oil price drop of 16% in May tests exploitation companies' profitability...

oil prices dropped nearly 9% this week as an already falling market sold off on Friday after Trump threatened new tariffs on Mexico in retaliation for their lax control of immigration, raising fears of further trade turmoil... after falling more than 6% to $58.63 a barrel last week on a worsening impasse in the US-China trade war, the benchmark price of US crude for July delivery steadied in overseas and off-market trading on Memorial Day and then moved higher on Tuesday, gaining 51 cents to $59.14 a barrel, even as oil traders remained caught between concerns over global supply and fears that the U.S.-Chinese trade conflict would hurt demand...the trade war fears moved to the forefront of concerns on Wednesday and oil prices fell more than 2% after China signaled it might restrict rare earths sales to the US, but perked up near the close after the American Petroleum Institute (API) reported a large draw in crude oil inventory, with oil ending the session just 33 cents lower at $58.81 a barrel...however, prices fell almost 4% to a two month low on Thursday after the EIA failed to confirm the API inventory draw and trade war fears returned, with the benchmark US price closing $2.22 lower at $56.59 a barrel...oil prices then plunged unimpeded on Friday after Trump stoked trade fears by threatening tariffs on Mexico and ended $3.09 or 5.5% lower at $53.30 a barrel, the lowest close since February 12th...oil prices thus ended 8.7% lower for the week and finished May more than 16% lower in their first monthly loss of the year...

with oil prices suddenly in free fall, it seems it would be an appropriate time for us to check what levels of oil prices are needed for oil producing companies to cover their expenses, and what levels of oil prices the exploitation companies need to drill a new well...every quarter the Dallas Fed conducts a survey of more than 200 oil and gas companies headquartered in or operating in their district, which forms the basis of their economic research on the oil & gas industry, and which also includes a set of different questions each quarter...in addition to the usual quarterly survey, the First Quarter Dallas Fed Energy Survey included a set of special questions to update to their data on breakeven oil prices by basin....160 oil and gas firms responded to the special questions survey, and in an overview, they present the results of that survey graphically, and that's what we'll look at today...

as the heading on this first graphic indicates, the first special question the Dallas Fed asked the oil executives was what WTI oil price they needed to cover their expenses on existing wells, and the range of their responses are indicated in a bar graph format below...

in the above graph, the blue, brick, yellow, orange, green, purple, and turquoise colored bars represent the range of oil price responses to that operating expenses question given by oil company executives with operations in the Permian Midland shale of western Texas, the Eagle Ford of south Texas, other US oil producing shale basins outside of those graphed, the SCOOP/STACK of Oklahoma, the Permian Delaware of far west Texas and New Mexico, other non-shale oil producing areas, and other Permian shale wells respectively, as the headings above the colored bars indicate...in addition, under each of those bars, they've indicated the number of oil executives that responded to that headline question for each of those basins or collectives...thus, what the first blue bar tells us is that for 19 oil company executives with wells in the Permian Midland shale, at least one company needs oil priced at $45 a barrel to cover its operating expenses, at least one oil company could cover their Midland basin expenses at $9 a barrel oil, and the average price needed to cover operating expenses for all oil companies producing oil in that basin is $27 a barrel...similarly, in the brick colored bar, we can see that at least one oil company with wells in the Eagle Ford can cover it's expenses with oil at $6 a barrel, while another company needs as much as $55 a barrel to cover their operating expenses in the same basin, while the average oil price the 11 companies with wells in the Eagle Ford needs is $28 a barrel...meanwhile, the yellow bar indicates responses from companies operating in 'other' shale basins, presumably such as the Bakken of North Dakota and the Niobrara chalk of the Rockies front range; it appears a company operating in one of those basins can meet their expenses with $5 a barrel oil, while the average prices needed to cover expenses by the 11 companies surveyed is again $28 a barrel, again with at least one company needing as much as $50 oil to cover their expenses in that basin... 

as we can also see in the other bars on that graph, there is at least one company operating in the Permian Delaware who needs $60 oil to cover their expenses, while there is also at least one company operating in another part of the Permian who needs $65 a barrel oil to cover their operating expenses...hence, with this week's WTI oil price closing at $53.50 a barrel, those companies are losing money with every barrel of oil they produce...

next we have a similar graphic showing what oil price each of the survey respondents said they needed to profitably drill a new well:

like the first graphic, the colored bars in this 2nd graphic outline the range of responses to the Dallas Fed question as to what oil price each of the executives says they need to profitably drill a new well, with the basin bars arranged left to right from the lowest average oil price to the highest, ie, in a slightly different order than for the operating expenses question...hence, we can see that among the 17 oil executives with operations in the Permian Midland shale who answered this question, at least one can drill a new well and make a profit with $23 oil, while at least one other company needs $65 oil to cover his costs of drilling a new well, while the average oil price needed to turn a profit for all those operating in the Permian Midland taking part in the survey was $47 a barrel...similarly, for the 13 oil execs who might be drilling new wells in one of the other shale basins outside of those graphed (yellow), responses ranged from those who could profit with oil price of $35 a barrel to those who need a price of $60 a barrel, with the average response for those drilling in those basins at $49 a barrel...drillers in the Permian Delaware (green) and in non shale areas (purple) also need an average of $49 a barrel to profitably drill, but we can see the range of answers for the 13 companies in the Permian Delaware is much narrower ($40 to $65) than for the 45 responders operating in non-shale areas, where the profitability threshold for new wells ranges from $20 to $75 a barrel oil...average breakeven prices for new drilling are higher still in the Eagle Ford and Oklahoma's SCOOP/STACK, but notice that even on the far right of the graphic, where other Permian wells have the highest average for profitability at $54 a barrel, above Friday's closing price, there are still drillers who say they can profit with $40 oil, even as some need as much as $70 a barrel to turn a profit....

so the major takeaway from this survey is that there is no single breakeven price, or even a narrow price range, either for operating existing wells, or for drilling new ones, and hence almost every move in the price of oil has the potential to impact the decisions being made in any basin across the US...however, the decisions to drill or not are not made on a daily or weekly basis; oil companies will usually set their budget once a quarter or once a half year, and most will enter into a futures contract to sell all or part of their expected production at a given price well in advance of heading out to the oil patch...still, for those who are not fully hedged and who's breakeven price is in the upper half of the range we see here, a price move like we've seen over the past month might be enough to provide the impetus to cancel or delay a project that they had planned...

meanwhile, natural gas prices also fell this week, albeit not as sharply as those of oil, as demand for air conditioning failed materialize to the degree anticipated and a larger increase of natural gas in storage than traders expected sent prices tumbling...after falling 3.3 cents to $2.598 per mmBTU last week, the contract for June natural gas increased 3.5 cents over Tuesday and Wednesday to finish trading at $2.633 per mmBTU...meanwhile, natural gas for July delivery, which had ended last week at $2.611 per mmBTU, rose just 1.3 cents over those first two days of trading this week before falling 7.7 cents on Thursday and 9.3 cents on Friday to end the week 6% lower at $2.454 per mmBTU...

the natural gas storage report from the EIA for the week ending May 24th indicated that the quantity of natural gas held in storage in the US increased by 114 billion cubic feet to 1,867 billion cubic feet by the end of the week, which meant our gas supplies were 156 billion cubic feet, or 9.1% more than the 1,711 billion cubic feet that were in storage on May 25th of last year, while still 257 billion cubic feet, or 12.1% below the five-year average of 2,124 billion cubic feet of natural gas that have typically been in storage as of the fourth weekend in May in recent years....this week's 114 billion cubic feet injection into US natural gas storage was well above the median forecast for a 98 billion cubic foot increase in supplies in surveys by Bloomberg and Natural Gas Intelligence, and likewise higher than the average 97 billion cubic feet of natural gas that have been added to gas storage during the same week of May in recent years....moreover, the 760 billion cubic feet of natural gas that were added to storage over the past 9 weeks has been the largest injection of gas into storage on record for any similar period this early in the injection season; injections for the same 9 weeks over most recent years aren't even 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 the week ending May 24th, showed that an increase in our oil exports and an increase refinery throughput meant that we needed to pull oil out of commercial crude storage for the third time in ten weeks...our imports of crude oil fell by an average of 81,000 barrels per day to an average of 6,862,000 barrels per day, after falling by an average of 669,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 395,000 barrels per day to 3,317,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,545,000 barrels of per day during the week ending May 24th, 476,000 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 higher at a record 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,845,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 16,767,000 barrels of crude per day during the week ending May 24th, 189,000 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 41,000 barrels of oil per day were being pulled out of the oil that's in storage in the US....hence, it's pretty obvious that this week's crude oil figures from the EIA seems to indicate that our total working supply of oil from net imports, from oilfield production and from storage was 881,000 barrels per day short of what the oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+881,000) 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 one or more of this week's crude oil metrics are 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 7,028,000 barrels per day last week, 8.5% less than the 7,679,000 barrel per day average that we were importing over the same four-week period last year...the 41,000 barrel per day decrease in our total crude inventories all pulled out of our commercially available stocks of crude oil, as the amount of oil stored in our Strategic Petroleum Reserve was unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at a record 12,300,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day higher at a record 11,800,000 barrels per day, while a 3,000 barrel per day decrease 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 May 25th was at 10,769,000 barrels per day, so this reporting week's rounded oil production figure was 14.2% above that of a year ago, and 45.9% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...    

meanwhile, US oil refineries were operating at ​91.2% of their capacity in using 16,767,000 barrels of crude per day during the week ending May ​24th, up from 89.9% of capacity the prior week, but still a bit below the recent historical refinery utilization rate for this time of year....likewise, the 16,767,000 barrels per day of oil that were refined this week were 2.3% below the 17,155,000 barrels of crude per day that were being processed during the week ending May 25th, 2018, when US refineries were operating at 93.9% of capacity... 

even with the increase in the amount of oil being refined, gasoline output from our refineries was a bit lower, decreasing by 20,000 barrels per day to 9,863,000 barrels per day during the week ending May 24th, after our refineries' gasoline output had decreased by 29,000 barrels per day the prior week....with that decrease in gasoline output, this week's gasoline production was 5.5% below than the 10,433,000 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) slipped by 24,000 barrels per day to 5,182,000 barrels per day, after our distillates output had decreased by 58,000 barrels per day the prior week...with this week's decrease, the week's distillates production was 2.2% less than the 5,296,000 barrels of distillates per day that were being produced during the week ending May 25th, 2018.... 

despite the decrease in our gasoline production, our supply of gasoline in storage at the end of the week rose for the third time in 15 weeks, increasing by 2,204,000 barrels to 230,944,000 barrels over the week to May 24th, after our gasoline supplies had increased by 3,716,000 barrels over the prior week....our gasoline supplies rose by less this week than last because our imports of gasoline fell by 263,000 barrels per day to 1,087,000 barrels per day, and because our exports of gasoline rose by 301,000 barrels per day to 717,000 barrels per day, while the amount of gasoline supplied to US markets decreased by 35,000 barrels per day to 9,394,000 barrels per day....after having reached an all time record high seventeen weeks ago, our gasoline supplies​ have since fallen 12%​ are still 1.5% lower than last May 25th's inventory level of 234,431,000 barrels, while they now are back to 1% above the five year average of our gasoline supplies at this time of the year...  

meanwhile, with the modest decrease in our distillates production, our supplies of distillate fuels fell for the 8th time in 11 weeks, decreasing by 1,615,000 barrels to 124,800,000 barrels during the week ending May 24th, after our distillates supplies had increased by 768,000 barrels over the prior week....our distillates supplies fell because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 495,000 barrels per day to 4,282.000 barrels per day, while our imports of distillates rose by 75,000 barrels per day to 177,000 barrels per day, and while our exports of distillates fell by 103,000 barrels per day to 1,308,000 barrels per day ...even after this week's inventory decrease, our distillate supplies were still 8.9% higher than the 114,629,000 barrels of distillate that we had stored on May 25th, 2018, even as they are now roughly 5% below the five year average of distillates stocks for this time of the year...

finally, with higher oil exports and an increase in refining, our commercial supplies of crude oil in storage decreased for the sixth time in 19 weeks, slipping by 282,000 barrels from 476,775,000 barrels on May 17th to 476,493,000 barrels on May 24th....even with that decrease, our crude oil inventories ​were 5% above the recent five-year average of crude oil supplies for this time of year, and remained more than 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the fourth weekend in May, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of May 24th were 9.7% above the 434,512,000 barrels of oil we had stored on May 25th of 2018, but at the same time still 6.6% below the 509,912,000 barrels of oil that we had in storage on May 26th of 2017, and 5.5% below the 504,205,000 barrels of oil we had stored on May 27th of 2016...    

This Week's Rig Count

the US rig count inched up for just the 2nd time in fifteen weeks this past week, but remained close to a 14 month low....Baker Hughes reported that the total count of rotary rigs running in the US increased by 1 rig to 984 rigs over the week ending May 31st, which was still down by 76 rigs from the 1059 rigs that were in use as of the June 1st 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 3 rigs to 800 rigs this week, which was still 61 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 2 rigs to 184 natural gas rigs, which was also down by 13 rigs from the 197 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

offshore drilling in the Gulf of Mexico increased by 1 rig to 23 rigs this week, as another rig was added offshore from Texas, where there are now 3 rigs deployed, with the other 20 all offshore from Louisiana....that's up 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 offshore from Texas, and up from the national total of 19 rigs offshore a year ago, as a rig was also set up in the waters offshore from Alaska at that time...

the count of active horizontal drilling rigs was down by 1 to 862 horizontal rigs this week, which was another 14 month low for horizontal drilling, with 67 fewer horizontal rigs running this week than the 929 horizontal rigs that were in use in the US on June 1st of last year, which was also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...on the other hand, the directional rig count was up by 1 rig to 70 directional rigs this week, and those were up by 5 rigs from the 65 directional rigs that were in use during the same week of last year...at the same time, the vertical rig count was also up by 1 rig to 52 vertical rigs this week, but those were still down from the 66 vertical rigs that that were operating on June 1st of 2018... 

the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary pdf from Baker Hughes that shows those changes...the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the second table shows the weekly and year over year rig count changes for the major US geological oil and gas basins...in both tables, the first column shows the active rig count as of May 31st, the second column shows the change in the number of working rigs between last week's count (May 24th) and this week's (May 31st) count, the third column shows last week's May 24th 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 1st of June, 2018...      

the two rigs that were added in New Mexico were both in the Permian Delaware, because the Texas Permian experienced a net loss of 1 rig, with single rigs shut down in Texas Oil District 8, the core Permian Delaware, and in Texas Oil District 7C, or the southern Permian Midland basin, while a rig was added in Texas Oil District 8A, or the northern part of the Permian Midland basin...the Louisiana rig increase was a natural gas rig added in the Haynesville shale in the northwest part of the state, but natural gas drilling ​activity ​still fell by 2 rigs nationally with rig removals in Ohio's Utica shale, West Virginia's Marcellus, and the Eagle Ford of southern Texas; ​note that ​the Eagle Ford shows no net change above because a rig drilling for oil was started up at the same time, leaving the current Eagle Ford deployment at 68 oil rigs and 7 natural gas rigs...we should also note that other than in the major producing states above, Mississippi drillers added two rigs last week and are now running four, up from two rigs a year ago, but not an unusual deployment in the state, which has seen as many as six rigs active at times over the past year...

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Ohio's Utica Shale oil and gas production dips in first quarter — During the first quarter of 2019, Ohio’s horizontal shale wells produced 5,073,536 barrels of oil and 609,452,391 Mcf (609 billion cubic feet) of natural gas, according to figures released June 1 by the Ohio Department of Natural Resources Division of Oil and Gas Resources Management. (Scroll down to see lists of the top 10 producing wells.)  Natural gas production from the first quarter of 2019 was down 8.8% from the final quarter of 2018, but showed a 14.57% increase over the first quarter of 2018.  Oil production from Ohio’s horizontal wells in the first quarter of 2019 was also down from the previous quarter, dropping 12% from the fourth quarter of 2018. Compared to the first quarter of 2018, however, oil production increased 28.69%. The ODNR quarterly report lists 2,277 horizontal shale wells, 2,228 of which reported oil and natural gas production during the quarter. There were 2,241 wells with reported oil and natural gas production during the fourth quarter of 2018. Of the wells reporting oil and natural gas results:

• The average amount of oil produced was 2,277 barrels.
• The average amount of natural gas produced was 273,542 Mcf.
• The average number of fourth quarter days in production was 86.

All horizontal production reports can be accessed at oilandgas.ohiodnr.gov/production. Oil and gas reporting totals listed on the report include Natural Gas Liquids (NGLs) and condensate.

EPA Declines to Regulate Waste as Ohio Valley Fracking Booms –  The U.S. Environmental Protection Agency last week said it will not strengthen regulations on waste created by oil and gas production, a move that could affect communities across the Ohio Valley where the oil and gas industry is booming in the Appalachian Basin.  No federal agency fully regulates oil and gas drilling byproducts — which include brine, or salty water laced with chemicals and metals, as well as similarly-contaminated sludge, rock and mud — leaving tracking and handling to states. EPA’s decision released last week stems from a 2016 lawsuit filed by environmental groups, who had petitioned the agency to make new rules for how it regulates oil and gas waste. When the agency failed to respond, a federal judge required EPA to formally respond by this spring. The decision reaffirms that states are in charge of regulating the disposal of chemical-laced and often radioactive liquids and solids created by the oil and gas industry. Environmental advocates decried the move. They argue regulations for both onsite storage of waste and offsite disposal vary widely from state to state. A 2016 report from the Center for Public Integrity calls the radioactive waste stream from horizontal oil and gas operations “orphan waste” because no single government agency is fully managing it. Each state is left to figure out its own plan. Advocates say EPA rules would create a baseline for how millions of tons of liquid and solid waste should be disposed.  “In a word or a sentence, the Trump administration hung out to dry communities that host oil and gas development,” said Aaron Mintzes with Earthworks, one of the group’s that pursued this issue in court.  Mintzes said a loophole in the Resource Conservation and Recovery Act, a federal law that governs how solid waste should be disposed, allowed EPA in 1988 to classify waste from oil and gas operations as “non-hazardous.” This gives operators wide latitude in how to dispose of it.

Ewing Sarcoma — What’s Causing These Occurrences? - Rare cancers have been striking children and young adults in some of the rural areas outside of Pittsburgh in alarming numbers, sometimes fatally, in Fayette, Greene, Washington and Westmoreland counties. So far, health authorities have provided little insight into what is happening. They should be developing a plan for getting to the bottom of this health scare.  Carrie Simkovic, a Greene County resident who founded a foundation to help young cancer patients after her own son’s diagnosis, had it right when she told the Post-Gazette: “When you have a little town like ours and have so many cancers, you have to ask, ‘What’s going on here?’” Ewing sarcoma — a cancer of the bone and tissue — is so rare that the nation sees only 200 to 250 cases a year. But there have been at least 27 cases in Fayette, Greene, Washington and Westmoreland counties since 2008.  The Post-Gazette also has documented other rare cancers among dozens of children and young adults in those counties — 10 in Washington County’s Canon-McMillan School District alone. The PG has documented 13 childhood and young adult cancer deaths in these counties since 2011, including three since 2015 in the West Greene School District.  Because the counties are a center of natural gas production, residents worry about environmental pollution as the source of the cancers. The Marcellus Shale Coalition, a trade group, has said there is no known link between fracking and childhood cancer. The operative word is “known.” The fracking process involves carcinogenic chemicals, and some academic studies have linked low birth weights, birth defects and asthma to fracking. But that’s surprisingly little information given the high stakes. Much more needs to be learned about rare childhood cancers and the possible role that environmental factors play in them. Southwestern Pennsylvania — home to a robust shale gas extraction industry, various sources of pollution and a frightening number of childhood cancers — is the right place to carry out that research.  Cheryl Potter, a Fayette County resident whose son Joshua died of Ewing sarcoma in 2016, put it this way: “You never get solid answers, and that’s the worst part.”

Appalachian gas storage hub seeks federal clean energy loan guarantee - Several environmental groups are considering legal options if the Trump administration approves $1.9 billion taxpayer-backed guarantee.A development corporation is seeking a $1.9 billion federal loan guarantee to help build an Appalachian storage hub for natural gas liquids.The financing guarantee would come from a U.S. Department of Energy program meant to support projects that “avoid, reduce, or sequester” air pollutants or greenhouse gas emissions and feature “new or significantly improved technologies.”The Title XVII program has never been used to finance a fossil fuel storage project, but environmental groups fear the Trump administration will bend criteria to approve the project.“It just does not fit the legal criteria” of the federal law, said Alison Grass, research director at Washington, D.C.-based Food & Water Watch, one of several environmental groups that is considering legal options.The proposal from Appalachia Development Group, LLC, calls for an underground storage facility to hold natural gas liquids from “wet gas,” such as ethane, which are used to make plastics and other products.  The storage facility’s site in Ohio, West Virginia or Pennsylvania hasn’t been finalized. The hub would have a web of pipelines and other infrastructure to collect and distribute feedstocks from all three states, plus possibly Kentucky. Steve Hedrick, CEO of Appalachia Development Group, said the project would “significantly” reduce emissions by minimizing the distances the liquids are transported before they are turned into plastic products. “With over half of the North American plastics converter market within 500 miles of Appalachia, the need for redundant transport is minimized while maximizing the value creation from the American resource,” Hedrick said via email. “In other words, we can significantly avoid or reduce anthropogenic emission of greenhouse gases merely through conversion of these raw materials closer to their production locations.” He did not offer a source or calculations of the amount of presumed emissions cuts resulting from transporting materials over fewer miles.

AG investigating wastewater case from landfill that accepts fracking waste --The Pennsylvania Attorney General’s office is investigating the disposal of contaminated water from a landfill that accepts fracking waste to a sewage treatment plant in Fayette County.The investigation comes a week after a judge barred the Westmoreland Sanitary Landfill in Rostraver Township from sending its wastewater to the nearby Belle Vernon Municipal Authority waste treatment plant for 90 days.The issue involves the landfill’s leachate — water that percolates through the landfill and gets collected for disposal. The landfill is permitted to send 50,000 gallons of the leachate per day to the treatment plant. But, according to a complaint filed by district attorneys in Washington and Fayette counties, the landfill had been sending 100,000 to 300,000 gallons of leachate per day. Beginning last spring, the treatment plant started seeing levels of pollution in its discharge to the Monongahela River go up and exceed state and federal limits. The treatment plant determined the contamination was coming from the landfill, which accepts fracking waste like drill cuttings. “That water was contaminated with diesel fuels, it’s alleged, carcinogens and other pollutants,” said Rich Bower, Fayette County District Attorney. Bower and Washington County District Attorney Gene Vittone petitioned Fayette County Court of Common Pleas Judge Steve P. Leskinen for a 90-day injunction against the landfill. The judge agreed and issued the injunction on May 17.  “We saw a serious problem with all of this because of the fact that the Monongahela River is a great source for drinking water around for all downstream,” Bower said.   According to court documents filed with the case, the municipal authority’s supervisor, Guy Kruppa, notified the Department of Environmental Protection about the problems with the landfill’s leachate. The DEP responded by giving the landfill a permit to operate a “pretreatment” system to deal with contaminants in its waste.  Under the arrangement, the landfill would “pay any penalties for effluent violations at the Belle Vernon plant” while the landfill came up with a better way to clean up its waste. “In turn Belle Vernon would need to let the landfill stay connected to their system.” This arrangement stuck out to the two local prosecutors. “It was troubling that the DEP had indicated (to the authority) to keep on discharging contaminated water and that the municipal authority should work out a deal for the landfill to pay the fines,” Bower said.  The landfill accepted 4,600 tons drilling waste in March, the latest month for which data are available, according to the DEP. This waste is mostly drill cuttings, which can contain naturally occurring radioactive materials, salts, and metals.

