oil prices fell nearly 8% to a 7 month low on a worsening of the US-China trade war early this past week, but then recovered three-quarters of that decline by week end on reports that the Saudis were on the phone with the Russians in an attempt to stop the price slide...after ending 1% lower at $55.66 a barrel last week on the Thursday Trump tweet announcing new tariffs on China, the contract price of US crude for September delivery opened trading lower on Monday as China had let its currency depreciate to 7 yuan to the dollar in response to Trump's tariffs, but its losses were limited by a draw from inventories at the Cushing, Oklahoma delivery hub for that contract, as US prices ended down just 93 cents at $54.69 a barrel even as global oil prices fell more than $2 on the currency war news...oil prices fell sharply for second day on Tuesday, tracking a volatile stock market, with US crude ending down $1.06 at $53.63 a barrel, even as Brent crude, the global benchmark, slid into a bear-market in falling more than 20% from its late-April peak...oil prices then plunged further on Wednesday after the EIA reported a surprise increase in US crude and gasoline supplies, with US crude ending down nearly 5% at $51.09 a barrel, while Brent crude fell $2.71 to $56.23 a barrel, an eight-month low....however, oil prices jumped on Thursday due to a firmer yuan and expectations of more OPEC cuts, with US crude ending 2.5% higher at $52.54 a barrel on reports that the Saudis phoned other oil producers to devise a policy response to halt the price slide...prices jumped again on Friday, supported by a drop in European oil inventories and expectations of more OPEC output cuts, despite an International Energy Agency report that demand growth was at its lowest since 2008, with US crude finishing the session $1.96, or 3.7% higher at $54.50 a barrel, the largest one-day gain in nearly a month...but despite that 2 session surge, US WTI prices still ended the week down 2% from last week's close, while Brent crude finished 5.4% lower at $58.53, with both benchmarks having entered a bear market earlier in the week...
natural gas prices, meanwhile, ended the week little changed, after falling to a 39 month low on Monday...after falling for a third week in a row and hitting 38 month lows twice last week before ending at $2.121 per mmBTU, the natural gas contract for September delivery fell 5.1 cents to a 39 month low of $2.070 per mmBTU on Monday, following a weekend report that US dry gas production had hit an all-time high of 90.4 billion cubic feet per day, thus topping 90 billion cubic feet per day for the first time in US history...prices rebounded 4.1 cents on Tuesday on strong power burns and a forecast for hotter than normal weather for the next 15 days, but backed off from that bullish news and still fell 2.8 cents on Wednesday...a slightly smaller than expected addition to storage moved prices 4.5 cent higher on Thursday, but they again fell back to a intraday low of $2.064 per mmBTU on Friday before ending the week at $2.119 per mmBTU, just two-tenths of a cent lower than the previous week's close...
the natural gas storage report for the week ending August 2nd from the EIA indicated that the quantity of natural gas held in storage in the US increased by 55 billion cubic feet to 2,689 billion cubic feet by the end of the week, which meant our gas supplies were 343 billion cubic feet, or 14.6% more than the 2,346 billion cubic feet that were in storage on August 2nd of last year, while still 111 billion cubic feet, or 4.0% below the five-year average of 2,800 billion cubic feet of natural gas that have been in storage as of the 2nd of August in recent years....this week's 55 billion cubic feet injection into US natural gas storage was a bit below the consensus forecast of a 57 billion cubic feet injection by analysts surveyed by S&P Global Platts , while it was well above the average 43 billion cubic feet of natural gas that have been added to gas storage during the same week of the summer over the past 5 years, the 19th such above average storage build in the last 21 weeks... the 1,511 billion cubic feet of natural gas that have been added to storage over the 19 weeks of this injection season remains as the largest injection of gas into storage on record for any prior similar period of the gas injection season...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending August 2nd indicated the first increase in US crude inventories in 8 weeks, despite a big jump in our refinery throughput, because of an increase in our crude oil imports and a drop in our oil exports, accompanied a major shift of unaccounted for crude from the demand side to the supply side of the oil balance sheet....our imports of crude oil rose by an average of 485,000 barrels per day to an average of 7,148,000 barrels per day, after falling by an average of 365,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 709,000 barrels per day to an average of 1,865,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,283,000 barrels of per day during the week ending August 2nd, 1,194,000 more barrels per day than the net of our imports minus exports during the prior week...over the same period, the production of crude oil from US wells was reported to be 100,000 barrels per day higher than the prior week at 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 17,583,000 barrels per day during this reporting week..
meanwhile, US oil refineries were reportedly using 17,777,000 barrels of crude per day during the week ending August 2nd, 786,000 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 341,000 barrels of oil per day were being added to the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 535,000 barrels per day less than what what was added to storage and what our oil refineries reported they used during the week...to account for that disparity between the supply of oil and the disposition of it, the EIA inserted a (+535,000) 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"....since last week's unaccounted for crude was on the demand side at -512,000, that means there was a week over week swing of 1,047,000 barrels per day in the unaccounted for portion of the oil balance sheet, or that this week's week over week comparisons were distorted by more than a million barrels of missing crude per day (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports fell to an average of 6,918,000 barrels per day last week, which was 14.9% less than the 8,129,000 barrel per day average that we were importing over the same four-week period last year...the 341,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be 100,000 barrels per day higher at 12,300,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states was unchanged at 11,800,000 barrels per day because a 9,000 barrels per day increase to 453,000 barrels per day in Alaska's oil production raised the final rounded national production total by 100,000 barrels per day (EIA"s math, not mine)...last year's US crude oil production for the week ending August 3rd was rounded to 10,800,000 barrels per day, so this reporting week's rounded oil production figure was 13.9% 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 96.4% of their capacity in using 17,777,000 barrels of crude per day during the week ending August 2nd, up from 93.0% of capacity the prior week, a refinery utilization rate that has been fairly typical for mid summer in recent years....the 17,777,000 barrels per day of oil that were refined this week were 1.0% above the 17,598,000 barrels of crude per day that were being processed during the week ending August 3rd, 2018, when US refineries were operating at 96.6% of capacity....
even with the big increase in the amount of oil being refined, gasoline output from our refineries was only a bit higher, increasing by 5,000 barrels per day to 10,421,000 barrels per day during the week ending August 2nd, after our refineries' gasoline output had increased by 327,000 barrels per day the prior week....even so, this week's gasoline production was 5.1% higher than the 9,913,000 barrels of gasoline that were being produced daily during the same week last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 122,000 barrels per day to 5,286,000 barrels per day, after our distillates output had decreased by 55,000 barrels per day the prior week....with this week's increase, our distillates production was 0.9% more than the 5,237,000 barrels of distillates per day that were being produced during the week ending August 3rd, 2018....
with our gasoline production little changed, our supply of gasoline in storage at the end of the week rose for the second time in 8 weeks and for the 6th time in twenty-four weeks, rising by 4,437,000 barrels to 235,172,000 barrels over the week to August 2nd, after our gasoline supplies had fallen by 1,791,000 barrels over the prior week....our gasoline supplies increased this week as our imports of gasoline rose by 100,000 barrels per day to 1,217,000 barrels per day while our exports of gasoline fell by 32,000 barrels per day to 777,000 barrels per day, and while the amount of gasoline supplied to US markets increased by 92,000 barrels per day to 9,651,000 barrels per day...after this week's increase, our gasoline supplies were fractionally higher than last August 3rd's inventory level of 233,868,000 barrels, and have now risen to roughly 4% above the five year average of our gasoline supplies at this time of the year...
with the increase in our distillates production, our supplies of distillate fuels rose for the 9th time in the past 21 weeks, increasing by 1,529,000 barrels to 137,451,000 barrels during the week ending August 2nd, after our distillates supplies had decreased by 894,000 barrels over the prior week...our distillates supplies increased this week because our imports of distillates jumped by 150,000 barrels per day to 253,000 barrels per day while our exports of distillates fell by 75,000 barrels per day to 1,435,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic demand, increased by 1,000 barrels per day to 3,886,000 barrels per day....after this week's inventory increase, our distillate supplies were 9.6% higher than the 125,423,000 barrels of distillates that we had stored on August 3rd, 2018, but still around 1% below the five year average of distillates stocks for this time of the year...
finally, with higher oil imports and much lower oil exports, our commercial supplies of crude oil in storage rose for the first time in eight weeks but for the sixteenth time in 29 weeks, increasing by 2,385,000 barrels, from 436,545,000 barrels on July 26th to 438,930,000 barrels on August 2nd ...after that increase, our crude oil inventories were roughly 2% above the five-year average of crude oil supplies for this time of year, and were 31.0% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the 1st Friday of August, 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 had generally been rising since this past Fall up until the recent 8 weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of August 2nd were still 7.7% above the 407,389,000 barrels of oil we had stored on August 3rd of 2018, but at the same time were 7.7% below the 475,437,000 barrels of oil that we had in storage on August 4th of 2017, and 11.0% below the 492,969,000 barrels of oil we had in commercial storage on August 5th of 2016...
This Week's Rig Count
the US rig count fell for the 22nd time in 25 weeks during the week ending August 9th, and is now down by 13.8% year to date....Baker Hughes reported that the total count of rotary rigs running in the US fell by 8 rigs to a new 19 month low of 934 rigs this past week, down by 123 rigs from the 1057 rigs that were in use as of the August 10th report of 2018, and less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...
the count of rigs drilling for oil fell by 6 rigs to 764 rigs this week, which was an 18 month low for oil rigs, 105 fewer than were running a year ago, and quite a bit below the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 2 rigs to 169 natural gas rigs, which was down by 17 rigs from the 186 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on August 29th, 2008...in addition, a rig classified as miscellaneous continued to drill this week, which was one less than the 2 "miscellaneous" rigs drilling a year ago...
the rig count in the Gulf of Mexico was up by 1 to 23 rigs this week, as another Gulf rig began operating off the shore of Louisiana...that brought the offshore Louisiana count up to 23, making for an increase of 5 Gulf of Mexico rigs from the 18 rigs that were deployed in the Gulf in the same week a year ago, when 16 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...in addition, there continues to be two rigs deployed off the coast of Alaska this week, same number as were drilling off the Alaskan shore a year ago, for a total US offshore rig count of 25, up from the total of 20 offshore rigs that were deployed a year ago..
the count of active horizontal drilling rigs was down by 2 to 817 horizontal rigs this week, which was the least horizontal rigs deployed since February 2nd, 2018 and hence also a new 18 month low for horizontal drilling...it was also 107 fewer horizontal rigs than the 924 horizontal rigs that were in use in the US on August 10th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the directional rig count was also down by 2 to 65 directional rigs this week, but those were up from the 64 directional rigs that were operating during the same week of last year... at the same time, the vertical rig count was down by 4 to 52 vertical rigs this week, and that was down by 17 from the 69 vertical rigs that were in use on August 10th of 2018...
the details on this week's changes in drilling activity by state and by major 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 August 9th, the second column shows the change in the number of working rigs between last week's count (August 2nd) and this week's (August 9th) count, the third column shows last week's August 2nd 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 10th of August, 2018...
once again, the most significant changes in drilling activity were outside of Texas, with the 4 rigs that were pulled out of Alaska not even showing up on the major US basin table above...in Oklahoma, the 3 rigs that were shut down in the Cana Woodford were apparently offset by a rig increase in the Granite Wash near the Texas panhandle, since Texas Oil District 10, where the Granite Wash stretches into Texas, only added one rig...the 2 rig decrease in the Haynesville also appears to have been split between states, as northern Louisiana only saw one rig pulled out, while Texas Oil District 6, which includes the western reaches of the Haynesville, also saw one rig shut down this week...however, there were no rig changes in the Texas Permian, so both of the rigs added in that basin were added in New Mexico, in the western-most reaches of the Permian Delaware...while the 2 rig decrease in the Haynesville appears to adequately explain the national natural gas rig count decrease, one of the rigs added in the Granite Wash happened to be targeting natural gas, while a natural gas rig in an 'other' not tracked separately by Baker Hughes was concurrently shut down...
Ethane storage coming to Monroe -- The plan to store natural gas liquids in underground salt caverns along the Ohio River, about 12 miles south of a proposed ethane cracker plant in the Dilles Bottom area of Shadyside, may soon become a reality. David Hooker, president of Mountaineer NGL Storage and the parent company of Denver-based Energy Storage Ventures, told the Monroe County Commissioners Monday that all permits have been approved and construction could begin the first quarter of next year.“It’s been a long time coming,” he said. “There’s been a lot of discussion about this Appalachian storage hub,” he said. “What we’re trying to do is build a storage facility because we think it’s needed. We think it’s important to everything that’s going on out here in terms of what can be for this valley, meaning more industry back here. Rather than (sending) it to the coast and ship it out of here, let’s keep it. That’s what storage does.” He said plans have been ongoing since 2013 and storage is the final stage of the production process. “Salt is the safest and most used way of storing liquid hydrocarbons in the country. There’s over a billion barrels of it in this country. We’re only talking about three million barrels. … It’s not very big, and it’s been going on for 70 years. You choose this stuff because it truly is the safest way to store those kind of hydrocarbons.” Hooker added that about $27 million has already been invested in Ohio, including $9 million for right of way and mineral rights for 200 acres of land in Monroe County. The company has also spent $6 million for technical validation such as ensuring the salt was the correct quality and depth, with methods including geo-mechanical and cavern mechanics, environmental analysis, and drilling bore holes to be certain of the ground’s stability. $12 million was also spent for engineering and permitting for Westlake Construction, administrative costs and other expenses.
Fracking boom - The Columbus Dispatch -- Six years ago, oil and gas company Antero Resources showed up in Belmont County, promising money to a struggling community in exchange for rights to drill on residents’ land.Oil and gas companies promised thousands, and in some cases millions, of dollars in an area where an estimated 14% of county residents live below the federal poverty level.Many in the community signed on.In Barnesville, 80% of landowners signed leases to allow Antero to drill for natural gas on or under their land. Schools have received an influx of money, and about 150 oil and gas jobs have been created in the county.But now a growing number of residents in eastern Ohio are wondering whether they are paying too high a price for the fracking bonanza.Amid the drilling boom, environmentalists and health experts have descended upon Belmont and neighboring Appalachian counties in an effort to measure the impact of hydraulic fracturing, known as fracking, on water quality, air emissions and even emotional health.“The evidence is strengthening and growing,” said Nicole Deziel, an assistant professor at the Yale School of Public Health, who has traveled to the region for three years to study air and water quality. “Scientists are quickly conducting health studies to better understand whether there are health impacts or not.” Activists say the clock is ticking. They hope to have clear findings before the oil and gas industry potentially takes a big next step.Chemical company PTTGC America, based in Thailand, is considering building a “cracker” plant on the west bank of the Ohio River in Belmont County that would convert an oil and gas byproduct into ethylene, a key ingredient in producing plastics and chemicals. Such a plant could produce hundreds of high-paying jobs and potentially draw plastics plants seeking access to the ethylene.This month, JobsOhio, the state’s economic development nonprofit agency, awarded a $30 million grant to ready the site, and PTTGC America already has invested more than $100 million to conduct engineering designs.“I am very hopeful we’re going to get a final decision ... and get to the point where they can move forward,” said Larry Merry, executive director of the Belmont County Port Authority. The cracker plant would be the largest economic development project in the state.
Gulfport Energy reports profit - Earnings double from second quarter of last year. Gulfport Energy reported a profit of $235 million, or $1.47 per diluted share, during the second quarter of this year, according to a press release Thursday. The Oklahoma City-based driller’s profit doubled from the same quarter in 2018. Gulfport drilled five wells and began production from 25 wells in the Utica Shale during the quarter, and is operating one horizontal rig. The company produced 124 billion cubic feet equivalent of natural gas during the quarter, with Utica wells contributing 77 percent of the total.
Study: Thousands Of Ohioans Live Near Natural Gas Storage Wells – WOSU - An estimated 30,000 Ohioans live within 650 feet of an underground natural gas storage well, according to a study published this week in the journal Environmental Health.The study examined storage facilities in six states, finding that 65 percent of wells are in urban and suburban areas. The wells hold natural gas before delivery to businesses and households.“Looking at these wells, I realized that they were in people’s backyards,” said lead author Drew Michanowicz, a research associate at Harvard University’s Center for Climate, Health and the Global Environment. “They were in neighborhoods — somewhat different than you might think of new, unconventional wells in rural areas.”Many wells appear to predate the development that grew up around them, he said. Michanowicz said he hopes the research will offer more insight into a part of the natural gas supply chain that isn’t often discussed.In 2015 and 2016, a months-long leak at the Aliso Canyon storage facility in Southern California led to the displacement of thousands from the area. SoCalGas later paid out a nearly $120 million settlement over the leak.Such leaks of methane from storage wells can contribute to climate change, Michanowicz said. State data on leaks in Ohio was not immediately available.Ohio’s storage wells are clustered in several places across the state, including southern Lorain County, between Mansfield and Wooster, northwest of Canton and south of Lancaster. “When you look at the storage wells in the Stark, Summit and Wayne County areas that are from Dominion, those date back to the 1940s, well before that area became populated,” Congress approved new regulations for pipelines and storage facilities in the wake of the Aliso Canyon leak. The federal Pipeline and Hazardous Materials Safety Administration issued rules in late 2016, but stayed the enforcement of some regulations in June 2017.
Hydraulic Fracturing May Carry Serious Health Risks For Nearby Residents: Investigative Report - AboutLawsuits.com - An investigative report warns that shale-gas mining practices, such as hydraulic fracturing, are negatively impacting the health of individuals who live in nearby areas, including the unborn children.The Pittsburgh Post-Gazette published the second in a series of reports earlier this month, titled “The Human Toll“, which highlights the side effects of pollution caused by hydraulic fracturing and other gas mining practices. The report indicates that numerous studies have found gas extraction is linked to a variety of health problems.More commonly referred to as “fracking”, hydraulic fracturing involves drilling and fracturing of shale rock to release oil and gas. .Problems from fracking have previously been linked to negative environmental effects to the surrounding communities, due the impact on drinking water, as well as increased dust and exhaust from drilling rigs, compressors and the transportation of the water, sand and chemicals. The process has also been linked to increased earthquake activity. The extent of the potential harm to humans living close to these fracking sites has yet to be determined.This latest report cites a compendium published by the Concerned Health Professionals of New York and Physicians for Social Responsibility, which found that, out of 1,778 peer-reviewed studies, 90.3% published from 2016 through 2018 linked fracking with harm or potential harm.“In our review of the data, seventeen compelling themes emerged; these serve as the organizational structure of the Compendium,” the compendium’s authors state. “Readers will notice the ongoing upsurge in reported problems and health impacts, making each section top-heavy with recent data.”According to the investigative report, studies have linked living near fracking operations to an increased risk of asthma in school children, an increased risk of preterm births, low birth-weight babies and high-risk pregnancies. Some studies have also found an increased risk of birth defects, miscarriages, and other health problems.The report notes that health outcomes worsen the closer a person lives to shale gas operations, and that these health problems can occur below established safe exposure thresholds. It was released on the same day as a study by researchers at the University of Colorado which found that pregnant women who live near fracking operations face an increased risk of having a child with congenital heart defects.
Fracking causes environmental damage and birth defects, new study shows - Fracking has revolutionized the extraction of oil and gas in just a few years, but this highly efficient method comes with environmental and health risks. Now, a new metastudy details its adverse effects on the local environment, the climate and human health.The new report, published by Physicians for Social Responsibility and Concerned Health Professionals of New York, brings together the findings of more 1,700 studies, articles and reports tying fracking activities to a host of health problems including birth defects, cancer and asthma. It’s the sixth edition of a report originally published in 2014, which helped inform New York State’s decision to ban fracking. A group of public health professionals that included Sandra Steingraber, a professor of environmental studies and sciences at Ithaca College, had wanted to make sure sound science was part of that decision.“So, we went to work, translating the science into plain English for our political leaders, members of the press and, most importantly, people in frontline communities who are going to be compelled to endure the risks that fracking brings to people's health,” Steingraber says. “When we first did this, we didn't call it a compendium, we called it a memo,” she says, “because there were only nine studies in the peer-reviewed literature. When we finally banned fracking in New York in December 2014, we had an edition of the compendium with 400 studies. At that point, people all over the world were … thinking about fracking — whether to allow it or not — so our compendium was in great demand. So we've kept going with it.” “Across all these data we saw a plethora of recurring problems and harms, and we uncovered no regulatory framework that could avert these harms,” Steingraber says. “In other words, there's no evidence that fracking can operate without threatening public health directly or without imperiling climate stability, on which public health, of course, depends.”
Report: ‘No Evidence That Fracking Can Operate Without Threatening Public Health’ - In 2010 when I first started writing about hydraulic fracturing there were more questions than answers about environmental and public-health threats. Those days are over. In June the nonprofits Physicians for Social Responsibility and Concerned Health Professionals of New York released the sixth edition of a compendium that summarizes more than 1,700 scientific reports, peer-reviewed studies and investigative journalism reports about the threats to the climate and public health from fracking. The research has been piling up for years, and the verdict is clear, the authors conclude: Fracking isn't safe, and heaps of regulations won't help (not that they're coming, anyway)."Across a wide range of parameters, from air and water pollution to radioactivity to social disruption to greenhouse gas emissions, the data continue to reveal a plethora of recurring problems and harms that cannot be sufficiently averted through regulatory frameworks," write the eight public health professionals, mostly doctors and scientists, who compiled the compendium. "There is no evidence that fracking can operate without threatening public health directly and without imperiling climate stability upon which public health depends." The research collected and summarized is wide-ranging and includes the harms not just from drilling and fracking, but the long tail of the process, including compressor stations and pipelines, silica sand mining, natural-gas storage, natural-gas power plants, and the manufacturing and transport of liquefied natural gas.
No safe way to conduct fracking | vindy.com -- Science. Evidence. Facts. Do these even matter anymore in U.S. policy? They should – especially when it comes to issues that affect our health and environment, like fracking. Concerned Health Professionals of New York and my organization, Physicians for Social Responsibility, recently released a remarkable compendium of research on the subject. It summarizes and links to over 1,500 articles and reports and has become the go-to source for activists, health professionals and others seeking to understand fracking. The new studies we looked at expose serious threats to health, justice, and the climate. A 2018 study in the Journal of Health Economics, for instance, found that the babies of Pennsylvania mothers living within 1.5 miles of gas wells had increased incidence of low birth weight. Babies with low birth weight (under 5.5 pounds) are more than 20 times more likely to die in infancy than babies with healthy birth weight. Babies exposed in utero to fracking are likely to face additional challenges throughout their lives. They may suffer long-term neurologic disability, impaired language development and academic success, and increased risk of chronic diseases, including cardiovascular disease and diabetes. Other researchers are finding that fracking wells and associated infrastructure are disproportionately sited in non-white, indigenous or low-income communities. But you don’t have to live near wells and pipelines to be at risk. We all face harm from fracking’s impact on the climate. So-called “natural gas” is 85-95 percent methane, a short-lived but highly potent greenhouse gas. Over its first 20 years in the atmosphere, methane traps about 86 times more heat than carbon dioxide. Unfortunately, as the research we collected finds, methane-leakage rates from drilling and fracking operations have “greatly exceed” earlier estimates.
The Growing Case to Ban Fracking - “There is no regulatory framework for fracking that will keep the toxins out of air and water, or will protect the climate from carbon and methane releases. It can’t be done. It can’t be made safe. Like lead paint, we finally have to ban it.” So concludes Sandra Steingraber of Concerned Health Professionals of New York in an interview. She is one of five authors of a newly released compendium of scientific and media findings on the dangers of shale gas development her group coauthored with Physicians for Social Responsibility. This report is the sixth in a series that looks at peer-reviewed scientific articles, as well as government reports and investigative stories, on the wide variety of harms created by the fracking industry. The reports examine the human rights implications of poisoning drinking water with fracking chemicals; the heavy climate impacts of methane release, in both the extraction and transportation of fracked natural gas for export; the industry’s weak record on worker safety; and increased earthquake activity in communities near fracking operations. Fracking extracts shale oil by injecting a mix of sand, water, and chemicals, many of which are known to be toxic, into horizontal wells drilled into rock. As Steingraber explains, “To get the sand grains down there and not clog plumbing, you have to add chemicals that lubricate. Also, shale is a living organism so you have powerful biocides to kill off the microbiota on shale. It’s toxic and there is no way to turn reverse that. Fresh drinkable water is turned to poison.” The industry has taken off thanks to support for domestic energy development under successive administrations. In 2018, the United States eclipsed both Saudi Arabia and Russia in natural gas production. Natural gas is mostly methane, some thirty timesmore powerful a heat-trapping gas than carbon, in a fracking industry leaky both in gas extraction and transport. As the increased supply has lowered prices, the industry hassought to expand exports, building the infrastructure to export liquified natural gas to other countries. For Steingraber, the notion that the United States would crack open its bedrock and fill its drinking water with known carcinogens in order to export energy to other countries is nothing short of blasphemy. “By design liquified natural gas has to leak so it’s already bad,” she says, “but getting it set up for transport is a climate disaster on steroids. It also creates a terrorist threat.” She points to one of the fifteen main themes of the report—the challenge to the notion that natural gas can help wean us off coal. “The common discourse is that natural gas [because it burns more cleanly than coal] is a bridge fuel,” she notes. “Now, not only can we show there is no evidence for that, but that fracking leads to a terrible place.”
Pennsylvania is Discharging Radioactive Fracking Waste Into Rivers As Landfill Leachate, Impacting The Chesapeake Bay & Ohio River Watersheds - Water that travels ninety-one miles down the West Branch of the Susquehanna River from the Lance Corporal Abram Howard Memorial bridge in Williamsport, Pennsylvania ends up at the Pennsylvania Governor’s Residence on the Susquehanna River in Harrisburg. On any given day, Governor Tom Wolf could look out from his window to wildlife on the River and people recreating in the waters rushing by. But what Wolf can’t see, is that his own Pennsylvania Department of Environmental Protection (DEP) has allowed radioactive material from fracking waste to be discharged into that River through sewage facilities upstream. A Public Herald investigation has uncovered that DEP is allowing 14 Sewage Waste Treatment Plants to discharge radioactive fracking waste as landfill leachate into 13 Pennsylvania Waterways. The process DEP created to “treat” and discharge the leachate through sewage plants appears to date as far back as the fracking boom (2009 or longer). The size of this story is vast and the numbers are overwhelming. The 14 discharge points hit waterways across the Commonwealth. In the east, the effluent of pollution flows from three facilities upstream of Harrisburg down the Susquehanna River into Maryland’s Chesapeake Bay. In the west 11 facilities — one hitting the Allegheny River from a plant in Johnstown, another reaching the treasured Youghiogheny River — are discharging radioactive fracking waste as landfill leachate into the Ohio River watershed. At start of 2019, there were 15, not 14, sewage facilities overseen by DEP to send landfill leachate to waterways. But one facility, the Belle Vernon sewage plant in Fayette County, shut down its leachate intake in May after superintendent Guy Kruppa said it was “killing their bugs.” When we asked the Department to provide the total annual volume of leachate for each of the 15 facilities, the DEP told Public Herald, “We do not have this information available.” Our own review of sewage discharge data from the Belle Vernon Plant says the total amount of landfill leachate potentially released to these 15 facilities, on the low end, is 547,500,000 million gallons per year (36,500,000 million gallons annually per facility), depending on rainfall. On the high end we’re looking at 1.6 billion gallons of leachate per year. Where and how this is all happening is best illustrated in the Public Herald interactive map “How Radioactive Fracking Waste Gets Into Pennsylvania Waterways” — produced with FracTracker Alliance.
