oil prices ended modesty lower this week, largely on disappointment in the details of a proposed US-China trade deal and on a big jump in US oil supplies...after rising nearly 4% to $54.70 a barrel on the promise of further OPEC output cuts and on hopes for a US-China trade pact last week, the price of US light sweet crude for November delivery opened 20 cents higher on Monday amid renewed geopolitical tensions in the Middle East, but immediately began falling as details about the first phase of a U.S.-China trade deal did little to reassure there'd be a quick end to the trade war and ultimately settled $1.11, or 2% lower at $53.59 a barrel...oil prices fell again on Tuesday, as traders worried that the unrelenting U.S.-China trade war would weaken the global economy and that swelling U.S. crude inventories would further pressure prices, with US crude ending 78 cents, or 1.5%, lower at $52.81 a barrel...however, oil prices recovered part of that loss on Wednesday on hopes that OPEC would extend its supply cuts at their coming biannual meeting, and ended 55 cents, or 1%, higher at $53.36 a barrel...oil prices then tumbled early on Thursday as industry data showed a much larger-than-expected build-up in U.S. inventories, but the drop was limited after the United Kingdom and the European Union announced they had reached a deal on Britain's separation from the Union, and then, boosted by a weaker dollar, oil prices reversed and rallied late in the session to end up 57 cents at $53.93 a barrel...oil prices edged lower again on Friday, as concerns about the weakest Chinese GDP report in 30 years outweighed a bullish report from its refining sector, but the day's losses were limited by hopes for progress toward a U.S.-China trade agreement, with oil ending down just 15 cents at $53.78 a barrel...still, oil prices still closed 1.7% lower on the week, as higher US crude inventories and the depressed outlook for energy demand outweighed the optimism about potential future trade deals...
natural gas prices, on the other hand, rose for the first time in 5 weeks, as both the 6 to 10 day and the 8 to 14 day forecasts indicated colder than lower temperatures for the broad midsection of the country, and as the storage report came in slightly under the market consensus...after falling 5.9% to $2.214 per mmBTU on record production and weak demand last week, the contract price of natural gas for November delivery rose 6.6 cents or 3% on Monday as a shift to colder in the weather data snapped a 5 day losing streak for natural gas contract prices...momentum from that move carried into Tuesday as prices rose another 5.9 cents, but prices then fell back 3.6 cents on Wednesday as the midday weather models showed less potential for strong, lasting cold....prices edged higher on Thursday on short-covering and position-squaring ahead of the weekly storage report and ended 1.5 cents higher when the report showed a smaller increase in stores than was expected, even though it was the largest on record for the date....natural gas prices then rose two-tenths of a cent on Friday to finish the week at $2.320 per mmBTU, 4.8% higher than the previous Friday...
the natural gas storage report for the week ending October 11th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 104 billion cubic feet to 3,519 billion cubic feet by the end of the week, which meant our gas supplies were 494 billion cubic feet, or 16.3% more than the 3,025 billion cubic feet that were in storage on October 11th of last year, and 14 billion cubic feet, or 0.4% above the five-year average of 3,505 billion cubic feet of natural gas that have been in storage as of the 11th of October in recent years, the first time out natural gas supplies surpassed the previous five-year average since Sept. 22, 2017.....this week's 104 billion cubic feet injection into US natural gas storage was a bit lower than the consensus forecast for a 108 billion cubic feet injection from analysts surveyed by S&P Global Platts, but it was well above the average 81 billion cubic feet of natural gas that have been added to gas storage during the second week of October over the past 5 years, the 29th such average or above average storage build in the last 31 weeks...the 2,341 billion cubic feet of natural gas that have been added to storage over the 29 weeks of this year's injection season is the second most for the same period in the modern record, eclipsed only by the record 2387 billion cubic feet of natural gas that were injected into storage over the same 29 weeks of the 2014 natural gas injection season, a cool summer when there were no injections below 76 billion cubic feet….
with our natural gas supplies now above the five year average for the first time in nearly 25 months, we'll include the graph of natural gas in storage that accompanied this week's storage report...
