record US oil exports; largest draw on crude supplies in 33 months; horizontal rigs at 16 mo low, vertical rigs at 4 mo hi

oil prices rose for a second week on ongoing hostilities between the US and Iran and the largest drawdown of US crude inventories in nearly 3 years, while oil traders held back awaiting the outcome of the Trump-Xi summit in Japan this weekend and the OPEC meeting next week...after jumping nearly 9% to $57.43 a barrel last week after Iran shot down a US spy drone which had ventured into its airspace, the price of US crude for August delivery opened higher and rose to $58.22 a barrel on Monday after Trump questioned the need for the US to defend the Straight of Hormuz, but the gains were capped on worries over weakening demand as oil prices settled with a gain of 47 cents at $57.90 a barrel...oil prices hung in a narrow range on Tuesday as concerns over declining crude demand were offset by risks linked to new U.S. sanctions targeting Iranian leaders, with prices settling 7 cents lower at $57.83 a barrel...however, oil prices opened more than a dollar higher on Wednesday on word of a permanent closure of major East Coast refinery and on industry data that showed U.S. crude stockpiles fell more than expected and then spiked up another dollar after the EIA reported the largest oil inventory withdrawal in nearly 3 years, before settling to close $1.55 higher at $59.38, with both oil & gasoline futures posting their highest settlements in 5 weeks...oil prices started out lower on Thursday, pressured by doubts that the G20 summit could produce a breakthrough on trade, and on perceptions that oil supply is ample despite the prospect of continued OPEC curbs, but then turned higher in the afternoon and managed to eke out a new multiweek high at $59.43 a barrel, as traders weighed tensions between the U.S. and Iran that threatened global supplies...oil prices were trending higher again on Friday, but then fell sharply just before the close as the other parties to the Iran nuclear deal vowed to forgo dollar based oil pricing to normalize trade with Iran, with oil finishing down 96 cents, or 1.6%, at $58.47 a barrel...but despite Friday's drop, oil prices still posted their second straight weekly gain while waiting for the G20 and OPEC talks, and finished with a gain more than 9% for the month of June, their fifth monthly gain this year, even after falling 16% during May...

meanwhile, natural gas prices rose from last week's three year low, as 15 day forecasts for hotter weather lifted prices for both the July natural gas contract and for August natural gas by more than 11 cents on Monday, and then the August contract tacked on another 5.6 cents on Thursday after the natural gas storage report showed a slightly lower than expected addition to storage over the previous week...the contract for July natural gas, which had ended last week more than 8% lower at $2.186 per mmBTU, rose 10.5 cents before trading in that contract expired at $2.291 per mmBTU on Wednesday, marking the lowest final monthly settlement for a natural gas contract since the June settlement of 2016, while the contract for August natural gas, which had fallen to $2.169 per mmBTU last week, rose 6.4% to end the week at $2.308 per mmBTU...

the natural gas storage report from the EIA for the week ending June 21st showed that the quantity of natural gas held in storage in the US increased by 98 billion cubic feet to 2,301 billion cubic feet by the end of the week, which meant our gas supplies were 236 billion cubic feet, or 11.4% more than the 2,065 billion cubic feet that were in storage on June 22nd of last year, while still 171 billion cubic feet, or 6.9% below the five-year average of 2,472 billion cubic feet of natural gas that have been in storage after the third week of June in recent years....this week's 98 billion cubic feet injection into US natural gas storage was was a little short of the average consensus estimate for a 101 billion cubic feet injection, but was still much higher than the average 70 billion cubic feet of natural gas that have been added to gas storage during the third week of June in recent years, the 15th consecutive such above average injection....the 1,194 billion cubic feet of natural gas that have been added to storage over the past 13 weeks has been the largest injection of gas into storage on record for any similar period of the injection season, as the 934 billion cubic feet that were added during the same 13 weeks of 2014 (when June was also unusually cool) is the only year that even appears close...

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 changes over the week ending June 21st, showed that a big drop in our oil imports combined with record exports of domestic crude meant that we saw the largest withdrawal of oil from our stored crude supplies in nearly three years, even as it was just  the 5th withdrawal in 14 weeks...our imports of crude oil fell by an average of 812,000 barrels per day to an average of 6,656,000 barrels per day, after falling by an average of 144,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 348,000 barrels per day to a record 3,770,000 barrels per day during the week (shown below), which meant that our effective trade in oil worked out to a net import average of 2,886,000 barrels of per day during the week ending June 21st, 1,160,000 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 100,000 barrels per day lower at 12,100,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,986,000 barrels per day during this reporting week...

(source)

meanwhile, US oil refineries were reportedly using 17,337,000 barrels of crude per day during the week ending June 21st, 73,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 1,827,000 barrels of oil per day were being withdrawn from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 525,000 barrels per day short of what our 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 (+525,000) 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 they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure that one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....  

further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 7,415,000 barrels per day last week, now 10.2% less than the 8,261,000 barrel per day average that we were importing over the same four-week period last year...the 1,827,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,100,000 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 11,600,000 barrels per day, while a 8,000 barrel per day increase to 474,000 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 June 22nd was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 11.0% above that of a year ago, and 43.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at 94.2% of their capacity in using 17,337,000 barrels of crude per day during the week ending June 21st, up from 93.9% of capacity the prior week, and a fairly normal refinery utilization rate for this time of year....however, the 17,337,000 barrels per day of oil that were refined this week were still 2.7% below the 17,816,000 barrels of crude per day that were being processed during the week ending June 22nd, 2018, when US refineries were operating at 97.5% of capacity....

with the increase in the amount of oil being refined, gasoline output from our refineries was similarly higher, increasing by 89,000 barrels per day to 10,512,000 barrels per day during the week ending June 21st, after our refineries' gasoline output had increased by 147,000 barrels per day the prior week....after 4 consecutive weekly increases in gasoline output, this week's gasoline production was 3.6% more than the 10,142,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 66.000 barrels per day to 5,305,000 barrels per day, after our distillates output had increased by 132,000 barrels per day the prior week....with this week's decrease, the week's distillates production was 1.7% less than the 5,396,000 barrels of distillates per day that were being produced during the week ending June 22nd, 2018.... 

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell for the 2nd time in 6 weeks and for the 14th time in 18 weeks, decreasing by 996,000 barrels to 232,225,000 barrels over the week to June 21st, after our gasoline supplies had decreased by 1,692,000 barrels over the prior week...that smaller draw from our gasoline supplies was because the amount of gasoline supplied to US markets decreased by 642,000 barrels per day from last week's record high to 9,466,000 barrels per day, while our exports of gasoline rose by 309,000 barrels per day to 939,000 barrels per day, while our imports of gasoline fell by 21,000 barrels per day to 816,000 barrels per day....after our gasoline supplies had reached an all time record high twenty weeks ago, they then fell by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, and hence are still 3.7% lower than last June 22nd's inventory level of 241,196,000 barrels, and back to near 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 11th time in 15 weeks, decreasing by 2,441,000 barrels to 125,380,000 barrels during the week ending June 21st, after our distillates supplies had decreased by 551,000 barrels over the prior week....our distillates supplies fell by more this week than last because our exports of distillates rose by 166,000 barrels per day to 1,719,000 barrels per day and because our imports of distillates fell by 132,000 barrels per day to 33,000 barrels per day, while the amount of distillates supplied to US markets, a proxy for our domestic demand, fell by 93,000 barrels per day to 3,968,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still 6.8% higher than the 117,423,000 barrels of distillate that we had stored on June 22nd, 2018, even as they fell to 7% below the five year average of distillates stocks for this time of the year...

finally, with record oil exports and that big drop in our oil imports, our commercial supplies of crude oil in storage fell for the eighth time in 23 weeks and by the most since Sept 2nd, 2016, decreasing by 12,788,000 barrels, from 482,364,000 barrels on June 14th to 469,576,000 barrels on June 21st...with that decrease, our crude oil inventories fell to 5% above the recent five-year average of crude oil supplies for this time of year, but still remained about 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after the third week of June, 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 June 21st were still 12.7% above the 416,636,000 barrels of oil we had stored on June 22nd, of 2018, but at the same time 7.8% below the 509,213,000 barrels of oil that we had in storage on June 23rd of 2017, and 5.3% below the 495,941,000 barrels of oil we had stored on June 24th of 2016...    

since this week's crude inventory withdrawal was the largest in nearly three years, and since supplies of gasoline and distillates were concurrently drawn down, we'll include a set of bar graphs of the historical changes in each of them to show you what the recent changes look like graphically...this set of inventory bar graphs was copied from the Zero Hedge post of this past week that reviewed the weekly EIA report:

above we have 4 similar bar graphs stacked one on top of another; from the top, the first graph shows the weekly change in US crude oil inventories over the last 3 and a half years, the second graph shows the weekly change in oil inventories at the Cushing Oklahoma storage depot, the basis for WTI oil contracts; the third graph shows the weekly change in gasoline inventories over the same period, while the bottom graph shows the weekly change in inventories of distillates...each graph has the same format: inventory increases for a given week are shown as a green bar above the zero line, whereas inventory decreases are shown as a red bar pointing down from the zero line, wherein the size of the bar in both cases is indicative of the size of the inventory increase or decrease...in addition, note that on the top graph ​for crude ​oil ​inventories, Zero Hedge has included a heavy dashed red line from this week's increase back in time to September 2nd, 2016, the only time on this graph that the red bar, marking the decrease in crude supplies, was greater than this week's decrease... however, even though this week's withdrawal from stored supplies was large by historical standards, it is somewhat of an outlier compared to recent experience, wherein we've been seeing additions to inventories more often than not, which you can see on the graph as a preponderance of green bars pointing upwards going back to September of last year....

the opposite is largely true for the gasoline inventory graph (3rd from the top) and the distillates inventory graph on the bottom, as you can see that the majority of recent weeks for both have red bars pointing down, indicating falling supplies...but note that both had large increases in the first weeks of the year, before the sanctions on Venezuelan crude kicked in and reduced the throughput of US refineries by 10%, as Gulf Coast refiners scrambled for weeks ​​to find equivalent grades of the heavy sour crude that they were designed to process...the two graphs thus clearly show the unintended ​consequences ​​of policy decisions made on the spur of the moment at the urging of the most reprobate of US officials and politicians​ on our own domestic energy supplies​...

This Week's Rig Count

the US rig count was unchanged over the week ending June 28th and hence matched the 16 month low of the prior week, when the rig count had fallen for the 16th time in eighteen weeks...Baker Hughes reported that the total count of rotary rigs running in the US remained at 967 rigs this past week, which was still down by 80 rigs from the 1047 rigs that were in use as of the June 29th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...

the count of rigs drilling for oil rose by 4 rigs to 793 rigs this week, which was still 65 fewer oil rigs than were running a year ago, and less than 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 fell by 4 rigs to 173 natural gas rigs, which was also down by 14 rigs from the 187 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on August 29th, 2008...in addition, there was also a rig classified as miscellaneous operating this week, which was down from the 2 miscellaneous rigs that were running a year ago, when Cabot Oil & Gas was drilling 2 exploratory wells into the Knox formation in Ohio that Baker Hughes had labeled as miscellaneous...

the rig count in the Gulf of Mexico increased by 2 to 26 rigs this week, as two more rigs began operations off the coast of Louisiana...the Gulf rig deployment now includes 24 rigs running offshore from Louisiana and 2 rigs deployed offshore from Texas, an increase ​of​ 8 ​​rig​s ​from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 17 rigs were drilling in Louisiana waters and one was deployed offshore from Texas...however, a year ago there was also a rig drilling offshore from Alaska, while all of this week's offshore activity was in the Gulf of Mexico...meanwhile, one of the so-called "inland waters" rigs which had been operating in southern Louisiana was also shut down this week, leaving three rigs still deployed on inland waters in the state, down from the 4 inland waters rigs that were operating in Louisiana a year ago...​​

the count of active horizontal drilling rigs was down by 6 to 840 horizontal rigs this week, which was a new 16 month low for horizontal drilling and 86 fewer horizontal rigs than the 926 horizontal rigs that were in use in the US on June 29th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was unchanged at 68 directional rigs this week, but those were up by 3 rigs from the 65 directional rigs that were operating during the same week of last year....on the other hand, the vertical rig count was up by 6 rigs to​ 59 vertical rigs this week, and those were also up from the 56 vertical rigs that that were in use on June 29th of 2018...hard to say if it's a significant development yet, but over the past three weeks, 15 horizontal rigs have been shut down, while 13 new vertical rigs have started drilling, pushing the vertical rig count to a 4 month high....

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 June 28th, the second column shows the change in the number of working rigs between last week's count (June 21st) and this week's (June 28th) count, the third column shows last week's June 21st 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 29th of June, 2018...     

this week's tables are obviously missing some information, since the major basin variances shown above total a net decrease of two, while we know from the summary that horizontal rigs were down by six....based on the state totals, we might guess that two of them might have been drilling in Alaska, while another two horizontal rigs might have been pulled out of a basin in Oklahoma or Texas not shown above...in Texas, 3 horizontal rigs were added in Texas Oil District 8, which would be the core Permian Delaware, while the rig counts in the other Permian districts were unchanged, which means that the rig that was shut down in New Mexico must have been drilling in the western Permian Delaware...elsewhere in Texas, two rigs were pulled out of the Eagle Ford, one each ​drilling for oil and​ for​ natural gas, leaving the Eagle Ford with 64 oil rigs and 7 targeting natural gas, while the 2 oil rigs pulled out of the Granite Wash were both targeting natural gas, and they were in Oklahoma, since drilling in the Texas Panhandle Oil District 10 was unchanged...meanwhile, the fourth natural gas rig that was shut down this week came out of an "other' basin not tracked separately by Baker Hughes..

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ODNR: Study linking radon to fracking in Ohio uses incorrect numbers - A new academic study linking the amount of radon present in a home to its proximity to deep-shale oil and gas “fracking” wells cites Athens County as having the most of these wells in the state of Ohio, with 108.  There’s one problem with that statistic: Athens County does not have 108 deep-shale fracking wells. In fact, it has zero. The number of horizontally drilled fracking wells in some eastern Ohio counties shown on a map that’s part of the study also appears to be incorrect.  Mark Bruce, a spokesperson for the Ohio Department of Natural Resources’ Division of Oil and Gas Resource Management, said Friday that the agency is working with the University of Toledo researchers who performed the radon/fracking study “to get their numbers right.” It's unclear whether correcting the numbers of deep-shale fracking wells in the study will alter the conclusions of the study. The study, called “Impact of the Hydraulic Fracturing on Indoor Radon Concentrations in Ohio: A Multilevel Modeling Approach,” recently was published on the website of the journal Frontiers in Public Health. Three researchers at the UToledo, one in its Department of Geography and Planning and two in its Department of Civil and Environmental Engineering, authored the study. For radon data collection data used in the study, the researchers had funding from the Ohio Department of Health and the U.S. Environmental Protection Agency. According to the study, the UToledo scientists geocoded 118,421 homes in all 88 Ohio counties between 2007 and 2014, and documented how close the homes were to any of 1,162 fracking wells in the state. That total number of fracking wells, as stated in the UToledo study, also is wrong, according to Bruce of the ODNR. He told The Athens NEWS Friday morning that the UToledo study gave incorrect numbers for the overall number of deep-shale fracking wells in Ohio (more than 2,600, not 1,162); deep-shale fracking wells in Athens County (zero, not 108); and drilling in some other Ohio counties (for example, the study shows Carroll County southeast of Canton as having between 7 and 19 fracking wells; it actually has had “476 horizontal wells… drilled and hydraulically fractured,” Bruce said).

Fracking in Ohio series: Some Ohio residents who complained about oil and gas feel 'abandoned' by the state - The Bonds’ trouble with the gas industry, and state regulators, started in 2011, before the shale boom had really gotten started in Noble County. They called the Ohio Department of Natural Resources (ODNR), which regulates the oil and gas industry, for help with a problem on their property. “Before I called the ODNR, someone said to me, ‘Listen, if you call the ODNR, you’re gonna be sorry.’ And boy oh boy we were sorry,” Bond said. The ODNR, which regulates oil and gas drilling, declined an interview about what happened. Records show that when ODNR came to investigate the Bonds’ complaint about a leaking oil tank, the agency issued a violation to the Bonds about a gas well on their property. That was only the beginning of a fraught relationship between the Bond family and Ohio regulators. The Allegheny Front confirmed that the Bond family made numerous complaints to various state agencies, concerning well pad noise and bright nighttime lights, and that gas development was polluting the air and water, and harming their health.“Every tree in the yard was dying, my cats died, my chickens died, we got sheep dying,” Kerri Bond claimed.She complained to the state about her family getting odd rashes, headaches, and dizziness. She said her grandson developed a breathing problem.Bond complained to the Ohio Department of Health, but their air testing found no radiological health hazard.She complained to the Ohio Environmental Protection Agency. “ The Ohio EPA declined to comment, but sent their Investigative Report to The Allegheny Front. The report clarified that while the agency has no authority to regulate noise or light pollution, it tested air quality at the well pad, and on the Bonds’ property. Antero was also allowed to test at the same time. The EPA found leaks from the well pad equipment of benzene and volatile organic compounds, but at levels allowed under Antero’s permit. Antero declined an interview, because the Bonds have a lawsuit pending against the company unrelated to the environmental claims. The EPA found that the chemical leaks did not create a health hazard. But growing body of evidence shows symptoms similar to the Bonds are associated with gas development.

Fracking in Ohio: State law gives energy companies right to force landowners into leases - Deciding what happens on private property might seem like a basic right. But when it comes to fracking, Ohio and other oil and gas-producing states have laws that can force landowners to lease their underground mineral rights to energy companies. That’s what happened to Patrick Hunkler and his wife, Jean Backs. It began in 2010, when a landman for an energy company knocked on their door.  The landman offered them $137 an acre for the mineral rights under their 21 acres in Belmont County, in eastern Ohio.  But they held out. By 2014, they were offered $8,500 an acre. Jean Backs was getting ready to retire. After 30 years working for the Ohio Department of Natural Resources (ODNR), the money might have been nice. But, she worried about the millions of gallons of water used to frack each well, and the waste it creates. “My big concern about signing a lease would be where’s that water going to come from and then what will happen to it when they’re finished,” she explained. “You can’t know that at the time that you signed a lease.” Still, her husband, who had worked for the Ohio EPA, and built a passive-solar house with recycled materials, was open to the idea. But he wanted a way to assure a lease would take into consideration his environmental concerns, including the bright lights used at well pads. And landmen pursued Hunkler and Backs like celebrities, making hundreds of calls to the family.  “We would express our environmental concern, the only thing that they could offer us was money – a price per acre, and royalties,” he said. But making money wasn’t as important to the family as protecting their environment. They say landmen called them foolish. They went as far as following them on vacation, even threatening to bring the sheriff over to force them to sign. Then in 2017, they got a notice from ODNR that Chesapeake Energy was seeking to unitize their property. That meant the state could force the family to sign a lease under a state law. “We normally think of the rights of the landowner as being things like the right to decide what’s done with your land. Or what’s not done with your land,” explains Heidi Robertson, a professor of law and environmental studies at Cleveland State University. She published a law review article in 2018 about Ohio’s unitization law.

Ascent CEO says Ohio Utica Potential Not Yet Fully Realized - The chief of Ohio’s largest natural gas producer sees plenty of running room in the Utica Shale, a play he said is not yet fully delineated or being developed to its maximum potential. In a rare public appearance before an industry audience in the Appalachian Basin, Ascent Resources LLC CEO Jeff Fisher said the Ohio pure-play is poised for growth this year at a time when other operators in the region are scaling back. The company’s assets span all three phases of the Utica in southeast Ohio, which Fisher said is both an advantage and an opportunity to learn more about a play that’s often overshadowed by its younger cousin the Marcellus Shale. “Those are pretty distinctive,” Fisher said of the Utica’s dry and wet gas windows, along with its oil phase. “We think that gives us hydrocarbon diversity, different economics, different markets, and we see that as a big advantage. “Certainly, the dry gas window has been extremely prolific,” he told a crowd gathered for Hart Energy’s annual Dug East Conference and Exhibition in Pittsburgh. “I’ve seen a lot of shale plays, I’ve drilled a lot of horizontal plays -- this play matches anything I’ve ever participated in before.” Ascent had its beginning in 2013 after the late Aubrey McClendon was ousted from the helm of Chesapeake Energy Corp. He founded American Energy Partners LP (AELP) to develop affiliates with basin-specific strategies across the country. Once American Energy Appalachia Holdings LLC, Ascent eventually rebranded and became independent. Fisher, a McClendon protege who was on the executive team at Chesapeake, said Ascent chose Ohio because much of the company’s team had drilled some of the Utica’s first unconventional discovery wells. Chesapeake was a Utica pioneer, delivering the play’s first commercial production in Ohio. Ascent is now the state’s No. 1 natural gas producer and the nation’s eighth largest, according to Fisher. While the first two years of the company’s existence were “frankly a time of survival,” Ascent’s move to raise $1.5 billion of capital in 2016 transformed it. By the following year, it had doubled its production and was running a six-rig program. In 1Q2019, the company produced 1.6 Bcfe/d including more than 26,000 bbl of liquids from a 350,000-acre position. .

New petrochemical complex could create a “cancer alley” on Ohio River - Political and corporate leaders in West Virginia, Pennsylvania and Ohio, as well as the US Department of Energy, are rabidly pursuing a gigantic new storage, refining and production complex for petrochemicals and plastics in the Ohio River valley. It would be fueled by the fracking boom in the Marcellus and Utica Shales that has produced an over-abundance of cheap natural gas and the more-valuable liquid byproducts like ethane that are used to make plastic. In western Pennsylvania, Shell Polymers is constructing what could be the first of several plants to convert ethane into plastic pellets for making many different kinds of plastic products. Plastic pollution is recognized as a huge threat to ocean life globally, and only 9 percent of plastics made to date have been recycled. The centerpiece of the project is a multi-billion-dollar underground storage complex called the Appalachian Storage Hub, designed by the Appalachia Development Group (ADG), which is owned by the Mid-Atlantic Technology, Research and Innovation Center (MATRIC) and the West Virginia University Innovation Corporation. In January ADG received a controversial invitation from the Department of Energy to apply for a $1.9 billion loan guarantee, from a fund normally earmarked for renewable or “clean” energy projects, created by the Energy Policy Act of 2005. Steven Hedrick, the chief executive officer of ADG, argues that through the use of regionally produced feedstocks from fracked gas, the project would “significantly avoid or reduce anthropogenic emissions of greenhouse gases through conversion of these raw materials closer to their production locations.” A coalition of almost 150 grassroots groups, including FracTracker Alliance and the FreshWater Accountability Project, wrote to House Appropriations Committee Chair Nita Lowey (D-N.Y.), questioning the legality of the loan guarantee proposal, noting that the funding is intended for clean energy innovations. ADG replied that the storage hub includes innovations in the form of advanced leak detection, and thus is a “clean” energy project.

Report: Bechtel Selected to Build PTT Ethane Cracker in Belmont County — A recent announcement at a natural gas industry conference in Pittsburgh appears to be a major step forward for the proposed ethane cracker plant in Belmont County, as Bechtel Corp. says it has been selected to oversee construction of the multi-billion dollar facility.Paul Marsden, Bechtel’s senior vice president, confirmed the news during a presentation at the Northeast Petrochemical Conference & Exhibition in Pittsburgh. Bechtel currently is overseeing construction of Royal Dutch Shell’s cracker plant in Monaca, Pennsylvania.The proposed PTT Global Chemical America plant at Dilles Bottom, just south of Shadyside along the Ohio River, would be of similar size and scale to the Shell plant. With Bechtel overseeing both projects, there’s a stronger possibility that workers from the Shell site, once it’s completed, could relocate to the local region to begin work on the PTT site. PTT, based in Thailand, has been studying and assessing the local market since at least late 2015, when it announced it would tap into the region’s large concentration of wet gas from Marcellus and Utica shale drilling and build an ethane cracker plant at the former FirstEnergy R.E. Burger power plant site. The company since has partnered with Daelin, a South Korean company, and work has been progressing steadily through property purchases, air and water permits and land clearing. Most recently, in March, PTT contracted with a local business to remove trees of more than 3 inches in diameter in a 140-acre area at the site of the proposed petrochemical complex.

Environmentalists critical of natural-gas storage hub in Southwest Pa. regional plan  - In May, the Southwestern Pennsylvania Commission (SPC), which is responsible for funneling federal funds to address regional infrastructure needs, released a 25-year plan for the Pittsburgh area. The plan, called “SmartMoves for a Changing Region,” included more money and bold visions for public transit, and mentioned how infrastructure changes could have a big impact in combating the effects of climate change. But the SPC’s plan also supports the creation of an Appalachian Storage Hub (ASH) for natural gases and other petrochemical products, and environmental and anti-fossil fuel groups weren’t pleased. A collection of environmental groups announced Monday that they would stand together in disapproval of the SPC’s inclusion of these hubs in the proposal. Twenty regional environmental groups, including the Breathe Project, the Group Against Smog and Pollution (GASP), and PennFuture, signed onto a critical letter addressed to the SPC. Matt Mehalik, the executive director of the Breathe Project, said in a news release that the existence of a storage hub would exacerbate climate change and have a harmful effect on public health.“The ASH concept is a direct threat to our region’s ability to meet climate change goals, putting our community at risk and giving us a reputation as a destructive, world-wide climate polluter,” Mehalik said. Currently, natural-gas drilling, or fracking, produces gas in the region that must be moved to established hubs in Texas and Canada for storage. Southwestern Pennsylvania is currently producing so much natural-gas that frackers must export large amounts of it, though the investment and financial results of that are still unclear. The plans say the ASH would support a pipeline, allowing the region’s natural gas to be kept at the storage hub and then processed at an ethane cracker plant like the one currently being built in Beaver County, where it will be turned into plastics. A 2018 U.S. Department of Energy study recommended the construction of a plant in the eastern United States to support the region’s natural gas industry, which is expected to grow rapidly over the next 30 years. While the Gulf Coast has historically dominated the country’s natural gas industry, the east, and Appalachia in particular, is projected to emerge as another hub.