Too much rain is messing with pipeline operators' infrastructure plans - There have been plenty of high-profile landslides dislodging and destroying oil and gas pipelines over the past few years, just as rains have wreaked havoc outside the oilfield — collapsing Route 30 in East Pittsburgh last year, opening up a giant sinkhole at a shopping plaza in Greensburg last month.The oil and gas industry is both a victim and a perpetrator of this dislocated earth. With hundreds of well pads and thousands of miles of pipelines newly added to the ground in Pennsylvania over the past decade, the industry’s development disturbs the surface and eliminates some trees and vegetation that would otherwise absorb rainfall. Then the rain, in turn, floods culverts, soaks the ground and moves soil without regard for what pipelines may be relying on its support. What we usually hear about is the big stuff — the fireballs in the sky documented by live-streaming drivers and neighbors. Last year alone, three newly laid pipelines snapped under pressure from landslides in Pennsylvania, West Virginia and Ohio — causing explosions, evacuations and millions of dollars in damage. But in the Pennsylvania Department of Environmental Protection’s violations database, there are many more unsung examples of how the earth slips and slides around energy infrastructure, sometimes punching right through erosion barriers and sometimes just menacing them with increasing rain. More than a few times, pipeline and extraction companies cited for erosion violations by the DEP pleaded not guilty by reason of weather — record-breaking, abnormal weather. The weather is indeed not normal. The National Oceanic and Atmospheric Administration said June of this year marked the wettest 8-month, 9-month, 10-month, 11-month, 12-month, 18-month, 24-month, 36-month and 48-month periods in Pennsylvania since record-keeping began in 1895. Over the past 12 months, nearly 2 feet more of rain fell than in an average year in Pennsylvania last century. According to Pennsylvania’s official Climate Impacts Assessment — last revised in 2015 — it will get worse from here. Rains will come more frequently in heavy bursts than in the past. And that will make fixing hillside slips even more challenging. “Sometimes the weather gets so inclement that you can’t do anything. It’s like a soup sandwich,” A few years ago, a heavy rain might have delayed Ben Wright’s hydroseeding company, Hydrogreen LLC, by an extra day.“This year, if there’s a storm, we’re out for four to five days because the soil is too wet to get equipment on,” he said.
Sunoco says Mariner East 2 system ‘backfired’ during maintenance but no risk to public --Sunoco Pipeline confirmed on Tuesday that its Mariner East pipeline system “backfired” during routine maintenance late Monday at the Boot Road pumping station in West Goshen Township, Chester County.In a statement, the company did not explain what caused the backfire but apologized for the noise, which alarmed neighbors and fueled longstanding concerns about the safety of the new pipelines, which carry highly volatile natural gas liquids.“During routine maintenance last evening at our Boot Station in West Goshen Township, there was a backfire on a flare stack at approximately 8:20 p.m. ET as the station was brought back online,” the company said in a statement. “This resulted in a loud noise, similar to what happens when a car backfires. We apologize for any inconvenience this may have caused to our neighbors.” Company spokeswoman Amanda Gorgueiro said the incident affected Mariner East 2, which had been shut down for planned maintenance. She said there was no release of liquids and no risk to public safety. Tom Casey, a pipeline opponent who lives about a quarter mile from the pumping station, said the explosion was very loud, and shook his house. “It sounded like a bomb going off,” he said. “It was instant and severe. It shook my house, it shook my neighbors’ houses. They all came out thinking that a tree had fallen.”
Pipeline experts say vapor buildup likely led to explosion at Chester County pump station -- Was Monday’s explosion at a Mariner East 2 pumping station in Chester County a routine maintenance glitch, as Sunoco Pipeline said, or was it a “dry run” for the catastrophe predicted by critics of the natural gas liquids pipelines? The public won’t know the answer to those questions until state and federal regulators, or Sunoco itself, release reports on an incident that scared residents near the station on Boot Road in West Goshen Township, leaving some to say that they had dodged a bullet. For now, independent pipeline experts say the blast appears to have been caused by the relighting of a pilot in a flare used by Sunoco for burning off excess gases, at a time when vapor had accumulated there. The pilot seems to have been extinguished for maintenance, during which time explosive hydrocarbons built up in the tube, and were ignited when the pilot was re-lit, causing the explosion, said Rich Kuprewicz, a pipeline expert who has consulted for the township. He does not have first-hand knowledge of Monday’s event but discussed it based on his experience of how pumping stations work. “If you shut off that pilot light and didn’t do certain procedures that normally you would follow, you could end up within the flare with combustible gas that, when you did ignite the pilot, it would cause what they call a backfire,” Kuprewicz said. “I’m going to call it what it is: It’s an explosion.” In 2015, Kuprewicz’s company, Accufacts, concluded in a report for the township that Sunoco had exceeded federal safety requirements in its plans for the pumping station. On Tuesday, he said that whatever the cause of the incident, Sunoco should clearly and quickly explain how it happened and how it will prevent a recurrence, addressing a public that already has deep misgivings about the safety of the pipelines running through their crowded neighborhood. “They could argue that it’s a minor backfire, but look, they are in a hyper-sensitive environment where people are just looking for a reason to hang you,” he said. “You just don’t do these things.”
2 state constables broke law while working for Mariner East pipeline, Chester DA says - Two Pennsylvania constables abused their elected positions while working as private security subcontractors for the controversial Mariner East pipeline project, the Chester County District Attorney’s Office said Thursday. Kareem Johnson, 47, of Coatesville, and Michael Robel, 58, of Shamokin, were charged with official oppression, Pennsylvania Ethics Act violations, and related offenses. Johnson is a constable in Coatesville and Robel is a constable in Northumberland County. As state constables, which are elected positions, they have duties that include protecting polling places, serving arrest warrants, transporting criminal defendants for courts, and providing security in courtrooms. They are paid by the courts. In 2018, Johnson was paid $36,785 by Raven Knights, a Harrisburg company, to work private security in Chester County, the District Attorney’s Office said. Johnson allegedly failed to report the income as required by the Ethics Act. Robel was paid $27,995 by Raven Knights from 2018 through 2019 to work private security for the Mariner East project, the prosecutors said. He also allegedly failed to report his income under the Ethics Act. Sunoco Pipeline is building three adjacent pipelines to transport natural gas liquids such as propane across the state from the Marcellus Shale region through Chester County to a terminal in Delaware County, where Sunoco is a major employer.
Southwestern cutting drilling rigs in Appalachian Basin - Southwestern Energy is reducing its rigs in the Appalachian Basin for the remainder of 2019,Kallanish Energy reports. The rig count is being reduced from six rigs in the first half of 2019, to two rigs by the end of the third quarter, the Texas-based company said.The independent producer said total capital investment for full-year 2019 “is not expected to exceed $1.15 billion” due to what it called capital efficiency improvements. It spent $693 million on capital projects in the first half of 2019. “Swn’s position as a leading Appalachia producer is underpinned by its operational outperformance, continued cost reduction, disciplined capital allocation and prudent commodity risk management. This, combined with a strong balance sheet and no material near-term debt maturities, provides resilience in this volatile commodity price environment,” said president and CEO Bill Way, in a statement. He said the company intends to return to free cash flow by the end of 2020. The company reported a second quarter 2019 net income of $138 million, or 26 cents a share, and adjusted net income of $40 million, or 8 cents per share. That compares to net income of $51 million, or 9 cents per share, in Q2 2018. The company recorded total quarterly production of 186 billion cubic feet-equivalent (Bcfe). The total's down from 234 Bcfe in the year-ago quarter due to the December 2018 divestment of Fayetteville assets. It's up 11% compared to 2Q 2018 after factoring in the sale.The company reported 148 billion cubic feet (Bcf) of gas production, along with 937,000 barrels of oil production and 5.50 million barrels of natural gas liquids production in the Appalachian Basin. Production was 79% natural gas, 3% oil and 18% natural gas liquids. Oil production was up 30% and Ngl production was up 13%. In Q2 2019, the company drilled 41 wells, completed 40 wells and placed 36 wells to sales. It captured a weighted average realized price of $2.61 per thousand cubic feet-equivalent including derivatives and excluding 44 cents/Mcfe of transportation costs. That is essentially flat, compared to Q2 2018, Southwestern said.
PES refinery to begin neutralizing hydrofluoric acid Monday - Workers at the Philadelphia Energy Solutions refinery in South Philadelphia are planning to start neutralizing tens of thousands of barrels of a highly toxic chemical beginning Monday. The refinery is shutting down after an explosion and fire destroyed part of the plant. The company has entered Chapter 11 bankruptcy. The chemical, hydrofluoric acid, is one of the most dangerous industrial substances in use. Refineries use it as a catalyst to create high-octane fuel and it was an integral part of the unit that exploded at PES back in June. The company’s own risk management plan, filed with the Environmental Protection Agency as a requirement under the Clean Air Act, describes a catastrophic worst-case scenario involving hydrofluoric acid. If 143,262 pounds of hydrogen fluoride were released over 10 minutes, a toxic cloud could travel for more than seven miles and affect more than a million people, including in schools, homes, hospitals, prisons, playgrounds, parks, and a wildlife sanctuary. The chemical penetrates the skin and reacts with the calcium in bones. Swallowing just a small amount, or getting small splashes on the skin, can be fatal, according to the Centers for Disease Control and Prevention. In its gaseous state, the CDC says, low levels of hydrogen fluoride can irritate the eyes, nose and respiratory tract. Breathing it at high levels “can cause death from an irregular heartbeat or fluid buildup in the lungs.”
Dangerous South Philly refinery chemical still poses threat to community - The dangerous task of disposing of a toxic chemical at the Philadelphia Energy Solutions refinery could put workers and the surrounding community at risk, according to city officials. Hydrofluoric acid is integral to the creation of high-octane gasoline. It’s used at about 48 alkylation units in the United States — and was used at the South Philadelphia refinery, where an explosion in June destroyed the unit and led to the closure and bankruptcy of the plant. But until the 33,000 gallons of hydrofluoric acid remaining at the site are treated and neutralized, the incident area remains unsafe and off-limits to anyone not wearing protective clothing. Philadelphia Fire Commissioner Adam Thiel said firefighters with the hazardous-materials unit remain at the site 24/7. “Rest assured we will be down there sharing this risk with the community and doing our best to stand between the community and danger,” Thiel said, “and we will continue to do that.” Hydrofluoric acid is one of the most dangerous industrial chemicals in use. “It’s a very special acid,” said May Nyman, professor of chemistry at Oregon State University. “It’s important for certain applications. But it’s also very dangerous.” At room temperature, HF is a gas, but for industrial use, it is dissolved into a liquid solution. Swallowing just a small amount of HF or getting small splashes on the skin can be fatal, according to the Centers for Disease Control. The acid molecules are very small and can easily penetrate the skin and get directly into bones, where the acid reacts with calcium and effectively dissolves the bones. In the gaseous state, the CDC says, low levels of HF can irritate the eyes, nose and respiratory tract. Breathing it at high levels “can cause death from an irregular heartbeat or fluid buildup in the lungs.”
WV oil and gas production reaches record high for tenth consecutive year — The Mountain State’s oil and gas industry continues to reach new heights, according to data from the West Virginia Department of Environmental Protection. The state’s oil and gas production levels in 2018 surpassed 2017 levels, marking the 10th consecutive year of output increases. According to the DEP’s Office of Oil and Natural Gas, natural gas production in the state rose to 1.8 trillion cubic feet in 2018 from 1.5 trillion cubic feet in 2017, a year-over-year increase of 17 percent. Anne Blankenship, executive director of the West Virginia Oil and Natural Gas Association, said the state continues to benefit from its abundant natural resources. “To put this monumental volume of gas production into context, the average West Virginia household consumes about 72 thousand cubic feet of natural gas per year,” she said. “We produce enough gas in one day to meet the needs of all West Virginians.” Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, said the industry has come a long way in just over a decade. “We started developing horizontally in late 2007. In 2008, we only produced 256 billion cubic feet of natural gas,” he said. “That’s many more times now than then.” Oil production in West Virginia grew nearly 60 percent, from 7.5 million barrels in 2017 to 12 million barrels in 2018. This is the largest amount of oil produced in the state since 1900, when West Virginia produced 16 million barrels, according to the DEP. Doddridge County is the state’s most prolific natural gas producer at 434 billion cubic feet a year. 2018 production in Doddridge County increased 53 billion cubic feet over 2017 levels, growing by 14 percent year-over-year. In Tyler County, production grew by 59 percent to 272 billion cubic feet from 2017 to 2018, making it the state’s second largest gas-producing county. Coming in third, Ritchie County saw production increase 26 percent from 2017 to 2018, rising from 158 billion cubic feet to 200 billion cubic feet in the span of one year.
Natural gas industry leader says years of production increase threatened - — For the 10th straight year the output of West Virginia oil and natural gas production has risen, bringing record-high numbers, according to data from the West Virginia Department of Environmental Protection (DEP). West Virginia Oil & Natural Gas Association (WVONGA) said numbers from the DEP’s Office of Oil and Natural Gas indicated production of natural gas in 2018 rose to 1.8 Tcf (trillion cubic feet) from 1.5 Tcf in 2017, a year-over-year increase of 17 percent. Anne Blankenship, Executive Director of WVONGA attributed the consistent rise to a few things on Wednesday’s MetroNews ‘Talkline.’ “The boom in the Marcellus Shale here that we are sitting on top of in West Virginia and more specifically the advances in technology that we make every year,” she said. She added the drilling technology getting better and better equals an increase in production which turns to gas prices being lower. But Blankenship said lower prices can be a double-edged sword because supply and demand in a low priced environment is not a good thing for a production company. “Because the prices are so low, you do see drillers pull back,” she said. “You do see some decreases and we may see them next year. We may not see quite the increase as far as a percentage as we saw in 2018.” WVONGA said oil production in West Virginia grew nearly 60 percent, from 7.5 million barrels in 2017 to 12 million barrels in 2018. This is the largest amount of oil produced since 1900 when the state produced 16 million barrels.
'Getting in the way:' Inside the standoff over the Mountain Valley Pipeline - Virginia Mercury — The roar of construction echoed through the hollow, as a bulldozer pushed dirt on an impossibly steep slope hundreds of feet up the ridge. At the bottom of the slope, a makeshift fence and stack of pallets marked a boundary — the edge of a support camp for tree-sitters who for 10 months have blocked the path up the other side of the hollow.These are the battle lines on the ground in the fight over the Mountain Valley Pipeline, a 303-mile natural gas transmission line intended to transport gas from the fracking fields of northern West Virginia through the rugged terrain of eastern Appalachia to a compressor station in southern Virginia’s Pittsylvania County.The encampment on Yellow Finch Lane has become a hotspot over the summer. In July, three protesters were arrested at the camp after others walked onto an MVP work site on a nearby road. An Austin man who had sat in a tree on the site for several months was also arrested after locking himself to a concrete structure and halting pipeline construction for several hours. The protesters, mostly young people, had traveled to Elliston not just from other parts of Virginia, but from West Virginia, Louisiana and beyond.Above the support camp, a tree-sitter wore a cap, sunglasses and what appeared to be a balaclava to protect his identity. He shouted over the bulldozer’s roar to explain why he’d put his body in the pipeline’s path.n “At this point, I can’t imagine doing anything else,” the tree-sitter said. “The effects of global climate change, U.S. imperialism and colonialism, and too much not taking a stand. I can’t imagine doing anything else. That’s why I’m here. There really is nothing else more important than our planet. There’s nothing more important at this moment.” That was Monday, July 29, the deadline that MVP had requested a federal judge to rule against the tree-sitters and allow U.S. Marshals to move in and remove them. The day came and went without such a ruling. On Friday, a federal judge refused a request from the pipeline company to add tree-sitters as defendants to an existing case seeking a preliminary injunction. While the tree-sitters and their supporters try to hold the line on the pipeline, a small army of lawyers are using the courts to halt construction. So far they’ve succeeded in creating a variety of regulatory obstacles that present significant challenges to the Mountain Valley Pipeline, as well as the Atlantic Coast Pipeline, another project seeking to transport natural gas from northern West Virginia to the Southeast, have yet to overcome. Both pipelines must obtain new authorization to cross federally managed land in Virginia and West Virginia, the Appalachian Trail and waterways along the entirety of the route.
MVP tree-sitters allowed to stay in pipeline's path, judge rules - Good news arrived Friday for opponents of the Mountain Valley Pipeline. A federal judge ruled that tree-sitters blocking construction in eastern Montgomery County will not be forced down from their positions. EQT, the corporation backing the pipeline, has been pushing to have the protesters removed so it can begin with tree-cutting in that location, which is just off Route 460 near Elliston. Judge Elizabeth Dillon denied Mountain Valley’s injunction Friday in Roanoke federal court. It could have led to U.S. marshals showing up to force down the tree-sitters. The two tree-sits near Elliston are the last remaining ones in the MVP path. Multiple unidentified people have rotated in and out of them. Pipeline opponents say multiple people have been arrested in the last month at that site for allegedly being on the pipeline’s planned path. Dillon said in her written decision that she ruled this way in part because the property owners are not helping the protesters. “There is no allegation or proof here that the tree-sitters are acting in concert with the landowners,” Dillon wrote. In past cases, both property owners and tree-sitters have faced punishment from the same federal court for actions deemed to be preventing pipeline construction. A similar Mountain Valley request did not go the protesters' way. In May of last year, Dillon ruled that “Red” and Minor Terry needed to come down from their Roanoke County tree-sits after being up in trees on Bent Mountain for more than a month.
MVP tries again to remove 2 tree-sitters who have blocked work on the pipeline for nearly a year - Unable to convince a federal judge to remove two tree-sitters blocking work on the Mountain Valley Pipeline, attorneys for the company are turning to state court in an effort to end the long-standing dispute. Mountain Valley filed a request Tuesday in Montgomery County Circuit Court for a temporary injunction to have the protesters extracted from two trees they have occupied on a wooded slope near Elliston for nearly a year. On Friday, U.S. District Court Judge Elizabeth Dillon denied a similar request on the grounds that the company had improperly gone after the two unidentified protesters as part of an eminent domain case used to take private land for the controversial pipeline. The tree-sitters had no ownership interest in the land and therefore could not be named as defendants in the case, Dillon ruled. She suggested that Mountain Valley pursue other options in either federal or state court. In its filing Tuesday, the Pittsburgh-based company expressed frustration in dealing with what is now the longest active blockade of a natural gas pipeline on the East Coast, according to Appalachians Against Pipelines. “MVP will sustain irreparable harm if the occupations are permitted to continue,” attorney Wade Massie wrote, saying the company had already spent more than $100,000 in extra construction costs and could incur another $250,000 to work around the tree-sitters. Perched on wooden platforms about 50 feet off the ground, in a white pine and a chestnut oak, the protesters have blocked work off Yellow Finch Lane since Sept. 5, 2018. They are positioned in such a way that any attempt to cut the trees — some of the last still standing along the pipeline’s 303-mile route through the two Virginias — could result in a life-threatening incident. Mountain Valley asked a circuit court judge to order the tree-sitters to come down, and if they refuse, to “direct law enforcement to take all necessary action to remove defendants from the tree stands and easements.”
Pipeline protester arrested in Montgomery County — Work on the Mountain Valley Pipeline in Montgomery County has been halted due to a protester on the site. The protester, identifying themselves as River Nason, has gotten onto a piece of welding machinery, according to a release from the Appalachians Against Pipelines. “It is a common misconception that we all contribute to and suffer from environmental damage equally,” Nason said in the release, “It is large corporations like EQT that are destroying our homes while their CEO’s look on from their penthouses.” According to the press release, the site that Nason is protesting on is located in a very rural section of Montgomery County, Va. The location in the release is described as not being visible from the public road and, “Requires a difficult hike to access.” “This is why ‘reduce, reuse, recycle’ is not enough,” Nason said in the release, “We will never be able to recycle enough empty milk jugs to make up for the hundreds of miles of forests and farmlands that the MVP has devastated in its wake.” With this not being the first protester, both law enforcement and pipeline workers have grown accustomed to the happening. In November of last year, a protester locker herself atop of a boom tractor in Lindside, of Monroe County, in an attempt to stop the pipeline work. As she did so, a sign, reading “ANTIPATRIARCHY, ANTIPIPELINE,” hung from the machinery. Before her protest, another protester stood their ground on an excavator on November 19. She was removed by West Virginia State Police and was charged with obstructing an officer, littering, tampering with a vehicle, and trespassing.
Regulators stop work on 2 miles of Mountain Valley Pipeline in Montgomery County - Virginia regulators ordered Friday that all work cease on construction of the Mountain Valley Pipeline along a 2-mile section of the route in eastern Montgomery County. The Virginia Department of Environmental Quality, in stopping work on the project for the first time, cited lapses in compliance with an approved erosion and sediment control plan. Agency director David Paylor said in a news release that his agency is “appalled” by findings during a Thursday inspection. Inspectors found a work site without control measures near U.S. 11/460, DEQ spokeswoman Ann Regn said. Elsewhere in the same area were control devices that had not been maintained, she said. “It’s a violation of the certification,” Regn said of the lapses found. “We did this certification to ensure natural resources are protected. We said all along we were going to hold them to a high standard.” Conditions seen during the site visit showed “an imminent and substantial adverse impact to water quality is likely to occur as a result of the land disturbing activities,” DEQ said in a letter to the company, which is based in Pennsylvania. Clearing, grading and trenching were banned in the affected area until DEQ had signed off on steps to fix the problems. Paylor’s reaction was to evidence “that construction priorities and deadline pressures would ever rise above the proper and appropriate use of erosion control measures,” the government’s statement said. Environmental advocate Russell Chisholm said in a release that he was “appalled” that the company’s skimping on control measures to advance the project surprised the DEQ. Citizens have repeatedly reported similar lapses in permit compliance for at least a year, said his statement, issued by the Protect Our Water Heritage Rights Coalition, an anti-pipeline group with constituents in Virginia and West Virginia. Chisholm is its co-chair.
Stop-work order does not go far enough, pipeline opponents say - A stop-work order on a 2-mile section of the Mountain Valley Pipeline doesn’t stop the widespread environmental problems along the remaining 301 miles of the project, opponents said Tuesday. Less than a week after the Virginia Department of Environmental Quality ordered work to cease on a section of the pipeline in eastern Montgomery County, a citizens group monitoring construction called yet again for a full stop-work order. “There are too many unresolved questions to allow this project to continue with impunity,” said Russell Chisholm, lead coordinator for the Mountain Valley Watch and co-chair of the Protect Our Water, Heritage, Rights coalition. Chisholm and others who spoke at a news conference asked why DEQ ordered Mountain Valley to stop work Friday because of violations of erosion and sediment control measures — problems that have occurred repeatedly since work began last year. The most recent lapses — which included a work site near U.S. 11/460 with nothing to curb runoff — marked the first time DEQ inspectors found an imminent and substantial risk to water quality, the standard set by a state law that allowed them to stop work on the natural gas pipeline until the problems are corrected. Details of the violation remained unclear Tuesday. A report from a Thursday inspection that led to the stop-work order the next day was not released by DEQ. Mountain Valley spokeswoman Natalie Cox said a construction crew with the joint venture reported “an incident regarding erosion and sediment control measures” to DEQ that led to the inspection and stop-work order. The stop-work order states that Mountain Valley failed to construct and maintain environmental protections, “and/or the erosion and sediment control measures that have been installed are not functioning effectively.”
Bernheim Alleges LG&E Hid Information About Gas Pipeline From Public - In a bid to stall or stop the Bullitt County Pipeline Project, Bernheim Arboretum and Research Forest has filed a complaint with utility regulators alleging Louisville Gas and Electric bypassed the typical process for a new natural gas pipeline and in doing so hid information from the public.LG&E first mentioned the need for a new gas pipeline during a 2016 rate case. Utility regulators approved the pipeline in 2017 and have also agreed to prevent public disclosure of a study and map identifying the proposed route.Opponents say LG&E’s strategy has prevented the community from working together. Instead, individual landowners say they were left to fend for themselves with little information to go on as LG&E tried to buy the remaining properties necessary to build the pipeline.“From day one they have isolated us from one another. I asked repeatedly, ‘give me a general path of the pipeline,’” said Vanessa Allen, a homeowner who has so far refused to sell to LG&E. “I would have gone door to door, all along they kept saying ‘oh we don’t even know if it’s going here.’”The pipeline would also run three-quarters of a mile through the Cedar Grove Wildlife Corridor, a 494-acre property Bernheim bought in 2018. While it would mostly run underneath existing electric transmission lines, Bernheim warns the project would do irreparable harm to habitat for rare and endangered species.Bernheim Executive Director Mark Wourms said it wasn’t just that LG&E shielded information about the pipeline. He said state regulators — the Kentucky Public Service Commission — allowed the utility to keep news of the pipeline secret.“And the PSC allowed LG&E to keep this pipeline quiet for several years while it was under study and engineering review,” he said. Public Service Commission Spokesman Andrew Melnykovych declined to comment except to say the commission’s approval of the project speaks for itself.
Major Long Distance Gas Transmission Pipeline Explodes & Burns Homes in Kentucky - The NTSB is investigating after a gas pipeline exploded, destroying homes, killing a woman and injuring several others early Thursday in Lincoln County, authorities said. The explosion occurred in the Indian Camp Trailer Park about 1:20 a.m. just outside Junction City, Kentucky, and flames shot up 300 feet in the air, according to Lincoln County Emergency Management director Don Gilliam. The fire — that could be seen dozens of miles away in Lexington and other communities — engulfed some homes and damaged others while residents fled. Nine homes were destroyed or extensively damaged, Gilliam said. “We are immensely sorry,” said Devin Hotzel, spokesman for Enbridge, the parent company of Texas Eastern that owns the line. He apologized during a meeting Thursday night to help affected residents with their immediate housing, food and medication needs. Lisa Denise Derringer, 58, was killed, the Lincoln County coroner’s office told WKYT. An autopsy was scheduled for Thursday, Kentucky State Police Trooper Robert Purdy said. Her daughter, Candy Ellis, wrote on Facebook that her mother called in her last moments. “She called me but couldn’t speak this morning,” Ellis said. “I have to believe that her heart was at peace when I was calling her name.” At least five were injured in the blast, Gilliam said. The injuries did not appear to be life-threatening. Ephraim McDowell Regional Medical Center in Danville treated five injured victims and four were released, a spokesperson said. Kentucky State Police Trooper Robert Purdy describes how a deputy rescued two people who were in danger after a gas pipeline explosion in Lincoln County Ky., on Aug. 1, 2019. One of the injured was a Lincoln County sheriff’s deputy who helped rescue an elderly man and woman. “Without him being there at the right time, we could have had more casualties than what we had,” Purdy said of the deputy. Although up to seven people were unaccounted for in the early hours after the blast, by noon Thursday, all had been located, Purdy said. The fire was out by 8 a.m., Purdy said. Anything within 500 yards of the fire and explosion had some kind of damage, he added. Of the nine hardest hit homes, five were destroyed and four were extensively damaged. More received less serious damage. Others were uninhabitable temporarily with water and electric service turned off. Enbridge will provide assistance, including temporary housing, to victims if needed, Hotzel said.