GOP counters Wolf's capital plan with drilling (AP) — Republicans who control the Pennsylvania Senate are preparing an alternative to Gov. Tom Wolf’s proposal for a multibillion-dollar capital plan, funding it by removing restrictions on natural-gas drilling underneath state-owned forest land rather than taxing natural-gas production. The chief sponsors, state Sens. Camera Bartolotta and Pat Stefano of southwestern Pennsylvania, said Tuesday that they expect the legislation to be unveiled this week, ahead of June’s budget negotiations between the Republican-controlled legislature and Wolf, a second-term Democrat, in the country’s No. 2 gas-producing state. The GOP plan could open up more potentially lucrative state-forest acreage that has been off-limits to exploration companies since Wolf took office. It would allow the Department of Conservation and Natural Resources to decide whether to enter into new gas leases, but not require it to add acreage. The plan envisions allowing exploration companies to reach below tracts of state-forest land using underground horizontal laterals from wells drilled on privately owned acreage adjacent to it, Bartolotta said. She said it doesn’t envision allowing new well sites on newly leased tracts of state-forest land. Drilling under another 781 square miles of state-forest land could yield $1 billion or more in upfront payments to finance a range of community projects, Stefano said. The Senate GOP plan is about one-fourth the size of Wolf’s “Restore Pennsylvania” program, and has another key difference: It doesn’t envision borrowing. Wolf proposed a $4.5 billion bond in January to be repaid over perhaps 20 years, including interest, by a new severance tax based on volume and floats with the price of natural gas. The goal, he said, is to fix critical infrastructure and revitalize communities. Using estimates of 2018 production and a price of less than $3, the tax would yield about $550 million in a year. At a price of more than $6, the tax would yield about $940 million. It would not change a 7-year-old per-well “impact fee” that Pennsylvania imposes on exploration firms.

Newspaper seeks to intervene in natural gas impoundment case - Attorneys for the Pittsburgh Post-Gazette and the natural gas industry tangled Tuesday afternoon in Washington County Court over the newspaper’s attempt to intervene in a long-standing legal dispute over the effects of an Amwell Township impoundment that was settled and made confidential in 2018. Newspaper attorney Frederick N. Frank said the Post-Gazette was acting as the public’s representative in seeking access to the sealed court case. “In most cases when the records are sealed, there’s no public notice,” Frank told President Judge Katherine B. Emery. “We always learn after the fact. A reporter would have to scour, on a daily basis, every docket to make sure the right to access was not being violated.” Kimberly A. Brown, an attorney representing Range Resources Appalachia Inc., used several arguments to attack the Post-Gazette’s request to intervene, one of which was that the Post-Gazette is not a legal entity registered with the Pennsylvania Department of State. A search of the web’s database of business entities within the state lists Post-Gazette Co. as “withdrawn and inactive.” Frank told the judge the Post-Gazette is “one of the oldest newspapers in the nation. Your honor, if that’s an issue, we can amend” court documents to Block Communications. The newspaper, which traces its origins to 1786 – long before business entities were required to register with the state – publishes a print edition five days a week and seven days online. Brown contends it’s too late to do that, and she also claimed the newspaper is tardy in its petition to intervene, citing news articles published in the Post-Gazette that referred to a settlement and non-disclosure that were published last year. Frank also argued that the Post-Gazette does not have to present a motive for wanting access to the settlement with Stacey Haney of a 2012 case which she brought on her own behalf and that of her children.

Produced Water Management: Is EPA Laying the Foundation for More Options or More Regulation? - In mid-May 2019, the Environmental Protection Agency (EPA) released for public comment its draft Study of Oil and Gas Extraction Wastewater Management under the Clean Water Act. The purpose of the study was to document EPA’s interactions since the spring of 2018 with various stakeholder groups as EPA sought to determine whether existing waste water management approaches permitted under the Clean Water Act for the onshore oil and gas extraction industry adequately meet current and future state and tribal requirements and policies. In particular, EPA sought input regarding whether support existed for potential federal regulations that would permit a broader discharge of treated produced water to surface waters. EPA is accepting public comment until July 1, 2019, and intends to finalize the study and announce future actions regarding the subject matter later in 2019.  The oil and gas production industry uses large amounts of water, particularly in unconventional drilling, with much of the water coming from existing or potential useable water sources. Similarly, the industry generates significant wastewater volumes that are expected only to increase over time. Most produced water is currently managed by disposal in underground injection wells, where the water is disposed at depths below geologic units containing useable groundwater, thus, at least in part, removing water what was once a potential resource from the available water cycle. With water scarcity representing a growing concern for dozens of states, EPA is asking whether current wastewater management options sufficiently meet states’ and tribes’ policy needs, and whether produced water should be viewed more as a potential resource and not only as a waste requiring disposal.

Analysis: Pipeline project slowdown may challenge Northeast production growth — The Appalachian basin has effectively become "de-bottlenecked" following a wave of pipeline project start-ups. But with virtually no new production-takeaway capacity expected to come online in the next year, the Northeast could be on a path to becoming "re-bottlenecked" as rising production fills existing capacity. In 2018 roughly 8 Bcf/d of producer-backed pipeline capacity was added to the Northeast region as a handful of high-volume expansion projects that had been years in the making finally came online. Last year saw the full start-up of the greenfield Rover Pipeline and Nexus Gas Transmission systems, as well as expansions on existing pipelines including the Atlantic Sunrise project on Transcontinental Gas Pipe Line, and the WB XPress and Leach XPress projects on Columbia Gas Transmission. This wave of new capacity installations in 2018 helped drive the largest single year-over-year Northeast production gain on record, with output rising by 21% year on year to an average 28.6 Bcf/d. And this mis-match between capacity added (8 Bcf/d) and production grown (4.9 Bcf/d) is the underlying driver behind huge improvements in basis prices across Appalachia, which went from being valued at a significant discount to Henry Hub to now trading, at times, within variable costs of transport to the Gulf. But the pipeline buildout has already slowed dramatically, and the next several years combined are expected to see less new capacity enter service than came online in 2018 alone. The two main projects under construction, the 2 Bcf/d Mountain Valley Pipeline and the 1.5 Bcf/d Atlantic Coast Pipeline, have faced significant construction delays and cost increases, and their in-service dates remain uncertain. Besides those, there are very few new expansion proposals before the Federal Energy Regulatory Commission that would support higher production and outflows in the years ahead. Furthermore, new pipeline projects can take anywhere from three to five years to go from open season to commercial service. In short, the pipeline that's in the ground now is essentially all the Northeast region has to work with, capacity-wise, for the foreseeable future.

Delaware Riverkeeper Network Claims LNG Cover Up – In a scathing letter sent to the Federal Energy Regulatory Commission (FERC), Delaware River Basin Commission (DRBC), Army Corps of Engineers (Army Corps), US Coast Guard, and state environmental regulatory agencies, the Delaware Riverkeeper Network asserts there has been a failure to disclose to the public a proposal, currently being reviewed and approved by multiple agencies, to export Liquefied Natural Gas (LNG) from the Gibbstown Logistics Center located in Gibbstown, Greenwich Township, New Jersey. According to the letter the Delaware Riverkeeper Network learned of the LNG export proposal by communicating with various agency staff, but that no documents or permit applications discussing development of the site since 2016 mentions the site is intended to be used for LNG export, including recent permit applications dated March 2019 that have been submitted to the state of New Jersey and the DRBC. Original proposals and documents propose a multi-use Marine Terminal, including for exporting Natural Gas Liquids (NGLs) but none discussing the export of Liquefied Natural Gas. The letter describes multiple efforts to learn about, and comment upon, the proposed site uses; including outreach to FERC that has no information on the LNG export proposal. “This looks to us like a deliberate cover-up. LNG export facilities are under increasing scrutiny because of the significant environmental and safety concerns they generate. There would be no reason not to disclose this critical body of information other than to evade full and fair review by agencies and the public and to avoid the public outcry of opposition that such news would be sure to generate,” said Maya van Rossum, the Delaware Riverkeeper and leader of the Delaware Riverkeeper Network. “Delaware Riverkeeper Network has participated in the public review process for this facility in good faith since 2016 only to find out that apparently there was a hidden purpose for the Gibbstown terminal. New Fortress Energy and Delaware River Partners may have thought they could avoid public scrutiny by sneaking in their intended use but they are dead wrong; we are demanding the comprehensive and public process this exceedingly dangerous proposal requires,”

The Trump administration is calling natural gas “molecules of freedom” now - It seems the US Department of Energy has made a linguistic decision to rebrand natural gas as “freedom gas,” and refer to its chemistry as “molecules of freedom.”In an agency press release touting the approval of a plan to increase exports of US natural gas shipped out of Texas, two Department of Energy officials offered quotes that included those zany monikers.“Increasing export capacity from the Freeport LNG project is critical to spreading freedom gas throughout the world,” US Under Secretary of Energy Mark W. Menezes said in the release. Menezes had a long career in the energy industry before joining the Trump administration.Just below him, Steven Winberg, also a longtime energy industry professional whose title with the Trump administration is listed as the “assistant secretary for fossil energy,” echoed his rhetoric:“I am pleased that the Department of Energy is doing what it can to promote an efficient regulatory system that allows for molecules of US freedom to be exported to the world,” Winberg said in the release. On Monday, meanwhile, the New York Times reported that the Trump administration had moved to stop its own scientists from modeling the long-term effects of climate change.

Nessel vows to move on shutting down Enbridge's Line 5 pipeline in 30 days — Attorney General Dana Nessel said is vowing to take legal action to shut down Enbridge Energy's controversial Line 5 within 30 days if Gov. Gretchen Whitmer is unable to reach a deal with the company to decommission the 66-year-old oil pipeline. "If there is a not a resolution sometime very soon, then I have every intention of moving forward on this. ... In the next month," Nessel said Tuesday in a podcast interview with Crain's at the Detroit Regional Chamber's Mackinac Policy Conference. Whitmer, a fellow Democrat, has been trying to negotiate a faster timeline for Enbridge to shut down the twin 20-inch oil pipelines laying on the bed of Lake Michigan west of the Mackinac Bridge, just a short distance from the Grand Hotel where business, political and nonprofit leaders are gathered for this week's annual confab. On Wednesday, the governor told Crain's she is on board with the one month deadline. "I've been keeping the attorney general very close and up to speed on where that is headed and I don't think that's an unreasonable thing for her to suggest that we need to have a strategy that's public within the next month or so," Whitmer said in a podcast interview at the Mackinac Island conference. "We're moving forward and if we don't have a resolution, it's going to play out, I think, in court. I don't think that's a good thing. But, ultimately, that might be where it's headed." The governor has said she's still open to allowing Enbridge to build a utility tunnel in the bedrock of Lake Michigan to house a new pipeline, but wanted to get the oil transportation giant to complete the project and decommission the existing pipeline faster than the projected seven- to 10-year timeline.

Update: Gas Storage Tank Fire That Prompted State Assistance Is Out -- A massive natural gas storage tank fire in West Virginia is out. News outlets report the West Virginia Division of Homeland Security and Emergency Management said in a statement that the blaze was extinguished around 5 a.m. Sunday after all-night efforts by local fire departments and state agencies. The tank is owned by Dominion Resources and is near the town of Friendly in Tyler County. No injuries were reported and Dominion Energy says there's no threat to public safety. Justice's office says the West Virginia Department of Environmental Protection will assist with cleanup.   Previous Story: West Virginia Gov. Jim Justice has ordered that all necessary state resources be used to battle a natural gas storage tank fire. In a news release, Justice's office said the fire began Saturday afternoon when lightning struck a storage tank that holds 1 million gallons of natural gas condensate. The tank is owned by Dominion Resources and is near the town of Friendly in Tyler County. Although the tank is on fire, the natural gas product had not been released as of Saturday evening. Fire departments have been working to extinguish the flames. Justice ordered the West Virginia National Guard and West Virginia Division of Homeland Security and Emergency Management to assist. No injuries have been reported and Dominion Energy says there's no threat to public safety.

US Supreme Court declines to take case on eminent domain practice for gas pipelines— Landowners' arguments that pipeline companies improperly gain quick access to properties well ahead of compensating owners will not get a hearing before the US Supreme Court.  The high court on Tuesday declined to take up a case brought by landowners whose properties were condemned to allow for construction of Transcontinental Gas Pipe Line's 1.7 Bcf/d Atlantic Sunrise Project. At issue is one of a series of cases that challenged implementation of eminent domain powers under the Natural Gas Act and which, if successful, could have affected pipeline projects' ability to meet in-service schedules. Federal appeals court rulings thus far generally have favored current practices, but another appeal arising from the Mountain Valley Pipeline project is expected.In Lynda Like, et al., v. Transcontinental Gas Pipe Line (18-1206), landowners asked the high court to overturn a 3rd US Circuit Court of Appeals ruling that upheld a district court's preliminary injunction that allowed the pipeline company to take immediate possession of property before a final judgment on the NGA condemnation. The landowners argued the case had important implications because "over the past 20 years, district courts have entered hundreds of preliminary injunctions granting private companies immediate possession of thousands of acres of private land." In this case, they argued that 18 months after the preliminary injunction, the petitioners had yet to receive compensation. District courts have created a system that is "far harsher and far more burdensome to property owners than any process actually authorized by Congress," they argued. Injunctions rearrange who can do what with the property and when, they said. Transco, in a brief to the Supreme Court, emphasized that the process it followed has been approved by courts of appeals in the 3rd, 4th, 6th, 8th, 9th and 11th circuits. It pointed to the 3rd Circuit finding that the NGA does not preclude federal courts from granting equitable relief in the form of a preliminary judgment when the gas companies have obtained a substantive right to condemn and otherwise qualify for equitable relief.  Only after the district court granted summary judgment in Transco's favor did it grant injunctive relief, it said. It countered argument that the practice amounted to a "quick take," citing the 3rd Circuit finding that the preliminary injunction merely hastened the enforcement of an existing substantive right.

How eminent domain is blighting farmers in path of gas pipeline - Under eminent domain, private property is seized from owners for public use. But for many landowners along the Mountain Valley pipeline route the forced loss of some of their land was not the end of their woes. Many suffered damages to the rest of their property after agreeing to land easements or fighting the pipeline’s invocation of the eminent domain law.   On 7 September 2018, Neal Laferriere was out on his farm harvesting ginseng and planting seeds with two of his children when they noticed a helicopter flying low over the property. “A few seconds later we started getting pelted by these little blue pellets. Two of my children sustained lacerations to the face,” he said.   He was informed the pellets were a product called EarthGuard Edge, meant for erosion control, and there was nothing to be done to clean up the product on the farm for which he had only recently obtained organic certification. “The land agent said they were sorry and they would make sure it wouldn’t happen again. The next two days, a helicopter flies over again and covers the rest of my property with these pellets,” added Laferriere. “We’ve lost a ton of business because of this. I can’t sell that product as certified organic, and I can’t sell it at all because I don’t feel like I can offer a product that is pure. I’m afraid of having somebody get sick,” explained Laferriere. “Our business, our life, our farm, is utterly ruined right now because of these people. Our livelihood has been shot. What we worked so hard for on the farm to get certified organic and start a profitable business, it’s not there any more.” In Rocky Mount, Virginia, part of Dave and Betty Werner’s property was taken via eminent domain for the pipeline route and it has devastated their farm. On the Werners’ 58-acre farm, their best pasture, where they raise cows, chickens, pigs and turkeys, was seized for the pipeline.  “As a result of the Mountain Valley pipeline taking over that lower pasture, it put us out of business. We can’t live and operate without that pasture and the water sources down there,” said Dave Werner. Construction began on their property in May 2018, which included blasting rock to clear trenches for the pipeline. “If they could either go away or finish this job, we could put our farm up for sale because we don’t want it any more in this condition, but we can’t even do that because of the mess.”

Lawyers for Mountain Valley Pipeline urge judge to remove tree-sitters by Friday - After staying up in the trees for nearly nine months, blockers of the Mountain Valley Pipeline are facing an attempt to bring them down. Lawyers for the company said in a recent court filing that it needs to have two tree-sitters removed by Friday so workers can finish clearing a path for the massive natural gas pipeline. On Sept. 5, 2018, two protesters took up residence in a white pine and a chestnut oak that stand in a construction easement for the pipeline in eastern Montgomery County. While the tree stands have switched occupants a number of times, they remain standing — in what is now the longest active blockade of a pipeline on the East Coast, according to Appalachians Against Pipelines. In December, lawyers for Mountain Valley asked federal Judge Elizabeth Dillon to issue a preliminary injunction against the tree-sitters, which would allow their removal by U.S. Marshals. Dillon had yet to rule on the request by 6 p.m. Wednesday. Mountain Valley said in mid-May it would like to have the tree-sitters removed by the end of the month “in order to avoid additional costs.” Lawyers for the company filed a notice in U.S. District Court in Roanoke, including an affidavit from Jeffrey Klinefelter, director of construction engineering for Mountain Valley. Klinefelter said that later in the month, Mountain Valley would have a crew of tree-cutters near the protest off Yellow Finch Lane in the Elliston area. The company asked that the two occupied trees be cleared of protesters so they could then be timbered “from an efficiency standpoint,” Klinefelter said. If Mountain Valley is forced to wait, it would cost an additional $22,000, he said. 

Federal pipeline safety regulators issue warning on floods and subsidence - Citing a number of recent incidents, including one in Pennsylvania, the Pipeline and Hazardous Materials Safety Administration, or PHMSA, sent a warning to natural gas and hazardous liquids pipeline operators earlier this month detailing the dangers of flooding and heavy rain events. The advisory points to “land movement, severe flooding, river scour, and river channel migration” as causes of the type of damage that can lead to leaks and explosions. It outlines current regulations, and details requirements for insuring safe pipeline construction and continued monitoring once a pipeline is in operation. The agency issues these types of advisories if it sees a trend, they do not necessarily lead to further rulemaking. In this case PHMSA says earth moving incidents have increased across the country, particularly in the east. Lynda Farrell, director of the Pipeline Safety Coalition, says it’s an indication that PHMSA officials are worried about recent events that have led to spills. “They’re saying ‘it’s a bad idea to put pipelines in areas where damage to the pipeline could be caused by earth movement,’” she said. “If you know there’s potential damage, don’t put them there.” The advisory does not have the weight of a regulation, it simply sounds an alarm and reiterates regulations associated with pipeline safety. PHMSA lists seven incidents that have occurred in the past several years, including the release of more than 1,238 barrels of gasoline into the Loyalsock Creek from a Sunoco/Energy Transfer pipeline in Lycoming County in October, 2016. Although not listed in the PHMSA bulletin, officials also suspect that heavy rains and landslides caused the explosion of Energy Transfer’s natural gas liquids Revolution Pipeline in Beaver County last September. The explosion destroyed a house and knocked down power lines.  Following the explosion, DEP inspectors also discovered Energy Transfer illegally eliminated 23 streams and 17 wetlands, and shortened the length of 120 streams while altering 70 wetlands during construction.

Protest planned at jobs fair for Robeson County gas facility - Piedmont Natural Gas has scheduled a job fair for Thursday afternoon as it plans to hire 150 people to begin building a $250 million natural gas storage plant in northwest Robeson County — and at the same time, activists plan to hold a protest and rally against it just outside. The conflict is set to happen from 5:30 p.m. to 8 p.m. at Oxendine Elementary School at 5599 Oxendine School Road, which is a Maxton address even though Maxton is miles away. The school is in Robeson County’s Wakulla community about 5 miles west of Red Springs. The project is to be built close by on 65 acres of a 685-acre tract on N.C. 71 at Rev. Bill Road. The project will be a property tax boon and economic driver for Robeson County, said Channing Jones, the county economic development director. The plant will endanger the community and damage the environment, said Mac Legerton, a long-time community activist Legerton is leading opposition to the gas storage plant and a separate project, the Atlantic Coast Pipeline, which is supposed to pipe natural gas from West Virginia to eastern North Carolina, terminating about 6 miles away in the Prospect area. But the Atlantic Coast Pipeline doesn’t yet exist. The new storage plant is set to get its gas from the Transcontinental Pipeline, which has 10,000 miles of pipe that carries gas from Texas and Louisiana on the Gulf Coast to the East Coast and Northeast. Piedmont Natural Gas intends to use the Wakulla storage plant to help the company keep sufficient gas supplies on hand to handle demand spikes during cold weather, spokeswoman Tammie McGee said. 

Editorial: Keep offshore drilling away from Georgia's coast - Opinion - Savannah Morning News - Many Georgians don’t like the idea of oil rigs dotting the horizon along their share of the South Atlantic Bight, that sinuous, concave coastline running from Cape Fear, North Carolina, to Cape Canaveral, Florida. Many in Carolina and Florida have also rejected this vision of the future.Governors of these states — and all other states along the Eastern seaboard — have loudly stated their opposition to lifting the Obama-era ban on drilling in U.S. coastal waters. Coastal, or territorial, waters extend out 12 nautical or 13.8 standard miles from the low tide line.Despite the outcry, the Trump administration was set to expand offshore drilling along the coast. A draft of a plan to do so was released last year and a final plan that would outline how oil lease sales would proceed was expected to be released this month. But a court decision got in the way.  So where does all this leave offshore drilling in coastal waters? That is perhaps as difficult to predict as it is to say how much oil is in those waters and what having it on hand would mean. With more than 40 million acres along the outer continental shelf already available for oil exploration, opening near shore waters would be a terrible idea, putting the coastal Georgia ecosystem at risk. The Energy Information Administration estimates that the current off-limits coastal waters in the lower 48 states might hold about 18 billion barrels of recoverable crude oil. However, up-to-date, comprehensive assessments have not been made in many years.Since the U.S. consumes about 7.5 billion barrels of oil each year, the untapped nearshore sea floor might supply the country’s energy needs for a little more than two years, if the estimates are correct.It’s simply not worth the risks, which can potentially include environmental damage, destruction of fishing economies and devastation of tourism in oil-soaked coastal areas. Meanwhile, other sources of energy like natural gas, wind and solar power continue to come online, reducing the nation’s overall dependence on oil.

2,100-gallon oil spill reported in marsh near Galliano - The U.S. Coast Guard, state and federal agencies are responding to an oil spill into marshland near Galliano, Louisiana, according to a news release. Authorities were alerted that approximately 2,100 gallons of crude oil poured into the area due to a mechanical failure at the Bowley Cap Facility in Lake Bully Bonds Sunday (May 26), the release stated. The leak has since been secured. A pollution response team, including the Coast Guard Houma’s Marine Safety Unit, Louisiana Department of Wildlife and Fisheries, Louisiana Oil Spill Coordinator’s Office and the National Oceanic and Atmospheric Administration, responded to the spill with hard boom and sorbents, the Coast Guard said. Three drum skimmers were also used. The cause of the mechanical failure is still under investigation, the release stated. Clean-up efforts will continue until sunset Saturday and resume Monday morning.