‘It looked like Armageddon’: Refinery fire puts focus on toxic chemical - The sirens went off about 4 a.m. Friday at the Philadelphia Energy Solutions refinery, following a warning that crackled over radios — a leak had been detected in “Unit 433."Unit 433 is an alkylation unit, one of several process units that convert crude oil into fuels and other products at PES, the East Coast’s largest refinery. The “Unit 433” name conveyed a special alarm to refinery workers.The unit uses hydrofluoric acid as a catalyst, one of the most toxic materials handled in the refinery. In its gaseous state — hydrogen fluoride — it can drift beyond the refinery fence line and imperil the public. Just seconds after the radio warning, the first of several explosions ripped through Unit 433, rattling the plant and lighting up the night sky. The fiery explosions, whose cause is unknown, injured five workers, unnerved the city, and caused gasoline markets to spike on speculation of fuel shortages.“It looked like Armageddon,” said a veteran refinery worker, who was granted anonymity because he was not authorized to speak. “If that’s HF, we’re dead.”City officials said that no HF was released, a fortunate outcome considering the ferocity of the explosions that rocked the plant — the fire was still not extinguished Saturday — and the proximity of the hydrofluoric storage tank near Unit 433. The injured refinery workers were treated at the scene.The city initially ordered residents to shelter in place, but no mention was made about HF. In a worst-case scenario, according to the refinery’s risk management plan filed with federal regulators, an HF gas cloud could travel seven miles in 10 minutes, involving 1.1 million residents in Pennsylvania and New Jersey. The toxin causes skin and respiratory irritation at low exposures. In large doses, it is fatal.

Unit at Philadelphia refinery completely destroyed in fire: sources - (Reuters) - The alkylation unit involved in a massive fire on Friday at Philadelphia Energy Solutions Inc’s oil refinery has been completely destroyed, which will hamper the supply of gasoline from the U.S. East Coast’s largest refinery, sources familiar with the matter said on Sunday.  The destruction of the unit, coupled with damage from the fire that ripped through the 335,000 barrel-per-day (bpd) refining complex, could force the 200,000 bpd Girard Point section of the two-section complex to remain shut for an extended period.  Major units in the Point Breeze section of the plant were also shut down due to unrelated repairs, sources said. It could take several years for the company to rebuild the unit. The damage will test the resolve and the finances of the struggling refiner, which emerged from bankruptcy roughly a year ago and has embarked on a number of cash-saving measures in recent months. It will also have to contend with growing concern from the local community and public officials over whether it can safely operate amid its financial woes. The fire, which began in a tank and involved several explosions that sent a huge fireball into the sky, engulfing the surrounding areas in smoke early on Friday morning, was extinguished Saturday afternoon, the Philadelphia Fire Department said on Sunday in a statement. The department’s hazmat unit and Philadelphia’s department of public health are continuing to monitor the air quality around the refinery.  A source familiar with plant operations said one explosion occurred at the 30,000 bpd alkylation unit that uses hydrofluoric acid (HF), one of the deadliest chemicals in the refining business and a source of controversy for its use to make high-octane gasoline at refineries located in densely populated areas. Hydrofluoric acid can form a toxic cloud at room temperature, with exposure leading to severe health problems and even death. Federal officials including the Occupational Safety and Health Administration and the U.S. Chemical Safety and Hazard Investigation Board on Monday will begin an investigation into the cause and origin of the fire, according to the fire department statement.

Feds to investigate Philly refinery explosion as local health officials remain cautious -Following a massive fire at the Philadelphia Energy Solutions Refining Complex, an oil refinery in South Philadelphia, health and air quality experts say residents in the path of the fire’s plume should be aware of potential health impacts from smoke and particulate matter in the coming days to weeks. A series of explosions that produced a giant fireball at the refinery in the early morning hours Friday led to plumes of black smoke and noxious odors that spread across the region. After receiving a request from the Clean Air Council, the U.S. Chemical Safety and Hazard Investigation Board announced it is deploying a four-person team to investigate the explosion. It has not yet been confirmed which chemicals burned in the fire, but preliminary statements have named propane and butane. According to Reuters, some sources cautioned an explosion occurred near hydrofluoric acid. The last of these is controversial for being one of the deadliest chemicals in the refining process. The Philadelphia Department of Public Health said in a statement that preliminary air sampling at the refinery and adjacent sites has shown no ambient carbon monoxide, combustible hydrocarbons or hydrogen sulfide. “Based on results of samples taken this morning, the Health Department has no findings that would suggest there is a threat to the public health as a result of today’s fire,” said James Garrow, a department spokesman. The findings were based on two air samples taken from up- and down-wind of the refinery this morning. Other local health experts are remaining more cautious. “There definitely is a risk of toxic chemical exposure,” said Gretchen Dahlkemper, who runs her own children’s health and toxic chemicals policy consulting firm in Philadelphia.

Investigations of Philadelphia refinery fire to include potential release of dangerous chemical -- Investigators from the Chemical Safety and Hazard Investigation Board who are investigating Friday’s refinery fire in South Philadelphia say their report will include recommendations aimed at preventing future incidents. Kristen Kulinowski, interim executive of the independent agency, said staff will be interviewing people involved and poring over documents to present a “detailed and fact-based report” of the fire at Philadelphia Energy Solutions. Kulinowski said those recommendations could be aimed at the company or regulators. “Wherever we see a gap that could have contributed to the incident or exacerbated the consequences of that incident we try to close that gap with a recommendation,” she said. The explosion and fire took a day and a half to extinguish and destroyed the alkylation unit that turned crude oil into gasoline. The former Sunoco refinery includes two facilities, Point Breeze and Girard Point, which together had the combined capacity of processing 335,000 barrels of crude oil a day. Four employees were injured in the accident, so the Occupational Safety and Health Administration is also investigating. Many say the impact could have been far worse. That’s because the unit that blew up used the dangerous chemical hydrogen fluoride, often referred to as HF. Kulinowski said the Chemical Safety Board has investigated incidents involving refineries’ use of hydrogen fluoride in the past, and will be doing so in this case as well. Hydrogen fluoride is used as a catalyst in the refining process to turn crude oil into high octane fuel. If released, it can form a vaporous cloud leading to death or severe injuries like blindness. 

Philadelphia Refinery Explosion Takes 350000 Barrels a Day Out of Production - Three explosions early Friday morning rocked the Philadelphia Energy Solutions (PES) refinery and continued to burn in the noon hour, although the fire department has declared the fire contained. Four refinery workers received minor injuries and were treated at the scene, according to a report in the Philadelphia Inquirer. The PES refinery has an operating capacity of 335,000 barrels of crude oil a day.Propane fed the fire, according to PES officials, although the cause of the explosion had not yet been determined. Less than two weeks ago, a small fire at the refinery was quickly extinguished and the cause of that fire has either not been found or not been disclosed.The refinery, the largest on the U.S. east coast, is privately held by Carlyle Group Inc. (NYSE: CG) and Sunoco, a subsidiary of Energy Transfer Partners L.P. (NYSE: ETP) and comprises two refineries: Girard Point and Point Breeze. PES filed for bankruptcy in January 2018, blaming its troubles on a federal requirement that refiners either blend ethanol into their products or purchase renewable fuel credits, called RINs, from refiners who do. The bankruptcy court allowed PES to retire the RINs, ginning up the ire of renewable fuels providers.A report from Reuters in February concluded that the withdrawal of more than $590 million in payments to its owners also played a role in the company’s bankruptcy. Reuters also noted that the company’s cash balance declined by $61 million, according to a post-bankruptcy filing registered in January 2019.Christina Simeone, a director at the Kleinman Center for Energy Policy, published a report in September predicting that PES likely would face another bankruptcy filing on or before its debts mature in 2022. PES also has no competitively priced access to cheaper U.S. crude oil. There are no crude oil pipelines feeding the refinery from the major U.S. shale oil plays. Crude supplies to east coast refiners arrive by either rail or tankers from Africa, the Middle East, Europe and Canada. Unless there is a change to Jones Act provisions requiring that goods (including oil) shipped from one U.S. port to another be transported on a U.S.-built ship, at least 75% owned by U.S. citizens or entities, and manned by U.S. crews, PES and other east coast refineries will always pay more for crude oil than their Gulf Coast and Midwest counterparts. A significant oil discovery in the nearby Utica shale play also would help, according to Simeone.

Philly refinery fire could push cash-strapped owner closer to the brink --The cost of repairing damage from Friday’s devastating fire at the Philadelphia Energy Solutions refinery in South Philadelphia could push the cash-strapped owner closer to the financial brink, just a year after emerging from bankruptcy.As federal investigators arrived Monday to examine what triggered the spectacular fire, which injured five refinery workers and took more than a day to extinguish, the cost and the extent of the damage remained unclear.What is clear is that PES was on shaky financial ground before the explosions reverberated across the city early Friday.The refinery’s cash balance has declined over the last six months, according to quarterly reports that its parent company, PES Holdings LLC, files with U.S. Bankruptcy Court in Delaware. Its long-term debt increased 7.5 percent during the first quarter of this year, to $755 million. The value of the owner’s stake declined 43 percent in the first quarter, to $82 million at the end of March.The owner may not have the resources to finance the cost of replacing the equipment that was destroyed in Friday’s fire, an alkylation unit that produced a high-octane additive required for making premium gasoline. The cost of replacing the equipment could easily top $100 million, say industry experts. “I would be really skeptical they’re going to be able to raise the money to retool,” said Christina E. Simeone, an energy analyst who wrote a report for the University of Pennsylvania’s Kleinman Center for Energy Policy last fall that suggested the refinery is so uncompetitive and debt-burdened that it is “likely” to face bankruptcy again by 2022.

Philadelphia Energy Solutions seeks to permanently shut oil refinery (Reuters) - Philadelphia Energy Solutions (PES) will seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, the company confirmed on Wednesday, a day after sources told Reuters about the plans. “The recent fire at the refinery complex has made it impossible for us to continue operations. We are grateful that the fire resulted in only a few minor injuries,” PES CEO Mark Smith said in a statement. “We are committed to an orderly process to safely wind down our operations.” Shutting the refinery, the largest and oldest on the U.S. East Coast, will cost hundreds of jobs and squeeze gasoline supplies in the busiest, most densely populated corridor of the United States. Smith, in his statement, said the company will “position the refinery complex for a sale and restart,” though such a process would probably take years and face community opposition. Workers at the complex were leaving the refinery on Wednesday, some escorted by security, others alone, carrying boxes with personal belongings to their cars, with several confirming they had been laid off. Employees have been instructed to immediately begin the process of mothballing units, sources familiar with the company’s plans said. “I was stunned (when) I found out,” said Wayne Flood, a refinery worker who was let go Wednesday. He did not say what his job was before getting into his car. About 100 non-union employees will be laid off immediately, with a “significant” number of the 700 union employees expected to lose their jobs in mid-July, the sources said. The 335,000 barrel-per-day (bpd) complex, in a densely populated area in the southern part of the city, erupted in flames early on Friday in a series of explosions that could be heard miles away. “The impact of the closure will be a massive blow to the local economy,” said Ryan O’Callaghan, head of the refinery’s union, estimating that it would cost tens of thousands of jobs when contractors and other businesses that rely on the plant are included.

Philadelphia Energy Solutions to close refinery damaged by fire; gas prices spike - Philadelphia Energy Solutions (PES) on Wednesday confirmed it will soon close its South Philadelphia oil refinery after last week’s devastating explosions and resulting fire and “position the refinery complex for a sale and restart.” Wholesale gasoline prices surged on news of a closure. The announcement is expected to set off a scramble among various interest groups -- industry, labor, and climate activists -- over the possible reuse of the 1,400-acre site. The riverfront property contains extensive infrastructure and fuel storage facilities, including a rail unloading facility, pipeline interconnections, and a link to the seaport. Philip Rinaldi, the refinery’s former chief executive, is talking to stakeholders about saving the plant, said former U.S. Rep. Bob Brady, who was instrumental in organizing the plant’s 2012 rescue by Sunoco Inc. to stave off a threatened closure. “It’s worth saving," said Brady, who is still the city’s Democratic Party chairman. "Phil has some ideas.” Rinaldi, 73, who retired at the end of 2017, confirmed Wednesday he was engaged in “exploratory meetings looking at the role for this asset." Closing the refinery would have a huge impact on the Philadelphia economy and on regional fuel markets. The 335,000-barrel-a-day refinery, the largest on the East Coast, employs more than 1,000 people directly, including nearly 700 hourly union workers, and thousands of contractors. The plant has long been a thorn in the side of environmentalists and neighbors who say it is a health risk.“Today, Philadelphia Energy Solutions made the difficult decision to commence shutdown of the refining complex,” the company’s chief executive, Mark J. Smith, said in a statement. “While our teams include some of the most talented people in the industry, the recent fire at the refinery complex has made it impossible for us to continue operations.” Smith said the company would conduct an orderly shutdown. “As part of the wind-down, the company will position the refinery complex for a sale and restart," he said.

The East Coast's largest refinery is closing and many say a greener future is possible for the site --Philadelphia is buzzing with news that Philadelphia Energy Solutions plans to close its sprawling refinery.   After years of close calls and passionate calls from activists eager to see the gas-making facility gone, a series of financial crises punctuated by a small fire, and then a massive one, led refinery officials to announce Wednesday a plan to shutter.   The largest refinery in the Northeast, the 150-year-old complex covers 1,300 acres on both banks of the Schuylkill River. The closure would mean the loss of more than 1,000 jobs and thousands of other indirect positions.    But this isn’t the first time Philly has been here.  In 2011, the previous operator, Sunoco, announced a plan to shutter the refinery. Over the course of the next year, local leaders including then-Congressman Bob Brady worked to save the facility. They brought in the Carlyle Group, a private equity fund that purchased a two-thirds interest in the refinery, keeping its doors open. That wasn’t the end of the South Philadelphia complex’s woes. Since then, the refinery faced bankruptcies, fires, and mounting environmental concerns. The refinery is by far the single largest polluter in the city. After over a century and a half of refining, swathes of the site are profoundly contaminated by lead, gasoline, and benzene, a carcinogen.  Now, with the refinery again planning to close, WHYY’s PlanPhilly spoke with seven Philadelphians, including politicos, neighbors and activists, about their vision for the polluted, yet weirdly prime, riverfront land. Here’s what they told us.  I’ve been speaking with Phil Rinaldi [previous chief executive officer of Philadelphia Energy Solutions], who was the guy I was always dealing with when they were ready to close the refinery down the last time. Back then, he came through with Carlisle and he had the expertise and he put the pieces together and I have faith in him to do it again. We’re trying to get it done again.  According to Phil, it can work and it can make money and it can and should be salvaged. It's almost too big to fail. The site is so big and there's nothing really you can do with it because of the contamination. There's nothing you can really do but have a refinery there. 

Official says refinery too unsafe for investigators to enter - — A federal safety board looking into the fire and explosions at the largest oil refinery on the East Coast says the unit where the blasts happened remains too dangerous to access.  Kristen Kulinowski is a leader of the U.S. Chemical Safety and Hazard Investigation Board. She calls the June 21 blaze and blasts at Philadelphia Energy Solutions a "fundamental failure."She says that investigators haven't determined a cause and that the first priority is to physically examine the unit once the area is structurally safe.For now, investigators are gathering perishable items, interviewing employees and requesting documents.She says the ordeal started when hydrocarbon vapors were somehow released in a unit that makes a blending agent for gasoline and then found an ignition source. If the hydrofluoric acid in that unit became a gas and got into the atmosphere, it would be harmful to humans.

Former Shale Gas CEO Says Fracking Revolution Has Been ‘A Disaster’ For Drillers, Investors - Steve Schlotterbeck, who led drilling company EQT as it expanded to become the nation’s largest producer of natural gas in 2017, arrived at a petrochemical industry conference in Pittsburgh Friday morning with a blunt message about shale gas drilling and fracking. “The shale gas revolution has frankly been an unmitigated disaster for any buy-and-hold investor in the shale gas industry with very few limited exceptions,” Schlotterbeck, who left the helm of EQT last year, continued. “In fact, I’m not aware of another case of a disruptive technological change that has done so much harm to the industry that created the change.” “While hundreds of billions of dollars of benefits have accrued to hundreds of millions of people, the amount of shareholder value destruction registers in the hundreds of billions of dollars,” he said. “The industry is self-destructive.” Schlotterbeck is not the first industry insider to ring alarm bells about the shale industry’s record of producing vast amounts of gas while burning through far more cash than it can earn by selling that gas. And drillers’ own numbers speak for themselves. Reported spending outweighed income for a group of 29 large public shale gas companies by $6.7 billion in 2018, bringing the group’s 2010 to 2018 cash flow to a total of negative $181 billion, according to a March 2019 report by the Institute for Energy Economics and Financial Analysis. But Schlotterbeck’s remarks, delivered to petrochemical and gas industry executives at the David L. Lawrence Convention Center in Pittsburgh, come from an individual uniquely positioned to understand how major Marcellus drillers make financial decisions — because he so recently ran a major shale gas drilling firm. Schlotterbeck now serves as a member of the board of directors at the Energy Innovation Center Institute, a nonprofit that offers energy industry training programs. His warnings on Friday were also offered in unusually stark terms. “The technological advancements developed by the industry have been the weapon of its own suicide,” Schlotterbeck added, referring to the financial impacts of shale gas drilling on shale gas drillers. “And unfortunately, the industry still has not fully realized how it’s killing itself. Since 2015, there’s been 172 E&P company bankruptcies involving nearly a hundred billion dollars of debt.”

Fearing Toxic Fumes, an Oil Port City Takes Matters Into Its Own Hands - Danielle Twomey hoists cardboard boxes and silver canisters out of the trunk of a car and carries them into South Portland's City Hall. She is from the state Department of Environmental Protection, and she's here to explain a new city-wide effort to understand the troubling stink in the air—and whether it is safe. Ever since the city learned that two local companies could be emitting as much as double the permitted amounts of volatile organic compounds, the community has been on edge. Twomey expects the council chambers to be full, as residents come to learn more about the air they breathe—and how to take matters, literally, into their own hands. South Portland is a close-knit, liberal city with a strong environmental consciousness. It's also an oil port surrounded by petroleum tanks. Where the shore isn't scenic beach here, it's covered with sprawling tank farms holding a range of petroleum products, including heated asphalt and bunker fuel. And there's the smell. It occasionally fills the air—sometimes to the point of stinging eyes and causing headaches—and it's not normal. Now, people here are wondering if the smell means they're breathing in VOCs coming from the tanks. Depending on which VOCs are present—and how much—they could irritate the eyes, nose and throat and cause respiratory problems and cancer. At 6:30 p.m., dozens of residents form a line that winds into the hallway as they sign up to get involved in a community-based temporary air monitoring program. They have come to City Hall to get trained to test their own air. By late August, the state will be ready to let the residents know the results of tests on their samples. By then, they hope to be able to give context for what those findings might mean for public health, too. It will take much longer to get a true base-line of how safe the air is in the city.

Shut down Enbridge Line 5? 6 things to know — Michigan's attorney general and environmental groups are pushing back on claims that Michigan could see fuel shortages and price spikes if Enbridge's hotly debated Line 5 through the Straits of Mackinac is shut down.The debate is intensifying amid an Enbridge advertising and public relations campaign touting the benefits of Line 5 that is bumping up against stepped-up warnings from environmentalists about the catastrophic effects of a spill in the straits.The issue is coming to a head as Attorney General Dana Nessel is expected to file court papers Thursday responding to an Enbridge lawsuit asking a judge to affirm its agreements with the administration of former Gov. Rick Snyder for the company to dig a tunnel beneath the straits to encase a replacement pipeline.Gov. Gretchen Whitmer hinted earlier that Nessel also may initiate legal proceedings Thursday to begin the process of shutting down Line 5.Recent studies have pointed to increases in the price of gasoline and propane if the flow of Line 5 crude oil across the states is cut off. But how much fuel prices would rise — and for how long — is difficult to pinpoint. Experts say that would depend, in part, on how much notice Enbridge and affected oil refineries were given to shift to alternative transporters and suppliers. A 2017 study, commissioned by the Snyder administration, pegged the impact on consumers from a Line 5 shutdown from as low as 2 cents a gallon for gas in  metro Detroit to as high as 25 cents a gallon for propane in the Upper Peninsula. A 2018 study, commissioned by the National Wildlife Federation, estimated Yoopers would only pay an extra 5 cents a gallon for their propane. Without Line 5, "the demand for crude oil in Michigan far exceeds its ability to be supplied," Al Monaco, the president and CEO of Enbridge, Inc., told the Free Press editorial board."There would be a significant impact on supply," and "prices are going way up," along with the volume of trucks and train cars carrying oil, Monaco said.An Enbridge spokesman would not quantify the projected price increases. Nessel counters, through a spokeswoman, that there is no independent evidence that a shutdown would significantly affect gas prices at Michigan pumps or sharply reduce jet fuel supplied to Detroit Metropolitan Airport, as officials in Ohio have suggested. She also points out that a task force appointed by Whitmer is working on finding alternative propane supplies for the U.P.

Michigan AG Dana Nessel files lawsuit to shut down Line 5 in Mackinac Straits — Michigan Attorney General Dana Nessel filed a lawsuit on Thursday aimed at shutting down Enbridge Energy’s Line 5, the 66-year-old twin pipelines that transport oil and liquid propane through the Straits of Mackinac. The suit indicates Nessel has run out of patience waiting for Gov. Gretchen Whitmer, a fellow Democrat, to negotiate a settlement with the Canadian energy giant over the pipeline’s future. Filed in Ingham County Circuit Court, the lawsuit calls the pipeline “a continuing threat of grave harm to critical public rights in the Great Lakes,” and seeks to void a 1953 easement that allows Enbridge to run the pipelines across state-controlled bottomlands in the Straits. The filing calls for Line 5 to stop flowing “as soon as possible after a reasonable notice period” and to allow officials to permanently decommission the lines. The move fulfils Nessel’s vow to kickstart a shutdown if Whitmer could not agree — after months of negotiation — on an expedited plan to remove Line 5 from the lake bed. “I have consistently stated that Enbridge’s pipelines in the Straits need to be shut down as soon as possible because they present an unacceptable risk to the Great Lakes,” Nessel said in a statement. “Governor Whitmer tried her best to reach an agreement that would remove the pipelines from the Straits on an expedited basis, but Enbridge walked away from negotiations and instead filed a lawsuit against the state. Once that occurred, there was no need for further delay.” In a separate filing, Nessel asked the Michigan Court of Claims to dismiss a lawsuit Enbridge filed on June 6. The company has asked that court to uphold a series of agreements made last year with Gov. Rick Snyder — Whitmer’s Republican predecessor — to replace the Straits pipelines and bury new lines in a bedrock tunnel expected to cost Enbridge $500 million. 

Schmid Pipeline Construction alleges it is owed $2 million for Mountaineer Express work – A pipeline company alleges it is owed more than $2 million for work completed as part of the Mountaineer Xpress Pipeline Project. Schmid Pipeline Construction Inc. filed a complaint in Wetzel Circuit Court against Columbia Gas Transmission LLC and Welded Construction LP and seeking enforcement of a mechanic's lien and other counts. The suit states that the plaintiff entered into a construction subcontract with Welded Construction in 2018 for labor and materials in connection with the construction of Columbia Gas' Mountaineer Xpress Pipeline Project. The plaintiff alleges it is currently owed $2.36 million for the work but has not been paid. The plaintiff is seeking all reasonable sums due, attorney fees and court costs. The plaintiff is represented by Norman T. Daniels Jr. and Nicholas R. Stuchell of Daniels Law Firm PLLC in Charleston.

Mountain Valley Pipeline protester arrested at West Virginia worksite -  An opponent of the Mountain Valley Pipeline was arrested Wednesday while protesting the project in West Virginia. The group Appalachians Against Pipelines says the protester spent over seven hours chained to an excavator on a worksite in Summers County. The group says the protester was charged with two misdemeanors and a felony, and bond was set at $6,000. Another protest continues in Montgomery County where tree sitters have been blocking the path of the pipeline for almost 300 days.

Planned plant open for public comment — Before ground can be broken for a proposed $1.2 billion coal-to-liquids-fuel facility in Mason County, the company developing it must get its permit applications approved by the West Virginia Department of Environmental Protection (WVDEP). That can only happen after a required public comments period ends Thursday, July 18, and then perhaps completion of public hearings on the project.Domestic Synthetic (DS) Fuels, a West Virginia-owned company, says that it will convert the state's coal and natural gas to gasoline and other fuels at the new plant. The facility will go on 200 acres secured from the Mason County Development Authority in the Mason County Industrial Park. So far, no permits for the project have received final approval. "The WVDEP has not approved any permits for this project," said Terry Fletcher, acting communications director for the WVDEP. "The WVDEP's Division of Air Quality (DAQ) received a permit application from Domestic Synthetic Fuels and issued a draft permit that has been sent out to public notice and is now open for public comment."  Fletcher said the public can mail in written comments until 5 p.m. Thursday, July 18, 2019.   "Once the comment period closes and all comments have been received, the WVDEP will review those comments and make a final determination on the permit," he said. According to an air quality permit notice issued by the WVDEP, a preliminary evaluation has determined that all state and federal air quality requirements will be met by the proposed construction. The notice said potential increases in emissions that would be authorized by this permit action include carbon monoxide, 71.32 tons per year (TPY); oxides of nitrogen, 80.91 TPY; particulate matter less than 2.5 microns, 54.66 TPY; particulate matter less than 10 microns, 78.12 TPY; particulate matter, 83.49 TPY; sulfur dioxide, 27.19 TPY; volatile organic compounds, 86.10 TPY; and total hazardous air pollutants, 16.96 TPY. All are under the threshold of acceptable levels, according to the permit notice.

Bernheim Battles For Conservation Over Growth In Pipeline Feud - Bernheim Arboretum’s Conservation Director Andrew Berry dips his fingers into the creek. “This water is coming out of an aquifer. You can feel it and feel how cold it is,” he said. The spring flows into Cedar Creek, which crosses the electric transmission lines where Louisville Gas and Electric plans to run a new natural gas pipeline three-quarters of a mile through Bernheim’s property. The proposed route is designed to fuel economic development in the area, but construction will impact dozens of stream crossings, wetlands and other habitats for rare, endangered and threatened species. The 12-inch, underground pipeline will serve communities in Shepherdsville, Mount Washington, Lebanon Junction and Clermont that are running out of capacity on their existing natural gas line. “Creating a secondary path would enhance that reliability, but additionally it would be able to enhance capacity so we can continue to serve and support that area as it grows,” said Louisville Gas and Electric Spokeswoman Natasha Collins. The pipeline’s path through Cedar Grove wildlife corridor has setup a showdown between LG&E and Bernheim. “Legally, Bernheim cannot grant an easement for the pipeline,” Berry said. “Essentially, that is a deed that is recorded that says that Bernheim won’t do anything to destroy the natural features of the property…and specifically says that we won’t grant easements for things like natural gas pipelines.” The path of the pipeline will cut through at least nine different outcroppings of Glade Cress, a federally threatened species that grows nowhere else in the world, according to an environmental survey. Construction will also clear forest, impact streams and wetlands and disrupt habitat for rare and endangered wildlife including the Indiana and northern long-eared bats and two species of snails. That’s not to mention the other fauna, including deer, bobcat, coyotes, 24 species of snakes and 229 species of birds that make their homes in and around Bernheim.

