environmental organization in the country with more than 3.5 million members — said the pipeline “is a high-pressure fracked-gas pipeline.” But, MVP Southgate does not mention anything about a gas-fracking system. “This is an interstate natural gas transmission line, and it does not involve any natural gas production in Virginia or North Carolina,” said Shawn Day, MVP’s media representative. The 24-by-16-inch pipeline is designed to transport 375 million cubic feet of natural gas per day to the Public Service Company of North Carolina Energy (PSNC) now known as Dominion Energy to customers as well as to new and existing markets in southern Virginia and central North Carolina. Before any construction begins, MVP must obtain necessary regulatory authorizations from the Federal Energy Regulatory Commission (FERC). The MVP Southgate team will also seek review from other federal, state and local agencies.
Williams Receives FERC Certificate Authorizing Northeast Supply Enhancement Project - Williams today reported that the Federal Energy Regulatory Commission (FERC) has issued a certificate of public convenience and necessity authorizing the Northeast Supply Enhancement project – an expansion of the existing Transco natural gas pipeline designed to serve New York markets in time for the 2020/2021 winter heating season. The Northeast Supply Enhancement project will provide 400,000 dekatherms per day of additional natural gas supply to National Grid – the largest distributor of natural gas in the northeastern United States. National Grid is converting about 8,000 customers per year from heating oil to natural gas in New York City and Long Island. The Northeast Supply Enhancement Project is critical to make these conversions possible, as well as keep up with new development in the area. “NESE will provide access to critical supply to serve our customers in New York City and on Long Island, ensuring there is enough natural gas for them to heat their homes and run their businesses,” said National Grid New York President John Bruckner. “This project aligns with our 80x50 pathway to reduce greenhouse gas emissions and supports City and State clean energy goals, while improving safety, reliability, resiliency and maintaining affordability and customer choice.” The Order issued by the Commission concludes a nearly three-year regulatory review process, ultimately determining that the Northeast Supply Enhancement project will serve the public interest and that environmental impacts would be minimized with the implementation of mitigation measures proposed by the company and FERC. Following the receipt of all necessary regulatory approvals, Williams anticipates beginning construction on the Northeast Supply Enhancement project facilities in the fall of 2019.
Landmark FERC pipeline challenge fails -- An appellate court today tossed a lawsuit targeting a federal plan to significantly narrow climate analyses for natural gas infrastructure. During oral arguments last month, judges for the U.S. Court of Appeals for the District of Columbia Circuit seemed skeptical of the Federal Energy Regulatory Commission's defense of its drastic climate policy shift (Energywire, April 12). But the case failed on the question of whether the plaintiff in the case, the small New York environmental nonprofit Otsego 2000, had standing to bring the challenge. "Otsego's affidavits do not identify any injury other than the organization's expenditure of time and money related to this litigation," the court wrote in a short order today. The lawsuit was born from FERC's refusal last year to rehear a challenge to Dominion Energy Transmission Inc.'s New Market Project, a set of gas infrastructure upgrades in upstate New York. FERC's Republican majority used the procedural document to announce a seismic shift in its approach to analyzing and disclosing upstream and downstream greenhouse gas emissions from the projects the agency authorizes. Democratic Commissioners Cheryl LaFleur and Richard Glick penned pointed dissents, and Glick made a rare appearance at oral arguments in the case. During the hearing, the judges — Clinton appointees Merrick Garland and David Tatel and Obama pick Robert Wilkins — asked counsel for Otsego 2000 to defend the group's standing. Legal experts who attended arguments noted FERC's placement of its policy change inside proceedings for a low-profile project was likely a strategic move.
Reps Overseeing Pipeline Safety are Profiting From Pipeline Companies -- Fossil fuel pipeline safety standards are set by the Pipeline and Hazardous Materials Safety Administration (PHMSA), which states that its mission is to “protect people and the environment by advancing the safe transportation of energy.” Since 2011, PHSMA has left open several rulemaking procedures to establish safety standards for natural gas pipelines, but it has so far failed to conclude any of them. While these rules sit in limbo, there have been several fatal gas pipeline incidents, including at least three in 2018—the Columbia Gas explosion in Massachusetts, an explosion in Texas that was caused by a leaking gas gathering pipeline, and an explosion of an Atmos pipeline, also in Texas.. It is estimated that there are now at least 439,000 miles of unregulated natural gas pipeline in the U.S. The lack of regulation means that pipeline companies are rarely penalized when their lines explode and cause property damage, injuries, or deaths. “[PHMSA uses] a figure of about $9-10 million as the benefit of a human life,” Weimer said. “So if you have a tragedy like San Bruno that kills 8 people and you go through a cost-benefit to look at installing new valves on pipelines, and you say that over the course of 10 years you’re going to prevent 10 lives from being lost, that would be worth about $100 million. At the same time if you look at what the cost would be for the industry to put a valve on every mile of pipeline that might be required…the cost of implementing automated valves way outweighs the benefit of the human lives you’re going to save.” The laws regulating the pipeline industry, including the cost-benefit analysis requirement, fall under the jurisdiction of the U.S. House Railroads, Pipelines, and Hazardous Materials Subcommittee. The subcommittee, part of the Transportation & Infrastructure Committee, is responsible for legislation reauthorizing the PHMSA every few years and establishing laws governing its operation and rulemaking process. So far the subcommittee has not passed legislation to address the agency’s stalled rulemaking process. According to a Sludge analysis of financial disclosures, the members of the Railroads, Pipelines, and Hazardous Materials Subcommittee have as much as $2.8 million invested in fossil fuel companies that own and operate oil and gas pipelines, presenting significant conflicts of interest. Many of the companies in which the representatives, both Democrats and Republicans, are personally invested are members of trade groups that oppose the PHSMA’s proposals to regulate natural gas gathering pipelines. The American Petroleum Institute and the GPA Midstream Association filed a joint position paper with the Department of Transportation in December 2018 opposing much of the PHSMA’s proposal for regulating gas gathering pipelines, stating that the new regulations would cost the industry $28 billion over a 15-year period.
Weekly Natural Gas Storage Report- Early June Outlook Is Bearish - EIA reported a storage build of 85 Bcf for the week ending May 3. This compares to the +89 Bcf we projected and consensus average of +87 Bcf. The +85 Bcf was higher than the five-year average of +70 Bcf but lower than last year's +89 Bcf. For the week ending May 10, we have a storage build of 100 Bcf. November EOS is forecasted to be 3.70 Tcf. We remain long our 1/4 sized UGAZ position. TDDs are projected to be higher than normal for the next 15 days. Even though we are long at the moment, the latest ECMWF-EPS long-range outlook was not supportive of the bull case. For the time being, the June weather outlook appears to show a colder than normal set-up, which would keep CDDs at bay. You also can see this explanation from the Commodity Wx Group: We estimate that if June is indeed colder than normal, then storage builds will be very sizable. We would see consecutive 100+ Bcf builds as low natural gas prices won't help offset the lower CDDs. In addition, another bullish point - production - was recently eliminated as the drop we observed earlier in the week was corrected. Temporary outages impacted production, so we are seeing lower 48 production regain ~89 Bcf/d. With production higher and demand projected to be lower, this spells the bear case for natural gas. But readers must remember that during the summer gas trading period, prices tend to oscillate around a price band. Even though the storage builds will be large in June, we think the downside is capped by the higher power burn switching demand. But if Mother Nature is not supportive, we see summer gas prices capped at $2.7/MMBtu for the time being. For the natural gas bulls, a hotter than normal summer is needed to boost demand and help eliminate the surplus we see in the market. The focus will quickly shift back to weather outlooks by the end of May.
No Surprises in EIA Natural Gas Report; OPEC Crude Production Inches Higher - Natural gas futures are trading lower, showing limited response to today’s U.S. Energy Information Administration (EIA) weekly storage report. The market is holding inside yesterday’s move, but lingering near the top of its one-week range. The chart pattern suggests investor indecision and impending volatility. Earlier in the session, the EIA reported that domestic supplies of natural gas rose by 85 billion cubic feet for the week-ended May 3. Traders were looking for a larger-than-average double-digit build. At 17:41 GMT, June Natural gas is trading $2.593, down $0.017 or -0.85%. A Bloomberg survey showed analysts were looking for a range of 79 Bcf to 108 Bcf, with a median 87 Bcf injection. International Exchange (ICE) EIA Financial Weekly Index futures settled Tuesday at a build of 86 Bcf. Natural Gas Intelligence’s (NGI) model predicted an 89 Bcf injection. Reuters predicted a build of 88 Bcf, down from last week’s 123 Bcf build. Last year, the EIA recorded an 85 Bcf build for the period, and the five-year average is an injection of 72 Bcf. Total stocks now stand at 1.547 trillion cubic feet, up 128 billion cubic feet from a year ago, but 303 billion below the 303 billion below the five-year average, the government said. U.S. West Texas Intermediate and international-benchmark Brent crude oil are trading lower, but up from their intraday lows. Some of the strength at the mid-session was fueled by a strong recovery in the stock market after President Trump said a trade deal with China was still a possibility. Also helping to underpin prices was a report that showed crude oil production in OPEC edged higher by a modest 30,000 barrels per day (bpd) to 30.26 million bpd last month. The S&P Global Platts survey showed the first increase after four months of steady declines. The report also showed production in Iran and Angola declined, but increased in Nigeria, Iraq and Libya. The S&P Platts survey also revealed surprisingly that production in Venezuela stabilized last month. Platts also said that the organization’s largest producer, Saudi Arabia, kept its production rate stable in April, at an average 9.82 million bpd. The Platts survey also showed that Iran saw an estimated 120,000 bpd drop in its production last month, to 2.57 million bpd. The reason was that many importers of Iranian crude stopped buying it in anticipation of the May 1 expiration of U.S. sanction waivers that Washington granted to eight large importers. At 17:55 GMT, June WTI crude oil is at $61.66, down $0.46 or -0.74% and July Brent crude oil is at $70.22, down $0.15 or -0.21%.
Collins, King back bipartisan effort to bar New England offshore drilling -- U.S. Sens. Susan Collins, R-Maine, and Angus King, I-Maine, are backing bipartisan legislation to prohibit offshore oil and gas drilling in New England, they announced on Monday.The bill, known as the New England Coastal Protection Act, was first introduced last year and has been reintroduced into the Senate by a group of New England lawmakers.Before the legislation was first introduced last year, Collins and King laid out some of their concerns in a letter then-U.S. Interior Secretary Ryan Zinke.Among other things they argued that even minor spills could cause serious harm to the lobster industry, which contributes an estimated $1.7 billion to the state’s economy, in addition to hurting other fisheries, aquaculture, and coastal tourism.On Monday, they elaborated on those concerns in a joint statement.“The waters off Maine’s coast provide a healthy ecosystem for our state’s fisheries and support a vigorous tourism industry, both of which sustain thousands of jobs and generate billions of dollars in revenue for Maine each year,” they said. They added: “With our environment so closely tied to the vitality of Maine’s economy, we cannot risk the health of our ocean on a shortsighted proposal that could impact our state for generations. We are proud to join our colleagues from New England to underscore the necessity of protecting our waters from offshore drilling.” While the Trump Administration has signaled that plans to open new coastline to offshore drilling were tentatively sidelined, the U.S. Bureau of Ocean Energy Management continues to review applications for permits to conduct seismic testing in the Atlantic Ocean, a precursor to oil and gas drilling, according to Monday's news release.
Amid Line 5 talks, who would share tunnel real estate? - Since its introduction in October, the proposed Straits of Mackinac utility tunnel has been touted for its potential to benefit multiple entities that own assets in the Straits. According to the agreement reached under Gov. Rick Snyder’s administration, the concrete structure at the bottom of the Straits of Mackinac would house replacement piping for Enbridge’s Line 5 petroleum pipeline, but could also be used to hold a number of phone, natural gas and electrical lines that currently run between Michigan’s upper and lower peninsulas. Last week, a letter from the American Transmission Company (ATC) cast some doubts on those promises. In that letter, addressed to the Chippewa Ottawa Resource Authority, Tim Finco, vice president for internal affairs at ATC, said “a tunnel is not an acceptable solution for ATC” for timing, safety and practicality reasons. “ATC does not believe that installing high-voltage electric lines in close proximity to high pressure oil or gas lines is a good idea,” Finco said. “Moreover, a utility tunnel carrying oil, gas and electric lines would dramatically increase costs. It is likely those costs would be passed on to U.P. electric users who already pay Michigan’s highest utility costs.” In a phone interview with the News-Review, a representative for ATC said it wasn’t the first time those concerns have been brought up. “ATC has been working closely with representatives from the governor’s office on such matters since the prior administration, and going forward to new administration, we will working with them for a plan,” said ATC spokeswoman Allisa Braatz. When asked if representatives of the company specifically raised their concerns during those early discussions with the governor’s office, she said they had.
Environmental groups push for ‘fracking transparency’ in Illinois - Republican state lawmakers from Southern Illinois pushed back last week against a bill that would require more public disclosure from oil and gas drilling companies whenever they use hydraulic fracturing, or “fracking” in their operations in the state. Their comments came during a hearing Tuesday in the House Energy and Environment Committee. It is considering House Bill 282, dubbed a “fracking transparency bill,” sponsored by Rep. Robyn Gabel (D-Evanston) and supported by environmental groups including Illinois People’s Action and Southern Illinoisans Against Fracturing Our Environment. “Property and health concerns clearly give the public the right to know where the wells are going and what frack chemicals are being used,” Bill Rau of Illinois People’s Action told the committee. “Some horizontal wells are drilled only 500 to 800 feet below the surface, which can be within or just below strata containing groundwater.” In 2013, Illinois passed a law requiring full public disclosure of large-scale fracking operations, but that law applied only to wells that inject more than 80,000 gallons of pressurized fluids. No such wells have been drilled in Illinois since that time, largely because there is little left of the underground oil and gas reserves in the state. The bill now being considered would extend those same public disclosure requirements to even the smallest fracking operations. Among other things, it would require the Illinois Department of Natural Resources to make public the location of every fracking permit it issues as well as the chemicals that are to be used in the fracking operation.
Shell, Energy Transfer Seek Louisiana Project Bids - Shell US LNG, LLC and Energy Transfer LP have issued an invitation to tender (ITT) to U.S. and international consortia for the engineering, procurement and construction (EPC) contract for their Lake Charles LNG project in southwestern Louisiana. In a written statement Friday, the companies reported that the project calls for converting their existing LNG import facility in Lake Charles, La., to a large-scale export facility. In March of this year, the companies – 50/50 partners in the joint venture – reported that they had signed a project framework agreement.. That deal set the commercial terms and pathway to advance the 16.45-million-tonne-per-annum potential development toward final investment decision (FID), the companies stated. According to Shell and Energy Transfer, the Lake Charles LNG project is already fully permitted and uses existing infrastructure. Moreover, they stated the liquefaction facility would benefit from “abundant natural gas supply” as well as proximity to Energy Transfer’s pipeline network as well as other pipeline infrastructure.
Most US Offshore Resources Not Up for Grabs - Ninety-four percent of the United States’ offshore resources are not available for investment. That’s what Eric Oswald, vice president for the Americas at ExxonMobil, revealed during a presentation at the Offshore Technology Conference in Houston, Texas, on Wednesday. “You guys know how much of the U.S. offshore is available for investment? … Six percent. Ninety-four percent of our nation’s resources offshore … are not available for us to invest in,” Oswald told delegates attending the presentation. “Who’s losing there? I mean it’s the country, right? It’s a huge amount of potential lost there … That’s an astonishing number,” he added. According to a Bureau of Ocean Energy Management fact sheet (BOEM), U.S. Outer Continental Shelf (OCS) production accounts for about 18 percent of domestic crude oil and four percent of domestic natural gas supply. In fiscal year 2016, federal leasing revenues for the OCS were approximately $2.8 billion, the fact sheet highlighted. The mission of the BOEM is to manage development of U.S. OCS energy and mineral resources in an environmentally and economically responsible way, according to the organization’s website.
BP Approves Thunder Horse Expansion in GOM - BP has approved the Thunder Horse Expansion Phase 2 project in the deepwater Gulf of Mexico, the company announced Monday. At its peak, the project is expected to add about 50,000 gross barrels of oil equivalent per day (boepd), with first oil expected in 2021. BP’s Thunder Horse expansion will add two new subsea production units with two new production wells. Plans include six additional wells to be drilled in the future as part of the overall development. The Thunder Horse expansion signifies the most recent major investment in the U.S. offshore region and follows other expansion projects at the platform in recent years. “This latest expansion at Thunder Horse is another example of how the Gulf of Mexico is leading the way in advantaged oil growth for BP, unlocking significant value and safely growing a high-margin business,” Starlee Sykes, BP’s regional president for the Gulf of Mexico and Canada, said in a company statement. “It also highlights our continued growth and momentum in a region that will remain a key part of BP’s global portfolio for years to come.” In October 2018, the company announced the Thunder Horse Northwest Expansion offshore Gulf of Mexico began four months ahead of schedule and would boost production at the platform by 30,000 boepd..
GOM Decommissioning Scene is Changing - Hardly an easy proposition to begin with, dismantling an offshore oil and gas platform in the Gulf of Mexico (GOM) is becoming even more challenging as the complexity of decommissioning and abandonment (D&A) projects intensifies.“The oil price declines that hit us in 2015-2016 caused many GOM production assets to become uneconomical,” Tom McNulty, Houston-based managing director of Great American Group, told Rigzone. “As such, low-hanging fruit – in shallow waters – was the recent focus and that aspect of D&A is less capital-intensive to do.” The D&A scene in GOM is changing, said McNulty. He explained that assets located in deeper water depths are increasingly reaching the end-of-life stage, translating into D&A projects that are much more challenging to complete.“The farther out you go, and the deeper the water, the more difficult the work,” said McNulty. “We are seeing that oftentimes the very same companies that built and installed GOM assets years ago are the very same companies that are hired to decommission them.”Citing government and market sources, McNulty highlighted the growing magnitude of D&A operations. Key data points include:
- Global D&A spending should reach $13 billion per year by 2040
- Worldwide, D&A expenditures will increase by 540 percent through 2040
- From 2021 to 2040, there will be an estimated 2,000 offshore D&A projects
- In just the GOM, decommissioning liabilities amount to roughly $40 billion.
Besides the logistical challenges associated with decommissioning remote offshore structures, the profit potential associated with the time-consuming process is minimal to nonexistent for the operator. As a project manager with Worley’s INTECSEA consultancy told Rigzone in 2018, an operator’s ultimate goal in the approximately five- to six-year D&A process is “to reduce overhead.”“The environmental and regulatory issues are multifold, particularly in this post-Macondo era,” said McNulty, adding that weather-related impacts, the need for specialized heavy equipment and cyclical shortages of skilled personnel represent other D&A challenges. “Litigation risk is massive, so a great deal of planning goes into each D&A project.”
Is Deepwater In Permanent Decline? No. At least according to a recent poll conducted during a presentation at the 2019 Offshore Technology Conference in Houston, Texas. The majority of poll participants attending the presentation, which focused on offshore deepwater, answered no when asked if they considered the segment to be in permanent decline. In a separate poll during the presentation, attendees were asked what they thought was the most promising technology innovation for deepwater in the next decade. Almost half of the participants for this poll answered “machine learning”, with 38 percent of participants siding with advances in mechanical, materials and electronics (MME). Nine percent answered “drones” and six percent answered “other”. Earlier this year, Rystad Energy revealed that it expects global deepwater liquid production to surpass 10 million barrels per day (MMbpd) this year, before rising further in 2020. The company confirmed to Rigzone back in February that global deepwater liquid production had never surpassed 10 MMbpd before. “With new fields starting up in Brazil and Gulf of Mexico, we expect the total deepwater liquid production to reach 10.3 MMbpd in 2019. This is an increase of 700,000 bpd compared to 2018,” Rystad said in a statement posted on its website in February. Angola, Norway, Nigeria, Brazil and the United States are the largest deepwater producers, Rystad Energy highlighted earlier this year.