Oil spill in Galliano caused by mechanical failure -   On Sunday, the Coast Guard responded to a crude oil discharge from the Bowley Cap Facility in Lake Bully Bonds near Galliano.  Watchstanders at Coast Guard Marine Safety Unit Houma received a National Response Center report of approximately 2,100 gallons of crude oil going into a marshy area near the Bowley Cap Facility due to a mechanical failure at the facility.A pollution response team from Marine Safety Unit Houma and a Louisiana Oil Spill Coordinator’s Office representative deployed to the facility to work with other responding agencies to coordinate clean-up operations.The source of the discharge has been secured and clean-up operations are underway to recover the spilled product.Containment boom, lined with sorbent boom, has been deployed to contain the spill.Three drum skimmers are engaged in skimming operations.Recovery operations are scheduled to finish on Tuesday morning.

Federal judge sends Plaquemines oil and gas damage suit back to state court - -  A lawsuit charging six oil and gas firms with damaging wetlands and land within the Potash Oil & Gas Field in Plaquemines Parish in violation of Louisiana’s coastal zone management laws should be heard in state 25th Judicial District Court in Plaquemines, a federal judge ruled Tuesday (May 28).The order is the first to return to a state court of 42 lawsuits charging that the historic operation of oil and gas companies in six parishes along Louisiana’s coastline -- including the construction of service canals, the improper disposal of hazardous wastes and saltwater, and other operations -- caused damage to wetlands that state law requires the companies to either pay compensation for or repair. There’s a good chance that the opinion issued by U.S. District Judge Martin L.C. Feldman of New Orleans will be followed in returning other suits to state courts that are under consideration by other federal judges in New Orleans. A similar ruling might also follow for the suits that were removed to the federal court in Lafayette.  "The governor is pleased that the judge approved the Department of Natural Resources’ motion, which is also supported by Attorney General Jeff Landry and simply says that these Louisiana claims should be heard in a Louisiana court,” said a statement issued by the office of Gov. John Bel Edwards. Edwards, Landry and the state Department of Natural Resources have intervened in all the suits in an effort to assure that any restoration or money coming from an ultimate ruling on behalf of the parishes will be used in compliance with the state’s coastal Master Plan.

$1.3B Pledged for Louisiana LNG Project - Stonepeak Infrastructure Partners will exclusively provide a $1.3-billion equity investment in Venture Global LNG, Inc.’s Calcasieu Pass LNG export facility in Cameron Parish, La., the companies reported Tuesday in a joint statement emailed to Rigzone. According to the companies, total committed capital to fund the construction of Calcasieu Pass – along with ongoing development of Venture Global’s Plaquemines LNG and Delta LNG projects – now totals $2.2 billion. More than $250 million has already been spent on Calcasieu Pass’ site preparation work, final engineering and equipment purchases and fabrication, the firms noted. “We are happy to announcement this important milestone for Calcasieu Pass and very proud to partner with a world-class investor like Stonepeak,” Mike Sabel, co-CEO of Venture Global, stated. “Their team brings a great depth of LNG knowledge and a track record of investing in exceptional infrastructure projects throughout North America.” Venture Global Co-CEO Bob Pender added that $855 million had previously been raised for the 10-million tonne per annum (mtpa) Calcasieu Pass project, which he said is “already significantly advanced” in regard to site construction as well as module manufacturing. “We are finalizing the balance of our Calcasieu Pass financing with our consortium of project finance lenders, and we look forward to providing LNG to our global customers – Shell, BP, Edison S.p.A., Galp, Repsol and PGNiG – in 2022,” Pender noted. Calcasieu Pass will use mid-scale, modularly, factory-fabricated liquefaction trains from Baker Hughes, a GE company, Venture Global and Stonepeak stated. Also, they noted that Kiewit is designing, engineering, constructing, commissioning and guaranteeing the facility, which has secured all necessary permits.

US Refiners Face Summer Snags  | Rigzone -- A global shortage of heavy crude will create hurdles for America’s key refining belts just as they ramp up gasoline production for summer driving season.In the Gulf Coast, dwindling heavy oil supplies have suppressed refining margins, while Midwest refiners may not reach the high run rates seen last summer. Gulf Coast profits from coking -- a process where heavy crude is broken down into fuels such as gasoline and diesel -- are already at their lowest levels in nearly a decade, according to data from Oil Analytics Ltd.The decline comes as a loss of crude supply from sanctions-hit Venezuela and Iran, as well as production cuts by Canada and OPEC, have driven up the price of fuel oil, which is used to make gasoline through the coking process. Gulf Coast fuel oil, a byproduct of heavy crude, reached a six-month high in late April.Gulf gasoline prices in the run-up to summer are also below the five-year average. Still, slimmer profits won’t necessarily mean less production. Margins are weak, but "we don’t expect any run cuts," said Jan-Jacob Verschoor, director of Oil Analytics Ltd., which studies refinery economics.For June through August, runs are expected to be around 9.3 million barrels a day, similar to utilization to last year, Chris Barber, head of refining biofuels analysis for ESAI Energy, said by phone.In the Midwest, it’s a different story. Refineries in the region rely on Western Canadian Select, a heavy crude that’s recently gotten cheaper after Alberta’s government eased some production limits. The inexpensive oil supply has driven up coking margins for area refiners -- but supply remains tight as Alberta won’t lift its mandatory output curbs until the end of the year. The supply crunch will likely push Midwest refinery runs to about 3.85 million barrels a day during June-August, lower than 3.95 million last year, Barber said.

Texas eminent domain reform died this session - Texas state lawmakers looking to reform the eminent domain process were unable to find common ground this session, despite hundreds of hours of negotiation. State Sen. Lois Kolkhorst's Senate Bill 421 sought to better protect property owners when private companies condemn their land — a nod to landowners in Texas who've grown accustomed to encroaching oil and gas pipelines. The bill would've required public meetings between property owners and industry groups and instituted measures to prevent low-ball offers to property owners, among other reforms. But after the bill was markedly watered down in a House committee and approved in that chamber — a charge led by state Rep. Tom Craddick, R-Midland — the legislation couldn't make it out of a joint House-Senate conference committee. The House version of the bill removed too many of the provisions Kolkhorst believed were critical, including measures aimed at restoring condemned land to as close to its original condition as possible. “The language of the House version would have turned back the clock for landowners and greatly harmed them,” Kolkhorst, a Brenham Republican, said in a statement Sunday. “I cannot agree to the Craddick proposal, which would do the opposite of what we set to do: help level the playing field for landowners in the taking of their property.” Th

Exxon, Others Leading High-Impact Drilling Rebound  | Rigzone - Large oil and gas companies are commanding a greater role in high-impact exploration, but a lack of depth in the quality of global drilling opportunities diminished their performance in 2018, Westwood Global Energy Group reported Friday.“The competitive landscape is changing with the largest companies like Total, Equinor and Exxon now leading the way on conventional high-impact drilling, which is forecast to increase by 20 percent this year,” Keith Myers, president for research with Westwood Global Energy Group, said in a written statement emailed to Rigzone. “At the same time, mature regions such as North West Europe are seeing a renaissance, as explorers focus on trying to find more hidden gems.”Westwood’s findings stem from the research, data analytics and consulting services firm’s latest“State of Exploration” report, which examined global conventional exploration over the past five years and previews prospects for 2019. According to Westwood, a “twin track strategy” driving the industry comprises:

• Increasing short-cycle exploration over the period in mature basins with existing infrastructure
• Continuing to hunt for new petroleum provinces, particularly in deep water.

Also, Westwood noted that companies are moving away from sub-Saharan Africa and other onshore frontier drilling opportunities that can take considerable time – in some cases upward of 16 years – to commercialize. Challenges above-ground include lack of infrastructure and political/regulatory hurdles, the consultancy added. Other report findings include:

• Compared to the previous year, exploration drilling in 2018 was up nearly 30 percent but yielded poorer performance with fewer big discoveries and a lower commercial success rate.
• From 2014 to 2018, high-impact drilling discovered volumes were down 50 percent overall against results from the preceding five-year period.
• High-impact drilling should increase 20 percent in 2019 to approximately 80 wells, with more wells planned in maturing and mature plays such as North West Europe and Mexico.
• More than 50 percent of high-impact wells for 2018 and more than 70 percent for 2019 involve supermajors; in contrast, the supermajor participation rate for 2015 was 34 percent.

Frac sand expected to remain cheap as supplies outpace demand - Sand prices for oil and gas fracking and for the valuations of sanding mining companies are expected to remain depressed as growing supplies continue to outpace rising demand, research reports say. Even as more sand mines shutter up North that produce the highest qualities of sand, they're more than outpaced by the growth of new mines in West Texas and even in South Texas' Eagle Ford shale that offer sand at more modest qualities, but at cheaper prices and much nearer to the oil and gas production. Even some Central Texas sand mines have closed in recent months. Energy companies have used increasingly larger supplies of sand and water per well in the hydraulic fracturing process to help crack open the shale rock and release greater volumes of oil and gas. A report in Moody's Investor Services said "frac sand castles may crumble" as prices stay low. Sand prices have plunged 20 percent in the last 12 months, Moody's said. Just this week, Houston sand mining firm Hi-Crush Partners LP said it is converting from a partnership structure to a traditional corporation under the name Hi-Crush Inc. to potentially help stabilize its finances. Hi-Crush's stock has plunged from more than $20 per unit in early 2017 down to just more than $2 t0day. Likewise, Fort Worth-based Emerge Energy Services, which is trading below $1, said it received a delisting warning from the New York Stock Exchange. Emerge said back in April it is considering filing for bankruptcy under a pre-structured plan with many of its creditors. In an already over-supplied sand market, the Norwegian research firm Rystad Energy said U.S. oil and gas sand demand will grow by 10 percent this year and by 17 percent in 2020. However, frat sand supplies also will grow by 10 percent this year.

Permian Cash Gains; Big Bearish Miss for EIA Sees Natural Gas Futures Slide - A large bearish miss in the latest U.S. government inventory data and forecasts showing underwhelming levels of June cooling demand had natural gas futures bulls in retreat Thursday. In the spot market, Midcontinent and West Texas prices clawed their way higher as much of the eastern two thirds of the Lower 48 saw modest declines; the NGI Spot GasNational Avg. added 2.0 cents to $2.080/MMBtu. The Nymex July futures contract settled at $2.547, down 7.7 cents after venturing as low as $2.534. Selling was of a similar magnitude further along the strip. August dropped 7.5 cents to settle at $2.557, while September settled at $2.549, off 7.4 cents. The bears may have been waiting for the June contract’s expiration Wednesday, as they “quickly pounced right at expiration time and haven’t looked back,” observed NatGasWeather. Adding to the bearish momentum that had developed in the market overnight, the Energy Information Administration (EIA) on Thursday reported a much larger-than-expected 114 Bcf injection into U.S. natural gas stocks. The 114 Bcf build, reported for the week ended May 24, overshot estimates by a wide margin, and the number easily tops both the 95 Bcf build recorded in the year-ago period and the five-year average 97 Bcf injection. Prior to the EIA report, consensus had formed around a build in the high 90s to low 100s Bcf. A Bloomberg survey had pointed to a median prediction of 98 Bcf, based on estimates ranging from 94 Bcf to 104 Bcf. The 114 Bcf figure topped even the highest estimate submitted to this week’s Reuters survey, which had called for a 101 Bcf injection based on a range from 91 Bcf to 110 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures settled Wednesday at 100 Bcf, while NGI’s model predicted a 98 Bcf build.  Shah pointed to the Midwest and South Central regions as the areas where estimates missed the mark this week. “I think it’s the timing of the heat that threw off the number,” Shah wrote. “This late-May heat resembled something we’d see in late June.” Total Lower 48 working gas in underground storage stood at 1,867 Bcf as of May 24, 156 Bcf (9.1%) higher than year-ago levels but 257 Bcf (minus 12.1%) below the five-year average, according to EIA. By region, EIA recorded a 35 Bcf build in the Midwest and a 30 Bcf injection in the East. Further west, the Mountain region refilled 4 Bcf for the week, while 12 Bcf was injected in the Pacific. The South Central region posted a 31 Bcf weekly build, including 27 Bcf injected into nonsalt and 4 Bcf into salt stocks, according to EIA.

Industry celebrates Trump's limits on states' regulation rights - Obama-era regulations that put the brakes on oil and gas development continue to fall by the wayside under the current administration. Two executive orders signed April 10 by President Donald Trump sought to limit the power of states to delay natural gas, coal and oil projects. The announcements were applauded by those in the Louisiana and Texas oil and gas industry, where an abundance of supply and increasing consumption are fueling heightened demand for pipelines. The orders essentially make it harder for states to block new pipeline development on environmental grounds, calling on the Environmental Protection Agency to review a section of the Clean Water Act requiring applicants to get certification from affected states.  Absent the edicts, economist Loren Scott, of Loren C. Scott & Associates in Baton Rouge, says future pipelines coming out of the oil- and gas-rich Permian Basin could have run the risk of local interference as projects neared metropolitan areas in Texas on the way to the Gulf Coast. Nonetheless, laying pipeline has traditionally met minimal local resistance in the oil- and gas-friendly Southern states—with the notable exception of the recently completed Bayou Bridge Pipeline running from Nederland, Texas, to St. James Parish. “You’re going across two states,” says Scott, “that are not generally afraid of pipelines.” Gifford Briggs, president of the Louisiana Oil and Gas Association, says Trump is simply continuing his administration’s policy of gradually removing the regulatory hurdles to progress. “He has also taken some actions at FERC (Federal Energy Regulatory Commission) to speed up the approval process for Liquefied Natural Gas projects, so it’s not surprising that he’s doing the same thing with pipelines.” Briggs hopes the recent orders will facilitate the extraction of oil and gas out of the shale plays, adding that the cheap and abundant supply is the primary reason for the surge of industrial and LNG projects along the Gulf Coast. In southwest Louisiana’s LNG market, demand for natural gas is expected to reach 14 billion cubic feet a day by 2025.

Bechtel Bags Rio Grande LNG Deals Worth $9.5B+ - NextDecade Corporation revealed Tuesday that it has awarded two contracts worth more than $9.5 billion to Bechtel Oil, Gas and Chemicals for the engineering, procurement and construction of its Rio Grande LNG project in Brownsville, Texas. The contracts are for the first phase of the project, which consists of three liquefaction trains, two 180,000 cubic meter storage tanks and two marine berths. Each liquefaction train is expected to have up to 5.87 million tons per annum of LNG capacity. NextDecade said it anticipates making a “positive final investment decision” on up to three trains of the Rio Grande LNG project as early as the end of the third quarter of 2019 and commencing operations in 2023.    According to NextDecade’s website, Rio Grande LNG is located in an uncongested deepwater port with access to a skilled labor force and in close proximity to abundant, low-cost recoverable gas resources in the Permian Basin and Eagle Ford Shale. NextDecade, which is headquartered in Houston, Texas, is an LNG development company focused on LNG export projects and associated pipelines in Texas

Hearings Begin in Lawsuit to Stop Permian Highway Pipeline -- A lawsuit to stop construction of the Permian Highway Pipeline began with hearings Tuesday. Hays County, the city of Kyle and property owners affected by the pipeline signed onto the lawsuit against energy infrastructure company Kinder Morgan and the Texas Railroad Commission. The pipeline would stretch 430 miles from West Texas to Houston. More than 1,000 land owners would be affected. Plaintiffs of the lawsuit claim that Kinder Morgan cannot claim eminent domain over their property without following Texas Railroad Commission rules for project approval. Under the rules of the commission, private companies aren't required to follow the same rules as government entities for these types of projects, but classifying the pipeline as a "gas utility" gives the company condemnation and eminent domain rights. Andrew Sansom said those rules aren't fair to landowners like him. He's the owner of the Hershey Ranch, a privately owned ranch dedicated to conserving wildlife. The property received a conservation easement to protect it from certain government projects. "Private land owners affected by this pipeline have not been given due process. If you look at Article 5 of the U.S. Constitution it says that the government cannot take private property without due process." Kinder Morgan held five public meetings to discuss the pipeline with affected communities, despite not being required to do so. Kinder Morgan Vice President Allen Fore said they readjusted the pipelines route in over 150 personal cases with land owners along the route. He said his company is only following the rules as they're written and land owners are disputing rules that can only change through legislation.

In court, opponents to pipeline through Hays county call for more oversight— A judge finished hearing arguments Wednesday in a case brought forth by local governments and property owners who oppose the intended route of a natural gas pipeline through the Hill Country. Now she says she will spend several weeks working to make a decision about whether there should have been more regulation or oversight for the process. The judge expects to have a decision ready in two to three weeks and an attorney for Kinder Morgan stated that the company would hold off from making any foreclosure proceedings against the plaintiffs until she makes her decision. Is this case goes to trial, the attorneys involved would want a trial in July or August. It is likely that no matter the outcome of this case, the outcome will be appealed. In a Travis County Courtroom Wednesday, Judge Lora J. Livingston heard two more witnesses brought forward by the defendants in this case: the pipeline company Kinder Morgan and the Texas Railroad Commission. The plaintiffs — the City of Kyle, Hays County and three landowners — brought forward all their witnesses at a hearing Tuesday. These parties have expressed concerns about the safety, environmental and economic repercussions of the Permian Highway Pipeline project. They object to the way Kinder Morgan set the route for the pipeline before seeking public input. They are hoping the judge will agree with them that the Railroad Commission has not carried out the public oversight with Kinder Morgan required by the Texas constitution These Hays County plaintiffs are hoping the judge establishes a temporary injunction that prohibits any exercise of eminent domain on this pipeline --at least in Gillespie, Blanco, and Hays Counties -- until a final "trial of merit" happens or guideline standards for gas pipeline oversight are established by the Railroad Commission. Such a ruling would call into question the ways that pipelines have been setting routes in Texas or more than a century. Kinder Morgan and the Texas Railroad Commission are trying to dismiss this lawsuit related to the state's eminent domain process. The Texas Railroad Commission is asking to be dismissed from this lawsuit entirely. 

EIA’s new liquids pipeline projects database shows new U.S. crude oil pipeline capacity - EIA recently launched a new liquids pipeline projects database that tracks more than 200 crude oil, hydrocarbon gas liquids (HGL), and petroleum products pipeline projects. Rising domestic crude oil production has led to several changes in Gulf Coast crude oil supply and demand patterns, creating a need for more pipeline capacity. Crude oil pipeline capacity additions originating in the Gulf Coast region represent most of the scheduled pipeline capacity growth over the next few years. EIA’s new database provides an improved capability to track this growth. The database contains project information such as project type, start dates, capacity, mileage, and geographic information for historical pipeline projects (completed since 2010) and future pipeline projects. The information in the database is based on the latest public information from company documents, government filings, and trade press, and it does not reflect EIA’s assumptions on the likelihood or timing of project completion. U.S. crude oil production doubled between 2010 and 2018, with about 70% of that growth coming from the Gulf Coast region. U.S. Gulf Coast crude oil production grew from 5.2 million barrels per day (b/d) in 2014 to 7.1 million b/d in 2018, driven by production in the Permian Basin in western Texas and southeastern New Mexico. As U.S. crude oil production increased, imports dropped off significantly. Previously, Gulf Coast crude imports were shipped to refineries in the region, and they also moved north by pipeline to refineries in the Midwest. But as import volumes declined, less pipeline capacity was needed from the Gulf Coast to the Midwest. New pipelines and reversals of existing pipelines originating in the Midwest are increasingly moving crude oil south from the Bakken region in Montana and North Dakota, as well as from Canada, to the Gulf Coast. As a result, the Gulf Coast transitioned from being a net shipper to a net recipient of crude oil from elsewhere in the country in 2015.  More recently, increasing Permian crude production has outpaced pipeline takeaway capacity to bring the crude oil to market. The increasing crude oil production and need for more pipeline transportation capacity prompted a large expansion of crude oil pipeline infrastructure. In the region, nine intrastate crude oil pipeline projects have been announced or are under construction with in-service dates between 2019–2021. These projects are planned to move crude oil throughout Texas and Louisiana to further alleviate regional constraints.

Pipeline Security Systems Market is Projected to Grow at a CAGR of 8.59% - The global pipeline security systems market was valued at USD 6.1 billion in 2017, and is expected to reach a value of USD 10.07 billion by 2023, at a CAGR of 8.59 %, during the forecast period (2018 – 2023).  Pipeline systems have evolved to become the primary solution for the commercial activities. The market for the pipeline security has been boosted by the demand for sustainable use of resources and the rising frequency of breaches and theft of small quantities of the product being transported. The pipeline established for transport of commodities is estimated to span across 3.5 million kilometers across 120 countries across the world. Oil & gas, natural gas has been estimated to be the most vulnerable to attacks, and hence, the increased spending by the oil and gas corporation to install robust security infrastructure to ensure security to the pipelines has been the primary reason for the growth of the market globally. Oil & gas industry is estimated to be the largest to commit to the use of existing pipeline networks for transport across the world. According to a study conducted by IT security firm Tripwire, more than 80% of the oil & gas companies have registered an increase in the number of cyber-attacks on their respective firms. The survey further reveals the lack of confidence in the present and existing security framework installed within the organization. The need for integrated and exhaustive security solutions has been emphasized by leading industry experts.The number of cyber-attack incidents has been growing continuously for the last few years, with the industry (along with BFSI) quoted to be the most vulnerable sector. The sector has also been found to be the most impacted by the robust state-sponsored cyber-espionage campaigns, which can affect the physical infrastructure as well. These vulnerabilities have forced the industry players to divert significant amounts of funds for security. The implementation of holistic security solutions to provide comprehensive security and to protect the system by reducing the number of threat actors or points of entry to the infiltrators is the need of the hour in this industry. The rising number of illegal connections to petroleum and oil products pipeline is a major factor affecting the market for crude oil in the global pipeline security market. This trend is particularly very severe in several regions in Eastern Europe. Due to lack of an effective system for monitoring and compliance to design specifications, there have been several major hazardous accidents in the past. Pipelines are major target for extremist groups, as even a simple explosion can lead to a blackout, affecting supply for several weeks in some cases. Hence, crude oil companies are increasingly looking for robust security systems to enhance their existing mechanism. Particularly, the use of supersensitive seismic monitoring devices, could provide early warnings if saboteurs were to approach a protected area.

Newly Added Shale Plays -- May 26, 2019 - EIA added new shale plays to their database earlier this year. For now they will be linked at the sidebar as "Emerging Shale Plays." EIA recently updated its methodology and production volume estimates for U.S. shale gas and tight oil plays to include seven additional plays, increasing the share of shale gas by about 9% and tight oil by 8% compared with previously estimated shale production volumes. The update captures increasing production from new, emerging plays as well as from older plays that had been in decline but are rebounding because of advancements in horizontal drilling and hydraulic fracturing. The selected plays are identified by examining the reservoir names reported by operators to state agencies. EIA uses the third party data source, Drillinginfo, which collects and distributes well level data gathered by the states. The most productive of the newly added plays is the Mississippian formation, which is located mainly in Oklahoma within the Anadarko Basin. The mainly carbonate rock type lies above the Woodford play and has produced liquids and natural gas for some time, but newer completion techniques have driven recent production gains.
The remaining six plays are smaller and are included in the rest of U.S. tight oil and shale gas categories.