the above graph comes from this week's Natural Gas Storage Report, and it shows the quantity of natural gas in billion cubic feet that was in storage in the lower 48 states over the period from September 2017 up to the week ending October 11th 2019 as a blue line, the average of natural gas in storage over the 5 years preceding the same dates shown as a heavy grey line, while the grey shaded background graph represents the previous upper and lower range of natural gas in storage for any given time of year for the 5 years prior to the two years that are shown by today's graph…thus the grey area also shows us the normal variation of natural gas storage levels as they fluctuate from season to season, with natural gas in storage underground normally building to a maximum by the first weekend in November, falling through the winter, and usually bottoming out at the end of March or the first week of April, depending of course on the spring heating requirements in any given year...as you can see, the level of natural gas supplies as indicated by the blue graph has been consistently below the 5 year average that's indicated by the dark grey graph over the two year span of this graph, with supplies through much of last year well below the 5 year range, often tracking a 15 year low for each date in question...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending October 11th showed that because of a decrease in our oil exports and a deepening slowdown in our oil refining, we were left with surplus oil to add to storage for the fifth week in a row...our imports of crude oil rose by an average of 70,000 barrels per day to an average of 6,295,000 barrels per day, after falling by an average of 67,000 barrels per day during the prior week, while our exports of crude oil fell by an average of 153,000 barrels per day to an average of 3,248,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 3,047,000 barrels of per day during the week ending October 11th, 233,000 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 unchanged at a record 12,600,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 15,647,000 barrels per day during this reporting week..
meanwhile, US oil refineries were reportedly processing 15,436,000 barrels of crude per day during the week ending October 11th, 221,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net average of 1,145,000 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 933,000 barrels per day less than what was reportedly added to storage plus what our oil refineries reported they used during the week....to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (+933,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily supply of oil and the consumption of it balance out, essentially a fudge factor that they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for again this week, it means that one or all of the oil metrics that the EIA has reported and that we have just transcribed are seriously off the mark (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 6,297,000 barrels per day last week, now 18.2% less than the 7,695,000 barrel per day average that we were importing over the same four-week period last year....the 1,145,000 barrel per day net increase in our total crude inventories included 1,326,000 barrels per day that were added to our commercially available stocks of crude oil, which was offset by a withdrawal of 181,000 barrels per day from our Strategic Petroleum Reserve....this week's crude oil production was reported to be unchanged at a record 12,600,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at a record 12,100,000 barrels per day, while a 12,000 barrels per day increase to 485,000 barrels per day in Alaska's oil production had no impact on the final rounded national production total...last year's US crude oil production for the week ending October 12th was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was 15.6% above that of a year ago, and 49.5% 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 83.1% of their capacity in using 15,436,000 barrels of crude per day during the week ending October 11th, down from 85.7% of capacity the prior week, and the lowest refinery utilization rate since September 2017, after Hurricane Harvey had caused the shutdown of 12% of US refining capacity along the western Gulf Coast....hence, the 15,436,000 barrels per day of oil that were refined this week was 5.4% less than the 16,316,000 barrels of crude per day that were being processed during the week ending October 12th, 2018, when US refineries were operating at a seasonal low 88.8% of capacity....
with the decrease in the amount of oil being refined, gasoline output from our refineries was also lower, decreasing by 68,000 barrels per day to 9,998,000 barrels per day during the week ending October 11th, after our refineries' gasoline output had decreased by 15,000 barrels per day the prior week....with that decrease in gasoline output, this week's gasoline production was 4.1% lower than the 10,430,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 147,000 barrels per day to 4,688,000 barrels per day, the lowest since March 2018, after our distillates output had increased by 22,000 barrels per day over the prior week....however, since our distillates production was down by a total of 528,000 barrels per day over the prior 3 weeks, our distillates' production this week was 2.6% below the 4,815,000 barrels of distillates per day that were being produced during the week ending October 12th, 2018....
with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the 11th time in 17 weeks and for the 25th time in thirty-two weeks, falling by 2,562,000 barrels to 226,201,000 barrels during the week to October 11th, after our gasoline supplies had decreased by 1,213,000 barrels over the prior week....the decrease in our gasoline supplies was larger this week even though the amount of gasoline supplied to US markets decreased by 106,000 barrels per day to 9,354,000 barrels per day, while our imports of gasoline rose by 9,000 barrels per day to 651,000 barrels per day while our exports of gasoline fell by 15,000 barrels per day to 781,000 barrels per day....after this week's decrease, our gasoline supplies were 3.4% lower than last October 12th's inventory level of 234,156,000 barrels, and but remained roughly 2% above the five year average of our gasoline supplies for this time of the year...