Ship collides with barges, causing massive gas product spill - An outbound tanker collided with two barges in the Houston Ship Channel, releasing an unknown amount of gasoline product into the water, according to authorities. The crash happened around 3:15 p.m. Friday, just east of Barbours Cut. One barge capsized. The other was damaged and leaked the product into the water. Both were carrying about 25,000 barrels of reformate. The Houston Ship Channel was closed from Light 61 to Light 75.Officials initially said about 25,000 barrels of reformate entered the water, but later said they were not sure how much was released. Reformate is a refined product that is blended with gasoline to boost octane to achieve levels needed for commercial sales. It is an extremely flammable liquid and vapor and can be fatal if it is swallowed. Reformate is toxic to marine life. The name of the 755-foot tanker that struck the barges was Genesis River and it was headed to Bayport Container Dock No. 5, officials said. Friendswood dispatch reported receiving several calls related to a smell of gasoline within the city. Officials said the smell is directly related to the crash in the Ship Channel. Galveston County officials said the Port of Houston and Center for Toxicology and Environmental Health are currently monitoring the air quality in and around the accident. County officials said the monitoring reports are not showing any detectable levels of concern in air quality in Kemah and Clear Lake Shores. Friendswood officials said tests were completed for Friendswood and League City, and said the results were "good with no detections of actionable levels of chemicals found." The city said there is no danger to the public. Officials said people should turn off air conditioners to limit the smell within homes. Via Sky 2 video, one of the barges could be seen with a significant amount of damage. No injuries have been reported.
Permian Oil Storage Facility Project Goes to KBR - KBR, Inc. has won a reimbursable front-end engineering design (FEED) and engineering, procurement and construction (EPC) contract for improvements to a Permian Basin oil gathering and storage terminal in West Texas, the company reported Thursday. KBR did not specify who awarded the contract, only stating that it is a “Tier 1 International Oil Company.” Under the contract, KBR will provide reimbursable cost FEED and EPC services to support the installation and construction of terminal facilities excluding storage tanks. The company noted that the facilities will handle Permian crude oil and condensate for transport to the Gulf Coast.
Shale producer Pioneer Natural Resources to cut executive ranks (Reuters) - Pioneer Natural Resources said on Tuesday it has asked nearly a third of its executives to leave their jobs as the U.S. shale producer continues to trim costs and considers selling more assets. The company expects to save $100 million annually with the job cuts and a new organizational structure, Chief Executive Scott Sheffield said during an earnings call. The Irving, Texas-based oil and gas producer expects to shed the employees on a voluntary and involuntary basis by June 1. Shale firms have pushed U.S. oil output to record levels. But years of heavy spending led to investor pressure to reduce spending and use the cash to pay dividends and repurchase shares. “The big change is to treat capital just as important as production,” Sheffield said. Pioneer’s stock was trading 6.8 percent lower at $145.71 around midday on Tuesday after Sheffield said he did not expect a wave of consolidation in the industry. The stocks of producers focused on the Permian Basin bounced in April when Chevron Corp revealed it had agreed to pay $33 billion for Anadarko Petroleum Corp. Occidental Petroleum Corp then made a $38 billion hostile bid for Anadarko. Pioneer shares traded at $150.92 the day before the Chevron-Anadarko deal, but closed at $168.32 the day it was announced. “I didn’t come back to sell the company,” said Sheffield the company’s founder, who returned as CEO after veteran executive Tim Dove abruptly retired in February. “I personally don’t think that there’s going to be a lot of (mergers and acquisitions) over the next one to two years.” On Monday, Pioneer reported its first-quarter profit jumped to $350 million, or $2.06 per share, from $178 million, or $1.04 per share, a year ago. The company did not say how many executives will leave and did not respond to a request for comment.
Report: Air quality harmed as Texas oil production booms (AP) — The production of oil and natural gas in West Texas is booming but it’s coming at a cost to residents who are regularly exposed to unhealthy levels of air pollution, according to a report issued by an environmental group. The Environmental Integrity Project noted in a report released Thursday that the Permian Basin, which extends into New Mexico , is one of the most productive hydrocarbon regions in the world. But a consequence of that production is dangerous levels of sulfur dioxide in the air around Odessa and other locations, according to the report, which adds that pollution levels in much of Ector County, where Odessa is located, exceed standards set by the federal Environmental Protection Agency. “Controlling air pollution in West Texas has not been a priority for the state, as evidenced by the scarcity of air pollution monitoring stations in the Permian Basin,” the report said. “And yet, the type of air pollution in the Permian Basin — dominated by excessive emissions of sulfur dioxide and hydrogen sulfide — is known to have serious environmental and public health consequences.” Ilan Levin, associate director of The Environmental Integrity Project, said regulators such as the Texas Commission on Environmental Quality need to have stricter oversight of air pollution permits while penalizing polluters who violate the terms of those permits. “It’s like they’re speeding and the cops out on the beat are not issuing any speeding tickets,” Levin said Wednesday. A spokesman for TCEQ declined to comment, saying the agency hadn’t seen the report. The report asserts that oil and gas facilities are releasing large amounts of unpermitted pollution during equipment breakdowns, maintenance and other so-called “emission events.” The unauthorized release of air pollution occurs mainly from flaring, which is a way to burn gas that’s released, according to the report, but Levin adds that flaring was meant to be a last resort that instead has “become a business model to get rid of gas that they don’t know what to do with.” There’s only one functioning air monitoring station measuring sulfur dioxide in the Permian Basin, the report said, and more are needed to better police the release of emissions. Exposure can make breathing difficult and harm a person’s respiratory system. There were at least 30 occasions from December 2016 to April of this year that sulfur dioxide levels measured at one location exceeded federal health standards, according to the report, adding that oil and gas operators in and around Ector County self-reported 2,564 unauthorized releases of air pollution from 2014 to 2017.
Electric Fracking Could Take Over The Permian - Shale production in West Texas continues to boom - so much so that shale oil and gas producers in the Permian Basin have more than they know what to do with. As production continues to outpace the expansion of sorely needed pipeline infrastructure, local operators in the Permian are letting approximately 104 billion cubic feet of natural gas go to waste each year by flaring, what is essentially just burning the gas away, instead of putting it on market. For many producers in the Permian, this has led to diminishing profits. One such company is Houston-based oilfield service company Baker Hughes. The company’s first quarter profit also took a nosedive, clocking in at $32 million--less than half of its profits for the same period a year earlier, when Baker Hughes reported a profit of $70 million. However, despite these dismal numbers, things are looking up for Baker Hughes. The company is debuting a new, cutting-edge technology that will harness this otherwise wasted gas to power their hydraulic fracturing equipment in the Permian Basin in West Texas. Simonelli announced to investors this week that his company will be forging a new path in fracking by introducing a revolutionary fleet of “electric frack” turbines that will “use excess natural gas from a drilling site to power hydraulic fracturing equipment — reducing flaring, carbon dioxide emissions, people and equipment in remote locations” according to reporting by the Houston Chronicle. During a Tuesday call with investors Simonelli characterized the new strategy as an across-the-board win for their customer base, saying, “We’re solving some of our customers’ toughest challenges such as logistics, power and reducing flare gas emissions with products from our portfolio.” One of these logistical sticking points concerns the high volumes of diesel required to power hydraulic fracking rigs. These new “electric frack” turbines are a good start. The approximately 500 traditional diesel-powered hydraulic fracking fleets scattered across the U.S. and Canada consume about 20 million horsepower of energy altogether according to calculations by Baker Hughes. This means that there is a massive market--about 15 gigawatts--for electricity generated by using the new gas-fired turbines. Instead of adding new carbon emissions these turbines will be powered with gas that is currently being burned off anyway instead of adding diesel emissions on top of the carbon dioxide from those flares. To date, eight of these groundbreaking “electric frack” fleets have been deployed in the Permian Basin, but if they are as successful as Baker Hughes seems to think they will be, we can expect a lot more in a hurry.
US oil and gas rig count falls 13 on the week to 1071: Platts Analytics — US oil and gas rigs fell 13 to 1,071 the week ended May 8, S&P Global Platts Analytics said Thursday, resuming what has generally been a six-month downward trend despite domestic oil prices continuing firmly above $60/b. The rig count drop has fluctuated up and down in recent weeks as upstream operators - many of whom have heavy early-2019 activity programs planned for the year - released a rig after finishing a program or prepared to drill new wells. Last week the rig count gained 18, landing at 1,084 after spending much of April slipping each week. The US rig count peaked in mid-November 2018 at 1,233 and has gradually decreased since then. It dropped below 1,100 in mid-February and since then has generally stayed around the high 1,100s.This week's rig count decrease was for both oil and gas. Oil-directed rigs were down by five to 852, while rigs chasing gas fell by six to 218.In addition, a two-rig decline was posted for rigs not specified for either oil or gas.For specific domestic plays, the biggest weekly drop of nine rigs, to 211, came from the geographic classification "Other" - a category for rigs not listed in any of the other eight large named basins.For named basins, the Utica Shale, sited mostly in Ohio, gained four rigs this week for a total 19. The Denver-Julesburg Basin mostly in Colorado gained two rigs for a total 32, while the Williston Basin of North Dakota and Montana added a rig for a total 62.Two areas lost three rigs apiece: the Haynesville Shale of East Texas and Northwest Louisiana, and the Dry Marcellus Shale, mostly in Pennsylvania. That left the Haynesville with 58 rigs and the Dry Marcellus with 35.The Wet Marcellus, also mostly in Pennsylvania, and also the Permian Basin of West Texas and New Mexico, each lost two rigs. That left the Permian with 462 rigs and the Wet Marcellus with 23 rigs.The SCOOP-STACK play in Oklahoma lost one rig, leaving 86, while the Eagle Ford Shale in South Texas stayed steady at 83 rigs.Also, the number of US permits approved this week fell by 439 compared with a week ago, for a total 549. The biggest single drop came in the "Other" category, down by 501 for a total 166 permits approved. For named plays, the Permian Basin gained the most, up 43 from last week to 204. The Dry Marcellus was up by 24 to 41 while the Wet Marcellus was up 12 to 20.
Buffett says Occidental Petroleum investment is a bet on oil prices over the long term - Billionaire investor Warren Buffett said Monday that Berkshire Hathaway’s $10 billion investment in Occidental Petroleum is a bet on oil prices over the long term. “It’s also a bet on the fact that the Permian Basin is what it is cracked up to be,” the chairman and CEO Berkshire told CNBC’s Becky Quick. But “oil prices will determine whether almost any oil stock is a good investment over time.” “If [oil] goes way up, you make a lot of money,” he added. Occidental revealed on Tuesday that Berkshire had committed to invest $10 billion in the company to help fund its proposed acquisition of Anadarko Petroleum. Berkshire would make the investment by purchasing 100,000 shares of preferred stock, which pays out an 8% annual dividend. Buffett was willing to invest $20 billion to help Occidental seal the deal, sources told CNBC’s David Faber. Occidental revised its bid to purchase Anadarko after the international oil and gas driller agreed to sell its business to Chevron last month for $65 a share in a 75% stock and 25% cash deal worth $50 billion including debt. Asked why Berkshire wouldn’t just buy Anadarko itself, Buffett said, “That might have happened if Anadarko came to us, but we wouldn’t jump into some other deal that we heard about from somebody else coming to us seeking financing.” Later in the interview, longtime investing partner and vice chairman Charlie Munger responded to the question as well, saying, “Nobody asked us to.”
Occidental inks $8.8 billion deal to sell Anadarko's African oil and gas assets to Total - Occidental Petroleum has reached a deal to sell Anadarko Petroleum’s oil and gas assets in Africa to French oil major Total for $8.8 billion. The agreement is contingent on Occidental first reaching an agreement to buy Anadarko and closing the deal. Occidental is competing with Chevron to acquire Anadarko. The announcement on Sunday offers some clarity on how Occidental would fund its cash-and-stock purchase of Anadarko. Occidental had said it would seek to sell $10 billion to $15 billion worth of assets to underwrite the $38 billion proposed takeover. Occidental said the sale of the Anadarko’s assets in Algeria, Ghana, Mozambique and South Africa to Total would also reduce the challenges of integrating the two drillers. The deal with Total is a binding agreement, and the divestment of the African assets would happen at the same time Occidental closes a deal to purchase Anadarko or shortly after. “Given our long history of working together productively, I am confident we can execute this sale quickly and efficiently,” Occidental CEO Vicki Hollub said in a statement. “Total has extensive experience working in Africa and is well positioned to maximize value from these assets.” The divestment would leave Occidental with Anadarko’s holdings in U.S. shale basins, the Gulf of Mexico and South America, as well as Western Midstream Partners, a fossil fuel transportation and processing company. Occidental is primarily interested in Anadarko’s acreage in the Permian Basin, the top U.S. shale field stretching from western Texas to southeastern New Mexico. Chevron reached a deal to buy Anadarko for $33 billion last month, but Occidental later put in a higher offer. Anadarko’s board of directors is currently considering Occidental’s bid.
Occidental revises bid for Anadarko in buyout battle with Chevron, offers mostly cash - Occidental Petroleum on Sunday put a revised buyout offer in front of Anadarko Petroleum, offering to pay shareholders in mostly cash as it seeks to derail Chevron’s acquisition of the international oil and gas driller. Occidental is still offering to buy Anadarko for $76 a share but would now pay 78% in cash and 22% in stock. The $57 billion transaction was initially structured as a 50-50 cash-and-stock deal when Occidental first made its public bid for Anadarko nearly two weeks ago. Anadarko agreed to sell its business to Chevron last month for $65 a share in a 75% stock and 25% cash deal worth $50 billion including debt. Anadarko’s board of directors resumed negotiations with Occidental last week after determining the rival bid could be superior to Chevron’s offer. Occidental says the revised offer creates immediate value and makes it more certain the deal will close. By offering more cash, Occidental will no longer have to seek approval from shareholders to purchase Anadarko. The risk of Occidental shareholders voting down the purchase created uncertainty that Occidental’s management could bring the buyout over the finish line. “Our revised proposal and merger agreement represents our comprehensive response to all points that your counsel has raised with ours over the course of the past week,” Occidental CEO Vicki Hollub said in a letter to Anadarko’s board of directors. Hollub revealed in the letter that counsel for Anadarko’s board requested three seats on Occidental’s board of directors. Occidental’s new offer does not include that provision because the improved bid does not warrant giving up the three seats, she said. Earlier on Sunday, Occidental announced it had reached a deal to sell Anadarko’s African assets to French oil major Total for $8.8 billion. That would achieve most of Occidental’s goal of divesting $10 billion to $15 billion in assets as part of the buyout. The announcement followed a commitment by Warren Buffett’s Berkshire Hathaway last week to invest $10 billion in Occidental to help fund the Anadarko buyout. Some investors and analysts, including CNBC’s Jim Cramer, have criticized the sale of preferred stock to Berkshire because it comes with a steep 8% annual dividend.
Oxy Jazzes Up Anadarko Offer, Makes $8B Total Deal - Occidental Petroleum Corporation (Oxy) revealed Sunday that it has jazzed up its offer for Anadarko Petroleum Corporation (APC) and agreed a deal to sell APC’s Africa assets to Total S.A. for $8.8 billion. Oxy has delivered a letter to the board of directors of APC setting forth the terms of a proposal to acquire APC for $76 per share, comprised of $59 in cash and 0.2934 shares of Oxy common stock per share of APC common stock. Oxy’s previous offer was for $76 per share, comprised of $38 in cash and 0.6094 shares of Oxy common stock for each share of APC common stock. The revised proposal has been unanimously approved by the Oxy board of directors and represents a premium of approximately 23.3 percent to the $61.62 per share value of Chevron’s pending offer, Oxy said in a company statement. Oxy added that the increased cash portion of $59 per share provides “significant immediate value, greater closing certainty and enhanced accretion”. In connection with Oxy’s proposal to acquire APC, the company has entered into a binding agreement to sell APC’s Algeria, Ghana, Mozambique and South Africa assets to Total for $8.8 billion. The sale is contingent upon Oxy entering into and completing its proposal to acquire APC and would be expected to close simultaneously “or as soon as reasonably practicable afterwards”, Oxy said. The proceeds of the sale of these assets would cover a portion of the cash consideration to fund the proposed acquisition of APC, according to Oxy. “We firmly believe that Occidental is uniquely positioned to drive significant value and growth from Anadarko’s highly complementary asset portfolio,” Oxy President and CEO, Vicki Hollub, said in a company statement. Commenting on Oxy’s Total deal, Greig Aitken, director of M&A research at Wood Mackenzie, said, “this is a move that will alleviate the concerns of Anadarko’s shareholders”. “Anadarko’s main concern appears to be uncertainty regarding the execution of the deal. Can Oxy finance the deal, will the bid value erode due to a falling share price, will its shareholders acquiesce?” Aitken added. “Combined with the recent $10 billion Berkshire Hathaway commitment, this disposal has allowed Oxy to increase the cash component of its bid from 50 percent to 76 percent (an increase of approximately $10.5 billion).
Anadarko likely to deem Occidental's buyout offer superior to Chevron's bid on Monday: Sources - Anadarko Petroleum’s board of directors is likely to determine on Monday that Occidental Petroleum’s buyout offer is superior to the agreement the board reached last month to sell Anadarko to Chevron, sources tell CNBC’s David Faber. The decision would flip the momentum of the bidding war in Occidental’s favor and put pressure on Chevron to sweeten its $33 billion offer. Occidental has taken several steps to outmatch the much larger Chevron since launching its $38 billion rival offer nearly two weeks ago. On Sunday, Occidental revised its bid, offering to purchase Anadarko for 78% cash and 22% stock, compared with its earlier 50-50 cash-and-stock proposal. Increasing the cash component of the deal means Occidental will not have to hold a shareholder vote on the acquisition, making it more certain that the driller could complete the deal. Occidental was able to offer more cash after securing a $10 billion preferred stock investment from Warren Buffett’s Berkshire Hathaway. Occidental also inked a deal to sell Anadarko’s African oil and natural gas assets to French oil major Total for $8.8 billion, which would also fund the cash component of the acquisition. If Anadarko’s board does deem Occidental’s bid superior, Chevron will have four days to put another offer on the table. Anadarko would have to pay Chevron a $1 billion breakup fee if its board ultimately chooses Occidental’s offer.
Anadarko to cancel Chevron buyout deal after board deems Occidental's bid superior - Anadarko Petroleum’s board of directors said on Monday that Occidental Petroleum’s buyout offer is superior to its agreement to sell its business toChevron, putting the deal with the oil giant in jeopardy.The reversal marks the latest twist in a rare bidding war in the oil and gas sector. Chevron now has four days to counter Occidental’s latest bid for Anadarko, an oil and gas driller with prized assets in the U.S. Permian Basin, the Gulf of Mexico and Africa.Shares of Occidental Petroleum were down slightly in after hours trading, while Chevron’s stock price ticked higher. Anadarko’s shares were roughly flat after jumping 3.8% on Monday. Chevron reached an agreement last month to buy Anadarko for $33 billion, or $65 a share. Shortly after, Occidental offered $38 billion, or $76 a share. Occidental on Sunday sweetened its bid by offering to pay mostly cash for Anadarko, after earlier structuring the transaction as a 50-50 cash-and-stock deal. Anadarko’s board of directors on Monday unanimously decided that the revised offer is a “Superior Proposal” under the terms of its agreement with Chevron. The board intends to cancel the deal with Chevron and enter into a definitive agreement to sell its business to Occidental. According to that agreement, Chevron has the right to put another offer on the table through Friday. Chevron’s merger agreement with Anadarko is structured as 75% stock and 25% cash. If Chevron does not make a counter offer, or if its revised proposal is rejected, Anadarko must pay Chevron a $1 billion breakup fee.
Chevron walks away from Anadarko Petroleum deal, will collect $1 billion breakup fee - Chevron said Thursday it will not submit a new offer to acquire Anadarko Petroleum, walking away from the deal after Occidental Petroleum pulled ahead in a battle to take control of the driller with prized assets in the top U.S. shale oil field. The decision means Chevron will collect a $1 billion breakup fee, a windfall that it could use to purchase another driller in the Permian Basin, the engine of the American oil drilling boom. Shares of the San Ramon, California-based oil major were up about 3% on Thursday. Anadarko announced on Monday that its board had unanimously decided that Occidental's revised $38 billion bid was superior to a $33 billion Chevron buyout. Anadarko said it intended to break its agreement with Chevron and strike a deal with Occidental if Chevron did not submit a better offer. Occidental, with backing from Warren Buffett's Berkshire Hathaway, offered to pay 78% cash and 22% stock for Anadarko, while the Chevron transaction was structured as a 75% stock and 25% cash deal. "Winning in any environment doesn't mean winning at any cost. Cost and capital discipline always matter, and we will not dilute our returns or erode value for our shareholders for the sake of doing a deal," Chevron Chairman and CEO Michael Wirth said in a statement.