• The Burket and Geneseo formations in the Appalachian Basin of Pennsylvania and West Virginia increased production in recent years. These dry shale gas formations lie above the Marcellus Shale but are thinner and do not cover as large an area as the Marcellus.
• The Uteland Butte member of the Green River Formation in the Uinta Basin of Utah is composed primarily of limestone, dolostone, and organic rich mudstones and siltstones.
• The Turner, Frontier, Sussex-Shannon, and Teapot-Parkman formations are located in the Powder River Basin of Wyoming and lie below and above the Niobrara formation, the basin’s primary hydrocarbon-bearing formation. They are mainly fine-grained sandstone with interbedded silt and shale

Only 10% Of US Shale Drillers Have A Positive Cash Flow - Nine in ten US shale oil companies are burning cash, according to Rystad Energy. Rystad has studied the financial performance of 40 dedicated US shale oil companies, focusing on cash flow from operating activities (CFO). This is the cash that is available to expand the business (via capital expenditure, capex), reduce debt, or return to shareholders.Only four companies in our peer group reported a positive cash flow balance in the first quarter of 2019, bringing down the share of companies with a positive cash flow balance from the recent norm of around 20% to just 10%. Total CFO fell from $14 billion in the fourth quarter of 2018 to $9.9 billion in the first quarter of 2019.“That is the lowest CFO we have seen since the fourth quarter of 2017,” says Alisa Lukash, Senior Analyst on Rystad Energy’s North American Shale team.“The gap between capex and CFO has reached a staggering $4.7 billion. This implies tremendous overspend, the likes of which have not been seen since the third quarter of 2017.”With negative cash flows, shale companies have historically relied on bond markets to finance their operations. Without additional funding and any debt refinancing, capex would have to be cut.However, no US shale company has made a public offering since the sharp fall in oil prices – and subsequent share price slide – late last year, marking the longest gap in public capital issuance since 2014.March and April 2019 saw a few of the more indebted operators issue bonds, intended to partly cover outstanding obligations for the coming year. However, pricing for this type of issuance has risen substantially due to the increased Fed Rate and the overall increased risk associated with US oil companies from a market perspective. “Recently released data, which confirmed dismal first quarter earnings, only served to cement negative market sentiment,” Lukash said. “While shale operators continue to focus on improving capital efficiency, investors are putting the industry under extreme pressure, leaving no room for undisciplined spending in 2019.” Many operators are building production momentum now after a seasonal dip during the winter months. As oil prices improve Rystad Energy expects the second quarter will see a significant increase in CFO while capex remains stable.The majority of US shale oil producers have slightly reduced their long-term debt by paying down obligations which will soon reach maturity.

Pioneer CEO says the natural gas company avoided a downturn in prices by shipping out to California - Windmills are bringing some of the cheapest electricity to the Permian Basin, pushing natural gas prices into the negative, Pioneer Natural Resources CEO Scott Sheffield told CNBC Thursday. “Pioneer has taken our gas to California, so we’re not seeing any of the negative prices,” he said in a one-on-one with “Mad Money’s” Jim Cramer. “But a lot of the independents are seeing negative.”In order to address challenges in natural gas, Sheffield said the company will need to add as many as five additional natural gas lines to its operations in the southwestern basin.Pioneer has about six crude oil lines that run from the Permian to the Gulf Coast, he said. The company only has one pipeline for natural gas there, he added.“What’s gonna solve our natural gas industry is get more [liquefied natural gas] projects,” said Sheffield, who returned to lead the company after Tim Dove retired in February. “We need to ship it out, just like we are crude oil; just like we are propane, butane [and] ethane end products.” Liquefied natural gas, or LNG, is natural gas that has been cooled for shipping and storage purposes.

Midwest Flooding Disrupts Crude, Fuel Cash Markets —Unexpected pipeline outages and refinery shutdowns over the past week—in part caused by bad weather in the U.S. Midwest—has roiled cash markets for both crude oil and refined products, traders said on May 28.Volatile trading was seen both in crude markets in the Cushing, Okla., hub and for gasoline and diesel traded in the Tulsa, Okla., region.The Ozark pipeline, which flows up to about 360,000 barrels per day (bbl/d) of crude oil, was shut, market intelligence firm Genscape said in a notice on May 28. It was not immediately clear whether flooding had caused the outage on Ozark, though the rains have caused other pipelines in the region to shut in recent days.The Ozark line flows northeast from Cushing to the Phillips 66 Wood River refinery in Roxana, Ill., according to Genscape. The outage had an immediate effect on the U.S. West Texas Intermediate crude cash roll—the three-day period after the front-month futures contract expires, when traders rebalance their positions. The roll trade is closely tied to supply and demand at Cushing, the delivery point for U.S. crude futures.The WTI June/July cash roll traded on May 28 at minus 40 cents per barrel, the weakest in more than two years, traders said. The cash roll traded at minus 20 cents per barrel on Friday ahead of the long holiday weekend.  Flooded areas of Arkansas and Oklahoma were bracing for more rain that will feed the already swollen Arkansas River, forecasters said on May 28. Up to 19 inches of rain has fallen in parts of Oklahoma over the month of May, the National Weather Service said, with more on the way. Tallgrass Energy on May 24 issued a notice of temporary embargo of deliveries for its Tallgrass Iron Horse Pipeline due to flooding on the Cimarron River in Oklahoma. That came a day after a similar notice for its Pony Express Pipeline, which runs from Guernsey, Wyo., to Cushing.The 200,000-bbl/d Diamond pipeline, which runs from Cushing across Arkansas to Valero Energy Corp’s Memphis refinery was also shut, traders and Genscape said on May 28.Flows on that line were already limited due to planned maintenance work at the gasoline-producing and alkylation units at the Memphis refinery, traders said. HollyFrontier’s 155,300 bbl/d Tulsa refinery shut operations as a precaution due to high water. Worries about reduced supply have boosted cash prices for gasoline in the Midwest. Group Three gasoline RUV-DIFF-G3 traded near the highest for this time of year since at least 2013, the earliest Refinitiv Eikon data available, at 3.75 cents per gallon above futures.

As North Dakota oil soars, so does waste of natural gas (AP) — North Dakota oil drillers are falling far short of the state’s goals to limit the burning of excess natural gas at well heads, five years after the state adopted the rules to reduce the wasteful and environmentally harmful practice. The industry has spent billions of dollars on infrastructure but is at least two years from catching up, and regulators are projecting that the state’s increasing gas production will still outstrip that new capacity. Environmentalists and even a key Republican say the problem will persist as long as the state doesn’t take a tougher approach with the industry, which has largely avoided financial penalties. “We need to find an excess flared gas solution immediately,” said Republican Rep. Vicky Steiner, whose hometown of Dickinson is in the heart of the state’s oil patch. “It’s a shame. I’d like to see us find a use for this.” “Compliance with the state’s flaring policy is not working,” added Wayde Schafer, spokesman for the state’s Sierra Club chapter. “We need to revisit the policy.” In 2014, when more than one-third of that gas was being burned off, North Dakota began requiring oil companies to limit flaring to no more than 15 percent by 2016, and to 10 percent by 2020. The national average for flaring is less than 1 percent. Oil companies endorsed the rules but struggled to meet them from the start. Most have often missed them. In March, drillers produced a record 2.8 billion cubic feet of natural gas per day, but about 20 percent of it went up in flames. That was well above the current limit of 12 percent — and was enough to heat all North Dakota homes for a month 10 times over, according to an analysis by the Legislature’s research agency.

Electricity needs projected to increase up to 70 percent (AP) — A new analysis says North Dakota will need significantly more power generation in the next 20 years because electricity consumption is projected to increase by up to 70 percent. The analysis reviewed by North Dakota Industrial Commission members Tuesday says the need for more power is driven largely by continued expansion of oil and gas activity in the western region of the state. That includes more drilling rigs, pipelines, refineries and other related facilities needed to produce and move oil and gas to market. The analysis by Barr Engineering also considered the additional population needed to staff those activities and associated services. The commission oversees the North Dakota Transmission Authority, which commissioned Barr Engineering to develop the forecast.

Will a new Washington State law hurt Bakken crude oil producers? - Refineries in Washington state have been reliable buyers of Bakken-sourced crude oil during the Shale Era, receiving an average of about 145 Mb/d — all of it by rail — over the past two-plus years. But a newly approved Washington law slashing the allowable vapor pressure limit for crude being unloaded from rail tank cars could hinder future growth in crude-by-rail shipments from North Dakota to the Evergreen State, or force Bakken producers to remove more butane and other “light ends” from the crude oil they rail west. It’s such a big deal that the state of North Dakota has indicated it will file suit to kill the new law. Today, we discuss Washington’s new law and its potential effects on Bakken crude oil producers. Besides long borders with Canada, the states of Washington and North Dakota don’t have a heck of a lot in common. Washington is known for its high technology (Boeing, Microsoft and Amazon) and coffee (Starbucks, and Seattle has one of the highest coffee-shops-per-capita ratios of any city), while North Dakota’s claims to fame are its wheat fields, “Fargo” (the movie, not the city) and, yes, the Bakken — one of the nation’s largest oil and gas producing areas. Still, there’s been a consistent link between the two states in recent years: Since the mid-2010s, Washington’s refining industry (combined capacity, about 660 Mb/d) has been counting on Bakken crude for more than one-quarter of its needs. As we said in The End of the Line, until the Shale Era, Washington’s five refineries (red dots in Figure 1) relied primarily on Alaska North Slope (ANS) crude oil shipped down from Valdez, AK, as well as waterborne imports, and piped-in crude from Western Canada. The Western Canadian crude is sent from Edmonton, AB, via the Trans Mountain Pipeline (hot-pink line) and the connecting Puget Sound Pipeline (green line) to four refineries in the Puget Sound area.

Estimated 80-125 gallons of oil spill on Haskell beach - On Tuesday evening, May 28, 2019, the City of Goleta became aware of an oil spill at Haskell’s Beach. As part of the ongoing response, cleanup and environmental assessment, teams are accessing the beach from Santa Barbara Shores Drive. The Mayor of Goleta has issued a statement: “Goleta is fully committed to protecting and preserving public safety and access to our beach and ocean. While oil spills are always of great concern, I am impressed by the way local, state, and federal agencies work together to contain the situation. We continue to monitor the situation and assess it for impacts,“ said Mayor Paula Perotte. Goleta – A Unified Command has been established to respond to a crude oil release that occurred at Pier 421 at Haskell’s Beach. The incident occurred while crews were working to plug an abandoned well, releasing an estimated 80 to 125 gallons of crude oil. Multiple assessments have not detected any sheen on the water, but ground crews have discovered oil and oily debris along the shoreline in the vicinity of Pier 421 and points east. A team of cleanup contractors are working to remove this material. Scientists continue to assess sensitive environmental sites in the area including snowy plover nesting sites near Coal Oil Point. No impacts to those areas have been observed. Crews from the Oiled Wildlife Care Network (OWCN) have also been activated and will be out assessing the area again tomorrow. At this time, three birds have been collected. The public is asked to avoid any potentially-oiled wildlife, as approaching or trying to help them can do more harm than good. Anyone seeing oiled wildlife is asked to call the OWCN at 1-877-823-6926.

Cleanup Continues for Haskell's Beach Oil Spill - The Office of Spill Prevention Response (OSPR) remains engaged in Goleta's crude oil spill that occurred during well plugging and abandonment operations at Pier 421 on Haskell's Beach in Goleta on Tuesday. Multiple assessments have not detected any sheen on the water, but ground crews have discovered oil and oily debris along the shoreline in the vicinity of Pier 421 and points east. A team of cleanup contractors is working to remove this material. Scientists continue to assess sensitive environmental sites in the area including snowy plover nesting sites near Coal Oil Point. No impacts to those areas have been observed. Crews from the Oiled Wildlife Care Network (OWCN) have collected ten birds, six of which are alive. OSPR reports some birds had injuries that appear unrelated to the oil response. The public is asked to avoid any potentially-oiled wildlife, as approaching or trying to help them can do more harm than good. Anyone seeing oiled wildlife is asked to call the OWCN at 1-877-823-6926. All beaches will remain open throughout the cleanup process and there are no impacts to public health, safety or recreational fishing. However, the public is asked to refrain from entering areas where crews are working or cleanup efforts are taking place.

Hundreds bash Trump’s oil fracking plan in SLO: ‘This battle does not end tonight’ - The movement against fossil fuel development on the Central Coast is alive and kicking. A public meeting erupted into an impassioned rally in San Luis Obispo Wednesday night as activists and local residents took turns bashing a federal plan to resume leasing public land in Central California to new oil and gas drilling, including fracking. More than 200 people gathered in a banquet room at Embassy Suites to raise alarms about the potential impacts to local groundwater, air quality and the climate. They called for the Bureau of Land Management to abandon plans to issue oil and gas leases in California for the first time in five years, including in the Central Valley and on the Central Coast. “Oil drilling, production and transport present a clear and ever-present danger to the health and safety of residents and businesses in our local economy,” said San Luis Obispo Mayor Heidi Harmon, who led the city in passing an ordinance opposing new oil and gas development and made a city-wide commitment to be carbon neutral by 2035. Representatives of the BLM’s Bakersfield office heard hours of testimony, chants, and jeers against the agency’s proposed plan to lift an unofficial moratorium on issuing oil and gas leases and allow fracking within the district. The office manages 400,000 acres of public land and 1.2 million acres of federal mineral estate in Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura counties. Agency officials said about 800,000 acres across those counties are available to new oil and gas leases.

Oregon Lawmakers Approve Fracking Moratorium – Oregon legislators have voted to place a moratorium on the oil and gas extraction process known as hydraulic fracturing, or fracking.  The state Senate voted to place a five-year ban on the practice. That is only half the timespan the House approved in March, but the House is expected to approve the Senate's revisions and send the bill to Gov. Kate Brown's desk. The measure, House Bill 2623, is garnering praise not only from environmental organizations, but health and safety groups as well.Thomas Meyer, regional organizing manager for Food & Water Watch describes fracking, which involves injecting a mix of chemicals into shale rock underground, as a dangerous process."In states where fracking has happened across the country, we see an increase in water contamination, in health problems, in air pollution," said Meyer. "And really, there's now been hundreds of peer-reviewed, scientific studies, particularly on the health impacts of fracking."Proponents of fracking claim there isn't enough evidence that the practice is harmful, and cite an economic stimulus to local communities. There currently are no fracking wells in Oregon, although the U.S. Geological Survey has identified coal-bed methane fracturing potential in the Willamette Valley. Meyer said it's also of concern that the federal government has been rolling back safeguards against fracking since 2017. His organization sees an urgent need to reconsider oil and gas development with the growing threat from climate change, although the Trump administration has been moving in a different direction.

Producing More with Less Cash and a Flat Rig Count - How can oil and gas companies spend less money, keeping the rig count relatively flat all while growing production?  Jesse Thompson, senior business economist for the Federal Reserve Bank of Dallas, answered this question earlier this week at the Mergermarket Energy Forum in Houston. He said there’s three pieces to the puzzle on how companies can do this.

1. Growth in Productivity. “Petroleum engineers are really good at their jobs and they’ve beaten everyone’s expectations for productivity growth for the past 10 years. That’s how companies are going to get more oil out of the money they do spend.”
2. Oilfield Services. “They have very little pricing power, if any, their margins are razor thin and they have an oversupply of capacity,” said Thompson. He said equipment ordered last year is just now being delivered. “New orders aren’t really there. Companies aren’t going to buy equipment because they’ve got some in inventory … they’re going to wear out existing inventory and then next year hopefully demand for services will go up and they’ll get their returns. But this year’s oilfield services costs are expected to be down year-over-year.”
3. Sand. “We’ve got more than enough sand … companies I talk to say sand costs are down year-over-year anywhere from 20-35 percent,” said Thompson. “That comes from in-basin sand being so much cheaper due to new supply and, in some cases, integrating the logistics of sand into the company itself and not paying an oilfield services company to do it for them.”

US Shale Companies are Burning through Cash - About nine in 10 U.S. shale companies are tremendously overspending, according to new analysis by Rystad Energy. Just about 10 percent of U.S. shale companies had a positive cash flow in the first quarter of 2019, meaning the majority of companies are burning through cash, according to energy research firm Rystad Energy. After studying the financial performance of 40 U.S. shale companies, Rystad found just four reported a positive cash flow balance in 1Q 2019. This is down from the recent norm of 20 percent. Total S.A. saw its cash flow from operating activities (CFO) fall from $14 billion in 4Q 2018 to $9.9 billion in 1Q 2019. “That is the lowest CFO we have seen since the fourth quarter of 2017,” said Alisa Lukash, senior analyst on Rystad Energy’s North American Shale team. “The gap between CAPEX and CFO has reached a staggering $4.7 billion. This implies tremendous overspend, the likes of which have not been seen since the third quarter of 2017.” Shale companies will be forced to cut CAPEX if they receive no additional funding or debt refinancing. But, according to Rystad, no U.S. shale company has made a public offering since the steep decline in oil prices late last year, marking the longest gap in public capital issuance since 2014. “Recently released data, which confirmed dismal first quarter earnings, only served to cement negative market sentiment,” Lukash said. “While shale operators continue to focus on improving capital efficiency, investors are putting the industry under extreme pressure, leaving no room for undisciplined spending in 2019.” But with shale operators ramping up production, Rystad expects a significant increase in CFO in second quarter as oil prices improve. “Larger diversified operators, which have multiple cash generating engines and are more resistant to volatile commodity prices, will be especially poised to open up to acquisition of new acreage,” Lukash added.

Fracking firms' cash flow drops off -  Cash flow at U.S oil and gas companies focused on the nation's booming shale fields is falling off despite criticism from Wall Street investors. Just 10 percent of shale-focused companies reported a positive cash flow over the first three months of 2019, the Norwegian research firm Rystad Energy reported Wednesday."That is the lowest (cash flow from operating activities) we have seen since the fourth quarter of 2017," Alisa Lukash, an analyst at Rystad said in a statement. "The gap between (capitol spending) and (cash flow from operating expenses) has reached a staggering $4.7 billion. This implies tremendous overspend." During the decade-long shale boom, oil companies have consistently spent more than they're taking in from oil and gas sales in a strategy designed to boost future production. But the practice has come under increasing scrutiny from investors like David Einhorn, who in a 2015 speech dubbed them "frack addicts." Rystad analysts said they were expecting cash flow to increase when companies report second-quarter earnings, as production typically increases following a "seasonal dip" during the winter months. "While shale operators continue to focus on improving capital efficiency, investors are putting the industry under extreme pressure, leaving no room for undisciplined spending in 2019," Lukash said. 

Schlumberger Suffers Credit Hit-- Schlumberger Ltd. had its debt rating lowered by S&P Global Inc. as belt-tightening in the U.S. shale patch translates into less drilling and fracking work for the world’s top oilfield services provider. The rating was cut a notch to A+, the fifth-highest invest grade, from AA-, S&P said on Friday. Its biggest rival, Halliburton Co., had its outlook revised to negative from stable by the ratings firm. Under pressure from shareholders, exploration and production companies are keeping spending in check, which is reducing demand for oilfield services, S&P said. "Oilfield services companies will no longer be able to generate the high operating margins they did in 2014," Carin Dehne-Kiley, an analyst at S&P, wrote Friday in a report to investors. "The oilfield services industry has fundamentally changed due to permanent efficiency and productivity gains realized by E&P companies as well as investor sentiment calling for E&P companies to live within cash flow and limit production growth." Oil services were hit hard by the steep sell-off in the oil market that started in 2014. North American customers cut back in response and now face an urge to return more cash to investors. A separate report from oil servicer Baker Hughes on Friday showed the number of rigs drilling for crude in the U.S. fell to the lowest in more than a year. Representatives for Schlumberger and Halliburton declined to comment.

Trace metal exposure among pregnant women living near fracking wells in Canada – -- The Journal of Exposure Science and Environmental Epidemiology last week revealed the findings of a 2016 pilot study that measured pregnant women's exposure to environmental contaminants in northeastern British Columbia, an area of intensive natural-gas production through hydraulic fracturing (fracking). The study, directed by Marc-André Verner, a professor at the School of Public Health (ESPUM) of Université de Montréal (UdeM), showed that the women had higher concentrations of some metals, especially barium, aluminium, strontium and manganese, in their hair and urine compared to the general population. "These results are of concern because a previous study showed that relatively high concentrations of barium, aluminium, strontium and manganese are found in rock samples from B.C.'s Montney Formation, where natural gas is extracted via fracking," said Élyse Caron-Beaudoin, a post-doctoral researcher at EPSUM and the study's lead author. "In addition, recent studies analyzing wastewater from fracking generally have shown higher concentrations of the same metals." "It's impossible to say with certainty whether fracking caused the women's exposure to these metals," she added, "but our study does provide further evidence that this could be the case."  The researchers found that concentrations of manganese in the women's urine were 10 times higher than in the reference populations. As well, the women's hair had greater concentrations of aluminium (16 times higher), barium (three times higher) and strontium (six times higher) than in the reference populations in France. Furthermore, barium and strontium concentrations were higher in hair samples from indigenous participants than in those from non-indigenous participants.

Court rules B.C. can't limit oil shipments in major blow for pipeline fight ...- British Columbia lost the largest tool in its toolbox to halt the Trans Mountain pipeline expansion with a court decision Friday that concluded it can't restrict oil shipments through its borders. The unanimous ruling from the B.C. Court of Appeal represented a major win for the project, which the federal government and Alberta see as crucial to getting more oilsands crude to overseas markets. B.C.'s minority NDP government, which took power on a promise to use every tool available to stop the expansion, swiftly announced plans to appeal to the Supreme Court of Canada. "Our government said from the outset that we would stand up for British Columbia's environment, our economy and our coast," said Attorney General David Eby. "Thousands of jobs and billions of dollars in economic activity would be put at risk by a diluted bitumen spill." The province filed a constitutional reference question to the Appeal Court that asked whether it had the authority to create a permitting regime for companies that wished to increase their flow of diluted bitumen. A five-judge panel agreed that the amendments to B.C.'s Environmental Management Act were not constitutional because they would interfere with the federal government's exclusive jurisdiction over interprovincial pipelines. Justice Mary Newbury wrote on behalf of the panel that the overall aim of the proposed amendments was to place conditions on and, if necessary, prohibit the movement of heavy oil through a federal undertaking. Newbury also wrote that the legislation is not just a general environmental law, but is targeted at one substance in one interprovincial pipeline: the Trans Mountain expansion project. 

Five takeaways from the Court of Appeal ruling on B.C.'s pipeline law  -- The British Columbia Court of Appeal ruled Friday (May 24) that the province did not have the authority to restrict shipments of diluted bitumen through its borders. Here are five takeaways from the decision and its impacts:

• 1. Provinces cannot bring in legislation that interferes with the federal government's exclusive jurisdiction over interprovincial pipelines. While the B.C. government did not dispute that the federal government was responsible for cross-boundary infrastructure projects, it argued that it should also be allowed to bring in legislation to protect its lands and waters from the environmental risks. The court disagreed, ruling the proposed legislation interfered with federal government's powers and that the National Energy Board is the body entrusted with regulating the flow of resources across Canada.
• 2. The court found B.C.'s legislation was aimed directly at the Trans Mountain pipeline expansion.   B.C. argued that its proposed legislative amendments were meant to protect its environment, while the federal government and Alberta argued the goal was to block or delay the Trans Mountain project. Justice Mary Newbury wrote on behalf of a five-judge panel that the proposed amendments were targeted at one substance, heavy oil, in one interprovincial project: the Trans Mountain expansion.
• 3. B.C. still wants to take its chances before the Supreme Court of Canada.  Although the panel unanimously agreed that the proposed legislation was unconstitutional, B.C. still plans to appeal to the highest court.
• 4. Alberta Premier Jason Kenney and former premier, Rachel Notley, are celebrating the decision as a win for the province. Kenney said he hopes the B.C. government will respect the rule of law and end its "campaign of obstruction," adding that the project would be a "win-win" for both B.C. and Alberta in creating jobs and increasing the flow of natural resources. Notley, now leader of the NDP Opposition, said she used a ban on B.C. wines last year to "force" the province to take the reference case to court. "Turns out B.C.'s toolbox was more Fisher Price than DeWalt," she said, referring to B.C. Premier John Horgan's statement that the government would use every tool in the toolbox to protect the coast from a potential spill.
• 5. It's unclear how many tools are left in B.C.'s toolbox to fight the project.