with the decrease in our distillates production, our supplies of distillate fuels fell for the 19th time in the past 31 weeks, decreasing by 3,823,000 barrels to 123,501,000 barrels during the week ending October 11th, after our distillates supplies had decreased by 3,943,000 barrels over the prior week...our distillates supplies fell this week even though our exports of distillates fell by 389,000 barrels per day to 1,065,000 barrels per day while our imports of distillates rose by 105,000 barrels per day to 197,000 barrels per day, because the amount of distillates supplied to US markets, an indicator of our domestic demand, increased by 330,000 barrels per day to 4,366,000 barrels per day....after this week's inventory decrease, our distillate supplies were 6.9% less than the 132,638,000 barrels of distillates that we had stored on October 12th, 2018, and fell to around 11% below the five year average of distillates stocks for this time of the year...
finally, with the refinery slowdown and the decrease in our oil exports, our commercial supplies of crude oil in storage rose for the seventh time in eighteen weeks and for the twenty-second time in 38 weeks, increasing by 2,927,000 barrels, from 425,569,000 barrels on October 4th to 434,850,000 barrels on October 11th to ...that increase lifted our crude oil inventories to 2% above the five-year average of crude oil supplies for this time of year, and to more than 31.1% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the second weekend of October, 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 over the past year up until July, after generally falling until then through most of the prior year and a half, our oil supplies as of October 4th were still 4.4% above the 416,441,000 barrels of oil we had stored on October 12th of 2018, but at the same time were 4.7% below the 456,485,000 barrels of oil that we had in storage on October 13th of 2017, and 7.2% below the 468,711,000 barrels of oil we had in commercial storage on October 14th of 2016...
This Week's Rig Count
the US rig count fell for the 8th time in 9 weeks and for the 31st time in 35 weeks over the week ending October 18th, and is now down by nearly 21.5% since the beginning of this year....Baker Hughes reported that the total count of rotary rigs running in the US fell by 5 rigs to a 30 month low of 851 rigs this past week, which was also down by 216 rigs from the 1067 rigs that were in use as of the October 19th report of 2018, and well less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...
the count of rigs drilling for oil increased by 1 rig to 713 rigs this week, which was still 160 fewer oil rigs 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 fell by 6 rigs to 137 natural gas rigs, a 32 month low for gas rig drilling activity, down by 57 rigs from the 194 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 September 7th, 2008...in addition, a vertical rig classified as miscellaneous continued to drill on the big island of Hawaii this week, a change from a year ago, when there were no such "miscellaneous" rigs deployed..
Gulf of Mexico offshore drilling activity decreased by 2 rigs to 21 Gulf rigs running this week, as 2 rigs that had been drilling offshore from Louisiana were shut down...that still left 21 rigs drilling in Louisiana's offshore waters, 2 more rigs than the Gulf of Mexico rig count of 19 a year ago, when 18 rigs were drilling in Louisiana waters and one was drilling offshore from Texas...in addition to the Gulf, one rig continues to drill offshore from the Kenai Peninsula in Alaska, which matches the offshore Alaska count of a year ago...hence, the national total of 22 offshore rigs is up by 2 rigs from the 20 rigs that were deployed offshore a year ago...however, another rig began drilling through an inland body of water in southern Louisiana this week, where there are now two drilling on inland waters, but still down from the 3 such "inland waters" rigs deployed a year ago...
the count of active horizontal drilling rigs was down by 5 rigs to 745 horizontal rigs this week, which was the least horizontal rigs deployed since May 12th, 2017 and hence is a 29 month low for horizontal drilling...that was also 181 fewer horizontal rigs than the 926 horizontal rigs that were in use in the US on October 19th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the directional rig count was unchanged at 55 directional rigs this week, but those were still down by 17 from the 72 directional rigs that were operating during the same week of last year...in addition, the vertical rig count was also unchanged at 51 vertical rigs this week, and those were down by 18 from the 69 vertical rigs that were in use on October 5th 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 table below that 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 October 18th, the second column shows the change in the number of working rigs between last week's count (October 11th) and this week's (October 18th) count, the third column shows last week's October 11th 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 19th of October, 2018...
we have a problem with the Permian rig count this week, since the Rigs by State - Current and Historical excel file from Baker Hughes shows that one rig was added in Texas Oil District 8, or the core Permian Delaware, that two rigs were added in Texas Oil District 8A, or the northern Permian Midland, and another rig was added in Texas Oil District 7C, or the southern Permian Midland...as it's likely that the rig pulled out of New Mexico had been operating in the western Permian Delaware, and since the Permian count is only up by one, we have to assume that two of those rigs that were added in Texas Permian districts were not targeting the Permian...to determine where, one could search the North America Rotary Rig Count Pivot Table (xls), which has individual well records going back to February 2011, but unless one knew offhand which counties were in each of those Texas districts it would likely be a fool's errand...