Pipeline opponents, spurned by the state, ask federal agency to stop work - It’s hard to count how many times Virginia environmental regulators have been asked to stop work on the Mountain Valley Pipeline. Since construction of the natural gas pipeline began last year — and was quickly followed by problems with storm runoff clogging nearby streams with sediment — state lawmakers, advocacy groups and individuals have asked the Department of Environmental Quality to halt work on the project time and time again. What is easier to count is the number of stop-work orders issued by DEQ on any construction project since 2002: Zero. The last time DEQ formally stopped work was in July 2001, when it said a Newport News company was causing a “massive disturbance of the wetlands ecosystem” on a 43-acre tract near an industrial park in the city. Stop-work orders are “as rare as the ivory-billed woodpecker,” said David Sligh, conservation director of Wild Virginia, referring to a critically endangered species that is close to extinction. Frustrated by DEQ’s lack of action on repeated requests to stop Mountain Valley from causing additional pollution, Wild Virginia and other environmental groups are taking a different tack. A complaint filed late Friday with the Federal Energy Regulatory Commission, the lead agency overseeing construction of the 303-mile pipeline, asks that it rescind its earlier approval of the project. The 24-page filing also asks for a stop-work order. FERC temporarily ceased work on the $5 billion project last August, after a federal appeals court threw out a permit for the pipeline to pass through the Jefferson National Forest. The suspension was lifted in large part later in the same month. Since then, FERC — like DEQ — has declined to issue a stop-work order, despite repeated requests from environmental groups and people living along a pipeline route where there have been repeated violations of erosion and sediment control measures. But the complaint filed Friday is different from the countless requests made to FERC previously, which were sent to the commission’s executive secretary and often received no response. Sligh said Wild Virginia’s action goes to the commissioners of FERC, who are appointed by the president, for a formal decision. The process includes a 20-day public comment period, and allows other parties to intervene. 

Pipeline backers set stage for Appalachian Trail fight - Developers of the Atlantic Coast pipeline yesterday filed a Supreme Court challenge focused on permits for the project's Appalachian Trail crossing. The outcome of the case could determine the future of the embattled natural gas pipeline. Phil Roeder/FlickrDevelopers of the Atlantic Coast pipeline yesterday launched a highly anticipated Supreme Court appeal to preserve permits for the natural gas project to traverse the Appalachian National Scenic Trail.A panel of judges for the 4th U.S. Circuit Court of Appeals earlier this year found the power to approve the project's 0.1-mile crossing of the trail fell not to the Forest Service, which may grant pipeline rights of way under the Mineral Leasing Act, but to the National Park Service, which is bound by a strict land conservation mandate (Energywire, Feb. 26).Dominion Energy Inc., Duke Energy Corp. and other companies behind the 600-mile pipeline asked the nation's highest bench to find that the lower court got it wrong.  "While more than 50 pipelines presently cross under that footpath pursuant to similar rights-of-way, the Fourth Circuit concluded in the decision below that the Forest Service — indeed, every federal agency — lacks the power to grant rights-of-way to cross beneath the Trail pursuant to the MLA, rendering the footpath a 2,200-mile barrier separating resource-rich areas to its west from consumers to its east," Kirkland & Ellis LLP attorney Paul Clement argued in a petition filed last night.  If the court rejects the case or issues a ruling that is unfavorable for Atlantic Coast, a costly reroute could shutter the project altogether, some analysts predict. Pipeline challengers will argue that the Forest Service has never had the power to issue a right of way for a pipeline to cross the trail.  "Such an approval has never been necessary because other options, like state and private lands and existing rights-of-way, provide sufficient opportunities to route pipelines in the East," Southern Environmental Law Center attorney D.J. Gerken wrote in a letter to the Forest Service this week. Gerken wrote that the 4th Circuit ruling does not affect existing pipeline crossings of the Appalachian Trail, which are either located on state or private land or predate federal acquisitions or the creation of the trail."We have examined every existing crossing of the [Appalachian National Scenic Trail] by an oil or gas pipeline and confirmed that the Forest Service has never before granted a new right-of-way for an oil or gas pipeline to cross the ANST where it traverses a national forest, until it did so for the Atlantic Coast and Mountain Valley pipelines," he wrote. The Atlantic Coast and Mountain Valley projects were designed to carry gas from West Virginia to endpoints in North Carolina and Virginia, respectively. The Supreme Court agrees to review roughly 1% of the cases it receives, but Atlantic Coast's petition was joined by a filing from Solicitor General Noel Francisco, lending the appeal additional heft.

U.S. natural gas prices hit by cool start to summer- Kemp (Reuters) - Relatively cool temperatures at the start of summer across the most densely populated parts of the United States have sent natural gas prices tumbling to their lowest level for three years, piling on the misery for producers. But the biggest losers are set to be coal miners, because low gas prices are further undermining the already fragile economics of the remaining coal-fired power stations and will likely hasten more closures.  Front-month futures prices for gas delivered to Henry Hub in Louisiana have averaged less than $2.34 per million British thermal units over the last 20 trading days, the lowest since 2016.That is down from an average of almost $4.40 in late November and early December, and 60 cents per million Btus below the same point last year.Heating demand during the winter of 2018/19 was moderately higher than in the previous three heating seasons but gas stocks remained fairly plentiful.The relatively cool start to the summer has compounded the problem by cutting air-conditioning demand and power producers' consumption of natural gas (https://tmsnrt.rs/2FDHRnw). Working stocks in underground storage have risen faster - or drawn down more slowly - than the five-year seasonal average for 15 consecutive weeks since the middle of March. U.S. dry gas production during the first quarter of 2019 was almost 13% higher than in the same period a year earlier, according data from the U.S. Energy Information Administration (EIA).But gas consumption by power producers increased by less than 7% over the same period (“Electric power monthly”, EIA, June 2019).Gas is increasingly produced for export by pipeline to Mexico and tanker to a range of destinations in Europe and Asia (“United States has been a net exporter of natural gas for more than 12 consecutive months”, EIA, May 2). Even with increased exports, however, the domestic market has been in surplus owing to mild temperatures and moderate power burn. In response, gas prices are tumbling to incentivise power producers to run gas-fired generators for more hours at the expense of the remaining coal plants.

Hotter Weather Trends Offer Support To Ailing Natural Gas Prices - Natural gas prices have suffered quite a decline over the last few weeks, thanks to very weak supply / demand balances. This has pushed to commodity to multi-year lows, with the July contract bottoming at $2.159 late last week. It has since found a little life, moving up around 15 cents off that low, closing just over the $2.30 level in today's session. While prices had reached very oversold levels, part of the recovery has come from an improved weather pattern here in the latter part of June, with slightly above normal heat expected to persist into the start of July as well. Notice the elevated GWDD (the measure of national weather demand) over the next 15 days. In map form, we see that there is a lack of "blue" on the maps, and while the heat we see is nothing extreme, the market has taken notice that it's not as tame of a pattern as what had been perceived. We first picked up on this risk for some hotter trends back more than two weeks ago, at a time when the pattern was very cool versus normal, giving the "forecast trends" a slightly bullish rating in our "Pre-Close" update from June 7th. That risk became reality as forecasts progressed, and at least contributed to giving prices a push higher off last week's multi-year lows. What's the next move from here? Sign up for a 10-day free trial here and take a look at the services we have to offer that can keep you one step ahead of the market. 

July Natural Gas Contract Marks Lowest Monthly Settlement Price Since June 2016  - The July 2019 natural gas contract is no more, having rolled off the board today with a final price of $2.291, marking the lowest monthly settlement in just over three years, since the sub-$2.00 settlement of the June contract in 2016. Very weak supply / demand balances have been the main culprit, but recent weather patterns have done absolutely nothing to help put a halt to the price declines, as almost every single day in the month of June so far has seen below normal demand levels. In map form, you can see the dominance of "blue" colors, or, cooler than normal, which of course means less natural gas demand. We are, in fact, looking at one of the coolest (lowest demand) June months that we've seen in several years. This has been a definite contributing factor toward allowing us to see six 100+ weekly builds, per EIA reports. The tide is turning, however, as we are finally about to string together several above normal demand days over the next week or two. Hotter than normal temperatures will be focused across key areas of the Midwest to East in the near term. As we showed yesterday, the hotter shift has already pushed prices up from the lows late last week.

Streak Of Triple-Digit Natural Gas Builds Comes To An End - After a run of six consecutive weeks with a reported natural gas build over 100 bcf, the streak finally ended with today's EIA report that showed we injected 98 bcf for the week ending 6/21. This turned out dead-on with the estimate that we had held since the start of this week, outlined in our Monday weekly report. While the build was well above the 5-year average build, it was reflective of much tighter supply / demand balances than we have seen for a long time, as the higher number was more a product of just being in a lower demand weather regime. Many parts of the country saw cooler than normal temperatures, limiting natural gas demand. The confirmation of tighter supply / demand balances helped prices stage a rally today, with the new prompt month August contract rising nearly 2.5% on the day. Forecast demand is also on the increase, with much more above normal temperature coverage in the near term, boosting natural gas demand. The longer the hotter pattern lasts, the more prices can continue to advance higher.

Downside Pressure To Be Applied To Natural Gas Prices As Forecast Shifts Cooler In The 8-15 Day Time Frame - The Energy Information Administration (EIA) released its weekly storage report on Thursday morning. The report revealed an inventory build of 98 BCF for the week ending June 21, which fell within the trading range of 90 BCF-113 BCF, but fell slightly below consensus estimates of 101 BCF. The build of 98 BCF for the week ending June 21 is compared to the 71 BCF build from a year ago and the five-year avg. build of 70 BCF. Despite being well above last year and the five-year average, the 98 BCF was the tightest stat of the summer so far in support of the bulls. Stockpiles stand at 2,301 BCF vs. 2,065 BCF a year ago and the five-year avg. of 2,472 BCF. That's 236 BCF higher than last year and 171 BCF less than the five-year avg. Figures 1 and 2 below are both depictions (table and graph) of Thursday's EIA natural gas storage report for the week of June 17-21.  Thursday's EIA storage report was positive news for the bulls and translated into a jump within the natural gas strip. On Thursday, the natural gas August futures contract saw a 2.38% or 5.6 cents gap up to $2.324. The September contact increased 5.4 cents to $2.298. Despite the positive news on Thursday for the bulls, the past couple of forecast model runs have trended slightly cooler in the 8-15 day time frame. After peaking over $2.360 early in the trading session, the front-month August natural gas futures contract settled lower Friday 0.53%, or 1.6 cents ($0.016), to $2.308. The September contract also settled lower 1.6 cents ($0.016) to $2.282. Figure 3 below is a chart depicting the price trend of the front-month August contract over the past 24 hours. According to Genscape, supply (88.4 BCF/d) is outweighing demand (79 BCF/d) though supply growth (0.2 BCF/d) was smaller than demand growth (1 BCF/d) week/week. Most of the demand increases have come from power burns (32.6 BCF/d), exports to Mexico (5.4 BCF/d), and LNG feed gas (5.5 BCF/d). Warm to hot and humid conditions will by and large be the theme over the next week or so across the central and eastern U.S. The East Coast will get a brief reprieve from the warmth/heat Sunday and Monday as an upper level trough will drop out of Canada bringing in cooler temperatures. The upper level flow pattern is expected to flatten out next week across the Lower 48. This means that temperatures will not be as hot but still warm (closer to normal levels) and humid. This is particularly the case for the north-central U.S. The flattening out of the pattern next week will allow for the jet stream and associated surface frontal boundary to move further to the south from the U.S.-Canadian border.

Natural Gas Prices Rally, Then Un-Rally In Today's Session  It was a roller-coaster ride for natural gas prices to end the week, with the August contract up as much as 4 cents on the day at one point before sellers stepped in, sending it to a daily decline of 1.6 cents, forming a shooting-star candle for the day. Despite today's close, prompt month prices did rise just over 5.5% for the week, thanks in part to a notably hotter weather shift in forecasts for the early part of July. The current 6-10 day period from the latest GEFS model looks like this: Contrast that with what the model showed 6 days ago for the same period: Notice the large hotter shift, especially in the Southeast, one critical region for natural gas demand. Those hotter trends had come to a halt in the last couple of model cycles, with our net GWDD (weather demand) change slightly lower this morning. This brings us back to today's price action. Given the weather forecast and our interpretation of supply / demand balances, our view sent to clients in this morning's report was neutral, feeling that it would be difficult to sustain any further price rally. While prices did rally on some strong initial Henry Hub cash prices, the rally indeed did prove to be unsustainable, reversing rather quickly after mid-morning. Next week is a new week, and in this case, a new month as well.

Bill would ban offshore drilling  - It’s another effort to stop oil and gas expoloration off local coastlines but this time it carries the teeth of possible national legislation. South Carolina Representative Joe Cunningham is helping to sponsor legislation that would permanently ban offshore oil and gas drilling off the Atlantic and Pacific Coasts. Cunningham saying that clean ocean jobs from tourism and fishing are vital to the economies of coastlines up and down the Atlantic as well as on the Pacific shore “Every coastal state with thriving tourism outdoor recreation or fishing industry is in danger if drilling is allowed to take place off of its shores,” says Cunninhgam. In Savannah, Paulita Bennett-Martin from Oceana applauded Cunningham’s legislative efforts. (His bill, H.R. 1941, has passed the House Committee on Natural Resources.) “What it really means is really a productive step forward in the fight against off shore drilling,” she told us. She said up to 23,000 jobs in Georgia depend on a clean ocean environment and that The Trump Administration and oil companies are receiving more push back on the plan to allow testing and maybe uiltimately leasing. “But the groundswell of opposition is incredible,” says Bennett-Martin. “it’s probably one of the biggest and most kind of active movements that i’ve seen in recent history.”

House votes to block US offshore drilling for one year -- The House on Thursday adopted a series of amendments that would block offshore drilling along most U.S. shores, taking development of all of the Atlantic and Pacific coasts off the table. The bipartisan amendments to a Department of the Interior spending bill would bar new offshore development for fiscal year 2020, which begins Oct. 1. Members on both sides of the aisle have pushed for measures that would limit drilling along their state’s shorelines. The collection of amendments included in the spending bill limit new development in most coastal waters, including the Florida portion of the Gulf of Mexico. One of the amendments received support from 25 Republicans. “It’s pretty cut and dry where I come from. We don’t want it and we don’t need it,” Rep. Joe Cunningham (D-S.C.) said at a meeting earlier this week to review offshore drilling bans. Another amendment would block the seismic testing used to find oil and gas reserves. The Trump administration has pushed an energy strategy that includes further offshore drilling, but Interior Secretary David Bernhardt has yet to unveil the department's five-year offshore drilling plan, citing the uncertainty surrounding an Alaska case that blocks development there. The House is expected to vote on the spending bill before the end of the month. After that, the measure will be sent to the GOP-controlled Senate.

Dozens of Coastal Republicans Vote with Democrats to Ban Offshore Oil, Gas Drilling --Two dozen Republican House members representing coastal states joined their Democratic counterparts this week in voting to effectively ban offshore oil and gas drilling — as well as other offshore practices — as the Trump administration rolled back more environmental protection policies put into place by the Obama administration. In total, 24 Republicans, along with nearly all Democrats, voted for a variety of measures that would, by restricting the use of federal funds related to these activities, prevent or severely restrict oil and gas drilling in the Atlantic and Pacific Oceans, as well as the portions of the Gulf of Mexico surrounding Florida. Seismic airgun testing that's used to locate the fossil fuel reserves would also be banned. The provisions were not a single piece of legislation but rather several smaller amendments successfully attached Thursday evening to a much larger appropriations bill for Fiscal Year 2020. The bans, if enacted, would be in place for one year. Of the 24 GOP legislators who voted in favor of at least one of these amendments, 20 represented East Coast states, including Florida (Gus Bilirakis, Mario Díaz-Balart, Matt Gaetz, Brian Mast, Francis Rooney, John Rutherford, Ross Spano, Michael Waltz, Ted Yoho, Vern Buchanan, Bill Posey); Maryland (Andy Harris), New York (John Katko, Peter King, Elise Stefanik, Lee Zeldin); South Carolina (Tom Rice); New Jersey (Chris Smith); Pennsylvania (Michael Fitzpatrick); and North Carolina (Mark Meadows). The move by House Republicans to side with Democrats for the increased environmental protections clashes with the Trump administration's stance, which has been to rollback environmental regulations put into place under Obama aimed to prevent a repeat of the deadly explosion of the oil drilling rig Deepwater Horizon in 2010.

This Louisiana Parish Allowed a Quarter of Its Sheriff’s Deputies To Work Security for a Pipeline —As construction equipment roared back to life, opponents of the Bayou Bridge Pipeline—part of the larger project connecting the Dakota Access pipeline to refineries in Louisiana—shook their heads in dismay. They had spent hours explaining to sheriff’s deputies that Energy Transfer, the company building the pipeline, did not have the required permission from landowners to begin construction—a fact later confirmed by a judge. But on that day in September 2018 under Louisiana’s scorching summer sun, there was no convincing the deputies from the St. Martin Parish Sheriff’s Office. Instead, they told the activists—who call themselves water protectors—they would be arrested on felony trespassing charges. “Why are you working for this company?” asked an independent reporter.  “Do it look like I’m working for this company? Do this company pay me? I work for the sheriff’s office,” replied Lt. Jay Capterville. Records show that Capterville was, in fact, not on the clock for the sheriff’s office that day. As for why he was in the swamp in uniform, there’s a likely explanation: He’s among the 58 sheriff’s deputies granted permission to moonlight for Hub Enterprises, which is Energy Transfer’s security contractor for the Bayou Bridge project. Capterville did not respond to requests for comment by deadline. In October 2018, the sheriff’s office granted the deputies retroactive permission to work with Hub Enterprises, accounting for 27% of the parish’s sheriff’s deputies. No request was denied. Of 19 deputies identified at the site between Aug. 1, 2018, and Oct. 13, 2018, all but five were off the clock.

Tensions between U.S. and Iran could impact gas prices, La. oil industry - Louisiana’s oil and gas industry is paying close attention to the escalating tensions between the U.S. and Iran even though America has become more energy independent. Professor Eric Smith of Tulane University’s Energy Institute said when it comes to oil, it is a world-market. "There’s nothing that happens anywhere in the world that doesn’t affect the price of crude oil and gasoline in the United States,” Smith said. Smith said paying more at the pump could be a consequence of the standoff between the U.S. and Iran, especially if tensions are protracted. "I think you should reasonably expect that. The thing I would caution people against is don’t overact to a short-term effect,” Smith said. Tyler Gray, president of the Louisiana Mid-Continent Oil and Gas Association, said some oil prices have already been impacted in recent days. "You do have these world tension issues that go on and you have seen a spike. Last week, West Texas Intermediate went up about 10 percent, ending around $57 a barrel. And as part of that, you are looking at a world market when it comes to those issues,” Gray said. 

The US government has studied the longest oil spill in history — 14 years after the leak began - The federal government’s first study of the nearly 15-year-long oil spill in the Gulf of Mexico estimates that up to 108 barrels per day — more than 4,500 gallons — is flowing from a site where an oil company’s platform and wells were destroyed during a hurricane.Monday’s report, by two scientists at the National Oceanic and Atmospheric Administration and a Florida State University professor, joined several others in disputing the company’s claim that only one drop of oil per minute is being released from a small area covered in mud, amounting to less than three gallons each day. “The results of this study contradict these conclusions by the Taylor Energy Company,” the authors said. The government’s findings also differ from those of three studies last year that said the flow of oil from the site was substantially higher. Geoscientist Oscar Garcia-Pineda estimated that between 250 and 700 barrels per day — up to 29,000 gallons — are flowing into the gulf. University of South Florida marine scientist Shaojie Sun determined that between 50 and 1,700 barrels per day — up to 71,400 gallons — were pouring from the site. Even one of the federal report’s authors — Ian MacDonald, the Florida State professor — estimated that nearly 150 barrels, about 6,300 gallons, spilled from the site that Taylor Energy once leased in an underwater canyon 12 miles off the coast of Louisiana. The other authors were NOAA scientists Andrew L. Mason and J. Christopher Taylor. The study concludes that the oil and gas releases at the site are coming from multiple wells, contradicting Taylor Energy’s explanation that it’s rising from oil-soaked sediment.  NOAA and its federal partners are in the early stages of the process to assess damages “to determine if public natural resources have been harmed by the oil and gas release.” An assessment of harm related to the BP oil spill in 2010 led to fines. Hurricane Ivan caused 80-foot waves that led to the walls of the canyon giving way, resulting in a mudslide that chopped down Taylor Energy’s oil platform in 2004. The event buried the broken wells under more than 100 feet of sediment. According to early federal estimates, the sediment is saturated with 97,000 to 346,000 gallons of oil.

Hidden oil spill: New study contradicts owner’s claims (AP) — A new federally led study of oil seeping from a platform toppled off Louisiana’s coast 14½ years ago found releases lower than other recent estimates, but contradicts the well owner’s assertions about the amount and source of oil. Oil and gas have been leaking into the Gulf of Mexico since a subsea mudslide caused by Hurricane Ivan on Sept. 15, 2004, knocked over a Taylor Energy Co. production platform, which dragged and broke a bundle of well pipes. Taylor capped nine wells but said it couldn’t cap 16. The company contends oil sheens on the water’s surface indicate there’s only a dribble of 2.4 to 4 gallons (9 to 15 liters) of oil and gas a day. Taylor Energy, which is fighting a federal order to stop the seepage, also says any oil rising from the site is from oil-soaked sediment and any gas is produced by living organisms. “The results of this study contradict these conclusions,” said the report paid for by the federal Bureau of Safety and Environmental Enforcement, which oversees offshore drilling, and written by two National Oceanic and Atmospheric Administration scientists and one from Florida State University. Taylor said in an emailed statement that it wants verifiable scientific data about the leak and a scientifically and environmentally sound solution. The company has said remaining pipes are buried under so much oily and treacherous silt that stopping any leaks would do more environmental damage than letting them be. No coastal environmental damage has been reported from the ongoing seepage, unlike the 2010 Deepwater Horizon oil spill, an outside scientist said. The BP spill oiled at least 400 square miles (1,000 square kilometers) of sea floor and 1,300 miles (2,000 kilometers) of shoreline from Texas to Florida, killing thousands of birds and contributing to dolphin deaths for years. The study’s authors figure that the total released each day from the Taylor site could have been as much as 4,500 gallons (17,000 liters) a day. They used sonar and a newly developed “bubblometer” to measure oil and gas bubbles rising through the water. These are based on direct measurements, while previous estimates have relied on satellite and remote sensing of the sheen of oil resulting from the seep, Chris Taylor, of NOAA’s National Centers for Coastal Ocean Science in Beaufort, North Carolina, said Friday. The figure is a conservative one, the report said.

Oil Leak Update: 1000x Worse Than Rig Owner Claimed, Still Going After 14 Years - The federal government is looking into the details from the longest running oil spill in U.S. history, and it's looking far worse than the oil rig owner let on, as The New York Times reported. The oil spill in the Gulf of Mexico received little public attention when it happened in September 2004, but it has been steadily leaking as much as 4,500 gallons a day, not three or four gallons per day as Taylor Energy Company, the rig owner, claimed, according to a new study by the National Oceanic and Atmospheric Administration (NOAA). And that's a conservative estimate, the report said.  Oil and gas have been seeping out of the leak that started 12 miles off the Louisiana coast when an underwater mudslide caused pipes to rupture and a production platform to sink during Hurricane Ivan. Taylor successfully capped nine wells, but said it couldn't cap 16. Taylor Energy Company, which sold its assets in 2008, estimated that the leak has been minimal based on oil sheen on the surface of the water. The company argued that between 2.4 to four gallons of oil dribble out per day when it asked a federal court to release it from a cleanup order. The company's executives asserted that oil plumes from the sea floor are from oil-soaked sediment around the sunken platform and that any rising gas is from living organisms, according to The New York Times."The results of this study contradict these conclusions," the report, issued on Monday by NOAA and Florida State University, concluded.In fact, the researchers directly refuted the sediment claim, stating that since the oil is only mildly biodegraded it cannot be from built-up sediment, as the AP reported. "While it is feasible that the heavily oiled sediments in and around the erosional pit could be contributing to oil in the water column, the chemical nature and volume of oil and gas measured precludes sediments from currently being the major source of oil to the marine environment," the report says.

Export terminal sales heat up Corpus Christi market -  With the Port of Corpus Christi expected to become the nation’s top crude oil export hub over the next decade, now is a good time to buy or sell a crude oil export terminal along the South Texas waterway, industry analysts said. Flint Hills Resources has become the third company over the past two months to put a Corpus Christi export project up for sale. In a statement Wednesday, the Kansas company, controlled by Charles and David Koch, confirmed hiring J.P. Morgan to put its Ingleside Crude Oil Export Terminal on the market and explore options for a either a sale or a partnership. The proposed sale comes as Houston pipeline operator Enterprise Products Partners looks to sell its 50 percent stake in a recently completed crude oil export terminal along the Corpus Christi Ship Channel. The Washington private equity firm The Carlyle Group is also seeking to sell a 25 percent stake in a proposed crude oil export terminal on nearby Harbor Island. Houston oil company Occidental Petroleum sold its Ingleside Crude Oil Export Terminal to another Houston company, Moda Midstream, in August. John Coleman, an analyst at the global energy research Wood Mackenzie, said sellers are trying to take advantage of peak prices just before construction ends several pipeline and export terminal projects expected to make the Port of Corpus Christi the leading U.S. crude exporter, surpassing the Port of Houston. “This doesn’t take away from the thesis that Corpus Christi is prime to be a major crude export volume hub,” Coleman said. “It’s people getting ahead of that story and maximizing value for some of their non-core assets.”