Alberta regulator restricts fracking near Brazeau Reservoir after earthquake - The Alberta Energy Regulator is moving to restrict oilfield fracking activity near the Brazeau Reservoir in west central Alberta as a precaution following a 4.4 magnitude earthquake in the area in March. The AER says hydraulic fracturing operations targeting the Duvernay underground formation or deeper are prohibited within five kilometres of the Brazeau dam infrastructure. Hydraulic fracturing is also banned for shallower operations within three kilometres. Oilfield firms that engage in hydraulic fracturing within five kilometres of the dam must report any seismic events greater than 1.0 magnitude and operations must cease if any event of 2.5 magnitude or greater is detected, the AER says. The epicentre of the earthquake in March was estimated to be about 32 kilometres northwest of Rocky Mountain House but it was not immediately linked to fracking activity. It was strong enough to be felt by local residents but no damage was initially reported. A 4.6 magnitude earthquake a week earlier was felt in Red Deer and Sylvan Lake in central Alberta and prompted the AER to order producer Vesta Energy Ltd. to suspend fracking at its well site, report all previous seismic activity and file a plan to eliminate or reduce future seismic activity from fracking. 

Cleanup underway after 400,000-litre produced water leak at Obsidian Energy well near Drayton Valley - The Alberta Energy Regulator (AER) says cleanup efforts are underway after 400,000 litres of produced water leaked from an Obsidian Energy well near Drayton Valley this week. On its website, the AER says the incident was the result of a mechanical failure. “[The mechanical failure] caused release to private land and impacted a nearby wetland,” the AER website says. “No impacts to wildlife [have been] reported.” The AER was unable to confirm if the well was for oil or gas or if it involved fracking. A statement on the spill, sent to Global News by Obsidian Energy, also did not provide that information. On its website, Obsidian Energy says it “is an intermediate-sized oil and gas producer with a well-balanced portfolio of high-quality assets producing roughly 30,000 boe (barrel of oil equivalent) per day.” “This would be what would be considered a very large spill,” said Greg Goss, a biology professor at the University of Alberta, who added that “any type of produced water leak is probably something to worry about.” In its statement, Obisidian Energy said it “discovered a sweet produced water spill at an operating site outside of Drayton Valley” on Wednesday afternoon. “Obsidian Energy takes responsibility for this event and is committed to minimizing our impact to the environment in all areas in which we operate,” the company said. “The spill was isolated at the source of the release. “It was immediately contained and cleanup is underway. There has been no impact to residents or wildlife in the area. Obsidian Energy is working closely with the Alberta Energy Regulator, including providing daily updates. Investigation is underway to determine the exact cause of the spill.” Goss said while the company or AER would have to confirm it, given the location and size of the leak, he believes it could likely be liquid related to hydraulic fracturing or fracking.

Texas Money Hits Canada Oil Patch Corner -- Texas money is flowing into a small corner of Canada’s oil sands at a time when big international companies are pulling out. Rangeland Energy, based in the Houston suburb of Sugar Land, is building a 50,000-barrel-a-day, 85 kilometer (53-mile) pipeline in the Marten Hills area of the Athabasca oil sands in northern Alberta to transport heavy crude from one of Canada’s newest oil plays. The conduit would link the remote location north of Fawcett Lake to the Plains Midstream Canada LP Rainbow Pipeline. The investment plan is a rare reversal of fortune for Canadian oil producers, beset by pipeline bottlenecks and mandatory production curtailments. In the past two years, companies including Royal Dutch Shell Plc and ConocoPhillips have sold oil sands facilities, often reallocating funds into U.S. booming shale plays. While Marten Hills is located in an oil sands region, producers including Cenovus Energy Inc., Deltastream Energy Corp. and Spur Petroleum Ltd. are employing multilateral drilling techniques used in shale to tap the Clearwater rock formation more than 1,600 feet (490 meters) underground, well below the oil sands that have traditionally drawn companies to the region. Backed by San Antonio, Texas-based private equity firm EnCap Flatrock Midstream, a unit of Houston-based EnCap Investments LP, Rangeland first entered the Canadian market about three years ago. The company won the contract to build a pipeline after responding to a request for proposals from three area producers, John Millar, Rangeland’s chief commercial officer, said by phone. “Our financial backer in Texas has always been interested in establishing a footprint in Canada,” he said. “Our observation is that the political climate is changing and people are feeling that things need to change.”

CNR Buys Devon's Canada Unit for $2.8B-- Canadian Natural Resources Ltd. agreed to buy the Canadian business of Devon Energy Corp. for C$3.8 billion ($2.8 billion), gaining heavy-oil assets in the province of Alberta. Devon’s Canadian land and facilities are within Canadian Natural’s core production areas, allowing the Calgary-based company to curb costs while boosting output. For Oklahoma-based Devon, the deal allows an increased focus on U.S. growth. The Canadian asset portfolio had net production averaging 113,000 oil-equivalent barrels in the first quarter, Devon said Wednesday in a statement. At the end of last year, proved reserves associated with the properties amounted to about 409 million barrels of oil. “These high-quality assets complement our existing asset base and provide further balance to our production profile,” Canadian Natural President Tim McKay said in a separate statement. Synergies are expected to provide benefits of C$135 million on an annualized basis, he said. The transaction is due to close by the end of the second quarter, with Devon using the proceeds for debt reduction. As the company focuses more on “high-return U.S. oil growth,” it’s also divesting its Barnett Shale gas assets in Texas. Data rooms for the Barnett will open shortly and Devon expects to exit the assets by the end of the year.

Police intimidation and violence used against UK fracking protestors - Lancashire police in north west England have revealed that they have been passing on the details of disabled anti-fracking protestors who are claiming benefits to the Department of Work and Pensions (DWP). Planning permission for the shale gas company Cuadrilla to drill at the Preston New Road site near Blackpool had initially been refused by Lancashire County Council. It was later approved by the secretary of state on appeal, allowing work to go ahead in October 2016. Police have defended their actions, claiming that they have a duty to alert the DWP if officers receive information that clearly suggests fraud maybe being committed. In a statement the police said, “The DWP are a partner agency and where we have information to suggest that fraud may be being committed we have a duty to pass that on, including video footage if we have it. They are the appropriate agency and it is their decision what, if any, action should be taken.” The Independent newspaper reported that at least two activists who attended anti-fracking protests at the Preston New Road site Blackpool had to attend interviews with the DWP. Both were questioned as to the validity of their claim to disability benefits. One of the protestors, Neil Sheldrick, who has a spinal disability, told the newspaper that this had “all got on top of me… It is making me feel very low. I’m being targeted for something I believe in.” Two months after starting to protest at the Preston New Road site, he was called in to be interviewed by the DWP. Neil said that his own GP could not understand why he had been sent in for a reassessment of his benefits. “The doctor wrote on his notes that I shouldn’t need to be assessed again because spinal cord injuries do not repair themselves.” Another protestor at the site, a disabled woman, who has a fluctuating condition, had her benefit claim suspended and her Motability car removed. Motability cars are provided via the disabled person’s benefit, enabling that person to get around and maintain independence.

Cuadrilla warned over release of up to 6.8 tonnes of unburned greenhouse gas from fracking site - Anti-frackers say they are concerned after Cuadrilla was warned after gas was vented from its Preston New Road drill site. The release of unburned methane, a greenhouse gas, occurred when Cuadrilla was flow testing gas released from shale rocks after it fracked late last year. The EA estimated between 2.7 and 6.8 tonnes of methane were sent unburned through the flare stacks at the site but said that although it breached its permit it was no risk to people and had “minimal to no impact on the environment”. But a spokesman from Frack Free Lancashire said: “Cuadrilla’s Preston New Road ‘flagship’ site was peddled as the most monitored site in the UK. Cold-venting methane is another in the history of breaches against their key environmental permits. “The community has been given repeated assurances about the “gold-standard, robust regulations” but this clearly shows that Cuadrilla cannot be trusted to operate safely and within the rules. It’s very concerning.” Nick Mace from Cuadrilla said: “We are fully committed to delivering our shale exploration operations in a safe and environmentally responsible way as a top priority and have amply demonstrated how we do this on a day to day basis. "The impact of the non-compliance is considered minor, with minimal to no impact on the environment. Cuadrilla will work will the Environment Agency to proceduralise this approach for future operations. Local people can be reassured that Preston New Road is the most monitored site in Europe and we continue to work closely with a range of regulators each and every day.”

Ithaca to Buy Chevron North Sea for $2B - Ithaca Energy Limited revealed Thursday that it will acquire Chevron North Sea Limited for $2 billion. The transaction has an effective date of January 1 and is expected to complete around the end of the third quarter of this year following approval by the UK Oil and Gas Authority. The deal, which will establish Ithaca as the second largest independent oil and gas producer in the UK North Sea, will add a further ten producing field interests to the existing Ithaca portfolio, four of which relate to assets operated by the company. As part of the transaction, approximately 500 employees will transfer to Ithaca, of which around 200 work offshore on Ithaca operated assets. “The acquisition of Chevron North Sea Limited is a significant step forward in the long-term development of Ithaca Energy and underlines our belief in the North Sea, particular in the UK Central North Sea where the enlarged business will own a range of interests in a number of key producing assets,” Les Thomas, Ithaca Energy CEO, said in a company statement. Asi Bartfeld, the CEO of Delek Group, which wholly owns Ithaca, said, “the acquisition is a key part of the Delek group’s strategic focus on building a world class exploration and production business”. Commenting on the deal, Tom Ellacott, senior vice president of corporate analysis at Wood Mackenzie (WoodMac), said the sale has been on the table for some time. “Delek confirmed last month it had made a bid,” Ellacott said in a statement sent to Rigzone. Greig Aitken, WoodMac’s director of corporate analysis, said the company recently identified the UK as one of nine countries that it considered “peripheral” to Chevron, “due to lack of scale and growth potential”. “Chevron will be left with 19 percent stake in the Clair field once the deal closes and a complete exit from the UK is looking increasingly likely,” Aitken added

Russia’s Dirty Oil Crisis Is Worse Than Almost Anyone Predicted -  For almost four weeks, the tanker Mendeleev Prospect has been anchored idly off the Polish port of Gdansk unable to discharge a $50 million cargo of crude oil. After any normal voyage the tanker would quickly deliver its 700,000 barrels of Russian crude into a refinery for processing into gasoline, diesel and other petroleum products. But the Mendeleev Prospect is in limbo, the victim of Russia’s unprecedented contaminated crude crisis that’s been spreading chaos though the European oil market for a month. Back in April, unusually high levels of the chemicals known as organic chlorides were discovered in Russian crude flowing through the giant Druzhba pipeline, built in the 1960s to carry crude from the U.S.S.R. to allied countries in Eastern Europe. The chlorides can severely damage oil refineries and on April 24 Russia’s state pipeline operator, Transneft PJSC, halted shipments. Moscow pledged to resolve the issue right away; four weeks later, the flow of Russian oil into Europe is little more than a trickle. Druzhba usually supplies as much as 1.5 million barrels a day of Russia’s benchmark Urals blend to central Europe — more than the total production of OPEC member Libya. The crude goes directly to refineries through two separate pipeline spurs and via tankers from the Ust-Luga export terminal in the Baltic. Despite repeated pledges from Russian authorities to resume shipments in days, the crisis is proving bigger, longer and costlier than almost anyone expected and a solution could still be weeks away. In Germany, one of the continent’s biggest refineries — the Leuna plant owned by French oil giant Total SA — was shut down. Poland has been forced to tap the emergency petroleum reserves. And as far west as Rotterdam, Europe’s petroleum hub, some refineries have been forced to run at lower rates. The technical challenge of handling millions of barrels of tainted crude has been compounded by fights over who will pay the cost of the crisis. An emergency summit in Warsaw on Thursday made some progress, but didn’t nail down a solution. Then there’s the mystery of what’s happening to Russia’s crude oil while Druzhba is shut. According to official data, output has barely dropped over the last four weeks, falling from 11.23 million barrels a day in April to 11.15 million barrels a day so far in May. But the country is shipping roughly 1 million barrels a day less than normal, about a tenth of its output. That’s led oil traders to puzzle on how Russia’s been able to maintain production, asking whether it has the millions of barrels of empty storage needed to hoard the crude that hasn’t flowed through Druzhba for four weeks.

Tainted Russian oil threatens to pollute politics of gas FT - When it comes to Russian exports, the saying goes, gas is the power and oil is the money. While Moscow has in the past used Gazprom’s pipelines to make mischief and play politics in Europe and transit countries in between, the black stuff is pure business: a serious export, and critical fuel for the country’s budget. That distinction is now at risk of becoming blurred, thanks to an energy supply crisis of Russia’s own making. Five weeks ago Polish buyers of Russian oil suspended shipments along the Druzhba pipeline, one of the world’s largest, complaining of contaminated crude. In the days that followed, Moscow admitted its most important crude export artery had been polluted with organic chloride. Panic spread across the European oil market as refineries scrambled to find out how far the contamination had got, and searched for replacement supplies. For EU energy companies that buy Russian oil and gas, particularly the five gas companies that have partnered with Gazprom to build the controversial Nord Stream 2 pipeline under the Baltic, the crisis has undermined the notion that Moscow is a reliable and dependable supplier — their key argument in favour of increasing Russian imports. Royal Dutch Shell, Uniper, Wintershall, Engie and OMV, prominent cheerleaders for Gazprom’s gas — and long-term buyers — have argued that it makes sense to increase options to buy Russian gas, giving Europe a long-term and trustworthy supply of cheap and easily accessible energy. 35m Amount of barrels of oil that has been tainted Those five companies are under increasing pressure from the US and some European capitals to pull their financial support for the Nord Stream 2 pipeline, which critics say is designed to hurt Kiev by reducing the amount of gas passing through Ukraine and will increase Moscow’s clout in Europe. Last week Rick Perry, US President Donald Trump’s energy secretary, said he believed sanctions against the pipeline were coming soon. While Mr Perry is known for outspoken statements, Mr Trump has railed against the project. While the Druzhba pipeline, with a capacity of up to 1.3m barrels a day of crude, is completely separate from Gazprom’s gas pipes, the oil crisis has highlighted two key arguments against Russia as an energy supplier. First, critics argue that EU companies should build pipelines to other suppliers and import terminals for gas ships to diversify away from Russia, arguing that Moscow’s 40 per cent share in European gas supplies is dangerously high. At the same time, opponents say Moscow’s habit of cutting shipments or concocting supply crises means it cannot be trusted.

Maduro Says Inbound Gas Tankers Sabotaged As Part Of US Imperial Aggression - Venezuelan President Nicolas Maduro has pointed the finger at the United States and allies in "imperial aggression" for waging a "sabotage" campaign against vital fuel shipments as well as humanitarian aid being sent to the country after multiple tankers and shipments were reportedly damaged.  Maduro is reported to have told a meeting with the political leadership of the United Socialist Party of Venezuela (PSUV) in Caracas this week that vessels carrying food “were sabotaged and did not leave the ports where they were going to leave.”  "Last week, sabotage was committed against ten tankers [with gasoline] to prevent them from reaching the Venezuelan coast. In any case, this problem is being dealt with and we are stabilizing the situation," Maduro said late on Monday. He also called the alleged acts of sabotage “torture to the economic body of the country” - however, didn't offer proof, and said further that problems with the fuel and food ships are “in the process of being resolved”. He described that the US and allied nations currently imposing aggressive sanctions on Venezuela were trying to prevent aid from reaching their destination.  “During the last 5 months of imperial aggression, we have endured financial persecutions, sabotage and coup skirmishes,” Maduro had tweeted Monday from his English-language account.

About 50 kg of oil spill filth collected at Malpe beach - Release of oil spill into the marine ecosystem in Malpe beach area has been cleaned by Udupi district administration and Malpe development committee together on Wednesday. They collected hazardous materials on Malpe beach which weighed approximately 50 kg. Residues found near Malpe beach and St Mary’s Island shore has worried the stakeholders in the tourism sector. As such filth tarnishes the image of this beautiful beach, it may impact the footfall also. Sudesh Shetty, the leaseholder for developing Malpe beach told TNIE that a ship may have released the oil into the water in the deep sea which is now reaching the shore. It is liquid petroleum hydrocarbon that causes severe damage to the marine ecosystem, he said. The oil spill has reached the shoreline in Yermal, Hejamady, Malpe, Kodi Kanyana and Beejadi in the past four-five days. Sudesh Shetty also pointed out that Malpe is the best beach in this temple city. ‘’So, we are worried as oil spill may wash further down and it is difficult to dispose.” Local shopkeepers are worried about the impact of the oil spill on tourism development. Prasad S, a shopkeeper near Malpe beach area told TNIE that last year too, Malpe beach had witnessed oil spill and it had reduced the beauty of the beach. About 10 volunteers cleaned the Malpe beach on Wednesday and cleaning of St Mary’s Island shore continued on Thursday. Meanwhile, Pollution Control Board officials reviewed the cleanup drive conducted at the Malpe beach.

Is India’s Oil Demand Being Underestimated-  Huge jumps of 8.2% and 9.5% in Indian oil demand in 2015 and 2016 led to growing expectations that India had reached a critical developmental ‘take off’ point. Rising incomes, motorisation, road building and a drive to expand manufacturing in a country of more than 1 billion people would replicate China’s multi-year boom with profound implications for global oil demand.In the end, Indian oil demand proved relatively disappointing, growing by only 2.9% in 2017 and 4.1% in 2018, and the forecast exuberance was reigned in.Nonetheless, the evolution of Indian oil demand remains a critical component of future oil demand growth. In its 2018 World Energy Outlook (WEO), the International Energy Agency (IEA) forecast that for the period 2017-2040, Indian oil demand will more than double from 4.4 million b/d to 9.1 million b/d, an increase of 4.7 million b/d. This represents 41% of global demand growth over the period. In comparison, China, which accounted for 43% of world oil demand growth from 2000-2017, will see much more modest growth of 3.5 million b/d from 2017-2040.In the IEA forecast, India would take over as the engine of oil demand, but wouldn’t have quite such a profound impact as China did from 2000-2017.However, China’s expansion was widely and wildly underestimated. The IEA’s 2002 WEO took an in-depth look at Chinese energy demand and forecast that Chinese oil consumption would rise from 5.0 million b/d to 12 million b/d in 2030, a point reached in 2016, 14 years early. The landslide victory of the Bharatiya Janata Party in India’s general election in May came despite low farm gate prices threatening to undermine the government’s rural support. The BJP won 303 seats in the lower house of parliament, up from 282 in 2014, giving it an enlarged outright majority and ensuring another five-year term for Prime Minister Narendra Modi. Modi’s pro-business economic policies and preparedness to spend on infrastructure bodes well for further gains in Indian oil demand. The economy appears to have rebounded from the impact of the removal of high denomination bank notes in 2016. The introduction of the Goods and Services Tax from July 1, 2017, despite its complexities, removes many barriers to interstate trade. Modi’s ‘Make in India’ programme should boost the manufacturing sector.

'It's time to tell our story': Australia's LNG industry finally fights - Russell (Reuters) - It’s taken a while but Australia’s liquefied natural gas (LNG) industry is putting on the gloves and stepping into the ring against the activists who want to condemn it and all fossil fuels to history’s dustbin. The central theme of virtually every speech on the opening day of the annual Australian Petroleum Production and Exploration Association (APPEA) conference was that the industry has to fight its corner and not allow environmentalists all the space in the fight for the hearts and minds of the populace. Australia’s LNG industry is now the largest in the world by capacity, having overtaken Qatar as the last of eight new projects prepares to start up, taking the country’s annual export capacity to more than 80 million tonnes of the super-chilled fuel. But the LNG industry, for all its success in building plants and discovering natural gas reserves to feed them has been largely silent when it comes to tackling the increasing focus of green activists, who view natural gas as the next enemy to tackle after coal. It has also suffered a public relations setback by being labeled as partly responsible for the sharp rise in domestic natural gas prices in Australia’s populated east coast, which coincided with the start-up of three LNG plants in eastern Queensland state. While it’s way too simplistic to conclude that the LNG plants were behind the price rise, the industry has struggled to communicate that it was a range of factors, including the depletion of traditional gas supplies, policy confusion and the restriction of exploration in some states that combined to cause the current price crisis.

Britain hands over £87,000 to support China's fracking industry - Britain has given thousands of pounds in foreign aid to support fracking in China, the Government has confirmed.Since 2016 the Foreign Office has spent £87,000 on projects to help the country’s ‘environmental regulation of shale gas development’.Meanwhile the fracking process – which involves breaking open rock layers to release underground gas – remains hugely controversial in the UK.  It often triggers minor earthquakes and campaigners claim it causes water contamination and traffic pollution.The Foreign Office argued that working with China was a national security priority and an opportunity to influence its future. But Alex Norris, Labour’s spokesman for international development, said: ‘The Tories are hypocritically spending UK aid to support fracking in China, while also announcing the climate crisis will be a top priority of their international development agenda.  'Fracking by the Chinese government has already been suspected of causing three earthquakes this year in Sichuan province.’

Could fracking with carbon dioxide instead of water be greener? -- Could a greenhouse gas be the answer to making fracking less controversial? Counterintuitive as the idea might seem, Chinese researchers claim that using carbon dioxide instead of water for fracturing rocks could be a greener way of extracting fossil fuels.  Traditional hydraulic fracturing, as the name suggests, involves pumping large volumes of water underground to create cracks in shale rock to release oil and gas. Carbon dioxide has been proposed before as an alternative that could address the fracking industry’s significant water demand in dry areas. It could also tackle problems associated with polluted water flowing back to the surface after the process.  To test how effective the gas might be, a Chinese research team drilled and fracked five wells with CO2 at Jilin oil field in north-east China, as well as conducting lab tests on rock samples from south-west China. They were “delighted” to find the wells produced up to 20 times as much oil after the fracking.  Carbon dioxide could be a useful way of addressing fracking’s water consumption in arid areas of the USand even the UK, where water companies have said the fracking industry could put pressure on some local water supplies. It also holds the prospect of opening up more of China’s shale gas resource, which is the world’s largest but has not been exploited as rapidly as that in the US.  “Reservoirs in China may be more suitable to be fractured by CO2,” says Nannan Sun of the Chinese Academy of Sciences. But he added it was too early to say if it could change the speed at which China’s fracking industry develops. While using the gas could be greener by reducing water use and potential water pollution, the research does not show CO2 fracturing is environmentally better overall. While some of the CO2 could be stored within the rocks, Nannan says it could also potentially leak out after fracking, which would add to global warming. If CO2 fracturing makes more oil and gas economically recoverable, that would add to the stock of fossil fuels we can burn too.