Safety Questions Raised After Kentucky Explosion On Enbridge-Owned Pipeline -- An explosion on an Enbridge-owned pipeline in Kentucky prompted the latest in a series of questions surrounding the safety of the energy firm's lines running through Wisconsin and the Upper Midwest. The incident on the Texas Eastern natural gas system killed one person and injured five others.While releasing the company's second quarter financial results Friday, Enbridge President and CEO Al Monaco said their hearts go out to the family and community."Our first concern of course is for those impacted, so we’ve mobilized resources to assist and support them," said Monaco. "Secondly, we're working with the federal agencies to investigate what happened and how the learnings can improve our approach and that of the industry in the future."The cause of the explosion in Kentucky isn't yet known. Superior Mayor Jim Paine said he wants to know if something similar could happen to his city. The company has 11 pipelines that move crude oil and natural gas liquids through Enbridge’s Superior Terminal."While industry sometimes results in accidents, I think we need to make sure we have the safest possible working and living environment around these resources," said Paine. The Superior community has been affected by explosions on the company’s system in the past. In 2007, two Superior men were killed in an explosion while they were working on an Enbridge pipeline near Clearbrook, Minnesota. Federal regulators issued the company a $2.4 million finefor the incident in 2010.
Second explosion this year on same pipeline - The last inspection of Enbridge’s Texas Eastern gas pipeline system may have been about four years ago, according to Jim McGuffey. He’s an incident commander with Enbridge who participated in a press conference Thursday after the company’s pipeline explosion resulted in one death, several injuries and the total destruction of at least five homes and multiple other structures in the Moreland community of Lincoln County. According to the company’s website, the pipeline system can transport 11.7 Bcf (billion cubic feet) per day of gas, extending from the Gulf Coast of Texas to the Northeast, through Ohio, Pennsylvania and New York. This is the second incident this year — the same pipeline exploded in Ohio in January. . A Reuters.com story says the explosion injured two people and damaged homes. Enbridge posted update messages on its website, saying it is “continuing to respond to the incident,” and that the National Transportation Safety Board “has assumed control” of the site. “The NTSB is investigating the incident and Enbridge is supporting that investigation,” and the company has “mobilized emergency response personnel and resources to the site, and we are continuing to work alongside first responders.” During Thursday’s noon press conference, McGuffey said the area contains three different pipelines, all 30 inches in diameter and located five feet below ground. He said the company’s pipelines in the area “had a sufficient amount of covering to protect them from heat.” Thursday, McGuffey said the company stopped the flow of gas in the pipeline that ruptured, and “dramatically decreased the pressure” in the other two pipelines while the investigation is ongoing. Other federal agencies were also on the scene, authorities said, such as the FBI and ATF — which is protocol when there’s an explosion.
The company behind the Kentucky explosion is also behind the worst inland pipeline accident in US history - A gas pipeline explosion in rural Kentucky early Thursday killed one person and sent five others to the hospital. The blaze also set homes on fire and destroyed railroad tracks.The pipeline is owned by Enbridge, a Canadian multinational company whose fuel networks crisscross all over the United States and Canada. This particular line was part of Enbridge’s Texas Eastern system, a network that carries natural gas south from the Marcellus and Utica shale of Pennsylvania, Ohio, and West Virginia to refineries in the Gulf Coast.The explosion in Kentucky is not the first Enbridge incident this year. In January, an Enbridge natural gas pipeline on the same system exploded in Ohio, igniting a fireball that injured two people and damaged homes. In November 2018, a ruptured Enbridge natural gas pipeline ignited a fire that evacuated part of a First Nations territory in British Columbia, Canada. But Enbridge also moves liquid fuel, and has been behind some of the biggest pipeline accidents in US history, including the catastrophic Kalamazoo River spill. In 2010, an Enbridge pipeline burst, spilling roughly 1 million gallons of thick, sticky Alberta tar sands crude oil into the river ecosystem near Kalamazoo, Michigan. Tar sands crude oil is nothing like its conventional crude oil counterpart; it is thicker and heavier, and must be diluted with a cocktail of chemicals that often include benzene and other carcinogens in order to flow through pipelines. That spill took years and more than a billion dollars to clean up, making it the largest and most expensive inland oil spill in US history. In 2012, an Enbridge line spilled more than 50,000 gallons of crude oil in Wisconsin, which required 17,000 tons of contaminated soil to be removed. The same year, an Enbridge line spilled and more than58,000 gallons in Alberta, Canada. A report published by the environmental group Greenpeace found that between 2002 and 2018, Enbridge averaged a rate of one hazardous liquid pipeline accident every 20 days, for a total of 307 spills and 2.8 million gallons released into the environment. Thirty of those incidents reportedly contaminated water resources, including 17 incidents that were reported to contaminate groundwater.
Enbridge Texas Eastern gas pipe remains shut after Kentucky blast (Reuters) - Canadian energy company Enbridge Inc said the section of its Texas Eastern pipe that killed one person when it exploded on Thursday remained shut while the company works with federal and state officials to investigate the incident. The blast near Danville, Kentucky was the second so far this year on the Texas Eastern system following an explosion in Ohio in January that injured at least two people. It was also the third big blast for Enbridge in less than a year following an explosion in British Columbia on its Westcoast system in October. Enbridge said the U.S. National Transportation Safety Board assumed control of the incident site and the company was supporting that investigation. Enbridge said Texas Eastern has three lines between its Danville and Tompkinsville compressors in Kentucky that make up its 30-inch (76-centimeter) pipeline system. The lines are Line 10, 15 and 25. The blast occurred on Line 15. At the time of the blast, about 1.7 billion cubic feet of gas (bcfd) was flowing south from the Marcellus and Utica shale in Pennsylvania, Ohio and West Virginia through the damaged section of pipe toward the Gulf Coast, according Refinitiv data. That represents about 2% of the 90 bcfd of gas produced in the Lower 48 U.S. states. One billion cubic feet of gas is enough to supply about five million U.S. homes for a day. The gas was flowing on Texas Eastern from producers in the Marcellus and Utica shale to utilities along the pipe route and industrial and liquefied natural gas export terminals along the Gulf Coast.
Enbridge to keep Kentucky gas pipe shut for at least a week after blast - (Reuters) - Canadian energy company Enbridge Inc said the section of its Texas Eastern pipeline in Kentucky that exploded on Thursday, killing one person, will remain shut through at least Aug. 12. Enbridge said in a notice to customers Monday afternoon it is working with federal and state officials investigating the incident and has not estimated when the damaged section of pipe will return to service. The U.S. National Transportation Safety Board has assumed control of the incident site in Kentucky and Enbridge said it is supporting that investigation. The blast, near Danville, Kentucky, was the second so far this year on the Texas Eastern system following an explosion in Ohio in January that injured at least two people. It was also the third big blast for Enbridge in less than a year following an explosion in British Columbia on its Westcoast system in October.
Enbridge works to return Texas Eastern natgas pipe after Kentucky blast (Reuters) - Canadian energy company Enbridge Inc said it is working on a plan to put in service a couple of pipelines adjacent to the Texas Eastern natural gas pipeline in Kentucky that exploded on Aug. 1, killing one person. The company, which made the announcement on Thursday, did not say when the two pipes would return to service. Earlier in the week, the company told customers it expected they would remain shut at least through Aug. 12. Enbridge said it is working with several agencies looking into the blast, including the U.S. National Transportation Safety Board, which is leading the investigation. The blast, near Danville, Kentucky, was the second so far this year on the Texas Eastern system following an explosion in Ohio in January that injured at least two people. It was also the third big blast for Enbridge in less than a year following an explosion in British Columbia on its Westcoast system in October. Enbridge said Texas Eastern has three lines between its Danville and Tompkinsville compressors in Kentucky that make up its 30-inch (76-centimeter) system. The lines are Line 10, 15 and 25. The blast occurred on Line 15. Traders noted the Kentucky incident had only a temporary impact on production in the Appalachia region, which returned to record levels earlier this week. At the time of the blast, about 1.7 billion cubic feet of gas (bcfd) was flowing south from the Marcellus and Utica shale basins in Pennsylvania, Ohio and West Virginia through the damaged section of pipe toward the Gulf Coast, according to data from analytics firm Refinitiv. That represents about 2% of the 90 bcfd of all the gas produced in the Lower 48 U.S. states. One billion cubic feet of gas is enough to supply about five million U.S. homes for a day
Explosions in Three States Highlight Dangers of Aging Fossil Fuel Infrastructure - DeSmog --On August 1, for the third time in as many years, Enbridge's Texas Eastern Transmission gas pipeline exploded. This tragic incident in central Kentucky killed a 58-year-old woman, Lisa Denise Derringer, and injured at least five others. Flames towered 300 feet high when the 30-inch diameter pipe ruptured at 1 a.m. and forced at least 75 people to evacuate. This explosion joins a string of others in the past several weeks involving America’s aging fossil fuel infrastructure — including a network of 2.6 million miles of pipelines, roughly half of which are over 50 years old, and over 130 oil refineries, many of which are 50 to 120 years old. The Kentucky incident came less than 24 hours after ExxonMobil’s Baytown, Texas, petrochemical plant saw its second major fire this year. Last week’s Baytown explosion injured 66 workers and has already spurred at least three lawsuits against the company, including one by a worker alleging his burns were far more serious than ExxonMobil had indicated. Just over a month earlier, a massive fireball and series of explosions ripped through the largest refinery on the East Coast, the Philadelphia Energy Solutions complex. It may be months before federal investigators reach conclusions about the cause of each accident, but all three incidents took place at sites with a long history of operations — and accidents. On Monday, Philadelphia Energy Solutions, which first started refining oil back in 1870, long before the invention of gasoline-powered automobiles, began the job of neutralizing and removing over 30,000 barrels of a deadly chemical used in the part of the refinery that exploded. The Baytown, Texas, refinery complex where last week’s fire took place is slated to mark its 100th year of operations next year. In the past century, it has expanded from a plant originally designed to refine 2,500 barrels of oil a day to a sprawling 3,400 acre complex. Today it hosts a 584,000 barrel-a-day refinery plus multiple chemical and plastics plants, including the petrochemical site where the recent fiery blast occurred. The gas pipeline behind the Kentucky explosion, the 8,835 mile long Texas Eastern line, was rapidly built in 1943 to carry liquid petroleum from Texas to New York and other East Coast destinations, and was converted to carry natural gas after World War II ended. In January, it had exploded in Ohio, injuring two and destroying two homes. In 2016, the Texas Eastern exploded in Greensburg, Pennsylvania, leaving one man hospitalized for months with severe burns. “With the rate of corrosion on this pipeline, there are many sections of the pipeline that are essentially a ticking time bomb,”
Wheeler Signs Proposal for Pipeline Projects to Bypass Clean Water Act -- U.S. Environmental Protection Agency (EPA) Administrator Andrew Wheeler signed a proposal Thursday night to change Clean Water Act rules and streamline the federal permit approval process for infrastructure projects like pipelines.The change would limit the ability of states to cite the Clean Water Act to block or delay projects from companies with incomplete permits, which has been a frequent tool used by groups in New York and other states fighting new natural gas pipelines. Signing the proposal opened a 60-day comment period, and Wheeler plans to formally announce this change at a National Association of Manufacturers event Friday."This is another example of the Trump administration bending the definition of cooperative federalism to mean they'll respect the rights of states that agree with it politically and will go after states…when they don't," said Christopher Gray, spokesman at NYU's School of Law's State Energy and Environmental Impact Center. For a deeper dive: Wall Street Journal
U.S. Northeast fuel sellers brace for uncertain winter for heating oil supply — Fuel distributors in the U.S. Northeast are preparing for an uncertain heating oil season this winter, with some locking in additional contracts, as upcoming global sulfur regulations are due to pull on distillate fuel demand, market participants said. The East Coast region has become vulnerable to price increases this winter, traders said, citing new shipping rules limiting sulfur content in refined fuels, along with the shutdown of Philadelphia Energy Solutions’ 335,000 barrels-per-day (bpd) refinery complex, a key supplier for the region. Those factors could squeeze heating oil supply, they said, while unplanned refinery outages could exacerbate any constraints. Fuel distributors said they were trying to get ahead of this problem to ensure adequate winter supply. During sudden cold snaps, the need for heating oil jumps sharply in a region that relies more on the fuel than any other part of the United States. Households in the Northeast account for about 80% of total U.S. households that use heating oil, according to the U.S. Energy Information Administration (EIA). About 5.7 million U.S. households use it as their primary fuel. Heating oil closed at $1.7532 a gallon on Wednesday, the lowest since January, but prices tend to rise in the winter. Strategies to prepare for the season vary by distributor, said Christian Herb, president of the Connecticut Energy Marketers Association. “Some members on the retail side are definitely taking action to lock in some more gallons,” Herb said. “More people are taking some additional actions than in previous years.” The East Coast relies on waterborne international imports as well as shipments from the Gulf Coast via Colonial Pipeline for much of its fuel supply needs. Local refiners help supply the rest. However, some of that supply will be unavailable after PES decided to shut its Philadelphia-area refinery, the largest in the region, due to a fire in late June. The facility produced an estimated 125,000 bpd of gasoline and 110,000 bpd of diesel, according to a note from Wood Mackenzie.“That region does supply the Northeast with petroleum products that are now going to need to be either shipped in via Colonial or shipped in externally,”
How this Southern Tier group is trying to work around NY fracking ban - A Tioga County landowners group appears willing to press ahead in challenging New York's hydrofracking ban by using an unconventional method of natural gas drilling designed to circumvent the prohibition. Tioga County Partners wants to drill on a 53-acre site in Barton using gelled propane, an arcane process that skirts the existing drilling ban. Rather than using a water and chemical mixture favored in hydrofracking, the process intended for use in Tioga County "involves the transport of propane to the well site, the chilling of that propane, and the mixture of chemical additives into the propane," according to documentation submitted by the sponsor. But much like hydrofracking, propane would be pumped into the shale formation more than a mile below the surface, fracturing the rock and freeing trapped natural gas deposits. Propane used in the process will be recovered, sponsors said, leaving few, if any, remnants in the ground. "Waterless hydraulic fracturing was first performed in Canada in 2008 and since then has been used to successfully treat more than 2,600 zones at over 800 sites in North America," Tioga Energy Partners said in its submission. State regulators are now establishing the scope of the environment review that will eventually be submitted by sponsors. In reviewing the impact statement, DEC staff said it will keep a keen eye on the potential climate change impact of the process, noting the state's initiative to eliminate nearly all greenhouse gas emissions by 2050. Additionally, the DEC wants assurances from the applicant that dangers from transporting and storing propane — "a potentially explosive material" — will be mitigated. Due to explosion risks, propane fracks — also known as “gas fracks” — typically use robotics to keep workers out of the “hot zone” during operations. The technology is still developing and has not been widely used, especially in places where water is available.
NYMEX September natural gas settles 5.1 cents lower on record-high production — The NYMEX September natural gas contract fell in Monday trading, continuing Friday's slide to find new 39-month lows. The front-month contract shed 5.1 cents, settling at $2.070/MMBtu, trading in a range of $2.029-$2.109/MMBtu. The core winter months of December and January also dropped by 4.1 cents and 4.0 cents in Monday trading, settling at $2.372/MMBtu and $2.506/MMBtu, respectively. "It's pretty clear that the market is driving lower on the avalanche of gas being produced," US dry production hit an all-time high this weekend at 90.4 Bcf/d on Saturday, soaring over 90 Bcf/d for the first time, according to S&P Global Platts Analytics. Production is forecast to stay around these levels, hovering at 89.9 Bcf/d over the next eight to 14 days. Month-to-date levels remain significantly higher than year-ago levels with August, averaging 90 Bcf/d, 8.4 Bcf higher than last year's level of 81.6 Bcf/d, Platts Analytics data shows. On weather in the US, McGillian said "without a hot forecast in the Eastern half, there's nothing to stop gas from hitting $2[/MMBtu]." Looking ahead, the most recent eight- to 14-day weather outlook from the National Weather Service predicts cooler-than-average temperatures for much of the Northeast and Midwest, which could put downward pressure on prices. Total demand sits at 83.1 Bcf on Monday, 3.4 Bcf under last week's average of 86.5 Bcf/d, mostly driven by a decrease in LNG feedgas demand, which saw a 27% drop from last week's average of 5.5 Bcf/d to Monday's 4 Bcf, according to Platts Analytics. Power burn is expected to drop from Monday's 39.9 Bcf to 39.3 Bcf/d over the next week, before bumping back up to 40.9 Bcf/d over the next eight to 14 days, Platts Analytics data shows.
U.S. natural gas demand is at a record - and prices keep dropping – Reuters - U.S. natural gas demand is at an all-time high and expected to keep rising - and yet, prices are falling. U.S. gas futures this week collapsed to a three-year low, while spot prices were on track to post their weakest summer in over 20 years. In other markets, such lackluster pricing would cause investment to retrench and supply to contract. But gas production is at a record high and expected to keep growing. Demand is rising as power generators shut coal plants and burn more gas for electricity and as rapidly expanding liquefied natural gas (LNG) terminals turn more of the fuel into super-cooled liquid for export. Analysts believe the natural gas market is not trading on demand fundamentals because supply growth continues to far outpace rising consumption. Energy firms are pulling record amounts of oil from shale formations and with that oil comes associated gas that needs either to be shipped or burned off. On the New York Mercantile Exchange, gas futures this week dropped to $2.03 per million British thermal units (mmBtu), the lowest since May 2016. For the summer, spot gas prices at the Henry Hub benchmark in Louisiana were on track to fall to their lowest since 1998. Gas speculators last week boosted their net short positions to the highest on record, according to the U.S. Commodity Futures Trading Commission. “All the bulls are gone,” said Kyle Cooper, consultant at ION Energy in Houston. The market is expecting a big boost in gas output this fall after Kinder Morgan Inc’s (KMI.N) Gulf Coast Express pipeline comes online in September and releases some of the gas currently stranded and being burned in the Permian. So much associated gas is coming out of the ground that gas prices in the Permian basin in Texas and New Mexico, the biggest U.S. shale oil formation, have turned negative on multiple occasions this year. Meg Gentle, CEO of U.S. LNG company Tellurian Inc, said current pipeline expansion plans will not meet record gas production in the Permian, leading to severely depressed prices at the Waha Hub in West Texas, which touched a record low of negative $9/mmBtu in April.
Opposing Forces Lead To Choppy Natural Gas Price Action -- So far this week, natural gas prices have maintained some volatility, plunging to new multi-year lows early yesterday morning, but have bounced back since then to levels very close to where we ended the day back on Friday. Opposing forces have been at work this week leading to this choppy price action. On the bearish side, we have new all-time highs in production. We also have seen a drastic reduction in LNG intake over the last few days. These two factors initially were the focal points of the market, leading us to the fresh lows early yesterday morning. All the while, weekend gas burns were more impressive, and we continue to see a supportive hotter than normal weather pattern, with forecast GWDDs above normal for the next 15 days, with good model agreement on such a pattern. As a result, the market said, "not so fast" to the bear parade, rallying off those fresh lows rather quickly, leading us to where we are today as we wait to see which side is able to gain the upper hand. A lot of unknowns remain, such as the duration of the LNG decline, and if the upcoming demand regime is enough to negate or outweigh the bump up in supply.
U.S. natgas futures rise nearly 2% on forecasts for hot weather ahead of storage report - U.S. natural gas futures rose almost 2% on Thursday as record power demand in Texas and forecasts for hotter weather and greater cooling demand in late August lifted prices from a near three-year low in the prior session. That increase comes despite the impending release of a federal report later Thursday that is expected to show a bigger than normal storage build. Analysts said utilities likely added a bigger-than-normal 59 billion cubic feet (bcf) of gas into storage during the week ended Aug. 2. That compares with an injection of 46 bcf during the same week last year and a five-year (2014-18) average build of 43 bcf for the period. If correct, the increase would boost stockpiles to 2.693 trillion cubic feet (tcf), 3.8% below the five-year average of 2.800 tcf for this time of year. The U.S. Energy Information Administration will release its weekly storage report at 10:30 a.m. EDT (1430 GMT) on Thursday. Front-month gas futures for September delivery on the New York Mercantile Exchange were up 3.1 cents, or 1.5%, to $2.114 per million British thermal units (mmBtu) at 9:29 a.m. EDT (1329 GMT). On Wednesday, the contract closed about a penny over Monday’s $2.070 close, which was the lowest settle since May 26, 2016. Analysts said gas futures have traded near multiyear lows since May because record production and mild spring weather allowed utilities to inject huge amounts of gas into storage, shrinking a massive inventory deficit and removing any concern about shortages in the winter even though power demand and liquefied natural gas (LNG) exports are on track to hit all-time highs this year. The amount of gas in inventory has remained below the five-year average since September 2017. It fell as low as 33% below that average in March 2019. But with production expected to keep growing, analysts said stockpiles should reach a near-normal 3.7 tcf by the end of the summer injection season on Oct. 31.
US natural gas in storage rises 55 Bcf to 2.689 Tcf: EIA - US natural gas in storage rose 55 Bcf to 2.689 Tcf for the week ended August 2, the US Energy Information Administration reported Thursday. The injection was less than an S&P Global Platts' survey of analysts calling for a 57-Bcf injection. The wider survey responses were between 54 and 65 Bcf. The build was also less than the Platts Analytics' storage model forecast calling for an injection of 61 Bcf. The build was above the 46-Bcf injection reported during the corresponding week in 2018 and also more than the five-year-average of 43 Bcf, according to EIA data. It marked the second-smallest injection since April 5. As a result, stocks were 343 Bcf, or nearly 15%, above 2.346 Tcf a year earlier and 111 Bcf, or 4%, below the five-year average of 2.800 Tcf. The EIA reported a 16-Bcf build in the East to 613 Bcf, compared with 571 Bcf a year earlier; a 24-Bcf injection in the Midwest to 701 Bcf, compared with 576 Bcf a year earlier; a 5-Bcf build in the Mountain region to 161 Bcf, compared with 148 Bcf a year earlier; a 2-Bcf addition in the Pacific to 272 Bcf, compared with 245 Bcf a year earlier; and a 7-Bcf injection in the South Central region to 941 Bcf, compared with 808 Bcf a year earlier. Total inventories are now 33 Bcf below the five-year average of 646 Bcf in the East, 1 Bcf above the five-year average of 700 Bcf in the Midwest, 16 Bcf below the five-year average of 177 Bcf in the Mountain region, 21 Bcf below the five-year average of 293 Bcf in the Pacific and 43 Bcf below the five-year average of 984 Bcf in the South Central region. The NYMEX Henry Hub September contract edged up about 5 cents from its opening price to $2.13/MMBtu following the report's release.
EIA Report Reveals Smaller-Than-Expected Natural Gas Build, But Is It Enough To Turn The Tide In Prices? - Contrary to the very bearish EIA report last week, today's report showed a natural gas build that was a little smaller than market expectations, with an injection of 55 bcf last week compared to the consensus estimate around 60 bcf. Part of the miss came from over-estimating the build in the South-Central region. We believe the record cool temperatures a couple of weeks ago led to the big bearish miss last week, as temperature extremes in either direction are often more difficult to model. This may have led to the over-estimation this week. Last week's weather was not hot by any means, but did not have nearly the same level of cooler air around as the prior week. Natural gas prices responded to the number by advancing higher, with the September contract up nearly 2.5% as of this writing. While we are around 10 cents off the lows, the downtrend remains intact for now. Could today's number be a sign that the paradigm may finally be shifting? That may be a bit premature. While it did reveal a lower-than-expected build, the supply / demand balances implied are not exactly bullish when looking at the same week in previous years. We also are faced with the likelihood of a couple larger builds in the next two weeks, thanks to the sharp decline in LNG exports due to Sabine maintenance, which typically lasts around three weeks. With all that said, we continue to be locked into a weather pattern favoring hotter than normal conditions, i.e. more demand for natural gas, as measured by our Gas-Weighted Degree Days. The pattern has been hot-dominated, however, since the final third of June, and it hasn't been enough to stop the downward slide. The flavor of this pattern is a bit different, though, with more emphasis in key regions of the South, such as Texas, where the hottest weather of summer is on the way. Time will tell if this new pattern sticks, and is enough to finally tighten balances to the point where we can put together and sustain a rally as we move closer to a time when seasonality begins to turn bullish, typically just after the Labor Day holiday.
Natural Gas Prices End The Week Virtually Unchanged From Last Friday - If you took this week off and are just now checking in, you'd think absolutely nothing had happened, as natural gas prices ended this week almost exactly the same as last week, with the September contract down just 2 ticks on the week. Of course, the week had its usual moves along the way, plunging to a new prompt month multi-year low of 2.029 Monday morning before recovering. There were a few more attempts to dip under the 2.10 level throughout the week, including this morning, but none of them held. The reason? Bullish and bearish factors continue to battle for control in determining the next move. We highlighted yesterday how the reported build in yesterday's EIA report was less than expected, but hardly bullish when comparing the same week in previous years. The LNG decline remains a bearish force as well, one which the market may be stuck with for another couple of weeks yet. With less natural being taken into LNG plants, the next couple of EIA reports will show inflated builds relative to what they otherwise would. We also had new production highs this week. On the bullish side, we have the weather pattern, which remains in its hot-biased mode, with above normal demand overall for the foreseeable future. This has been the mode of the pattern ever since the demise of the El Niño base state back in late June. One key change occurred this week, however. Notice the lack of heat in Texas on the above map, as the strongest heat since the pattern turned hotter has been in the eastern U.S. Texas is now seeing its hottest weather of the summer, with 100 or better in the major cities of Dallas, Houston, and San Antonio. This stronger heat is forecast to continue at least for another week or so, as seen on our official forecast maps. Because Texas is a very important state when it comes to natural gas usage, stronger heat there can lead to higher natural gas burns, which we have seen confirmed in this week's data.
United States sets new daily record high for natural gas use in the power sector --The United States likely set a new daily record on Friday, July 19, of 44.5 billion cubic feet (Bcf) for natural gas consumption by electric power plants, according to S&P Global Platts. U.S. power sector natural gas consumption exceeded the previous record of 43.1 Bcf—set on July 16, 2018—on five days in July. Higher-than-normal temperatures and relatively low natural gas prices contributed to increased natural gas consumption by electric generators.Higher electricity demand for air conditioning during a heat wave from July 15 through July 22 drove the increased power generation, especially from natural gas-fired generators. Although the highest temperatures occurred during the weekend, most states east of the Rocky Mountains experienced warmer-than-normal weather in the days leading up to the heat wave. From July 16 through July 21, the average maximum temperature exceeded 85°F in most parts of the country.Relatively low natural gas prices have also led to higher natural gas-fired generation this summer. According to Natural Gas Intelligence, natural gas spot prices at the Henry Hub in Louisiana averaged $2.33 per million British thermal units (MMBtu) from July 16 through July 21. So far this summer (June 1–August 1), Henry Hub prices have averaged $2.31/MMBtu, 19% lower than during the same period last year. Spot natural gas prices elsewhere in the country have been even lower than those at Henry Hub. Natural gas prices at the Chicago Citygate—the regional price benchmark for Midwestern states—have averaged 19¢/MMBtu lower than Henry Hub prices so far this summer. Regional spot prices in the Northeast (such as Dominion South in western Pennsylvania) have traded 30¢/MMBtu lower than Henry Hub.