Rystad: U.S. Shale Is Now The World’s Second Cheapest Source Of Oil Supply -U.S. shale oil—which just four years ago was the world’s second most expensive oil resource—is now the second cheapest source of new oil supply globally, just behind the giant onshore oil fields in the Middle East, Rystad Energy said on Thursday.North America’s tight oil has reduced costs over the past four-five years and has proven to be a competitive source of oil supply even when oil prices are not very high, according to the energy research firm. Rystad Energy estimates in its latest cost of supply curve update that the averageBrent Crude breakeven price for tight oil is now US$46 a barrel, just four dollars above the average $42 per barrel breakeven oil price for the giant onshore fields in Saudi Arabia and other Middle Eastern countries.To compare, in 2015, North America’s shale ranked as the second most expensive resource in Rystad Energy’s global liquids cost curve, with an average breakeven price at $68 per barrel.In 2019, onshore Middle East leads the cheapest source of supply, followed by North American shale, offshore shelf with average breakeven price of $49 a barrel, deepwater with a $58 breakeven price, and Russia onshore with $59 a barrel breakeven. The most expensive source of oil supply is the oil sands, where the average breakeven oil price is $83 a barrel, Rystad Energy’s cost curve analysis shows. “Tight oil is a short cycle investment with a relatively brief lead time from the sanctioning of new wells to the start of production. This gives E&P companies the flexibility to adapt to market conditions and easily change activity levels,” Espen Erlingsen, Head of Upstream Research at Rystad Energy, said, commenting on the analysis. “In the ever-changing oil price environment, this implies tight oil investment has less uncertainty compared to offshore,” Erlingsen added. According to the Q1 Dallas Fed Energy Survey, with executives from 82 E&P firms chiming in, average breakeven prices to profitably drill a new well in the U.S.range from $48 to $54 per barrel, depending on the region. Drillers need $50 a barrel on average to profitably drill a new well, down from $52 per barrel when the same question was asked last year. Average breakeven prices in Midland in the Permian were $48, the lowest-cost in the U.S., and the lowest-cost region in the past three years.
The Shale Boom Is About To Go Bust -- The shale industry faces an uncertain future as drillers try to outrun the treadmill of precipitous well declines. For years, companies have deployed an array of drilling techniques to extract more oil and gas out of their wells, steadily intensifying each stage of the operation. Longer laterals, more water, more frac sand, closer spacing of wells – pushing each of these to their limits, for the most part, led to more production. Higher output allowed the industry to outpace the infamous decline rates from shale wells. In fact, since 2012, average lateral lengths have increased 44 percent to over 7,000 feet and the volume of water used in drilling has surged more than 250 percent, according to a new report for the Post Carbon Institute. Taken together, longer laterals and more prodigious use of water and sand means that a well drilled in 2018 can reach 2.6 times as much reservoir rock as a well drilled in 2012, the report says. That sounds impressive, but the industry may simply be frontloading production. The suite of drilling techniques “have lowered costs and allowed the resource to be extracted with fewer wells, but have not significantly increased the ultimate recoverable resource,” Technological improvements “don’t change the fundamental characteristics of shale production, they only speed up the boom-to-bust life cycle,” he said.For a while, there was enough acreage to allow for a blistering growth rate, but the boom days eventually have to come to an end. There are already some signs of strain in the shale patch, where intensification of drilling techniques has begun to see diminishing returns. Putting wells too close together can lead to less reservoir pressure, reducing overall production. The industry is only now reckoning with this so-called “parent-child” well interference problem. Also, more water and more sand and longer laterals all have their limits. Last year, major shale gas driller EQT drilled a lateral that exceeded 18,000 feet. The company boasted that it would continue to ratchet up the length to as long as 20,000 feet. But EQT quickly found out that it had problems when it exceeded 15,000 feet. “The decision to drill some of the longest horizontal wells ever in shale rocks turned into a costly misstep costing hundreds of millions of dollars,” the Wall Street Journal reported earlier this year.
Fracking- Earthquakes are triggered well beyond fluid injection zones -- Using data from field experiments and modeling of ground faults, researchers at Tufts University have discovered that the practice of subsurface fluid injection used in 'fracking' and wastewater disposal for oil and gas exploration could cause significant, rapidly spreading earthquake activity beyond the fluid diffusion zone. Deep fluid injections -- greater than one kilometer deep -- are known to be associated with enhanced seismic activity -- often thought to be limited to the areas of fluid diffusion. Yet the study, published today in the journalScience, tests and strongly supports the hypothesis that fluid injections are causing potentially damaging earthquakes further afield by the slow slip of pre-existing fault fracture networks, in domino-like fashion. The results account for the observation that the frequency of human-made earthquakes in some regions of the country surpass natural earthquake hotspots. The study also represents a proof of concept in developing and testing more accurate models of fault behavior using actual experiments in the field. Much of our current understanding about the physics of geological faults is derived from laboratory experiments conducted at sample length scales of a meter or less. However, earthquakes and fault rupture occur over vastly larger scales. Observations of fault rupture at these larger scales are currently made remotely and provide poor estimates of the physical parameters of fault behavior that would be used to develop a model of human-made effects. More recently, the earthquake science community has put resources behind field-scale injection experiments to bridge the scale gap and understand fault behavior in its natural habitat. . The hazard posed by fluid-induced earthquakes is a matter of increasing public concern in the US. The human-made earthquake effect is considered responsible for making Oklahoma -- a very active region of oil and gas exploration -- the most productive seismic region in the country, including California. "It's remarkable that today we have regions of human-made earthquake activity that surpass the level of activity in natural hot spots like southern California," said Robert C. Viesca, associate professor of civil and environmental engineering at Tufts University's School of Engineering, co-author of the study and Bhattacharya's post-doc supervisor. "Our results provide validation for the suspected consequences of injecting fluid deep into the subsurface, and an important tool in assessing the migration and risk of induced earthquakes in future oil and gas exploration."
Fracking can cause earthquakes tens of kilometres away – new research -- Earthquakes threaten to be a show-stopper for fracking. In the Netherlands, the largest gas field in Europe will be shut down by 2030 after sustained damage to homes from earthquakes became too severe. In Oklahoma, US officials have severely curtailed operations after injection of waste water underground caused several earthquakes above magnitude five – one nearly 180,000 times stronger than the 2.3 magnitude earthquake that brought a seven-year pause on fracking in the UK.While operations have since resumed in Britain, the practice still remains a political battleground, with earthquakes at the centre. The UK government’s fracking commissioner, Natascha Engel, recently resigned, claiming that an [unreasonably low] magnitude 0.5 threshold for tolerated earthquakes amounted, in effect, to a ban on fracking.Residents, on the other hand, largely oppose fracking near their homes. Fears of damage to property and the well itself at a fracking location in Lancashire, in the north of England, notably lowered house prices in the area. In the absence of a known mechanism by which fracking could cause earthquakes more than a mile or two from drilling sites, operators have often denied responsibility for such quakes. However, new research has now linked distant earthquakes to fracking, providing evidence that much larger areas surrounding sites may be at risk from drilling operations than previously demonstrated. This is a critical problem not only for fracking, but for cleaner energy solutions too. By design, the breaking of rock that inevitably accompanies both waste water disposal and fracking produces small, usually imperceptible earthquakes. Occasionally though, the injection of fracking fluid or waste water can cause movements in natural pre-existing geological faults – large cracks that already exist in the rock. If sufficiently severe, the resulting earthquake can cause damage to houses, threatening local communities. Some of these earthquakes occur very near the fracking site itself, but others have been reported as far as 50 kilometres away, making it difficult to guarantee the safety of surrounding areas.
In “new era” of oil and gas regulation, Colorado communities waste no time writing own rules - Less than three weeks after Gov. Jared Polis signed into law a sweeping billgiving cities and towns in Colorado new powers to regulate oil and gas drilling, communities sitting atop the state’s vast fossil fuel deposits are already looking at how to flex their newfound muscle. Lafayette, just hours after the bill was signed, added another six months to its moratorium on drilling in the city. Broomfield next week will discuss temporarily banning new oil and gas wells while it mulls new rules on the industry. Larimer County is launching an Oil and Gas Regulations Task Force that will meet over the spring and summer to come up with recommendations on how county leaders can move forward imposing limits on an activity that has been at the center of recent public health debates. “I think it’s no-holds barred for communities,” said Joe Salazar, a former state lawmaker from Thornton who heads the anti-fracking group Colorado Rising. “The oil and gas industry has been abusive for a long time and now communities are going to fight back. It’s the dawn of a new era.” That new era began on April 16 when the governor signed into law Senate Bill 19-181, which passed the Democratic-led legislature earlier in the month. The measure transfers much of the state’s authority over oil and gas activity to local governments. It also fundamentally revamps the mission of the Colorado Oil and Gas Conservation Commission, the main regulatory body over energy extraction in the state, to prioritize public health and safety in permitting decisions and abandon the agency’s traditional role of fostering energy development.
Court delays block Keystone XL pipeline construction in 2019 - Court delays block Keystone XL pipeline construction in 2019 (AP) — An executive for the company proposing the Keystone XL oil pipeline from Canada’s oil sands into the U.S. says it has missed the 2019 construction season due to court delays. TransCanada executive vice president Paul Miller made the statement during a Friday earnings call with analysts. The company also announced it was changing its name to TC Energy Corp. Plans to begin construction of the long-delayed pipeline got blocked last November when a federal judge in Montana ordered additional environmental reviews of the project. President Donald Trump has been trying to push it through. He issued a new permit for Keystone last month. The $8 billion line would carry up to 830,000 barrels (35 million gallons) of crude daily, along a route stretching from Canada to Nebraska.
US says it will complete Keystone environmental review (AP) — U.S. government attorneys say the Trump administration plans to finish a new environmental review of the Keystone XL oil pipeline from Canada even if a federal appeals court throws out a lawsuit that blocked the project. President Donald Trump issued a new permit for the $8 billion pipeline last month. In court filings on Tuesday, government attorneys said it is “undisputed” that Trump’s permit is not subject to two major environmental laws — the National Environmental Policy Act and Endangered Species Act. Nevertheless, the attorneys say the State Department will complete an environmental study ordered by a federal judge in Montana in November. The long-delayed line would carry up to 830,000 barrels (35 million gallons) of crude daily from Canada to Nebraska.
Could "Liking" an Anti-Pipeline Facebook Post Soon Be Illegal? - A new South Dakota law — written in consultation with the company that owns Keystone XL — could punish people for exercising their right to peaceful protest. Is it a harbinger of things to come? In March, Governor Kristi Noem of South Dakota signed legislation to usher in a new law that has come to be known informally as the Riot Boosting Act: an assault on Americans' right to protest that perversely tries to pass itself off as a good-governance measure. Conceived with the assistance of TC Energy (TransCanada) — the company behind the embattled Keystone XL pipeline — this law would, among other things, authorize the state to sue individuals and groups for protesting projects like Keystone XL, should there be any damages as a result of the protest. The insidious nature of this law becomes obvious on closer inspection. By coining a new term — "riot boosting" — South Dakota creates an atmosphere of vagueness and fear that aims to chill the voices of indigenous people and others who are passionately opposed to projects like Keystone XL. After all, the state already has a law on the books to punish those who might destroy property or put people in danger during a protest.
Tester urges Interior to fight drilling next to Glacier park (AP) — U.S. Sen. Jon Tester is urging the Interior Department to continue its fight against energy development on land in northwestern Montana considered sacred to some Native Americans, after the government dropped a court appeal in the matter. In a letter released Friday, the Democratic lawmaker accused Interior Sec. David Bernhardt of undermining the Blackfeet Nation’s attempts to prevent drilling in the Badger Two-Medicine area. The 10-square-mile (26-square-kilometer) area bordering Glacier National Park is the site of the Blackfeet creation story. Most oil and gas leases in the area, issued decades ago, have since been cancelled by federal officials. But under Bernhardt, officials last month reversed course and dropped the government’s appeal of one of two leases that were still in dispute. Agency officials have declined to explain the move.
80K gallons of produced water spill on Dunn County farm land (AP) — A pipeline spill in Dunn County released nearly 80,000 gallons of produced water and impacted pasture land. North Dakota’s Department of Environmental Quality says the spill is believed to have been caused by workers installing an electrical line. Produced water is a mixture of saltwater and oil that can contain drilling chemicals. Pipeline operator XTO Energy reported the spill 27 miles southwest of Mandaree in late April and on Monday updated the spilled volume to 1,900 barrels. A barrel holds 42 gallons. State officials have inspected the site and are monitoring remediation.
15,000-gallon brine spill cleaned up in Renville County (AP) — A pipeline spill in Renville County released about 15,000 gallons of saltwater, but it didn’t impact any farmland or waterways.The state Oil and Gas Division says Cobra Oil and Gas Corp. reported Tuesday that 360 barrels of brine spilled Monday at a tank battery about 2 miles north of Sherwood.Brine is a byproduct of oil production. The spill was contained by on-site dikes, and all of the saltwater was recovered. A state inspector visited the site and will monitor any additional cleanup.
Judge sends suit over pipeline back to North Dakota court (AP) — A federal judge has sent back to North Dakota state court a lawsuit alleging the environmental group Greenpeace conspired against the Dakota Access oil pipeline. The two sides had agreed to the move, and U.S. District Judge Daniel Hovland recently signed off on it. Texas-based pipeline developer Energy Transfer Partners maintains Greenpeace and others should be held responsible for trying to disrupt pipeline construction and damage the company’s reputation and finances. Greenpeace accuses ETP of using the legal system to bully critics. Greenpeace had cited federal law dealing with court jurisdiction to try to get the state lawsuit moved to federal court, where the group had already prevailed against racketeering claims alleged by ETP. But ETP disputed Greenpeace’s argument, and the group late last week acknowledged the company was correct.
Sanford: Western North Dakota most likely home for plastics plant- A company that is exploring the potential of a value-added natural gas project in North Dakota does have western North Dakota on its short list. “It’s the only place they could be,” Lt. Governor Brent Sanford told the Williston Herald on Thursday. “They start looking at things like where do you have underground storage formation, where do you have the gas lines, where are they able to supply the gas, where do they have the most ethane produced.” Between 25,000 and 50,000 barrels per day of ethane are produced at natural gas processing plants in Williams County near Tioga and Williston. Right now, that ethane is being shipped by pipeline to Canada presently, for plastics manufacturing. That’s just the tip of what’s available gas-wise in the state. “We know we have the gas,” Sanford said. “We’re flaring enough gas to power the whole state. The opportunity is here, and our gas is rich in ethane.” The state produced 2.6 billion cubic feet per day of natural gas in February, according to the most recent figures from the North Dakota Division of Oil and Gas. About 20 percent of that was flared or burned off, due to a lack of infrastructure and processing capacity. A petrochemical plant would not only change the dynamic when it comes to flaring for its economy, but for the economy by capturing more of the wealth chain and keeping it in the state. During the last legislative session, lawmakers approved a sales tax exemption for certain natural gas processing facilities, in hopes of attracting a plastics manufacturing plant. Bakken Midstream told lawmakers during deliberations that it is considering a value-added natural gas infrastructure project in North Dakota.
Oregon DEQ denies Jordan Cove LNG water quality permit - The Oregon Department of Environmental Quality on Monday denied a water quality certification for the proposed Jordan Cove liquefied natural gas (LNG) export terminal and its feeder pipeline, the Pacific Connector pipeline, though the agency left the door open for the company to reapply.In a letter Monday to the project backers, the agency said “DEQ does not have a reasonable assurance that the construction and authorization of the project will comply with applicable Oregon water quality standards.”DEQ is in charge of administering the federal Clean Water Act in Oregon and the certification is required for the U.S. Army Corps of Engineers to issue permits for the project.The decision was applauded by opponents of the controversial project, but it is not a deal killer. Jordan Cove can request a contested case hearing within 20 days. DEQ also said it was making its decision “without prejudice,” meaning the company can also resubmit a new application. The agency said it was denying the application because there “is insufficient information to demonstrate compliance with water quality standards, and because the available information shows that some standards are more likely than not to be violated.”Specific concerns included impacts on water quality from construction and operation of the Pacific Connector pipeline. The 36-inch diameter pipe would affect more than 352 bodies of water and traverse mountainous, landslide-prone areas in its 230-mile path from an interstate gas hub in Klamath County to the proposed export terminal in Coos Bay. It would also need a 95-foot right of way across Southern Oregon, a massive path that would require clearcutting timber and building roads -- creating the potential for significant erosion. DEQ also raised concerns about the release of release of drilling materials from the crossing of the Coos Bay estuary.
As Oregon Sends Jordan Cove LNG Back to Drawing Board, Gulf Coast Projects Press Forward - On Monday, Oregon state regulators dealt a blow to the proposed Jordan Cove Liquefied Natural Gas (LNG) project, refusing to issue a state water quality certificate required by the Army Corps of Engineers, citing unresolved concerns about water pollution and the company’s failure to answer information requests from the state in a timely manner. “The state water quality standards are intended to protect people and species from harm, and it’s clear Jordan Cove would cause incredible damage to Oregon’s waterways.”The state decision was made without prejudice, meaning that the company can reapply.Jordan Cove has sought federal permits to daily ship more than 1 billion cubic feet of natural gas, a fossil fuel which can be worse for the climate than coal, according to multiple studies, when burned for electrical power.If built, Jordan Cove would become the largest source of climate-changing greenhouse gas emissions in Oregon, numbers from a recently completed federal environmental review show, releasing 2.14 million metric tons of carbon dioxide (CO2) equivalents a year — a huge chunk of Oregon’s total greenhouse gas goal, set at 51 million tons next year and tightening after that.It would take the state’s only remaining coal-fired power plant 15 years to create as much greenhouse gas pollution as Jordan Cove would emit in one year, that analysis found. That coal-fired power plant, the Boardman plant, is slated to close next year, and Portland General Electricannounced in February that it planned to build a 380 megawatt wind, solar, and battery energy facility to power 105,000 homes to partially replace Boardman’s 575 megawatts of power.Nonetheless, driven by a massive glut of gas from the North American shale drilling rush, a massive wave of LNG export projects is underway. Five of the 11 projects FERC currently lists as “proposed” are larger than Jordan Cove, including the 3.6 billion cubic feet (bcf) per day Brownsville project in Brownsville, Texas, and the 3.4 bcf/day Venture Global LNGproject in Plaquemines Parish, Louisiana, which would each have more than tripled the capacity of the proposed Oregon terminal.In April, FERC announced approval for Tellurian’s Driftwood LNG project in Louisiana — recipient of the largest local tax break in U.S.history, with a capacity of 4 bcf/day — and the Port Arthur Liquefaction Project in Port Arthur, Texas, with a 1.86 bcf/day capacity. Earlier this month, the Trump administration’s Department of Energy granted Driftwood and Sempra Energy’s Port Arthur project export approvals that would permit their LNG to be sold in Asian countries. And FERCissued a final environmental impact study for a proposed 3.4 bcf/day plant in Plaquemines Parish, Louisiana, moving that project closer to approval.