US Warns Hong Kong to Avoid Oil Tanker - (Bloomberg) -- The U.S. warned Hong Kong that it could face penalties if it does business with an oil tanker headed for the city that allegedly violated sanctions on Iran. Washington wants to put China and the autonomous city on notice that it will aggressively and consistently enforce its Iran sanctions, a senior U.S. official said on Tuesday, speaking on condition of anonymity. The official said China would be informed that any entity doing business with the ship would expose it to U.S. sanctions. The attention levied on this single vessel, the Pacific Bravo, underscores Washington’s desire to stymie Iran’s oil exports. Relations between the two sides have deteriorated sharply in recent weeks, following President Donald Trump’s pledge to force Iran’s vital oil exports down to zero and a revocation of key sanctions waivers. The Pacific Bravo is owned by China’s Bank of Kunlun, according to the senior U.S. official. Reuters reported in October that the bank -- once Beijing’s major channel for transactions with Iran -- would stop handling such payments due to sanctions pressure. Next StopWhile the U.S. official said the tanker is heading to Hong Kong, ship-tracking data compiled by Bloomberg shows a vessel called the Pacific Bravo off the coast of Sri Lanka and signaling Indonesia as its next stop. The senior U.S. official said it was imperative that Hong Kong authorities prevent the vessel from docking or allowing local entities from providing services to ships that might misrepresent themselves in order to avoid exposing themselves to sanctions violations. Washington wants to make clear that anyone doing business with Iran, won’t be doing business with the U.S., the official said, adding that there would be more sanctions to come. Hong Kong’s Marine Department said in an email Wednesday that at present, it “has no information showing if the respective vessel will enter or pass by Hong Kong waters.”

Iran’s Oil Exports Plunge To 400,000 Bpd In May --After the U.S. ended all sanction waivers for Iranian oil customers on May 2, Iran’s crude oil exports have been significantly down this month compared to April and more than 2 million bpd off their 2.5-million-bpd peak in April 2018, just before the U.S. withdrew from the Iran nuclear deal and moved to re-impose sanctions on Iran’s oil industry. According to industry sources and tanker-tracking data cited by Reuters on Wednesday, Iran’s oil exports this month have plummeted to 400,000 bpd, which is less than half of Iranian oil exports last month.The United States had given eight countries six-month waivers to continue buying oil from Iran after the U.S. re-imposed sanctions on the Iranian oil industry in November. The United States, however, pursued a maximum pressure campaign against Iran last month and put an end to all sanction waivers for all Iranian oil buyers, beginning in May.Most of the Iranian oil shipments are going this month to Asia, according to tanker tracking data from Refinitiv Eikon and to two industry sources. One of the sources told Reuters they expected Iran’s average oil shipments this month to be around 400,000 bpd, but the other source noted that exports could hit 500,000 bpd. Some of Iran’s oil exports are believed to have been already under the radar as Iran is said to have increased the use of the ‘switch-off-the-transponder’ tactic, which makes tracking its exports via the AIS systems increasingly difficult and opaque.Earlier this month, Iran was spotted resuming illicit shipping of oil to Syria, with a million barrels of oil arriving in early May, for a first such delivery since the start of this year. Experts believe that Iran will be re-opening and using more of its illicit oil channels to keep oil trade and continue getting some revenues from its most precious export commodity. The inability to fully track Iran’s oil supply is making OPEC and allies’ task to asses global supply to the market increasingly difficult, as opaque data about Iran adds to mounting uncertainty over oil supply disruptions elsewhere, clouding OPEC’s outlook on global supply for the rest of this year.

Kuwait oil minister sees balanced oil market toward end 2019 (Reuters) - The oil market is expected to be in balance toward the end of 2019, as global inventories fall and demand remains strong, but OPEC’s job is not done yet, Kuwait’s oil minister told Reuters. There are still uncertainties around oil demand growth due to concerns about the impact of the U.S./China trade dispute on global economy, while U.S. shale oil production is still rising, Khaled al-Fadhel said on Monday. This uncertain outlook is making it tough for OPEC and its allies to have a clear oil supply plan for the second half of the year. Fadhel said it was too early to say now if the oil producers will extend their current output targets after June. The Organization of the Petroleum Exporting Countries (OPEC), Russia and other non-OPEC producers, known as OPEC+, agreed to reduce output by 1.2 million barrels per day (bpd) from Jan. 1 for six months, a deal designed to stop inventories building up and weakening prices. “There is great anxiety in the market today mainly related to supply concerns. For example, the impact of the U.S government decision announced recently not to extend the waivers to major buyers of Iranian crude has yet to be felt,” Fadhel said in written answers to questions from Reuters. He also cited the possibility of further U.S. sanctions on Venezuela, political tensions in Libya, U.S. shale oil production growth and trade dispute between Washington and Beijing as reasons why the global supply and demand outlook remains unclear. “If we are to look at the OECD commercial inventories, I think we are on the right track. OECD Inventories are falling toward the last 5 year average, and the record level of conformity reached in April by OPEC and its non-OPEC partners have played a significant role,” he said.

Hedge funds bang defensive drum on oil- Kemp – (Reuters) - Hedge funds liquidated more of their bullish petroleum positions as concerns about the health of the global economy and oil usage outweighed European and Middle Eastern supply disruptions. But selling in the most recent week was notably lighter than in the three previous, suggesting at least some managers think prices have pulled back enough for the time being. Positions were reported at the close on May 21, before oil prices slumped on May 23 amid fears about the economic impact of a prolonged trade conflict between China and the United States. Hedge funds and other money managers cut their combined net long position in the six most important petroleum futures and options contracts by 4 million barrels, exchange and regulatory data showed. Portfolio managers have now reduced their net long position by a total of 64 million barrels over the last four weeks, after raising it by 609 million barrels over the previous 15 weeks. Funds trimmed total long positions by 14 million barrels, but in a sign the liquidation cycle was expected to slow, also cut short positions by 10 million (https://tmsnrt.rs/2I7yblE). Liquidation was again concentrated in crude and U.S. gasoline while funds bought U.S. heating oil and European gasoil, probably anticipating an IMO-driven consumption rise. Fund managers sold 13 million barrels of NYMEX and ICE WTI, 4 million barrels of Brent, and 5 million barrels of gasoline, but purchased 6 million barrels of heating oil and 12 million barrels of gasoil. Middle distillates such as heating oil and gasoil are normally the most exposed to the economic cycle since their use is concentrated in freight, manufacturing, mining, and oil and gas production, as well as farming. But the prospective increase in consumption as a result of new marine fuel regulations at the end of the year is likely supporting interest from fund managers despite the deteriorating economic outlook. Overall, fund managers are still bullish on the outlook for oil prices, though that optimism has been dented by the stream of worse-than-expected economic indicators in recent weeks.  :

Oil steadies as trade fears balance Mideast tension and supply cuts -- Oil steadied on Monday, trading below $69 a barrel, as concern over the U.S.-China trade dispute and global economic outlook offset support from Middle East tensions and supply cuts. Figures on Monday showed that profits for Chinese industrial companies shrank in April while new orders for U.S.-made capital goods fell more than expected in a further sign that the economy is slowing. The main factor preventing crude prices from rising on the geopolitical news is the concern about the global economy, said Petromatrix oil analyst Olivier Jakob. “The macroeconomic outlook does not look good,” Jakob said. Brent crude, the global benchmark, was up 5 cents at $68.74 a barrel by 0839 GMT, having fallen by about 4.5% last week. U.S. West Texas Intermediate crude was down 36 cents at $58.27. Both crude contracts registered their biggest weekly price declines of the year last week. Public holidays in the United States and Britain on Monday limited participation, keeping volumes low. Rising tension between the United States and Iran, with Washington’s announcement on Friday that it would deploy more troops to the Middle East, has had little impact on the market so far.. Money managers cut their net long U.S. crude futures and options positions - bets on rising prices - in the week to May 21, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. Oil supply cuts - both voluntary and those resulting from U.S. sanctions - have boosted prices this year and are still keeping a floor under prices. The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, an alliance known as OPEC+, has been cutting supply to tighten the market. U.S. sanctions on OPEC members Iran and Venezuela have curbed their crude exports, reducing supplies further. Brent’s price structure remains in backwardation, with prices for prompt delivery higher than those for future dispatch, suggesting a tight balance between supply and demand.

Brent oil consolidates near $70 after two-day rally - Brent oil is currently trading just above $70 per barrel, representing little change on the day. Prices rallied 1.11% on Monday as escalating tensions between US and Iran triggered fears of supply disruptions. On Friday, Washington announced that it will deploy more troops in the middle east, sending the black gold higher vey 1.84%. The bid tone also strengthened on reports that Russia’s oil production dropped in May as shipments via the Druzhba pipeline to Europe were found to be contaminated in April. The two-day rally, however, seems to have stalled near $70. Supply reductions by OPEC, escalating US-Iran tensions and drop in Russia’s oil output indicate the path of least resistance for Brent is to the higher side. Even so, oil may remain under pressure if other riskier assets post losses on trade tensions.

Déjà Vu: Oil Prices Stuck Once Again – Oil started the day mixed, with WTI up but Brent flat. The market seems to be once again stuck between supply outages on the one hand, and fears of a softening economy on the other. That was the same dynamic for much of May, although prices have now stabilized at a lower level, with WTI right around $60 and Brent under $70. “Oil prices lack direction because the oil market currently finds itself caught between supply risks and concerns about demand,” Commerzbank said.  The shale boom in North Dakota has led to a spike in flaring, despite the state setting out flaring rules intended to cut down on the practice. In 2014, the state adopted targets, aiming for no more than 15 percent of production flared by 2016, a level that would lower to 10 percent by 2020. In March of this year, the industry flared 20 percent. “We need to find an excess flared gas solution immediately,”said Republican Rep. Vicky Steiner. “It's a shame. I'd like to see us find a use for this.”  President Trump said that he is not seeking regime change in Iran, and only wants to contain their nuclear weapons, a comment that seems to contradict the rising drumbeat for war. “We are not looking for regime change. I just want to make that clear,” Trump said during a visit to Japan. “I’m not looking to hurt Iran at all. I’m looking to have Iran say no nuclear weapons,” Trump said. “No nuclear weapons for Iran and I think we will make a deal.” . The increasingly important role of U.S. shale in the global energy mix is a deflationary force in the medium-term, Morgan Stanley argues. Unlike conventional production, shale resources are abundant and the real cost determinant is the industrial process following extraction, which means that costs can be driven down over time.  Traders say that buyers of Iranian oil have disappeared following U.S. sanctions. In March, the countries that had exemptions on U.S. sanctions purchased 1.6 million barrels per day from Iran, and evidence suggests that they are all mostly abiding by U.S. demands to cease purchasing. “China has enough problems with the U.S. They don’t want to give them a pretext,” an Iranian oil executive told the WSJ.

Oil mixed as trade fears weigh despite tight supply - Oil prices were mixed on Tuesday as prices were caught between concerns over global supply and fears that the U.S.-Chinese trade conflict will hurt demand. Brent crude fell by 15 cents, or 0.2%, to $$69.96 a barrel, with prices repeatedly veering above and below $70 in choppy trading. U.S. West Texas Intermediate (WTI) was up 34 cents, or 0.6%, at $58.94. U.S. crude futures were trading for the first time since Friday after a long holiday weekend. Investors, however, are concerned that the trade war between the United States and China could hit the global economy and dent fuel consumption. Brent futures last week registered a decline of 4.5% and WTI was slid by 6.4% for its biggest weekly loss since December. “Oil prices lack direction because the oil market currently finds itself caught between supply risks and concerns about demand,” Commerzbank said in a note. “A whole host of poor economic data from the major economic areas of the U.S., China and Europe, plus the entrenched situation in the trade talks, are not good news for the demand outlook.” On the flip-side, crude has gained support from supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies since the start of the year, with political tensions in the Middle East another bullish influence. No political solution appears forthcoming to end U.S. sanctions that have largely taken Iranian and Venezuelan crude out of global markets. “Brent is likely to resume its upward trend in line with its fundamentals, which are tight,”

Oil prices drop as trade war worries outweigh supply disruptions - Oil prices fell by around 1% on Wednesday on concerns the Sino-U.S. trade war could trigger a global economic downturn, but relatively tight supply amid OPEC output cuts and political tensions in the Middle East offered some support. Front-month Brent crude futures, the international benchmark for oil prices, were at $69.53 a barrel at 0641 GMT, down 58 cents, or 0.8%, from last session’s close. U.S. West Texas Intermediate (WTI) crude futures were at $58.46 per barrel, down 70 cents, or 1.2%, from their last settlement. “Investors are concerned from a macro perspective about worldwide demand, particularly in the face of the growing trade dispute between the U.S. and China,” he said. Another concern was that “falls in emerging market currencies (are) making dollar-priced crude oil dearer to purchase in those nations” and that crude prices could pull back. Despite the economic concerns, global oil demand is so far holding up well, likely averaging over 100 million barrels per day (bpd) this year for the first time, according to data from the U.S. Energy Information Administration (EIA). But analysts are concerned that tightening credit amid the economic slowdown will hamper trading in commodities. “We remain cautious regarding the short-term macroeconomic environment,” commodity brokerage Marex Spectron said in a note. “Credit availability on the physical commodity markets is of particular concern.” Eastport, a Singapore-based tanker brokerage, had similar concerns. “An increase in caution and risk aversion could weigh on economic growth,” it said in a note on Wednesday. Despite these concerns dragging on oil markets, crude prices remain relatively tight.

Prices of oil slide more than 2% — Oil prices fell more than 2% on Wednesday as China signalled it would use the rare-earths card in its trade war with the US, stoking concerns that an ongoing standoff could hurt crude demand. Supply constraints linked to Opec output cuts and political tension in the Middle East offered some support, however. Front-month Brent crude futures, the international benchmark for oil prices, were at $68.55 a barrel at 9.33am GMT, down $1.56 from last session's close, having hit a session low of $68.44. US West Texas Intermediate crude futures were at $57.71 per barrel, down $1.43, after hitting a low of $57.66. Both contracts are set for their first monthly decline in five. In a sign of escalating tensions between the world's two biggest economies, China signalled it was ready to use its dominant position in rare earths to strike back in a trade war with the US, Chinese newspapers warned on Wednesday. While China has so far not explicitly said it would restrict rare earths sales to the US, Chinese media has strongly implied this will happen. "China is the world's biggest producer of these highly-prized raw materials and is poised to use them as leverage in its trade spat with Washington," Despite these concerns dragging on oil markets, crude prices remain relatively well-supported. "Supply risks remain at elevated levels with continued geopolitical uncertainty in the Middle East, as well as Venezuela's well-known struggles," July Brent crude futures were trading at about $1.50 a barrel above the August contract, a structure known as backwardation, which points to a tight market. "The last time it was any higher in this segment was in September 2013," Commerzbank said. "That market participants are prepared to pay such a premium for oil that can be delivered at short notice points to tight oil supply."

WTI Extends Gains After Bigger Than Expected Crude Draw - WTI bounced hard after testing $57 today as a pipeline that drains crude from the key Cushing, Oklahoma, supply hub was said to be ready to restart Thursday.  OPEC's “wishy-washy" stance on simply setting a new date is adding to uncertainty, said Michael Loewen, a commodities strategist at Scotiabank in Toronto.“The macroeconomic overlay is affecting everything,” he said.“If China starts restricting that flow of rare earths, that will materially restrict economic growth.”But inventory concerns remain high on the agenda... API:

• Crude -5.265mm (-500k exp)
• Cushing -176k
• Gasoline +2.711mm
• Distillates -2.144mm

Crude inventories were expected to draw modestly in the last week after 4 builds in the last 5 weeks but surprised with a big draw, just as gasoline surprised with a big build... WTI hovered just shy of $59 ahead of the API print, after ramping off the lows (below $57) intraday on MPLX reopening rumors, but the machines could not make up their minds after the data showed a bigger than expected crude draw which limped WTI back to $59...

Crude Inventory Draw Perks Up Oil Prices - The American Petroleum Institute (API) reported a large draw in crude oil inventory of 5.265 million barrels for the week ending May 24, coming in over analyst expectations of a 857,000-barrel drawdown in inventories. Last week, the API reported the latest in a string of surprise builds in crude oil inventories, the last of which was 2.4 million barrels. A day later, the EIA estimated that US inventories had increased by 4.7 million barrels.Even with this week’s draw, the net build is still a significant 26.65 million barrels for the 22-week reporting period so far this year, using API data.  To compare, this is what the graph looked this this same week in 2017: Oil prices rose briefly on Wednesday as news that flooding might impact oil flowing near Cushing, Oklahoma. But news of the escalating China/US trade dispute pushed prices lower, with WTI falling $0.31 (-0.52%) to $58.83, with Brent falling $0.80 (-1.16%) to $67.87 by 2:58pm EST. Prices continue to remain volatile in the wake of mounting tensions in the Middle East, supply disruptions in Venezuela and Iran, and the US/China trade dispute.Both benchmarks are trading significantly down on the week.The API this week reported a build in gasoline inventories for week ending May 24 in the amount of 2.711 million barrels. Analysts estimated a draw in gasoline inventories of 528,000 barrels for the week.Distillate inventories fell by 2.144 million barrels for the week, while inventories at Cushing fell by 176,000 barrels.US crude oil production as estimated by the Energy Information Administration showed that production for the week ending May 17 rose slightly to 12.2 million bpd from the all-time high of 12.3 million bpd achieved during the week of April 26.The U.S. Energy Information Administration report on crude oil inventories is due to be released on Thursday at 11:00a.m. EST due to the Memorial holiday. By 4:45pm EST, WTI was trading down at $59.07 and Brent was trading down $68.07.

Oil prices fall as trade war worries outweigh supply disruptions - (Reuters) - Oil prices fell in volatile trade on Wednesday, weighed down by equity markets as China signaled readiness to escalate the trade war with the United States, stoking concerns that an ongoing stand-off could hurt demand. Supply constraints linked to the Organization of the Petroleum Exporting Countries’ output cuts and political tensions in the Middle East offered some support, however. Brent crude futures, the international benchmark for oil prices, ended the session at $69.45 a barrel, down 66 cents, or 0.9%, having hit a session low of $68.08. U.S. West Texas Intermediate (WTI) crude futures fell 33 cents, or 0.6%, to settle at $58.81 per barrel, after hitting a low of $56.88, the lowest since March 12. Both contracts were set for a monthly decline. In the United States, cash crude markets in Cushing, Oklahoma and fuel markets in the area have been roiled this week by pipeline outages and disruptions due to flooding in the Midwest after heavy rains. But U.S. crude futures and the front-month spread between July and August U.S. crude futures pared some losses in part due to news of the Ozark pipeline from Cushing to Illinois restarting on Thursday, traders and brokers said. Trading in the front-month spread is closely tied to supply and demand at Cushing, the delivery point for U.S. crude futures. In a sign of escalating tensions between the world’s two biggest economies, China signaled it was ready to use its dominant position in rare earths to strike back in a trade war with the United States, Chinese newspapers warned on Wednesday. Rare earths are a group of 17 chemical elements used in products ranging from high-tech consumer electronics to military equipment. Trade worries and slowdown fears have pressured investors to dump so-called “risk assets” such as equities and oil globally and seek safety in German and U.S. government debt. Wall Street’s main indexes hit more than two-month lows on Wednesday. While China has so far not explicitly said it would restrict rare earths sales to the United States, Chinese media have strongly implied this would happen.

Midwest flooding disrupts U.S. crude, fuel cash markets (Reuters) - Unexpected pipeline outages and refinery shutdowns over the past week - in part caused by bad weather in the U.S. Midwest - has roiled cash markets for both crude oil and refined products, traders said on Tuesday. Volatile trading was seen both in crude markets in the Cushing, Oklahoma hub and for gasoline and diesel traded in the Tulsa, Oklahoma region. The Ozark pipeline, which flows up to about 360,000 barrels per day (bpd) of crude oil, was shut, market intelligence firm Genscape said in a notice on Tuesday. It was not immediately clear whether flooding had caused the outage on Ozark, though the rains have caused other pipelines in the region to shut in recent days. The Ozark line flows northeast from Cushing to the Phillips 66 Wood River refinery in Roxana, Illinois, according to Genscape. The outage had an immediate effect on the U.S. West Texas Intermediate crude cash roll - the three-day period after the front-month futures contract expires, when traders rebalance their positions. The roll trade is closely tied to supply and demand at Cushing, the delivery point for U.S. crude futures. The WTI June/July cash roll traded on Tuesday at minus 40 cents per barrel, the weakest in more than two years, traders said. The cash roll traded at minus 20 cents per barrel on Friday ahead of the long holiday weekend. Flooded areas of Arkansas and Oklahoma were bracing for more rain that will feed the already swollen Arkansas River, forecasters said on Tuesday. Up to 19 inches (48 cm) of rain has fallen in parts of Oklahoma over the month of May, the National Weather Service said, with more on the way. Tallgrass Energy LP on Friday issued a notice of temporary embargo of deliveries for its Tallgrass Iron Horse Pipeline due to flooding on the Cimarron River in Oklahoma. That came a day after a similar notice for its Pony Express Pipeline, which runs from Guernsey, Wyoming to Cushing. The 200,000-bpd Diamond pipeline, which runs from Cushing across Arkansas to Valero Energy Corp’s Memphis, Tennessee, refinery was also shut, traders and Genscape said on Tuesday. HollyFrontier’s 155,300 bpd Tulsa, Oklahoma, refinery, shut operations as a precaution due to high water. Worries about reduced supply have boosted cash prices for gasoline in the Midwest. 

Global economic slowdown hits diesel consumption – Kemp (Reuters) - Global manufacturing and trade volumes have been decelerating since the third quarter of 2018 and the slowdown is starting to show up in sluggish consumption of middle distillates such as gasoil and diesel. Global manufacturers have reported falling export orders for eight months since September, according to the new export orders component of the JP Morgan global purchasing managers’ index. World trade volumes peaked in October and have since been contracting at the fastest rate since 2009, according to the Netherlands Bureau of Economic Policy Analysis. Every real-time measure of manufacturing and trade flows points to a very sharp slowdown over the last nine months (https://tmsnrt.rs/2Wf88Tp). Container shipments are falling. Air cargo is down. Rail freight is shrinking. And shipping lines are cancelling voyages owing to lack of demand. Distillates are the most heavily exposed to the business cycle since most gasoil and diesel is used in freight transportation, manufacturing, mining, oil and gas extraction and farming. OECD stocks of gasoil and diesel were down by less than 2 percent in March compared with the same month a year earlier, and by less than 4 percent in the first quarter compared with the same period in 2018. Year-on-year stock draws have slowed from more than 12 percent for single-month and three-month periods in the second quarter of 2018, according to statistics from the Joint Organisations Data Initiative. Global distillate stocks may now actually be rising. By the middle of May, distillate stocks in the United States were more than 12 million barrels (11%) higher than at the same point last year. 