In the United States, most petroleum is consumed in transportation – EIA - Petroleum, which consists of crude oil and refined products such as gasoline, diesel, and propane, is the largest primary source of energy consumed in the United States, accounting for 36% of total energy consumption in 2018. Crude oil is processed at petroleum refineries to make many different products, such as motor gasoline, distillate fuel oil, hydrocarbon gas liquids, and jet fuel. More than two-thirds of finished petroleum products consumed in the United States are used in the transportation sector. The U.S. Energy Information Administration’s (EIA) U.S. petroleum flow diagram helps to visualize U.S. petroleum supply (production, imports, and withdrawals from storage) and disposition (consumption, exports, and additions to storage). The large number of refined products and outlets for sale (e.g., gasoline stations) makes data difficult to collect and end-use consumption difficult to calculate. EIA uses petroleum product supplied to estimate petroleum consumption. EIA calculates product supplied by adding field production, refinery and blender net production, and imports and then subtracting stock change, refinery and blender net inputs, and exports. Petroleum product supplied increased for the sixth consecutive year in 2018, totaling about 20 million barrels per day (b/d). In 2018, U.S. exports of crude oil reached a record high of 2.0 million b/d, an increase of about 0.8 million b/d from 2017. U.S. crude oil exports have increased significantly since the beginning of 2016, after the U.S. Congress lifted restrictions on exporting crude oil. In addition, U.S. exports of total petroleum products reached a record high of 5.6 million b/d in 2018, an increase of 0.3 million b/d from the previous year. The United States imported about 8 million b/d of crude oil in 2018, a 3% decrease from 2017. Net imports of crude oil and petroleum products were down to about 2 million b/d, the lowest level since 1967. The United States still imports crude oil because of geographic and quality considerations.
Energy expenditures per dollar of GDP are highest in energy-producing states - According to the U.S. Energy Information Administration’s (EIA) State Energy Data System (SEDS), every state saw increased total energy expenditures and total energy expenditures as a percentage of gross domestic product(GDP) in 2017 compared with the previous year. Only the District of Columbia had a decrease in total energy expenditures. States such as Louisiana, Mississippi, and Wyoming, which tend to have relatively more energy-intensive industries, have a much higher percentage of energy expenditures per dollar of GDP. The District of Columbia and states that have concentrated urban areas with less energy-intensive industries, such as Massachusetts and New York, have the lowest expenditures per GDP.U.S. total energy expenditures (the amount of money spent to consume energy in the United States) increased in 2017 for the first time since 2014, reaching $1.14 trillion. U.S. GDP, calculated as the total value of goods and services produced in the United States including energy, totaled $19.5 trillion in 2017, 4% more than 2016 levels in nominal terms and 2% more in real terms (adjusted for inflation).In 2017, U.S. energy expenditures per GDP reached 5.8%, up from a record low of 5.6% in 2016, after its first annual increase since 2011. These increases are primarily a result of increased average U.S. energy prices, up almost 9% nationally from 2016 to 2017. Average U.S. prices for petroleum and natural gas increased by 14% and 13%, respectively, and electricity prices increased by 2%. Total U.S. energy consumption increased by less than 1% during the same time. Louisiana had the highest energy expenditures per GDP of any state in 2017 at 13.5%. In this ranking, Louisiana has been the highest every year since 1997, the earliest year for which EIA has state data. In 2017, 50% of the state’s total energy expenditures occurred in the industrial sector, which includes its energy-intensive petrochemical industry. Overall, Louisiana’s total energy expenditures increased by nearly 21% from 2016 to 2017, the largest percentage increase of any state during that period.
Enbridge: Unsupported segment of Line 5 has grown beyond 75-foot limit - An unsupported span of Enbridge Energy’s Line 5 oil pipeline beneath the Straits of Mackinac has grown to 81 feet, surpassing the 75-foot limit outlined in the company’s easement agreement with the state. Enbridge notified the state of the development Wednesday and said it applied for approvals to place screw anchors or supports along that segment of the pipeline in March 2018 but is still waiting on an answer for the U.S. Army Corps of Engineers. The Canadian company said it already has received state permits for the work from the Michigan Department of Environment, Great Lakes and Energy. The unsupported span measured 66 feet last summer, but officials discovered it had grown to 81 feet last month, Enbridge spokesman Ryan Duffy said Wednesday. The company's easement agreement allows for a 90-day window in which to address the unsupported span, he said. Exposed sections of the Line 5 oil pipeline that don’t lie on the lake bed are required to have supports or screw anchors attached to them at least every 75 feet. The areas needing support change from year to year as soil washes away or erodes. "Since learning about it, we’ve been talking with the Army Corps and have told them we want to get out there as quick as we can," Duffy said.
Wide Gap Opens Beneath Enbridge's Line 5 In Great Lakes - Enbridge said this week that erosion has caused a wider gap beneath an unsupported section of its Line 5 oil pipeline in the Great Lakes than the gap allowed under the pipeline company’s agreement with the state of Michigan.The gap has now increased to 81 feet, wider than the 75-foot upper limit set by Enbridge’s easement agreement with Michigan, and up from 66 feet last summer, the company’s spokesman Ryan Duffy told The Detroit News on Wednesday.The wider gap poses “no safety or integrity risk,” Enbridge says, although Michigan regulators told AP they were unable to immediately confirm such an assessment.Enbridge applied to obtain a permit to have supports or screw anchors installed at the unsupported section in March 2018, but it is still waiting for a permit from the U.S. Army Corps of Engineers, the company says.“Since learning about it, we’ve been talking with the Army Corps and have told them we want to get out there as quick as we can,” Duffy told The Detroit News.“This notice reinforces the need to decommission Line 5 as quickly as possible,” the office of the Michigan Attorney General said in a tweet, referring to the latest issue with the oil pipeline under the Straits of Mackinac.“This erosion makes the 66-year-old pipeline increasingly vulnerable to anchor strikes and potential ruptures and reinforces the need for the legal action Attorney General Nessel has taken to remove the pipeline from the Straits,” AG Nessel’s spokeswoman Kelly Rossman-McKinney said in a statement to The Detroit News. Enbridge, for its part, plans to build a tunnel to house Line 5 and is conducting research in the Straits of Mackinac this week to understand the conditions.
Agency readies decision on underwater oil pipeline supports(AP) — The U.S. Army Corps of Engineers says it’s preparing to decide whether to let Canadian oil transport company Enbridge install supports for its underwater oil pipeline in Michigan’s Straits of Mackinac.Enbridge disclosed Wednesday that erosion had opened a gap beneath one of two Line 5 pipelines in the channel linking Lakes Huron and Michigan. The gap is about 6 feet (1.83 meters) wider than allowed under a state easement.The company says the pipe’s integrity isn’t threatened. But it wants to install more than 50 screw anchors for greater stability.Michigan has granted a permit. Enbridge says it’s been waiting 16 months for the Army Corps to do likewise.Spokeswoman Lynn Rose said Thursday the Corps recently received information it needed from Enbridge to make a decision, which will come soon.
DNR investigating Jackson County mine spill; unknown material discolored Trempealeau River - State environmental officials are investigating a spill at a Jackson County frac sand mine that discolored water in the Trempealeau River. According to the Wisconsin Department of Natural Resources, the spill occurred Saturday at Wisconsin Proppants Hixton mine in the town of Curran, about 12 miles northwest of Black River Falls. It’s not clear how much material was released or if it involved mine wastewater, which can contain high concentrations of toxic metals as well as chemicals used to process sand. DNR spokesman Andrew Savagian said the release was not stormwater runoff. “We know there was a spill event at Wisconsin Proppants,” Savagian said. “We know it happened. We don’t know the impacts.” The DNR took water samples Tuesday, which have been sent to the Wisconsin State Laboratory of Hygiene to test for the presence of metals. Staff are scheduled to return to the site Wednesday to further assess the impacts and necessary cleanup. Savagian said the plant operator, WP Operations, contacted the DNR and “has taken steps to mitigate the release and potential impacts.” Plant manager Hamilton White referred questions to the DNR. “I’m really not at liberty to talk about it,” he said. “It’s not a major breach of any kind.”
Oil association president says Edwards’ support of coastal erosion lawsuits is devastating to state’s economy - The president of the Louisiana Oil and Gas Association has said Gov. John Bel Edwards’ push for parish coastal erosion lawsuits against companies in the gas and oil industries has hurt the state's economy.“Over the past couple of years, the U.S. oil and gas sector has experienced a boost in activity that is everywhere except in Louisiana," LOGA’s President Gifford Briggs told the Louisiana Record. "We have a tax rate and a legal climate that is holding Louisiana’s oil and gas industry from reaching its full potential. We look forward to hearing all of the gubernatorial candidates share their plan to reignite Louisiana’s energy industries.”For now, a couple of those candidates have already criticized Edwards', including GOP gubernatorial candidate Rep. Ralph Abraham who released a statement making it clear that should he win the race, he'll end Edwards’ “war on the gas and oil industry.” Abraham said Edwards has gone beyond encouraging parishes to file lawsuits against oil and gas industry leaders, to signaling that if others don’t sue, he will.“How can we expect our energy and job producers to keep investing in Louisiana and the coastal waters that surround us if our governor and chief executive officer of the state has declared all-out war on the industry?" Abraham said. "We can’t. We also shouldn’t be surprised that our largest economic competitor, Texas, is reaping the rewards of Edwards’ energy assault. Texas welcomes energy growth with open arms, and the economy in Texas is booming as a result of it.”His competitor, Eddie Risponse, made similar comments against Edwards. According to The Advocate, Risponse said, “I’m going to do everything I possibly can as governor to reverse what we have today by this governor. Thousands of jobs are lost to feed these greedy trial lawyers.”
Energy Transfer plans VLCC-capable crude export terminal near Nederland — Energy Transfer is looking to enter the crowded field of proposed US deepwater crude export terminals capable of fully loading VLCCs, with a project that connects to the company's 28-million-barrel Nederland, Texas, terminal, executives said Thursday on the company's second-quarter earnings call. Mackie McCrea, chief commercial officer, said the project would stand out from competitors because of the vast amount and diversity of supply that collects at Nederland, which he called the largest above-ground oil storage in the country. "If you look at Nederland and you look at the amount of barrels that come in -- pipelines that come from Canada, from Cushing, from West Texas -- every major area comes into Nederland," McCrea said. On the market side, McCrea said: "We just have to be competitively priced. We're working on our costs, and we're negotiating with potential shippers. We feel real good about how we're progressing." McCrea said Energy Transfer would soon file an application with the US Department of Transportation's Maritime Administration, and the project would take at least 2 1/2 years. Energy Transfer owns the 570,000 b/d Dakota Access crude pipeline that moves about 40% of Bakken production. It aims to increase capacity to 1.1 million b/d by late 2020, feeding more Bakken crude to Midwest and Texas Gulf Coast refining and export markets. Seven other companies have proposed deepwater oil ports across the Gulf of Mexico to move the next wave of US crude exports, although not all of the proposed capacity will be needed.
US oil rig count hits fresh 19-month low amid broad drilling slowdown — The US oil rig count fell to a 19-month low this week as drilling activity waned in nearly all major basins, information published by RigData showed Thursday. The number of active US oil drilling rigs edged down by 11 to 815 this week, the lowest since January 2018 and 100 lower than year-ago levels. The decline in oil drilling activity led the combined US oil and gas rig count down 11 to 1,022 last week, itself a 19-month low. Rig count declines were seen in most major oil-focused basins. Active Permian and Williston basin rigs fell back one each to 437 and 57, respectively, while the SCOOP-STACK and Denver-Julesburg basin each shed two active rigs, bringing counts there to 76 and 30, respectively. In the West Texas Eagle Ford basin, the number of active oil rigs was unchanged on the week at 81. The number of active drilling permits was sharply lower last week at 860, down 279 from the week prior and the lowest since early May. The drilling slowdown comes amid a steep decline in oil prices in recent weeks. Front month WTI futures have fallen more than 10% from mid-July as weakened global economic indicators have weighed on oil demand growth outlooks. WTI futures were down more than 5% during the reporting week. Improved efficiencies and rising well completion rates have allowed operators to increase production outlooks in second quarter guidance even as total rig counts have ebbed. New-well oil production per rig in the major basins is forecast at 715 b/d in August, up 10 b/d from 705 b/d in July, according to US Energy Information Administration data. The greatest efficiency gains are forecast for wells in the Bakken, which is slated to edge up 15 b/d to 1,424 b/d, and in the Permian, which is expected 12 b/d higher at 684 b/d in August. At the same time the number of drilled but uncompleted wells across all basins has continued to slip, falling to 8,248 in June. Total DUCs are down 0.8% from a February peak of 8,315, according to the latest EIA data. The nationwide gas rig count was unchanged this week at 207 as counts across major basins remained range bound. Still, the total gas rig count was down 21 from year-ago levels. Active rigs in the Marcellus and Haynesville plays fell back one each to 51 and 53 this week, respectively. But these declines were matched by the addition of two rigs in the Utica Shale basin, putting the active rig counts there up to 17. The Haynesville decline put rig counts down to the lowest in at least 19 months.
Oil Price Correction Triggers Shale Meltdown -It was a rough week for the U.S. shale industry. A series of earnings reports came out in recent days, and while some drillers beat expectations, there were some huge misses as well. Concho Resources, for instance, saw its share price tumble 22 percent when it disclosed several problems at once. Profits fell by 25 percent despite production increases. Concho conceded that it would slash spending and slow the pace of drilling in the second half of the year. It also said that one of its projects where it tried to densely pack wells together, which it called “Dominator,” the results were not as good as they had hoped. The project had 23 wells, but production disappointed. The “30 and 60 day production rates were consistent with our other projects in that area, but the performance has declined,” Leach said. So, the company will abandon the densely packed well strategy and move forward with wider spacing. In the second quarter the company had 26 rigs in operation, but that has since fallen to 18. At the start of the year, the company had 33 active rigs. The company reported a net loss of $792 million for the first six months of 2019. As Liam Denning put it in Bloomberg Opinion: “It’s sobering to think that Concho, valued at more than $23 billion in the spring of 2018 and having since absorbed the $7.6 billion purchase of RSP Permian Inc., now sports a market cap of less than $16 billion.” The reason these results are important is because they may not be one-off problems for individual companies, but are more likely indicative of the problems plaguing the whole sector. Whiting Petroleum had an even worse week. Its stock melted down on Thursday, falling by 38 percent after reporting a surprise quarterly loss that badly missed estimates. The company announced that it would cut its workforce by a third. According to the Wall Street Journal and Wood Mackenzie, a basket of 7 shale drillers posted a combined $1.58 billion in negative cash flow in the first quarter, four times worse than the same period a year earlier.
The Worst Is Still To Come In Energy Markets -- It’s been a rough week for the stock market across the board, but there is one sector that’s hurting more than all the rest. The only sector currently in a bear market is the energy sector, which fell more than 6 percent at the beginning of the month, making it the number-one worst performer on the S&P 500 Index. One major factor at least partially causing the downturn is a recent escalation of the now more-than yearlong trade war between the United States and China, which heated up to new levels last week when United States President Donald Trump tweeted that he would be imposing a further 10 percent tariff on a further $300 billion of Chinese goods starting on September first. China quickly retaliated, predictably following the tit-for-that model that the both sides of trade war have followed since its beginning last year, by allowing its tightly controlled currency to drop to its lowest value in over a decade, exacerbating trade tensions between the two countries by making Chinese goods less expensive for U.S. markets and, conversely, making U.S. goods more prohibitively expensive for Chinese consumers. “The U.S.-China trade war has always been serious. Now it's starting to get scary,” CNN Business reported, mincing no words about the precariousness of the U.S. market going forward. Just after Trump’s Thursday tweets announcing September 1st’s newly escalated tariffs against China, oil prices immediately dropped by 8 percent “with the stocks of oil producers also plummeting, some by more than 10 percent” in what was “the largest single-day drop in oil prices in the past three years” according to a report from Forbes. And the surf is only going to get rougher going forward. Speaking to CNBC on Mondays edition of “Trading Nation,” head of technical analysis at worldwide brokerage and investment bank Oppenheimer Ari Wald said, “it’s a bearish trend and a poor risk-reward. [...] The sector has just not been rewarded when oil rises to the same degree it’s been slammed when oil falls.” CNBC uses West Texas crude to exemplify this trend, pointing out that the region’s crude oil “has surged more than 110 percent since bottoming in 2016. Over that period, the XLE energy ETF has added just 19 percent.” Oppenheimer’s Wald went on to say that the sector’s largest stock Exxon Mobile is also projected to continue a downward trend, in a turn of events that is sure to have a negative impact on the energy sector as a whole.
US Drops Another Eight Oil, Gas Rigs - The U.S. rig count continued its decline this week as the nation dropped another eight oil and gas rigs, according to weekly data from Baker Hughes, a GE Company. Six oil rigs and two gas rigs were shed, bringing the total number of active rigs to 934, which is 123 fewer rigs than a year ago. Alaska led all states in rig losses, shedding four rigs this week. Louisiana and Oklahoma dropped two rigs apiece while Kansas and Texas dropped one rig each. New Mexico was the only state to add rigs, tacking on two. Among the major basins, the Cana Woodford and Haynesville lost three rigs and two rigs, respectively. The Granite Wash added two rigs as did the Permian. Energy research firm Rystad Energy recently refuted speculations that the Permian’s well performance was declining. In fact, fracking operations in the Permian continue to break records. The Permian’s total number of active rigs stands at 444, accounting for almost half of the nation’s active rig count.
Texas Oil, Gas in Mild State of Contraction - Texas' upstream oil and gas economy is in a mild state of contraction, according to oil economist Karr Ingham. Halfway through 2019, Texas’ upstream oil and gas economy is in a mild state of contraction, according to Karr Ingham, petroleum economist for the Texas Alliance of Energy Producers and creator of the Texas Petro Index (TPI). “The TPI achieved its cyclical peak in October 2018 and since then has declined for six of the last eight months, including four months in a row through June,” Ingham said in a July 31 release. Since, Oct. 2018, the TPI has lost 2.9 percent of its value. The industry has declined in the following areas:
- Crude oil and natural gas prices
- Rig count
- Drilling permits
- Crude oil well completions
- Value of statewide natural gas production
- Upstream industry employment
However, where Texas is not slacking is in its crude oil and natural gas production. In June, the American Petroleum Institute (API) reported that Texas crude oil production exceeded five million barrels per day (bpd) in May. For reference, production was 3.6 million bpd in March 2015 and 3.1 million bpd in September 2016, according to data from the Texas Alliance of Energy Producers. Ingham also noted that Texas is now producing 42 percent of the nation’s crude oil output, while the Texas portion of the Permian alone is contributing 25 percent to total U.S. crude oil production. As for Texas upstream oil and gas employment, in June there were 224,600 industry-related jobs. This reflects both the addition of 43,000 jobs since the downturn and 2,200 jobs lost since October 2018.
Is the US Shale Boom Winding Down? -U.S. shale oil output growth is slowing and nowhere is this more evident than in the Permian Basin, where growth will be under 1 percent in August according to the Energy Information Administration (EIA). The EIA estimated July Permian production reaching 4.23 MMbbl/d (millions of barrels of oil per day), an increase of 55,000 b/d (barrels per day) on June. In contrast in July, the EIA revised production downwards to 4.17MMbbl/d, forecasting growth of just 34,000 b/d by the end of August. Now many companies, ranging from EOG Resources Inc. to smaller players such as Laredo Petroleum Inc., are dropping their 2019 growth forecasts. Producers in various North American oil-rich shale basins are dialling back growth plans in the face of a growing number of complex problems which are killing returns and discouraging investors. The biggest and constant constraint on attracting new money and rewarding investors is the high rate of shale well depletion -- as much as 70 percent in the first year -- which forces companies to keep spending on new wells just to maintain output. Slowing growth in the Permian basinNow, a new crop of problems including a combination of operational bottlenecks, and market and logistical factors, are reducing output growth in the Permian basin and raising investor concerns. New well flows are not what they used to be, since wells are drilled further away from sweet spots or placed too close to each other in order to make the most of all that very expensive acreage. Also, the prolific Permian basin is now producing the wrong type of oil. The growth in super-light oil output in the last year, is not an unalloyed blessing since, the majority of U.S. refineries are dedicated to processing heavier and medium crudes imported from Brazil, Canada, Columbia, Ecuador and Mexico. The absence of heavy Venezuelan oil, due to the embargo on imports, has made blending the lighter oil from the Permian basin more difficult at home and has constrained export opportunities, since there are only a few condensate splitters or simple refineries able to handle Permian light crude in Europe. The shale energy revolution is now over a decade old and investors and lenders are becoming impatient for a return rather than laying out more money to compensate for high rates of well depletion or finance new wells.
Time Is Almost Up For U.S. Shale - A top U.S. shale executive said that it may only be the Midland basin in the Permian that can grow production beyond 2025. Aside from Midland, every other shale basin may be on borrowed time, with the best acreage already picked over and oil prices languishing below $60 per barrel. It’s been a brutal two weeks for the U.S. shale industry, clobbered by a series of poor financial results from several drillers at a time when oil prices more broadly are in freefall. The latest was Oasis Petroleum, which plunged by more than 30 percent on Wednesday, after the company said it would probably spend a little bit more than previously expected, and might produce a little bit less. Last week, Concho Resources admitted that one of its more promising experiments, a 23-well project, suffered from poor results because the wells were packed too closely together. The company’s share price plunged by more than 22 percent because investors realized that perhaps Concho Resources, and other shale drillers like it, may not be able to produce as much oil as expected from a given level of spending.But the hits keep on coming. President Trump announced a new round of tariffs, scheduled to take effect in September. China responded by digging in, and letting its currency depreciate, which set off a global panic about currency wars and a slowing economy. Oil entered a bear market, down more than 20 percent from a recent peak in April. U.S. energy stocks across the board fell to new depths.Prices recovered on Thursday on rumors about more OPEC+ cuts, but that has done little to dispel concerns about U.S. shale. The industry faces both medium and long-term challenges as well. Pioneer Natural Resources, one of the larger producers in the Permian and widely considered one of the stronger companies, warned about the future of drilling. “Rig count and Tier 1 acreage is being exhausted at a very quick rate,” Pioneer President and CEO Scott Sheffield told analysts on an earnings call on August 6, referring to the Delaware basin, which has seen a surge of activity most recently. “I am lowering my expectations of the Permian, reaching 1 million barrels of oil per day growth annually as it did in 2018,” Sheffield said. “I'm still convinced the Permian will reach 8 million barrels a day at a much slower pace with the Midland Basin as the only growing basin in the U.S. past 2025.” 8 million barrels per day is not exactly peanuts. That would amount to another doubling of output compared to today’s levels. But Sheffield said that everywhere outside of the Midland sub-basin within the Permian faces an uncertain future.
Permian Not on Its Way Out - A handful of industry insiders have speculated that the Permian may be on its way out, noting that well productivity in the region is declining. That’s what Rystad Energy highlighted in a company statement posted on its website on Friday. The energy research company emphasized in the statement, however, that the truth is “quite the opposite”. “Some market participants argue that the average well performance in the Permian is already declining, based on speculations of depletion of core inventory, as well as a growing share of child wells and well spacing challenges,” Rystad Energy said in the statement. “After careful analysis, we do not find sufficient evidence in the data to support these speculations,” Artem Abramov, Rystad Energy’s head of shale research, added in the statement. “We conclude that the average new production per well in the basin matches the all-time highs seen in early 2019, despite depletion concerns,” Abramov continued. Abramov went on to state that a typical horizontal Permian well currently produces approximately 830 barrels of oil per day during its second month of production, which is an “all-time high level”. Earlier this year, Regina Mayor, global sector head of energy and natural resources for KPMG, revealed in a television interview with Bloomberg that she thought “Permania” was alive and well and here to stay. In a separate television interview with Bloomberg back in January, Fatih Birol, executive director at the International Energy Agency, said, “we have not seen the full impact of the shale revolution yet”. “[There is] more to come both for oil and gas and it will have huge implications for the oil industry, gas industry and the markets,” Birol told Bloomberg in the interview.
Qatar Pumping $550MM Into Permian Midstream Player - Oryx Midstream Services revealed Wednesday that Qatar Investment Authority (QIA) will invest approximately $550 million in the company. In a statement published on its website yesterday, Oryx said an affiliate of QIA has acquired a “significant” stake in the business from an affiliate of Stonepeak Infrastructure Partners. Oryx also noted that QIA has committed to invest in the development of the company. The partnership is the latest in a series of investments undertaken by QIA across the United States, where QIA aims to increase investment to $45 billion in the coming years, Oryx highlighted in the statement. "The significant investment and commitment from QIA alongside Stonepeak’s strong operational and capital support will allow us to continue to grow our footprint in the Permian Basin and deliver the highest level of service to current and future customers,” Oryx CEO, Brett Wiggs, said in a company statement. “We are thrilled to lead Oryx in partnership with these world-class investors,” he added. The CEO of QIA, Mansoor Al-Mahmoud, said, “we believe that Oryx represents a strong midstream platform with tremendous growth potential, and we look forward to working with our new partners at Stonepeak”. “This acquisition is a further demonstration of QIA’s strategy to increase the size of our U.S. portfolio, and to invest more in major infrastructure projects,” he added. Oryx describes itself as the largest privately-held midstream crude operator in the Permian Basin. The company, which was founded in 2013, is focused on developing, acquiring, owning and operating midstream assets in the Permian Basin region. The QIA is the sovereign wealth fund of the State of Qatar. The organization describes itself as an important building block of the Qatar National Vision 2030 and a respected professional global investor.
Permian Fracking Continues to Break Records - The prolific Permian Basin continues to break records. Hydraulic fracturing (fracking) in the Permian broke old records in June, according to energy research firm Rystad Energy, who estimates there were as many as 18 wells fracked per day in June. Previously, fracking operations in the Permian peaked at 520 wells in August 2018. Rystad estimates almost 550 wells were fracked in June. “The Midland platform has undoubtedly been the driver of this upwards trend with consistent month-over-month increases,” said Oleksii Shulzhuk, senior analyst on Rystad’s shale team. “According to our latest estimate, fracked wells totaled 339 in June 2019, constituting a whopping 70 percent growth since the first quarter of 2019, when an average of 200 wells were fracked per month.” Nationwide, U.S. fracking operations saw a strong recovery in June with 49 wells fracked per day, an increase of five daily wells since May. “This puts fracking in June just one daily well short of reaching the all-time high rate that was achieved in August 2018, when 50 wells were fracked across the U.S.,” Shulzhuk added. The U.S. saw the spring months experience flattened average fracking activity, with just one well per day increase in both March and April followed by a two well-per-day decline in May. Conversely, June experienced an increase of five wells per day across all major shale-producing regions in the U.S. – driven by the Permian, Eagle Ford, Bakken and the SCOOP/STACK play in Oklahoma .