Trump Wants To Open Over 1 Million Acres In California To Fracking - On April 25, the Trump administration released details of its plan to open up more than a million acres in California to oil drilling and hydraulic fracturing – including areas close to Sequoia, Kings Canyon and Yosemite National Parks. The plan would end a 5-year moratorium on leasing federal land in the state to oil and gas developers, but it comes at a time when opposition to drilling for fossil fuels in California is growing.The Bureau of Land Management (BLM), which is part of the U.S. Department of the Interior, released the proposal to bring oil and gas extraction to 1,011,470 acres of public and private land in California in its 174-page “Hydraulic Fracturing Draft Supplemental Environmental Impact Statement.”The Trump administration first put forward the idea last year, and it targets land across eight counties in Central California: Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura.“The Central Valley has some of the worst air quality in the nation, and we know fracking and drilling make air quality worse,” said Clare Lockwood, a senior attorney at the Center for Biological Diversity.“We will push back every step of the way against this reckless plan to subject more of California’s land, wildlife, and communities to fracking,” emphasized Monica Embrey, a senior campaign representative at the Sierra Club. In 2013, a federal judge ruled that by issuing oil leases in Monterey without examining the environmental dangers posed by fracking, the federal government had violated the National Environmental Policy Act. The ruling was the result of a lawsuit brought by Earthjustice, the Center for Biological Diversity and Los Padres ForestWatch.Three years later, another judge overturned a similar plan for drilling and fracking. Those rulings all happened under Obama, but last year a federal court ordered the Trump administration to stop issuing permits for fracking off the California coast. Now the Trump administration is reintroducing its 2018 plan to bring fracking to large swaths of land in California. The opposition to this latest plan is likely to be fierce, as environmental groups get ready to fight back against Trump’s stubborn refusal to accept the promise and popularity of sustainable energy. The president continues to deny the impact of climate change, despite all the evidence to the contrary, and he continues to line the pockets of his Big Oil and Big Gas cronies
Trump's CA fracking plan is 'dangerous,' environmental groups say — The Trump administration’s plan to open up more than 1 million additional acres of public and private land in California to fracking is raising alarm in the environmental community. Environmentalists are challenging the proposal as “dangerous” to humans and iconic national parks nearby, including Yosemite and Sequoia-Kings Canyon National Parks. Last month, the U.S. Bureau of Land Management issued a draft supplemental environmental impact statement on the plan that includes using hydraulic fracturing, or fracking, to extract oil and gas from eight central counties in the state. “The risks posed to our national parks by further oil and gas development, particularly these iconic treasures that helped to inspire the modern-day conservation movement, is saddening to say the least,” Mark Rose, National Parks Conservation Association’s Sierra Nevada field representative, said in a statement. “Yosemite, Sequoia and Kings Canyon already experience some of the worst air quality within the park system, posing unprecedented threats to visitors and the natural resources that call these places home.” Rose further warns that allowing more “fracking near these treasured lands and the more than 1 million acres spanning from the Central Valley to the coast could be disastrous for our national parks, surrounding communities and other public lands.” California now ranks as the seventh largest state in terms of crude oil production, after being in third place until 2016. The state has already issued 121 permits for fracking so far this year, according to the California Department of Conservation. The BLM proposal includes additional oil and gas development in Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura counties. The agency plans to hold hearings in California on its proposal starting May 21 and indicated the 45-day public comment period ends June 10.
Fringe demand goes mainstream: Stop drilling and mining -- Democrats are embracing a once-fringe demand that could cut emissions at the scale of the Obama administration's biggest climate policies. A growing number of presidential candidates want to lock down the vast fossil fuel deposits sitting beneath federally owned lands and waters. President Obama resisted such calls until the end of his term, when he halted new leases for coal mines and some offshore drilling. Now, White House hopefuls want to go even further on their first day in office. "Keep it in the ground" has transformed from an activist chant into a mainstream campaign promise thanks to a Democratic electorate increasingly attuned to climate change. It also signals a backlash against President Trump's aggressive drilling proposals. "Any candidate that comes through the Low Country, or South Carolina in general, needs to be talking about banning offshore drilling. They need to be talking about protecting our beaches. And if they don't, I can't imagine them having much credibility with our voters," said Rep. Joe Cunningham, a South Carolina Democrat who used the issue to flip a red seat in last year's midterms.Former Texas Rep. Beto O'Rourke (D) last week joined at least four other presidential candidates who are calling for a complete fossil fuel moratorium on public lands and in federal waters.O'Rourke and Massachusetts Sen. Elizabeth Warren have promised to halt new fossil fuel leasing on their first day in the White House. Vermont Sen. Bernie Sanders (I) and New York Sen. Kirsten Gillibrand, along with Warren, have co-sponsored the "Keep It in the Ground Act," which would also stop leasing. Washington Gov. Jay Inslee has endorsed that legislation, too, and former Secretary of Housing and Urban Development Secretary Julián Castro has said he supports the idea.Hawaii Rep. Tulsi Gabbard wrote a bill that would prohibit new federal permits for fossil fuel projects and exploration. Sens. Kamala Harris of California and Cory Booker of New Jersey have co-sponsored legislation that would codify and expand the Obama administration's restrictions on Arctic offshore drilling. And that's not counting the other candidates who have signed on to the Green New Deal, which calls for drastically reducing fossil fuels while protecting public lands and waters, though it doesn't specifically prescribe a moratorium.
House climate panel will study drilling ban backed by 2020 Dems - Rep. Kathy Castor (D-Fla.), chairwoman of the special House committee studying the impacts of climate change, said Friday her panel will examine a proposal by 2020 presidential hopeful Sen. Elizabeth Warren (D-Mass.) to ban new fossil fuel drilling on public lands and waters. A number of other 2020 Democratic candidates — including Sens. Bernie Sanders (I-Vt.) and Cory Booker (D-N.J.) and former Rep. Beto O’Rourke (D-Texas) — also have endorsed a moratorium on drilling on public lands. “We’re going to examine that in the Climate Crisis Committee because what the scientists are telling us now is that we’ve got to cut our carbon pollution dramatically,” Castor said during an appearance on C-SPAN’s “Newsmakers” that is set to air later Friday. “If we are going to have a just transition [to clean energy], especially for communities across the country that have a lot of jobs in fossil fuels, it doesn’t make a lot of sense to expand extraction, especially on public lands,” she continued. “It’s an important issue moving forward in the context of how we cut our carbon pollution.” Several liberal lawmakers have argued that the government should ban oil and fossil fuel drilling if it wants to mitigate the effects of climate change. A recent U.S. Geological Survey report found that the extraction and burning of fossil fuels from federal lands accounted for nearly one-quarter of U.S. carbon dioxide emissions between 2005 and 2014. With Democrats taking control of the House last fall, the incoming Speaker, Rep. Nancy Pelosi (D-Calif.), named Castor, a close ally, to lead a new select committee examining climate change. That panel does not have the authority to write legislation, but it is tasked with offering policy recommendations to the full House Democratic Caucus by next year. “That gives us time to take a look at [a ban],” Castor said, “but a lot of the committees now are on the front lines of turning back the damage of what the Trump administration is doing to clean air and clean water.” Castor’s comments came a day after the House passed her bill to block President Trump from pulling the U.S. out of the Paris climate agreement. But the legislation is going nowhere in the Senate, where Senate Majority Leader Mitch McConnell (R-Ky.) has vowed to be a “Grim Reaper” for what he deemed socialist bills coming out of the House.
Pipeline Bottlenecks Cost Canadian Producers $20 Billion --Canada has plenty of oil, and demand is high, but the Canadian oil industry has nevertheless taken a major hit this year thanks to its persisting pipeline bottleneck. The Albertan oil industry has long been plagued by insufficient pipeline volumes but has not been able to fix the issue with any semblance of efficiency thanks to major bureaucratic and litigation-based delays on building new infrastructure like the long-delayed Trans Mountain pipeline expansion project. With pipeline capacity maxed out, Canadian oil producers have run out of storage space, leading to a major glut in oil reserves with nowhere to go. This has forced Canada to sell their oil at a major discount. In fact, a new study released this week by conservative think tank the Fraser Institute calculates that Canadian oil producers missed out on a whopping $20.62 billion more than they earned this year thanks to their severely depressed prices. Compared to the West Texas Intermediate benchmark, in the last year Canadian heavy crude traded, on average, at a discount of $26.50 U.S. a barrel. This is a huge dive from the five-year preceding, when Canadian heavy crude traded at an average of just $11.90 U.S. a barrel less than West Texas Intermediate. The pipeline capacity deficit has negatively impacted the Canadian economy in a number of ways. “Canada’s lack of adequate pipeline capacity has imposed a number of costly constraints on the country’s energy sector including overdependence on the US market and reliance on more costly modes of energy transportation,” states the Fraser Research Bulletin. “In 2018, these factors, coupled with the maintenance downtime at refineries in the US Midwest, resulted in significant depressed prices for Canadian heavy crude (Western Canada Select) relative to US crude (West Texas Intermediate) and other international benchmarks.” Fraser Institute went on to say that their calculations also found that if Canadian oil had been able to be transported in volumes corresponding to their current levels of production instead of watching their oil glut balloon and prices drop accordingly, Western Canadian Select would have traded at an average price of $52.90 U.S. a barrel during 2018 instead of the actual average price from last year, which clocked in at just $38.30 a barrel. “In September 2018, western Canadian oil production reached 4.3 million barrels per day but the takeaway capacity on existing pipelines remained constant at around 3.9 million barrels per day,“ the think tank’s report states.
Canada Likely to Greenlight Trans Mountain Expansion -- The Canadian government is likely to proceed with expansion of the Trans Mountain oil pipeline when it announces its final decision on the conduit next month, officials familiar with the matter say. The government has made no secret about its interest in finding a way to expand the line, but has tiptoed around the matter to avoid opening any decision up to legal challenges that have already delayed the project -- and things remain fluid as consultations continue. However, with a June 18 decision approaching, the government is likely to proceed with the expansion, the officials said, speaking on condition of anonymity because the they’re not authorized to speak publicly. Prime Minister Justin Trudeau has begun signaling his interest. “The only way to do it is to do it responsibly, and that’s what we’re doing. The need for it, and the national interest, is clear,” he said on April 30. However, to rush ahead without appropriate consultation “would be a guarantee you would continually be bogged down in the courts for the years to come.” The construction of the expansion, which would add 590,000 barrels of daily shipping capacity, would be a boon for Canadian oil drillers that have suffered from a lack of pipeline space that has weighed on local crude prices. That pipeline pinch sent Western Canadian Select crude to a record low of $13.46 a barrel last year, spurring Alberta’s government to order an unprecedented province-wide oil-production cut. Prices have since recovered to around $50.
First Nations seek ‘influence and control’ in pipeline purchase -First Nations seeking an equity stake in the Trans Mountain pipeline and its proposed expansion aren’t just seeking profit, they want “influence and control” over its environmental impact.“As shareholders of this pipeline, we want to be able to appoint a director who will promote Indigenous concerns, who will provide environmental oversight,” said Michael LeBourdais, chair of the Western Indigenous Pipeline Group and chief of the Whispering Pines/Clinton Indian Band.The band had sought an ownership stake during negotiations with Kinder Morgan Canada on a mutual benefits agreement related to an expansion that would triple the capacity of the 60-year-old pipeline. The Trans Mountain pipeline was purchased by the federal government from Kinder Morgan in August of last year for $4.5 billion. Ottawa is expected to approve a $9.3 billion expansion in June after having completed a new round of consultations with First Nations ordered by the court.Several First Nations have expressed interest in buying a stake in the pipeline since the purchase.“We always wanted to buy,” he said. “We always wanted equity. But in our negotiations with Kinder Morgan, equity was not on the table. When the government of Canada bought the pipe it opened the door to equity.” Whispering Pines is one of 43 First Nations in B.C. and Alberta that have signed mutual benefits agreements with Trans Mountain worth about $400 million.But a number of First Nations have opposed the project in court on a legal landscape that is exceptionally complex.While elected band councils have signed agreements with the pipeline proponents, the courts have recognized that hereditary First Nations leaders must also be consulted and accommodated on matters concerning the use of their traditional territories. Last week, Grand Chief Stewart Phillip of the Union of B.C. Indian Chiefs wrote an open letter to B.C. First Nations warning them against investing in the pipeline. “In a world where demand for oil has peaked and is declining, the oilsands, which has higher costs and higher carbon emissions than other sources of oil, will be some of the first oilfields to be shut down,” wrote Phillips.
Burnaby loses yet another Trans Mountain court battle. Is it time to stop? --Another day, another court loss for the City of Burnaby in regards to the Trans Mountain pipeline expansion project. On Thursday, the Supreme Court of Canada dismissed the city’s “application for leave to appeal from the judgment of the Federal Court of Appeal” – so much mumbo jumbo – which means the highest court in the land will not hear the city’s appeal. Burnaby was appealing a section of a decision from the appeals court after work on the Trans Mountain was halted in August of 2018. The appeals court cited the National Energy Board’s lack of consideration of the impacts of marine shipping on waters such as Burrard Inlet, as well as inadequate consultation of First Nations. The city was looking for more requirements being imposed on the NEB before the pipeline project could move ahead.Last August, the Supreme Court of Canada dismissed another city appeal – this one was challenging the NEB’s jurisdiction in Burnaby.At the time, that was the 17th-consecutive court ruling in favour of Trans Mountain against various challengers, according to the Canadian Press. At that point, Trans Mountain was looking like the Harlem Globetrotters and every challenger was the Washington Generals. Then, just days later, came the stunning court decision that has the federal government is still working to satisfy. Currently, the feds have extended the deadline to consult with First Nations about the project. It’s unclear how sincere this consultation is – it could still just be window dressing considering that the feds actually own the pipeline and it would be a political disaster for the federal Liberals if the project doesn’t go ahead.
Shell to Spud Deepwater Mexico Well in December - With investments flowing into Brazil and Mexico, deepwater opportunities abound for the two countries, according to Martin Stauble, Shell’s vice president of exploration for North America and Brazil.“Both countries from a deepwater perspective are certainly exciting hubs to pay attention to,” Stauble said during the Offshore Technology Conference in Houston Tuesday afternoon.Stauble said Shell has successfully added attractive pre-salt acreage into the mix through recent bid rounds. The company plans to spud five pre-salt wells in Brazil in 2019 and 2020. The first one, Alto de Cabo Frio, will spud in September.Drilling plans for Mexico are expected later this year.“Mexico – we didn’t have any position there in deepwater until early last year when we walked away with nine deepwater blocks,” said Stauble. “The first well we expect to get drilled in Mexico will hopefully be in early December.”Shell then plans to spud four or five more wells in 2020.“The main challenge is whether we get all the required regulatory bits and pieces together by December, but we have good collaboration with the [Mexican government],” Stauble said.He added that currently, it can take up to two years to get a permit to spud a well in Mexico. There’s also still difficulty getting seismic permits in Brazil. “I’m very keen on deepwater. I like it. It’s exciting. It has grown. And it is profitable,” he said. “You’re going to see Shell growing in this space with continued investment.”
Pemex's Dismal Earnings Spark Investor Jitters-- Just as Petroleos Mexicanos’ bonds finally recovered from last year’s rout, a dismal earnings report sent them tumbling back down. Pemex said on April 30 that its oil output declined 12 percent in the first quarter from a year ago, while its refineries operated at just 34 percent of capacity. In the next five days, yields on the company’s bonds maturing in 2027 jumped 31 basis points to 6.539 percent, making them the laggards among Mexican peers in that period. The results are another blow to Pemex, the world’s most indebted oil major with about $106.5 billion in outstanding debt. The government of Andres Manuel Lopez Obrador has plans to restore the company to its former glory, but struggled to reverse more than a decade of production declines, leaving investors unconvinced. "Pemex’s problems run deep, and international financial markets don’t have faith that it will do what’s needed to solve them,” said Alejandra Leon, Mexico energy analyst at IHS Markit. “We haven’t seen any indication that Pemex has implemented concrete action to reverse production declines, and what was surprising is that the refining business didn’t reflect higher income from combating fuel theft that was part of the rescue package.”
No deaths reported in Mexico pipeline blast - (Reuters) - No deaths were reported after a fuel pipeline exploded in southern Mexico, an emergency services official said on Thursday, adding that a fire triggered by the blast was under control. Mexican state oil firm Pemex is investigating the incident that occurred in one of its pipelines in southern Chiapas state, a company spokesperson said.David Leon, Mexico's head of emergency services, said the pipeline burst late on Wednesday in the Reforma municipality of Chiapas. The fire had yet to be extinguished but was under control, he said.Two incinerated cars were found at the blast site, Reforma mayor Herminio Valdez told Milenio. They were likely being used to transport stolen fuel, he said. In January, at least 117 people died when a Pemex pipeline exploded in the state of Hidalgo shortly after President Andres Manuel Lopez Obrador launched a crackdown on rampant fuel theft, ordering pipelines closed in an effort to stamp out criminal activity.
Argentina's YPF shifts focus to shale oil to reverse overall production decline — YPF, the largest oil and natural gas producer in Argentina, is focusing on shale oil for production growth as a glut slows natural gas output, managers at the state-backed company said Friday. The shift is aimed at reversing an expected an up to 3% decline 3% in overall output this year. "We have shifted our focus to accelerating our shale oil developments" in Vaca Muerta, the country's largest shale play, said Sergio Giorgi, YPF's vice president of strategy and business development. Giorgi spoke on a conference call with investors after the company reported late Thursday that its overall hydrocarbon production dropped 11.5% to 486,500 barrels of oil equivalent a day in the first quarter from 549,600 boe/d in the same quarter a year ago, dragged down by a 20.6% plunge in natural gas production to 34.7 million cubic meters a day from 43.7 million cu m/d. Oil production also fell, but only 0.5% to 226,400 b/d from 227,600 b/d, while output of natural gas liquids dropped 11.2% to 41,700 b/d from 47,000 b/d. Despite the decline, Giorgi said YPF is sticking to its earlier target of a 2-3% drop in overall production this year. "It is challenging, but doable," he said. YPF recently started the full-scale development of Bandurria Sur with Schlumberger and La Amarga Chica with Malaysia's Petronas in the oil window, building on its experience in Loma Campana, a partnership with Chevron. Loma Campana was producing most of its net 30,500 b/d of shale oil in Q1, up 63.3% on the year, which helped it increase its total net shale output by 45.1% to 71,100 boe/d in Q1 from 49,000 boe/d, according to the company's latest financial results. To extend the growth, the company is widening its testing in the oil window, now concentrated in the southeast of the play, and building treatment and transport infrastructure, helping to offset declines at its many maturing conventional oil fields around the country. YPF is running six shale oil pilots and expects to go into full-scale development on two of them in 2020 and 2021. It is working with Shell on the Bajada de Anelo block and with a consortium of France's Total, Germany's Wintershall and BP-backed Pan American Energy on the San Roque block. Another pilot is on its 100%-owned Loma La Lata Oeste block, which is next to Loma Campana, while two blocks in the north of the play -- Bajo del Toro with Norway's Equinor and Chihuido with Chevron -- are being tested with the idea of going into full development starting as soon as 2021.
'We are hammering the last nail in the coffin of the fracking industry' - It was always a poisoned chalice, mediating between multinational fracking firms and the local communities dead set against the extreme form of energy extraction in their backyards. Nonetheless, it still shocked many when the government’s “shale commissioner”, the former Labour MP Natascha Engel, resigned at the end of last month after barely six months in the job. The role was impossible, despaired Engel, who lost her seat in North East Derbyshire in 2017 after coming out in favour of fracking in the constituency. The government, she complained, was “choosing to listen to a powerful environmental lobby campaigning against fracking rather than allowing science and evidence to guide our policymaking”.Hurrah, thought Dave Shaw, as the news filtered through to Doncaster. Six years after he co-formed Frack Free South Yorkshire to oppose shale gas extraction on his doorstep, he was joyous. Over the phone in the following days, he said: “I most definitely feel we are winning. I feel like we are hammering the last nail in the coffin of the fracking industry.”Until 2011, hardly anyone in the UK who wasn’t a geologist had heard of fracking, which is the process of creating fractures in shale rock formations to release natural gas trapped inside. Then there was a series of small earthquakes caused by fracking near Blackpool by a firm called Cuadrilla. Concerns began to mount and the government issued a moratorium on fracking. But in December 2012, the government lifted the ban and began issuing exploration licences covering large swathes of the UK, including about 95% of South Yorkshire. Shaw – who is a Labour councillor as well as a builder – has been at the forefront of the fightback. Last week, he was in the final planning stages of one of the best-publicised protests yet, at the Tour de Yorkshire cycle race. Team Sky – the British squad that has won the Tour de France in six of the past seven years – were racing, only they had transformed into Team Ineos, after their new sponsor, a petrochemical and plastic-producing company that holds licences to frack all over Yorkshire. “It gives us an opportunity to highlight what Ineos is doing and talk about the hypocrisy of Team Sky, who rode around last season with whales on the back of their jerseys as part of a campaign against plastic pollution in the oceans and are now being sponsored by [one of] the biggest producers of plastics [in Europe].”