in addition, there's also a disconnect on the totals in the Marcellus shale and the states involved, since the Marcellus shows a three rig decrease while West Virginia shows a one rig decrease and Pennsylvania shows 4 fewer rigs...since the West Virginia and Pennsylvania current rig counts add up to the current Marcellus count, that means the shallow vertical rigs targeting gas we noted starting up in Fayette County, Pennsylvania during the week ending Sept 13th and in southern West Virginia earlier this year were both shut down this week...to get from there to the 6 rig decrease in natural gas that this week's report shows, then, we include all 5 of those Appalachian rigs - 3 in the Marcellus and the two shallower rigs targeting formations not tracked separately by Baker Hughes, and two natural gas rig pulled out of the Eagle Ford in southeastern Texas, which are then offset by a rig added in the Barnett shale formation in the north central part of the state...however, neither of those Texas formations shows a change in the table above because their natural gas change was offset by a change in oil rigs; for the Eagle Ford, two oil rigs were added, leaving that basin's count at 52 oil rigs and 8 targeting natural gas, while an oil rig was pulled out of the Barnett shale, leaving the Barnett with two oil rigs and two targeting natural gas...
DUC well report for September
Monday of this past week saw the release of the EIA's Drilling Productivity Report for October, which includes the EIA's September data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the seventh month in a row, this report showed a decrease in uncompleted wells nationally in September, as both drilling of new wells and completions of drilled wells decreased....moreover, the inventory of uncompleted wells fell in every major US basin, including the Permian basin of western Texas and New Mexico, which had seen increases of newly drilled but uncompleted wells (DUCs) every month from August 2016 through August 2019...for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 206 wells, the largest decrease on record, falling from a revised 7,946 DUC wells in July to 7,740 DUC wells in September, which still represents 6.2% more than the 7,284 wells that had been drilled but remained uncompleted as of the end of September of a year ago...that DUC decrease occurred as 1,184 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during September, down by 61 from the 1,245 wells that were drilled in August and the lowest in 19 months, while 1,390 wells were completed and brought into production by fracking, a decrease of 5 well completions from the 1,395 completions seen in August....at the September completion rate, the 7,740 drilled but uncompleted wells left at the end of the month still represent a 5.6 month backlog of wells that have been drilled but are not yet fracked, down from a backlog of 5.7 months a month ago...
both oil producing regions and natural gas producing regions saw DUC well decreases in September, since no major basin saw an increase...the number of DUC wells remaining in the Oklahoma Anadarko decreased by 59, from 885 at the end of August to 826 DUC wells at the end of September, as 82 wells were drilled into the Anadarko basin during September while 141 Anadarko wells were being fracked....in addition, the Permian basin of west Texas and New Mexico saw its total count of uncompleted wells fall by 49, from 3,717 DUC wells at the end of August to 3,668 DUCs at the end of September, as 503 new wells were drilled into the Permian, while 552 wells in the region were being fracked....at the same time, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 32 to 473, as 168 Niobrara wells were drilled in September while 200 Niobrara wells were completed....meanwhile, DUC wells in the Eagle Ford of south Texas decreased by 24, from 1,468 DUC wells at the end of August to 1,444 DUCs at the end of September, as 175 wells were drilled in the Eagle Ford during August, while 199 already drilled Eagle Ford wells were completed....in addition, DUC wells in the Bakken of North Dakota fell by 21, from 696 DUC wells at the end of August to 675 DUCs at the end of September, as 104 wells were drilled into the Bakken in August, while 125 of the drilled wells in that basin were being fracked...
among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 16 wells, from 520 DUCs at the end of July to 504 DUCs at the end of September, as 107 wells were drilled into the Marcellus and Utica shales during the month, while 123 of the already drilled wells in the region were fracked...in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory decrease by 5 wells to 180, as 45 wells were drilled into the Haynesville during September, while 50 Haynesville wells were fracked during the same period....thus, for the month of September, DUCs in the five oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 185 wells to 7,056 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 21 wells to 684 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and gas...
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Utica Shale well activity as of Oct. 12
- DRILLED: 202 (203 as of last week)
- DRILLING: 166 (165)
- PERMITTED: 469 (470)
- PRODUCING: 2,340 (2,339)
- TOTAL: 3,177 (3,177)
No horizontal permits were issued during the week that ended Oct. 12, and 13 rigs were operating in the Utica Shale.