Permian fracking activity sets new records with fewer people -- Companies are hydraulically fracturing more oil wells in the booming Permian Basin than ever before and getting it done with far fewer workers than just a year ago, according to new studies. The trends show that the industry, on an efficiency kick since the last oil bust, is becoming ever more productive as investors press energy companies to lower costs and boost profits. Oilfield services firms fracked 18 Permian wells a day in June for a monthly total of about 550 wells, easily surpassing the August 2018 record of about 520 wells, according to the research firm Rystad Energy. They did it with 20 percent fewer fracking crews, according to a separate report from another research firm, Kayrros. A fracking crew typically has about 30 workers. “Thanks to ever shorter frac times, well completions are holding steady,” the Kayrros report. This intensifying activity comes despite subdued oil prices. Oil settled Wednesday at a seven-month low of $51.09 per barrel in New York as prices got battered by rising U.S. crude stockpiles, a slowing global economy and weakening growth in worldwide energy demand. While much of the new drilling and future Permian growth is focused on the Delaware Basin, the western lobe of the Permian, most of the well completion activity is still occurring in the more mature Midland Basin. The United States is producing more than 12 million barrels of oil a day, with more than one-third coming from the Permian. “This latest batch of fracking activity confirms our belief that prospects look promising for U.S. shale production in the second half of the year,” said Oleksii Shulzhuk, senior analyst on Rystad Energy’s shale team. Fracking activity had plunged late last year as oil prices collapsed by more than 40 percent from October to Christmas time, but the activity has recovered this summer after modest growth in the spring. Fracking activity also has grown in South Texas’ Eagle Ford shale, North Dakota’s Bakken shale and in Oklahoma, but not to the extent of record breaking activity in the Permian, Rystad said. Nationwide, Rystad said 49 wells were fracked per day in June — up by five daily wells since May — which is just shy of the record of 50 wells per day in August 2018.
Exxon, Chevron move to dominate Permian as smaller players pull back - - The Big Oil companies Exxon Mobil and Chevron are keeping their promises to dominate the Permian Basin, rapidly ramping up production as smaller companies contend with declining drilling activity, muted oil prices and a skeptical Wall Street unwilling to finance their growth. Exxon Mobil has, by far, become the Permian’s most active driller with more than 50 rigs operating in the West Texas oil field, increasing production there by nearly 90 percent in 12 months. Chevron, along with Occidental Petroleum of Houston, is one of just two companies producing more than 420,000 barrels of oil equivalent per day from the region, the companies said Friday in their quarterly earnings reports. The Permian, now the world’s most productive oil and gas basin, is producing about 4.2 million barrels of crude oil a day, more than one-third of the nation’s record output of more than 12 million barrels a day. The basin, by far the central focus of the shale boom, also is the country’s second-most prolific natural gas producer. Small and midsize oil firms led the so-called shale revolution, proving horizontal drilling and hydraulic fracturing techniques. Exxon and Chevron — and energy majors generally — came to shale slowly, but now they are using their deep pockets, size and diversified income to continue to invest in drilling projects in the Permian and drive growth there. To a lesser extent, the European energy majors Royal Dutch Shell and BP also are focusing on Permian growth. Earlier this year, Exxon and Chevron both pledged to churn out close to 1 million barrels of oil equivalent a day from the Permian by 2024. Exxon has the acreage to eventually drill 6,500 Permian wells, Chapman said. So far, they’ve brought only about 100 new wells online. Exxon Mobil, headquartered in Irving, said its profits fell more than 20 percent in the second quarter to $3.1 billion from about $4 billion in the previous year, blaming low natural gas prices and smaller petrochemical profit margins. Exxon’s petrochemical profits were the worst in 11 years because of a global glut in chemicals and plastics supplies. Chevron’s petrochemical business was also hit by shrinking profit margins. But both energy giants said they view the slowdown in petrochemicals as temporary.
U.S. WTI Midland crude back in positive territory: traders (Reuters) - U.S. West Texas Intermediate (WTI) crude in Midland traded in positive territory for the first time in more than a month on Monday on expectations a new pipeline from the nearby Permian basin will begin operation soon, traders said. WTI Midland for September traded as strong as 15 cents per barrel above benchmark futures, the strongest level since late June. On Friday, the grade traded at a midpoint of a discount of about 65 cents per barrel to futures. Plains All American Pipeline LP set rates for its 670,000-barrel-per-day (bpd) Cactus II pipeline from the Permian basin to the Corpus Christi area on Friday, effective the same day, triggering expectations among market participants the line will begin service soon. Commodities merchant Trafigura, one of the biggest shippers on the line, intends to ship full contractual volumes once the line starts up, a source told Reuters in June. The trading house has signed a long-term agreement with Plains to ship a total of 300,000 bpd of crude and condensate on the Cactus II pipeline. A surge in oil production had outpaced pipeline takeaway capacity in the Permian, the biggest oil basin in the country, depressing Midland prices for over a year.
Texas regulator issues fines for 270 oil and gas safety violations- The Railroad Commission of Texas assessed $864,689 in fines involving 270 enforcement dockets against operators and businesses at the Commissioners' conference this week. The Commission has primary oversight and enforcement of the state's oil and gas industry and intrastate pipeline safety.One docket involved $6,202 in penalties after an operator failed to appear at Commission enforcement proceedings. Operators were ordered to come into compliance with Commission rules and assessed $315,187 for oil and gas, LP-Gas or pipeline safety rule violations. Pipeline operators and excavators were assessed $543,300 for violations of the Commission's Pipeline Damage Prevention rules.
Texas Oil Regulator Shifts Stance on Gas Flaring-- An unusual split vote by Texas regulators over the flaring of natural gas shows that the days of giving a free pass to the controversial practice in the Lone Star state may be numbered. The chairman of the Texas Railroad Commission, which oversees the oil and gas industry in the state, dissented during a recent hearing over a flaring permit. Wayne Christian said there’s too much gas being burned off out of convenience rather than necessity, and he’s concerned about the “frequency and ease” with which companies are being allowed to continue with the practice. While his comments didn’t alter commission policy, they indicate a change may be coming. Texas is widely regarded as the most oil-and-gas-friendly state, and the commission has never turned down a request to burn excess gas. But the volume now being flared -- more than residential gas demand for the whole of Texas -- has attracted criticism for both its wastefulness and the carbon-dioxide emissions that come with it. Permian flaring rose about 85% last year, according to data from Oslo-based consultant Rystad Energy. Josh Price, an analyst at Height Capital Markets, said he doesn’t believe regulators will clamp down on flaring until new pipelines are completed and substantially relieve the oversupply, which could come next year, but the chairman’s comments show how the commission is shifting on the issue and that concerns over flaring in Texas are growing. The commission decided to “make a political statement saying ‘We are hearing people. We understand that this is becoming an issue and we’re going to do something about it,’” Price said in an interview. “That, coming from the chairman, has the most impact.” The commission grants flaring permits for up to 180 days. Without that, the only alternative for some producers is the so-called shut-in of oil or gas wells to curb output. Special extensions to permits can be granted, usually for up to two years, Price said. Christian made his comments Tuesday during a commission meeting in Austin to hear an attempt by pipeline operator Williams Co. to block the request for a flaring permit made by EXCO Resources Inc. It was the first time a driller has asked for a permit for all of the gas coming out of wells that are already connected to pipelines, and also the first time a midstream company has lodged a protest.
Plains All American to begin commercial service on Texas pipeline next week (Reuters) - U.S. pipeline operator Plains All American Pipeline LP expects to begin partial service on its 670,000-barrel-per-day (bpd) Cactus II pipeline next week, Chief Executive Willie Chiang said on Tuesday. Houston-based Plains has filled about half the crude line, which runs from the Permian Basin in West Texas to the U.S. Gulf Coast. It plans to start full operation by the first quarter of 2020, Chiang told investors on a conference call. The Plains pipeline would be the first of three new lines beginning operations in the next few months that is expected to ease a bottleneck in West Texas that has weighed on regional oil prices. The pipeline will be able to connect to the Corpus Christi, Texas, area, which includes extensive crude export and storage terminals, by the end of September, Chiang said.
New U.S. pipelines poised to start price war for shale shippers (Reuters) - The operators of two new pipelines in West Texas shale fields are offering discounted prices to attract shippers accustomed to high fees to move oil to export hubs, according to the pipeline companies and federal filings. These bargain rates, in one case half the initial published rate, will aid strapped oil producers that once had to sell their oil for about $10 less per barrel because of transport constraints to move their oil from the largest shale oil field in the country. But pipeline companies, which have in the past year raced to add new capacity to flow oil from the Permian Basin to the refining and export hub on U.S. Gulf Coast, will face pressure to cut rates in coming weeks, said oil traders and analysts. The two operators - EPIC Midstream and Plains All American (PAA.N) - are opening lines that combined will in coming months be able to carry about 1.6 million barrels of oil per day (bpd) from West Texas to the Gulf Coast. A third line, the 900,000 bpd line being developed by Phillips 66 (PSX.N), will open later this year that will boost total capacity to flow oil from the region by two-thirds. “There’s no way another 2.5 million bpd are waiting to get sent to Corpus Christi (Texas),” said Sandy Fielden, an analyst at Morningstar. “Clearly, there’s going to be too much capacity ... There will be buying up of barrels in Midland like it’s going out of style.” GRAPHIC: tmsnrt.rs/2GVze8d
U.S. shale shippers will pay surcharge for Trump steel tariffs - (Reuters) - Plains All American Pipeline LP (PAA.N) said on Friday it will tack on a fee for users of a new oil pipeline to pay for the cost of the Trump administration’s tariffs on imported steel, with analysts and traders calling it the first U.S. energy pipeline operator to do so. In addition to the steel levies announced last year, President Donald Trump on Thursday said he plans to expand U.S. tariffs to $300 billion in Chinese imports, escalating a trade dispute that has increased costs for American consumers of everything from steel to electronics to shoes. Houston-based Plains will begin charging shippers a 5 cents per barrel fee on its 670,000 barrel-per-day (bpd) Cactus II pipeline next April to offset higher construction costs from “governmental regulation and tariffs,” according to a filing with the Federal Energy Regulatory Commission. Plains last year estimated the 25% steel tariff would add $40 million to its costs for the $1.1 billion pipeline, which runs 550 miles (885 km) from the Permian basin of West Texas and New Mexico, the top U.S. shale field, to the U.S. Gulf Coast. The Trump administration last year imposed tariffs on imported steel and aluminum to shield U.S. producers from overseas competition and protect jobs. It was one in a series of tariffs imposed by Trump since becoming president in 2017. “This is an example of how harmful trade policies such as steel tariffs and quotas are hurting the U.S. energy industry, economy, and potentially energy consumers,” said Natalia Sharova, a spokeswoman for the trade group American Petroleum Institute.
What’s in the way of this Texas pipeline? A cute songbird. The golden-cheeked warbler, an endangered songbird native to Central Texas, always seems to be flitting around controversy. It proved to be a roadblock derailing the Texas Department of Transportation’s plans to build a toll road in 2016. Prominent politicians in Texas say protections for the bird infringe on property rights. And in the last few years, the diminutive bird has survived multiple attemptsto remove it from the federal endangered species list.Now the warbler is at the center of a fight between Kinder Morgan and landowners in the Hill Country who want to block the company’s proposed pipeline through the 25-county region. Last fall, Kinder Morgan unveiled plans to build the Permian Highway Pipeline, a 430-mile conduit capable of transporting 2.1 billion cubic feet of natural gas per day from the Permian Basin in West Texas to the Gulf Coast. The pipeline route would cut right through some of the most pristine parts of the state, including vast swaths of oak-juniper woodlands, the warbler’s preferred habitat. It would also run over the Edwards Aquifer, a source of drinking water for more than two million people in Texas.A group of Hill Country landowners, the Travis Audubon Society, and Hays County, part of the Austin metro area, recently notified Kinder Morgan that it plans to sue the company if it applies for federal permits to build the pipeline without an adequate plan to protect the warbler and other endangered species in the area.“They want to do the bare minimum, so long as it’s cheap and fast,” said David Smith, an attorney representing the group. “This is all about trying to get their project built faster than their competitors’ projects. But none of their competitors are insisting on going through a very environmentally sensitive part of the state.” The battle over the Permian Highway Pipeline comes amid a fracking boom in the Permian Basin, which is expected to provide a third of the country’s crude oil this year. It recently eclipsed production from Saudi Arabia’s Ghawar field, the world’s biggest oil field.
Kinder Morgan ordered to pay Hill Country landowner nearly $250,000 in property damages - A real state commission overseeing land condemnation issues has ordered Houston pipeline operator Kinder Morgan to pay a Hill Country landowner nearly $250,000 in property damages.In a Thursday morning decision, the three-member panel of the panel of Blanco County Special Commissioners ordered Kinder Morgan to pay landowner Matthew Walsh $233,500 in damages for the company's proposed Permian Highway Pipeline project.Kinder Morgan is seeking to build the $2 billion pipeline to move 2.1 billion cubic feet of natural gas per day from the Permian Basin of West Texas to the Katy Hub near Houston but faces stiff opposition along the proposed route through the picturesque Texas Hill Country.A company appraisal valued the 50-foot easement on Walsh's land at $16,707 but the Blanco landowner got legal help from the Texas Real Estate Advocacy and Defense Coalition and filed a claim stating that the overall damage to the appraised value of his 53-acre property was $261,663. Walsh claimed the pipeline project would delay building a home on the property and selling the land in the future."I feel like I've been living in a nightmare since I heard about the pipeline coming through my land last October," Walsh said in a statement released by the , a nonprofit group opposed to the project. "Kinder Morgan's initial offer was insultingly low. I hope that other landowners will hear my story and join me in fighting for fair compensation."
It Doesn’t Matter At All That Oil is Priced in Dollars #43,656 - Dean Baker - The New York Times ran a piece on China's devaluation of its currency, which warned that the move could hurt China because commodities like oil, which are priced in dollars, will become more expensive for companies in China. While it is true that the devaluation will make imported goods more expensive, the fact that some are priced in dollars is irrelevant. Suppose oil was priced in yen. Other things equal, the decision to devalue against the dollar would also mean that Chinese yuan is devalued against the yen. This would lead to the same increase in the price of oil as if oil were priced in dollars. The pricing in dollars is simply a convention, there is special importance to it in international trade.The piece also raises the prospect that the drop in the value of the yuan, "could spur wealthy Chinese to take their money out of the country." While it could have this effect, it may also have the opposite effect. Once the yuan has dropped in value the question is whether it is likely to fall further. This drop may lead many investors to believe that a further decline is unlikely, just as if the stock market fell by 20 percent, investors may come to believe that further decline is unlikely and therefore may be anxious to buy into the market. It is also important to put the drop of the yuan in some context. The devaluation reduced the value of the yuan by less than 1.5 percent against the dollar. This is a large single day movement, but it is not that unusual for currencies to move around by this amount against each other even without government intervention. Also, a 1.5 percent reduction in the value of the yuan will not have large effects on the price in China of oil or other commodities.
Dems want to kill oil and gas leasing. Here's why it matters --Democratic presidential candidates are rallying behind the idea of stopping new leases to extract fossil fuels from federal lands, with the majority of the field pledging to act on the issue if elected in 2020.Sen. Elizabeth Warren of Massachusetts, for example, first made the pledge in April as part of her plan for transforming the federal government's relationship with public lands. Since then, at least 19 other candidates have endorsed an executive order to halt new leases, according to the campaigns and The Washington Post. Warren and at least eight others would extend the ban to new offshore drilling in federal waters.The idea of stopping new leases is grounded in the notion that the U.S. government has a particular responsibility for emissions stemming from fossil fuels extracted from federal property or via transfers of government-owned mineral rights.The U.S. Geological Survey concluded last year that fossil fuels from federal lands and waters account for 24% of the nation's carbon dioxide emissions throughout their life cycle.Because the government oversees those resources, it has the power to dictate whether they are brought out of the ground in the first place, activists argue. Regardless of the political viability, cutting federal leasing could have broad consequences — politically and financially — for swaths of the United States.Thirty-five states receive money from offshore and onshore development, but most of that cash is concentrated in a few big winners — meaning Democrats' promised action could have an outsize effect on those regions.New Mexico, the largest producer of oil on federal land, has the most money to lose. Energy-related income from leasing, production royalties and other fees contributed $635 million to New Mexico's coffers in 2018. That year, a single oil and gas lease sale brought in record revenue of $1 billion, which was split between the state and federal government.Wyoming wasn't far behind its southern neighbor, taking in $564 million last year from federal energy programs. Some coastal states would lose revenue if the ban included offshore drilling, and popular programs funded by leasing dollars could run out of money.
Health officials: Pipeline leaks 10K gallons of oil (AP) — North Dakota’s Health Department says more than 10,000 gallons of oil has spilled from a pipeline in Williams County. The agency says in a statement that the spill was reported Friday by Samson Oil & Gas USA Inc. Environmental scientist Brian O’Gorman says the spill occurred Thursday north of Williston at a well pad and affected a small patch of nearby grassland. O’Gorman says the cause of the spill is under investigation. He says no water sources were affected. O’Gorman says about 4,200 gallons had been recovered by late Friday afternoon and the spill was contained.
A legacy of salt contamination draws attention, research to Bottineau County oil fields -- Wildcatters first hit oil here in the 1950s, bringing jobs to the region but also scarring the farmland by dumping brine into evaporation pits dug into fields. Oil drilling still occurs today, and although the state has since outlawed the pits, pipelines leak saltwater on occasion. On a recent bus tour of the area, local farmer Daryl Peterson grabbed the microphone to talk about brine, which is salty water that comes to the earth’s surface alongside oil and gas at well sites. “You can look off any direction and see a lot of damage,” he said. He asked the driver to slow down by a bald spot every mile or so, including at a small tract of land southeast of Renville that a farmer seeds each year. “I have never seen it harvested once,” Peterson said. “It will not grow a crop.” A little further down the road, he nodded to the distance. “We call this the ‘Great White Salt Flats’ off to the right,” he said. “It runs for half a mile.” Peterson, who’s had brine spills on his own farmland, offered commentary to a group of landowners, state officials and oil workers on a tour hosted by North Dakota State University Extension and the Northwest Landowners Association. He said he’s for oil development, but it needs to be done responsibly because brine contamination is costly and takes land out of production. “The best choice is to do better regulation, better maintenance and prevent the spills,” he said. “The onus right now is falling on the landowners.” And it’s tough on those who lease land, such as Matt Peterson, who farms an area northwest of Renville where a saltwater pipeline owned by Petro Harvester leaked in 2011. The company has since installed a tile drainage system that captures water in pipes underground. Sumps pump it — along with the salt it carries — back up, and trucks carry the fluid away for disposal. Local landowners estimate that the leak damaged 26 acres eight years ago, and 20 acres remain sterile today.
Tribal leaders request hearing about increase in oil carried by Dakota Access Pipeline --South Dakota tribal leaders are requesting a public hearing in North Dakota about a proposed increase in oil carried by the Dakota Access Pipeline. Energy Transfer Partners plans to expand the pipeline's capacity from more than 500,000 barrels per day to as much as 1.1 million barrels to meet growing demand without constructing additional pipelines or rail shipments. The pipeline carries oil from North Dakota through South Dakota and Iowa to a shipping point in Illinois. The tribal leaders say they haven't been adequately informed about the plans and are asking the North Dakota Public Service Commission to hold a public hearing. The Commission is receiving public feedback until Aug. 9 before it announces whether it'll hold a hearing. "The water comes down through here, our territory, so we have to make sure that the water is clean and stays clean," Rosebud Tribal President Rodney Bordeaux said in a statement. Cheyenne River Tribal Chairman Harold Frazier said he has serious safety concerns about an increase in the pipeline's oil flow. "We don't know if the pipeline is capable of handling (it), and I haven't seen any documents to justify that," Frazier said in a statement. The construction of the Dakota Access Pipeline sparked massive protest at Standing Rock Reservation in North Dakota in 2016. The pipeline was completed and began moving oil in 2017.
BNSF investigating report of petroleum sheen - BNSF Railway Co. will be working in the Whitefish River today following a report of a petroleum sheen in the river.The company is investigating a complaint of a petroleum sheen received by the Montana Department of Environmental Quality in the river near the Whitefish Landing river access site, according to Maia LaSalle, public affairs director for BNSF.“We continue to work with Montana DEQ, [U.S. EPA] as well as the city of Whitefish in regards to that report,” LaSalle said in a release.Access to the area will be controlled due to heavy equipment operating in the area near the river access site in the morning on Wednesday. The park, sandwiched between the river and the city’s bike path, just west of the intersection of Miles Avenue and Railway Street, is near the railroad roundhouse.A major cleanup of the Whitefish River was completed by BNSF in 2013, involving the excavation of petroleum-contaminated soils in the river.Mayor John Muhlfeld on Monday said a citizen complained of seeing a petroleum sheen about 20 feet in length in the river, about 15 feet off shore from the public access point.“BNSF sent an investigative team out and they agitated the sediments in the river,” he said. “They followed up and pressure washed the river bottom to see if they could find where the sheen was coming from, but the sheen is still there.”Muhlfeld said BNSF plans to use an excavator in the river, along with appropriate precautions to protect the river. “They are looking to further investigate and characterize where the sheen is coming from,” he said. “They expect it’s probably coming from an upland area, meaning an area between the roundhouse and the shoreline of the river. Perhaps the liner they have in place to intercept any residual petroleum is not functioning.”
Trump fracking plan targets over 1 million acres in California - The Trump administration on Thursday detailed its plan to open more than a million acres of public and private land in California to fracking, raising environmental concerns at a time when opposition to oil and gas drilling in the state is intensifying.The action would end a five-year moratorium on leasing federal land in California to oil and gas developers. That pause came after a federal judge ordered the Obama administration to halt similar leasing efforts until it could better evaluate the environmental risks of hydraulic fracturing, also known as fracking.Trump’s plan – first proposed by the administration in 2018 — targets public and private land spread across eight counties in Central California: eastern Fresno, western Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura.The move drew immediate criticism from environmentalists, who said it would pose health risks and worsen air quality in a part of the state notorious for pollution.“The Central Valley has some of the worst air quality in the nation, and we know fracking and drilling make air quality worse,” said Clare Lakewood, a senior attorney at the Center for Biological Diversity, an environmental advocacy group.Lakewood said Trump’s plan would unleash a “fracking frenzy” that would endanger people and wildlife alike.Once a plan is finalized and approved, environmental groups are expected to sue to block it, as they have in the past. Proposed by the Bureau of Land Management, the plan is only the latest in a series of attempts by the federal government to open public land in Central California to fracking.
Trump plan to allow new fracking on California coast, Central Valley moves forward - The administration insists it is abiding by the the National Environmental Policy Act of 1969 and the Federal Land Policy and Management Act of 1976 as it promotes responsible energy exploration. The agency’s plan could result in up to 37 new oil and gas wells drilling on new land leases over the next 20 years, primarily in Fresno, Monterey and San Benito counties, according to the BLM’s preferred plan. BLM estimates that the oil and gas industry directly supports 3,000 jobs and $623 million in tax revenue within those counties. A separate Bureau of Land Management office in Bakersfield already released a supplemental environmental impact statement last month that considers new oil and gas development on 1.6 million acres of public land across another region of California, which includes Fresno, Kern, Kings, Madera, San Luis Obispo, Santa Barbara, Tulare and Ventura counties. The planning area includes about 400,000 acres of public land and 1.2 million acres of federal mineral estate, according to the report. That plan calls for the use of hydraulic fracturing on 40 new wells over the next 10 years. The extraction method is currently primarily used in California to enhance oil production in the San Joaquin Valley, home to some of the largest producing oil fields in the country. The bureau has not issued any fracking leases since a 2013 court ruling that the agency had violated the National Environmental Policy Act without first considering environmental impacts of the practice. While California remains one of the largest oil producing states in the nation, production has steadily declined over the last three decades. Thousands of Californians submitted comments to the agency in protest of the plan to open more land for drilling and fracking. Among the concerns are increased air pollution and potential contamination of groundwater, a limited resource in Central California.
Berkeley gas hook-up ban appears likely to spread to other California cities: WSPA head — The move to ban natural gas hook-ups to certain types of new-builds in Berkeley, California, could soon spill over to other municipalities across the state, the president of the Western States Petroleum Association said Wednesday. "In the city of Berkeley builders will be prohibited from receiving permits that include gas infrastructure," Catherine Reheis-Boyd said the LDC Gas Rockies and West Forum in Los Angeles. "Wow. Can you imagine if every local municipality takes up this issue? It's death by a 1,000 cuts." Passed by the city council last month, the ban takes effect on January 1, 2020. It bans gas hook-ups in new multi-family construction, but provides some allowances for first-floor retail and certain types of large structures. The measure looks poised to spread to other cities across the state, with approximately 50 municipalities mulling their own version of such a law. Part of the reason cities are looking to implement such a measure is due to Senate Bill 100. Signed into law last September, It intends to eliminate all gas use by 2045 as the state plans to shift to 100% renewables by that time. However, renewable gas will be allowed under the law. Electricity generation is intended to replace gas in those new-builds for purposes such as heating and cooking. "We've heard a lot about the push against fossil fuel use in Colorado, but California is like Colorado on steroids," said Reheis-Boyd, whose organization represents the oil and gas industry in California, Oregon, Washington, Nevada and Arizona. "We are at a tipping point in California." The rapid push to renewables, combined with multiple fees and taxes, have caused California energy costs to increase by 25% over the past several years, while the rest of the US has only increased by about 3%.
Republicans push DOT to quash Wash. crude-by-rail law -- A group of House and Senate Republicans are pressing the Department of Transportation to intervene against a Washington state law that they say could prevent the shipment of Bakken crude oil and natural gas to Pacific Northwest ports and refiners.
Pair of Calgary-based fracking firms report double-digit Q2 revenue declines -Two of Canada’s biggest oil and gas well-fracking companies are posting double-digit percentage revenue declines as energy exploration spending slowed in the quarter ended June 30. Calfrac Well Services Ltd., which has operations in Canada, the U.S., Russia and Argentina, reported revenue of $430 million, a 21 per cent fall from $545 million in the same period of 2018. Trican Well Service Ltd., which is focused on the Canadian market, reported revenue of $110 million, a 36 per cent decline compared with $172 million in second quarter 2018. The Calgary-based companies step in after a well is drilled to prepare it for production, performing operations including hydraulic fracturing, where liquids, sand and chemicals are injected under pressure to break up tight underground formations and free trapped oil and gas. Calfrac reported a net loss of $42 million, up from a loss of $15 million a year earlier, as its job count and pricing levels declined in both Canada and the United States. Trican’s net loss improved to $29 million from $35 million as it continued to sell equipment and cut costs, including implementing an unspecified number of job cuts during the second quarter. Both companies said they expect stronger business conditions in the second half of 2019.