Russia Arrests 4 In Dirty Oil Sabotage Case Which Blocked Major Siberia-Europe Pipeline - For more than two weeks contaminated oil from Russia has clogged the giant Druzhba pipeline, the main delivery line for multiple EU countries, especially impacting Belarus, Poland and Germany. Russia is Germany's largest energy supplier — and with no word on just how long the blockage will last — it is likely to prove financially disastrous as there's an estimated 37 million barrels of contaminated crude accumulating in pipelines spanning from Belarus to Ukraine to Hungary. Far from being a mere technical disaster, Russian authorities had previously revealed the developing "dirty oil" crisis to be intentional — the result of organized crime and an attempt to cover up mass theft on the part of oil executives. Russia’s Investigative Committee announced Tuesday in a statement that four private oil firm executives have been arrested with two more being sought.They are alleged to have pumped low quality contaminated oil near the Volga River city of Samara “to conceal thefts,” according to the statement. Interfax reported the suspects names as Svetlana Balabay, Rustam Khusnutdinov, Vladimir Zhogolev and Sergei Balandin, all of which will remain in pre-trial detention through June. The charges range from damaging crude oil pipelines and theft, to engaging in organized crime. Russia’s Investigative Committee further said the group was attempting to hide oil theft worth over 1 million rubles (or $15,300). The suspects are associated with the little-known Nefteperevalka, Petroneft Aktiv and Magistral oil firms. It is Nefteperevalka firm which reportedly owns the section of the Druzhba pipeline where investigators think the contamination originated in April. The criminal nature of the crisis was first revealed when a high concentration of organic chloride - which is destructive to refining equipment and typically used by small producers - was discovered in the Russian crude transit, causing engineers to halt service.
Russia Close to Restoring Oil Flows to Europe- Russia is getting closer to restoring supplies of uncontaminated oil to Europe via both sections of the Druzhba pipeline and the Baltic port of Ust-Luga, the country’s energy minister said. “On May 6, shipments of compliant crude started in the direction of Brody point,” in Ukraine, from where they can reach European consumers, Energy Minister Alexander Novak said at a government meeting Tuesday. “In the near future, we expect an agreement to start shipments in the direction of Poland,” he said. Ust-Luga will receive the first batches of clean oil Wednesday morning, according to Novak. That’s a slower timetable than Russia previously indicated. Deputy Prime Minister Dmitry Kozak pledged on April 27 that the nation will fully restore normal supplies through the pipeline within two weeks, but Novak now says that should happen in the second half of May. Belarus has estimated it may take “months of hard work” to do so. The Russian authorities also have yet to offer a comprehensive solution for removing all contaminated oil from the system. Poland and Ukraine are transit countries for the northern and the southern link of the Druzhba pipeline, respectively, and the resumption of the flows would mark a gradual return to normal operation after the outage which has lasted more than a week. Ust-Luga is the key sea gateway for Russia oil supplies to Europe, and contamination issues at the port risked choking off exports to the continent. Refineries in some east European countries refused to accept oil from the Soviet-era pipeline after Belarus, another transit country for Druzhba, reported an extremely high level of organic chlorides in the shipped volumes. Russia later confirmed contamination of its batches with the organic compounds that can severely damage refinery equipment. Russia’s Deputy Prime Minister Dmitry Kozak pledged on April 27 the nation will restore the supplies within two weeks, while Belarus estimated it may take “months of hard work” to fully resume flows. Russia’s crude oil output and exports have not been affected by the Druzhba halt, Novak said. The nation produced 11.233 million barrels a day of crude in April, according to Bloomberg calculations based on data from the Energy Ministry’s CDU-TEK unit.
Cyprus gas discoveries spark US-Russian gamesmanship - In recent years, energy companies have discovered a number of significant gas reserves in the Eastern Mediterranean, and the rush to develop the offshore resources is reshaping the region's political and economic dynamics. Earlier this year, ExxonMobil, together with Qatar Petroleum, found the third large gas reservoir off the coast of Cyprus. Known as the Glaucus-1 field, this latest discovery will add to the inventory of Eastern Mediterranean gas reservoirs coming online in neighboring Israeli and Egyptian territorial waters, which are expected to form a new energy hub for regional and, possibly, export markets.At the same time, officials in Washington are increasingly expressing support for cooperation between Israel, Cyprus and Greece in developing the reserves as a measure to counter both growing Russian influence in the Eastern Mediterranean, and also Turkish hostility towards gas development in Cyprus' territorial waters, where both have claims to energy resources. The move signifies the return of direct US involvement in a region, where it has been largely absent in recent years as Russia strengthened its positions on the Syrian coast. Some officials in Washington and Europe also see the development of Eastern Mediterranean gas fields as a potential alternative energy source to Russian gas imports, through what is being called the East Med pipeline, which would run from Israel and Egypt through Cyprus, Greece and then onward to Italian and European markets. "The US is finding Greece, and by extension Cyprus and certainly Israel, as the allies it needs if it's going to consolidate itself in the East Med," Harry Tzimitras, director of the Peace Research Institute Oslo Cyprus Center, told DW. In a show of support, US Secretary of State Mike Pompeo met with Israeli, Greek and Cypriot leaders in March to discuss regional energy development and joint security initiatives. In April, US Senators Bob Menendez and Marco Rubio introduced the Eastern Mediterranean Security and Partnership Act, which would lift a decades-old arms embargo on Cyprus, as well as establish a "United States-Eastern Mediterranean Energy Center to facilitate energy cooperation between the US, Israel, Greece, and Cyprus."The legislation is one of two bills introduced in the US Congress this year aiming to stop the transfer of the NATO coalition F-35 warplanes to Turkey, until officials in Ankara end negotiations to purchase the Russian S-400 missile defense system, which US officials say pose a threat to NATO defenses in Turkey, a NATO member.
U.S. and EU concerned by Turkey's plans to drill off Cyprus (Reuters) - The United States and European Union have expressed deep concern over Turkey’s plans for offshore drilling operations in an area claimed by Cyprus as its exclusive economic zone, adding to tensions between Ankara and its Western allies. The statements at the weekend came after Turkish Foreign Minister Mevlut Cavusoglu said “we are starting drilling” in the region. Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas. “The United States is deeply concerned by Turkey’s announced intentions to begin offshore drilling operations in an area claimed by the Republic of Cyprus as its Exclusive Economic Zone,” State Department spokesperson Morgan Ortagus said on Sunday. “This step is highly provocative and risks raising tensions in the region. We urge Turkish authorities to halt these operations and encourage all parties to act with restraint.” Cavusoglu said that Turkish seismic research vessel Barbaros Hayrettin Pasa was continuing work in the region. “We will conduct drilling in areas of Turkey’s continental shelf and we are starting our drilling work at points identified by Barbaros Hayrettin Pasa,” he said in northern Cyprus on Saturday. The Cyprus foreign ministry said it “strongly condemns” Turkey’s drilling operations within its exclusive economic zone. “This provocative action by Turkey constitutes a flagrant violation of the sovereign rights of the Republic of Cyprus,” it said on Saturday. Speaking at NATO’s North Atlantic Council Mediterranean Dialogue meeting in Ankara on Monday, President Tayyip Erdogan said he expected NATO to support Turkey’s rights in the Mediterranean. “The legitimate rights of Turkey and the Northern Cypriot Turks over energy resources in the eastern Mediterranean are not open for argument. Our country is determined to defend its rights and those of Cypriot Turks,” he said. “We expect NATO to respect Turkey’s rights in this process and support us in preventing tensions.” The U.S. statement followed similarly worded comments on Saturday by EU foreign policy chief Federica Mogherini, who expressed “grave concern” about Turkey’s intentions.
Agri SA launches court proceedings against granting of shale gas exploration rights - Agricultural organisation Agri SA has launched court proceedings in the Pretoria High Court against the granting of environmental authorisations and explorations rights for shale gas to Africa-focused oil and gas exploration and development company Rhino Oil and Gas. Although the authorized exploration activities by Rhino Oil and Gas will not entail actual drilling, the current legal dispensation in relation to oil and gas in South Africa affords holders of exploration rights the exclusive and automatic entitlement to apply for and be granted full-scale production rights, Agri SA said in a statement this week. In effect, the organisation explained that this means that entities such as Agri SA, must then resort to the courts from the outset to prevent hydraulic fracturing, or fracking, for shale gas from taking root in South Africa. “In the absence of satisfactory information about the availability and treatment of water to sustain a fracking and shale gas industry in South Africa, Agri SA cannot support government’s apparent appetite for a full-scale gas industry in this country,” Agri SA natural resources head Janse Rabie said. He lamented that, in the eyes of Agri SA, government is not cautious enough when it comes to shale gas, especially considering that South Africa is already a highly water-stressed country. Additionally, the statement noted that aerial and seismic survey techniques are not entirely non-invasive. Privacy issues and the effects of the surveys being conducted in areas used for traditional religious and customary purposes, stand to be materially affected and do not appear to have been considered in the granting of the authorisations in this instance, Agri SA noted. In 2018 Rhino Oil and Gas obtained environmental authorisation to conduct aerial exploration activities for petroleum over large parts of the North West, Free State, KwaZulu-Natal and Eastern Cape provinces. In January, the Petroleum Agency of South Africa granted exploration rights to Rhino Oil and Gas with respect to its North West, Free State and Eastern Cape exploration areas.
Solomon Islands to refloat ship after oil spill - Since early February, bulk carrier, Solomon Trader, has been wedged on a reef off Rennell Island, where it has spilled an estimated 100 tonnes of oil. The spill happened near a protected marine area and poisoned local water supplies and fishing grounds, sparking an international outcry. More than three months on, the Solomon Islands Disaster Management Office said the vessel will be refloated and towed from the reef. Its director, Loti Yates, said the process, which is being led by a salvager contracted by the shipowner's insurer, will take around three days. "It is a huge and very, very difficult operation," he said. Mr Yates added that cleanup efforts which began in March are ongoing, with oil still coating the shoreline of the nearby and once pristine Kangava Bay. He added that all oil onboard the ship had been removed but based on ship records there was an unknown amount missing. "Maybe they evaporated, maybe they just sailed away or sunk into the bottom of the ocean. Not sure yet." Mr Yates said investigations by the Solomon Islands government into the disaster had been obstructed by a missing data drive taken from the ship by its owner. He said requests for the data - which is too big to transfer online - to be sent physically had gone unanswered for the past three weeks.
Majors Driving Rise in Global Discoveries - Oil and gas exploration is off to an explosive start in 2019, with such majors as BP, Eni and Exxon Mobil taking a bigger bite of the conventional resources discovered in the first quarter, according to a new report by Norwegian research firm Rystad Energy. At the end of the first quarter global discoveries of conventional resources reached 3.2 billion barrels of oil equivalent (boe). Most of the gains were recorded in February, announcing some 2.2 billion barrels of newly discovered resources – the best monthly total on record since August 2015. The six largest discoveries by the oil majors each exceeded 150 million boe, and the top three could even hold more than 300 million boe apiece. American major ExxonMobil was the most successful, with three significant offshore discoveries accounting for over 38 percent of total discovered volumes in the first quarter of 2019. With discoveries made offshore of Cyprus with 700 million barrels of oil equivalent in the Eastern Mediterranean and off of Guyana in South America with more than 5 billion oil-equivalent barrels. Apart from Exxon Mobil, the other top discoveries were made by Paris-based oil major Total, with its Brulpadda find estimated to have a potential 1 billion barrels of "wet" gas off the coast of South Africa. Spanish-based Repsol's South Sumatran seas find has preliminary estimates of at least 2 trillian cubic feet of recoverable resources, making it the largest such find in Indonesia for 18 years. And in Britain’s North Sea China’s CNOOC, in a partnership with Total, made an offshore find equivalent to 250 million barrels of oil.
Saudi Aramco to Provide Extra Oil to Asian Buyers-- Saudi Arabia is set to supply more crude to oil-starved Asian refiners, and extract a heavy price for it. State-run producer Saudi Aramco will sell additional cargoes to customers in the world’s biggest oil-consuming region for June loading, according to people with knowledge of the matter. The shipments will be on top of those scheduled under long-term crude contracts, they said, asking not to be identified because the information is confidential. While the extra supplies will alleviate a squeeze driven by U.S. sanctions on Iran and Venezuela as well as unexpected disruptions from Russia to Nigeria, the refiners face a costly bill. Aramco raised its official selling price for June cargoes of its flagship Arab Light crude to the biggest premium to Middle East benchmark prices in 11 months. The cost of the Arab Medium variety was set at highest since December 2013, while Arab Heavy was increased to the most in over six years. The higher costs aren’t expected to deter Asian buyers, who had earlier this month asked OPEC’s biggest producer for additional supplies even before the kingdom set its pricing for June cargoes. The scramble for shipments follows the May 2 expiry of U.S. sanctions waivers for buyers of Iranian oil, which the White House decided not to renew as part of its campaign to squeeze Tehran’s finances. Global benchmark Brent crude fell as much as 1.1 percent a barrel on the ICE Futures Europe exchange and traded down 67 cents at $70.57 at 11:10 a.m. in London. Prices slipped 1.8 percent last week, after gaining in the previous five weeks. Refiners in India, where oil demand is growing at the fastest pace in the world, are set to receive as much as 200,000 barrels a day of incremental supplies, the people said. Some refiners in China, the top crude importer, and Japan will also receive additional shipments, they said. Aramco was willing to supply more volumes to meet the requests of a major Chinese refiner, said a person familiar with the company’s procurement, although details on the type and quality of oil on offer remained unclear. The press office for Aramco, known officially as Saudi Arabian Oil Co., couldn’t immediately comment.
China Invests In Game-Changing Arctic LNG Project - Russia’s second largest natural gas producer, independent player Novatek, has signed up key participation from two state-owned Chinese oil majors in its massive Arctic LNG 2 project. The deals were inked last week at the Second Belt and Road Forum for International Co-operationheld in China. This cements Novatek’s position as Russia’s leading liquefied natural gas (LNG) developer, moving it a step ahead of the country’s two state-backed companies, Rosneft and Gazprom. China National Offshore Oil Corp. (CNOOC) and China National Oil and Gas Development Co. (CNODC), a unit of China National Petroleum Corp. (CNPC), signed up to acquire 10 percent each in the project. CNOOC is also China’s largest offshore oil and gas producer and developer. Novatek’s chairman, Leonid Mikhelson, welcomed CNOOC’s involvement, saying China was “one of the key consuming markets for our LNG sales.” He added that Arctic LNG 2 would be a “game-changer” in the global gas market and noted the company’s experience from its Yamal LNG project as a demonstration of its ability to carry out operations in the Arctic. The entry of the CNPC unit, meanwhile, was described by Mikhelson as an “important milestone” for Arctic LNG 2, while he noted the Chinese company’s participation in Yamal LNG. “The accumulated experience of working together is a solid basis for the successful implementation of our new LNG project,” he said. No details have been given yet for the price the Chinese companies paid. French oil major Total also invested in Arctic LNG 2 in March. Novatek, in its first-quarter results, said the sale of a 10 percent stake in the project had resulted in a net gain of $4.8 billion. China was instrumental in making the Yamal LNG work. In addition to the participation of CNPC, which acquired a 20 percent stake in 2013, the Silk Road Fund (SRF) purchased a 9.9 percent stake for $1.21 billion in March 2016. SRF also provided a 15-year loan worth some $813 million. Additionally, CNPC signed up to a 20-year off-take agreement, covering 3 million tons per annum (mtpa) of Yamal LNG’s production, indexed to the Japanese Crude Cocktail (JCC) price, the leading LNG pricing benchmark in Asia.
China Set To Defy U.S. Sanctions On Iran - Tensions between Washington and Beijing could soon peak if China positions itself to defy President Trump’s repeal of Iranian oil sanctions waivers. On Saturday,noted Chinese analysts said that China might not submit to U.S. sanctions pressure over its Iranian oil imports because Iran is a key investor in China’s Belt and Road Initiative as well as a key energy partner.Two weeks ago, the Trump Administration surprised both domestic and international energy markets players and watchers when it refused to extend 180-day waivers for Iranian oil first put in place in November. Washington also said it would place sanctions on any country that continues to buy Iranian oil after May 2. Japan, China, India, South Korea, Taiwan, Italy, Greece, and Turkey - all of Iran’s biggest oil clients - were initially granted 180-day waivers. As a result of the U.S. move, London-traded, global oil benchmark Brent crude breached the psychologically important $75 per barrel price point. Since then, Brent has pared those gains by nearly $5 per barrel amid a host of factors, including a jump in U.S. crude inventories to their highest level since September 2017 as well as U.S. production hitting a record 12.3 million barrels per day (bpd), cementing its top global oil producer slot ahead of Russia and Saudi Arabia. Brent ended the trading session on Friday at just under $71 per barrel, while U.S. oil benchmark, NYMEX-traded West Texas Intermediate crude (WTI) futures ended the session at $61.94 per barrel, up 13 cents, but losing nearly 3 percent for the week, its second consecutive week of declines. According to a report in the Beijing-based Global Times, experts in the country also said that China’s energy security wouldn’t be affected too much by the removal of oil sanctions waivers due to diversification of supply, while the issue could even offer Beijing a new bargaining chip in ongoing trade negotiations with Washington as both sides try to reach an agreement to end nearly a year of tit-for-tat trade tariffs. It should be noted that the Global Times is known for expressing hawkish views, sometimes in adherence with the official Chinese Communist Party (CCP) line and sometimes not.
Iran’s Master Plan To Beat U.S. Sanctions -One key foreign policy goal of the current U.S. government is to initiate regime change in Iran by crippling its economy to such a degree that popular unrest removes the current power structures in the country, particularly the near-omnipresent IRGC. To this end, the past few weeks have seen the U.S. end all waivers on importing oil from Iran, designate the Islamic Revolutionary Guard Corps (IRGC) as a foreign terrorist organisation, and sanction 14 individuals and 17 entities linked to Iran’s shadowy Organization of Defensive Innovation and Research. All of this followed the U.S.’s momentous withdrawal last May from the Iran nuclear deal. The IRGC believes that its only chance of avoiding this fate is to widen the existing divisions between the U.S. and the European Union (EU) so that it can generate export revenues from Europe, in addition to those it can rely on from the historically sanctions-busting states of Asia. Consequently, the IRGC has come up with a last-ditch strategy to do achieve this, a senior source who works closely with Iran’s Petroleum Ministry exclusively told OilPrice.com earlier this week. The EU has always been of the opinion that Iran has never broken the terms of the nuclear deal – a view also taken by the CIA, incidentally. At the time of U.S. President Donald Trump’s initial criticism of the nuclear deal last January, the EU’s foreign policy chief, Federica Mogherini, stated: “This is not a bilateral agreement,... so it is clearly not in the hands of any president of any country in the world to terminate [it],...The president of the United States has many powers, but not this one.” After the U.S. withdrew from the deal last May, the EU invoked the ‘Blocking Statute’ that effectively bans European companies from following the U.S.’s sanctions on Iran. Concomitant with this, Mogherini said that Brussels would not let the nuclear deal with Tehran die, adding that: “We are encouraging small and medium enterprises in particular to increase business with and in Iran as part of something that for us is a security priority.”
Europe Vows To Continue Buying Iranian Oil As US Revokes Export Waivers - As if to mark one year since President Trump formally withdrew from the JCPOA - better known as the "Iran Deal" - last May, the foreign ministers of the UK, France and Germany, as well as EU foreign policy head Federica Mogherini, on Saturday issued a statement condemning the White House's decision, and vowing once again to abide by the terms of the deal. The statement is the latest sign that Trump's decision to reimpose sanctions on Iranian oil exports could set up the US for a showdown with its allies in Europe that could accelerate the de-dollarization of the global financial system, as Europe continues to work on an alternative payments system to the Treasury-dominated SWIFT network. "We, the High Representative of the European Union and the Foreign Ministers of France, Germany and the United Kingdom, take note with regret and concern of the decision by the United States not to extend waivers with regards to trade in oil with Iran," the European guarantors of the nuclear deal, called the Joint Comprehensive Plan of Action, Politico reports.The US turned the screws on Iran last week by cancelling all of the waivers on Iranian crude exports it had issued after reimposing sanctions back in November - effectively leaving $1 billion in Iranian crude stranded outside a Chinese port - while also cancelling two of the seven waivers granted to businesses working with Iran's civilian nuclear program.Despite the US's decision to brand Iran’s revolutionary guard as a "terrorist organization," the Europeans continued to "encourage all countries" to make their "best efforts" to engage in legitimate trade with Iran.It's also possible that the Europeans' statement was intended to calm global oil markets, as the US's decision to crack down on remaining Iranian oil exports, combined with the turmoil in Venezuela and Libya, could send oil prices higher (though the Trump administration has sought to offset this by recruiting Iran's regional rivals to increase their output). The rising tensions between Iran and Saudi Arabia have prompted Iran to warn that the collapse of OPEC could be imminent (should that happen, it's very likely that a new organization led by Saudi Arabia and Russia could emerge in its place). And in any case, Iran has vowed to continue exporting its oil in defiance of the Americans' wishes.