More drilling, man camps coming to Permian Basin as oil prices rise --Permian Basin oil production continued to ramp up, as a multi-million-dollar joint venture brought a multi-year drilling campaign to one of the most prolific shale formations in southeast New Mexico and West Texas.Houston-based oil and gas financing company Development Capital Resources (DCR) and financial firm Ares Management Corporation announced the venture on Wednesday to bring an exploratory drilling program to the Wolfcamp formation.The U.S. Geological Survey announced in November 2018 that it found the one of the largest underground supplies of oil and gas ever in that formation – up to 46.3 billion barrels oil and about 281 trillion cubic feet of natural gas. The $165 million joint venture will fund the ongoing program, expected to continue through 2020 and take place throughout the formation which extends into southern Eddy County on its north end and south into Culberson and Reeves counties in Texas.“This transaction represents a continuation of our strategy of participating in energy sector joint ventures with quality operators in established basins,” said Ronnie Scott, president of DCR in a news release. “As the structure of energy joint ventures continues to evolve, DCR has worked to remain flexible in finding ways to assist operators to improve and develop their assets.” Gary Levin, partner at Ares said the move represents an ongoing effort for the firm to capitalize on the booming oil and gas industry in the Permian Basin region.

More oil and gas disposal wells to address growing waste in Permian - More disposal wells for the oil and gas industry are coming to the Permian Basin, as a Houston-based company looked to expand its facilities in West Texas. Milestone Environmental Services announced Wednesday that it acquired three leases and four injection permits in Howard County, Texas. The purchase added 150,000 barrels of daily injection capacity to the company’s assets, allowing it to combine receiving points and injection wells into a “single, integrated production waste management network,” in the northern Midland Basin, read a Milestone news release. More: Study: New Mexico loses on federal oil and gas leases, industry calls for quicker approvals The move was intended to strengthen Milestone’s focus on addressing waste streams in the Permian, said Milestone Chief Executive Officer Gabriel Rio. “Water disposal infrastructure is a valuable and natural complement to our existing business, which builds on our deep injection experience, superior operating record, and blue-chip customer base,” Rio said. The company also broke ground on a slurry injection facility near Big Spring, Texas the release read, located about 8 miles north of the town on State Highway 87. The facility was expected to open by the of 2019, and will accept waste streams from drilling, completion and production including oil- and water-based muds. It will also accept drilling fluids, flowback, tank bottoms, dirty water and produced water. As with Milestone’s seven other slurry injection sites – located in the Permian, Eagle Ford and Haynesville shales – the Big Spring facility also provided washouts for trucks, and frac tanks. The Big Spring site was third new facility announced by Milestone this year in the Permian.

Drillers Using Fuel to Power Fracking Operations | Rigzone-- Thrifty drillers have found a new use for the glut of natural gas that’s sent prices for the fuel below zero in America’s biggest shale patch: Use it to power fracking operations. For decades, explorers have used massive diesel engines mounted on tractor-trailers to shoot a mixture of water, sand and chemicals down wells and blast open layers of oil-soaked shale rock. That’s changing now that soaring output has crushed gas prices, especially in West Texas’ Permian Basin, where the fuel is a byproduct of crude oil extraction. Explorers are switching to so-called e-fracking, using gas from their own wells to run turbines for electric motors that power drilling pumps. The move helps in two ways: It cuts about $1 million a month in fuel costs for a set of fracking equipment by 90%, according to Wells Fargo & Co., and it lessens the excess gas burned off at the well site, a practice environmental groups frown upon. Tudor Pickering Holt & Co. predicts electric pumps will represent about a third of the market in roughly the next five years, from about 3% now. The e-frac movement is “probably going to have some legs," Jud Bailey, a senior equity analyst at Wells Fargo in Houston, said in a phone interview. “It’s clearly a movement by some major operators to experiment with it,” though it’s not clear how quickly a shift would happen, he said. The savings could be a boon for an industry pressed to trim spending and return cash to investors amid crude-market volatility. Halliburton Co., the world’s biggest provider of fracking gear, and a unit of Royal Dutch Shell Plc are already taking advantage. Halliburton plans to deploy fleets -- the term for rigs, pumps and other equipment that’s generally brought by truck to the well site -- powered by electric motors in the third quarter. Shell subsidiary SWEPI LP signed an electric fracking equipment contract with U.S. Well Services Inc. in March, while oilfield service provider ProPetro Holding Corp. has said it plans to deploy two e-fracking fleets by the end of the year. A conventional fracking job involves using about 20 giant diesel-powered pumps, each the size of an 18-wheeler trailer. In e-fracking, a small-diameter gas pipeline shuttles the fuel from the well to a turbine powering an electric motor. Though the electric pumps are still mounted on trucks, they’re smaller than their diesel counterparts. Some e-frac models can carry two pumps, significantly reducing the number of trailers and traffic and lowering labor costs. They’re also more reliable than diesel engines, according to U.S. Well Services. 

Feuding, $6B Texas land trust will consider C-corp conversion -- A multibillion-dollar Texas land trust mired in a hotly contested proxy fight will consider converting into a corporation to operate more like an oil and gas firm, as it tries to mollify dissident shareholder unhappy about how the trust and its operations are run.  The 130-year-old Texas Pacific Land Trust holds about 900,000 acres in the heart of the booming Permian Basin — assets that have sent the value of the trust skyrocketing. The Dallas-based trust, established to dispose of the large landholdings of a defunct 19th century railroad, has an unusual structure dating back to the 1880s with a board operated by just three trustees who serve lifetime appointments.The proxy fight was triggered in March when one of the three died, creating a rare opportunity for hedge fund investors to attempt to pick the next trustee. The New York investment firm Horizon Kinetics, which owns nearly a quarter of the shares, is leading the efforts by dissident investors to get their own representative on the board, while pushing a potential switch from a trust to a corporate structure, which would include a larger board of directors and greater transparency to shareholders. The fight has devolved into a messy court battle in recent weeks with both sides accusing each other of fraud.  The trustees on Monday offered what appears a compromise, announcing that they formed a conversion exploration committee to weigh the a potential switch from trust to corporation. The committee is made up of two of the existing trustees, their nominee for the third trustee and an investor of their choosing.

Fed Dallas report indicates pessimism in oil and gas industry - - Oil and gas companies in Texas are holding onto their cash as they ride out a wave of oversupply caused by uncertainty in international markets, according to a new report by the Federal Reserve Bank of Dallas. Production was flat last quarter in the oil and gas sector after three years of growth, and many companies expressed pessimism moving into the third quarter, the Dallas Fed said Wednesday. A third of companies surveyed by the Fed said they are lowering their spending forecasts for 2019, while 36% said they are sticking to their previous spending levels. The remainder said they were increasing spending, but companies' overall outlook on the future dropped sharply compared to the first quarter and uncertainty shot up to its highest level since 2017, the year that the Dallas Fed began indexing the companies' responses. The Dallas Fed surveyed 161 energy companies across Texas, northern Louisiana and southern New Mexico for its latest survey, including exploration and production companies and oilfield services providers. Oilfield services companies were particularly pessimistic about the future, with many telling the Fed that trade disputes were hurting their bottom lines. "We see oversupply, oversupply and oversupply of both oil and gas," one oilfield services company said, "and lower demand because of the trade war and slowing economy in China." Below is a sample of what oil and gas companies told the Dallas Fed in its latest energy outlook report. The Fed doesn't name the companies that provide comments for its surveys.

Fracked Shale Oil Wells Drying Up Faster than Predicted, Wall Street Journal Finds – DeSmog - In 2015, Pioneer Natural Resources filed a report with the federal Securities and Exchange Commission, in which the shale drilling and fracking company said that it was “drilling the most productive wells in the Eagle Ford Shale” in Texas.Its Eagle Ford wells, Pioneer’s filing said, were massive finds, with each well able to deliver an average of roughly 1.3 million barrels of oil and other fossil fuels over their lifetimes.Three years later, The Wall Street Journal checked the numbers, investigating how those massive wells are turning out for Pioneer.Turns out, not so well. And Pioneer is not alone.Those 1.3 million-barrel wells, the Journal reported, “now appear to be on a pace to produce about 482,000 barrels” apiece — a little over a third of what Pioneer told investors they could deliver.In Texas’ famed Permian Basin, now the nation’s most productive shale oil field, where Pioneer predicted 960,000 barrels from each of its shale wells in 2015, the Journal concluded that those “wells are now on track to produce about 720,000 barrels” each.Not only are the wells already drying up at a much faster rate than the company predicted, according to the Journal’s investigative report, but Pioneer’s projections require oil to flow for at least 50 years after the well was drilled and fracked — a projection experts told the Journal would be “extremely optimistic.”  And while Pioneer has become one of the most active drillers in the Permian, it’s hardly alone in booking projections that the Journal found were dubious.

Why rapid shale production is a perk --Since the early days of shale oil and gas production, some analysts have expressed alarm about the rapid decline that those wells experience, suggesting either that this will harm shale’s financial viability and/or lead to an early peak and decline in overall production.  But this attitude fails to acknowledge the benefits of producing a resource rapidly. It is true that it seems inefficient to install capacity that will quickly be underutilized. No one builds a refinery that will see its utilization drop to 20 percent in a few years. But that is the nature of producing fluids; a field can be designed to produce at a constant rate, but only by offsetting the decline in individual well production, whether by enhanced recovery methods and/or additional drilling.The contrary interpretation of rapid decline is that it represents accelerated production and thus, accelerated revenue accrual. Investment depends on capital and so revenue must be discounted by something roughly akin to the borrowing rate or desired rate of return, usually from 10 to 15 percent per year. In simple terms, money sooner is better than money later, all else being equal.The first figure shows representative production curves for a conventional oil well, declining at 8 percent per year, and a shale well whose production drops 65 percent in the first year but flattens out thereafter. In each case, the total production (over eleven years) is about one million barrels.  Considering the discounted cash flow, or revenue which is discounted by 12 percent per year from the initial year, the difference becomes a bit more clear. The second figure shows the discounted revenue for the same wells from 2019 to 2030. The shale well’s front-loading of revenue is clear and financially valuable; total net present value is $36 million versus $29 million for the conventional well in this example.    There is another, somewhat speculative, benefit that shale producers are better positioned to exploit: the impact of supply disruptions. Although all commodities suffer from volatile prices usually due to influences that are not predictable in the medium term, like severe or beneficial weather, the oil industry is particularly prone to fluctuations that persist for a time.  As the figure below shows, the Arab Spring in 2011 disrupted Libyan production and tighter sanctions on Iran in 2012 caused its production to drop. While there were offsetting factors, incidents such as this increase the probability that prices will be elevated for a period of several years.

Report: Series of failures led to deadly leak at Texas plant — A series of failures, including flawed equipment and inadequate safeguards, helped cause a 2014 poisonous gas leak that killed four workers at a Houston-area chemical plant, according to a federal agency’s final report on the deadly accident.Four employees at the now-closed DuPont chemical plant in LaPorte, Texas, died in the release of methyl mercaptan — a chemical used in the manufacture of insecticide and fungicide.The chemical began leaking from a valve around 4 a.m. on Nov. 15, 2014, in a unit at the plant in La Porte, about 20 miles (32.19 kilometers) east of Houston. Killed in the accident were Crystle Wise, Wade Baker and brothers Robert and Gilbert Tisnado. A fifth worker was injured.Various safety management system deficiencies, including problems with troubleshooting operations, safe work practices, toxic gas detection and emergency response, contributed to the severity of the incident, the U.S. Chemical Safety Board said in its report, issued Tuesday.“Our investigation revealed a long chain of failures which resulted in this fatal event, including deferring much needed process improvements; improvements that could have prevented the toxic release,” said Kristen Kulinowski, the safety board’s interim executive authority.   In a statement, Corteva, a spinoff of DuPont’s agriculture division, said while it disagrees with some of the safety board’s findings, it values the agency’s perspective and will carefully consider the recommendations.“Our deepest sympathies remain with the families and friends of our four colleagues who lost their lives on November 15, 2014. We are committed to maintaining a safe working environment at our facilities and will work to continuously improve our safety systems,” Corteva said. In its final report, comprised of recommendations that are not mandatory, the safety board said the chemical leak resulted from a long “chain of implementation failures,” including the flawed design of piping at the plant and ineffective building ventilation that had been identified five years before the leak but was never fixed.

Planned pipeline route to cross Tyler County -- Plans for a natural gas pipeline projected to cross Tyler County indicate it will be completed in early 2021. The project, which is dubbed the CJ Express, is an expansion project, which according to Midcoast Energy, LLC, is designed to provide the transportation of natural gas supplies from East Texas to the Houston Ship Channel and Gulf Coast markets. The pipeline will include up to 107 miles of 36-inch pipe and run through six counties, from Shelby County into Hardin County. It will also include a 39,000-horsepower compressor station, according to a Midcoast news release. When it was first announced last year, the route of the pipeline was to include up to 150 miles, commencing near Carthage in Panola County, but the most recent information available confirms a shorter projection. The Houston-based Midcoast secured an undisclosed anchor shipper for the project in April, according to a news release. The most recent project summary states that construction is estimated to begin later this year, with right of way acquisition having already begun. In the state of Texas, pipelines are not required to be permitted before being built, according to the State Railroad Commission. The Commission has authority over intrastate pipelines for safety and rate regulation but does not have the authority with respect to eminent domain powers. 

Kinder Morgan wins Texas court challenge, removing obstacle to $2 billion gas pipeline – (Reuters) - Kinder Morgan Inc can begin work on a $2 billion natural gas pipeline without having the Texas energy regulator approve its proposed route, a state judge ruled on Tuesday. The decision removes a challenge to the state’s licensing process that lets gas pipeline companies determine their own route and acquire land without a landowner’s consent. Texas is in the midst of a pipeline-construction boom with multibillion-dollar projects under way to bring shale oil and gas to market. A Travis County District court ruled the Texas Railroad Commission, the state’s oil and gas regulator, is not required to set standards for routing the pipelines or private land-takings, Judge Lora Livingston wrote on Tuesday. The state allows gas pipeline operators that qualify as utilities to use eminent domain to take land for the public good. “The court finds no authority for the proposition that the legislature has granted authority to the Commission to oversee the rights granted,” she wrote. She also granted Kinder Morgan’s request to dismiss it from the lawsuit. A group of Texas landowners and officials had sued to block construction, arguing the oil and gas regulator failed to seek public input or properly supervise the routing of Kinder Morgan’s Permian Highway Pipeline, which will carry 2 billion cubic feet per day of natural gas roughly 400 miles (645 km) from West Texas to the U.S. Gulf Coast. Kinder Morgan had asked the court to throw out the landowners’ lawsuit, arguing it was up to the state legislature, not the court, to change the pipeline permitting process. “The court’s finding validates the process established in Texas for the development of natural gas utility projects,” Tom Martin, a Kinder Morgan executive, said on Tuesday.

Water Woes Could be a Boon for Pipeline Companies - For companies that haul oil and natural gas, the next big thing may be dirty water, according to Jefferies Group LLC. As booming U.S. oil production unleashes a torrent of contaminated water that rises to the surface with crude, pipeline operators may be in the best position to harness those flows and expand into the water-handling business, said Peter Bowden, Jefferies’ global head of energy investment banking. In the Permian Basin alone, the combination of saltwater from wells and water used in the fracking process is expected to be three times larger than crude output by 2023, according to Jefferies. Pipeline owners already are adept at transporting oil and gas, so adding water to their portfolios may be a logical next step, Bowden said Friday at an Oilfield Water Connection conference in Houston. “Water is going to offer them more growth than their core business,” he said. “There’s a case that the public midstream companies should be doing all three streams everywhere they can.” There have been more than $2.5 billion of Permian-focused water deals so far this year, according to Gabe Collins, a fellow at Rice University’s Baker Institute. Many of the transactions have involved private-equity firms, he said during the same conference. 

What is the Halliburton loophole? - In 2005, the 109th United States Congress passed the Energy Policy Act. Like any major bill, its provisions ranged from the useful (like authorizing tax credits for alternative energy producers), the questionably effective (like extending daylight savings time for a few weeks), and the downright counterproductive (like incentivizing the use of coal as an energy source). The act also included an exemption that fell firmly in the latter category that would later become known as the Halliburton loophole. This loophole amended the Safe Drinking Water Act — a major tool the EPA uses to keep our drinking water clean — to provide an exemption for the fluids used in hydraulic fracturing (or fracking). As a result, the EPA does not have the legal authority to regulate fracking fluids. This exemption came to be as a result of a recommendation by the Energy Task Force, an organization formed by then-President George Bush and headed by then-Vice president Dick Cheney, former CEO of Halliburton, which coincidentally also first patented fracking and is the largest provider of fracking services in the world. Hence, the Halliburton loophole.

Wisconsin frac sand mines sit dormant as competition grows (AP) — Wisconsin’s frac sand industry is grappling with several idled mines as the sector faces increased competition in Texas and Oklahoma. Areas of western and central Wisconsin saw heavy investment from 2011 to 2014, when sand mines, processing plants and rail loading facilities were emerging throughout the area. Since then, Superior Silica Sands has idled three sand mines in Wisconsin, while Hi-Crush is halting production at its mine in Augusta. Syverson told the Eau Claire Leader-Telegram that demand remains strong, but energy companies have built mines closer to oilfields in Texas and Oklahoma. The production expansion has lowered prices and allowed oil drillers to purchase local sand for less than the cost of shipping it from Wisconsin, he said. “The capital has already been invested in Wisconsin, so the real questions are how much of this sand will still be needed and how many of these higher-cost operations that are taken off line will never come back,” he said. Syverson also argued that companies in the Permian Basin in West Texas and southeast New Mexico are moving toward finer grain sand. It’s lower quality but more plentiful than the northern white sand that’s produced in Wisconsin. “Wisconsin sand is still the Cadillac of all sands, but these companies in the Permian Basin are saying they can make more money driving a Chevy than a Cadillac,” Syverson said. “It’s all a cost-benefit analysis.”

Green Nimbyism: Frac Sand Mining Near Zion National Park – Dean Baker - Last summer, my wife and I moved out to southern Utah. . Our new home, Kanab, is located between Grand Canyon and Zion national parks, with the Escalante Grand Staircase National Monument just to our east. The area gives us endless opportunities for exploring and hiking.  It now looks like our plans are in danger. A start-up mining company, Southern Red Sands LLC, has plans to set up a frac sand mining operation in the hills just above the city. This facility would both mine and process sand to be used in hydraulic fracturing or fracking sites in various parts of the West.  Apparently, the sand in the hills above Kanab is very well suited for fracking. It also is much closer to the western fracking sites than the current sources, which are mostly located in Wisconsin and Texas. For this reason, Southern Red Sands sees a real bonanza here. Many of the people in the town see it differently. Kanab’s primary industry is tourism, which depends both on its proximity to the national parks and monuments, and its own natural beauty. Its motto is “magically unspoiled.”  That doesn’t fit well with an industrial sand mining plant located on the city’s outskirts. The mine and plant will be capable of operating around the clock. The noise is likely to carry for many miles on an otherwise quiet and beautiful plateau.  Apart from its impact on Kanab, Southern Red Sands has picked a location for its mine that it is just over 10 miles from Zion National Park, a place of extraordinary beauty that people travel from all over the world to see. A sand frac mine and processing facility is going to make this place considerably less appealing for decades into the future.Suppose the people of Kanab are successful and can keep the sand frac mine from being located here, won’t it just mean that some other community has to deal with the noise and pollution of a sand frac mine? That is possible, but stopping the sand frac mine next to Kanab is not just about preventing a threat to the local environment. The reason for locating the mine and processing facility near Kanab is that it is the lowest cost place to mine frac sand. Just as was the case with the Keystone XL Pipeline and tar sands oil, if this mine is blocked, it will raise the cost of frac sand, which will raise the cost of fracking. Given the damage that fossil fuel burning is doing to the planet, we should all want to raise the cost of fracking as much as possible.

Colorado changes its regulatory structure for oil and natural gas production – EIA - In mid-April, Colorado’s governor signed a law changing the way the state regulates its oil and natural gas industry. Senate Bill 181, also known as Protect Public Welfare Oil and Gas Operations, amends the Oil and Gas Conservation Act and gives counties and municipalities increased regulatory authority over oil and natural gas development in their jurisdictions. In 2018, Colorado produced 460,000 barrels per day of crude oil and 5 billion cubic feet per day of natural gas gross withdrawals, accounting for 4% and 5%, respectively, of the national totals. Colorado’s main oil- and natural gas-producing regions are the Denver Basin in northeastern Colorado and the Piceance Basin in western Colorado. The San Juan Basin that stretches across the Colorado-New Mexico border was once a major natural gas-producing area, but output from that area has declined in recent years. As of the end of May 2019, Colorado had about 40,000 active oil and natural gas wells. More than one-third of those wells were located in Weld County, which stretches from the Denver metropolitan area to the Wyoming border. Other counties that have at least 3,000 active wells include Garfield, on Colorado’s western border; Yuma, on the eastern border; and La Plata, on the southern border. EIA’s Energy Mapping System provides the locations of each of these wells, based on data from Drillinginfo, Inc. Under the new law, local governments have the authority to regulate the location of new oil and natural gas production facilities as well as the effects of oil and natural gas production, such as land use and surface impacts, including noise. The law also gives local governments the authority to inspect oil and natural gas facilities; impose fines for leaks, spills, and emissions; and impose fees to fully cover regulatory costs. The law directs Colorado’s Oil and Gas Conservation Commission (COGCC) to create rules to ensure the structural integrity of wells, require certification of employees, increase public disclosure of well data, and specify when inactive infrastructure must be re-inspected before being put back into use. The COGCC is also directed to adopt rules that require producers to consider alternative locations for proposed oil and natural gas facilities that are near populated areas.

US oil, gas rig count rises by 11 on week to 1051: S&P Global Platts Analytics — The US oil and gas rig count rose by 11 week on week to 1,051, S&P Global Platts Analytics said Thursday, as the rig count continued a familiar seesaw pattern that has gradually brought it down by nearly 200 rigs since late 2018. Oil-directed rigs rose by five to 837 for the week ended June 26, while natural gas rigs were up four to 208. A rise of two rigs was posted for categories not specified for oil or gas.This week's 1,051 total represents a decline of nearly 100 rigs since the start of this year and a fall of 182 since the recent peak of 1,233 in mid-November 2018, a time when the price of WTI was dropping from October highs in the mid-$70s/b. The tendency of the rig count since then has been to seesaw up and down while gradually dropping more rigs over time. Click here for full-size image.  WTI has also had its ups and downs since late 2018, but was just shy of $60/b Thursday morning.Among the larger basins, the Permian Basin of West Texas/New Mexico and the Eagle Ford Shale of South Texas each rose three rigs. On Thursday, the Permian totaled 437 rigs and the Eagle Ford, 88.The SCOOP-STACK of Oklahoma rose two rigs to 83, while the "Other Basins" category, which accounts for all other rigs outside the eight largest named basins, was up eight to 226.  In both the Wet and Dry Marcellus Basins, the number of rigs remained the same as last week -- 29 for Dry, 22 for Wet. Also unchanged week on week was the Williston Basin of North Dakota/Montana at 62. The biggest decline of the week, down three rigs to 55, was seen in the Haynesville Shale of East Texas and Northwest Louisiana.Otherwise, the Denver-Julesburg Basin mainly in Colorado, and the Utica shale largely in Ohio, dipped by a rig each. That left the D-J with 31 rigs and the Utica with 18.In ad dition, the number of permits for the week ended June 26 was up 61 to 1,353.

Chaco drilling moratorium included in spending measure — U.S. land managers would be prohibited from using federal funds to approve oil and gas projects near Chaco Culture National Historical Park for the next year under a measure approved by the U.S. House. Democratic Congressman Ben Ray Lujan of New Mexico included the language in a spending package that cleared the chamber Tuesday. The language aims to codify a commitment from Interior Secretary David Bernhardt to defer leases within 10 miles (16 kilometers) of the park while regulators prepare a new resource management plan. Legislation that calls for permanently banning drilling on federal lands within the buffer is pending. It would not affect land owned by the Navajo Nation or individual tribal members. Tribes and environmentalists have been advocating for more protections, saying the region is full of culturally significant sites.

Tribes to get more documents sought in Dakota Access lawsuit  (AP) — A federal judge has ordered the Army Corps of Engineers to turn over more documents that four Native American tribes say could bolster their lawsuit seeking to shut down the Dakota Access pipeline in North Dakota.U.S. District Judge James Boasberg directed the federal agency to give up the documents by Wednesday, the Bismarck Tribune reported.The Standing Rock, Cheyenne River, Yankton and Oglala Sioux tribes accused the Corps in February of withholding dozens of documents that they say could show how the pipeline may threaten the Lake Oahe reservoir on the Missouri River, which serves as their water source.Fears of an oil spill into the river sparked massive protests in 2016 and 2017, drawing thousands of pipeline opponents to North Dakota.Federal officials had turned over some documents, but said requests for dozens more were vague or too broad.The tribes accused the Corps of producing a “fragmented and incomplete record” to justify its approval of the $3.8 million pipeline that began carrying oil from North Dakota to Illinois in June 2017. Last week, the pipeline’s operator, Texas-based Energy Transfer Partners, announced plans to double its capacity.It’s unclear how useful the documents will be to the tribal case.Boasberg gave the tribes an Aug. 16 deadline to submit their final arguments. The case won’t be resolved for several months after the filing. The Standing Rock Sioux tribe plans to request a full environmental impact study of the pipeline and for the pipeline’s operations to be shuttered during the review, according to Jan Hasselman, an attorney for environmental law organization Earthjustice.“In the meantime, we’re gearing up for an election,” Hasselman said. “A new administration could well undo the Trump (administration) permits.”