China Rescues Venezuela's Worn Oil Refineries -- A Chinese contractor has agreed to shore up Venezuela’s derelict refining network to ease fuel shortages, potentially complicating the Trump administration’s push for regime change in the oil-rich country. Wison Engineering Services Co., a Shanghai-based chemical engineering and construction company that is using China’s ‘Belt and Road’ infrastructure program to expand overseas, agreed last month to repair Venezuela’s main refineries in exchange for oil products including diesel, according to people with knowledge of the deal. U.S. financial sanctions aimed at starving the current regime of revenue contributed to the decision to revive a domestic refining industry crippled by years of mismanagement and under-investment, said one of the people, who asked not to be identified because the information is confidential. The deal mirrors the OPEC producer’s other arrangements with Russian and Chinese oil majors, under which payments are made in crude by Venezuela’s cash-strapped national oil company. Wison’s repairs are expected to last six months to a year, according to another person. The Nicolas Maduro administration was having difficulties navigating the U.S. economic blockade even before the U.S. announced additional restrictions on Aug. 5. Last month state-controlled Petroleos de Venezuela SA was importing Russian gasoline through Malta to relieve shortages, a slow and expensive route to the Caribbean nation. Irregular fuel supplies have crippled mobility in a country where shortages of food and basic medical supplies have already caused a health crisis and led to one of the largest mass migrations of recent times. PDVSA, as the state producer is known, has been directing most available gasoline to Caracas, where Maduro is most vulnerable to mass protests. The Trump administration was hoping to swiftly chase Maduro out of power earlier this year, and has criticized China and Russia for supporting what it considers a criminal and repressive regime. China and Russia have an interest in preventing the complete collapse of Venezuela’s oil industry because it’s the only way to recoup the tens of billions of dollars in loans and investments they have made in the past decade. Wison’s deal also underscores how the oil-hungry Asian nation remains committed to Venezuela as a strategic location for foreign investment.
Very little public support for relaxing rules and regulations around fracking -- A major new public attitudes survey on fracking reveals very little public support for relaxing the rules and regulations around fracking -- a key demand of major shale gas extraction companies. The team, including Professor Lorraine Whitmarsh from Cardiff University, also found that people have low trust in the energy companies involved and want decisions taken at a local level. The independent survey shows only 8% of people in the UK think that the 'Traffic Light System' currently used to monitor and regulate seismic activity during fracking is too stringent and just 22% support the UK government regulator changing the threshold of seismic activity at which hydraulic fracturing must cease from 0.5 to 1.5 magnitude. These will be challenging results for those calling on the industry regulator, the Oil and Gas Authority, to relax the rules and regulations around fracking. Currently any tremor measuring 0.5 magnitude or above means fracking must be temporarily stopped while tests are carried out. The main sources for information about shale gas extraction are from environmental non-governmental organisations such as Friends of the Earth, Greenpeace, the National Trust, and Campaign for the Protection of Rural England with 48% using this source 'sometimes' or 'often'. Only 12% of people said they trusted shale gas industry groups or firms to provide information about fracking and only 11% said they want the UK government to make the decisions about shale gas extraction sites. 41% of participants want decisions for planning consent to be taken at the local level (e.g. council planning). The most trusted sources of information are the British Geological Survey (61%) and university scientists (59%), supporting the need for further independent research into the environmental impact of shale gas extraction.
Cuadrilla seeks permission to keep fracking until 2021 - Cuadrilla will apply for permission to continue work at the UK’s most advanced fracking site as the industry seeks a way forward despite regulation it claims is stifling business.Chief executive Francis Egan will ask Lancashire County Council to let the firm continue for another 18 months on top of the current period. Its license at the Preston New Road is set to run out at the end of November, 30 months after it was granted. However, Egan said, the firm will only have drilled or fracked at the site for 21 of those months. The extra time would give Cuadrilla the chance to drill two more wells on top of the two it has already drilled. It has permission, but did not have the time, the company said.There will be no changes to the substance of the planning permission, and the site will still be decommissioned and restored by April 2023, Egan said.It comes as the Oil and Gas authority today approved Cuadrilla’s plans to start fracking at its second well. The approval included one year for flaring gas, the OGA said today. Shale gas proponents have pointed to British gas as a less carbon intensive way of meeting the UK’s gas needs. Liquid natural gas, imported from places like Qatar, is estimated to have a carbon footprint around a fifth higher. However protesters worry that fracking can cause earthquakes, and contaminate groundwater.
Europe's Oil Demand May Not Dip as Much as Some Claim - However, Europe's domestic oil production outlook remains weak. Europe today (per IEA definition, which notably includes Turkey) utilizes oil for 30 percent of its energy, just slightly below the global average. Consuming 15.5 million b/d, Europe accounts for 16 percent of global demand, or double its share of the population. Since 2012, Europe’s consumption has quietly risen 4 percent but still peaked in 2006 at just over 17 million b/d. The 28-member European Union accounts for about 80 percent of the continent’s total oil usage. Europe has accounted for a third of all refinery closures around the world, with capacity down 15 percent to 15.7 million b/d since 2000. Germany, Europe’s largest economy, illustrates the structural decline in oil demand that defines the continent. In 2018, Germany consumed 2.3 million b/d, a steady fall from 2.7 million b/d in 2000 and 3.4 million b/d in the late-1970s. CarsParticularly in the west, Europe has been at the forefront of climate change policies to curtail greenhouse gas emissions. Reductions in oil demand are a priority because the transport sector has surpassed power and now accounts for nearly 30 percent of Europe’s CO2 emissions. With transport making up 60 percent of total oil consumption, significantly expanding the electric car fleet is fundamental to Europe’s strategy to meet the Paris Agreement signed in December 2015. This is a hefty chore. Europe has about 500 oil-based cars for every 1,000 people. And the December riots in Paris illustrate how carbon and fuel taxes to cut consumption lack general public support. At 30-40 cents per kWh, Europe’s home power rates are three to four times higher than those in the U.S. In addition, the ability of more wind and solar to displace oil is regularly overstated. Renewables are strictly sources of electricity, a sector where oil plays just a tiny role (2 percent of all power). Numerous cities and governments have announced impending bans and deadlines for the phase-out of petrol and diesel cars. The outlook for electric cars to displace oil ones is basically positive in Europe. Norway, for instance, is the global leader with electric cars holding a 40 percent market share. Best-case scenario puts Europe’s battery electric vehicle adoption for the fleet at 40 percent by 2030 and 80 percent in 2050.
Norway's Trillion Dollar Fund Isn't Ditching Oil After All - Norway’s US$1-trillion fund - the world’s biggest sovereign wealth fund - sent shockwaves through global markets nearly two years ago when it said in November 2017 that it recommended the removal of oil and gas stocks - around US$35 billion worth of shares - from the fund’s equity benchmark index to make Norway’s wealth and economy less vulnerable to a permanent drop in oil and gas prices. The initial proposal of the fund - which has amassed its vast wealth from none other than Norway’s oil and gas revenues and is therefore commonly referred to as ‘the oil fund’--was to dump all oil stocks from its portfolio, including significant stakes in Big Oil worth billions of U.S. dollars each. Nearly two years later, after compromises and subsector changes in the index provider FTSE Russell that Norway uses as a reference, the initial proposal of dumping more than US$35 billion of oil stocks has been now narrowed down to stakes in purely exploration and production companies worth a total of less than US$6 billion - and also worth less than the fund’s stake in Shell alone. Norwegian economists tell Bloomberg that the heavily reduced (not final yet) list of oil stocks for sale will likely have a very small effect and is reduced to a “symbolic” divestment, while Greenpeace’s finance campaign director for the Nordics, Martin Norman, described to Bloomberg the whittled-down proposal as “completely scandalous.”The initial proposal shocked the markets as investors started questioning whether other major funds would follow suit and opt out of fossil fuels at a time when shareholders, investors, and environmentalists are increasingly pressing major oil companies to start taking climate change seriously and to prepare their business portfolios for a world of peak oil demand, whenever that may come. After months of deliberations, Norway’s government proposed in March 2019 that the fund divest from 134 companies classified by the index provider FTSE Russell as belonging to the exploration and production subsector. As at the end of 2018, the Norwegian fund held stakes in E&P companies—under FTSE Russell’s classification for such—with an approximate value of US$7.8 billion (66 billion Norwegian crowns). To compare, as of the end of 2018, the fund’s total equity holdings in oil and gas firms had a value of US$37 billion, spread in investments in 341 companies, including just below 1 percent in each of Exxon and Chevron, 2.45 percent in Shell, 2 percent in Total, 2.31 percent in BP, and 1.59 percent in Eni. The stake in Shell alone was worth US$5.9 billion.
Environmental Agency files complaint against petroleum - The Environmental Affairs Agency decided to file a complaint against the General Petroleum Company (GPC) in Ras Ghareb of the Red Sea governorate after the company’s work caused oil pollution to spread over a distance of 150 meters in the Dai al-Qamr area amid warnings of the spots extending to other areas and impacting beaches and maritime life on the Red Sea. The Agency added that the complaint will be submitted to the Attorney General of Red Sea Prosecution Abdel Maged al-Qasas to investigate the company’s officials on charges of polluting the beach and damaging maritime life. Environmental sources asserted that the results of the technical report on the oil stains revealed that the stain data were identical to those of the oil samples of the GPC, and added that the agency’s technical committee will determine the value of financial compensations expected for the affected marine environment. The Environment Ministry announced July 5 that it spotted a crude oil spill covering 1,500 meters off the coastal area of Ras Ghareb in the north of the Red Sea governorate and declared a state of emergency while cooperating with the Petroleum Ministry to determine the spill’s source. Crude oil spill pollution has covered the coastal area of Ras Ghareb six times, causing severe damage to the beaches and marine life of the Red Sea.
Pertamina prepares 45 boats to handle oil spill - Pertamina Hulu Energi Offshore North West Java (PHE ONWJ) has prepared 45 ships to deal with the oil spills in Karawang waters, West Java. The oil spill was caused by a leak in PHE's offshore oil and gas platform in July. PHE ONWJ and a team of international experts on well control have begun drilling to stop gas bubbles around the YY platform since last Thursday.As of Wednesday, August 7, the YYA1-RW drilling stage has reached a depth of 540 meters and preparing to drill the 17-1/2 hole section. The drilling began two days ahead of the original schedule and is targeted to reach a depth of 2,765 meters, PHE VP for relations Ifki Sukarya said in a press release here on Wednesday."The mobilization of the Rig Up Jack Soehanah around the relief well is carried out in conjunction with the geo-hazard and geotechnical survey, so there is no waiting time. Some preparatory work can be carried out simultaneously to speed up the two-day polling time from the original plan," Ifki said.The emergence of gas bubbles around the YY platform began on Friday morning, July 12, 2019. In accordance with safety standards, PHE ONWJ then stopped drilling activities and activated the Incident Management Team (IMT).PHE ONWJ workers are making maximum efforts to cope with the abnormal conditions, following operating procedures. "The first priority is the safety of workers, the community and the surrounding environment," Ifki said. To clean up the coast from Pertamina's oil spill, around 5,000 residents in nearby areas are involved. These fishermen are paid to compensate for the inability to go to sea for fishing because of the oil spill.
Demand for Nigerian oil dire as U.S. competition ramps up -(Reuters) - Nigerian oil has suffered its slowest sales of the year in August, traders said, as U.S. exports of competing light, sweet grades flood traditional markets in Europe and Asia. The changes illustrate how U.S. President Donald Trump’s strategy for “energy dominance” is reshaping oil markets worldwide, as U.S. oil exports surged 260,000 barrels per day in June to a monthly record of 3.16 million bpd. Crude from Africa’s top exporter has largely been pushed out of the U.S. market in the last decade due to booming domestic output. Exports to the United States slid to zero for three weeks in July, the U.S. Energy Information Administration said. But now shale oil from the U.S. Permian basin is pouring ever more into traditional strongholds for Nigerian oil in Western Europe, India and Indonesia. Both Nigeria and the United States are big producers of the kind of light, sweet grades that are ideal for refining into gasoline. According to IHS Markit, Europe has imported around 46% of Nigeria’s oil since the beginning of 2019, India nearly 18%, and the rest of Asia about another 10%. “They’re facing bigger competition from the U.S., and in the last few weeks, U.S. exports have really picked up,” one major buyer of West African crude told Reuters. As many as forty cargoes for export in August were still in need of buyers when Nigeria began publishing its preliminary programme for September exports beginning on Jul. 18.
Australia negotiating with Trump administration to buy emergency oil supplies The Morrison government is negotiating with the Trump administration to buy millions of barrels of oil from America's tightly guarded fuel reserve under an emergency strategy to lower the risk of Australia plunging into an economic and national security crisis.The deal forms a core plank of a new push to shore up dangerously low domestic storage levels, which have left the nation vulnerable to price hikes and rationing in the event of war or disaster in the oil-rich Middle East or increasingly volatile South China Sea. Australia needs an oil reserve in the event of an emergency according to Energy Minister Angus Taylor who has been in talks with the US to provide that supply. Australia imports 90 per cent of its liquid fuels but only has enough petrol and crude oil to last 28 days – well below the 90 days it is obliged to store under an agreement with the International Energy Agency. Overall, Australia has just 57 days of net coverage compared with 92 for New Zealand, 280 for Britain and 700 for the United States.
Australia to consider reserving some gas for home market (Reuters) - Australia, the world’s top liquefied natural gas exporter, on Tuesday said it would consider forcing gas producers to reserve some supply for the domestic market, as it looks to cut energy bills for households and manufacturers. Resources Minister Matthew Canavan and Energy Minister Angus Taylor said they would review a range of policies, including so-called gas reservation, pipeline access and price transparency to come up with options by February 2021. Australian conservative and Labor governments have long resisted calls for domestic gas reservation on the view that interfering in the market could distort prices and deter new production in the long run. However, following a tripling in wholesale gas prices over the past five years after the start-up of liquefied natural gas (LNG) exports from eastern Australia, the government has come under pressure to boost supply and cut prices. “Past approvals of large gas export projects have not adequately considered the impact on the domestic gas market and that has contributed to some of the pressures we have seen in recent years. We cannot afford to repeat these past mistakes,” Taylor and Canavan said in a joint statement. Any gas reservation would not affect the state of Western Australia and would only apply to future developments, Canavan said in a televised media conference. Two years ago the government introduced the controversial Australian Domestic Gas Security Mechanism, which requires the resources minister to decide each year whether to limit LNG exports from Queensland state to avert any forecast local shortage.
China's Largest Oil Company Caught Importing Iranian Crude -The Trump Administration's decision to reimpose sanctions on the Iranian oil trade has dramatically reduced Iranian crude exports - but it hasn't stopped some of the US's largest economic rivals from accepting shipments of Iranian crude, according to several media investigations. Not only has China continued to import Iranian crude, so have several other Asian and Mediterranean countries, according to data from several tanker tracking services studied by the New York Times and other media organizations. Per the NYT, in April 2018, before Trump withdrew from the nuclear deal, Iran exported 2.5 million barrels of oil per day. One year later, that figure was at one million. And in June, after the end of the exceptions or waivers, ships in Iranian ports loaded about 500,000 barrels per day, according to Reid I'Anson, an energy economist at Kpler, a company tracking seaborne commodities. Of course, this fact isn't lost on the Trump Administration, which, according to the FT, has been tracking the movements of tankers linked to China's biggest state-run oil company amid signs that the ships are helping to bring in Iranian crude. China National Petroleum Corp, via its subsidiary, the Bank of Kunlun, has, in recent months, employed a fleet of tankers to move oil from Iran to China. And an NYT visualization of tanker traffic shows the route some of these tankers take while moving oil from Iran to China and elsewhere in the region. Below are satellite images of some of these tankers docking at Chinese ports. Last week, the Treasury Department sanctioned Chinese oil trader Zhuhai Zhenrong for buying oil from Iran. The decision was intended to send a message to other Chinese firms, and anyone else buying Iranian oil who also hoped to do business with the US. But targeting CNPC would be an especially serious escalation at a time when tensions between the US and China are nearing a breaking point. Even as satellite data and imagery suggest that the tankers linked to Bank of Kunlun are employing tactics including turning off tracking devices and changing their names.
US Oil Likely in China's Crosshairs-- China is expected to start avoiding U.S. crude oil imports as trade tensions ratchet up, according to traders and analysts, ensnaring a key commodity that has largely escaped the tit-for-tat trade war. After tensions escalated over the past week, some Chinese buyers will likely begin reducing purchases of oil from the U.S. in anticipation that Beijing will impose tariffs, according to traders who supply American oil to China, asking not to be identified due to company policies. Retaliatory levies on U.S. natural gas and soybeans have already choked off China’s imports of those commodities. Adding crude oil to the mix disrupts further what should be a mutually beneficial energy relationship between the world’s biggest crude producer and importer. The U.S. surpassed Saudi Arabia and Russia to take the top spot last year, while China became the world’s largest oil buyer in 2017. If U.S. President Donald Trump goes ahead with new tariffs threatened to begin Sept. 1, Beijing will likely retaliate with duties on most, if not all, of its U.S. imports, including oil, Michal Meidan, director of the China Energy Programme at the Oxford Institute for Energy Studies, wrote in a note. Sinopec, China’s largest refiner, continues buying American oil, according to a person familiar with the matter. Unipec, the company’s trading arm, plans to load two supertankers with Bakken and Permian crude this month for shipment to its refining system and is looking for supplies in September, the person said. It “looks like a tariff on crude oil is inevitable if things escalate,” said Li Li, an analyst at Shanghai-based commodities researcher ICIS-China. One trader at a company that supplies China and has a long-term contract to buy U.S. crude said Beijing will probably apply retaliatory tariffs, though there has been no official notice of such a move. Two other traders who regularly sell American crude to China said they expect refiners to rein in purchases to show their support for President Xi Jinping, even if no tariffs are applied. Sinopec’s imports of U.S. crude will continue unless prices are uneconomical or if an import levy is imposed, said a person familiar with the matter. That said, not all of Unipec’s purchases will necessarily end up in China, as the company has been reselling cargoes to other destinations in Asia and Europe where returns are more attractive.
Oil prices could crash by $30 if China buys Iranian crude: BofA -Crude oil prices could sink by as much as $30 a barrel if China decides to buy Iranian crude oil in retaliation to the latest U.S. tariff measures, according to Bank of America Merrill Lynch. “While we retain our $60 a barrel Brent forecast for next year, we admit that a Chinese decision to reinitiate Iran crude purchases could send oil prices into a tailspin,” a BofA Merrill Lynch Global Research report said Friday, warning that prices could sink by as much as $20-30 a barrel in that scenario. The Chinese Ministry of Commerce has threatened countermeasures after President Donald Trump threatened to slap a 10% tariff on $300 billion dollars of Chinese goods. The decision Thursday floored oil markets and sent crude plunging 8% — the most in four years. Analysts warn that “oil volatility is set to rise again” as markets wait for a Chinese response to the latest US tariff threat, which could include purchasing Iranian oil. “This decision would both undermine US foreign policy and cushion the negative terms-of-trade effects on the Chinese economy of rising US tariffs,” the report added. Shipments of Iranian oil fell below 550,000 b/d (barrels per day) in June from about 875,000 b/d in May and about 2.5 million b/d in June 2018, according to data from S&P Global Platts. Roughly half of Iran’s exports were shipped to China in June and July, according to the firm. But a Chinese decision to purchase Iranian oil in a further defiance of U.S. sanctions could act as a double edged sword, according to other analysts. “Iran would welcome any opportunity to increase its production whether or not it breaches the terms of the U.S. sanctions, but the strategy there would introduce China to a partner over which it doesn’t have an enormous amount of control,” “Don’t forget there are other producers that would also be targeting that trade with China, so for instance you could see Iraq or Saudi Arabia step in and try and discount the volumes that they would be exporting to China as a way to circumvent Iran getting that extra market share,” he added.
Hedge Funds Were Divided On Oil, Until Trump Tweeted- Kemp (Reuters) - Hedge fund managers were deeply divided over the future direction for oil prices, until the United States announced fresh tariffs on China and sent prices plunging late last week.Hedge funds and other money managers increased their net long position in the six major petroleum futures and options contracts by 20 million barrels over the seven days ending on July 30.But hedge fund buying came when trade talks between the United States and China appeared to be back on track and before the announcement on Aug. 1 of new tariffs (https://tmsnrt.rs/2Yv8PJu).Fund managers were net buyers of Brent (+20 million barrels), U.S. heating oil (+7 million) and European gasoil (+6 million) but sellers of NYMEX and ICE WTI (-11 million) and U.S. gasoline (-2 million).Before the tariff announcement, there were indications of a deep split between those portfolio managers bullish about oil because of supply disruptions and OPEC cuts and those bearish because of the economy.Funds added 37 million barrels of bullish long positions, as well as 17 million barrels of bearish shorts, in the week ending July 30, according to exchange and regulatory records.Bullish longs rose to 844 million barrels, up from a recent low of just 744 million in the middle of June. But bearish shorts also climbed to 241 million, the highest level since February.Before the tariff announcement, the market was more evenly split between hedge fund bulls and bears than at any time since the middle of June.But the announcement bombed into this delicate balance, severely disrupting traders' assumptions, sending Brent tumbling by more than 7% on Aug. 1, the largest one-decline for more than three and a half years.From a positioning perspective, the oil market still looks close to balance, with a roughly equal chance of short covering or long liquidation moving prices higher or lower. From a fundamental perspective, however, the economic outlook has clearly deteriorated, with U.S. interest rate traders marking up the probability of recession sharply.
Oil prices fall 2% as US-China trade war concerns hit demand outlook --Global oil benchmark Brent futures fell more than 2 per cent on Monday on global growth concerns after US President Donald Trump last week threatened China with more tariffs, which could limit crude demand from the world's two biggest buyers. Brent crude fell $1.38, or 2.2 per cent, to $60.51 a barrel by 12:49 p.m. EDT (1649 GMT). US West Texas Intermediate (WTI) crude futures fell 28 cents, or 0.5 per cent, to $55.38 a barrel, finding some support from a draw in inventories at the Cushing, Oklahoma, storage hub and delivery hub for WTI. Stocks at Cushing fell nearly 2.4 million barrels in the week to Aug. 2, traders said citing data from market intelligence firm Genscape. The front-month WTI contract traded at a premium of 12 cents to the second-month, the highest since April. "The escalation in the US-China trade is another negative for the oil demand outlook, as the fallout from the spat continues to greatly impact the Asian economic region, which is key to the oil demand outlook," said John Kilduff, partner at Again Capital Management. Both crude benchmarks plummeted by more than 7 per cent last Thursday to their lowest level in about seven weeks after Trump's announcement, before recovering somewhat to leave Brent down 2.5 per cent on the week and US crude 1 per cent lower. Trade war worries hit global equities again on Monday, while stoking a rally in safe-haven assets including the Japanese yen, core government bonds and gold. Trump last week said he would impose a 10 per cent tariff on $300 billion of Chinese imports starting on Sept. 1 and said he could raise duties further if China's President Xi Jinping failed to move more quickly towards a trade deal.
Oil Struggles As Markets Rocked By Trade War - Oil prices fell again on Monday, with Brent down in particular, dipping below $60 per barrel. The catalyst this time was the firm response by China to proposed U.S. tariffs. China let its currency depreciate to 7 yuan to the dollar, which immediately sparked further retaliation from Washington. The Treasury Department labeled China a currency manipulator, taking the standoff to another level. Perhaps the silver-lining is that the pressure is now on the Federal Reserve to cut interest rates again – a long-sought objective by President Trump. But, the markets are not taking any comfort in this dynamic. On Tuesday, markets started on a positive note after China apparently softened its tone, with the central bank setting a stronger target for the yuan than expected, an indication that China is not yet ready to use its currency as a weapon. WTI traded in Midland rose to its strongest level since June after Plains All American Pipeline set rates for its 670,000-bpd Cactus II pipeline on Friday, raising expectations that it would begin service soon. Cactus II is one of three pipelines expected to come online this year connecting the Permian to the Gulf Coast. Higher tariffs on China is dragging down oil, raising expectations of a cut in global growth. But the industry is also paying more for steel because of the tariffs. Plains All American said that it would charge oil producers 5 cents per barrel because of the tariffs. Iran seized another oil tanker on Sunday, this time an Iraqi ship that Iran says was smuggling fuel to Arab countries. According to S&P Global Platts, 1 in 7 new natural gas combined-cycle power plants are running at shockingly low levels. More than 33,000 MW of capacity had capacity factors below 40 percent in 2018. Some plants are even shutting down in California because of surging solar power and depressed electricity prices. Young people are increasingly steering clear of the oil and gas industry, owing to a combination of factors, including fears about job insecurity and the climate crisis. As a result, the industry could find itself short on talent as aging workers head into retirement.
Oil hovers around $60 as US-China trade tensions weigh - Oil prices rebounded slightly on Tuesday from big falls in recent sessions, but Brent crude remained near seven-month lows around $60 a barrel due to escalating trade tensions between China and the United States. Brent prices have lost more than 9% in the past week, with U.S. President Donald Trump vowing to impose new tariffs on Chinese imports and China making further moves against U.S. agricultural cargoes. The United States also responded to a decline in China’s yuan on Monday by branding the country a currency manipulator. International benchmark Brent futures were up 0.28% at $59.98 a barrel, having dipped earlier in the session to their lowest since Jan. 14 at $59.07. West Texas Intermediate crude futures rose 0.24% to $54.79 per barrel. “This morning’s slight price recovery is hardly worthy of mention. Concerns about demand and the escalating trade conflict are still keeping the oil market in a stranglehold,” Commerzbank analyst Carsten Fritsch said in a note. “As far as the oil market is concerned, there are two key questions: 1) Why should China carry on buying U.S. crude oil? and 2) Why should China continue to adhere to the U.S. sanctions when it comes to buying Iranian oil?” Global equities hit a two-month low and Brent fell more than 3% on Monday as traders worried the dispute between the world’s two biggest oil buyers would dent demand, helping to prompt Tuesday’s short-covering.
Oil Slumps Into Bear Market-- Brent oil slid into bear-market territory, as the U.S.-China trade spat threatened to expand into a currency war and investors despaired about the damage to crude demand. The rout for London-traded futures picked up speed as Tuesday’s session drew to a close, with Brent ending the day down 1.5% The global benchmark has now fallen more than 20% since a late-April peak, meeting the common definition of bear market. Prices slumped despite a modest rally in equity markets after the People’s Bank of China moved to strengthen the yuan on Tuesday. The Trump administration had earlier declared the Asian nation a currency manipulator, opening the potential for even harsher impacts on global trade. “We shouldn’t underestimate the potential impact of a full-blown trade war between the world’s two biggest economies,” said Bart Melek, head of global commodity strategy at TD Securities. “This could very well mean we as a market significantly overestimated demand growth for oil and we could easily be in a surplus situation in 2020.” Brent crude prices are down more than 9% this month as global economic worries eclipse the rising threat of supply disruptions in the Middle East. Iran could step up its operations against tankers passing through the Strait of Hormuz, the world’s most important oil chokepoint, Foreign Minister Javad Zarif said on Monday. Brent for October settlement fell 87 cents to settle at $58.94 a barrel on the London-based ICE Futures Europe Exchange. West Texas Intermediate for September delivery lost $1.06, or 1.9%, to $53.63 a barrel on the New York Mercantile Exchange. WTI for October traded at a discount of $5.35 to Brent for that month, a gap that’s narrowed markedly in recent days as trade fears undercut the outlook for global oil prices.