Iranian Oil Shipments Slide Under US Sanctions - Iran’s oil shipments tumbled this month after the U.S. ended sanctions waivers that allowed eight governments to buy from the Persian Gulf country. So far, not a single ship has been seen leaving Iran’s oil terminals for foreign ports in tanker tracking data compiled by Bloomberg. China, India, South Korea and Japan were among those allowed to buy about 1 million barrels a day of Iranian crude and condensate, a light form of oil extracted from gas fields, until May 2. Hopes that those exemptions might be extended were dashed, leaving buyers at risk of U.S. penalties if they continued to take Iran’s oil. They seem not to have taken that chance. China, South Korea and Japan had already taken a cautious approach to the end of waivers, cutting their purchases of Iran’s oil in April. The long voyages from the Persian Gulf to northeast Asia, taking as much as a month, meant that oil lifted from Iranian terminals in April would not arrive until after the waivers had expired, leaving buyers at risk of reprisals. Iran’s oil ministry, National Iranian Oil Co. and National Iranian Tanker Co. declined to comment. The much shorter voyages to India meant that refiners there could keep buying Iranian oil until well into April and still see it arrive before May 2. As a result, the volume of crude seen leaving Iran for India in April was the most in seven months, at 400,000 barrels a day. While tanker tracking provides a valuable indication of shipments, it does have limitations. Ships’ captains can turn off the transponders that signal their vessel’s position, hiding them from view. While this tactic has been employed by Iran since November, ships have usually reappeared several days after leaving the Persian Gulf, or when passing choke points such as the Suez Canal or Singapore. As of May 9, there were four Iranian tankers anchored off China, capable of holding a combined 5 million barrels, with another supertanker on its way. Two more very large crude carriers, each able to haul two million barrels, were observed at Indian ports waiting to discharge the last cargoes loaded in April. Most of the rest of the Iranian tanker fleet is either heading back toward the Persian Gulf after discharging cargoes, or have been observed in or near the region in the past two days. There are some Iranian tankers that may still be hauling cargoes. No tracking signals have been received from 10 VLCCs for at least 16 days. It is also possible that non-Iranian vessels could be picking up cargoes with their transponders turned off.
Oil prices correct lower on hedge fund sales: Kemp - (Reuters) - Hedge fund managers have started to increase their bearish oil positions for the first time since the start of the year, amid signs the previous bull run had become overextended and prices were ripe for a correction. Hedge funds and other money managers were net sellers of the six major petroleum futures and options contracts in the week to April 30, bringing to an end a record-breaking 15-week run of net purchases. Portfolio managers cut their net long position by 17 million barrels last week, after having raised it by a total of 609 million since Jan. 8 (https://tmsnrt.rs/2LpJ0Ek ). Funds were net sellers last week of NYMEX and ICE WTI (-19 million barrels), U.S. heating oil (-2 million barrels) and European gasoil (-8 million barrels). Net sales were only partially offset by small purchases of Brent crude (+8 million barrels) and U.S. gasoline (+3 million), according to position records published by regulators and exchanges. Before the sales, positions in crude and especially gasoline had started to look very lopsided, increasing the probability fund managers would reduce some of their length and reverse the recent bullish price trend. Fund long positions outnumbered short ones by a margin of 35:1 in gasoline, 11:1 in crude and 3:1 in middle distillates on April 23. Following last week’s sales, the long-short ratios have been trimmed slightly to 28:1 in gasoline, 9:1 in crude and 2:1 in middle distillates. From a fundamental perspective, spot oil prices and calendar spreads appear poised to rise further, provided the global economy avoids a recession. Fund managers are betting U.S. sanctions on Iran and Venezuela combined with output restraint by Saudi Arabia will cause the crude market to tighten significantly in the second half of 2019. They are also anticipating that U.S. refineries will process record amounts of crude to stabilise gasoline inventories this summer and then build distillates stocks before new maritime fuel rules at the end of the year. Record crude processing should tighten the global oil market even further in the remainder of the year, which is showing up in a big backwardation in crude futures prices. Brent's calendar spread for July to December has climbed to a backwardation of more than $2.80 per barrel, up from $1.80 a month ago, and a small contango at the start of the year. From a positioning perspective, however, hedge fund managers are already heavily committed to the bullish narrative. With so much speculative money riding on a further rise in prices, and few short positions left to squeeze, oil prices had become increasingly vulnerable to a correction.
Oil bounces up on Iran concern after touching one-month low on trade tensions (Reuters) - Oil futures edged higher in volatile trade on Monday as rising tensions between the United States and Iran buoyed prices after they touched a one-month low following U.S. President Donald Trump’s threat that he may raise tariffs on Chinese goods. Brent crude futures rose 39 cents to settle at $71.24 a barrel. The global benchmark earlier sank to $68.79 a barrel, its lowest since April 2. U.S. West Texas Intermediate (WTI) crude futures rose 31 cents to settle at $62.25 a barrel. WTI’s session low was $60.04 a barrel, the weakest since March 29. Additional buying was sparked after WTI broke through $62 a barrel in early afternoon trade, said Bob Yawger, director of energy futures at Mizuho in New York. The United States is deploying a carrier strike group and a bomber task force to the Middle East to send a clear message to Iran that any attack on U.S. interests or its allies will be met with “unrelenting force,” U.S. national security adviser John Bolton said on Sunday. The development injected a risk premium into the market. Acting U.S. Defense Secretary Patrick Shanahan said he had approved sending the carrier strike group and bombers to the Middle East because of a “credible threat by Iranian regime forces.” “You’re seeing those increasing geopolitical tensions,” Prices fell early after Trump said on Twitter on Sunday that tariffs on $200 billion of goods would increase on Friday to 25 percent, reversing his February decision to keep them at 10 percent due to progress in trade talks. Trump early on Monday appeared to defend his Sunday statement, citing the trade deficit between the United States and China. “Sorry, we’re not going to be doing that anymore!” he tweeted. The comments worried investors about trade talk progress between the world’s two largest economies and ignited concerns that ongoing tensions could hurt global oil demand. China’s Foreign Ministry spokesman Geng Shuang told a news briefing on Monday that a Chinese delegation was still preparing to go to the United States for trade talks. “We are also in the process of understanding the relevant situation,” he said.
Global Markets In Tailspin After Trump Reignites Trade War --Oil prices sank on Monday morning after President Trump decided to reignite the trade war with China just before it was supposed to be resolved.Trump took to twitter to announce a major escalation in the trade fight, apparently in a bid to make China buckle under the pressure. Seemingly out of nowhere, after weeks of encouraging press coverage that seemed to suggest the two sides were zeroing in on a deal, Trump said that he would hike tariffs by the end of the week, blaming China for dragging its feet. The tweet sent global financial markets into a tailspin, not least because it caught everyone off guard. The Shanghai Composite Index fell more than 5 percent on Monday while the Stoxx Europe 600 fell by 1.5 percent. Trump says that U.S. tariffs on $200 billion of Chinese goods will jump from 10 to 25 percent by the end of this week. He also said new tariffs would go up on an additional $325 billion worth of goods. That tranche of goods, to be hit with tariffs “shortly,” would see levies at a rate of 25 percent.The question now is how Beijing will respond. China’s vice premier Liu He was about to travel to the U.S. in what the world had widely thought would be the final sprint to a trade deal. As of Monday, a Chinese spokesman said that a trade delegation would still make the trip, although exactly who would show up was unclear. President Trump seems to be emboldened by a series of strong jobs reports in the U.S., while China’s economy has already begun to slow.Related: Nigeria Shuts In More Oil After Protests In Niger DeltaIt is unclear if Trump will follow through on the threat. In various fights over the last two years, one of his negotiating tactics is to issue over-the-top threats in an effort to browbeat his counterpart into making concessions. Often he secures a minor or even a cosmetic concession, he declares victory and scraps his threat (see: North Korea).
US crude rises 31 cents, settling at $62.25, after tumbling on Trump's tariff threat - Oil futures edged higher in volatile trade on Monday as rising tensions between the United States and Iran buoyed prices, which earlier touched a one-month low after U.S. President Donald Trump said he may raise tariffs on Chinese goods. U.S. West Texas Intermediate crude futures settled 31 cents higher at $62.25 per barrel on Monday. WTI hit $60.04 earlier in the session, its lowest since March 29. Brent crude futures rose 39 cents to $71.24 per barrel, after earlier hitting its lowest since April 2 at $68.79. Additional buying was sparked after WTI broke through $62 a barrel in early afternoon trade, said Bob Yawger, director of energy futures at Mizuho in New York. Injecting risk premium into the market, the United States is deploying a carrier strike group and a bomber task force to the Middle East to send a clear message to Iran that any attack on U.S. interests or its allies will be met with “unrelenting force,” U.S. national security adviser John Bolton said on Sunday. “You’re seeing those increasing geopolitical tensions,” said Phil Flynn, an analyst at Price Futures Group in Chicago. The deployment comes after the Trump administration tightened energy sanctions on Iran last week in a bid to drive the Islamic Republic’s oil exports to zero. The U.S. stopped issuing sanctions waivers that allow some of Iran’s biggest customers to import limited amounts of Iranian crude oil. Elsewhere, top oil exporter Saudi Arabia raised its crude oil prices for June to its Asian and European customers, and cut prices to the United States, a signal that Riyadh is in no hurry to boost oil supply ahead of an OPEC meeting next month.
Saudi Exports Send Oil Prices Falling – Oil prices seesawed at the start of the week, falling initially on Monday after President Trump reignited the trade war, only to rebound on fears of rising U.S.-Iran tensions. Oil dropped sharply again in early trading on Tuesday, following news that Saudi Arabia would send more oil to Asia. The oil markets are on edge after Trumpissued a threat to hike tariffs at the end of this week. He blamed China for slow-walking trade talks, and said that the 10 percent tariffs on $250 billion worth of goods would rise to 25 percent, while a 25 percent tariff on a further $350 billion worth of goods would also go into effect. Iran will restart parts of its nuclear program in response to relentless pressure from the U.S. and the Trump administration’s own withdrawal from the 2015 nuclear accord. President Hassan Rouhani said that Iran would reduce some of its “minor and general” commitments. Iran also said it would take “reciprocal actions” to the U.S. withdrawal from the agreement. The development comes shortly after the U.S. sent warships to the region as a “message” to Iran. . Oil fell after Saudi Arabiasaid that it would increase shipments to Asia to offset declines from Iran. Sources told Bloomberg that India may see an additional 200,000 bpd from Saudi Arabia. . Oil facilities in Nigeria’s Nembe region have been temporarily shut down due to protests. Leaks along the Nembe Creek Trunkline, one of two major pipelines for Bonny light, had previously forced a shut down. The latest outage will keep Bonny light under force majeure. In an effort to beat out Chevron in its pursuit for Anadarko Petroleum, Occidental Petroleum sweetened its offer by offering more cash instead of stock. The revised offer of $76 per share will breakdown to $59-per-share in cash. That offer comes on top of the promise by Berkshire Hathaway to invest $10 billion into the combined company, as well as the agreementbetween Occidental and Total SA for the French oil company to buy up Anadarko’s African assets for $8.8 billion. On Monday, Anadarko said it was convinced, and announced that the Occidental offer was the “superior proposal.” It is unclear if Chevron will up the ante. The IEA said that investment in renewables stagnated last year. “After nearly two decades of strong annual growth, renewables around the world added as much net capacity in 2018 as they did in 2017, an unexpected flattening of growth trends that raises concerns about meeting long-term climate goals,” the IEA wrote. Last year, the world added 180 GW of renewable energy, the same increase as the year before and the first time since 2001 that net capacity additions did not expand year-on-year. The IEA said that level of growth is only about 60 percent of what is needed for the world to hit its climate targets in the long run.
Oil drops 1.4% to 5-week low, settling at $61.40, as US-China trade war intensifies -Oil prices tumbled on Tuesday as renewed doubts over U.S.-China trade talks stoked concerns over global growth, but U.S. sanctions on Iran and Venezuela tightened supply and helped to stem losses. U.S. President Donald Trump on Sunday said he would raise tariffs on $200 billion worth of Chinese goods from 10-25% by Friday. The comments dragged on both Asian and U.S. stock markets. U.S. West Texas Intermediate crude futures settled 85 cents lower at $61.40 per barrel, dropping 1.4% to the weakest closing price since March 29. Brent crude oil futures fell $1.31, or 1.8%, $69.93 per barrel around 2:30 p.m. ET (1830 GMT), on pace for the lowest settle since April 4.“An escalation in the U.S.-China trade war has brought oil prices under renewed pressure,” said Abhishek Kumar, head of Analytics at Interfax Energy in London. “The spat has reinvigorated demand-side concerns, given that the conflict has been adversely impacting prospects for global economic growth.” On the supply side, oil markets remain tense as the United States has tightened sanctions on Iranian oil exports and plans to bulk up its forces in the world’s top oil-exporting region. U.S. officials announced on Sunday that the movement of the Abraham Lincoln carrier strike group and a bomber task force towards the Middle East was meant to counter “credible threats,” but Tehran dismissed the move as “psychological warfare.” “The threat of military action with Iran appears to have heightened ... This has allowed the oil complex to gain some footing after WTI has been beaten down during the past couple of weeks by some unexpectedly large crude supply increases,”
Oil Algos Confused By Bigger Than Expected Crude Build, Gasoline Draw - Oil prices tumbled today (after ripping higher yesterday along with everything else) as Trump's tariff-threats appear to be taken more seriously by market participants.“There are concerns about the broad economic environment,” said Michael Tran, a commodity strategist at RBC Capital Markets LLC in New York. “Clearly, the biggest risk to the oil market right now is the Trump factor coupled with macro headwinds.” After last week's surprisingly large crude build, all eyes are on API data tonight for hints at whether the extreme long positioning in the energy complex will be squeezed any further. API:
- Crude +2.81mm (+1.2mm exp)
- Cushing +618k
- Gasoline -2.833mm
- Distillates -834k
Another bigger than expected crude build last week but draws in gasoline and distillates (again) offset the bearish bias of the build... American drillers have boosted output to a record while pushing nationwide stockpiles to the highest since September 2017. WTI was testing down towards a $60 handle ahead of the data and kneejerked modestly higher after the print, despite the crude build...
Oil Falls After Third Consecutive Crude Build - The American Petroleum Institute (API) reported a build in crude oil inventory of 2.81 million barrels for the week ending May 3, coming in over analyst expectations of a 744,000-barrel buildup in inventories. Last week, the API reported a surprise buildup in crude oil of 6.81 million barrels. A day later, the EIA reported an even larger build of 9.9-million-barrels. Including this week’s data, the net build is now 20.92 million barrels for the 19-week reporting period so far this year, using API data. Oil prices fell sharply on Tuesday as the China-US trade war continues, sparking fears that global growth will be disappointing, despite a tightening of oil supplies in Venezuela and Iran in the wake of US sanctions. WTI was trading down on Tuesday before the data release at $60.74, down $1.51 (-2.43%) on the day at 12:42pm, but down week on week by more than $3 per barrel. The Brent benchmark was also trading down on the day at $69.47, down $1.77 (-2.48%) at that time. The Brent benchmark was also significantly down week on week. The API this week reported a draw in gasoline inventories for week ending May 3 in the amount of 2.833 million barrels. Analysts estimated a draw in gasoline inventories of 917,000 barrels for the week. Distillates fell by 834,000 barrels for the week, while inventories at Cushing gained 618,000 barrels. By 4:41pm EST, WTI was trading down at $60.74 and Brent was trading down at $69.47.
Oil Prices Extend Losses On Growth Worries - - Oil prices fell on Wednesday to extended losses from the previous session as renewed doubts over U.S.-China trade talks stoked concerns over global growth. Mixed trade data from China also added to economic uncertainty while surging China crude imports and U.S. sanctions on crude exporters Iran and Venezuela helped to limit the overall downside. Benchmark Brent crude dropped 0.6 percent to $69.47 per barrel, while U.S. West Texas Intermediate (WTI) crude futures were down 0.4 percent at $61.16 per barrel. After the U.S. confirmed that it planned to raise tariffs on $200 billion of Chinese goods, investors remained edgy ahead of trade talks on Thursday and Friday in Washington. Chinese trade data proved to be a mixed bag. While exports unexpectedly shrank 2.7 percent in April from a year earlier, imports surprised with their first increase in five months. China's crude oil imports in April hit a record high of 10.68 million b/d, rebounding from 9.3 million b/d in March, preliminary data from the General Administration of Customs showed. The Organization of the Petroleum Exporting Countries, Russia and other producers will meet in June to decide their output policy for the rest of the year. Saudi Arabia, OPEC's de-facto leader, would raise its crude oil production to meet market needs arising from U.S. sanctions on Iran, U.S. Energy Secretary Rick Perry said on Tuesday.
WTI Pops After Surprise Crude Draw - Oil rallied overnight from a five-week low as concern over supply losses from Iran to Russia overrode an API-reported rise in American stockpiles and trade-war fears.“There are concerns about the broad economic environment,” said Michael Tran, a commodity strategist at RBC Capital Markets LLC in New York. “Clearly, the biggest risk to the oil market right now is the Trump factor coupled with macro headwinds.”After last week's surprisingly large crude build, all eyes are on this week's data for hints at whether the extreme long positioning in the energy complex will be squeezed any further. DOE
- Crude -3.96mm (+1.9mm exp)
- Cushing +821k
- Gasoline -596k
- Distillates -159k
After the prior week's huge build, crude stockpiles were expected to build modestly (as API reported) but instead crude saw a large drawdown (3.96mm) and gasoline and distillates also drewdown. However, Bloomberg's Catherine Ngai notes that while we saw that big headline draw in crude, it's important to note that inventories in the Midwest jumped by 1.66 million barrels. That might've been caused by some refinery hiccups in the region as well as the open arb from Permian and Midcon into Cushing.Saudi imports hit a record low...
Oil rises 1.2%, settling at $62.12, after surprise drop in US crude stockpiles - Oil futures rose on Wednesday, boosted by a surprise drawdown in U.S. crude stockpiles, but an escalating U.S.-Chinese trade fight limited oil's gains as investors worried about the global outlook for energy demand. U.S. West Texas Intermediate crude futures settled 72 cents higher at $62.12 per barrel, posting a 1.2% gain. Brent crude oil futures rose 49 cents, or 0.7%, to $70.37 per barrel on Wednesday. U.S. crude inventories fell by 4 million barrels in the week to May 3, the Energy Information Administration said. Analysts had expected an increase of 1.2 million barrels. Gasoline stocks fell by 596,000 barrels, while distillate inventories fell by 159,000 barrels, the data showed. "The report was bullish ... due to a sharp decline in imports," said John Kilduff, a partner at Again Capital LLC in New York. "The fall in crude oil inventories also came despite lowered refinery operating rates." Prices have gained more than 30% so far this year as the global supply outlook has tightened due to U.S. sanctions on crude exporters Iran and Venezuela, as well as supply cuts by OPEC, Russia and their allies. Still, prices were pressured by the trade war between the world's two largest economies. The United States will raise tariffs to 25% from 10% on $200 billion worth of Chinese imports effective Friday, according to a notice posted to the Federal Register. President Donald Trump had threatened the duties after China backtracked on a trade deal. Chinese Vice Premier Liu He will travel to Washington for two days of trade talks this week, China said on Tuesday. "The market is fearful that the other shoe is going to drop on the global economy if we get into a trade war; it will hurt oil demand,"
Oil falls on trade dispute despite surprise drop in US crude inventories - Oil prices steadied on Thursday as an escalating trade battle between the United States and China counteracted upward pressure from a surprise decline in U.S. crude inventories. Heightened tensions between the world's two biggest economies have clouded the outlook for global growth, which influences oil demand expectations. Global equity marketswere also hit. Brent crude oil futures were down 3 cents at $70.34 a barrel by 7:12 a.m. ET (1112 GMT), heading for their second consecutive weekly loss. Earlier in the session they fell as low as $69.57 a barrel. U.S. West Texas Intermediate crude futures were at $61.43 per barrel, down 69 cents and set for a third week of losses. "Supply-side issues are bigger that those due to demand growth worries." U.S. President Donald Trump said on Wednesday that China "broke the deal" in trade talks with Washington and would face stiff tariffs if no agreement is reached. Higher tariffs are set to take effect on Friday, during Chinese Vice Premier Liu He's two-day visit to Washington which starts Thursday. "The oil market has come under renewed pressure this morning, with the hope of a China/U.S. trade agreement fading," ING said in a note. "However, fundamentally the oil market remains constructive, with the global balance tightening, and the potential for a number of supply-side risks (remaining)." Oil prices have had some support from signs of tighter global supply on the back of production cuts by OPEC and allies including Russia.