Physicians call for halt to natural gas fracking projects - Two physicians groups have issued a 145-page report calling for an immediate halt to projects involving hydraulically fracked natural gas in the Northwest. “Fracked Gas: A Threat to Healthy Communities” identifies six major projects, including a proposed $2 billion plant at the Port of Kalama to convert natural gas into methanol for export to Asia. Hydraulic fracturing is a technique for extracting oil or gas from rock by injecting a high-pressure mix of water, sand or gravel, and chemicals. Physicians for Social Responsibility in Washington and Oregon released their report Wednesday. The report comes as the Port of Vancouver weighs adopting a policy barring the port from pursuing new bulk crude oil or coal terminals. Environmentalists advocating action to combat climate change have urged the port to expand that draft policy to encompass natural gas. Business organizations, including the Greater Vancouver Chamber of Commerce, have cautioned against adopting policies that could have “unintended consequences.” The report opposes any expansion of facilities to transport, store, process or export fracked gas in the Northwest. Dr. Patricia Kullberg, who spent 20 years as medical director of the Multnomah County Health Department in Oregon, is one of the report’s nine authors.  Kullberg said about two-thirds of the natural gas coming into Oregon is fracked and has been mixed with conventionally drilled natural gas. “The gas industry would like very much to turn the Pacific Northwest into a hub for processing, refining, liquefying and exporting natural gas,” Kullberg said. “We hear a lot about the potential economic benefits of these facilities, but we hear very little about the economic cost,” she said, mentioning medical bills, environmental degradation and negative effects to fisheries, tourism and recreation.

Jordan Cove LNG backers claim high support from landowners for pipeline -As federal regulators take several rounds of public comments this week in Southern Oregon on the massive Jordan Cove Energy Project, backers are claiming they’ve made major headway addressing one of regulators’ biggest concerns.Pembina Pipeline Corp, the Canadian company that is proposing a liquefied natural gas export terminal in Coos Bay, says it has secured voluntary easement agreements with 82 percent of the individual landowners along the 229-mile route of the terminal’s proposed feeder pipeline, which would run from an interstate gas hub in Klamath County to Coos Bay.As with most issues surrounding the controversial project, those numbers are disputed, reflecting the ongoing battle between the project’s backers and opponents to control the narrative around public support as both state and federal regulators get closer to important permitting decisions.Officials from the Federal Energy Regulatory Commission are holding four tightly-controlled public comment sessions in Southern Oregon this week. It will be the last round of public feedback on the Draft Environmental Impact Statement issued by the commission’s staff in late March. The commission is expected to render its decision on the project early next year. If Pembina’s landowner numbers are accurate, as the company insists, it marks significant progress from the small percentage that had signed easement agreements when regulators denied the project a license in 2016. That lack of support proved a decisive factor. At that time, FERC decided the previous owner of the project had not demonstrated sufficient public need for the project to overcome the negative impacts on landowners along the pipeline route.

Oregon Governor Kate Brown Signs Five-Year Fracking Ban Bill -- Oregon Governor Kate Brown signed into law a five-year ban on fracking for oil and gas exploration and production on June 17. HB 2623, sponsored by Rep. Julie Fahey and Sen. James Manning, received final approval by the state legislature on June 5. The bill previously banned fracking for 10 years, but the Senate reduced that ban to five years. The House concurred in Senate amendments and repassed the bill. The votes were: Ayes, 40; Nays,  The controversial process to extract oil and gas has poisoned drinking water and caused widespread health problems in other states, according to fracking opponents. It has has been banned in Vermont, New York, Maryland, and Washington. Food & Water Watch was the first national organization to call for a ban on fracking everywhere – and has helped mobilize opposition to fracking in Oregon, California and across the country. “This is a huge victory for Oregon communities and the growing national movement against fracking,” said Food & Water Watch Regional Organizing Manager Thomas Meyer in response to the governor signing the bill into law. “Fracking should be banned everywhere, for the sake of our health, our water, and the climate we all depend on. Passing this bill is a big step towards achieving that goal.”

Inslee unveils plan to fight fossil fuel pollution, ban fracking --Washington Gov. Jay Inslee (D), a 2020 presidential candidate, unveiled on Monday his plan for tackling fossil fuel pollution, including ending subsidies for oil and gas companies and phasing out fracking. The proposal, Inslee’s fourth plan for addressing climate change, calls for taking on the oil and gas companies he calls “the greatest and most powerful special interests that are holding back our clean energy future.” Even as candidates compete to showcase their environmental credentials, Inslee’s latest plan stands out in its attempt to tackle the source of emissions from what is now the largest producer of greenhouse gas emissions: transportation. “To build a clean energy economy, we must transition off of fossil fuels, and we will need a President who is willing to stand up to the fossil fuel corporations,” Inslee said in a statement on the plan's release. The White House hopeful's plan would eliminate the nearly $20 billion in yearly subsidies to oil, gas and coal companies. In additional to baring drilling on federal lands and offshore areas, Inslee’s plan specifically targets fracking--a controversial process of pushing water and other chemicals deep underground to push oil out of rock crevices and bring them to the surface. The process has been associated with contaminated drinking water and credited with helping the U.S. increase its domestic crude supply. Inslee says he would work with Congress to ban fracking, including limitations on air and water pollution that could stem from the practice. He also calls for a “G.I. Bill for Energy Workers" to help workers transition from the oil industry.

US Oil Production Hits New All Time High - U.S. crude oil production reached a new all time high of 12.2 million barrels per day (MMbpd) in May. That’s according to the American Petroleum Institute’s (API) latest monthly statistical report, which revealed that Texas crude oil output exceeded 5 MMbpd last month for the first time. “These milestones were achieved despite less drilling activity, which is testament to productivity but also pipeline infrastructure expansions that helped enable drilled but uncompleted wells to come to market,” the API report stated. Last month also saw record U.S. petroleum exports at 8.1 MMbpd and a U.S. crude oil inventory increase of 10.5 percent over May 2018, the report revealed. In its second quarter industry outlook report, released on the same day as the latest monthly statistical report, the API said the United States is poised for a continuation of record oil production. This report also highlighted that while U.S. crude oil export capacity has been “sufficient”, some capacity estimates suggest “some urgency to plan forward”. “The historic milestones in U.S. oil production this quarter underscore the necessity of pipeline infrastructure to continued U.S. energy leadership,” API Chief Economist Dean Foreman said in an organization statement. “With the surge expected to continue, our focus must now shift toward ensuring the necessary infrastructure and logistics are in place to support growth in providing energy to consumers, as well as exports,” he added. “If current predictions by the U.S. Energy Information Administration and others prove correct, the U.S. will likely push up against the lower bound of existing crude oil export capacity by the end of this year, which creates urgency around building new infrastructure to ensure we don’t miss out on this rare opportunity,” Foreman continued. Earlier this month, Rystad Energy forecasted that U.S. crude output would hit 13.4 MMbpd by December and average 12.5 MMbpd in May.

U.S. refinery capacity reaches record high at the start of 2019 -- As of January 1, 2019, U.S. operable atmospheric crude oil distillation capacity was a record-high 18.8 million barrels per calendar day (b/cd), an increase of 1.1% since the beginning of 2018, according to EIA’s annual Refinery Capacity Report. The previous high of 18.6 million b/cd was set at the beginning of 1981. U.S. annual operable crude oil distillation unit (CDU) capacity has increased slightly in six of the past seven years. Operable capacity includes both idle and operating capacity.  Barrels per calendar day reflect the input that a distillation unit can process in a 24-hour period under usual operating conditions, taking into account both planned and unplanned maintenance.  Barrels per stream day reflect the maximum number of barrels of input that a distillation facility can process within a 24-hour period when running at full capacity under optimal crude oil and product slate conditions with no allowance for downtime. Stream day capacity is typically about 6% higher than calendar day capacity. . Secondary refining capacity, including thermal cracking (coking), catalytic hydrocracking, and hydrotreating and desulfurization, increased by less than 1% from year-ago levels. The number of operable refineries remained at 135 on January 1, 2019; however, similar to last year’s report, four refineries previously considered separate in survey data were merged into two.   Marathon Petroleum Corporation acquired 10 refineries from Andeavor in 2018, making it the largest refiner in the United States. Marathon’s refineries collectively have an operable capacity of slightly more than 3.0 million b/cd, 16% of total U.S. refining capacity and about 800,000 b/cd more capacity than the second-largest refiner, Valero Energy Corporation.  Refinery runs and crude oil production both continued at record levels in the United States in 2018. U.S. crude oil production, which averaged 11.0 million barrels per day (b/d) in 2018, has more than doubled since 2009. Crude oil inputs to refineries averaged 17.0 million b/d in 2018 compared with 14.3 million b/d in 2009. Since 2009, operable refinery crude oil distillation capacity increased 1.2 million b/cd, and utilization rose from 83% in 2009 to 93% in 2018, resulting in the 2.6 million b/d increase in crude oil inputs. During the same period, U.S. crude oil imports decreased by 1.3 million b/d, and U.S. crude oil exports increased by 2.0 million b/d, leading to an overall decrease in net imports of 3.3 million b/d.

Early Shale Optimist Sees Another Decade of U.S. Supply Growth -- The U.S. will account for almost a quarter of global oil and gas production by the early 2030s as the shale boom keeps on booming, according to the head of Rystad Energy. Output from shale including crude oil, condensate and natural gas liquids could climb to as high as 25 million barrels a day, Jarand Rystad, chief executive officer of the research and intelligence company, said in an interview in Kuala Lumpur. The U.S. will likely make up about 23% of global liquids production and pump 27% of the world’s gas by then, he said. Part of the reason for the expected growth is that companies are getting better at hydraulic fracturing, the process of pumping a mixture of water and sand into a horizontal well to create millions of tiny cracks in the shale rock that allow oil and gas to flow to the surface. Frackers are using more sand, creating more cracks and boosting the productivity of each well, Rystad said. “It’s about sand, horsepower and water injection,” he said at the Asia Oil & Gas Conference. “Those three parameters are what’s driving activity levels, and those are three times higher today than they were back in 2014.” Rystad has been a staunch believer in U.S. shale since early this decade when many analysts and OPEC ministers were unconvinced that a natural gas drilling revolution would translate to a surge in oil output. He recalled being labeled “ridiculously too aggressive” in 2012 when projecting shale crude production would grow fourfold to 4 million barrels a day within four years. The forecast was too low and shale has transformed the nation into the world’s biggest producer.

Bring on Higher Oil Prices: They’ll Boost the US Economy. Powell Sees it Too. A New Experience for the US - Wolf Richter: Powered by the iffy situation in the Persian Gulf, the Strait of Hormuz, and the Gulf of Oman, with attacks on tankers and now the downing of a US drone, the price of crude oil got a little nervous in recent days. WTI jumped about 6% today to over $57 a barrel. But this was just a minor uptick in the overall scheme of things: The US, which has become the largest oil producer in the world, is in the middle of its second oil bust in five years:These two oil busts are largely a consequence of surging US crude oil production. During the oil bust of 2014-2016, the price of WTI collapsed by over 75%, careening from $107 per barrel to a low of $27 per barrel in 18 months, before starting to rebound. In the process, a slew of oil-and-gas drillers filed for bankruptcy. Production fell sharply from early 2015 through much of 2016, but then new money from Wall Street appeared, and production began to soar again, hitting new records all along the way.Shale wells produce a variety of liquid hydrocarbons (they also produce gaseous hydrocarbons which are not included here). This production of crude oil and petroleum products soared from just over 7 million barrels per day (bpd) in 2010 to 16.6 million bpd currently, according to EIA data: This surge in production comes even as shale oil-and-gas drillers have essentially been cash-flow negative in their entire history, drilling more and more of their investors’ funds forever into the ground. But so far so good — as long as it’s not my money.The US used to be the largest net importer of crude oil and petroleum products in the world.  But surging production in the US has slashed imports. And recently exports have surged, and the trade in crude oil and petroleum products is now nearly balanced between the US and the rest of the world. And the net imports are heading toward zero – the point where the US imports as much as it exports.In February, net imports were down to just 176,000 barrels a day, the lowest in the EIA data going back to 1971.

Energy products are key inputs to global chemicals industry --The industrial sector of the worldwide economy consumed more than half (55%) of all delivered energy in 2018, according to the International Energy Agency. Within the industrial sector, the chemicals industry is one of the largest energy users, accounting for 12% of global industrial energy use. Energy—whether purchased or produced onsite at plants—is very important to the chemicals industry, and it links the chemical industry to many parts of the energy supply chain including utilities, mines, and other energy product manufacturers.The chemicals industry is often divided into two major categories: basic chemicals and other chemicals. Basic chemicals are chemicals that are the essential building blocks for other products. These include raw material gases, pigments, fertilizers, plastics, and rubber. Basic chemicals are sometimes called bulk chemicals or commodity chemicals because they are produced in large amounts and have relatively low prices. Other chemicals—sometimes called fine or specialty chemicals—require less energy to produce and sell for much higher prices. The category of other chemicals includes medicines, soaps, and paints. The chemicals industry uses energy products such as natural gas for both heat and feedstock. Basic chemicals are often made in large factories that use a variety of energy sources to produce heat, much of which is for steam, and for equipment, such as pumps. The largest feedstock use is for producing petrochemicals, which can use oil-based or natural-gas-based feedstocks.In terms of value, households are the largest users of chemicals because they use higher value chemicals, which are often chemicals that help to improve standards of living, such as medicines or sanitation products. Chemicals are also often intermediate goods—materials used in the production of other products, such as rubber and plastic products manufacturing, agricultural production, construction, and textiles and apparel making.

How Long - New Western Canadian Crude Pipelines Crawl Toward Completion -- For more than six months now, the provincial government of energy-rich Alberta has been trying to mitigate the sometimes painful effects of having too little pipeline capacity to move crude oil to market. They’ve mandated production cuts by larger producers, contracted for crude-by-rail (CBR) services — then moved to undo those deals — and pressed the Canadian government to help advance long-delayed pipeline projects. Things appear to have reached a semi-happy medium for now: the price spread between Western Canadian Select (WCS) and West Texas Intermediate (WTI) has narrowed, but remains wide enough to justify sending crude out by train. Still, it’s clear that the big tranches of new pipeline capacity many had hoped would be built or at least under construction by now face more hurdles. How long will Alberta producers need to wait for unfettered pipeline access to the U.S. Midwest and Gulf Coast and to Canada’s West Coast? Today, we provide an update on WCS pricing, Alberta crude-by-rail, and the key pipeline projects that never seem to get finished.  It’s been an eventful period in Alberta’s oil patch, and an active time at the provincial government in Edmonton. As we said in Money Changes Everything back in early December 2018, then-Premier Rachel Notley announced that, starting on January 1, 2019, the Alberta Energy Regulator (AER) would institute mandatory production cuts for any producers in the province averaging 10 Mb/d or more of production over their highest six months in the previous year. The mandated reductions, which began at 325 Mb/d (or about 8% of total production) in January and have been ratcheted down since then (to 175 Mb/d — or about 4.5% of total production — in June and July), have had their desired effects, namely (1) to work down the crude oil inventories that had built up in Alberta due to takeaway constraints, and (2) to shrink the spread between WCS (the benchmark Western Canadian crude blend) and WTI, which last fall had ballooned to more than $40/bbl.

Alberta Hires CIBC for Crude-by-Rail Program-- Alberta’s new government plans to sell the leases and services the Canadian province has accrued to help companies ship oil out of the region. CIBC Capital Markets has been hired to help with the transaction. Jason Kenney, elected premier last month, campaigned on a platform that included getting rid of predecessor Rachel Notley’s crude-by-rail program, arguing that the business should be left to the private sector. The oil-rich province invested C$3.7 billion ($2.8 billion) in the plan. “According to industry forecasts and statements by producers, the future of crude-by-rail in Alberta is very bright – and will continue to be so, without government interference,” Energy Minister Sonya Savage said in a statement Thursday. Notley set up the rail program to help alleviate a glut caused by too much oil and not enough export pipelines, a situation that caused Canadian oil prices to collapse last year and prompted the government to impose mandatory production limits on large crude producers. Not all companies had the capital to invest in shipping crude by rail, she said at the time. Canada’s crude-by-rail shipments collapsed in February to the lowest in more than a year after government production limits caused heavy Canadian crude’s discount to benchmark futures to narrow so much that it made shipping by rail uneconomic. Since then, exports by rail have risen by more than 100,000 barrels a day to 236,000 in April, National Energy Board data show.

BP Signs On As Canada LNG Project Customer - BP Gas Marketing Limited has signed a binding liquefied natural gas (LNG) sales and purchase agreement (SPA) for deliveries from the proposed Woodfibre LNG Export facility near Squamish, British Columbia, project developer Pacific Oil & Gas Limited (PO&G) reported Wednesday. “We are honored to have BP as a foundation customer of our Woodfibre LNG project,” Ratnesh Bedi, PO&G president, said in a written statement. “BP is a global LNG portfolio player and a pioneer in the international LNG business. We look forward to providing BP with a consistent supply of flexible Canadian LNG that can displace more carbon-intensive fuels.” PO&G stated that the SPA specifies terms for the delivery of 0.75 million tonnes per annum (mtpa) of LNG over 15 years on a free on board basis, with first delivery anticipated in 2023. Moreover, the company reported that it is working on a deal with BP Canada Energy Group ULC under which BP Canada would provide gas transportation and balancing services to Woodfibre LNG over a 15-year term. PO&G plans to develop Woodfibre LNG at the site of a former pulp and paper mill approximately 43 miles (70 kilometers) north of Vancouver. The company stated that the facility will be capable of producing approximately 2.1 mtpa of LNG and offer 250,000 cubic meters of storage capacity. Canada’s National Energy Board has authorized the project to export LNG over a 40-year period, and provincial and federal governments as well as local First Nation have granted environmental approvals for the development, PO&G states on its website.

Canada Risks Becoming Banana Republic Over Energy - Canada risks becoming a “banana republic” for its restrictive energy policy and failure to attract new investment into the sector, according to a Calgary money manager. “We have had basically signs on our energy industry that Canada is closed for business,” Geeta Sankappanavar, co-founder of Grafton Asset Management, said Thursday at the Bloomberg Canadian Capital Markets conference in London. “Today we are in danger of becoming unfortunately a little bit like a banana republic on the energy side.” Sankappanavar, who says her firm has raised and deployed C$1 billion ($760 million) in the Alberta oil patch, blamed carbon taxes, falling oil prices and increased regulatory scrutiny under new federal government rules for contributing to what she calls an “awful” malaise in the sector. “It is a very, very dark and bleak place,” she said. “We have had significant regulatory and political challenges in our industry.” ‘Wasting Our Time’The money manager sees some room for optimism following the approval this week of the Trans Mountain pipeline expansion that would almost triple capacity on a line taking oil from Alberta to the Pacific Coast near Vancouver. More needs to be done, she said. “We are wasting our time” and at risk of becoming “violinists on the Titanic,” she said. Sankappanavar said Canada does offer some opportunities as a “deep value” play given the decline in asset values. The industry also needs to do a better job promoting the progress it’s made in reducing relative emissions and investing in renewable energy.

Mexico's oil regulator approves BP's offshore drilling plan - (Reuters) - Mexico’s oil regulator on Tuesday approved a $97 million (£76.4 million) plan for drilling in an offshore area operated by British supermajor BP in the southern Gulf of Mexico.The four-year exploration plan approved by the national hydrocarbons commission (CNH) covers a 700,000 square kilometre shallow water block, located north of the coast of Tabasco state.BP won the rights to drill last June, along with its partner French oil major Total.BP’s contract is one of over 100 awarded since a sweeping energy reform was finalised in 2014, championed by Mexico’s previous government in a bid to reverse years of declining crude production. The current government of President Andres Manuel Lopez Obrador has suspended all future auctions, favouring instead a larger role for national oil company Petroleos Mexicanos, known as Pemex.

Mexico's Pemex to stick to areas it knows best, pass on deepwater: CFO (Reuters) - Petroleos Mexicanos will focus on shallow water projects and onshore plays, and avoid investing in its deepwater riches for now, as the ailing Mexican state-run oil company seeks to turn around a 14-year slide in crude production, a top official said on Thursday. Chief Financial Officer Alberto Velazquez outlined the approach the state-owned oil company known as Pemex will take at a conference in the colonial city of Leon on Thursday. He emphasized that Pemex has no plans to invest in costly and technologically complex deepwater projects in the Gulf of Mexico, but will instead focus its exploration and production budget on the country’s shallow water and onshore potential. “We are not going to invest in those types of developments,” said Velazquez, referring to deepwater projects. The vast majority of Pemex’s current production comes from shallow water areas clustered around the southern rim of the Gulf of Mexico, off the coast of the states of Veracruz, Campeche and Tabasco. While the company has drilled wells and made discoveries in Mexican territorial waters in the deepwater Gulf, and has a joint venture partnership in one such project with Australia’s BHP Billiton, it has yet to produce any oil or gas there. Pemex’s current crude production averages just under 1.7 million barrels per day (bpd), down nearly a half from peak output of about 3.4 million bpd in 2004. Mexican President Andres Manuel Lopez Obrador has pledged to raise Pemex output to 2.5 million bpd by the end of his term in 2024.

Crude oil inputs to Mexico’s petroleum refineries continued to decline in 2018 --Crude oil inputs to Mexico’s petroleum refineries declined for the fifth consecutive year in 2018, falling to nearly 600,000 barrels per day (b/d), a 50% drop from 2013 levels. This decline in crude oil processing has coincided with a decrease in domestic production of the light crude oil that the country’s refineries are better suited to process. Mexico has increasingly relied on imports of petroleum products from the United States to satisfy domestic demand.Petróleos Mexicanos (Pemex), Mexico’s national oil company, owns and operates the country’s six petroleum refineries, which have a combined atmospheric crude oil distillation capacity of about 1.6 million b/d. On an aggregate basis, performance at Pemex refineries has declined over the past five years after maintaining an average refinery utilization rate near or above 75% between 1990 and 2013. By 2018, the utilization rate of Mexico’s refinery network fell to less than 40%.Pemex’s refineries are mostly configured to process light crude oil. Of its six refineries, three (Minatitlan, Cadereyta, Madero) are equipped with coker units to produce lower-sulfur gasoline from heavy crude oil. The 35% decrease in Mexican light crude oil production between 2013 and 2018 has resulted in limitations on crude oil refinery inputs. Inputs of light crude oil to Pemex refineries fell below 400,000 b/d in 2018, about a 50% reduction from 2013 levels.Refineries require periodic maintenance to ensure optimal operation of processing units that refine crude oil into petroleum products such as motor gasoline and diesel. Crude oil inputs at Pemex refineries since 2014 have been further constrained by operational issues associated with the company’s refineries.Pemex maintains control over much of Mexico’s petroleum product imports and distribution. Declines in domestic production of liquid transportation fuels have increased Mexico’s reliance on foreign sources of refined petroleum products.

The Dead Cow Finally Produces Oil, a Century After Its Discovery - Along the western edge of Argentina’s Patagonia, on an arid steppe nestled against the Andes mountains, lies a shale formation known as the Vaca Muerta. And ever since engineers confirmed what an American geologist suspected a century ago -- that the Vaca Muerta, or dead cow, contains massive amounts of oil and gas -- the rush to replicate the U.S. fracking boom was on. First came YPF SA, the local oil giant, and Chevron Corp. Then the likes of Total SA and Royal Dutch Shell Plc. Between them, they poured some $13 billion into exploration over the past eight years. None of them ever had much to show for it, though. Obstacles kept popping up, and production was marginal. Until now. In the last few weeks, two companies have exported two small cargoes from the formation, one of light oil, the other of liquefied natural gas, foreshadowing what industry officials say will be a steady flow of shipments by the end of the year. It’s way too early to declare victory -- any number of logistical and economic hurdles remain. But it’s the first sign that all the money and time invested might actually pay off, and turn Argentina back into the global energy provider it used to be well over a decade ago. “The system is going to change from one of importing oil and products to one of exporting,” said Sean Rooney, Shell’s chief in Argentina. “And that’s going to grow over time. It’s going to be some hundreds of thousands of barrels a day.”

Entire coastal water supply threatened by kerosene spill - - The only water supply system for the entire Slovenian coast may be in jeopardy after a kerosene-carrying train derailed Tuesday afternoon near one of the potable water sources. Measures have been taken to prevent the worst, but there is no doubt that the kerosene will reach the groundwater with the first strong rainfall at the latest. The regional water system operator, Rižanski vodovod, supplies more than 87,000 residents, but the figure grows much higher during the summer season, to about 130,000 people. Slovenia is bracing for a heatwave expected to peak in the second half of the week and the coast is a popular destination for many seeking to respite from scorching temperatures. Following an emergency meeting this morning, called in the wake of the spill, Rižanski Vodovod urged its clients to conserve water. The porous Kras terrain is notoriously tricky when it comes to water flow and Nataša Viršek Ravbar of the Karst Research Institute of the Research Centre of the Academy of Sciences and Arts (ZRC SAZU) told the STA that it is only a matter of time before the oil reaches the nearest water source. Once a pollutant is in the Karstic ground, there is nothing anybody can do, she said. As fas as she knows, the tunnel where the accident happened does not have built-in oil catchers. Currently, efforts are under way to pump out the spilled kerosene from the tunnel near the village of Hrastovlje. It is estimated that some 10,000 litres of the fuel spilled as several wagons derailed last afternoon. Viršek Ravbar believes that the only way to ensure quality of water is constant monitoring. The oil will likely reach the water source during the next rainfall and may remain polluted for a long time.

Dirty oil crisis over for Russia, but contagion felt on high seas - (Reuters) - In the opinion of Russian officials, the oil contamination crisis that disrupted flows from the world’s second-largest exporter of crude this spring is long over.  But a closer look at a dozen tankers containing dirty Russian oil suggests that for the buyers, the debacle has a long way to run and will cost them hundreds of millions of dollars. Two months since buyers discovered Russia was shipping oil contaminated with organic chloride, which is designed to boost output but can destroy refining equipment, less than half of the tainted crude loaded on tankers has found end-users. More than 1 million tonnes worth around $500 million remains homeless, zigzagging between Europe and Asia. In China, buyers have refused to take dirty Russian oil, forcing trader Vitol to send a cargo back to Europe. That means buyers are struggling to place oil even at discounts of $10-15 per barrel - or $10-15 million per regular Suezmax tanker - to the current, regular price of $65 a barrel. “I’m not willing to risk our equipment just for cheap crude,” said an oil trader with a North Asian refinery. Buyers have also paid millions of dollars in demurrage charges as tankers are stuck with the dirty oil, preventing ship-owners from sending them on new voyages. Russia has promised to compensate buyers after they file claims post-sale. “The problem is that this oil is often impossible to sell. So how can I file a claim?,” a Russian oil buyer said.