Why Bears Will Win The Oil Price War - The most recent jump in prices through mid-May came largely as a result of geopolitical risk and supply outages. Rising tensions in the Middle East and disruptions in places like Venezuela and Iran are showing no signs of going away anytime soon. These geopolitical factors will keep some upward pressure on oil prices for the next few quarters. However, in the background, there are several variables that could exert deflationary pressure on the oil market. Morgan Stanley has noted that U.S. shale is slowing, “but with 200 [billion] barrels of resource with breakevens in the $40-45/bbl range, there is an increasingly credible scenario that shale could grow >1 mb/d per year out to 2025.” Moreover, oil producers are turning to a variety of digital technologies, robotics and automation that could keep costs in check. That’s good for individual oil companies, the investment bank argues, but in the aggregate, it puts a lid on crude prices.Morgan Stanley drew parallels to copper and aluminum markets. In the past, oil was like copper in that producing the next project became more and more expensive. Scarcity meant higher prices and the tendency for companies to venture into ever riskier frontiers. On the other hand, shale is more like aluminum, the bank says – the resource itself is abundant, so costs are more determined by the industrial process that comes after extraction. As a result, as technology improves, costs fall. Aluminum prices have steadily declined over the last century while copper has been more volatile and cyclical.   Because of shale’s increasingly important role in the global market for crude oil, the entire oil market may begin to resemble what has occurred with aluminum. In other words, there is a cap on oil prices in the medium-term, Morgan Stanley argues. That leaves little room for OPEC+ to add production; the group may have to maintain its output curtailments for years to come.Depressed prices mean that investment outside of North America could dwindle. That’s bad news for companies working outside of the U.S. and Canada and also negative for oilfield service companies. “For the majors and the E&Ps, their place on the cost curves would be more critical than ever,” Morgan Stanley warned. “Ongoing focus on cost and capital efficiency would remain a key priority.” On top of this, as other governments try to compete for capital with North America, tax rates on the energy industry could fall, Morgan Stanley said. That also could act as yet another deflationary force.

Brent falls on trade war worries, tight oil market supports - Oil prices fell on Thursday on fears of a global economic slowdown due to a U.S.-China trade war but losses were capped by a tightening crude market and rising political tensions in the Middle East. Brent crude futures, the international benchmark for oil prices, were at $68.89 per barrel at 9:20 a.m., down 59 cents, or 0.9%, from their last close. U.S. West Texas Intermediate (WTI) crude futures were up 18 cents, or 0.31%, at $58.99 a barrel, supported by expectations of a fall in U.S. crude inventories. “An escalating U.S.-China trade war represents a risk to oil markets,” Bernstein Energy said in a note on Thursday. A senior Chinese diplomat ramped up the rhetoric against the United States on Thursday by comparing actions from Washington to “naked economic terrorism” Bernstein said that under “a full-blown trade war scenario” global oil demand would grow by 0.7 percent this year versus 2018, only half of current estimates. Because of weakening demand, Bernstein said any upside for oil markets was capped despite relatively tight supply. Oil prices have been supported in recent months by output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and other major producers as well as falling supplies from Iran. Iranian May crude exports dropped to less than half of April levels at around 400,000 barrels per day (bpd) after the United States tightened sanctions on Tehran’s main source of income. Iran needs to export at least 1.5-2.0 million bpd of crude to balance its books.

WTI Extends Losses After Smaller Than Expected Crude Draw - Oil prices have slipped lower this morning after popping following API's reported bigger-than-expected crude inventory draw  U.S. crude inventories were expected to fall for the first time in three weeks, with investors will focus on refinery consumption, which dropped unexpectedly in last EIA report. “As those refiners come back in, we’re probably going to see demand really rip higher in the U.S.,” says Michael Loewen, a commodities strategist at Scotiabank in Toronto.  As Bloomberg also notes, heavy rains and flooding in the Midwest and Great Plains last week meant that a number of refiners had to pull back from their typical summer demand pick-up plans. DOE:

• Crude -282k (-1.4mm exp)
• Cushing -16k
• Gasoline +2.204mm
• Distillates -1.615mm

Following last night's solid crude draw, EIA reported a tiny 282k draw (well below expectations) and at the same time gasoline stocks rose notably for the 2nd week in a row...  US Crude production continues to hover near record highs, rebounding modestly last week...

Oil falls to 2-mth lows on small U.S. crude stock draw, trade war worries (Reuters) - Oil prices fell almost 4% to their lowest in over two months on a smaller-than-expected decline in U.S. crude inventories and fears of a global economic slowdown due to the U.S.-China trade war. The Energy Information Administration (EIA) said U.S. crude stockpiles fell nearly 300,000 barrels last week, less than the 900,000-barrel decline analysts forecast in a Reuters poll and well below the 5.3 million-barrel drawdown the American Petroleum Institute (API) reported late Wednesday. The decline last week reduced crude stocks from their highest since July 2017 seen the previous week, but at 476.5 million barrels, they were still about 5% above the five-year average for this time of year. "The oil inventories report has added to the bearish sentiment prevailing in today's trading session,"   "Demand-side concerns emerging from the ongoing U.S.-China trade war are expected to remain the key driver weighing on oil prices." Brent futures fell $2.58, or 3.7%, to settle at $66.87 a barrel, while U.S. West Texas Intermediate (WTI) crude dropped $2.22, or 3.8%, to close at $56.59. Those were the lowest closes for Brent since March 12 and WTI since March 8. For the month, Brent is on track to fall about 8% and WTI around 11%, which would be the first monthly decline for both contracts in five months. The premium of Brent over WTI , meanwhile, fell to around $10 per barrel, down from a more than four-year high of $11.59 on Wednesday. "An escalating U.S.-China trade war represents a risk to oil markets," Bernstein Energy said in a note. A senior Chinese diplomat compared trade actions from Washington to "naked economic terrorism." Bernstein Energy said under "a full-blown trade war scenario," global oil demand would grow by just 0.7% this year, half of current estimates. Because of weakening demand, Bernstein said any upside for oil markets was capped despite relatively tight supply. Oil prices have been supported this year by output cuts from the Organization of the Petroleum Exporting Countries and other major producers, as well as by falling supplies from OPEC members Iran and Venezuela due to U.S. sanctions. Iranian May crude exports dropped to less than half of April levels at around 400,000 barrels per day (bpd) after the United States tightened sanctions on Tehran's main source of income. Iran needs to export at least 1.5-2.0 million bpd of crude to balance its books.

Trade wars tip oil towards biggest monthly drop in 6 months - Oil was on track for its biggest monthly drop in six months on Friday as U.S. President Donald Trump ramped up trade tensions, weighing on the demand outlook. Brent futures are heading for an 11% slide in May and WTI for a 14% drop, their biggest monthly losses since November. “No notice was taken of data that were positive for prices, whereas mildly disappointing figures put prices under considerable pressure,” Commerzbank analysts said. “This selective reaction is typical of a climate of severe pessimism, as is the fact that market players are currently focusing only on demand worries while ignoring the fact that supply remains limited.” Front-month Brent crude futures, the international benchmark for oil prices, were at $64.80, down $2.07 from last session’s close. U.S. West Texas Intermediate (WTI) crude futures were at $54.93 per barrel, down $1.66 from their last settlement. Both grades earlier hit their lowest since March 8. U.S. President Donald Trump vowed on Thursday to slap tariffs on all goods from Mexico unless it stops illegal immigration, firing up fears over economic growth and appetite for oil. “U.S. refiners import roughly 680,000 barrels per day of Mexican crude. The 5% tariff adds an extra $2 million to the cost of their daily purchases,” PVM analysts said. The Mexico trade dispute adds to a trade war between the United States and China, which many analysts expect to trigger a recession.. China’s factory activity shrank more than expected in May, an official survey showed on Friday. Crude prices have also been under pressure from a return in U.S. oil production to a record 12.3 million barrels per day, and a much smaller than expected decline in U.S. stockpiles. The U.S. Energy Information Administration (EIA) said crude stocks fell by around 300,000 barrels last week. That was much less than the 900,000-barrel decline analysts had forecast in a Reuters poll, and well below the 5.3 million-barrel drawdown seen by the API industry body. Giving a floor to prices, top oil exporter Saudi Arabia’s increased output in May was not enough to compensate for lower Iranian exports, a Reuters survey found. Washington will sanction any country that buys oil from Iran after the expiration of waivers on May 2, U.S. Special Representative for Iran Brian Hook said on Thursday.

Oil falls over 3% on fresh trade worries, posts biggest monthly drop in six months (Reuters) - Oil slumped over 3% on Friday and posted its biggest monthly drop in six months, after U.S. President Donald Trump stoked global trade tensions by threatening tariffs on Mexico, a key U.S. trade partner and major supplier of crude oil. Brent crude futures fell $2.38, or 3.6%, to settle at $64.49 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $3.09 to $53.50 a barrel, a 5.5% loss. Brent touched a session low of $64.37 a barrel, lowest since March 8. WTI hit $53.41 a barrel, weakest since Feb. 14. Brent futures posted an 11% slide in May and WTI a 16% drop, their biggest monthly losses since November. Trump vowed on Thursday to ratchet up tariffs unless Mexico stopped people from illegally crossing into the United States. The plan would impose a 5% tariff on Mexican imports starting on June 10 and increase monthly, up to 25% on Oct. 1. That could hit the lucrative cross-border energy trade. “U.S. refiners import roughly 680,000 barrels per day of Mexican crude. The 5% tariff adds an extra $2 million to the cost of their daily purchases,” PVM analysts said. The United States also exports more fuels to Mexico than any other country, according to the U.S. Energy Department. So far Mexico has not said whether it would retaliate. Mexican President Andres Manuel Lopez Obrador on Friday urged Trump to back down from the threats. Investors were already worried that the U.S.-China trade war increased the danger of a recession. Additional levies by Beijing on the majority of U.S. imports on a $60 billion target list are due to take effect on Saturday, in response to Washington’s move this month to slap further tariffs of up to 25% on $200 billion of Chinese goods. A Reuters survey showed Brent crude prices are likely to hold near $70 a barrel for the rest of the year as elevated supply risks in the Middle East offset risks to demand. 

Peace And Oil: Trump’s Endgame In Saudi Arabia -  By now, after two-and-a-half years in office, it’s obvious that President Trump’s relations with Riyadh are dictating his foreign policy, even at the expense of further enraging a Democratic-controlled Congress intent on removing him from office. Trump’s last pro-Saudi move came on Friday week the fire-brand president declared a national emergency because of tensions with Iran and swept aside objections from lawmakers to complete the sale of over $8 billion worth of weapons to Saudi Arabia, the United Arab Emirates (UAE) and Jordan. The Trump administration informed congressional committees that it would push ahead with 22 military sales to the three Middle Eastern countries, drawing rebuke from both sides of the aisle for circumventing a long-standing precedent for congressional review of major military weapons sales. Not only has the move infuriated Congress over what they see as presidential abuse of power, but it comes as Congress grows increasingly agitated over human rights abuses in Saudi Arabia. Riyadh has been implicated in the controversial killing of Saudi dissident journalist and U.S. resident Jamal Khashoggi in the Saudi consulate in Istanbul last October. The paper trail for the crime was traced all the way back to Saudi Crown Prince Mohammed bin Salman. Even then, Trump stood by his Saudi allies and the Royal family though it created a considerable backlash from both Democrats and Republicans and even internationally. The Trump administration is also being called on the carpet for continued U.S. support for Saudi Arabia’s military actions in neighboring Yemen which has resulted in a large number of civilian casualties. The Royal family has also strengthened its grip domestically with a top-down authoritative rule over any hint of dissent. Last month, Saudi Arabia put to death 37 so-called terrorists, most of them Saudi citizens, for what they said were terror-related crimes. CNN reported that one was even crucified - a troubling prospect from Western and U.S. lawmakers that tie any kind of political and military support to a country’s human rights record. All of these developments have led to Congressional angst over Saudi Arabia and the president’s incessant support for the kingdom. However, Trump’s playbook sees Saudi Arabia not only as a key ally in the Middle East but as internal in helping keep global oil prices in check. Perhaps more importantly, Riyadh is key in Trump’s policy to drive Iran to its knees economically and force it to the bargaining table over its nuclear, ballistic missile and Middle Eastern hegemony purists. Yet, looking at the past 40-year record from Iran, it’s a gambit that could backfire and lead to a U.S.-Saudi military confrontation with Iran - a prospect that would roil global oil markets and hit economic growth at the same time it’s slowing due to ongoing U.S.-China trade tensions.

Iran's Leadership At Highest Level Ordered Attacks On Pipeline, Tankers- Pentagon -- The Pentagon says "the leadership of Iran at the highest level" ordered a spate of disruptive attacks over the past two weeks including attacks on an Aramco Saudi oil pipeline and pumping facilities, the recent sabotage of four tankers near the Strait of Hormuz, as well as a May 19 lone rocket attack on the US embassy in Baghdad's protected Green Zone. However, the Pentagon statements issued by Adm. Michael Gilday, director of the Joint Staff, on Friday offered absolutely nothing in terms of hard proof. That still didn't stop the war rhetoric from continuing: "Even more troubling: We have had multiple credible reports that Iranian proxy groups intend to attack U.S. personnel in the Middle East," Gilday said. The military analysis site, Task & Purpose in a follow-up pressed the Pentagon to cite some level of evidence that Iran did indeed order attacks "at the highest levels." The response was issued as follows: "The Iranians said they were going to close the Strait of Hormuz," Gilday said. "The Iranians struck those tankers. The Iranians struck the pipeline facility in Saudi Arabia through their proxies in Yemen. We know they're tied directly to those proxies. We know they're tied directly to the proxies in Iraq that launched the rocket."The Pentagon statements came on the heels of a Washington Post report saying the White House has agreed to send "roughly 2,000" additional troops to the Middle East to help protect American forces in the region and "monitor Iran" — as prior reports suggested in the days leading to Trump's Thursday meeting with Defense Department l  eaders. Follow-up statements have put the number at 1,500.

US To Send 900 Troops To Middle East To Counter Iran The Trump administration is sending about 900 additional troops to the Middle East in what senior defense officials insisted Friday is a “narrowly-focused defensive posture” intended to protect U.S. troops from Iran without provoking a wider conflict. “We think that through a combination of a very measured deployment of assets as well as public messaging, we are again trying to underscore that we are not seeking hostilities with Iran,” said Joint Staff Director Rear Adm. Michael Gilday. “In the military dimension, that is the best we can do — because they are reacting in the military dimension.” “We just want to be clear that based on our posture and the assets we are flowing to theater, [U.S. posture] is not in any way designed to be provocative.” The deployment will include 900 fresh troops, including an Air Force fighter squadron, to allow the Pentagon to respond to any attacks, gather intelligence on Iran and its proxies, and harden its existing defenses. One Patriot missile defense battalion — which includes about 600 troops — already in the region will also be extended. Pentagon officials declined to say where the troops would be sent. Acting Assistant Secretary of Defense for International Security Affairs Katie Wheelbarger told reporters Friday only that they would not go to Iraq or Syria. The U.S. currently has about 70,000 troops across all domains in the Middle East.

Iran Touts Secret Weapons Able To Sink US Warships In Reaction To Troop Deployment - Iranian leaders have reacted to Friday's US announcement for a planned new deployment of 1,500 troops to the Middle East to monitor threats from Iran after the Pentagon specifically blamed Tehran for ordering attacks on a Saudi oil pipeline and four tankers near the Strait of Hormuz — an order which US officials said came from "the highest level".Foreign Minister Mohammad Javad Zarif on Saturday slammed the new deployment as “extremely dangerous... for international peace,” according to state news agency IRNA . “Increased U.S. presence in our region is extremely dangerous and it threatens international peace and security, and this should be addressed,” Zarif said.   And separately a top Iranian military general touted "secret weapons" that are capable of sinking US warships in the Persian Gulf.According to Reuters, citing the semi-official news agency Mizan, General Morteza Qorbani, an adviser to Iran’s military command, issued the following threat:America... is sending two warships to the region. If they commit the slightest stupidity, we will send these ships to the bottom of the sea along with their crew and planes using two missiles or two new secret weapons.Currently the USS Abraham Lincoln carrier strike group is operational in the region, along with B-52 bombers out of Qatar, and patriot missile batteries. Other than Iran's arsenal of long-range ballistic missiles, underwater drone capabilities, and most notably recent claims of a domestic built stealth destroyer and a fleet of small stealth submarines, it is unclear what these "new secret weapons" could be, if they exist at all.  Last December Iran unveiled its first stealth destroyer in a televised ceremony wherein the warship was launched into operation in the Persian Gulf at a moment when tensions with the US were ratcheting up over new rounds of sanctions. 

Khamenei Denounces Rouhani For Negotiating Nuclear Deal - This has been reported by Juan Cole.  Apparently Supreme Jurisprudent, Ali Khamenei of Iran in a speech to a large number of university students has seriously denounced President Rouhani for having negotiated the JCPOA nuclear agreement with the United States and other powers.  During the negotiations Khamenei played a mixed role, raising doubts about the negotiations, but allowing them to continue and for the agreement to be adopted and implemented.  As all know, Iran has until now kept its part of the agreement, whereas President Trump withdrew the US from it and has imposed even more serious economic sanctions on Iran than were there before the agreement, with other powers unable to substantially offset the US actions, even as their governments have continued to nominally support the agreement.  Thus, Khamenei has now fully and openly declared that his doubts were correct and that Rouhani was foolish to make the agreement. This follows the announcement that Iran will begin nominally breaching the agreement by expanding its enrichment of uranium.  The violation remains relatively minor at this point, but it is a significant step in any case. With the US raising military pressure, even as Trump says he does not want a war, it seems that this situation is just getting worse with almost nobody making any effort to halt this slide into rising conflict.  As it is, Khamenei seems to be preparing his nation for the worst.

Iran’s hardliners are losing the youth - "It's time to kiss your lips, it's time to sexy dance": USA-based Iranian pop singer Sasy is currently making waves in Iranian elementary schools with his song "Gentleman". Clearly having a great time, headscarf-wearing girls and boys in school uniforms jump and shriek to the fast rhythms. Sometimes there are even teachers present. They co-ordinate the kids and then proceed to film the whole thing using their mobile phones. Yet they must surely all be aware that they are crossing a major red line – after all dancing and public celebrations have been forbidden in Iran for 40 years. It is not clear whether this trend constitutes an organised campaign, or whether it is merely coincidence that several schools have been using the song to entertain their pupils. The videos have been making the rounds on the Internet since 5 May and have triggered an avalanche of comments, both for and against. Ali Motahari, vice-president of the Iranian parliament, known for his misogynistic remarks and whose father was one of the architects of the Islamic Republic, condemned dancing in schools and demanded the dismissal of "irresponsible" teachers and a statement from the Minister of Education. Parliamentarians also condemned the "un-Islamic" behaviour. Education Minister Mohammad Bathai has since set up a three-member information committee. "To protect the children from such harmful influences, common prayers should be held in the schools. Close links to the Koran and a way of life as preached by the imams should mean children grow up optimally in an Iranian-Islamic culture," Bathai is quoted by Tasnim, a news agency close to the Revolutionary Guard. The new regulations introduced by the Ministry of Education re-inforce the old ones: that girls and women are not allowed to sing solo, that any participation of male teachers in the leisure activities of girls' schools is forbidden, and that in all schools exclusively "age-appropriate" songs may be played that refer to "the cultural and historical values and customs of Iran".

New Satellite Photos Reveal Iran's Land Bridge Linking Tehran To The Mediterranean - Both Washington and Tel Aviv's past decade of Syria policy has been driven largely by fears of a so-called "Shia crescent" or Iranian land bridge which would conceivably connect Tehran with the Mediterranean via pro-Shia Baghdad and Damascus in a continuous arch of influence. A 2007 article in The New Yorker by famed investigative journalist Seymour Hersh even predicted that a major proxy war fueled by the West and Saudi Arabia, and centered in Syria would soon erupt in order to prevent this so-called Iranian and pro-Shia expansion to the Mediterranean. Hersh presciently wrote at the time:To undermine Iran, which is predominantly Shiite, the Bush Administration has decided, in effect, to reconfigure its priorities in the Middle East. In Lebanon, the Administration has coöperated with Saudi Arabia’s government, which is Sunni, in clandestine operations that are intended to weaken Hezbollah, the Shiite organization that is backed by Iran. The U.S. has also taken part in clandestine operations aimed at Iran and its ally Syria. A by-product of these activities has been the bolstering of Sunni extremist groups that espouse a militant vision of Islam and are hostile to America and sympathetic to Al Qaeda. Fast-forward more than a decade after Hersh's predictions, and a bloody proxy war for Syria that has tragically taken half-a-million lives out of which Assad and his Hezbollah and Iranian allies have emerged victorious, the Washington neocons' worst nightmare has come true. A literal new land bridge establishing an international highway that runs all the way from Tehran to Beirut is now under construction, just released satellite images reveal. At the end of a month that's nearly witnessed directly military confrontation between the US and Iran, with a continuous war of words and American military build-up in the Persian Gulf, the White House has ordered a fresh deployment of 1,500 troops to the Middle East to monitor Iran's actions, according to Pentagon statements. No doubt these new ground forces will take note of any potential Iranian troop or proxy militia movements through Iran into Syria. Beirut-based Al-Masdar News provides the following details of the newly released satellite images as follows:

Iraq Stands With Iran Against US Sanctions on Tehran - Alhakim held talks in Baghdad with his Iranian counterpart Javad Zarif, who arrived in the Iraqi capital for discussions with Iraqi officials. The top Iraqi diplomat said bilateral relations between Baghdad and Tehran were the focus of Zarif’s visit to Iraq.  “We are against the US sanctions against Iran,” Alhakim said.  Tensions between Washington and Tehran have mounted steadily since US President Donald Trump unilaterally withdrew the US from a landmark nuclear agreement between Iran and the P5+1 group of nations (the five permanent UN Security Council members plus Germany). The Trump administration has also re-imposed sanctions on Iran’s banking and energy sectors, while Iran has threatened to close the strategic Strait of Hormuz to US oil shipments.

Russia Unlikely to Stay Neutral if U.S. and Iran Go to War – Moscow Times -  Russia's Middle East policy is marked with balancing acts that secure the country's role as an agile and effective balancing power. The fall of the Islamic Republic could undermine Moscow's capacity for balancing in the Middle Eastern region. It has the potential to cripple Russia's policy in Syria by giving more freedom of action to U.S.-allied groups, further weakening the recovering Assad government.At the same time, Russia and Iran have created a major security convergence for responding to shared threats and adapting strategies to gain required international recognitions by revising the U.S.-led order. Issues that Russia rarely shares with other Middle Eastern powers.And most significantly, a U.S.-led attack on Iran would pave the way for U.S.-led security architecture in the Middle East, providing Washington with major leverage. All these developments provide ground for speculation about the degree of Moscow’s involvement in a possible military confrontation between Iran and the United States.Although Moscow could financially gain from a politically isolated and less economically competitive Iran, the geopolitical fallout from a regime change in Teheran will significantly outweigh the potential economic benefits.Particularly, a direct confrontation between Tehran and Washington that could bring back major U.S. military build-up is a geopolitical challenge that threatens Russia's interests in the Middle East. Moscow has already blamed the U.S. for provoking Iran and has shown its opposition to the U.S. tightening pressure on Tehran's defense program by recognizing Iran's legitimate defense interests.Moreover, Russia’s active involvement in the global politics that has been demonstrated in recent years is a far cry from the relative passivism that marked Moscow’s reaction to the Yugoslav War or the U.S. invasion of Iraq. Therefore, it will not come as a surprise if Russia decides to make a step beyond mere diplomatic support to protect her interests in the Middle East, including militarily assisting Iran.