Oil Supply Shortages Countered By Trade War - Oil prices were flat in early trading on Friday, sandwiched between supply outages and the escalating U.S.-China trade war. The U.S. hiked tariffs on $200 billion of Chinese goods from 10 to 25 percent on Friday, while leaving open the possibility that trade talks could continue. Trump also began the process of new tariffs on another $325 billion in Chinese imports. China vowed to implement retaliatory measures. “The opportunity window for avoiding a trade war is closing fast,” Citigroup wrote in a note to clients. Global financial markets were largely stable on Friday, suggesting that major investors still think that a resolution can be reached. “Our base case remains that the U.S. and China will eventually reach some kind of accord,” said Mark Haefele, global chief investment officer for the Swiss bank UBS, in a note. As the sweet spots in the U.S. shale patch become crowded, it may be more costly and difficult to keep production elevated, according to a new report. While drilling techniques have succeeded in growing output, the industry may simply be front-loading production. Crude inventories fell and oil production also dipped in the most recent report from the EIA. That ended a string of inventory increases and offers some evidence that the market is not oversupplied. Brent crude futures have opened up a steep backwardation, evidence that the physical market for crude is tightening. Yet, spot prices have fallen in the last two weeks, and analysts are puzzled at the discrepancy. “There is no true sign of weakness in the physical market,” Olivier Jakob, managing director of consultant Petromatrix GmbH, told Bloomberg. “You have lower exports from Venezuela, you’ve got sanctions for Iran, Libya which is still a risk.” The U.S.-Iran conflict escalated this week, with rhetoric on both sides growing more heated. Iran said it would withdraw from parts of the nuclear deal, and top U.S. officials hinted at a military response. Washington also imposed sanctions on metals exports from Iran. Iran warned the EU to step up incentives or else it will fully withdraw from the 2015 accord. Meanwhile, Iran’s oil exports are plunging. Saudi Arabia is holding firm on oil exports despite the tightening market. Saudi oil exports are expected to remain below 7 mb/d in June, with production also below the OPEC+ ceiling.
Oil Inches Higher As Rig Count Continues To Decline - The number of active oil and gas rigs fell again in the United States this week according to Baker Hughes, after a string of losses in the weeks prior, keeping the overall rig count well below year-ago levels for a fourth week in a row. The total number of active oil and gas drilling rigs in the United States fell by 2 according to the report, with the number of active oil rigs falling 2 to reach 805 and the number of gas rigs holding steady at 183. The combined oil and gas rig count is 988, with oil seeing a 39-rig decrease year on year and gas rigs down 16 since this time last year. The combined oil and gas rig count is down 57 year on year. At 10:43am EST, WTI was trading up slightly $0.05 (+0.08%) at $61.75—up on the day, but down on the week as traders struggle to accurately assess the state of the oil market with Iran sanction waivers ending and the China-US trade war taking a turn for the worse. The Brent benchmark was trading up $0.21 (+0.30%) at $70.60, down slightly week on week. While the United States has seen a significant drop in the number of active oil and gas rigs, US oil production continues to rise. US crude oil production fell slightly for week ending May 3, standing at 12.2 million barrels, easing off last week’s all-time high of 12.3 million barrels per day. Canada’s rig count increased by 2, with the number of active oil rigs up by 5, and the number of gas rigs holding falling by 3 to reach 41. Canada’s oil rigs are now down 10 year on year, with gas rigs down 6 year on year. WTI was trading up 0.50% on the day at 1:08pm EST, with Brent up 0.70%.
Oil prices steady as supply factors offset US-China trade tensions - Oil prices were little changed on Friday even as the start of U.S. President Donald Trump 's tariff hike on $200 billion of Chinese goods kept tensions high in the trade dispute between the world's two biggest economies. Brent crude oil was up 14 cents at $70.53 a barrel around 10:30 a.m. ET (1430 GMT), having touched a peak of $71.23. U.S. West Texas Intermediate crude futures were down 4 cents at $61.66, having earlier hit $62.49. Both contracts were on track for small weekly losses. The United States escalated its tariff war with China on Friday by increasing levies to 25% for $200 billion worth of Chinese goods, but negotiations were set to continue on Friday. Trump issued orders for the tariff increase, saying China "broke the deal" by reneging on previous commitments. He also said he would start the "paperwork" on Friday for 25% duties on a further $325 billion of Chinese imports. Prices were supported by tighter supply amid continuing production cuts by OPEC and U.S. sanctions on Iran and Venezuela. Growing trade between the world's two largest oil consumers could affect oil demand. The two countries together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency shows. While trade war concerns have weighed on prices this week, "the spreads clearly point towards a tight market", ING bank said. The July Brent crude contract was trading at nearly $1 a barrel above the August contract in a market structure known as backwardation. RBC's Croft: Rising geopolitical tensions could push oil prices higher
Oil steady, ends week lower as trade tensions weigh (Reuters) - Oil prices were mostly steady on Friday, ending the week slightly lower as trade tensions stoked by a U.S. move to hike tariffs on Chinese goods overshadowed tightened global supplies and expectations of rising U.S. refining demand. Brent crude oil settled 23 cents, or 0.4%, higher at $70.62 a barrel, but posted a weekly loss of 0.3%. U.S. West Texas Intermediate (WTI) crude futures ended 4 cents lower at $61.66, with a weekly loss of 0.5%. After a volatile week, investors were worried over the possibility of a protracted and bitter U.S.-China trade war, despite last-minute efforts to salvage a deal. U.S. President Donald Trump on Friday said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators ended a second day of talks. Growing trade tensions between the world’s two largest oil consumers could affect oil demand. The United States and China together accounted for 34% of global oil consumption in the first quarter of 2019, data from the International Energy Agency showed. Prices gained some support on Friday as investors anticipated U.S. Gulf Coast and Midwestern refineries, which are coming out of seasonal maintenance, to boost oil demand ahead of the U.S. summer driving season. “Crude oil has more potential for upside,” said Tom Kloza, chief oil analyst at the Oil Price Information Service. “With Gulf refineries starting up, demand is going to be significantly above supply for the next 100 days or so.” Investors also focused on tightened supplies following OPEC-led production cuts since the start of the year. Investors believe the Organization of Petroleum Exporting Countries and its producer allies will extend the six-month output-cut agreement in coming weeks. “We’re waiting to see whether the Saudis signal their extension of the production cut,” in coming weeks, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. “The market is finding its next driver.” Markets have been buoyed further by Washington’s bid to cut Iran’s oil exports to zero. The United States reimposed sanctions on Iran in November after pulling out of a 2015 nuclear accord between Tehran and world powers last year. It initially allowed Iran’s biggest buyers to continue purchasing oil via waivers for another six months, but those exemptions ended at the beginning of May.
Saudi Arabia's oil exports to stay below 7 mln bpd in June- Gulf source (Reuters) - Saudi Arabia is expected to keep its crude exports below 7 million barrels per day in June, while output would stay under its production quota under a global deal to cut oil supply, a Gulf source familiar with Saudi oil plans said on Wednesday. “Moderate requests have been received from customers for June liftings, which will all be met, most notably from countries which previously had waivers from sanctions against purchases of Iranian crudes that were recently discontinued by the U.S. administration,” the Gulf source said. “Based on such requests, Saudi oil production for the month of June is expected to remain below its OPEC+ commitment, while exports will also stay under 7 million barrels per day.” The Gulf oil source also said that based on market conditions so far, current oil production level by OPEC and its allies should be sufficient to bring global oil inventories back to balance by the end of the year.
Saudis To Meet All Ex-Iran Crude Orders As Possible OPEC Collapse Looms - Saudi officials have signaled the kingdom plans to meet all orders from former buyers of Iranian oil for the month of June. US Energy Secretary Rick Perry confirmed in statements made Tuesday that OPEC's de facto leader Saudi Arabia would increase its oil production to make up for choked supply resulting from US sanctions efforts that aim to bring Iran's crude exports "down to zero". However, Azerbaijan’s oil minister said the Saudis informed him that no firm decisions would be made on production levels for the whole year in unilateral fashion; instead, Riyadh plans to seek backing for any extreme measures during OPEC's June meeting at the oil cartel's headquarters in Vienna, Austria - where future production policy will be hashed out. This has left many asking the obvious question: will Iran soon pull out of OPEC altogether? It appears we'll soon find out after OPEC's June meeting. Saudi Arabia plans to meet all the requests for oil purchases it has received for June, notably from countries that had to stop buying Iranian crude because of the recent U.S. sanctions. The world’s biggest oil exporter has received moderate requests from customers for shipments next month, including from former buyers of Iran’s oil, according to a Persian Gulf person familiar with Saudi plans, who asked not to be identified because the matter is confidential.
The Saudi Shia: Between an Iranian rock and a Saudi hard place --Last month, Saudi Arabia quietly beheaded 37 people, mostly Shia men from the country's Eastern Province. They had all been sentenced in what international human rights organisations called "grossly unfair" trials - some for "spying" for Iran and others for "joining a terrorist" group. Many of them had alleged they were tortured into signing false confessions. None of the bodies was given back to the families, who were told not to hold funerals. Two of them were pinned to a post for the public to see - a measure clearly meant to stir fear within the Shia minority, which makes up between 10 and 15 percent of the Saudi population and is mostly based in the Eastern Province.Although the Saudi authorities have tried to present this case as a national security issue - trying the 37 men in a special court that deals with terrorism and portraying them as Iranian agents - it has little to do with either terror acts or Iranian influence. Shia disenfranchisement in Saudi Arabia has deep historical roots and only recently has been instrumentalised in the growing regional conflict between Riyadh and Tehran. The only "crime" of the Shia men who were executed in April and the many more who are still being held in Saudi jails was to demand the end of systemic discrimination and human rights abuses.
174 Yemeni Fishermen Kidnapped by Saudi Arabia— The Saudi-led Coalition kidnapped more than 170 Yemeni fishermen and seized their boats while they were fishing near the port city of Hodeida this past week. To demonstrate clearly that they posed no threat, the fishermen hung large white flags on the back of their boats and waved fish in the air as Coalition military vessels approached their boats. “A gunboat approached and forced us to get off the boat, then a Saudi soldier told us to follow them to the warship. I managed to escape but the others could not,” Salem Arud told MintPress. “We are not Houthis, just poor fishermen who went out to make a living in the sea.” “All told, 174 fishermen and 10 boats were abducted by Saudi-led forces,” Mohammed al-Hassani, head of the Forum of Tahamah Fishermen, told MintPress. “Despite Sweden’s truce, Coalition forces have continued to prevent Yemeni fishermen from fishing and if the fishermen dare to sail, they will be killed or detained.” After a ceasefire agreement for the port city of Hodeida was reached in Sweden late last year, thousands of fishermen decided to take their small boats into deeper waters off of Hodeida’s coast, but have faced arrest or even been the target of airstrikes by the Saudi-led Coalition. Meanwhile, the families of the kidnapped fishermen organized a protest asking the Coalition to release their loved ones. “Saudi forces kidnapped my sons. Their fate is still unknown,” a father of two fishermen told MintPress during the protest. According to the Legal Center for Rights and Development in Yemen, a non-governmental organization monitoring human-rights violations, the destruction of 433 fishing boats by the Saudi-led Coalition has robbed many of Hodeida’s residents of their sole source of income and ability to feed their families.
US deploys aircraft carrier and bombers after 'troubling indications' from Iran - The US is sending an aircraft carrier and a bomber task force to the Middle East in response to a “number of troubling and escalatory indications and warnings” from Iran, the national security advisor John Bolton has said. It was unclear on Sunday night what Iranian actions Bolton was referring to. There have been no recent incidents in the Persian Gulf where US and Iranian navies are routinely in close proximity and the Abraham Lincoln carrier strike group was already bound for the Gulf a month before Bolton made his announcement. However, the tone of Bolton’s declaration looked likely to escalate tensions in the region, and it comes days after the Iranian government expressed concern that Bolton and other hawks were seeking to draw the Trump administration into a new war. In a written statement, Bolton said the ships and planes were intended “to send a clear and unmistakable message to the Iranian regime that any attack on United States interests or on those of our allies will be met with unrelenting force.” “The United States is not seeking war with the Iranian regime, but we are fully prepared to respond to any attack, whether by proxy, the Islamic Revolutionary Guard Corps, or regular Iranian forces,” the statement said. Rotations of aircraft carrier “strike groups” and bomber fleets happen routinely. At present there are none in the US Central Command region, which encompasses the Middle East and Afghanistan. The Abraham Lincoln carrier strike group, left its base in Norfolk, Virginia, on 1 April and was due to sail to the Mediterranean for exercises and then on to the Gulf.
US threatens Iran with war - Will US bombs and missiles soon be raining down on Iran? The dispatch of US warplanes and an aircraft carrier strike group to the Persian Gulf region with the express aim of sending “a clear and unmistakable message” that Washington is ready to attack Iran, along with other bellicose US actions, indicates that preparations are far advanced for a provocation that could—and most likely would—trigger a catastrophic war.On Sunday evening, US National Security Adviser John Bolton announced that the aircraft carrier USS Abraham Lincoln and US Air Force bombers were being deployed to threaten Iran. Claiming that there were “troubling and escalatory indications and warnings,” Bolton vowed “that any attack on United States interests or those of our allies will be met with unrelenting force.” “We are fully prepared,” added Bolton, “to respond to any attack, whether by proxy, the Islamic Revolutionary Guard Corps, or regular Iranian forces.”Bolton’s threats were echoed by fellow anti-Iran war-hawk, US Secretary of State Mike Pompeo. He too advanced a sweeping justification for possible military action against Iran, including any “attack” on US “interests” and those of its allies by a long and diverse list of groups that Washington castigates Tehran for backing, from Shia militias in Iraq and Houthi fighters in Yemen to the Palestinian group Hamas and Lebanon’s Hezbollah.“We will hold the Iranians accountable for attacks on American interests,” Pompeo told reporters late Sunday, “The fact that those actions take place, if they do, by some third-party proxy, whether that’s a Shia militia group or the Houthis or Hezbollah, we will hold the Iranians—Iranian leadership—directly accountable for that. With these “warnings” Washington has effectively proclaimed license to manufacture, at a time of its choosing, a pretext for launching war on Iran. An “attack” on the “interests” of the US and its allies could include virtually anything, from a clash between one of the various Shia militias in Iraq and any of the 5,500 US troops that remain stationed there, to the death of an Israeli-American citizen by a crude rocket launched from the Gaza Strip.
White House Accuses Iran of Planning to Attack US Troops in Iraq — A US buildup of military forces in the Middle East and threats to use force against Iran are now being justified by US officials who claim to have “clear indications” that Iran was plotting to attack US forces in Iraq according to some reports. Exactly what these “clear indications” actually were is unclear. Israeli media, however, gave credit to Israeli intelligence, saying they’d passed on their own report of a “possible Iran plot,” and the White House went from there. This intelligence doesn’t seem great, as officials say that Mossad was unclear what Iran was actually planning to do, but that tensions are on the rise, and there were several scenarios that Mossad came up with that might happen. Israel is always keen to drum up tensions between the US and Iran at any rate, so they probably didn’t need a lot of confidence to pass it along to the US and hope something came of it. Iran, by contrast, accused the US of “talking up” the threat as a justification for a buildup that the US Navy had scheduled some time ago. The Navy has already scheduled the aircraft carrier deployment nearly a month ago.
U.S. targets Iran's metals for sanctions, Tehran relaxes nuclear deal compliance (Reuters) - U.S. President Donald Trump on Wednesday imposed new sanctions on Iran, targeting revenue from its exports of industrial metals, the latest salvo in tensions between Washington and Tehran over a 2015 international accord curbing the Islamic Republic’s nuclear program. Iran had announced hours earlier that it was relaxing some restrictions on its nuclear program, steps that stopped short of violating the deal with world powers for now, but threatening more action if countries do not shield it from U.S. sanctions. An executive order issued by Trump covers Iran’s iron, steel, aluminum, and copper sectors, the government’s largest non-petroleum-related sources of export revenue and 10 percent of its export economy, a White House statement said. “Tehran can expect further actions unless it fundamentally alters its conduct,” Trump said. The administration says the nuclear deal, negotiated by Trump’s predecessor Barack Obama, was flawed as it is not permanent, does not address Iran’s ballistic missile program and does not punish it for waging proxy wars in the Middle East. Tensions between the two countries were already high when the Trump administration said last weekend that it was deploying a carrier strike group and bombers to the Middle East in response to what it said were “troubling indications and warnings” from Iran. On Wednesday, a senior administration official said the United States was “not escalating militarily against Iran” and accused Iran of being “provocative.” It was in Iran’s best interests to continue complying with the pact, the official said. The executive order effectively bans entities from the purchase, acquisition, sale, transport, or marketing of those minerals and their products from Iran or face sanctions.
Iran to resume parts of shuttered nuclear program after US pulls out of deal: report - Iran will resume certain parts of its shuttered nuclear program in the wake of U.S. withdrawal from the 2015 nuclear deal but will not pull out of the deal entirely, Reuters reported, citing state media.Iranian President Hassan Rouhani plans to announce the scaling back of some “minor and general” commitments under the deal on Wednesday, which marks the anniversary of President Trump’s announcement that the U.S. would exit the arrangement, according to the news service.“The Islamic Republic of Iran in reaction to the exit of America from the nuclear deal and the bad promises of European countries in carrying out their obligations will restart a part of the nuclear activities which were stopped under the framework of the nuclear deal,” a source told the state-run IRIB news agency Monday, according to Reuters. The details of what commitments the Iranian government plans to scale back are unclear, but a Wall Street Journal report quotes European diplomats who believe the nation may devote more research into centrifuges that could produce enriched uranium. The report comes amid increasing tensions between the U.S. and Iran. On Sunday evening, national security adviser John Bolton announced the U.S. would deploy the USS Abraham Lincoln carrier strike group and a bomber task force “in response to a number of troubling and escalatory indications and warnings.”
Iran Urges Diplomacy as US Ramps Up “Wildly Reckless” Threats of War - In the face of belligerent threats of war from the Trump administration, Iran on Wednesday took what some observers described as rational steps to reduce compliance with the nuclear accord to pressure European nations to live up to their end of the deal.“The path we have chosen today is not the path of war, it is the path of diplomacy,” Iranian President Hassan Rouhani said in a speech Wednesday, which marks the one-year anniversary of U.S. President Donald Trump’s violation of the nuclear agreement.“It is not us who has left the negotiation table,” Rouhani added. Rouhani’s announcement came just days after U.S. national security adviser John Bolton used the routine deployment of an American aircraft carrier and bomber task force to threaten Iran with “unrelenting force”—a move critics denounced as a dangerous step in the direction of all-out war. The Iranian president said European signatories of the nuclear accord have 60 days to negotiate new terms that would mitigate the impact of crippling sanctions imposed by the U.S. If the 60-day deadline is not met, Rouhani said, Iran will end limits on uranium enrichment. Matt Duss, foreign policy adviser for Sen. Bernie Sanders (I-Vt.), said that while American war hawks often characterize Iran as “a crazy irrational regime that can’t be negotiated with,” Iran “is responding pretty rationally to Trump’s wildly reckless and irrational Iran policy.”