Billionaire businessman launches legal action to keep Origin Energy fracking off NT cattle station - A billionaire businessman has launched court action against Origin Energy over its plan for gas exploration on a Northern Territory cattle station. Retail magnate Brett Blundy's company BB Retail Capital and co-owners Bullwaddy Pastoral Co are accusing the gas company of not properly consulting them about the environmental risks associated with the planned "test fracking" operation. They're seeking to stop the NT Government from approving test fracking on part of the station, in the first case of its kind for the Territory. Mr Blundy has invested millions of dollars into buying and developing several NT stationsincluding Amungee Mungee, near Daly Waters, 600 kilometres south of Darwin. In 2013, he invested $6.5 million for the 320,000-hectare station. He also owns two other nearby cattle stations, OT Downs and Mungabroom. The station hosted Origin Energy's first test well in 2016. That generated the gas industry's excitement about the Beetaloo Basin region, and predictions the area contains enough gas to power Australia for 200 years.But BB Retail Capital and Bullwaddy Pastoral Co, owned by Katherine pastoralists Adrian and Emma Brown, are trying to force Origin Energy to admit it hasn't properly carried out legally required stakeholder engagement.The station owners have alleged the gas company didn't give them time to respond to the anticipated environmental risks of fracking.In launching the Supreme Court action, they are also seeking to prevent the Territory Government considering or approving Origin's test fracking plan.

Africa Leads in LNG Investments for 2019 - With LNG greenfield investments expected to reach near $103 billion this year, 2019 is set to shatter previous records for the oil and gas industry, according to energy research firm Rystad Energy. And Africa is leading the way. With some LNG megaprojects in the works, Africa has become the dominant LNG investment destination for 2019 and has almost one-third of total greenfield investment. “Last week’s final investment decision by Anadarko for its Area 1 LNG project marks the beginning of a new phase for not only Mozambique and the African continent, but for the industry as a whole,” Pranav Joshi, analyst on Rystad’s upstream team, said in a note to Rigzone. “Area 1 is the largest LNG project that has been sanctioned in Africa to date and will also kick start the wave of sanctioning activity of other bigger LNG projects this year.” The Area 1 project’s greenfield CAPEX is estimated at $15.6 billion, which is in the same league as major LNG developments in the U.S., Russia and Australia. And if Mozambique’s Area 4 LNG project receives a final investment decision (FID) from operator ExxonMobil Corp. this year, it will be account for another $14.7 billion in greenfield expenditure in Africa. That will bring the yearly total to 28 percent of the global tally for approved investments in newly sanctioned LNG projects, according to Rystad.

Dibi field oil spill: Delta community threatens NOSDRA, Chevron - Omaetan community youths in Warri North council of Delta State have threatened to expose staff of the National Oil Spill Detection and Response Agency, NOSDRA and Chevron officials over a 2018 spill and alleged plot to side track their community for failing to involve them in the post spill impact assessment, PSIA, and Addressing newsmen in Warri, weekend, the community youth chairman, Mr. Godfrey Adidi in a letter dated June 20, and addressed to the Director-General/CEO of NOSDRA and signed by his vice, Mr. Rawlings Odudu; Secretary, Mr. Emmanuel Utsoritselaju and PRO, Mr. Rowland Mene, disclosed that a PSIA was ordered to involve all affected parties but expressed regret that some parties have concluded plans to complete and sign the JIV documents without their involvement on Wednesday, June 26, 2019. They warned that any attempt to side track them in the processes initiated by their community would result in dire consequences. According to the statement, “Itsekiri youths are not into militancy. But we are not lazy or afraid, just that we put the interest of Nigeria first. Aja-Omaetan youths are ready to take the bull by the horns. Be prepared for any violence or unrest within the DIBI field as a result of the planned fraudulent JIV signing.” In the letter copied to Vice President Osinbajo, Senate President, Speaker of the House of Representatives, Inspector General of Police, D-G, DSS and Governor Okowa, they asserted that they are ready to protect themselves from further acts of those destroying their environment and only source of livelihood and therefore called for a joint “Post Spill Impact Assessment, PSIA, as ordered without delay.

Chevron Phillips, Qatar Petroleum to Build Ethane Cracker - Chevron Phillips Chemical Co. LLC (CP Chem) on Monday signed an agreement with Qatar Petroleum (QP) to pursue the development, construction and operation of a petrochemicals complex in Qatar’s Ras Laffan Industrial City, the U.S.-based firm reported. According to a written statement from CP Chem, the complex is expected to comprise a 1,900-kiloton-per-annum (KTA) ethane cracker and two high-density polyethylene (HDPE) units with a combined capacity of 1,680 KTA. QP will own a 70-percent majority share in the joint venture and CP Chem will hold the remaining 30 percent stake, CP Chem noted. Moreover, QP stated that the facility will be the largest ethane cracker in the Middle East and will raise Qatar’s polyethylene production capacity by 82 percent. Patrick Kirby, chemicals principal analyst with Wood Mackenzie, observed that the planned CP Chem-QP project represents the fourth ethane-based steam cracker in Qatar using local ethane supply. Three facilities in-country currently boast more than 2.7 million tonnes per annum (mtpa) of ethyelene capacity and the new project will raise that figure by nearly 70 percent, he said. “The conclusion of these agreements constitutes an important milestone for Qatar Petroleum as petrochemicals represent a major pillar of our growth strategy to achieve our vision of becoming one of the best national oil and gas companies in the world,” Saad Sherida Al-Kaabi, QP’s president and CEO and Qatar’s Minister of State for Energy Affairs, said at a press conference Monday in Doha following a signing ceremony with CP Chem. “Qatar is one of the world’s leading producers of the natural gas liquids that will fuel these world-scale assets,” noted Mark E. Lashier, CP Chem’s president and CEO. “This project fits perfectly with our global strategy to build petrochemical assets in regions of the world where feedstock options are abundant and competitively priced.” CP Chem noted the project’s engineering design phase should begin shortly and that it anticipates a late-2025 start-up. 

OPEC+ Deal Pot Looks Sweeter for Russia as Gulf Money Flows In - When the courtship between Russia and Saudi Arabia and its Gulf allies began more than four years ago, the prospect of billions in new investment for the region was big selling point for the Kremlin. Now, as the two big oil producers mull whether to extend the centerpiece of their rapprochement — the deal to cut production that’s helped shore up crude prices around the world — the investment flood looks a lot smaller than promised. But for capital-starved Russia, it may still be enough. “There is a certain frustration on the Russian side,” said Alexey Potemkin, the chief executive officer of Moscow Policy Group, a consultancy group that advises on Russia-Gulf business projects. In particular, he said the Saudis were stalling on some deals and “this raises questions among decision-makers about the seriousness of Russia’s Gulf counterparts with regard to investments.” Fruitful Friendships Saudi Arabia and its Gulf neighbors seem to be getting the message. They’re expected to invest a total of $5 billion in Russia this year — in projects from a space launch site to toll roads in the Moscow region. That’s more than any single year since Saudi Crown Prince Mohammed Bin Salman, often called MBS, met Russian President Vladimir Putin back in 2015 and promised $10 billion in investment to help cement their newfound friendship. The kingdom has delivered about a quarter of that so far, according to Russian statistics. Though Russia has reaped plenty of other economic benefits from higher oil prices and geopolitical dividends from cozying up to the Gulf, perceptions of the investment payoff are likely to be a factor in Russia’s thinking about whether to extend the production cuts deal at the meeting in early July. MBS, and his Abu Dhabi counterpart Sheikh Mohammed bin Zayed or MBZ, have been slowly diversifying overseas assets away from their vast U.S. holdings as they become wary of the unpredictability of President Donald Trump’s policy in the region. “It is clear that MBZ and MBS enjoy a good rapport with Putin and that they are very keen on cementing the OPEC+ relationship for the longer term and beyond the purely commercial realm,” said Steffen Hertog, an associate professor at the London School of Economics. “There has been a general trend to diversify Saudi and Emirati overseas assets away from the U.S.” 

US, Iran Conflict Could Agitate Global LNG Markets- A potential conflict between the U.S. and Iran could be far more disruptive for liquefied natural gas markets than to the world’s crude shipments. About a quarter of the world’s LNG goes through the Strait of Hormuz, the narrow sea conduit that borders Iran and through which tankers carrying about one-fifth of the world’s oil transit, according to the U.S. Energy Information Administration. Major importers are also less prepared for LNG supply disruptions, because they hold a fraction of the inventories they do for oil. Tehran has threatened in the past to halt fuel shipments through the vital passage. Tensions in the region are high after U.S. President Donald Trump approved and then later called off military strikes against Iran on Thursday night after Iranian forces shot down an American Navy drone over the strait. “Whatever spike you get in oil, you will likely get twice the spike in spot LNG,” said David Hewitt, an oil and gas analyst at Macquarie Capital Ltd. “The market would be unable to” make up the full amount of shipments from the region if deliveries through the strait were halted, he said. Most of Qatar’s gas shipments head to Asian nations and Japan, South Korea and India are among its top LNG buyers, according to the International Gas Union. Inventory levels and seasonal demand could also impact any disruption on global markets. While most major importers don’t have as much storage for gas as they do for oil -- Japan had about 19 days of LNG imports on hand at the end of March versus enough oil in strategic reserves to cover 133 days of deliveries -- the startup of new export projects and mild weather have curbed LNG demand, leaving the market oversupplied.

Oil markets are underestimating the impact of another flare-up in US-Iran tensions, analysts warn - Oil traders are under-prepared for another flare-up in U.S.-Iran tensions, energy analysts have told CNBC, as President Donald Trump’s administration prepares to impose “major ” new sanctions on the Islamic Republic. Six oil tankers and a U.S. spy drone have been attacked since May either in, or near, the Strait of Hormuz — the world’s busiest transit lane for seaborne oil shipments that separates Iran from its neighboring Gulf states. The flurry of attacks has escalated tensions between the U.S. and Iran. The prospect of another military conflict in the Middle East prompted international benchmark Brent crude to climb around 5% last week, while U.S. West Texas Intermediate (WTI) jumped more than 10% — its biggest gain since December 2016. Nonetheless, David Hewitt, an oil and gas analyst at Macquarie, told CNBC’s “Street Signs Europe” on Monday that oil traders were still underestimating the impact of another flare-up between Washington and Tehran. When asked whether there is an insufficient amount of geopolitical risk premium priced into energy markets at present, Hewitt replied: “The simple answer is yes — and absolutely yes.” “If we go to more sanctions today… You would expect that they will react more. So, back to the geopolitical pricing in crude, you have got to think that there is a greater potential for something to happen at some point in the future be it this week or next, or as we go forward,” Hewitt said. Brent crude was trading at $65.28 at around 8:30 a.m. ET on Monday, up around 0.1%, while U.S. WTI stood at $57.88, more than 0.7% higher.

Saudi Arabia puts off day of reckoning on oil production -- When Brian Hook, the US envoy on Iran, declared himself “very pleased” last week with Saudi Arabia’s efforts to ensure oil markets are well supplied, he was engaging in some diplomatic footwork worthy of an Olympic gymnast. As tensions have soared between Washington and Tehran, the US has been grateful that the oil price has risen only marginally to $65 a barrel, despite the threat that conflict could pose to supplies from the Middle East. But for all the public thanks, Mr Hook knows as well as any oil analyst that Saudi Arabia has played little part in keeping prices in check this year. Instead, since last November, Saudi Arabia has slashed oil production by 1.2m barrels a day — or the equivalent of removing the entirety of the UK’s North Sea crude output — in an increasingly desperate bid to prop up the price. Mr Hook knew he could allow Saudi Arabia a pass in public, and likely in private too. He was, after all, speaking not only with a close ally, but from a position of strength. The main reason Saudi Arabia has had to scramble to cut production, despite Washington sanctioning oil exports from Iran and Venezuela, is owing to booming supplies from US shale fields. Riyadh has been able to stop the oil price from cratering, and derailing its own economic reform programme, by lowering its own production time and time again. In the process it has inadvertently freed up markets for the growing bounty of US barrels and kept enough cash rolling in for independent US producers to expand output further. All the while, it has stopped short of endangering the world economy with a runaway oil price. For Washington, then, Saudi Arabia’s oil policy can be seen as a success story. Mr Hook’s decision to avoid rocking the boat, regardless of Saudi Arabia’s real actions in the oil market, is therefore perfectly understandable. 

Oil Price Risks Skewed to Downside - Oil price risks remain skewed to the downside but increasing tension in the Middle East could change that outlook quickly. That’s what investment bank Jefferies believes, according to a research note sent to Rigzone on Monday by Jefferies Equity Analyst Jason Gammel. Demand weakness and OPEC uncertainty are the factors driving risk to the downside, according to the research note, which highlighted the impact escalating United States and Iran tensions could have. The note revealed that Jefferies’ current Brent crude forecast is $64.50 per barrel for the second half of 2019 and $62.75 per barrel for 2020. Market focus has been on slowing demand since trade discussions between the United States and China fell apart in late April, according to the note, which states that there have been plenty of reasons to be concerned about demand. “PMI (Purchasing Managers Index) trends have been clearly negative; GDP forecast cuts by the IMF and others have indicated slowing economic activity which has been corroborated by weak refining margins,” Gammel stated in the note. “Most salient for the oil markets has been the massive increase in U.S. inventories since the beginning of April. Liquidation of managed money length has also contributed to both the oil price decline and its increased volatility,” he added. In the note, Gammel re-iterated the view that an extension of OPEC+ production cuts through the end of the year seems highly likely. Gammel added that the market expects an extension though and said any failure could see the oil price “gap down”.

Hedge funds pause oil sales as Mideast tensions rise (Reuters) - Hedge fund liquidation of petroleum futures and options positions stalled last week as bearishness about the global economy was tempered by fears about a possible disruption of oil exports from the Gulf. Hedge funds and other money managers were net sellers of just 3 million barrels in the six most important futures and options contracts linked to petroleum prices in the week to June 18. (https://tmsnrt.rs/2FtXsWx) Portfolio managers have sold a total of 389 million barrels in the last eight weeks, but last week’s sales were the smallest so far, as tensions between the United States and Iran raised concerns about supply interruptions. Funds were net sellers last week of Brent (-21 million barrels) and European gasoil (-1 million barrels) but buyers of NYMEX and ICE WTI (+12 million), U.S. gasoline (+1 million) and U.S. heating oil (+5 million). Concerns about a global economic slowdown have been hitting oil prices as well as the price of a broad range of other commodities and equities since late April. But the economic outlook has now weakened so much the U.S. Federal Reserve has signalled it may cut interest rates, which traders see as a possible bullish signal. From a positioning perspective, the balance of price risks had already shifted towards the upside by early June, creating conditions for a short-covering rally. By June 11, fund managers were running the most bearish position in U.S. heating oil for two years and the most bearish position in NYMEX and ICE WTI since the end of the oil slump in 2016. In that context, tensions in the Strait of Hormuz as well as hopes for a U.S. interest rate cut and the renewal of trade talks between the United States and China all combined to trigger a bout of short covering. There are still an elevated number of short positions that could be squeezed, pushing prices higher, if tensions in the Middle East worsen or there are signs of a re-acceleration in the global economy. From a fundamental perspective, however, the outlook for oil remains bearish for the moment, with most global economic indicators pointing to a prolonged slowdown hitting oil consumption in the second half of the year. 

How Is the US-China Trade War Affecting Oil? -How exactly is the trade war between the United States and China affecting the global oil industry? The greatest impact of the United States-China trade war on the global oil industry is its effect on oil prices, explains Steve Wood, a managing director at financial services company Moody’s. “The market is concerned that a prolonged dispute will result in slower global economic growth leading to lower demand for oil,” Wood told Rigzone. “This, in turn, has caused oil prices to weaken, which reduces cash flow and earnings for oil producers,” he added. Given the current considerations on the supply side, the oil market should have seen risk premium pushing up oil prices, according to Rystad Energy Senior Analyst Artyom Tchen. “Instead we haven’t seen that over the last month,” Tchen said. “We believe that [the] United States-China trade war and resulting weak economic growth sentiment is among those factors that balance supply risks and cap oil prices,” the Rystad Energy representative added. Already introduced tariffs, excluding the latest U.S. round on $200 billion worth of Chinese goods and Chinese retaliation on $60 billion worth of U.S. goods, have dented oil demand growth this year by around 150,000 to 200,000 bpd, according to Rystad Energy estimates. “We forecast 2019 demand growth at 1.2 million barrels per day (bpd), as opposed to [a] pre-trade-war forecast of 1.4 million bpd,” Tchen stated.

US oil rises 0.8%, but gains capped amid worries over weakening demand - U.S. oil prices rose on Monday, adding to last week’s surge, but concerns about the possibility of weakening demand kept their gains in check. West Texas Intermediate futures climbed 0.8% to settle at $57.90 per barrel. Last week, U.S. crude surged 10% after Iran shot down a U.S. drone on Thursday in the Gulf, adding to tensions stoked by attacks on oil tankers in the area in May and June that Washington has blamed on Iran. “The tightening of supply/demand balances in the coming months is likely to only heighten the market focus on these geopolitical risks unless they abate.” The International Energy Agency (IEA) said this month it had revised down its estimate for crude demand growth in 2019, citing the U.S.-China trade row. Hopes are waning for progress in Sino-U.S. trade talks at this week’s G20 meeting as investors await a meeting between Presidents Donald Trump and Xi Jinping. “The oil market ... is turning its attention to the upcoming G20 meeting and the (limited) prospect for a deal, and with that, renewed focus on slowing demand growth,” said Saxo Bank’s head of commodity strategy Ole Hansen. Supply still looks to remain relatively tight, as the Organization of the Petroleum Exporting Countries and its allies including Russia, an alliance known as OPEC+, appear likely to extend a deal on curbing output when they meet on July 1-2 in Vienna, analysts said. Russian Energy Minister Alexander Novak said on Monday that international cooperation on crude production had helped stabilize oil markets and was more important than ever. But he also voiced concerns about demand, saying extending the deal on supply cuts would depend in part on “the consumption of oil in the third and fourth quarters, (and) the pace of growth of the world economy.”

U.S. oil ends higher, but Brent falls as Trump administration announces additional Iran sanctions -Oil futures split two ways on Monday, with U.S. prices ending higher but global benchmark Brent crude posting a loss as the U.S. announced new sanctions on Iran.President Donald Trump on Monday signed an executive order imposing financial sanctions on Iranian leaders, according to pool reports from the White House.Trump on Monday “took aim at the [Iran] Supreme Leader Ayatollah Khamenei and questioned the U.S. presence in defending the Straight of Hormuz,” said Edward Moya, senior market analyst in New York with Oanda. “We are not seeing a clear message from the White House, but Trump appears hesitant to engage in war.”“Trump does not want a war before the [U.S. presidential] election and he could choose to make a deal with Iran and use that as another campaign point,” Moya told MarketWatch. Traders have been closely watching these developments, which have the potential to disrupt oil flow in the Middle East.In Monday dealings, August West Texas Intermediate crude climbed by 47 cents, or 0.8%, to settle at $57.90 a barrel on the New York Mercantile Exchange. That was the highest front-month contract finish since May 29, according to Dow Jones Market Data. Prices rose 8.8% for last week, the biggest weekly percentage climb since the week ended Dec. 2, 2016. The hefty climb for U.S. prices last week came on the heels of expectations that Middle East tensions may lead to a disruption in the oil markets. Oil bulls had also cheered signs that economy-boosting central bank policy would be delivered. Meanwhile, international benchmark August Brent crude BRNQ19, +0.98% ended down 34 cents, or 0.5%, at $64.86 a barrel on ICE Futures Europe. The contract wrapped trading Friday at $65.20 — the highest since May 30. Front-month Brent saw a 5.1% gain last week.

Oil prices steady as US-Iran tensions weigh - Oil prices hung in the balance on Tuesday as concerns over declining crude demand were offset by risks to supply linked to new U.S. sanctions on Iran. Benchmark Brent crude futures were down 12 cents at $64.74 a barrel by 0832 GMT. U.S. crude futures were up 3 cents at $57.93 a barrel. Hopes for progress in the trade war between China and the United States during this week’s G20 meeting were dampened by a comment from a senior U.S. official saying U.S. President Donald Trump was “comfortable with any outcome” from the talks. Weak manufacturing data released on Monday by the Federal Reserve Bank of Dallas added to worries about slipping demand for crude oil due to the trade conflict. Demand concerns weighing on oil prices were briefly overcome last week when Brent climbed 5% and U.S. crude surged almost 10%, its strongest week since 2016, after Iran shot down a U.S. drone on Thursday, adding to tensions stoked by attacks on oil tankers in the area in May and June. Washington has blamed the tanker attacks on Iran, which denies having any role. U.S. President Donald Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei and other top Iranian officials with sanctions on Monday. Iran said this move closed the path of diplomacy. Trump also said on Twitter that other countries should protect their own oil shipping in the Middle East rather than have the United States protect them. Meanwhile, the Organization of the Petroleum Exporting Countries and its allies including Russia appear likely to extend a deal on curbing output when they meet on July 1-2. The chief executive of Saudi Aramco, state oil firm of OPEC’s de facto leader, said it had no plan to increase its current maximum output capacity of 12 million barrels per day (bpd), given sizeable spare capacity. Russian Energy Minister Alexander Novak said international cooperation on crude production had helped stabilise oil markets and was more important than ever. He also voiced concerns about demand. U.S. sanctions on Iran and Venezuela have cut oil exports from the two OPEC members but U.S. production has been rising, leading some Russian officials to accuse Washington of carving out market share for its energy exports.

Middle East Tensions Move Oil Prices Higher --  Oil prices were steady in early trading on Tuesday, before WTI rose to break the $58 mark. It seems U.S.-Iran tensions are slowly overpowering continued U.S.-China trade war concerns.   In a tweet on Monday, President Trump said that the U.S. was no longer dependent on oil coming through the Strait of Hormuz, and he suggested that other countries should pay for security in the region. “China gets 91% of its Oil from the Straight, Japan 62%, & many other countries likewise,” Trump wrote. “So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships on what has always been....a dangerous journey. We don't even need to be there in that the US has just become (by far) the largest producer of Energy anywhere in the world!” The U.S. has made navigation through the Strait a national security concern since the 1970s.    Following the aborted military strike from last week, the U.S. imposed a new round of sanctions on Iran, targeting top level officials, including Ayatollah Ali Khamenei. Iran’s crude oil and condensate exports averaged 1 mb/d in April and 800,000 bpd in May, according to S&P Global Platts. In response, Iran’s foreign ministry said the sanctions on top officials means the “permanent closure of the path of diplomacy.” Trump’s aim for a new nuclear deal “has thus become a distant dream,” Commerzbank said in a note. “It appears that the doors have been closed – at least for the time being – to any diplomatic solution to the crisis.”   Even as Russia has declared the oil contamination crisis over, roughly $500 million of tainted oil cannot find willing buyers, even at a steep discount of $10 to $15 per barrel. “I’m not willing to risk our equipment just for cheap crude,” an oil trader with a North Asian refinery told Reuters.  Pioneer Natural Resources is discarding its aggressive growth model, forgoing plans to pursue 1 mb/d of production, and instead is focusing on profitability, according to the Wall Street Journal. The strategy shift is hard to overstate, as it signals the growth-at-all-costs business model for shale drilling is reaching its limits. Questionable economics are catching up to the industry. Pioneer has slashed its workforce and is slowing down on drilling. The big question is if others in the industry will follow Pioneer’s lead.

Oil Mixed as Trump Sanctions Target Iran Leaders - U.S. crude settled a touch lower on Tuesday, but U.K Brent rose on heightened tensions in the Persian Gulf after Trump targeted Iran’s Supreme Leader Ayatollah Ali Khamenei and other top officials with sanctions above those imposed on the Islamic Republic. Tehran reacted with outrage, with President Hassan Rouhani calling the White House mentally disabled. The Iranian government added that hopes for a diplomatic solution had ended. New York-traded West Texas Intermediate crude settled down 7 cents, or 0.1%, at 57.83 a barrel. WTI finished last week up 9.4% for its best weekly gain since the week to Nov. 27, 2016. The September contract for London-traded Brent crude, the benchmark for oil outside of the U.S., settled up 10 cents, or 0.2%, at $64.28. Brent gained over 5% last week, its most since the week ended Feb. 15. The August contract was up 19 cents at $65.05 a barrel. Trump’s tweets, speeches and actions over the past year have often disrupted the rally in oil more than fed it. But over the past week, his administration and Tehran have been adding to crude's geopolitical premium with their tough talk. “The U.S. president does not want war with Iran,”  “But for survival, Iran is left with no choice than an escalation.” Abhi   “At least through year-end, (the) likelihood is just for more antagonism,” Rajendran said. Always relishing a good fight on Twitter, Trump countered Rouhani's remarks by saying, "Iran's very ignorant and insulting statement, put out today, only shows that they do not understand reality. Any attack by Iran on anything American will be met with great and overwhelming force." "In some areas, overwhelming will mean obliteration. No more John Kerry & Obama," Trump tweeted, referring to the way the former U.S. president and his secretary of state produced the first global nuclear accord with Iran. Just before the sanctions he announced on Iran’s top leadership, Trump said he was prepared to negotiate with Tehran, without preconditions, in a bid to ease tensions building since he withdrew the U.S. a year ago from a global nuclear deal with theIslamic Republic and began pressuring it with economic sanctions. Oil prices were also boosted by expectations that weekly data due from the U.S. Energy Information Administration on Wednesday will show a 2.89-million-barrel drop in crude stockpiles, almost matching the last decline of 3.11 million barrels. 

WTI Spikes After Biggest Crude Draw Since March -Oil prices are higher since last week's inventory data, thanks in large part to the chaos occurring in the Strait of Hormuz sparking some war premium back into a slightly squeeze-prone-positioning. “Oil squeezed higher last week on tensions in the Middle East, but with so much uncertainty regarding the trade war and global economy, the demand argument is too shaky for a sustainable rally just yet,” Tyler Richey, co-editor at Sevens Report Research in Palm Beach Gardens, Florida, wrote in a note to clients.But for tonight (and tomorrow's EIA data), all eyes will be back on inventories... API:

• Crude -7.55mm (-2.9mm exp) - biggest draw since March
• Cushing -1.26mm
• Gasoline -3.17mm
• Distillates +160k

After last week's crude draw, expectations are for more of the same this week and API reported a large 7.55mm crude draw - the biggest since March along with a sizable draw in Gasoline...  “It feels like demand is very, very weak,” said Michal Meidan, head China analyst at Energy Aspects. “On the supply side, the consensus really was OPEC rolling over the supply cuts,” so it’s quite surprising that prices haven’t risen further, especially with all the geopolitical stress, she said. WTI hovered just below $58 ahead of the inventory print , but as API data hit, it spiked to the highs of the day...