Regional roundup — Activity has increased in Ohio’s Marcellus and Utica shale plays during the past decade, with counties including Jefferson, Harrison, Belmont and Monroe experiencing the most development. The spike in development has also brought many questions from landowners who have wells installed or are in the process of being installed on their properties.On top of recent shale development, Ohio is also home to many abandoned wells that have now become property hazards. Ohio State University Extension in Harrison County will hold a shale energy workshop from 6 p.m. to 8 p.m. on Tuesday that will address commonly asked questions regarding oil and natural gas development. Those interested in learning about the process for plugging orphan wells in Ohio are encouraged to attend. Guest speakers will include Dan Lima, agriculture and natural resources educator for OSU Extension in Belmont County and staff from the Ohio Department of Natural Resources Division of Oil and Gas Resources. This event will be held at Puskarich Public Library, 200 E. Market St., Cadiz. The cost is $5 per person. Pre-registration is required and those interested can register before Monday by contacting OSU Extension, Jefferson County at (740) 264-2212 or by e-mail lyon.194@osu.edu. Send registration to OSU Extension, Jefferson County, 500 Market St., Ste. 512, Steubenville, OH 43952.
Report: Ohio counties have received nearly $142M in real estate property taxes from Utica Shale production - A new release of The Utica Shale Local Support Series indicates that there has been a significant increase in the amount of real property tax revenue paid to local schools and governments from the oil and gas production in Ohio since the last report was issued in 2017.These numbers have more than tripled the previously reported amount of $45 million paid out to eight counties between 2010 and 2015.The updated 2019 report, Ohio’s Oil and Gas Industry Property Tax Payments, includes data from eight Ohio counties where oil and natural gas development is occurring including Belmont, Carroll, Columbiana, Guernsey, Harrison, Jefferson, Monroe and Noble counties. The report also examines the various ways shale development is benefitting Ohio’s schools, municipalities and other vital local services. None of the eight counties have a major metropolitan area and most of of them have struggled to bring in new investments. So, the oil and gas industry has been an asset to these counties by bringing in jobs and providing a source of revenue that wasn’t previously available. “The new report’s findings show that in total, the oil and natural gas industry contributed more than $141.9 million to eight Ohio counties from 2010 to 2017 from this tax alone,” an Oct. 9 news release from the Ohio Oil and Gas Association said.The report list the following key findings for Ohio shale counties:
What's in fracking chemicals? Energy nonprofit demands answers - Ohioans could be exposed to dangerous chemicals that state laws don’t require drilling and fracking companies using them to disclose, according to a report issued by a nonprofit organization.“Ohio and 28 other states have enacted rules that require some public disclosure of fracking chemicals. However, most if not all of these rules have exceptions that allow well owners to withhold chemical identities as trade secrets,” according to a report by the Partnership for Policy Integrity, a group based in Pelham, Massachusetts, that specializes in energy policy.“We looked at Ohio’s records and found trade-secret chemicals being used extensively in eastern Ohio in oil and natural gas wells, which could be some of the same trade-secret chemicals that the (U.S. Environmental Protection Agency) has health concerns about. We can’t say that definitively because the identities are secret,” said senior counsel Dusty Horwitt, who wrote the report.“But it’s entirely possible that some of these chemicals could have effects that EPA identified like neurotoxicity, developmental toxicity, lung toxicity, kidney toxicity and liver toxicity,” Horwitt said. “People need to know. People have a right to know, and first responders have a right to know if they might be exposed to those types of chemicals.” Well drillers injected secret chemicals 10,992 times into 1,432 wells in Ohio between 2013 and 2018, according to the report. People can be exposed to the chemicals through leaks, spills, air emissions, the migration of underground fluids from injection wells where fracking wastewater is disposed of, or the migration of oil and gas at production wells. People also can be susceptible when “brine” — a chemical-laden waste byproduct of fracking — is spread on roads as a de-icer, according to the report. “Chemicals comprise only a small percentage of fracking fluid. But due to some chemicals’ high toxicities and the staggering quantities of fracking fluid, a small percentage of chemicals in today’s wells could equal enough volume to contaminate billions of gallons of water if the chemical leached into the water supplies,” according to the report.