Trump ratchets up pressure on Iran with sanctions on exports of steel, copper and other metals - President Donald Trump on Wednesday ordered new sanctions placed on Iranian metals, Tehran's largest non-petroleum-related sources of export revenue.It is the administration's latest effort to pressure the regime over its support for weapons proliferation and extremist groups in the Middle East."Today's action targets Iran's revenue from the export of industrial metals — 10 percent of its export economy — and puts other nations on notice that allowing Iranian steel and other metals into your ports will no longer be tolerated," Trump said in a statement about the sanctions. Trump added that Tehran "can expect further actions unless it fundamentally alters its conduct" and said that he looks forward to "meeting with the leaders of Iran in order to work out an agreement and, very importantly, taking steps to give Iran the future it deserves." Wednesday's executive order targets Iranian iron, steel, aluminum and copper sectors in hopes of denying the Iranian government the ability to "provide funding and support for the proliferation of weapons of mass destruction, terrorist groups and networks, campaigns of regional aggression, and military expansion," according to Trump. "It remains the policy of the United States to deny Iran all paths to both a nuclear weapon and intercontinental ballistic missiles, and to counter the totality of Iran's malign influence in the Middle East."The Trump administration also took aim at Iranian oil by effectively ordering countries worldwide to stop buying Tehran's oil or face sanctions of their own. Brian Hook, the State Department's Iran special envoy, said Wednesday during a briefing that the U.S. would not grant sanction waivers to any countries buying Iranian oil. The latest revelation comes hours after Tehran announced it was relaxing some restrictions on its nuclear program but would not violate a 2015 accord with Russia, China, Britain, France, Germany and the United States.
'We reject any ultimatums': Europe responds firmly to Iran's nuclear deal threat - The EU has responded firmly to Iran's threat to roll back its 2015 nuclear deal commitments, saying in a statement Thursday that it rejects any ultimatums but remained committed to the multilateral pact."We reject any ultimatums and will assess Iran's compliance on the basis of Iran's performance regarding its nuclear-related commitments under the JCPOA and the NPT," the joint statement from the EU high representative and the foreign ministers of France, Germany and the U.K. read, referring to the deal itself — the Joint Comprehensive Plan of Action — and the Treaty on the Nonproliferation of Weapons, respectively.In essence, the EU is saying that inspectors, not declarations, will determine how it approaches Iran going forward. And that may take some time: Data on Iran's nuclear activities will be unclear until the International Atomic Energy Agency publishes its quarterly report in August. Iranian President Hassan Rouhani announced Wednesday his country would end its compliance with two particular conditions of the nuclear deal if Europe did not step in to protect the country from U.S. sanctions, re-imposed after the President Donald Trump administration withdrew from the agreement one year ago.Rouhani essentially gave Europe an ultimatum: Choose Iran over the U.S. by resuming Iranian trade in violation of sanctions, or see Iran return to higher levels of uranium enrichment. Tehran said it would restart construction on its Arak nuclear reactor, which was capable of producing weapons-grade plutonium and had been shut down as part of the 2015 deal."We remain fully committed to the preservation and full implementation of the JCPOA, a key achievement of the global nuclear non-proliferation architecture, which is in the security interest of all," the EU statement read. "We strongly urge Iran to continue to implement its commitments under the JCPOA in full as it has done until now and to refrain from any escalatory steps."
China and India May Be Europe’s Last Hope to Save the Iran Deal - – The European Union will defend the Iran nuclear accord despite Tehran’s decision to backtrack on its commitments in response to US sanctions, diplomats believe, but European powers expect it to collapse without a deal to sell Iranian oil to China or India, Reuters reported.Britain, France, and Germany, which signed the 2015 deal along with the United States, China and Russia, are determined to show they can compensate for last year’s U.S. withdrawal from the accord, protect trade and still prevent Tehran from developing a nuclear bomb.But with Iran’s economy dependent on crude exports that are traded in U.S. dollars, a promised European trade channel to bypass American sanctions has proved complicated, is not yet operational, and may never be able to handle oil sales. “This situation now risks deteriorating, but it will be step by step and not a collapse all in one go,” said a senior European diplomat. A French diplomat talked of a “negative spiral” in which trade in food and medicines was simply not enough, while another European envoy spoke of Iran’s “phased exit” from the deal.The Iran accord, one of the West’s biggest foreign policy achievements until U.S. President Donald Trump pulled out in May 2018, lifted punishing United Nations’ sanctions on Iran in return for Iranian compliance with the deal.Iran has met its terms but Trump withdrew because he believes the accord did not curtail Tehran’s ballistic missile programme or address Iranian involvement in Syria’s civil war, something Europeans argue the 2015 deal was not designed to do.By reimposing punitive sanctions, the United States says it aims to dramatically weaken Iran’s clerical rulers and force Tehran to renegotiate a broader arms control deal.The European Union says that can still be done without tearing up the nuclear accord, which put strict limits on Iranian enrichment.
Iran appears to be restarting oil shipments to Syria as Trump turns up pressure - Tanker-tracking firms believe Iran is once again shipping crude oil to Syria, resuming the illicit trade as tensions with Washington rise and the Islamic Republic faces increasing international isolation. An Iranian delivery of approximately one million barrels of crude was made into the Syrian port of Baniyas during the first week of May, according to TankerTrackers.com and ClipperData, two groups that follows oil vessels. This would be the first Iranian oil delivery to Syria since the end of 2018, according to Samir Madani, founder of TankerTrackers. The suspected delivery comes one year after the U.S. unilaterally pulled out of an international nuclear agreement with Iran and just one week after the Trump administration tightened energy sanctions in an effort to push Iranian crude exports to zero. It also follows the deployment of a U.S. carrier strike group and bomber task force to the Middle East earlier this week. US and Iran both made 'deliberately provocative' gestures The US is being 'deliberately provocative' to Iran: Expert 2:34 AM ET Thu, 9 May 2019 | 02:52 Iran's leadership in Tehran responded on Wednesday by announcing it will stop complying with key parts of the nuclear accord. The same day, Washington slapped new sanctions on Iranian metal exports. Analysts have widely predicted that Iran will step up efforts to smuggle oil into Syria and neighboring Iraq as the U.S. makes it more difficult for Tehran to ship oil to its few remaining customers, including China, India and Turkey. Madani, the TankerTrackers founder, has tracked Iranian vessels for nearly three years, both through data collected by the U.S. Coast Guard and what he calls, "eyes in the sky," essentially visual data collected by a network of satellites. This allows the group to track tankers that may turn off their transponders — a common move for those selling oil off the markets. The most recent moves by an Iranian tanker, previously known as True Ocean, caught the attention of both tracking companies when the vessel made a series of unusual moves. The Suezmax tanker in question, now traveling as the Masal, is on the U.S Treasury's list of vessels that has been used to move oil to Syria in the past.
Billion-Dollar Fleet Destroyed With One Missile - Iran Cleric Threatens To Sink US Carrier - At a moment the US carrier strike group ordered deployed to the CENTOM Persian Gulf region area of command has traversed the Suez Canal, and as multiple B-52 bombers have also landed in Qatar in response to "troubling and escalatory" threats by Iran against US troops in the region, a top American military commander in the region has threatened he's ready to send an aircraft carrier through the vital Strait of Hormuz "if needed". But should the US send a carrier through the key narrow oil shipping Persian Gulf choke point which is routinely patrolled by IRGC boats, one senior cleric has vowed the US Navy's..."Billion-dollar fleet can be destroyed with one missile" — according to Iran's ISNA News Agency Vice Admiral Jim Malloy, commander of the US Navy’s Bahrain-based Fifth Fleet, made the statements to Reuters on Friday.He oversees all US naval forces in the Middle East, and at the very moment the USS Abraham Lincoln Nimitz-class carrier makes its way into the area, the commander said, “If I need to bring it inside the strait, I will do so.” He added, “I’m not restricted in any way, I’m not challenged in any way, to operate her anywhere in the Middle East.”He didn't specifically name the USS Abraham Lincoln during the telephone interview, but certainly the remarks were intentionally timed as a part of the White House's ongoing "maximum pressure" campaign against Iran. Iran, for its part, has dismissed the "deployment" and the underlying threat Bolton touted Sunday night as requiring a response as "fake intelligence" and part of a US “psychological warfare” campaign - further noting the carrier strike group's embarkation was pre-scheduled and merely used as a pretext for escalating threats. Of the latest claims that credible intelligence indicates Iranian actions against Americans in the region could be imminent, Malloy said the intelligence was linked “with actual activity that we observed.”
Rockets fired from Gaza day after Israel kills four Palestinians =A Palestinian has been killed in an Israeli air raid on the northern Gaza Strip, according to Gaza's health ministry, amid a fresh escalation between Israel's military and Gaza fighters. Imad Nseir, 22, was killed in Beit Hanoun after Israeli warplanes targeted multiple areas in the besieged enclave on Saturday morning after dozens of rockets were fired from Gaza into southern Israel. The latest flare-up comes after Israeli forces killed four Palestinians in two separate incidents on Friday. Al Jazeera's Harry Fawcett, reporting from Jerusalem, said the barrage of rockets fired from Gaza came after an Israeli drone attack in the north of the strip early on Saturday, which injured three people. "We are looking at another military escalation, the first since last month's in which we saw another exchange of air raids and rocket fire out of Gaza, which seemed to end with some hopes towards some kind of longer-term resolution," he said. "There was a good deal of reporting about talks between Israel and Hamas mediated by Egypt with further relaxing of the situation likely to happen from the Israeli side," he continued. "Hamas says so far all they have seen is the relaxation in maritime controls, allowing fishing out to 15 nautical miles from six, which has now been reduced again."
Gaza rocket fire kills Israeli man amid escalating violence - CBS News Palestinian militants in the Gaza Strip on Sunday intensified a wave of rocket fire into southern Israel, striking towns and cities across the region, killing at least one person and seriously wounding three others in one of the bloodiest rounds of fighting since the 2014 war. At least eight Palestinians, including a pregnant woman and her 14-month-old niece, have also been killed. Israeli forces struck dozens of targets throughout Gaza, including militant sites that it said were concealed in homes or residential areas. The army also moved armored units toward the Gaza perimeter as the sides headed closer to all-out war. Moshe Agadi, a 58-year-old Israeli father of four, was struck in the chest by shrapnel in a residential courtyard from one of the 450 rockets fired from Gaza in less than 24 hours. Then a midday barrage hit Ashkelon again, wounding three people, including two seriously who were suffering from "multisystem trauma." The Magen David Adom rescue service said another person was critically wounded when a rocket landed on The Israeli military has retaliated with some 260 airstrikes against militant targets in Gaza.
Israel steps up strikes as Gaza rocket attacks intensify - (AP) — Gaza militants fired hundreds of rockets into southern Israel on Sunday, killing at least four Israelis and bringing life to a standstill across the region in the bloodiest fighting since a 2014 war. As Israel pounded Gaza with airstrikes, the Palestinian death toll rose to 23, including two pregnant women and two babies. The bloodshed marked the first Israeli fatalities from rocket fire since the 2014 war. With Palestinian militants threatening to send rockets deeper into Israel and Israeli reinforcements massing near the Gaza frontier, the fighting showed no signs of slowing down. Israeli Prime Minister Benjamin Netanyahu spent most of the day huddled with his Security Cabinet. Late Sunday, the Cabinet instructed the army to “continue its attacks and to stand by” for further orders. Israel also claimed to have killed a Hamas commander involved in transferring Iranian funds to the group. Israel and Hamas, an Islamic militant group that seeks Israel’s destruction, have fought three wars since Hamas violently seized control of Gaza from Western-backed Palestinian forces in 2007. They have fought numerous smaller battles, most recently two rounds in March. While lulls in fighting used to last for months or even years, these flare-ups have grown increasingly frequent as a desperate Hamas, weakened by a crippling Egyptian-Israeli blockade imposed 12 years ago, seeks to put pressure on Israel to ease the closure. The blockade has ravaged Gaza’s economy, and a year of Hamas-led protests along the Israeli frontier has yielded no tangible benefits.
Israel hits offices of Turkish state news agency in Gaza - An Israeli airstrike hit the office of Turkey's state-run news agency in Gaza, Turkey's foreign minister said Saturday, calling it a "new example of Israel's unrestrained aggression."Israeli warplanes carried out dozens of retaliatory airstrikes across the Hamas-controlled Gaza Strip in response to a barrage of rockets fired from Palestinian militants as hostilities flared into a second day.Turkey's state-run media reported that the building in which Anadolu Agency is located in Gaza was hit by at least five Israeli rockets after warning shots were fired. No deaths or injuries were reported. Turkish officials condemned the attack, which is likely to add fuel to already tense relations with Israel. Turkish President Recep Tayyip Erdogan slammed Israel for the bombing. "We strongly condemn Israel's attack against Anadolu Agency's office in Gaza," Erdogan wrote on Twitter.
Netanyahu pledges 'massive strikes' in Gaza as death toll rises - Israeli Prime Minister Benjamin Netanyahu has ordered "massive strikes" on the Gaza Strip after a two-day escalation that killed 24 Palestinians and four Israelis. Israeli warplanes and gunboats continued to target the Gaza Strip on Sunday as fighters in the besieged enclave fired a barrage of rockets into southern Israel. A 34-year-old Hamas commander was killed in what the Israeli military described as a targeted strike. An army statement accused Hamad al-Khodori of "transferring large sums of money" from Iran to armed factions in Gaza. He was the fifth Palestinian reported killed on Sunday. Other Palestinian victims included two pregnant women and three infants. In the Israeli city of Ashkelon, a 58-year-old Israeli man was killed after being struck by shrapnel from a rocket attack. Two other Israelis, critically wounded in a separate rocket attacks on a factory on Sunday afternoon, later died. "This morning I instructed the IDF [the Israeli Army] to continue with massive strikes against terrorists in the Gaza Strip," Netanyahu, who doubles as Israeli defence minister, said in a statement after consulting with his security cabinet on Sunday. He said he had also ordered "tanks, artillery and infantry forces" to reinforce troops already deployed near Gaza, a move that raised fears of a ground invasion. "Hamas is responsible not only for its attacks against Israel, but also for the Islamic Jihad's attacks, and it is paying a very heavy price for it," Netanyahu added.
Israel and Gaza militants agree to cease-fire after a weekend of violence - — An uneasy cease-fire settled over the cities of southern Israel on Monday after a weekend that brought a rain of 600 rockets from the Gaza Strip, but not all residents thought the truce was a good thing. Near the explosion-scarred house of Moshe Agadi, 58, who became the first Israeli since 2014 to die in rocket fire from Gaza, mothers took their children to play in a park after 48 hours of sheltering indoors. “Israel needs to stop this once and for all,” said Inna Kraysberg, 34, as her two young children played on a nearby slide. Four Israelis died in the violence, the worst round of fighting between Israel and militant factions in Gaza since Israel’s 2014 war with Hamas. In Gaza, 25 people were killed as Israel responded with airstrikes, bringing multistory buildings thundering to the ground. However, efforts by Egypt and the United Nations to broker a cease-fire bore fruit by the early hours of Monday, as armed factions in Gaza said they had agreed to a truce. Hamas and Islamic Jihad, the two largest militant groups in Gaza, confirmed that a cease-fire was in place. A spokesman for the office of Israeli Prime Minister Benjamin Netanyahu declined to comment on the reports, but the Israeli military said that protective restrictions for civilians in southern Israel were being lifted.
Israeli Newspaper Publishes Terms of ‘Deal of the Century’ - The US has said it will reveal its deal after the Muslim month of fasting comes to an end in early June. The main points of the agreement put together by Trump’s son-in-law, Jared Kushner — who has extensive interests in Israel and its settlements — and proposed by the US administration are as follows: A tripartite agreement will be signed between Israel, the PLO and Hamas, and a Palestinian state will be established that will be called “New Palestine” and will be established in the occupied West Bank and Gaza, with the exception of the settlements. Israel would release Palestinian prisoners gradually over the course of three years under the deal. The settlement blocs in the occupied West Bank, which are illegal under international law, would form part of Israel.Jerusalem will not be divided but is to be shared by Israel and the “New Palestine” with Israel maintaining general control.Palestinians living in Jerusalem would be citizens of the Palestinian state but Israel would remain in charge of the municipality and therefore the land. The newly formed Palestinian state would pay taxes to the Israeli municipality in order to be in charge of education in the city for Palestinians. The status quo at the holy sites will remain and Jewish Israelis will not be allowed to buy Palestinian houses and vice versa. Egypt will offer the new Palestinian state land to build an airport, factories and for agriculture which will service the Gaza Strip. Palestinians will not be permitted to live on this land. A highway would be built to connect the Gaza Strip to the West Bank 30 metres above Israel. Funding for the project will mainly come from China, which will pay 50 per cent of the cost, with South Korea, Australia, Canada, the US and EU each paying a ten per cent each. The US, EU and Gulf states would fund and sponsor the deal for five years to establish the state of “New Palestine”, the leak claims. This would be at a cost of $6 billion a year; the majority of which -70 per cent – would be paid by Gulf states, with the US contributing 20 per cent and the EU ten per cent. “New Palestine” would not be allowed to form an army but could maintain a police force. Instead, a defence agreement will be signed between Israel and the “New Palestine” in which Israel would defend the new state from any foreign attacks. Upon signing the agreement, Hamas will hand over all its weapons to Egypt. The movement’s leaders would be compensated and paid salaries by Arab states while a government is established. If Hamas or any Palestinian bodies refuse this deal, the US will cancel all of its financial support to the Palestinians and pressure other countries to do the same. If, on the other hand, Palestinian Authority President Mahmoud Abbas signs the deal but Hamas and Islamic Jihad do not agree to it, a war would be waged on the Gaza Strip with the full backing of the US. However, if Israel refuses the deal the US would cease its financial support. The US currently pays $3.8 billion a year to support Israel.
Turkey says it will not bow to U.S. sanctions over S-400 deal (Reuters) - Turkey will never bow to U.S. sanctions over its agreement to purchase Russian S-400 surface-to-air missile defense systems, Vice President Fuat Oktay said on Sunday regarding a deal that has strained ties between the NATO allies. Washington says the systems are not compatible with NATO equipment and may compromise its Lockheed Martin F-35 fighter jets. It has warned of possible U.S. sanctions if Ankara pushes on with the Russian deal. Turkey, a prospective buyer and a partner in the production of the F-35s, has said the S-400s and jets would not impact each other and that it will not abandon its deal with Russia. It has proposed forming a working group with Washington to assess the impact of the S-400s, but says it has not received a response yet. Speaking to broadcaster Kanal 7, Oktay said the U.S. concerns are unreasonable and that the planned July delivery date for the S-400s remained unchanged. “When Turkey signs an agreement, Turkey keeps its promise. We signed this agreement and certain payments were made,” Oktay said. “I don’t think the arguments and concerns here have a lot to lean on,” he said. The United States has also offered to sell Turkey its rival Raytheon Co. Patriot defense systems, which Turkey’s Defence Minister Hulusi Akar said Ankara was still evaluating. NATO Secretary General Jens Stoltenberg, who will visit Turkey next week, told Turkey’s state-run Anadolu news agency on Sunday that decisions about defense procurement were up to individual countries. “The issue of procuring military materiel is a national decision for countries, but the ability of allied armies to work together is a fundamental issue for NATO to run its operations and missions,” Stoltenberg was quoted as saying.
Chinese authorities are reportedly using an app to monitor Muslims in Xinjiang and see if they match 36 'person types' deemed as dangerous - Chinese authorities are using an app to monitor residents in the western Xinjiang region and flag them to officials as dangerous, according to a Human Rights Watch (HRW) report released Thursday.Researchers at HRW said they obtained a copy last year of a mass surveillance app used by police in Xinjiang, which is home to an estimated 13 million Uighur Muslims as well as a other Muslim minority groups that are subjected to unprecedented surveillance measures. Researchers said the app was publicly available when they downloaded it in early 2018, and the app's source code indicated its first iteration was released in December 2016.According to the report, the app compiles data about Xinjiang inhabitants, including their blood type, height and information about their electricity use, and warns government officials and police officers when it detects a suspicious person. As part of the detection process, the app classifies suspects based on 36 "person types" that are marked as suspicious, HRW said. While the report doesn't go into detail on all 36 personas, it explained on some occasions the code makes specific reference to figures or activities specific to Xinjiang. For example, the app references "followers of Six Lanes," which is said to relate to followers of certain religious scholars in Xinjiang who are considered threatening. The app is also said to flag people who have gone on the Hajj, or religious pilgrimage to Mecca, without government permission. In the past, authorities have outfitted Muslims embarking on the Hajj with GPS trackers in order to keep tabs on their activities while abroad. Muslims have also been forced to pledge loyalty to the communist party before being allowed to leave Xinjiang for the Hajj.
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