Oil prices rise on drop in US crude stocks, refinery outage - Oil prices rose on Wednesday, buoyed by an outage at a major refinery on the U.S. East Coast and industry data that showed U.S. crude stockpiles fell more than expected. Front-month Brent crude futures, the international benchmark, were up 82 cents at $65.87 per barrel. They earlier touched their highest since May 31 at $66.25 a barrel. U.S. West Texas Intermediate (WTI) crude futures were at $58.95 per barrel, up $1.12 from their last settlement. WTI earlier hit its highest level since May 30 at $59.13 a barrel. Philadelphia Energy Solutions is expected to seek to permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, two sources familiar with the plans said on Tuesday. The plant, located in the busiest and most densely populated part of the U.S. east coast, had already declared force majeure on some gasoline supplies following the fire. U.S. gasoline futures hit their highest level since end-May on Wednesday. “Oil is up in reaction to the API data combined with the refinery disruption on the U.S. East Coast. Gasoline is up and leading the complex and helping to keep momentum up on crude,” Olivier Jakob of Petromatrix consultancy in Switzerland said. “Refinery margins are improving globally because if that refinery can’t operate then you’ll have to compensate with higher runs elsewhere.” U.S. crude stockpiles fell by 7.5 million barrels in the week ended June 21 to 474.5 million, compared with analyst expectations for a decline of 2.5 million barrels, American Petroleum Institute data showed. Crude stocks at U.S. delivery hub Cushing, Oklahoma, fell by 1.3 million barrels.

WTI Spikes After Biggest Crude Inventory Draw In Almost 3 Years - Oil prices have accelerated their gains overnight to 4-week highs after API reported a bigger-than-expected crude draw and mid-east tensions remain high.“This is the market’s reaction to the unexpectedly pronounced fall in U.S. crude-oil stocks,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.“Apart from crude-oil stock trends, the focus here is also likely to be on gasoline demand” as the northern hemisphere moves into the peak summer driving season. DOE:

• Crude -12.778mm(-2.9mm exp) = biggest draw since Sept 2016
• Cushing -1.746mm
• Gasoline -996k
• Distillates -2.441mm

Following last week's bigger-than-expected crude draw and API overnight, DOE expectations were for a notable crude draw (with a whisper number of 3.2mm), but no one expected the massive 12.78mm collapse in inventories - the biggest since Sept 2016. But there were draws across the board... As the US oil rig count extends its declines, it appears - perhaps - that US crude production has peaked (for now)...

U.S. crude stocks slump nearly 13 million bbls as exports hit record high: EIA - (Reuters) - U.S. crude oil stocks fell by nearly 13 million barrels last week, the most in nearly three years, as exports hit a record high, the Energy Information Administration said on Wednesday. Crude inventories fell 12.8 million barrels in the week ended June 21, far surpassing analyst expectations for a decrease of 2.5 million barrels. That was the most since September 2016, according to the statistical arm of the Department of Energy. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 1.7 million barrels, EIA said. Oil prices jumped on the news, with U.S. crude futures nearly touching $60 a barrel for the first time in a month. U.S. futures were up 3.2% to $59.70 a barrel as of 10:44 a.m. EST (1444 GMT), after hitting $59.93 just after the data was released. Brent crude futures gained 2.6% to $66.76 a barrel. “The report was solidly bullish with the extraordinary crude oil inventory drawdown of over 12 million barrels,” said John Kilduff, a partner at Again Capital Management in New York. “Imports of crude oil plunged, while exports rose appreciably, closing in on 4 million bpd.” Net U.S. crude imports fell last week by 1.2 million barrels per day. Overall crude exports rose to 3.8 million bpd, beating its previous record of 3.6 million bpd in February. Refinery crude runs rose by 73,000 bpd, EIA data showed. Refinery utilization rates rose by 0.3 percentage points to 94.2% of total capacity. Gasoline stocks fell by 996,000 barrels, compared with analysts’ expectations in a Reuters poll for a 288,000-barrel gain. U.S. gasoline futures extended earlier gains, as that contract had already been rallying on news that Philadelphia Energy Solutions was planning to close the largest U.S. East Coast refinery after a massive fire last week. Distillate stockpiles, which include diesel and heating oil, fell by 2.4 million barrels, versus expectations for a 522,000-barrel increase, the EIA data showed.

U.S. oil, gasoline futures post highest settlements in 5 weeks - U.S. oil prices climbed by nearly 3% on Wednesday, as the U.S. government reported a weekly drop of nearly 13 million barrels in domestic crude stocks. Gasoline futures also rallied on news of the planned closure of a key East Coast refinery. Prices for both U.S. oil and gasoline settled at their highest in five weeks. “An eye opening [more than] 12 million-barrel draw in crude, which was 10 million barrels bigger than expected, should give support to the move” higher Wednesday, said Tariq Zahir, managing member at Tyche Capital Advisors. Given the drawdown in gasoline inventories and supply decline at the U.S. oil trading hub at Cushing, Okla., “we wouldn’t be surprised to see the $60 level get breached in WTI,” he said. “However, with the upcoming OPEC meeting and also the [Group of 20 leaders summit], we will see the next directional move on the results of these two events.” August West Texas Intermediate crude rose $1.55, or 2.7%, to settle at $59.38 a barrel on the New York Mercantile Exchange after tapping a high at $59.93. The settlement was the highest for a front-month contract since May 22, according to Dow Jones Market Data. International benchmark August Brent crude gained $1.44, or 2.2%, to $66.49 a barrel on ICE Futures Europe—the highest settlement in about a month. The Energy Information Administration on Wednesday reported that U.S. crude supplies dropped by 12.8 million barrels for the week ended June 21. Analysts polled by S&P Global Platts expected a decline of 2.8 million barrels in crude stocks, on average. The American Petroleum Institute on Tuesday reported a 7.5 million-barrel fall.

US oil jumps 2.7% to $59.38 per barrel after massive supply drop - Oil prices soared on Wednesday as traders cheered a massive drop in U.S. supply while tensions with Iran heightened after President Donald Trump imposed new sanctions on the country this week. U.S. West Texas Intermediate crude futures settled up 2.7% at $59.38 per barrel. Brent crude futures rose 2.1% at $66.42 per barrel. The Energy Information Administration said Wednesday that U.S. crude inventories fell by 12.8 million barrels last week. Crude hit its session high after the data was released. Last week was the biggest draw down since September of 2016, when inventories fell 14.5 million barrels.. “Domestic production ticked down, gasoline demand was strong, exports plunged, refinery utilization rose, it just had everything going for it.” “Whatever we’re not using here, we’re just exporting,” . “As our production increases, there will be more available for the world market. World oil demand continues to grow. We’re supplying that increased demand as well as some of the shortfall (from Iran and Venezuela).” Crude exports reached a record of 3.77 million barrels per day. Imports meanwhile fell to 800,000 per day. “It’s due to a significant decline in imports at the same time we exported a record amount of crude oil on the gulf coast,” said Lipow. Oil also got a boost amid simmering tensions between Iran and the U.S. Trump signed an executive order Monday imposing new sanctions on Iran in response to the downing of an unmanned U.S. drone last week. On Wednesday, he told Fox Business Network “I hope we don’t” have a war with Iran but it “would not last very long.” In addition to rising tensions with Iran, last week the East Coast’s largest gasoline refinery, Philadelphia Energy Solutions, had a series of explosions that shut down operations. The founder of Oil Price Information Service, Tom Kloza, said he does not know if Philadelphia Energy Solutions’ refinery is closing for good but if it does, the loss of supply will be made up from elsewhere, including from the Gulf Coast, Europe and Canada, as the entire world is well supplied.

Oil slips to $66 ahead of G20, OPEC meeting -- Oil slid to around $66 a barrel on Thursday, pressured by concerns over whether the G20 summit will produce a breakthrough on trade and perceptions that supply is ample despite the prospect of continued OPEC curbs. U.S. President Donald Trump said on Wednesday a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports if the two countries don’t agree. “A complete breakdown of the talks will have a negative impact on the financial markets and also on oil, but the sell-off in risky assets should be short-lived,” said Tamas Varga of oil broker PVM. “Oil bulls might have to wait until the second half of next week to start firing from all cylinders.” Brent crude, the global benchmark, was down 61 cents at $65.88 by 0840 GMT. U.S. West Texas Intermediate crude fell 35 cents to $59.03. Oil jumped by more than 2% on Wednesday after the latest U.S. petroleum supply report showed a larger-than-expected drop in crude stocks. Inventories fell 12.8 million barrels, more than the 2.5 million barrel decrease analysts had expected. Nonetheless, supply remains sufficient in the world’s biggest oil consumer. “U.S. oil inventories remain well above the five-year average, signalling a well-supplied market,” said Carsten Menke of Swiss bank Julius Baer. “Demand still looks soft, while the supply situation remains fragile.” Traders said uncertainty over a trade breakthrough at the G20 - which could translate into a stronger oil demand outlook - and doubts about continued output cuts by OPEC and its allies were crimping follow-through buying.

Oil edges higher ahead of G20, OPEC meeting – Brent crude futures rose 6 cents to settle at $66.55 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 5 cents to settle at $59.43 a barrel. The Organization of the Petroleum Exporting Countries is expected to roll over a deal on cutting supplies at a meeting next week and discuss deepening the curbs, Iraq’s oil minister said. Sources told Reuters this month that Algeria had floated an idea of deepening the cut by some 600,000 barrels per day. A deal between OPEC and its allies, including Russia to curb output by 1.2 million bpd, runs out at the end of June. Meetings on July 1-2 in Vienna will discuss the next steps. The OPEC meeting will follow the G20 summit this weekend. “If we don’t see OPEC extend its production agreement and the U.S. and China leave the G20 with more problems, this rally up to one-month highs could stop,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. U.S. President Donald Trump said on Wednesday a trade deal with Chinese President Xi Jinping was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports if the two countries don’t agree. “It’s clear that investors are a little cautious when it comes to this meeting, given how talks collapsed previously and the fighting talk we’ve since seen from both sides,” Tensions between the United States and Iran have also kept the market on edge. Iran is on course to breach a threshold in its nuclear agreement within days by accumulating more enriched uranium than permitted, although it had not done so yet by a deadline it set for Thursday, diplomats said, citing U.N. inspectors’ data.  Oil prices eke out new multiweek high as traders weigh G-20 trade uncertainty, supply factors - Oil prices ended modestly higher on Thursday to notch a new multiweek high, as global markets awaited pivotal trade discussions out the Group of 20 leaders summit and watched simmering tensions between the U.S. and Iran that could pose a risk to global supplies. The move followed a roughly 3% price surge Wednesday for U.S. prices, seen on data showing a weekly drop of nearly 13 million barrels in domestic crude supplies. On Thursday, August West Texas Intermediate crude added 5 cents, or nearly 0.1%, to settle at $59.43 a barrel. Prices on the New York Mercantile Exchange logged another settlement at the highest for a front-month contract since May 22, according to Dow Jones Market Data. Month to date, prices trade roughly 11% higher. “The strength in the oil market this month, in my opinion, is warranted,” “With the tensions in the Mideast supporting price, any setback in the Strait of Hormuz [major oil-shipping choke point] will impact supply immediately.” Tensions between the U.S. and Iran have grown after Iran shot down a U.S. surveillance drone over the Strait of Hormuz earlier this month. “Chinese demand is clearly on the rise, confirmed by stockpiles falling and consumption increasing,” he said, adding that a trade deal between the U.S. and China at the G-20 would be “supportive of oil prices.” International benchmark August Brent crude tacked on 6 cents, or about 0.1%, to end at a roughly one-month high of $66.55 a barrel, ahead of the contract’s expiration at the end of Friday’s session. It was up more than 3% for the month so far. President Donald Trump and his Chinese counterpart Xi Jinping will use the G-20 meeting this weekend to “press pause” on their continuing trade war, analysts said, although uncertainty persists. That spat has put the health of the economic recovery, and thus, energy demand, in question.

Oil prices little changed ahead of G-20 talks, OPEC meet - Oil prices were little changed on Friday as traders awaited any update on the Sino-U.S. trade war from a scheduled weekend meeting of the two countries’ presidents at the G20, and eyed next week’s OPEC gathering. Brent crude futures were up 15 cents, or 0.2%, at $66.70 per barrel. U.S. West Texas Intermediate (WTI) crude futures were up 14 cents, or 0.3%, at $59.60 a barrel. The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between U.S. President Donald Trump and Chinese President Xi Jinping on Saturday. A trade dispute between the world’s two biggest economies has weighed on oil prices, fanning fears that slowing economic growth could dent demand for the commodity. “While there are no expectations of a truce between the two parties, it will set the scene for the OPEC meeting a couple of days later,” ANZ Bank said in a note. Trump said on Wednesday a trade deal with Chinese President Xi was possible this weekend but he is prepared to impose U.S. tariffs on most remaining Chinese imports should the two countries disagree. “Even if U.S.-China trade talks turn positive, we think OPEC will extend the current production cuts until the end of the year. However, deeper cuts look unlikely, given the rising supply issues,” ANZ said. The Organization of Petroleum Exporting Countries (OPEC) and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts. “The market sentiment is that OPEC+ will agree to extend cuts, but after all what matters is how deep the cuts will be and how much Saudi Arabia and Russia will curb,” said Kim Kwang-rae, a commodity analyst at Samsung Futures in Seoul. OPEC+ members agreed to curb oil output by 1.2 million barrels per day from Jan.1. Russian President Vladimir Putin said in an interview with the Financial Times on Thursday that the OPEC-led supply cut helped stablise oil markets and the future of the output deal was expected to be on the agenda at the G20 summit.

Oil falls after parties to nuclear agreement vow to intensify efforts to normalize trade with Iran - Oil prices fell just before the settlement on Friday after the remaining parties to the Iran nuclear deal vowed to help normalize trade with the Middle Eastern nation. U.S. West Texas Intermediate (WTI) crude futures settled down 96 cents, or 1.6%, at $58.47 a barrel after trading in a narrow range for most of the session. European parties to the Iran nuclear deal have been trying to rescue the accord and are trying to keep Iran from violating the deal. Crude futures were little changed for most of Friday ahead of talks over the trade dispute between the U.S. and Chinese presidents this weekend and on production cuts from OPEC on Monday. Tensions between the United Sates and Iran have also been keeping markets on edge. A week after President Donald Trump called off air strikes on Iran at the last minute, the prospect that Tehran could soon violate its nuclear commitments has created additional diplomatic urgency to find a way out of the crisis. The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between Trump and Chinese President Xi Jinping on Saturday. A trade war between the world’s two biggest economies has weighed on prices, fanning fears that slowing economic growth could dent demand for oil. Trump said he hoped for productive talks with the Chinese president, but said he had not made any promises about a reprieve from escalating tariffs.

Oil prices fall, but post weekly gain ahead of G20 talks, OPEC (Reuters) - Oil prices fell on Friday but posted their second straight week of gains ahead of trade talks between the U.S. and Chinese presidents this weekend, and on widely expected production cuts from OPEC on Monday. The most active September Brent crude futures LCOU9 fell 93 cents to settle at $64.74 a barrel. Brent August crude LCOc1 futures settled unchanged at $66.55 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures lost 96 cents to settle at $58.47 a barrel. Brent posted a gain of more than 20% in the first half of 2019, while WTI marked a gain of more than 25%. Both contracts also notched their second straight weekly gain. Oil futures fell just ahead of settlement as investors sized up positions before meetings this weekend and next week that could lend direction for the market. The leaders of the G20 countries meet on Friday and Saturday in Osaka, Japan, but the most anticipated meeting is between U.S. President Donald Trump and Chinese President Xi Jinping on Saturday. A trade war between the world’s two biggest economies has weighed on prices, fanning fears that slowing economic growth could dent demand for oil. Trump said he hoped for productive talks with the Chinese president, but said he had not made any promises about a reprieve from escalating tariffs. The Organization of the Petroleum Exporting Countries and some non-members including Russia, known as OPEC+, will hold meetings on July 1-2 in Vienna to decide whether to extend their supply cuts. “You had a wave of selling come in advance of the OPEC and non-OPEC meeting on Monday, where it’s fully expected that they’re going to rollover production cuts,” said Andrew Lipow of Lipow Oil Associates in Houston. “But ironically they’re doing that because they’re seeing the oil demand growth forecast get revised downward and that’s contributing to a sense that we remain oversupplied.” Russia is cutting its oil output in June by slightly more than envisaged in the OPEC+ deal, RIA news agency cited Russian Energy Minister Alexander Novak as saying.

U.S. oil prices fall, but gain 9% for month with U.S.-China trade talks, OPEC meeting ahead - U.S. oil prices settled lower Friday, but gained more than 9% for the month of June, as traders awaited the outcome of Sino-U.S. trade talks in Japan Saturday and meetings early next week between key oil producers.Traders are eager to hear of any progress in Sino-U.S. trade discussions at the Group of 20 meetings, which could help to support expectations for oil consumption by the two largest economies in the world.Also in focus was next week’s gathering of the Organization of Petroleum Exporting Countries, which should include a production update and potential commentary on tensions between the U.S. and Iran, friction that is seen posing a risk to oil production and shipping. “The duration of the U.S. and China trade war is the single most important factor” in the decision making process by OPEC and its allies, known as OPEC+, related to the production cut agreement, said Rob Thummel, portfolio manager at investment firm Tortoise. “Talks, signals, and even better— an agreement—between the U.S. and China at the G20 this weekend will dictate the OPEC+ decision.”  August West Texas Intermediate crude lost 96 cents, or 1.6%, to settle at $58.47 a barrel. Prices on the New York Mercantile Exchange on Thursday settled at the highest for a front-month contract since May 22. Month to date, prices climbed 9.3%, according to Dow Jones Market Data.International benchmark August Brent crude settled unchanged at $66.55, holding ground at a roughly one-month high. Prices on a front-month contract basis were up 3.2% for the month, according to Dow Jones Market Data. The August contract expired Friday and the new front-month contract, September Brent BRNU19, -0.29% fell 93 cents, or 1.4%, to finish at $64.74. President Donald Trump and his Chinese counterpart Xi Jinping will use the G-20 meeting this weekend to “press pause” on their continuing trade war, analysts said, although uncertainty persists, especially around the treatment of technology security. The spat has put the health of global economic growth, and thus, energy demand, in question.

Trump threatens ‘obliteration,’ Iran calls White House ‘mentally retarded’  (Reuters) - U.S. President Donald Trump threatened on Tuesday to obliterate parts of Iran if it attacked “anything American,” in a new war of words with Iran which condemned fresh U.S. sanctions on Tehran as “mentally retarded.” But Trump later left the door open for talks, saying that Iran should speak to the United States “peaceably” to ease tensions and potentially lift U.S. economic sanctions.The U.S. president on Monday signed an executive order imposing additional, largely symbolic, sanctions against Iranian Supreme Leader Ayatollah Ali Khamenei and other senior figures, with punitive measures against Foreign Minister Mohammad Javad Zarif expected later this week. Iran shot down a U.S. drone last week and Trump said he had called off a retaliatory air strike with minutes to spare, saying too many people would have been killed. It would have been the first time the United States had bombed the Islamic Republic in four decades of mutual hostility.

Miscalculations in the US-Iran conflict could lead to a 'world war,' says Malaysia's Mahathir - The United States is provoking Iran and growing risks of miscalculation could lead to a “world war,” according to Malaysia’s Prime Minister Mahathir Mohamad. “I think as far as I can see, it is America, which is making all the provocation,” Mahathir told CNBC’s Tanvir Gill on Saturday, when asked which side might be responsible for miscalculations. “First, they withdrew from the (nuclear) treaty, and now they’re sending warships to the Gulf, and doing things that will provoke Iran,” he told CNBC in Bangkok, Thailand where Asian leaders were gathered for the Association of Southeast Asian Nations summit. Tensions between the the U.S. and Iran tested new highs on Thursday, when Tehran shot down an unmanned American military spy drone. If they go to war, it will not be Iran against America. It will be a world war. \ The shooting of the drone prompted U.S. President Donald Trump to approve military strikes on several Iranian targets — but he abruptly called off the attacks late Thursday. The president said he withdrew the plan because he believed the loss of life — estimated to be about 150 people — would have been disproportionate to the downing of an unmanned drone. “I am in no hurry,” Trump said on Twitter Friday. “Our Military is rebuilt, new, and ready to go.” Even before the latest escalation in tensions, the two countries appeared to be heading closer toward a military conflict — although both sides have said it’s something they hope to avoid. The Pentagon has in recent months announced plans to deploy thousands of troops to the Middle East to counter Iran, amid allegations the Islamic country was responsible for attacks on oil tankers in the region. Tehran has rejected those accusations. Mahathir on Saturday warned: “If they go to war, it will not be Iran against America. It will be a world war.” He explained that other countries that do not want to see nuclear weapons being used “will have to come in and put a stop to it.”

Iran Threatens To Shoot Down More Surveillance Drones, Claims US Cyberattack Failed - As President Trump prepares to move ahead with plans to slap new sanctions on Iran - which he promised over the weekend - the Iranians are doubling down on their own threatening language, warning that their armed forces wouldn't hesitate to shoot down more US surveillance drones if Washington continues to press them.  Late last week, the Trump administration reportedly called off a planned military strike after Iranian forces shot down the drone, which was worth more than $100 million, and furthermore warned that they could have shot down an American spy plane carrying dozens of people (according to the Iranians) but they chose not to (an indication of their benevolence before the Trump administration).  But even as Washington continues to lather its belligerent rhetoric with offers to engage with Tehran, the Iranians remain extremely wary, and have followed up mostly with threats of their own, according to the AP, Iran’s naval commander, Rear Admiral Hossein Khanzadi, warned Washington that Tehran is capable of shooting down other American spy drones that drift into Iranian airspace (Washington contends that the drone was flying over international waters when it was shot down). "We confidently say that the crushing response can always be repeated, and the enemy knows it," Khanzadi was quoted as saying by the semi-official Tasnim news agency during a meeting with a group of defense officials.  Meanwhile, Tehran has rebutted reports that Washington launched a cyberattack against Iran late last week by warning that the attack wasn't successful. In a number that sounds slightly exaggerated, Iran's minister for information said Iran 'neutralized' 33 million attacks with its firewall last year.

Trump doesn't want to protect other countries' oil tankers — that could be a big problem -- A flurry of oil tanker attacks in the world’s busiest transit lane for seaborne oil shipments has triggered grave concerns about maritime security, with President Donald Trump suggesting the U.S. could stop providing protection to other ships. Six oil tankers and a U.S. spy drone have been attacked since May either in, or near, the Strait of Hormuz — a strategically important waterway which separates Iran, Oman and the United Arab Emirates.Trump has since said the U.S. may lessen its role in the Strait of Hormuz, as domestic oil and gas output soars and U.S. energy imports from the Middle East decline.The suggestion indicates a weakening of a nearly 40-year-old U.S. policy to defend national interests in the Persian Gulf and appeared to contradict White House officials seeking to reassure allies of the U.S. commitment to safe transport of energy through the narrow waterway. In response to Trump, Japan’s chief cabinet secretary, Yoshihide Suga,reportedly said Tuesday that the safety of shipping in the Strait of Hormuz is “a matter of life and death for our country in terms of energy security and it is extremely important for the peace and prosperity of the international community.” The Strait of Hormuz — located between the Persian Gulf and the Gulf of Oman — is seen as one of the most important waterways in the world, linking crude producers in the Middle East with key markets in the rest of the world. It plays a pivotal role for Asian economies that are heavily dependent on oil imports from the Middle East.Flows through the narrow channel in 2018 made up about one-third of total global seaborne traded oil. More than one-quarter of global liquefied natural gas trade (LNG) also transited the Strait of Hormuz last year. Daily oil flow in the Strait of Hormuz averaged 21 million barrels per day in 2018, according to the U.S. Energy Information Administration (EIA). That’s the equivalent of about 21% of global petroleum liquids consumption.

Aramco Can Keep Crude Flowing if Hormuz Hit-- Saudi Arabian Oil Co. has the experience and infrastructure it needs to keep crude flowing should supply through the Strait of Hormuz be disrupted, according to the chief executive officer of the state-run producer. “We are increasing our readiness,” Amin Nasser said in an interview in Seoul on Tuesday. “We can supply through the Red Sea and we have the necessary pipelines and terminals.” Brent crude has jumped about 8% since mid-June as worsening relations between the U.S. and Iran have magnified fears that shipments could be disrupted through the Strait of Hormuz, a narrow choke-point through which about one-third of all seaborne crude flows. There have been a series of attacks on tankers over the past few weeks and the downing of an U.S. Navy drone, which American officials have blamed on Iran. “It’s a concern for the whole world because that is an important supply route for a lot of crude, not only from Saudi Arabia,” Nasser said. Saudi Aramco operates a pipeline with a capacity of 5 million barrels a day that carries crude 1,200 kilometers (746 miles) between the Gulf and Red Sea, enabling it to ship oil from both sides of the country. But that compares with the company’s total exports of around 7 million barrels a day, meaning it would need to find other ways of getting any remaining oil to the market. In mid-May, flows through the cross-country link were halted after two pumping stations were hit by a drone attack by Yemen’s Iranian-backed Houthi rebels. The state-run company, which is the world’s biggest oil exporter, traces its beginnings to the 1930s and kept pumping crude through the Iran-Iraq war and the two Gulf Wars. Aramco would draw on that experience to keep supplies flowing, Nasser said. “We had experience through the Gulf conflict but we have always met our commitments to our customers,” he said. “So we have a track record of building enough flexibility in the system to manage a situation or a crisis.”