Oil's post-crash bounce fades as buy-the-dip proves a bust- Kemp (Reuters) - Oil prices have continued to drift lower after plunging last week, highlighting the risk for traders trying to exploit mean-reversion strategies by buying futures contracts after a sharp fall in prices. Front-month Brent futures prices tumbled by more than 7% on Thursday, a percentage change equivalent to more than three standard deviations for all daily price moves since 1990.The one-day percentage decline was largest for more than three and a half years since February 2016, when prices were still close to their cyclical lows at just over $30 per barrel.But if some traders were hoping prices would show a significant short-term bounce after such a severe sell off, they have been disappointed.Front-month futures prices rose by just 2.3% on Friday, then fell again by 3.4% on Monday, and are still trading below last Thursday's close. Experience suggests prices do tend to bounce slightly in the days after a sharp sell-off, so there is an exploitable trading strategy, but gains tend to be small and highly uncertain. Buying the dip is risky with relatively low expected returns and a high probability of making a loss. Since 1990, front-month futures prices have fallen by 7% or more on a total of 44 days, including last Thursday, out of a total of more than 7,500 trading days. By far the largest decline occurred on Jan. 17, 1991, when prices plunged by almost 35%, and was linked to the first Gulf War.The Jan 1991 decline was an extreme outlier (the next largest percentage decline was less than 14%) so it has been excluded from the analysis that follows.Following a decline of 7% or more, prices generally bounce in the days that follow, rising on average by a total of around 3.5% (https://tmsnrt.rs/2MLbDeb).Most of the gains occur in the first 6-7 trading days after the initial slump and have largely disappeared within 10-20 days.Rises are slightly more common than further falls in the first 10 days, but the margin is narrow, and they become almost equally likely after around 15 days.Any post-crash bounce is small and fleeting, and it is almost as common prices will continue drifting lower.For smaller crashes, where prices decline by 5% or 3% in a single day, the expected price bounce becomes even more marginal and transient.
Oil prices fall sharply for second day, tracking volatile stock market - Oil futures prices closed sharply lower Tuesday — including a roughly seven-month low for international benchmark Brent — as contracts gave up early gains once the stock market pared its recovery. Oil fell as questions persisted over global demand for energy, uncertainty that’s tied to U.S. tensions with major trade partners. West Texas Intermediate crude for September delivery was down $1.06, or 1.9%, to $53.63 a barrel on the New York Mercantile Exchange, the lowest finish since June 17, according to Dow Jones Market Data. WTI traded in positive territory briefly Tuesday, up to $55.42. Crude fell 1.7% on Monday and WTI is now off 19% from its 2019 settlement high of $66.30 hit on April 23. U.S. stocks were higher late but off their best levels of the session, and the Dow briefly turned negative, as investors digested the latest development in an intensifying trade spat, with China in particular. “Concerns about demand and the escalating trade conflict are still keeping the oil market in a stranglehold,” said Carsten Fritsch, analyst with Commerzbank. Oil markets have dropped, and recovered, in step with other risky assets over recent sessions. Last week, the U.S. oil benchmark suffered its biggest one-day fall in more than four years after President Trump moved to impose additional import tariffs on Chinese goods and China pledged retaliation. China’s currency on Monday weakened, trading at the key 7 yuan to the dollar level and sparking a global selloff in equities and oil, while sending investors scampering into haven assets such as gold and bonds. The U.S. responded to the decline in the yuan by branding China a currency manipulator Meanwhile, global benchmark October Brent crude BRNV19, +2.77% fell 87 cents, or 1.4%, at $58.94 a barrel on ICE Europe Tuesday, the lowest since Jan. 8. It traded up to $60.56 earlier, but has now shed some 4.7% so far this week. That trims the year-to-date gain to about 9.5%, according to Dow Jones Market Data.
Oil Price Forecast Majorly Revised at Fitch - Fitch Solutions Macro Research (FSMR) analysts have made a “major downward revision” to their Brent oil price forecasts, the company’s latest outlook report has revealed.The analysts now expect prices to average $67 per barrel this year, $65 per barrel in 2020 and $61 per barrel in 2021. This compares to FSMR’s previous forecasts of $70 per barrel in 2019, $76 per barrel in 2020 and $80 per barrel in 2021. “The revision reﬂects a deteriorating economic outlook and a sharper than expected slowdown in oil demand,” FSMR analysts stated in the report, which was sent to Rigzone on Tuesday. “Tight market management by OPEC and Russia, coupled with a steep decline in exports from Venezuela and Iran, have failed to revive prices and upwards of three million barrels per day of supply is now sitting on the sidelines, waiting for a point of re-entry,” the analysts added.The Bloomberg consensus, which was highlighted in the report, forecasted that Brent would average $67.7 per barrel in 2019, $67.8 per barrel in 2020 and $67.5 per barrel in 2021. Back in May, analysts at FSMR saw the price of Brent averaging $73 per barrel this year. In March the analysts lowered their average annual price forecast for Brent for 2019 from $75 per barrel to $73 per barrel. Last month, Abhishek Kumar, head of analytics at Interfax Energy in London, revealed that Interfax Global Gas Analytics was forecasting that Brent will average $68 per barrel this year. Ann-Louise Hittle, vice president of macro oils at Wood Mackenzie, revealed back in June that the company was projecting Brent to average $68 per barrel in 2019.
WTI Extends Losses Despite 8th Weekly Crude Draw In A Row - An ugly day in the energy complex saw WTI tumble to a $53 handle as US-China trade tensions were anything but calmed (despite the equity market's exuberance).“We shouldn’t underestimate the potential impact of a full-blown trade war between the world’s two biggest economies,” said Bart Melek, head of global commodity strategy at TD Securities.“This could very well mean we as a market significantly overestimated demand growth for oil and we could easily be in a surplus situation in 2020.” API:
- Crude -3.43mm (-2.8mm exp)
- Cushing -1.6mm
- Gasoline -1.1mm (-1.2mm exp)
- Distillates +1.2mm (+200k exp)
Crude stocks fell for the 8th week in a row, with a bigger than expected draw of 3.43mm barrels last week. WTI accelerated its losses into the NYMEX close and hovered around $53.80 ahead of the API print and started to drift lower after the data hit...
Oil Prices Plunge After Surprise Crude, Gasoline Build -Oil prices have plunged overnight (back near 7-month lows) as global growth fears accelerate (despite a bigger than expected crude draw from API) as traders wait to see if official DOE data confirms the API print.“The bearish and deteriorating global macro situation seems to have the upper hand, pushing oil lower and lower,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. DOE
- Crude +2.39mm (-2.8mm exp) - biggest build since May
- Cushing -1.504mm
- Gasoline +4.44mm (-1.2mm exp) - biggest build since Jan
- Distillates +1.529mm (+200k exp)
After 7 straight weeks of draws, DOE reports crude inventory built by 2.39mm barrels last week (and Gasoline stocks also jumped)US Crude production continued to rebound last week from storm-driven shut-ins
Oil falls after EIA data shows surprise build in inventories, sets new 7-month low on trade tensions - Oil prices fell further on Wednesday, extending recent heavy losses as deepening U.S.-China trade tensions weighed on the outlook for the global economy and energy demand. Brent crude futures were down 3.56%, at $56.84 a barrel, setting a fresh seven-month low. Prices have lost more than 20% since hitting their 2019 peak in April. U.S. West Texas Intermediate (WTI) crude futures were down 3.8%, at $51.57. U.S. crude stocks rose last week, while gasoline and distillate inventories also rose, the Energy Information Administration said on Wednesday. Crude inventories rose by 2.4 million barrels in the last week, compared with analysts’ expectations for a decrease of 2.8 million barrels. Brent has plunged more than 10% over the past week after U.S. President Donald Trump said he would slap a 10% tariff on a further $300 billion in Chinese imports from Sept. 1, sending global equity markets into a tailspin. “The market continues to grow more uncertain about the demand outlook given the deterioration of trade talks between China and the U.S.,” ING analysts said in a note. The bank lowered its 2019 price outlook, mostly because of demand concerns, forecasting that global oil supplies will exceed consumption in the first half of next year.
Oil Craters On Fears of Currency War - Oil prices plunged on Wednesday as fears of economic recession rose after a wave of interest rate cuts from around the world. In rapid succession, the central banks of India, New Zealand and Thailand cut interest rates on Wednesday as they scrambled to protect their economies and exports from the fallout from the U.S.-China trade war. The rate cuts are a sign that the battle between Washington and Beijing poses threats to the global economy.Higher U.S. tariffs on China would slow both economies, but the response of the Chinese government could be to weaken its currency in an effort to offset the effect of tariffs. On Monday, China’s yuan weakened to around 7 to 1 to the U.S. dollar – although the official anchor stopped just short of that threshold – the weakest since the global financial crisis in 2008. China’s central bank has thus far refrained from letting it weaken further, as there are a litany of risks of letting the yuan depreciate too much.But because of China’s importance to the global economy, and because currencies are interconnected, and because the dollar-yuan relationship sets the tone for global monetary policy, the sudden weakening of the yuan puts tremendous pressure on other emerging markets. Two days after the yuan dropped, India, New Zealand and Thailand quickly moved to cut their interest rates. “This is a defensive action by countries seeking to protect themselves from the collateral damage of rising global trade tensions, amid weakening domestic growth,” said Eswar Prasad, former head of the International Monetary Fund’s China division, according to the New York Times. But defensive action can beget more defensive action. As more currencies depreciate, more pressure is piled on others to follow suit. The danger is a cascading race to let currencies depreciate, ultimately leading to a kind of currency war. The dollar is the world’s reserve currency, and an incredibly liquid safe haven asset, so capital tends to flow into the dollar in times of turmoil. That is especially true when other currencies are depreciating. As such, the dollar tends to see upward pressure in times of upheaval, which can be problematic. President Trump has already been berating the Federal Reserve to cut interest rates deeper; he won’t be too pleased if the dollar starts to strengthen relative to other currencies.
Oil price falls to lowest point in eight months - The price of international oil standard Brent crude plummeted to its lowest point since the beginning of the year today as trade war worries gripped the market. The 3.2 per cent oil price drop came after a torrid week for markets, with prices down by around $8 since last Wednesday. A barrel of the black stuff reached lows of $56.77 this afternoon. “Oil has been crushed by recent events and the risks posed to the global economy and therefore the demand outlook,” said Craig Erlam, an analyst Oanda. Meanwhile WTI crude, the US standard, hit $52.06 per barrel, down 2.9 per cent on the day. Yesterday US President Donald Trump said that the trade row with China was unlikely to be drawn out further. But that was not enough to calm global markets after he slapped tariffs on more Chinese goods last week. “The market continues to grow more uncertain about the demand outlook given the deterioration of trade talks between China and the US,” ING analysts said in a note. It comes as tensions in the Middle East have worried traders in recent weeks. Iran’s Revolutionary Guard has boarded both British and Iraqi ships going through the Persian Gulf. Meanwhile British Royal Marines have boarded an Iranian oil tanker they said was breaking European sanctions on Syria. The two sides have also been facing off over the Strait of Hormuz, with the US Navy last month downing an Iranian drone over the strait. It came after several small attacks on international tankers going through the strait, which the US blames on Iran and its proxies.
US Cuts Brent Oil Price Forecast - The U.S. Energy Information Administration (EIA) has cut its Brent spot price forecast to $64 per barrel in the second half of 2019 and $65 per barrel in 2020 in its latest short-term energy outlook (STEO).In its previous STEO, released in July, the EIA’s Brent spot price forecast for the second half of the year and 2020 was $67 per barrel. Commenting on its latest projections, the EIA said in its August STEO that the forecast of “stable” crude oil prices is the result of its expectations of a “relatively balanced global oil market”.Earlier this week, Fitch Solutions Macro Research (FSMR) analysts made a “major downward revision” to their Brent oil price forecasts.The analysts now expect prices to average $67 per barrel this year and $65 per barrel in 2020. This compares to FSMR’s previous forecasts of $70 per barrel in 2019 and $76 per barrel next year. The Bloomberg consensus, which was highlighted in the report, forecasted that Brent would average $67.7 per barrel in 2019 and $67.8 per barrel in 2020.Back in May, analysts at FSMR saw the price of Brent averaging $73 per barrel this year. In March the analysts lowered their average annual price forecast for Brent for 2019 from $75 per barrel to $73 per barrel. In its August STEO, the EIA also forecasted that U.S. crude oil production will average 12.3 million barrels per day (MMbpd) in 2019 and 13.3MMbpd in 2020. Both of these would be “record levels”, the EIA highlighted.The EIA estimates that U.S. crude oil production averaged 11.7MMbpd in July, which it pointed out was a 0.3MMbpd drop from the June level.“The declines were mostly in the Federal Gulf of Mexico (GOM), where operators shut platforms for several days in mid-July because of Hurricane Barry,” the EIA stated in its August STEO. “EIA estimates that GOM crude oil production fell by more than 0.3MMbpd in July. Those declines were partially offset by the Lower 48 States onshore region, which is mostly tight oil production, where supply rose by more than 0.1MMbpd,” the EIA added.
Saudis Discussing Options to Halt Oil Slide-- Saudi Arabia has phoned other oil producers to discuss possible policy responses as oil prices fell to a seven-month low, a Saudi official said. The kingdom won’t tolerate a continued slide in prices and is considering all options, the official said, asking not to be identified discussing private talks. He didn’t say what measures were being discussed. Saudi Arabia, the world’s largest oil exporter, has already cut production more than required under the agreement between the Organization of Petroleum Exporting Countries and allies outside of the group. Oil has been swept up in a global market meltdown as the U.S.-China trade dispute worsened, spurring fears it would morph into a currency war. The deteriorating economic situation prompted rate cuts this week in New Zealand, India and Thailand amid concern there could be a recession. West Texas Intermediate crude rebounded Thursday after the Saudi efforts were revealed, following Wednesday’s 4.7% plunge. The U.S. benchmark crude rose 3.2% to $52.72 a barrel as of 1:07 p.m. in Singapore. Planned gatherings in Abu Dhabi in the week starting Sept. 9 will be critical for leaders of the OPEC+ group, especially the Saudi and Russian energy ministers, to signal their intentions on production in the wake of oil’s price collapse, said Helima Croft, chief commodities strategist at RBC Capital Markets. “This has been a tough week for them,” Croft said. “I do not think that these guys are complacent. I can imagine that Secretary General Barkindo is on the phone with Khalid Al-Falih and Alexander Novak right now. I can imagine the dialog is pretty ferocious.”
Oil jumps 2.5% due to firm yuan, expectations of more OPEC cuts - Oil jumped more than $1 a barrel on Thursday on expectations that falling prices could lead to production cuts, coupled with a steadying of the yuan currency after a week of turmoil spurred by an escalation in U.S.-China trade tensions. Brent crude was up $1.29 at $57.53 a barrel, after hitting a session high of $58.01. U.S. West Texas Intermediate (WTI) crude futures settled up $1.45 per barrel at $52.54, 2.84% higher. China’s yuan strengthened against the dollar and its exports unexpectedly returned to growth in July on improved global demand despite U.S. trade pressure. “Brent and WTI were rebounding on the combination of a stronger-than-expected official fix in the yuan, alleviating currency war fears,” said Harry Tchilinguirian, global oil strategist at BNP Paribas in London. Reports that Saudi Arabia, the world’s biggest oil exporter, had called other producers to discuss the slide in crude prices might also have supported the market, he said.Both crude contracts fell to their lowest since January on Wednesday after the U.S. Energy Information Administration said U.S. crude stockpiles rose last week after nearly two months of decline as imports hit their highest since January. “We believe the oil market is starting to price in the fear of a severe and multi-year breakdown in U.S.-China economic relations,” Crude oil shipments into China, the world’s largest importer, in July rose 14% from a year earlier as new refineries ramped up purchases. Fuel exports continued to climb as supply outstripped demand in the world’s second-largest oil consumer. Saudi Arabia plans to keep its crude
Oil Prices Rebound After Sliding 5% Overnight - Oil prices rebounded on Thursday in Asia after plunging almost 5% overnight on rising crude stockpiles.U.S. Crude Oil WTI Futures jumped 3.1% to $52.69 by 1:08 AM ET (05:08 GMT), while International Brent Oil Futures gained 2.9% to $57.88.Oil prices were supported today by reports of possible producer actions to prop up oil markets.Citing an unnamed official from Saudi Arabia, Bloomberg said the world's top exporter contacted other producers and is in talks to take action to halt the slide in prices.Oil prices slumped overnight after the U.S. Energy Information Administration (EIA) reported in its weekly oil inventory dataset that crude stockpile rose by 2.39 million barrels in the week to August 2.That was compared to forecasts for a stockpile draw of 2.85 million barrels, after a decline of 8.5 million barrels in the previous week.The EIA also reported that gasoline inventories unexpectedly surged by 4.44 million barrels, compared to expectations for a draw of 0.72 million barrels, while distillate stockpiles increased by 1.53 million barrels, compared to forecasts for a gain of 0.48 million.Ongoing Sino-U.S. trade war was also cited as a headwind for oil prices.Hopes of a quick trade deal diminished after the U.S. slapped additional tariffs on more Chinese goods.Tensions escalated further after the People’s Bank of China reportedly devaluated the yuan this week, prompting Washington to label Beijing as a currency manipulator. China and the U.S. are the world’s biggest oil importers.
Oil Rebounds From Seven-Month Low-- Oil advanced for the first time this week after Saudi Arabia signaled it’s taking steps to stabilize the market, which has been rocked by the escalating U.S.-China trade war. While futures in New York rose 2.8% on Thursday, they are still down over 10% in August. Prices got a reprieve after officials from the world’s largest oil exporter said it will keep oil exports below 7 million barrels a day and allocate less crude than customers demand next month. OPEC’s biggest producer will also scale back output in September. That helped oil rebound from the lowest close since January, after it tumbled along with other risk assets this week on concern that the trade spat between Beijing and Washington will hurt the health of the global economy. Growth in world oil demand is slowing and won’t exceed 650,000 barrels a day in 2019, according to major commodities trader Vitol Group. “One of the world’s largest crude suppliers saying they’ll try to re-balance the market is providing traders some comfort,” said Michael Loewen, director of commodity strategy at Scotiabank. “The Saudis will do whatever is necessary to keep the market afloat. They have proven they will do so in the past by cutting supply, so there’s no reason to question whether they’ll do it again.” West Texas Intermediate oil for September delivery advanced $1.45 to settle at $52.54 a barrel on the New York Mercantile Exchange. Brent for October settlement climbed $1.15 to settle at $57.38 on the ICE Futures Europe Exchange. The global benchmark crude traded at a premium of $4.92 to WTI for the same month. Saudi Arabia has already cut production more than required under an agreement between the Organization of Petroleum Exporting Countries and the group’s allies including Russia. Planned gatherings in Abu Dhabi early next month will be critical for leaders of the OPEC+ coalition to signal their intentions on production, said Helima Croft, chief commodities strategist at RBC Capital Markets. Meanwhile, U.A.E. Energy Minster Suhail Al-Mazrouei said on Twitter that “oil market fundamentals are good” and prices are undergoing a “temporary over-reaction, which is driven by speculation.”
Oil jumps more than 3% on European stockdraw despite demand slowdown forecast Oil prices jumped on Friday, supported by a drop in European inventories and expectations of more OPEC output cuts despite the International Energy Agency reporting demand growth at its lowest since the financial crisis of 2008. Brent crude futures gained $1.10, or 1.9%, to $58.48 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up $1.96, or 3.7%, to settle at $54.50 a barrel. “Despite a further cut in oil demand growth by the IEA, oil prices are trading marginally higher, as the demand growth cut was already announced previously by the head of the IEA and the agency still expects larger inventory draws for 2H19,” said UBS analyst Giovanni Staunovo. The IEA said global oil demand to May from January grew at its slowest since 2008, hurt by mounting signs of an economic slowdown and a ramping up of the U.S.-China trade war. Oil prices rose after Euroilstock data showed total crude and product inventories of 16 European nations in July were slightly lower than in June. Yet crude oil prices have lost about 20% from 2019 peaks reached in April. Brent was on track for a weekly drop of about 5%, while WTI was set to fall about 2.4%, after markets this week were weighed down by unexpected build in U.S. crude stockpiles and on fears of slowing demand amid the deepening China-U.S. trade war. Russia’s energy ministry said the IEA’s estimates were largely in line with its own forecasts and that Moscow had taken into account the possibility of a slowdown in oil demand when it extended an output reduction deal with the Organization of the Petroleum Exporting Countries. Saudi Arabia, de facto leader of OPEC, plans to maintain
August: Economic woes hold sway over geopolitics - IEA - While geopolitical tensions in the Middle East Gulf remain high, with US sanctions recently extended to more Iranian officials and a Chinese oil importer, as well as another tanker seizure, oil prices (Brent) have eased back from the most recent high of $67/bbl. Shipping operations are at normal levels, albeit with higher insurance costs. The messages from various parties that vessels will be protected to the greatest extent possible, and the IEA’s recent statement that it is closely monitoring the oil security position in the Strait of Hormuz will have provided some reassurance.There have been concerns about the health of the global economy expressed in recent editions of this Report and shown by reduced expectations for oil demand growth. Now, the situation is becoming even more uncertain: the US-China trade dispute remains unresolved and in September new tariffs are due to be imposed. Tension between the two has increased further this week, reflected in heavy falls for stock and commodity markets. Oil prices have been caught up in the retreat, falling to below $57/bbl earlier this week. In this Report, we took into account the International Monetary Fund’s recent downgrading of the economic outlook: they reduced by 0.1 percentage points for both 2019 and 2020 their forecast for global GDP growth to 3.2% and 3.5%, respectively. Oil demand growth estimates have already been cut back sharply: in 1H19, we saw an increase of only 0.6 mb/d, with China the sole source of significant growth at 0.5 mb/d. Two other major markets, India and the United States, both saw demand rise by only 0.1 mb/d. For the OECD as a whole, demand has fallen for three successive quarters. In this Report, growth estimates for 2019 and 2020 have been revised down by 0.1 mb/d to 1.1 mb/d and 1.3 mb/d, respectively. There have been minor upward revisions to baseline data for 2018 and 2019 but our total number for 2019 demand is unchanged at 100.4 mb/d, incorporating a modest upgrade to our estimate for 1Q19 offset by a decrease for 3Q19. The outlook is fragile with a greater likelihood of a downward revision than an upward one.
Oil Markets On Edge Despite Price Bounce – The main news today comes from the IEA, which called global oil demand “fragile” amid signs of a slowing economy. “The situation is becoming even more uncertain: the U.S.-China trade dispute remains unresolved and in September new tariffs are due to be imposed,” the Paris-based agency said in its monthly report. “The outlook is fragile with a greater likelihood of a downward revision than an upward one.” While Saudi Arabia’s promise to keep oil exports below 7 million bpd has given oil prices a boost, sentiment remains undeniably bearish. The IEA’s latest Oil Market Report shows some worrying numbers on oil demand. Consumption declined in May by 160,000 bpd year-on-year. Between January and May, demand was only up by 520,000 bpd, the weakest increase since 2008. Overall, the agency cut global demand growth for 2019 to 1.1 mb/d. The data offers further evidence of an economic slowdown. Reports suggest that Saudi Arabia called other producers to explore deeper action in response to sliding prices. The report alone helped spark a rebound in prices. The Oil Kingdom also announced that it would keep oil exports below 7 million bpd. Permian oil producers could see not onlyexpanded midstream capacity, but also lower fees as new pipelines bring competition. As much as 1.6 mb/d of capacity is coming online in the next few months, with another 900,000 bpd set to be operational before the end of the year. The midstream bottleneck will quickly transform into a surplus. “There’s no way another 2.5 million bpd are waiting to get sent to Corpus Christi (Texas),” Sandy Fielden, an analyst at Morningstar, told Reuters. “Clearly, there’s going to be too much capacity ... There will be buying up of barrels in Midland like it’s going out of style.” The potential for economic recession combined with ongoing increases in supply growth pose a rather gloomy recipe for oil prices heading into next year. Recent developments have “sent cold shivers” through the oil team at Rystad Energy, the consultancy said in a release.
Oil Jumps Most in Month - Oil surged the most in nearly a month as investors digested Saudi Arabia’s latest plan to help stabilize prices following a large dip earlier in the week that was fueled by demand concerns. WTI advanced 3.7% in New York on Friday, paring its weekly loss to 2.1%. Escalating tensions between China and the United States along with a surprise gain in U.S. stockpiles pushed prices to a seven-month low during the week. Yet, Saudi Arabia retaliated to the rout with a plan to limit output and exports in September, a move that seemed to placate the market. Oil was "vulnerable for a correction,” said Gene McGillian, a senior analyst and broker at Tradition Energy in Connecticut. "Right now, the Saudis’ willingness to take steps has kind of stemmed the market slide. The question is how much can that rally work without other producers stepping up as well? Given this trading environment, these kind of big price swings are more expected than not.” Saudi Arabia, the top producer in the Organization of Petroleum Exporting Countries, plans to keep oil exports below 7 million barrels a day next month as it allocates less crude than customers demand, according to unnamed officials from the kingdom. State-run Saudi Aramco will provide customers across all regions with 700,000 barrels a day less than they requested, the officials added. A large-volume bullish options trade was also reported just after 9 a.m. in New York, for 25,500 contracts -- equivalent to 25.5 million barrels of oil. The buyer of the options would profit from a tighter supply and demand outlook for WTI at the end of the year, helping to push oil prices higher. West Texas Intermediate crude for September delivery advanced $1.96 to settle at $54.50 a barrel on the New York Mercantile Exchange, the biggest increase since July 10. Meanwhile, WTI is edging closer to its 50-day moving average, which it has held below since the beginning of the month. Brent for October settlement rose $1.15 to end the session at $58.53 a barrel on the ICE Futures Europe Exchange. The global benchmark crude traded at a $4.16 premium to WTI for the same month, the smallest discount in more than a year. Despite the daily advance, it’s hard to ignore crude’s plummet this week due to growing fears that the trade spat between the U.S. and China will expand into a currency war. Meanwhile, the International Energy Agency trimmed forecasts for oil-demand growth this year and next, and called the demand outlook “fragile” in a report Friday.