Saudi king blasts Iran for ‘naked aggression’ in the Gulf - Saudi Arabia's king has accused the kingdom's key rival, Iran, of developing nuclear and ballistic missiles which threaten regional and global stability, telling regional leaders that action is needed to stop Iranian "escalations" following a series of attacks on oil assets in the Gulf. The comments by King Salman Abdul Aziz came as Saudi Arabia on Thursday hosted in Mecca emergency meetings of the Gulf Cooperation Council, the Organization of the Islamic Conference and the Arab League to counter what it said was Iran's growing influence. A Gulf-Arab statement and a separate communique issued after the wider summit both supported the right of Saudi Arabia and the United Arab Emirates to defend their interests after the attacks on oil pumping stations in the kingdom and tankers off the UAE. But in a sign of regional tensions, Iraq, which has good ties with neighbouring Iran and the United States, said it objected to the Arab communique, which stated that any cooperation with Tehran should be based on "non-interference in other countries". Addressing Arab and Muslim leaders earlier, King Salman pressed the international community to "use all means to stop Iran from interfering in other countries' affairs". "This is naked aggression against our stability and international security," the Saudi ruler told the gathered officials.

US Troops To Be Based In Saudi Arabia, Qatar Against Iran Threat -  Just hours after US National Security Advisor John Bolton formally accused Tehran of conducing the May 12 tanker "sabotage" attacks near the Strait of Hormuz, Iran's foreign ministry has responded that "we are ready for war" amid fears that Washington could still be on a war footing in the Persian Gulf. “We hope that we can start a dialogue, but we are ready for war,” Deputy Foreign Minister Abbas Araqchi told RIA Novosti. Bolton had told a press conference earlier in the day in Dubai, “The point is to make it very clear to Iran and its surrogates that these kinds of actions risk a very strong response from the United States.” Bolton is in Abu Dhabi attending an emergency summit of gulf leaders to consider the implications of both the "sabotage" tanker attacks near Fujairah emiriate in the UAE and the drone strikes two days following on a Saudi Aramco pipeline and oil pumping station. Meanwhile acting U.S. Defense Secretary Patrick Shanahan told reporters while in Asia for a major policy speech on the region, "nobody wants war" with Iran. However, he added that the US is ready and willing to "defend ships in the Strait of Hormuz" if necessary. Also of note is that Shanahan for the first time identified that 900 American troops newly deployed to the Middle East in response to the heightened Iran threat are headed to Qatar and Saudi Arabia.

Tension Intensifies in Persian Gulf – The US and its Arab allies are edging towards a confrontation with Iran in a contested waterway through which 20% of the world’s tradeable oil passes daily. In synchronization with its Arab allies, notably Saudi Arabia, and with Israel, the US is intensifying pressure on Iran to wind back its support for what it terms “bad actors” in the region. This includes Syria, Hezbollah in Lebanon, radical groups in the Palestinian territories, including Hamas, the Houthis in Yemen, and disaffected anti-regime elements in the Gulf. While the US denies it is seeking to bring about regime change in Iran, this clearly is its hope.Secretary of State Mike Pompeo and Acting Defense Secretary Patrick Shanahan stated their objective is to deter Iran and prevent further intensification. According to the Associated Press, Shanahan stated, “Our biggest focus at this point is to prevent Iranian miscalculation. We do not want the situation to escalate.“ Aside from an aircraft carrier strike group and B-52 bombers being moved to the region. A Patriot missile defense system has also been moved into the region in an undisclosed location. Non-essential personnel have been removed from neighboring Iraq, and U.S. allied countries with military training personnel have also scaled back those individuals in the region. The U.S. actions in the region have been the result of “credible threats” to U.S. forces and interests in the Middle East, according to Shanahan. Iran has been connected to the recent cyberattack by Hamas in Gaza against Israel and an escalation in the civil war in Yemen. Iran is also believed to be behind the sabotage of four oil tankers in United Arab Emirates directly across the gulf from Iran. Bombings ascribed to ISIS in Iraq have also recently escalated as the U.S. Navy forces have entered the region. If a ground assault is waged, forces may mass in Iraq and Afghanistan, which border Iran on the west and east respectively. The U.S. also has air forces stationed in Turkey, located to the northwest of Iran. Iran is surrounded on all sides by U.S. allies, but with uncertainty over relations with Pakistan — also to the east of Iran. However, Iran has a history of conducting naval exercises with Russia in the Caspian Sea located between the two countries to the north. The Caspian Sea is also considered a major shipping route for Iranian oil. With Russia’s naval power, there is concern they may become involved if there are military actions between Iran and the U.S.

Iraq Sentences French ISIS Fighters To Death -Three French citizens who joined ISIS and have been sentenced to death in Iraq, after being found guilty of joining the Islamic militant group.  The men, Kevin Gonot, Leonard Lopez and Salim Machou were three of 14 French nationals belonging to the Islamic State arrested in Syria and turned over to Iraq by Syrian Kurdish forces. According to the BBC, here is what is known about the three men - who will be the first French IS suspects to receive the death penalty.  Gonot, 32, is from south-eastern France. He is believed to have entered Syria through Turkey to join the al-Nusra Front, a branch of al-Qaeda, before pledging allegiance to IS.He was arrested in Syria with his mother, his wife, and his half-brother in December 2017. A French court has also sentenced him in absentia to nine years in prison.Machou, 41, belonged to an IS cell composed of European fighters that has carried out attacks in Iraq and Syria and planned others in Paris and Brussels, according to the Centre d'Analyse du Terrorisme (CAT), a French think tank. Lopez, a 32-year-old from Paris, also travelled with his wife and two children to IS-held Mosul in northern Iraq before entering Syria, CAT quotes French investigators as saying. –BBC   Human rights organizations have been critical of trials of suspected Islamic State militants in Iraq, saying that they often rely on circumstantial evidence or forced confessions.

Six Explosions Rip Through Iraq's Oil City Of Kirkuk In Terror Attack - A series of explosions have rocked the oil-rich northern Iraq city of Kirkuk, which lies 150 miles north of Baghdad in a disputed region which Iraqi Kurdistan leaders have jostled with the national government for control over.  On Thursday evening half a dozen or more explosions ripped across a central avenue, leaving at least five people dead and a dozen or more wounded, according to unconfirmed early conflicting reports. Some reports have cited as many as six or more among the dead what may have numbered eight total explosions.  Dramatic footage captured the moment of one of the bombs being detonated on a busy street during the heart of the evening in an area known as a popular commercial hub filled with cafes and malls.  The moment of one of the explosions in Quds street in #Kirkuk. At least 6 killed 12 wounded. pic.twitter.com/4n2psyxLtj — Baxtiyar Goran (@BaxtiyarGoran) May 30, 2019    According to regional Kurdistan 24 media:  According to initial reports, five explosions were heard in the center of the province near the Peace Mall on Jerusalem Street. A source in the area told Kurdistan 24 the incident left many killed and injured. The attack is believed to have involved improvised explosive devices (IEDs) and possibly car bombs in what was clearly a terror attack on the ethnically diverse northern Iraqi city.  There have been early reports that suicide bombers may have been involved. No group has claimed responsibility, however, the city has seen a remnant ISIS insurgency wreak havoc on the area of late, for which Kurdish Peshmerga forces have reportedly been deployed to root out.  Regional gulf media outlet Al-Arabiya reports the death toll may be rising as hospitals take in more casualties:

Russian Jets Unleash Hell On Idlib After Ceasefire Talks With Turkey Collapse - On Thursday over five Russian fighter jets began launching airstrikes over the Idlib Governorate following the collapse of ceasefire talks with Turkey. According to a military source in northwestern Syria, the ceasefire talks collapsed after Turkey demanded that the Syrian Arab Army (SAA) withdraw from all the areas they captured in northwestern Hama. The Russian military reportedly rejected Turkey’s demands and restarted their aerial campaign over the Idlib province. The Syrian Air Force had already launched airstrikes over the Idlib Governorate on Thursday, but the Russian military had only carried out limited attacks due to their ceasefire talks with Turkey. The source added that the Syrian Army has yet to receive the green light to resume their ground offensive against the jihadist forces in northwestern Hama. The Turkish regime had been pushing for a new ceasefire deal around the Idlib deescalation zone after their rebel allies lost a great deal of territory in northwestern Hama. Speaking to Al-Masdar from Damascus, a Syrian Arab Army (SAA) officer said that Ankara is pushing Moscow for an open-ended ceasefire in northwestern Syria. The officer said Turkey wants to prevent any more Syrian Army advances in northwestern Syria, while also demanding that the latter withdraw from the areas they recently captured. Syria is trying to retake its province Idlib—which is controlled by rebranded al-Qaeda—with help from Russia & Iran. So the US gave the "greenlight" to NATO member Turkey to send more weapons, including anti-tank TOW missiles, to AQ-allied "rebel" proxieshttps://t.co/vW1QYoNEz5  — Ben Norton (@BenjaminNorton) May 30, 2019   He added that Russia is resisting Turkey’s pleas because they have made similar requests in the past and they have repeatedly failed to deliver on their promises.

US Remains in Denial About How Many Civilians They Killed in Iraq and Syria — The U.S.-led coalition that launched airstrikes against Iraq and Syria against ISIS admitted Friday that those attacks killed civilians, but the number they reported—1,302 deaths in a nearly five-year period—was immediately dismissed as too low by the human rights organization Amnesty International.“While all admissions of responsibility by the U.S.-led coalition for civilian casualties are welcome, the coalition remains deeply in denial about the devastating scale of the civilian casualties caused by their operations in both Iraq and Syria,” the group’s senior crisis response advisor, Donatella Rovera, said in a statement.The coalition, in a statement announcing the findings of its internal review, said that of the “34,502 strikes between August 2014 and the end of April 2019” it found that “at least 1,302 civilians have been unintentionally killed by coalition strikes.” That number, while 1,302 people too many, is still far below projections from other organizations over the past. “Even in cases where the coalition has admitted responsibility this has only happened after civilian deaths were investigated and brought to its attention by organizations such as Amnesty International and Airwars,” said Rovera. In April, a study by Amnesty and Airwars projected that 1,600 civilians died in coalition airstrikes in the Syrian city of Raqqa alone from June to October 2017, a number that, in four months, is higher than the coalition’s total findings for over four years across two countries.

The hangman of the Middle East: US-backed regime in Egypt hands down nearly 2,500 death sentences - Egypt’s US-backed dictatorship of Gen. Abdel Fattah al-Sisi has sentenced 2,443 people to death since coming to power in a bloody coup in 2013, according to a report issued this week by the UK-based human rights group Reprieve.Of those sentenced to die by hanging, 2,008, or 82 percent of the total, were convicted of political offenses.A death penalty index tracking the use of the death penalty in Egypt and identifying those faced with execution recorded cases up until September 23, 2018, when 77 of those on the country’s teeming death row faced imminent execution as a result of convictions in criminal trials. Since then, at least six of them have been put to death. In total, 144 people have been executed by the Egyptian regime over the past five years. This compares to a single execution carried out between the 2011 revolution that overthrew the 30-year-long US-backed dictatorship of Hosni Mubarak and the July 3, 2013, coup led by General Sisi against the elected government of President Mohammed Morsi. During this same interval, a total of 152 death sentences were recommended by the Egyptian courts, compared to the nearly 2,500 issued since. The death sentences have, in many cases, been handed down in mass trials in which defendants are brought before drumhead military tribunals in which they are denied all of the elementary rights to a fair trial including the right to present an individual defense, representation by legal counsel and the ability to call or examine witnesses. The assembly line of state murder in Egypt begins with arbitrary arrest followed by a period of “enforced disappearance” in which prisoners are held incommunicado without charges and subjected to hideous torture until submitting to signing a confession. They are then brought into cages in military courts alongside dozens if not hundreds of others.

Heavy Fighting Rips Through Tripoli As Libya's Gen. Haftar Renews Offensive  - After few week lull in Gen. Khalifa Haftar's Libya National Army (LNA) advance on Tripoli, fighting has once again ripped through the Libyan capital city, in an ongoing renewed civil war between parallel governments in east and west of the country which has now killed over 500 and pushed 75,000 out of their homes, and has again ramped up the migrant crisis in Europe.  Reuters reports, "Heavy fighting raged in the Libyan capital on Saturday as eastern forces made a new push to advance inside the city controlled by the internationally recognized government." The LNA's new push began Saturday morning in a southern suburb, and continues the siege which began in early April, and has involved tanks, mortars, heavy urban fighting, and warplanes.  Gen. Haftar — who solidified control of Eastern Libya over the past two years and swept through the south in January, is seeking full control over Tripoli which would secure his hold of the entire country and its vital oil resources, of which he already controls a major chunk of in the east and south.  He's long been described by many analysts as "the CIA's man in Libya" — given he spent a couple decades living in exile a mere few minutes from CIA headquarters in Langley, Virginia during Gaddafi's rule. Last month, the White House went from a position of nominal support for the UN-backed government in Tripoli (now under attack by Haftar), to openly backing Haftar for the first time. A White House statement said Trump “recognized Field Marshal Haftar’s significant role in fighting terrorism and securing Libya’s oil resources" during a phone call with the "renegade" general.  Other countries like France and the UAE are also significant backers of Haftar, with the latter coming under fire for shipping banned weapons to the Libyan warlord. However, awkwardly these and other countries stand against the majority UN recognition of the Government of National Accord (GNA) in Tripoli as the legitimate authority over Libya and its prime minister Fayez al-Sarraj.

Turkey Invades Northern Iraq In Operation Against Kurdish Militants --Turkey has launched a cross-border operation into neighboring Iraq against Kurdish militants in a mountainous northern region of the country.  The Turkish defense ministry confirmed its military unleashed a barrage of artillery fire and air strikes on Monday afternoon before ground forces entered northern Iraq to “demolish the caves and shelters that are being used by terrorist groups and to eliminate terrorists” — a reference to the outlawed PKK.  “The operation, with the support of our attack helicopters, is continuing as planned,” the statement said further. While cross-border shelling has happened somewhat frequently in the past, Turkey has rarely sent ground troops.Back in December 2015 when Turkey, claiming to be engaged in counter-ISIS and general counter-insurgency operations, crossed into Iraq with a large ground force then Iraqi Prime Minister Haidar Abadi demanded Turkey cease violating Iraqi sovereignty, in a standoff which proved a major embarrassment for Baghdad. Turkish state media released video footage of its operation inside Iraq: Not only has Turkey not been bashful about routinely violating the sovereignty of both Iraq and Syria ostensibly to "fight terrorists", it has often positively boasted about it and published video footage of the incursions.  Citing the defense ministry, Reuters reports the following of the ongoing, controversial operation:It said the operation targeted Iraq’s Hakurk region, just across the border from Turkey’s southeastern tip, which also borders Iran. The Kurdistan Workers Party (PKK) militant group is based in northern Iraq, notably in the Qandil region to the south of Hakurk.

Netanyahu—unable to form a government—threatens new Israeli elections - Just six weeks after Prime Minister Benjamin Netanyahu’s right-wing electoral alliance won a majority in the 120-seat Knesset (parliament) in the April 9 elections, Netanyahu’s Likud party has introduced legislation to dissolve the Knesset and call a second election at the end of August. Two more votes are needed before the resolution becomes law. This unprecedented move brings to the fore the vicious factional infighting among Israel’s far right parties that dominate its political system, long touted as the only democracy in the Middle East. These developments portend the implosion of Israel’s political system and mirror the almost universal collapse of traditional bourgeois rule within ruling elites throughout the world. The possibility of new elections follows Netanyahu’s failure to bring Avigdor Lieberman’s right-wing, secular Yisrael Beytenu (Israel is our Home) party into his coalition, which is dominated by far-right nationalists and religious zealots, leaving his prospective government with just 60 seats. Lieberman was insistent that the new government support a law forcing ultra-Orthodox Israelis to serve in the Israel Defence Forces (IDF), an anathema to Netanyahu’s religious party partners. He refused to accept any of their attempts to soften it, saying, "I won't be party to a Halachic government," referring to religious Jewish law. Lieberman added, "We will go to elections again, and the people will determine whether they want a right-wing government or a Haredi [religious] government." He claims that there are between 20 and 25 legislators who support a state run on the principles of Jewish law. The Likud Party in turn accuse him of trying to turn the escalating row over the draft conscription law into a war over religion.

Israel on Verge of Fresh Elections as Lieberman Deals Blow to Netanyahu – Prime Minister Benjamin Netanyahu’s chances of forming a new government became significantly slimmer on Monday, as his former defense minister Avigdor Lieberman ruled out serving with ultra-Orthodox parties. Hours later, a bill to dissolve Israel’s parliament, the Knesset, passed a preliminary reading – the first step towards it dismissing itself. In a news conference earlier in the day, Lieberman called for fresh elections, nearly two months after the last. “We will support the dissolution of the Knesset,” Lieberman announced at a news conference, adding that his party would suggest no other candidate for prime minister to President Reuven Rivlin. In response, Netanyahu’s Likud party struck a conciliatory tone. “We invite Lieberman to join us today and not contribute to the toppling of a right-wing government,” the party said in a statement. The five seats won by Lieberman’s ultra-nationalist Yisrael Beiteinu party in the 9 April parliamentary election would see Netanyahu pass the 60-seat threshold to form a government in the 120-strong Knesset. Lieberman’s party has been at odds with ultra-Orthodox parties Shas and United Torah Judaism, who won eight seats each, over a military conscription bill that would make it mandatory for Haredi men studying the Torah, who are currently exempt from service, to join Israel’s armed forces. Lieberman has long said that all Israeli men must equally share the burden of mandatory military service. Ultra-Orthodox parties say seminary students should remain exempt from conscription, as they have been since Israel’s founding in 1948. “We have made our position clear since 2018: We will not agree to any change in the draft bill,” Lieberman said at the news conference, adding that he did not want to be part of a “halakah [Jewish law] government”. While some parties backed Lieberman’s call for another election, opposition leader Benny Gantz railed against the prospect of another poll, arguing that Rivlin should give his Blue and White party the chance to form a government. Gantz said his party, which was tied with Likud on 35 seats in April’s election but had less obvious partners to form a majority with, “would oppose the dissolving of the Knesset”. “Netanyahu prefers elections that will silence the Israeli nation for many months, waste a lot of money, and all this for a single principle: Netanyahu above all,” Gantz added.

Does Iran’s Economic Fate Depend on a Lifeline From China? - It’s hard to predict what will happen in the oil market as the U.S. sanctions on Iran tighten. For now, it looks like India, Japan, South Korea and Turkey will hold off from buying Iranian oil. These countries—with China—had been the main sources of Iran’s foreign exchange. It is unlikely—at the present time—that India, Japan, South Korea and Turkey will break the U.S. siege on Iran. They have made it clear that they do not want to rattle the U.S. cage. Request for new waivers from the U.S. came to naught. India’s government had said that it would reassess the purchases of cheap Iranian oil after the elections. It is likely that India will restart some buys, but certainly not enough to prevent economic collapse in Iran. As the May deadline for the U.S. sanctions loomed, these countries bought vast amounts of oil from Iran to create their own buffer stocks. Revenues from the export of oil reached $50 billion for the Iranian financial year of 2018-19 (ending March 20). The oil sector contributed to 70 percent of Iran’s exports. This income is essential for running Iran’s government and paying its 4.6 million employees. The cost of the government is roughly $24 billion. With the collapse of sales to India, Japan, South Korea and Turkey, Iran will have a very difficult time raising revenues to maintain its economy. The National Development Fund and the hard currency reserves have already begun to be depleted, with dollar holdings now in the tens of billions. Tehran has long been hoped that China would continue to buy Iranian oil and prevent the meltdown of Iran’s economy and its government. There are two reasons why China would want to ignore U.S. sanctions and continue to buy Iranian oil. The first has to do with the fact that Iran’s oil is cheap and of a quality that Chinese refiners prefer. The second has to do with Iran’s crucial location along the line of China’s Belt and Road as well as its String of Pearls initiatives. Chaos in Iran or a government in Tehran that is pliant to the United States would be unacceptable to Beijing. Roads, trains and pipelines—the infrastructure of the Belt and Road Initiative—are to run from the Chinese territory through Central Asia into Iran and then outward toward West Asia and—via Turkey—into Europe. Iran’s centrality to this project should not be underestimated. In the first few months of 2019, China bought about half of Iran’s crude oil exports. It has become a crucial pillar for Iran, whose diplomats say quite openly that if China no longer buys Iran’s oil or invests in Iran, the problems for the country will be grave. Massive oil buys from China in the weeks leading to the end of the U.S. waivers are, however, no indication of the continuation of this relationship. Chinese oil companies put in large orders to stockpile oil in anticipation of the cuts. Oil analysts suggest that the two major Chinese oil importers—China Petrochemical Corporation (Sinopec) and China National Petroleum Corporation (CNPC) have not put in any buys since the U.S. waivers expired.

US Universities And Retirees Are Funding The Technology Behind China’s Surveillance State — Princeton University and the US’s largest public pension plan are among a number of stateside organizations funding technology behind the Chinese government’s unprecedented surveillance of some 11 million people of Muslim ethnic minorities.Since 2017, Chinese authorities have detained more than a million Uighur Muslims and other ethnic minorities in political reeducation camps in the country’s northwest region of Xinjiang, identifying them, in part, with facial recognition software created by two companies: SenseTime, based in Hong Kong, and Beijing’s Megvii. A BuzzFeed News investigation has found that US universities, private foundations, and retirement funds entrusted their money to investors that, in turn, plowed hundreds of millions of dollars into these two startups over the last three years. Using that capital, SenseTime and Megvii have grown into billion-dollar industry leaders, partnering with government agencies and other private companies to develop tools for the Communist Party’s social control of its citizens. Also among the diverse group of institutions helping to finance China’s surveillance state: the Alaska Retirement Management Board, the Massachusetts Institute of Technology, and the Rockefeller Foundation all of which are “limited partners” in private equity funds that invested in SenseTime or Megvii. And even as congressional leaders, such as Sen. Marco Rubio of Florida, have championed a bill to condemn human rights abuses in Xinjiang, their own states’ public employee pension funds are invested in companies building out the Chinese government’s system for tracking Uighurs.

This map shows a trillion-dollar reason why China is oppressing more than a million Muslims - The Uighurs, a mostly-Muslim ethnic minority in Xinjiang, western China, are living in one of the most heavily-policed and oppressive states in the world. This map helps explain why. People in Xinjiang are watched by tens of thousands of facial recognition cameras, and surveillance apps on their phones. An estimated 2 million of them are locked in internment camps where people are physically and psychologically abused. China's government has for years blamed the Uighurs for a terror, and say they saying the group is importing Islamic extremism in Central Asia. But there's another reason why Beijing wants to clamp down on Uighurs in Xinjiang: The region is home to some of the most important elements of the Belt and Road Initiative (BRI), China's flagship trade project. The BRI, which went into effect in 2013, aims to link Beijing with some 70 countries around the world via railroads, gas pipelines, shipping lanes, and other infrastructure projects. It is considered President Xi Jinping's pet project, and an important part of his political legacy. The map above shows Xinjiang's position along various BRI infrastructure projects.It is divided between six land routes, collectively named the Silk Road Economic Belt, and one maritime route, the Maritime Silk Road. Xinjiang is home to many projects along the Silk Road Economic Belt, as the map indicates.  China is estimated to have invested between $1 trillion and $8 trillion into the project, the Center for Strategic and International Studies said.Trade in goods between China and other countries along the BRI totalled $1.3 trillion in 2018 alone, the state-run Xinhua news agency reported, citing China's Ministry of Commerce.