Trump says any war with Iran 'would not last very long,' but he still hopes for no conflict - President Donald Trump said Wednesday “I hope we don’t” have a war with Iran, but it “would not last very long.” In an interview with Fox Business Network, Trump also explained his decision to call off military strikes on Iran in retaliation for its downing of a U.S military surveillance drone last week. “I decided not to kill a lot of Iranians,” said. “I like Iranians.” Asked about the possibility of war with Iran. Trump said: “I can tell you that, it would not last very long.” “We’re in a very strong position,” he added. Trump suggested that he would not deploy U.S. troops to fight Iran if there were a conflict. “I’m not talking boots on the ground,” he said. Trump on Tuesday warned on Twitter that any Iranian attack on Americans would be met with “great and overwhelming force” and “obliteration.” “Iran leadership doesn’t understand the words ‘nice’ or ‘compassion,’ they never have,” Trump wrote. “Sadly, the thing they do understand is Strength and Power, and the USA is by far the most powerful Military Force in the world, with 1.5 Trillion Dollars invested over the last two years alone.” Trump told reporters in the Oval Office on Tuesday that he does not need an “exit strategy” on the dispute with Iran. “We would love to be able to negotiate a deal if they want to. If they don’t want to, that’s fine, too,” Trump said.

Trump says 'not talking boots on the ground' if action taken against Iran (Reuters) - U.S. President Donald Trump said on Wednesday that he was “not talking boots on the ground” should he take military action against Iran and that he had “unlimited time” to try to forge an agreement with Tehran. Iran suggested it was just one day from breaching a limit in the 2015 nuclear deal that restricted its stockpile of uranium, a move that would pressure European countries aiming to be neutral to pick sides. The fate of the multilateral nuclear deal, under which Iran agreed to curbs on its nuclear program in return for relief from economic sanctions, has been at the heart of the U.S.-Iran dispute which took on a military dimension in recent weeks. Last week Iran shot down a U.S. drone it said was in its air space, which Washington denied. Trump called off retaliatory air strikes at the last minute, saying too many people would have died. Washington also accused Tehran or its proxies of attacks in May and June on six tankers in the Gulf region, which Iran denies. Asked on Fox Business Network if a war was brewing, Trump replied: “I hope we don’t but we’re in a very strong position if something should happen.” “I’m not talking boots on the ground,” Trump said. “I’m just saying if something would happen, it wouldn’t last very long.” Speaking later at a gathering of religious conservatives, the U.S. president talked about whether there could be a new agreement with Iran, suggesting he could live without one. “If it doesn’t happen, that’s fine with me,” Trump said. “I have unlimited time, as far as I’m concerned.” Trump last year unilaterally withdrew from the nuclear deal with Iran struck by his predecessor President Barack Obama, arguing that it did not go far enough to restrict Iran’s nuclear and missile programs and other activities in the Middle East. He has since re-imposed U.S. economic sanctions on Iran, including taking the unprecedented step in May of trying to drive Iran’s oil exports to zero.

More US Warships Arrive In The Mideast Even As Trump Signals Draw Down - Despite Trump taking to Twitter Monday morning to question, "why are we protecting the shipping lanes for other countries (many years) for zero compensation," and asserting further that "All of these countries should be protecting their own ships" — the US naval build-up in the Persian Gulf region continues. The US Navy confirmed early Monday that more military ships have arrived in the US 5th Fleet area of responsibility, which includes the Persian Gulf and Middle East waters. Though not pinpointing their exact location, the additional deployment which comes in the wake of last week's US drone shoot down by Iran, that saw Washington coming very close to launching major strikes in response, is described in Navy statements as including a major amphibious assault ship and two support vessels: Monday's Navy statement says the USS Boxer amphibious assault ship, along with the amphibious transport dock USS John P. Murtha and the amphibious dock landing ship USS Harpers Ferry arrived in the 5th Fleet's area of responsibility. The AP notes that the the USS Boxer carries the 11th Marine Expeditionary Unit and a combat helicopter squadron, and departed the US west coast at the start of May as part of a regularly scheduled deployment; however, it's quick transition to the 5th Fleet area is in support of the USS Abraham Lincoln carrier strike group already there in response to Iran.  The new military arrivals to the region came just as US Secretary of State Mike Pompeo met with Saudi King Salman and separately with Crown Prince Mohammed bin Salman in the port city of Jeddah to tackle the escalating crisis with Iran in the Persian Gulf.

Iran Says US Drone Came Down Full 4 Miles Inside Its Territory --On Wednesday Iran's military came forward with a new, detailed claim of the US drone's location it shot down last Thursday, which nearly resulted in a major American attack on the country.The head of the Iranian Armed Forces' Geographical Organization, Brig. Gen. Majid Fakhri, was cited as saying by the semi-official Tasnim news agency that the drone wreckage was found four miles inside Iran's territorial waters."After the shooting down of the drone, initial actions were taken and its location was identified," Gen. Fakhri said, and added, “The drone was definitely in the waters of Iran as reports show that it was four miles or more than seven kilometers inside the Iranian territorial waters.” From the start the US has insisted the nearly quarter-billion dollar RQ-4A Global Hawk UAV was in international airspace, and as a joint Stars and Stripes-Bloomberg report notes, some of the basic facts are still being disputed, especially the drone's flight path. According to the Iranian military's latest account of the events:The IRGC said on Thursday that a US spy drone that violated the Iranian territorial airspace in the early hours of the day was shot down by the IRGC Aerospace Force’s air defense unit near the Kooh-e-Mobarak region in the southern province of Hormozgan.The intruding drone was reportedly shot by Iran’s homegrown air defense missile system “Khordad-3rd”. The Islamic Revolutionary Guard Corps (IRGC) had said from the start it was responding to a violation of Iranian airspace, which it called a "red line".

Not Enough - UAE Rejects US Proof Of Iran's Role In Prior Tanker Attacks -  Russia has given official backing to Iran's version of events concerning last week's drone shoot down which nearly sparked a major US-Iran war, as Bloomberg reports, and lashed out at the White House's sanctioning of Iran's Supreme Leader. "There is a very narrow window left because this is an absolutely insulting step for intergovernmental relations. But hope dies last," a top Russian Foreign Ministry official in Moscow, Zamir Kabulov told reporters of Washington's new sanctions on Khamenei."Iran will never be alone if, God forbid, the U.S. ever takes absolutely crazy and irresponsible actions against it," he said. "Not only Russia, but many countries sympathize with Iran."Meanwhile Russian media is reporting exclusive quotes from the United Arab Emirates' foreign minister which brings the entire series of events which led to the current crisis into question. Specifically the UAE has called into question unfounded US assertions that there's "proof" that Iran was behind prior May tanker attacks in the Gulf of Oman,  which set the stage for the June 13 limpet mine incident and resulting blame game.  Though last Thursday's dramatic drone shoot down over the gulf now makes the tanker "limpet mine attack" incident seem like a distant memory, it was a series of tanker incidents in the gulf which hastened the US-Iran collision course in the Strait of Hormuz, given the US military build-up in response to the May as well as mid-June events.  “We cannot accuse any nation at the moment because we don’t have indisputable proof,” UAE foreign minister Sheikh Abdullah bin Zayed Al Nahyan said Wednesday during a joint media conference with his Russian counterpart Sergey Lavrov in Moscow. During that prior May incident, two Saudi tankers were reported attacked near the Strait of Hormuz, along with two other international vessels off the UAE port city of of Fujairah, in what the Saudis and their allies dubbed “sabotage operations”.  Appearing to indirectly respond to firm assertions out of Washington that none but Iran could have been responsible - and specifically the elite IRGC force - the UAE FM said further: If other nations have more concrete information, I am sure the international community will gladly hear them out. But we have to be very serious and careful. It has to be reliable, scientifically confirmed information which would convince the international community.

Dozen US F-22 Stealth Jets Arrive In Qatar To Counter Iran - Up to a dozen US F-22A Raptor Stealth Jets have touched down at the US Air Base Al-Udeid in Qatar amid soaring tensions with Iran, and as the Pentagon continues to bolster its forces in the gulf after the recent prepared military attack called off by President Trump at the last minute. The aerial defense analysis site, The Aviationist, confirmed the new US stealth jet deployment and noted, "While it’s still not confirmed that the deployment of the Raptor was just a pre-planned rotation to the region (rather than part of a build up of forces around Iran), according to rumors, more tactical assets are being moved to the Gulf area in the following days."#BREAKING: Twelve F-22A 5th Gen. fighter jets of 94th Fighter Squadron, 1st Fighter Wing arrived Al-Udeid AB, #Qatar in-order to reinforce #USAF's combat capability in #MiddleEast for confronting hostile activities of #Iran's Islamic Regime in the region when it is necessary. pic.twitter.com/1MAfD8dft5— Babak Taghvaee (@BabakTaghvaee) June 28, 2019 On Thursday at least nine of the reported dozen F-22 Raptors belonging to the 192nd Fighter Wing of the Virginia Air National Guard were documented by local photographers as departing Moron Air Base in southern Spain, having been deployed from Joint Base Langley-Eustis, Virginia. They flew over the Mediterranean and landed in Qatar, despite their usual deployment base to the region being Al Dhafra in UAE, according to The Aviationist.

Iran seen breaking nuclear pact limit in days; Trump says 'no time pressure' - (Reuters) - Diplomats said Iran is on course to breach a threshold in its nuclear agreement within days but U.S. President Donald Trump, who has ratcheted up pressure on the Middle Eastern country, said there was “absolutely no time pressure” on the issue. The prospect that Tehran could soon violate its nuclear commitments, a week after Trump called off air strikes on Iran at the last minute, has created additional diplomatic urgency to find a way out of the crisis. Iran had set Thursday as a deadline beyond which it would exceed the threshold for stockpiles of enriched uranium allowed under its 2015 nuclear deal with major powers, which Tehran is still following even though Washington abandoned it last year. The diplomats, citing U.N. inspectors’ data, said the Islamic Republic was on course to exceed the limits soon by accumulating more enriched uranium than permitted but it had not done so by Thursday. However, Trump said of Iran on Friday: “We have a lot of time. There’s no rush.” “They can take their time. There’s absolutely no time pressure. I think in the end, hopefully, it’s going to work out. If it does, great - and if it doesn’t, you’ll be hearing about it,” he said as he greeted Indian Prime Minister Narendra Modi on the sidelines of a G20 summit in Osaka.

Iran says European efforts to salvage nuclear deal are not enough - European officials said they created a trading vehicle to help Iran get some relief from U.S. sanctions, but Tehran may see the proposal as insufficient to stop it from moving forward with a threat to violate its nuclear deal. The remaining parties to the nuclear deal, abandoned by the U.S. last year, have been scrambling to find a way to keep Iran from leaving the agreement. They held an urgent meeting in Vienna in an effort to hold Iran from violating the deal. The trade mechanism was announced after the meeting. But Iran said it would continue with its plan to enrich uranium even though it is just days away from a volume that would violate the nuclear accord. Iran’s deputy foreign minister Abbas Araghchi said Friday he would report back to Tehran on the talks. “The decision to reduce our commitments has already been made and we will continue unless our expectations are met,” he said. Araghchi said the talks were a “step forward, but it is still not enough and not meeting Iran’s expectations.” The U.S., meanwhile, warned European companies that they have a choice of doing business with the U.S. or Iran. Brian Hook, State Department’s special representative on Iran, made the comment to reporters in London Friday. “The Europeans are basically trying to placate them by setting up this trade mechanism. It’s basically a barter trade system. They had high expectations that it could handle such things as oil, which we saw as unrealistic,” said Henry Rome, Eurasia Group analyst on Iran. “It’s mainly designed to allow Iran to buy humanitarian goods. What we saw today was basically the Iranians saying we’ll get back to you. The likely outcome is it’s not good enough, and we’ll get additional nuclear escalation.”

Iran seizes 1,000 bitcoin mining machines using subsidized power - (Reuters) - Iranian authorities have seized about 1,000 bitcoin mining machines in two abandoned factories, state television reported, after warnings that the activity had led to a spike in consumption of government-subsidized electricity.“Two of these bitcoin farms have been identified, with a consumption of one megawatt,” Arash Navab, a power official in the central province of Yazd, told the television.The machines, which produce cryptocurrencies that are banned in Iran, were mostly to blame for a 7% increase in power consumption in the month to June 21, according to an Energy Ministry spokesman, quoted by the website of state-run Press TV. In 2018, Iran’s central bank banned the country’s banks from dealing in cryptocurrencies, including bitcoin, over money-laundering concerns.

US Threatens to Sanction Any Nation That Imports Iranian Oil— President Donald Trump’s special envoy for Iran further stoked tensions between Iran and the U.S. on Friday when he said the United States will sanction any country that imports Iranian crude oil.Envoy Brian Hook, in his comments to reporters in London, said that there were no exemptions, reiterating a threat the Trump administration made two months earlier.“We will sanction any imports of Iranian crude oil,” Hook said, according to Reuters.  “There are right now no oil waivers in place,” said Hook, who added the administration intends to “sanction any illicit purchases of Iranian crude oil.”Hook’s comments came four days after the Trump administration announced new economic sanctions against Iran and one day after Iran Foreign Minister Javad Zarif told Trump on Twitter that “Sanctions aren’t [an] alternative to war; they ARE war.”“Negotiations and threats are mutually exclusive,” Zarif added.Special envoy Hook’s new statements came as representatives to the remaining parties to the 2015 nuclear accord—the U.S. ditched it last year—met in the Austrian capital. Per The Associated Press: At the heart of the meeting in Vienna is Iran’s desire for European countries to deliver on promises of financial relief from U.S. sanctions. Iran is insisting that it wants to save the agreement and has urged the Europeans to start buying Iranian oil or give Iran a credit line to keep the accord alive.  President Trump, who’s at the G20 summit in Osaka, Japan through Saturday, indicated that his administration is keeping an attack on Iran still on table.  “I think that in the end, hopefully, it’s going to work out,” said Trump of the conflict between the two nations. “If it does, great. And if doesn’t, you’ll be hearing about it.”

The Oil Crisis Saudi Arabia Can't Solve -- Saudi Arabia’s CEO Amin Nasr’s message to the press that oil flows to the market are guaranteed, should be taken with a pinch of salt.Looking at the current volatility in the Persian/Arabian Gulf and the possibility of a temporary closure of the Strait of Hormuz, the Aramco CEO’s message might be a bit overoptimistic. In reality, Aramco will not be able to keep the necessary crude oil and products volumes flowing to Asian and European markets in the case of a full Strait of Hormuz blockade. Even that Aramco owns and operates a crude oil pipeline with a capacity of 5 million bpd, carrying crude 1,200 kilometers between the Arabian Gulf and Red Sea, much more is needed to keep the oil market stable.    Nasr’s move to stabilize the market is praiseworthy but should be seen as an attempt to quell fears of traders and financial analysts, especially just before the OPEC+ meeting in Vienna next week. Nasr reiterated that Aramco (aka the Kingdom) is able to supply sufficient crude through the Red Sea, reiterating that the necessary pipeline and terminal infrastructure is there. However, what analysts tend to forget, Nasr’s statement is only linked to Saudi’s oil export volumes, which will likely be not higher this summer than around the level this pipeline can support. The real issue, if it comes to a full-blown conflict, is that not only Saudi oil is being threatened. At present, between 20-21 million bpd of crude and petroleum products are transported via the Strait of Hormuz. Saudi exports are a vast part of it, but also the UAE, Iraq, Kuwait, Bahrain, Qatar and Iran, will have to look at additional routes. A closure or military action in the region will cause a temporary disruption for all maritime traffic. Besides the options that are the already on the table, such as the Saudi onshore pipeline and the UAE’s Fujairah pipeline,  no other real alternatives are available, as overland trucking or rail transport is minimal. Transferring volumes via the Saudi and UAE’s pipelines is not an option at all, as the total capacity of the two is less than 10 million bpd, representing not even 50% of the current maritime flows through Hormuz. Another thing that should be noted is that pipelines can’t ship crude and crude products at the same time.

British target training of Saudi air force 'did not stop Yemen atrocities” - Government claims that British military training improved the humanitarian record of the Saudi air force have been contradicted by documents suggesting it did little to prevent atrocities. On 20 June the court of appeal ruled that British arms sales to Saudi Arabia were unlawful, in a judgment that accused ministers of failing to properly assess the risk the weapons posed to civilians in Yemen. Government lawyers, attempting to justify the arms exports, argued that British training for the Royal Saudi Air Force embedded good practice and ensured “greater compliance” with international humanitarian law. Yet court documents from the case show that indiscriminate bombing of civilians by the Saudi-led coalition in Yemen took place after British training – sometimes almost immediately after. Three days after Britain provided training – between 27 July and 14 August 2015 – up to 70 people were killed by airstrikes and shelling at the port at Hodeidah. The following month airstrikes on a wedding in the village of Wahijah, near the Red Sea port of al-Mokha, killed at least 135 people. In October 2015 repeated airstrikes on a Médecins Sans Frontières hospital in Haidan occurred, despite the hospital’s GPS coordinates being shared with the coalition. The episode prompted the UK to provide further training to the Saudi air force between October and January, including targeting training. However, in March 2016 airstrikes by the Saudi-led coalition on a crowded village market in Hajjah province killed 106 people. Days later deadly attacks struck a civilian building in the city of Taiz. “We are always being told how positive the UK’s influence supposedly is on Saudi forces, but nothing could be further from the truth. The atrocities and abuses have continued unabated, regardless of UK training and engagement.

UN Sent 24,000 Tons of Infested and Rotten “Aid” to Starving Yemenis— Since 2015, Yemen’s Customs and Consumer Protection has had to either send back or seize over 24,000 tons of aid determined unfit for consumption sent from the United Nations World Food Program (WFP). Among the “aid” included 15,000 tons of supplementary food for pregnant women and medicine. On November 6, Yemen’s Port Authority rejected and sent back a vessel from the World Food Program containing 10,000 tons of white wheat. After inspection, authorities noticed the wheat was infested with live insects. A similar incident occurred in February when authorities inspected a WFP shipment containing 96,000 bags wheat was not stamped with an expiration or production date. Another particularly notable incident took place in May of 2019. At this time, Yemeni authorities found dead insects inside 8 million kilograms of wheat. Throughout June, authorities were forced to reject nearly 130,000 bags of white beans that were either wet, rotten, or infested with dead insects. Meanwhile, the United Nations has attempted to shift blame for their unfit shipments on the Sana’a government, led by Ansarullah aka. the “Houthis.” On June 20, the UN announced it would begin suspending aid shipments to Yemen, citing accusations of Ansarullah “diverting food” shipments. The UN claimed it had no problem with the Saudi-backed government in Aden, which likely has no issue distributing rotten food to its citizens. According to the WFP, the suspension of aid is expected to impact 850,000 people.Yemen isn’t the only crisis impacted by the UN’s carelessness in regards to sending disgusting aid shipments. In 2016, the UN was caught  sending expired food to Somalia meant for victims of a devastating drought.

Millions Have Fled War-torn Yemen – the US Has Accepted 50  - Since a devastating war began in Yemen in 2015, causing thedisplacement of 3 million people, the United States has taken in just 50 Yemeni refugees.Despite the deteriorating conditions in Yemen, where citizens must endure outbreaks of famine and disease amid the fighting, the number of Yemeni refugees resettled in the US has fallen almost to zero since Trump entered office.Just two Yemeni refugees were resettled in the US in fiscal year 2018 and one has been resettled so far in fiscal year 2019, according to state department statistics.This is no coincidence, considering Trump has dismantled the US refugee program, setting a record low ceiling of 30,000 refugees in total for fiscal year 2019. Advocates say this move has guaranteed that a backlog of refugees in war-torn countries such as Yemen will only become more clogged.“You can’t overstate the impact on Yemenis seeking safety in the United States. It’s become almost impossible,” said Nazanin Ash, vice-president of public policy and advocacy for the International Rescue Committee. “You have extraordinary levels of humanitarian suffering in Yemen. People can’t leave, and aid can’t get in.” As the US continues to support its close ally Saudi Arabia in the war, sellingweapons and providing intelligence, civilians in Yemen are at constant risk of airstrikes and street bombings. With the war showing little sign of slowing down, the halt of the US refugee program – which had typically taken in thehighest number of refugees in the world – is devastating.

Yemen′s Houthi rebels strike Saudi airport - Yemen's Houthi rebels attacked Abha airport in southwestern Saudi Arabia, killing one person and injuring seven others, the kingdom's official media outlet SPA said Sunday. Houthi rebels said earlier that they had launched drone attacks on airports in Abha and Jizan, both near the border with Yemen. Saudi media made no mention of an attack in Jizan. Saudi-owned Al Arabiya TV said the suspected drone hit a parking lot in Abha airport, in what a Riyadh-based military coalition described as "a terrorist attack by the Iran-backed Houthi militia."Earlier this month, Houthi rebels launched a cruise missile at Abha airport, wounding 26 people. Since then, Saudi Arabia has intercepted multiple Houthi-launched drones.The Houthis also carried out a drone strike on a key Saudi oil pipeline earlier this month. The uptick in Houthi attacks on Saudi Arabia comes as tensions between the United States and Iran soar, threatening a major conflagration in the region after a series of attacks on oil tankers near thestrategic Strait of Hormuz and the downing of a US drone by Iran this week.

Yemen urges intl pressure to curb potential oil spill in Red Sea - The Yemeni government renewed calls on the United Nations to pressure Houthi militias into allowing international teams to prevent the breakout of a potentially disastrous oil spill at the Safir offshore oil platform, which floats off Hodeidah’s northern coast. In an address to the UN Secretary General, Yemeni Deputy Foreign Minister Mohammed Abdullah al-Hadrami stressed the need to get Houthis to grant the international body’s probing technicians access to Safir. The facility contains more than one million barrels of crude oil pumped before Houthis staged a nationwide coup four years ago. The Iran-backed insurgents refuse allowing the internationally-recognized government from exporting that oil, and threaten blowing up the naval facility if they are not allowed to sell the oil reserves themselves. Any explosion at Safir will cause a catastrophic oil spill with irreversible environmental damage. Apart from Houthi threats of attack, Hadrami warned against the Houthis’ continued blocking of assessment teams from examining the reservoir, which he said was in a corrosive condition that could lead up to a shocking environmental disaster that would contaminate Red Sea and regional waters. Mohammed Ali al-Houthi, President of the Revolutionary Council, a body formed by the militants, had tabled an offer previously to sell the oil reserves stored in Safir and have the freely-elected government and insurgents split revenues. Hadrami, for his part, stressed the government's keenness to its long-standing demand for solutions on this particular issue. He underscored that the government has cooperated fully with the UN in this regard and is waiting for experts to evaluate the development of an effective strategy. The Yemeni deputy foreign minister also placed blame on the militias for causing an environmental disaster in the Red Sea.

Underwater oil pipelines sabotaged near Syria - At least five underwater oil pipelines near Baniyas in northwestern Syria were sabotaged causing an oil spill on Saturday, according to the Syrian Petroleum and Mineral Resources Ministry, the Syrian state news agency SANA reported. The Ministry reported the incident in a statement on Sunday. After divers inspected the affected pipelines, they found that five lines had been damaged.  Petroleum pipelines vandalized in Banyas, repairs being carried outhttps://t.co/eCW1CbUFxT— SANAEnglishOfficial (@SANAEnOfficial) June 23, 2019Repairs began as soon as the damages were assessed and the Ministry stated that operations would return to normal within a few hours, according to SANA. Petroleum and Mineral Resources Minister Ali Ghanem told Syrian TV later that six lines had been damaged and that repairs were being conducted to return the terminal to normal operation within a few hours. Ghanem described the incident as a "cowardly terrorist attack."

Palestinians strike, protest against Kushner’s “deal of the century” - Even in this protracted and bitter context, however, the conference convened in Bahrain this week with US President Trump’s son-in-law and fellow real estate scion Jared Kushner at its head, represents the most degraded farce ever realized in the discredited name of “Middle East peace.” The so-called “workshop” in Bahrain brought together representatives of the ruling oil monarchies of Saudi Arabia and the United Arab Emirates, US officials, a smattering of Israeli businessmen, the US private equity billionaire Stephen Schwarzman, the ineffable ex-British Prime Minister Tony Blair, World Bank president David Malpass and Christine Lagarde of the International Monetary Fund. Absent, however, was any Palestinian representatives or any officials of the Israeli government, making the idea that the gathering provided some new path to peace ludicrous on its face. The Palestinian Authority boycotted the event. Its convening was met with a general strike in the Gaza Strip and demonstrations in various parts of the West Bank, including a march by 3,000 in Nablus. Some of the protesters were fired on by Israeli troops. The Israeli state did not bother to send anyone to the conference; its interests were already well represented by Kushner and the other two top US officials overseeing the proceedings, Trump's ambassador to Israel, David Friedman and White House Middle East envoy Jason Greenblatt. Kushner’s family and Friedman are longtime active supporters of the Zionist settlements, while all three unconditionally defend the right-wing government of Prime Minister Benjamin Netanyahu. Opening the “Peace to Prosperity Workshop,” Kushner delivered a speech from a stage that looked like it had been borrowed from the set of a US television game show. His main task was delivering a PowerPoint presentation of a 136-page glossy brochure issued by the White House. “For the moment imagine a new reality in the Middle East,” he told his audience of sheiks, bankers and right-wing officials, who were assembled in one of the world’s last absolute monarchies, which executes, imprisons and tortures its political opponents. Kushner’s improbable “vision” was that of the transformation of the West Bank and Gaza into a capitalist investor’s paradise, where profits would be so great, and the banks and big business so unfettered, that “money can trickle down to the people.”

Kushner: Arab Peace Initiative no basis for Israel-Palestine deal  -White House senior adviser Jared Kushner said it will not be possible to solve the decades-longIsraeli-Palestinian conflict with a deal "along the lines of the Arab Peace Initiative".Kushner made the comments during an exclusive interview with Al Jazeera shortly before his departure for a Washington-sponsored "workshop" in Bahrain's capital, Manama, where officials and businesspeople from the United States, Israel, and several Arab states will discuss on Tuesday and Wednesday the economic part of the long-delayed US Middle East peace plan."I think we all have to recognise that if there ever is a deal, it's not going to be along the lines of the Arab peace initiative," said Kushner, who is also US President Donald Trump's son-in-law and has been tasked by him to lead the Middle East peace process."It will be somewhere between the Arab peace initiative and between the Israeli position," he added.Responding to whether a two-state solution was still viable given the recent comments by US Ambassador to Israel David Friedman about Israel retaining the right to annex parts of the occupied West Bank, Kushner called the Arab Peace Initiative "a great effort" but added that "if that was where a deal was going to be made, a deal would have been made a long time ago". The two-state solution closely corroborates the Arab Peace Initiative, which was proposed by Saudi Arabia in 2002. The initiative called for normalised relations between Israel and other Arab states in exchange for a full withdrawal by Israel from lands it occupied in the 1967 war, including the Golan Heights, East Jerusalem and the West Bank.