Iran 'seizes Iraqi tanker in Gulf for smuggling fuel' - Iran has seized another foreign tanker in the Gulf, state media reports claim. Iranian forces seized the Iraqi ship for "smuggling fuel for some Arab countries" and detained seven sailors, according to the reports. Iraq's oil ministry has said it has no connection to the seized vessel and that it is working to gather information about it. The incident comes amid heightened tensions after the US tightened sanctions on Iran's oil sector. The sanctions were reimposed after Washington's unilateral withdrawal from a landmark 2015 nuclear deal. If confirmed, the Iraqi tanker would be the third foreign vessel to have been seized by Iran in recent weeks. On 13 July, the Iranian coastguard detained the Panama-flagged MT Riah. The Revolutionary Guards' Sepah News site said at the time that the ship was seized during naval patrols aimed at "discovering and confronting organised smuggling". Also last month, Iran seized the British-flagged tanker the Stena Impero in the Strait of Hormuz, saying it had collided with a fishing vessel. Fars news agency reported that the operation to seize the ship was carried out last Wednesday near the Gulf island of Farsi. The vessel was carrying about 700,000 litres (154,000 gallons) of fuel at the time, according to a Revolutionary Guard Corps commander quoted in state media. The tanker was reported to have been taken to Bushehr Port in south-western Iran and its fuel handed over to the authorities. Iranian reports say the tanker was Iraqi but the nationalities of the seven crew have not been disclosed. In a statement carried by the Iraqi News Agency, Iraq's oil ministry said it had no connection with the ship. "The ministry does not export diesel to the international market," it said, adding that authorities were seeking more information about who the vessel belonged to.
Iran seizes Iraqi oil tanker smuggling fuel in Gulf: TV - (Reuters) - Iranian Revolutionary Guards seized an Iraqi oil tanker in the Gulf which they said was smuggling fuel and detained seven crewmen, Iran’s state media reported on Sunday, in a show of power amid heightened tension with the West. The vessel was intercepted near Iran’s Farsi Island in the Gulf, Iran’s semi-official Fars news agency said. The elite Revolutionary Guards Corps (IRGC) has a navy base on Farsi Island which is located north of the Strait of Hormuz. “The IRGC’s naval forces have seized a foreign oil tanker in the Persian Gulf that was smuggling fuel for some Arab countries,” the Guards commander Ramezan Zirahi told state TV. The state news agency IRNA, quoting the Guards, said it was an Iraqi ship that was seized on Wednesday night in the Gulf. Zirahi said it was carrying 700,000 liters of fuel, without elaborating on the nationalities of the detained crewmen. “The boats of the IRGC navy were patrolling the area to control traffic and detect illicit trade when they seized the tanker,” Fars quoted Zirahi as saying, adding that the seizure was in coordination with Iran’s judicial authorities. Iran, which has some of the world’s cheapest fuel prices due to heavy state subsidies and the fall of its currency, has been fighting rampant fuel smuggling by land to neighboring countries and by sea to Gulf Arab states. “The tanker was transferred to the Bushehr port, where its fuel was handed over to the authorities,” Zirahi told TV.
Iran Owns the Persian Gulf Now – It has long been an accepted fact within the U.S. foreign-policy community that if any country blocked or interfered with shipping in the Strait of Hormuz, the United States and its allies would use the awesome force at their disposal to defend freedom of navigation. Yet like so much else in this era, long-held truths and ironclad laws have turned out to be elaborate fictions. The United States has invested great sums in the Middle East over many decades to undertake a few important tasks—notably protecting the sea lines—but this task does not seem to be something the current president believes to be a core American interest. After all, on June 24, President Donald Trump tweeted: “China gets 91% of its Oil from the Straight, Japan 62%, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships on what has always been a dangerous journey.” Anyone who still believes that the United States is going to challenge Iran directly should reread Trump’s tweet. It is more than that, however. It is a harbinger of what is to come in U.S. foreign policy. The United States is leaving the Persian Gulf. Not this year or next, but there is no doubt that the United States is on its way out. Aside from the president’s tweet, the best evidence of the coming American departure from the region is Washington’s inaction in the face of Iran’s provocations. Officials and analysts will often counter this, conjuring the number of personnel, planes, and ships the United States maintains in and around the Gulf, but leaders in Riyadh, Abu Dhabi, Doha, Manama, and Muscat understand what is happening. They have been worrying about the U.S. commitment to their security for some time and have been hedging against an American departure in a variety of ways, including by making overtures to China, Russia, Iran, and Turkey. On Wednesday, the Emiratis and Iranians met for the first time in six years to discuss maritime security in the Gulf. That is a positive development. And while both sides insist the meeting was routine and low-level, there is no doubt that American inaction has officials in Abu Dhabi rethinking how to deal with the Iranian challenge, which may run counter to U.S. efforts to isolate Tehran.
Russia Gains Stranglehold Over Persian Gulf - In a potentially catastrophic escalation of tensions in the Persian Gulf, Russia plans to use Iran’s ports in Bandar-e-Bushehr and Chabahar as forward military bases for warships and nuclear submarines, guarded by hundreds of Special Forces troops under the guise of ‘military advisers’, and an airbase near Bandar-e-Bushehr as a hub for 35 Sukhoi Su-57 fighter planes OilPrice.com has exclusively been told by senior sources close to the Iranian regime. The next round of joint military exercises in the Indian Ocean and the Strait of Hormuz will mark the onset of this in-situ military expansion in Iran, as the Russian ships involved will be allowed by Iran to use the facilities in Bandar-e-Bushehr and Chabahar. Depending on the practical strength of domestic and international reaction to this, these ships and Spetsntaz will remain in place and will be expanded in numbers over the next 50 years. This gradual roll-out of Russian capability in a country is the Kremlin’s tried and tested operating procedure for leveraging economic and/or political support for a country into that country allowing itself to be used as, effectively, one large multi-level forward military base for Russia. Exactly the same plan was used, and remains in place, in Syria, with Russia maintaining a massive army presence in and around Latakia, Syria, despite having repeatedly made assurances that it was to withdraw from this military theatre. In the early stages, these troops – again, in reality all Spetsnatz foreign operatives – appeared in the guise of military advisers and to provide ‘security staff’ for the huge Russian Khmeimim Air Base and the S-400 Triumf missile system in place in and around Latakia. This Russian presence was later duly expanded and formalised under an agreement signed with Syria in January 2017, which allowed Russia to continue its operations in Latakia and also to utilise the naval facility at Tartus for the next 49 years. This is precisely the format of agreement that has been agreed by Iran’s Islamic Revolutionary Guards Corp (IRGC) and Supreme Leader Ali Khamenei in the last few days, despite muted protest from the broadly pro-JCPOA (Joint Comprehensive Plan of Action) nuclear deal allies of President Hassan Rouhani. Given how poorly Iran has fared in its recent dealings with Russia – most notably over its Caspian Sea oil and gas rights– Iran’s decision to go ahead with this latest deal may seem surprising to many but is the product of two key reasons. First, Iran has no other choice of a potential geopolitical ally in its current fight against sanction-induced economic austerity and political marginalisation. The second reason is that President Rouhani and his broadly moderate pro-West, pro-JCPOA supporters have lost the confidence of many who voted for him due to his inability to deliver the economic prosperity that he promised would result from the nuclear deal agreed in 2015 and implemented on 16 January 2016. “This includes [Supreme Leader, Ali] Khamenei, who supported Rouhani for the first few years but now has no choice but to go along with the IRGC’s recommendations, and this Russia deal is at the forefront of these,” said a senior Iran source.
Iran warns Britain of ‘mother of all wars’ over naval patrols in Strait of Hormuz --President Rouhani warned that conflict with Iran would be “the mother of all wars” as Tehran further raised tensions in the Persian Gulf by agreeing to joint naval patrols with Russia. Tehran has signed a military deal with Moscow that will see the two countries’ navies hold joint military exercises in the Gulf this year as Iran and Washington beef up their opposing military alliances in the region. During a military ceremony on Kish Island, to the south of the Iranian mainland, Rear-Admiral Hossein Khanzadi announced the joint patrols, potentially risking confrontation with two British warships that are part of US-led patrols to protect commercial shipping in the Strait of Hormuz. A sixth of the world’s oil exports and a third of liquified natural gas are transported through the 25-mile waterway, which is the only route from the Gulf countries to the open sea. Although it is an international shipping lane, meaning that Iran cannot legally block those that pass through it, vessels must go through Iranian waters at its northern end and Omani waters to the south. It was in these Iranian waters that Tehran seized an Iraqi oil tanker over the weekend. The US Fifth Fleet, which is based in Bahrain, is responsible for protecting the shipping lane. While the details of the Tehran-Moscow deal are classified, Admiral Khanzadi revealed that a significant part of it related to naval co-operation. He also criticised the western countries that are escalating their military presence in the Persian Gulf. “The show that arrogant countries, most importantly the US and Britain, put on is only a big bluff and a dishonest act aimed to create the impression that the region is unsafe,” he said.
Iran is reportedly jamming ship GPS navigation systems to get them to wander into Iranian waters Ships passing through the Strait of Hormuz and the Persian Gulf have reported unusual GPS interference, among other problems, and the US believes Iran is to blame.The Department of Transportation's Maritime Administrationissued a warning on Wednesday about threats to commercial vessels posed by Iran, saying that ships operating in the region could have a variety of issues, including "spoofed bridge-to-bridge communications from unknown entities falsely claiming to be US or coalition warships."At least two incidents were said to involve GPS interference, it said."Due to the heightened regional tensions, the potential for miscalculation or misidentification could lead to aggressive actions against vessels belonging to US, allied, and coalition partners operating in the Arabian Gulf, Strait of Hormuz, and Gulf of Oman," US Central Command, which oversees American military operations in the Middle East, said in an emailed statement.It added that ships had reported experiencing "GPS interference, bridge-to-bridge communications spoofing, and/or other communications jamming with little to no warning."In some cases, a US defense official told CNN, Iranian navy and Islamic Revolutionary Guard Corps vessels have spoofed merchant ships' automatic identification system to make themselves look like commercial shipping vessels. The official said Iran had GPS jammers operating on Abu Musa Island, in the Persian Gulf near the Strait of Hormuz, apparently to cause ships and aircraft to inadvertently wander into Iranian waters or airspace, thus justifying a seizure.
Iran Has Hundreds of Naval Mines. U.S. Navy Minesweepers Find Old Dishwashers and Car Parts. - The U.S. Navy officer was eager to talk. He’d seen his ship, one of the Navy’s fleet of 11 minesweepers, sidelined by repairs and maintenance for more than 20 months. Once the ship, based in Japan, returned to action, its crew was only able to conduct its most essential training — how to identify and defuse underwater mines — for fewer than 10 days the entire next year. During those training missions, the officer said, the crew found it hard to trust the ship’s faulty navigation system: It ran on Windows 2000. The officer, hoping that by speaking out he could provoke needed change, wound up delaying the scheduled interview. He apologized. His ship had broken down again. Thousands of miles away in the Persian Gulf, another officer, this one assigned to a minesweeper in the Navy’s 5th Fleet, offered much the same account. While tensions with Iran seem to escalate by the day, the officer said the four minesweepers based in the Gulf were so physically unreliable that he doubted his superiors would actually send them into action in a crisis. The ships are one of the Navy’s primary tools for finding and neutralizing mines. They use sonar to hunt for them. The bombs are then disabled by divers, underwater drones or towing equipment dragged behind the stern. But the aging minesweepers routinely need repairs, the officer in the Persian Gulf said, and the companies that used to make a variety of spare parts no longer exist. A sailor recently aboard one ship said the sonar meant to detect mines was so imprecise that in training exercises it flagged dishwashers, crab traps and cars on the ocean floor as potential bombs.
Deadlock over Iranian cargo ships exposes deep crisis of Brazilian ruling class - Two Iranian vessels, the Bavand and the Termeh, were docked from early June to July 27 at Paranaguá, in the southern state of Paraná, the country’s third largest port, until finally receiving the fuel needed for their return journey. They had been chartered by the Brazilian company, Eleva Química, having brought in loads of urea, a petrochemical product used as fertilizer, and set to return to Iran loaded with 100 tons of Brazilian corn. Petrobras, Brazil’s state-run oil company, however, declined to supply diesel to the ships out of fear of US reprisals. According to O Globo, the basis for the decision had been a specific communication by the US government to Brazilian authorities that the importation of urea from Iran is subject to restrictions unilaterally imposed by Washington and companies and ports that facilitate its trade could be subject to sanctions. The conspiratorial character of the decision, which the government could not justify on the basis of international law, but only by invoking the “US communication,” unleashed a court dispute that revealed the increasing breakdown of the Brazilian political system. After Petrobras’ refusal to fuel the ships, the Paraná state justice covering the city of Paranaguá initially granted an injunction to Eleva Química forcing Petrobras to supply fuel to the vessels under penalty of a daily fine. In response, both the Brazilian Attorney General’s Office and the Brazilian Solicitor General’s Office appealed the injunction. Two days later, questioned about the issue, Bolsonaro answered contemptuously: “You know we are aligned with their [US] policy. So we do what we have to do.” Finally on July 25, Supreme Court President José Antônio Dias Toffoli ordered Petrobras to supply fuel to the vessels. He added that doing so under a court order would facilitate Petrobras’s defense in face of threats from Washington. Most remarkable, however, was Toffoli’s argument that Petrobras’ refusal to fuel the vessels would damage Brazil’s trade balance, as Iran is a major trading partner, responsible for one-third of the exports of Brazilian corn.
China Mulls Joining US 'Escort' Coalition In Gulf Even As It Defies Iran Oil Embargo -China is, to the surprise of many observers, actually mulling joining a proposed US-led maritime coalition to protect oil shipping lanes in the Gulf following Iran's military confirming it has seized three foreign tankers this summer. “If there happens to be a very unsafe situation we will consider having our navy escort our commercial vessels,” the Chinese ambassador to the UAE Ni Jian told Reuters in Abu Dhabi. “We are studying the U.S. proposal on Gulf escort arrangements,” China’s embassy later confirmed. The question that remains, however, is which side would the Chinese escort actually be trying to protect? Perhaps Beijing joining such a joint operation is a strategy for attempting to shape outcomes in the Gulf? After all, while the consideration is on the table it remains that China is among a handful of countries that continues to defy US sanctions, as it continues to import its crude via at least a dozen Iranian tankers, a New York Times investigation confirmed just days ago. But at a time the White House has struggled to get its proposed joint maritime mission off the ground, given deep reluctance in Europe, President Trump over a month ago directly appealed to China and Japan via a tweet, saying they “should be protecting their own ships” in the contested region. China gets 91% of its Oil from the Straight, Japan 62%, & many other countries likewise. So why are we protecting the shipping lanes for other countries (many years) for zero compensation. All of these countries should be protecting their own ships on what has always been....— Donald J. Trump (@realDonaldTrump) June 24, 2019 It remains unclear whether any formal request accompanied the public appeal. China has walked a fine line in the crisis, not wishing to add more fuel to the fire of worsening Sino-US relations, especially with recent failed attempts to mend the trade war.
S.Korea Weighing Military "Options" To Protect Its Shipping In Persian Gulf South Korea is denying a Yonhap news agency report which said US Defense Secretary Mark Esper issued a f ormal request to South Korea to send troops to join a proposed US-led maritime force in the Strait of Hormuz to protect international tankers sailing near Iran, according to Bloomberg. Esper is said to have directly appealed to Defense Minister Jeong Kyeong-doo during a meeting in South Korea. Seoul is said to be considering "various options," according to Reuters, since South Korean vessels frequent the strait. Despite Seoul officials now downplaying the story, a prior Reuters report detailed early this week: The Maekyung business newspaper, citing an unidentified senior government official, said South Korea had decided to send the anti-piracy Cheonghae unit operating in waters off Somalia, possibly along with helicopters. ...“It is obvious that we have to protect our ships passing through the Strait of Hormuz, isn’t it? So we’re considering various possibilities,” deputy ministry spokesman Ro Jae-cheon told a regular news briefing on Monday. The current mixed messaging coming out of Seoul, however, suggests plans could be stalled, possibly as official wait and see if the White House plans for a global force gets off the ground. Meanwhile the only European country to enthusiastically jump on board the US administration's joint patrol plan has been the United Kingdom, with Germany and France trying to distance themselves, even as they attempt to form a European-led maritime initiative. At the moment France, Japan, and India have said they are undecided. Earlier this week it was revealed that China also, to the surprise of many observers, is actually mulling a reported invitation to join the proposed US-led maritime coalition to protect oil shipping lanes in the Gulf following Iran's military confirming it has seized three foreign tankers this summer.
Boris Johnson backed plan to send British troops to Yemen - Boris Johnson supported sending British troops to Yemen while he was foreign secretary in a mission aimed at controlling a port which had become a strategic prize in the bitter conflict, The Independent has learnt. The operation was proposed at a period of particularly vicious strife, with mounting civilian casualties. It envisaged royal marines taking over Hodeidah, which had become the only effective lifeline for aid going into the country, with airspace shut off due to a Saudi-led blockade. Now that Mr Johnson is in Downing Street that option “remains very much on the table”, according to government officials. The British initiative last year would have needed agreement with the two opposing sides, the Houthis and the coalition under Saudi Arabia and the United Arab Emirates (UAE), and close liaison with international relief agencies. The plan had been originally envisaged by MP Tobias Ellwood when he was at the Foreign Office in 2017 working under Mr Johnson, who encouraged him to develop it further. Mr Ellwood then proposed the mission at a strategy meeting in summer 2018 after moving as a minister to the Ministry of Defence. The issue was discussed as an offensive by the Saudi-led coalition was looming. The plan was supported by Mr Johnson and received the backing of the national security adviser Mark Sedwill and a number of commanders.
Yemeni Houthis launch drone attacks on Saudi aiports, airbase (Reuters) - Houthi forces in Yemen launched drone attacks on Saudi Arabia’s King Khalid air base as well as the Abha and Najran civilian airports, the Houthis’ military spokesman said on Monday. Houthi forces spokesman Yahya Saria said the attack on Abha airport “hit its targets”, and air traffic was disrupted at both Abha and Najran. All three locations are in southwest Saudi Arabia, near the border with Yemen. But an official at Saudi’s General Authority of Civil Aviation (GACA) told Reuters that traffic is running as usual at both Abha and Najran airports and there was no disturbance. A spokesman for the Saudi-led coalition fighting the Iran-aligned Houthis in Yemen had earlier said that Houthi drones had been intercepted and downed heading in the direction of civilian airports. The Houthis, who control the Yemeni capital Sanaa, have in recent months stepped up attacks against targets in Saudi Arabia. In response, the coalition has struck military sites belonging to the group, especially around Sanaa.The Houthis on Thursday said they launched missile and drone attacks on a military parade in the southern port city of Aden, the seat of Yemen’s internationally-recognized government and a stronghold of the coalition, killing dozens. The escalation in violence threatens a United Nations-sponsored deal for a ceasefire and troop withdrawal from the flashpoint coastal city of Hodeidah, which became the focus of the war last year when the coalition tried to seize its port, the Houthis’ main supply line and a lifeline for millions of Yemenis.
Turkey to launch offensive in Kurdish-controlled area in northern Syria (Reuters) - Turkey will carry out a military operation in a Kurdish-controlled area east of the Euphrates in northern Syria, Turkish President Tayyip Erdogan said on Sunday, its third offensive to dislodge Kurdish militia fighters close to its border. Turkey had in the past warned of carrying out military operations east of the river, but put them on hold after agreeing with the United States to create a safe zone inside Syria’s northeastern border with Turkey that would be cleared of the Kurdish YPG militia. But Ankara has accused Washington of stalling progress on setting up the safe zone and has demanded it sever its relations with the YPG. The group was Washington’s main ally on the ground in Syria during the battle against Islamic State, but Turkey sees it as a terrorist organization. Erdogan said both Russia and the United States have been told of the planned operation, but did not say when it would begin. It would mark the third Turkish incursion into Syria in as many years.
Pentagon Warns It Will Prevent Unacceptable Turkish Invasion Of Northern Syria - Turkey has for days been poised to unilaterally invade northern Syria over US objections, which Ankara officials say is to establish a 32 kilometer (20 mile) inside the war torn country, giving Turkey complete control of a region where the Syrian Kurdish YPG operates (People's Protection Units). Turkey has long considered the US-backed group, which forms the core of the Syrian Democratic Forces (SDF), to be a terrorist extension of the outlawed PKK. The Pentagon has condemned the impending Turkish unilateral move, with US Defense Secretary Mark Esper telling reporters early Tuesday that it would be unacceptable and thwarted by Washington, though it's unclear how far the Pentagon would be willing to go. "What we're going to do is prevent unilateral incursions that would upset, again, these mutual interests that the United States, Turkey and the SDF share with regard to northern Syria," Esper said. Crucially, according to ABC News, US officials "have made clear that an invasion is an extremely risky venture that could threaten the safety of U.S. forces working with the SDF...". On Sunday Turkish President Recep Tayyip Erdogan said that his forces would launch an operation in Syria east of the Euphrates River at an unspecified start date, and noted that the US and Russia had been notified. In ongoing negotiations this summer the US and Turkey have clashed over just such a "safe zone," given Turkey wants the area completely clear of Kurdish armed groups, which the Pentagon simultaneously backs. Turkish defense officials have lately threatened their "patience is limited" as the army builds up its forces along the border. The Foreign Ministry on Friday warned, "We won't let this process be dragged out. If our expectations aren't met, we are fully capable of taking whatever measures [are needed] to ensure our national security." Ankara has long condemned US training, logistics support, and weapons going to the YPG, especially as it operates in Manbij, a key Syrian Kurdish stronghold near the border with Turkey. US officials have been present in Ankara for talks early this week to try and negotiate a last minute settlement to avoid the invasion, with Esper noting Tuesday there's been "progress" made on certain key issues.
Pentagon report says ISIS is 're-surging in Syria' following Trump's troop withdrawal - ISIS is "re-surging" in Syria less than five months after President Donald Trump declared the terror group's caliphate there had been 100% defeated, according to a newPentagon inspector general's report on the fight against ISIS."Despite losing its territorial 'caliphate,' the Islamic State in Iraq and Syria (ISIS) solidified its insurgent capabilities in Iraq and was re-surging in Syria," the report, which was published on Tuesday, warned.President Donald Trump has repeatedly touted his administration's role in driving the terror group from areas under its territorial control, telling a Cabinet meeting last month, "We did a great job with the caliphate. We have 100% of the caliphate, and we're rapidly pulling out of Syria." But the new report said the partial withdrawal of some US troops from Syria has already impacted the fight against the remnants of ISIS, making it harder to advise local allies on the ground and depriving the US of the ability to monitor areas that are described as potential recruiting zones that would allow the group to replenish its ranks.Asked about the report's findings on Wednesday, Secretary of State Mike Pompeo said that the "administration is incredibly mindful of the success we've had versus ISIS," while acknowledging that he had not read the report. "I'm sure it's the case that there's pockets where they've become a little stronger. I can assure you there are places where it's become weaker as well," Pompeo said.
Drone Strike By Pro-Haftar Forces On Public Assembly Kills Over 40 In Libya - Pro-Haftar forces in Libya have been accused of yet another mass atrocity, this time in an airstrike on a public building in southwestern Libya, according to new reports, following an attack on a migrant center in Tripoli July 3rd which killed 44 people and wounded some 180. Al Jazeera is reporting a new drone strike Monday killed at least 40 people who were attending a wedding ceremony in the town of Murzuq: Reports said forces loyal to strongman Khalifa Haftar launched the attack on Sunday in the town of Murzuq. Al Jazeera learned that the victims were attending a wedding when the attack took place. Hours later the AFP said the drone attack was carried out on a town hall meeting where over 200 people were present, but details remain unclear. The air strike left "42 dead and more than 60 injured, 30 of them critically" in Qalaa neighborhood, according to eyewitness statements made to the AFP.Tripoli's GNA government immediately called for a full investigation and is connecting to downed drone to the mass casualty airstrike. Recently there's been growing evidence that UAE and Turkish-supplied drones have been operational in the hands of Haftar forces. International monitors now count nearly 1,100 killed since Haftar's bid to take Tripoli began on April 4; however, the current chaos and proxy war still unfolding in the North African country has been largely ignored in American media. Since longtime Libyan strongman Muammar Gaddafi's overthrow and field execution by UK and UK backed-rebels in 2011, which was facilitated by a US-NATO bombing campaign, the country has existed in chaos and anarchy, with up to three and sometimes four governments vying for control over the population.
French-backed Libyan militia airstrike kills 42 civilians - On Monday, a month after military strongman Khalifa Haftar’s Libyan National Army (LNA) bombed a refugee detention camp near Tripoli, killing 44 people, LNA aircraft repeatedly bombed a government building in the southern Libyan city of Murzuq. In three strikes, they killed 42 people and left over 60 wounded, including 30 in critical condition. Victims of the bombing reportedly included guests from a wedding that had recently taken place at a nearby venue. Murzuq municipal councilman Ibrahim Omar reported that 200 local dignitaries had assembled at the building “to settle social differences.” He added, “No armed or wanted people were among them. … Haftar bombed unarmed civilians.” Omar called for humanitarian aid, saying that the local hospital was overflowing and could not cope with the large number of casualties from the bombing. The LNA released a statement declaring that it had targeted “Chadian opposition fighters,” which, according to Al Jazeera, is a phrase that in LNA briefings “usually refers to Tebu tribesmen opposing them in the area.” Haftar’s forces had occupied Murzuq, the center of an oil-rich region in the southwest of the country, in April. However, the LNA apparently lost control of it after sending many of its forces northwards to attack Tripoli. The House of Representatives of the rival Government of National Accord (GNA) in Tripoli issued a statement that the LNA’s bombings “have gone beyond war crimes to crimes against humanity.” Responsibility for the atrocity in Murzuq lies above all with the NATO imperialist powers. After going to war with Libya in 2011, backing various Islamist and tribal militias to destroy Colonel Muammar Gaddafi’s regime and plunging Libya into a decade of bloody civil war, they are now waging a bitter proxy war across the country. After the LNA bombing of the Tajoura refugee camp near Tripoli last month, US officials vetoed a neutrally worded UN Security Council resolution drafted by the UK, calling for a cease-fire.
UN Report Shows US Forces Kill More Afghan Civilians Than ISIS & Taliban...Combined - The war in Afghanistan has reached new levels of insanity as a UN report shows US forces are killing more civilians than ISIS and Taliban combined. For the last several decades, the US government has openly funded, supported, and armed various terrorist networks throughout the world to forward an agenda of destabilization and proxy war. It is not a secret, nor a conspiracy theory—America arms bad guys. The situation has gotten so overtly corrupt that the government admitted in May the Pentagon asked Congress for funding to reimburse terrorists for their transportation and other expenses. Seriously. But that was just the tip of the iceberg. A new report from the United Nations shows the US and its allies in Afghanistan have killed more innocent men, women, and children than the group they claim are the bad guys, the Taliban.The now 18-year-old quagmire in Afghanistan is raising serious questions and once again, it appears that the civilians are taking the brunt of the hit — not the ostensible enemy.According to a report in the NY Times:In the first six months of the year, the conflict killed nearly 1,400 civilians and wounded about 2,400 more. Afghan forces and their allies caused 52 percent of the civilian deaths compared with 39 percent attributable to militants — mostly the Taliban, but also the Islamic State. The figures do not total 100 percent because responsibility for some deaths could not be definitively established. The higher civilian death toll caused by Afghan and American forces comes from their greater reliance on airstrikes, which are particularly deadly for civilians. The United Nations said airstrikes resulted in 363 civilian deaths and 156 civilian injuries.“While the number of injured decreased, the number of civilians killed more than doubled in comparison to the first six months of 2018, highlighting the lethal character of this tactic,” the United Nations report said, referring to airstrikes. Naturally, the US military calls this report by the UN anti-American propaganda.