Gulfport Sees Higher Q3 Production, Lower Prices - Gulfport Energy Corporation GPOR issued a comprehensive update on third-quarter 2019 results pertaining to pricing and production. Gulfport’s total oil and gas production increased to 1,527 million cubic feet equivalent per day (MMcfe/d) from 1,427 MMcfe/d in the corresponding period of last year. Of the total output, 93% comprised natural gas while the remaining 5% and 2% comprised NGL and oil, respectively.Average realized natural gas oil price (before the impact of derivatives) during the third quarter was $1.64 per thousand cubic feet, lower than the year-ago period’s $2.32. Average realized natural gas liquids price was 38 cents per gallon, down from the year-ago quarter’s 74 cents. Gulfport fetched $51.75 per barrel of oil during the quarter, down from the year-ago figure of $68.73. Overall, the company realized $1.84 per thousand cubic feet equivalent in the quarter vis-a-vis $2.82 a year ago. In the quarter under review, this Oklahoma-based company drilled three wells, one gross and net operated well in the South-Central Oklahoma Oil Province (SCOOP) and the remaining in the Utica Shale field. Further, in the third quarter, Gulfport ended drilling three gross operated wells in the Utica Shale and two other, which were in different stages of completion. It also turned-to-sales 16 gross operated wells in the Utica Shale during the period. Gulfport projects its net full-year daily production in the mid-point of the previously provided guided range of 1,360-1,400 MMcfe per day.
Will a push for plastics turn Appalachia into next ‘Cancer Alley’? - Construction cranes climb into the sky and sprawl across the massive petrochemical facility that will turn a byproduct of fracked gas into plastic on the banks of the Ohio River, just outside Pittsburgh. Even at a distance, from the car park of a cancer treatment centre on a nearby hilltop, Royal Dutch Shell’s 386-acre site is a behemoth. It will anchor yet more gas, plastics and chemicals infrastructure in the tristate region of Pennsylvania, Ohio and West Virginia. The plant would solidify demand for fracked natural gas and the ethane that comes with it out of the ground. It would make 1.6m tons of plastic and 2.2m tons of globe-heating carbon dioxide annually – roughly the same amount the city of Pittsburgh is trying to eliminate. The facility would also release hundreds of tons of toxic compounds into the air. As global demand for plastics grows, the buildout of this industry threatens US progress on the climate crisis and clean air. Opponents say the vast plastics industry will prolong fracking, even after power companies shift further towards renewable power, such as solar and wind. “To me, it’s so obvious that they are trying to lock us into fossil fuels,” said Terrie Baumgardner, a member of the Beaver County Marcellus Awareness Community. At a time when scientists warn humans must stop pulling fossil fuels out of the ground and spewing plastics into the environment, natural gas drilling is booming in Appalachia and the ethane-to-plastics industry there is just getting started.
DEP, CNX reach $1.48 M settlement on abandoned wells The Pennsylvania Department of Environmental protection announced a settlement Friday with CNX in which the company will put up bonds and plug more than 100 abandoned natural gas wells.The order covers 141 conventional wells and five shale gas wells in Allegheny, Washington, Greene and Westmoreland counties. Under the settlement, CNX will post a $1.48 million performance bond to cover the costs of plugging the wells, and the state has given the company eight years to plug and restore the well sites.A performance bond is a guarantee that a company will pay for cleanup costs of its operations, if it ever goes out of business or enters into bankruptcy.The wells were part of a July 2018 order from the state requiring three companies to plug over 1,000 abandoned wells. A March 2019 settlement dealt with most of those wells. This month’s settlement took care of the rest. “These settlements represent a major victory for Pennsylvania’s citizens and our environment, today and into the future,” DEP Secretary Patrick McDonnell said in a statement.The state considers any well that doesn’t produce oil and gas for a calendar year to be an abandoned well.Methane from abandoned wells can get into underground well water and into peoples’ homes, posing a health and environmental threat. In addition, the wells can leak oil and brine into the environment.The order mandates CNX plug five wells by the end of 2019 and 20 wells a year until all the wells are plugged, a process that should take no more than eight years.
CNX to plug Beaver Run Wells— The Pennsylvania Department of Environmental Protection said Friday it issued a consent order and agreement with CNX Gas Company LLC for well-plugging violations in four southwestern Pennsylvania counties, including seven wells in northern Westmoreland County. DEP said the settlement requires CNX to post a $1.48 million performance bond and provides an extended schedule for CNX to plug abandoned wells and restore well sites, including five in Washington Township and two in Bell Township. Five are along the shores of the Beaver Run Reservoir, while two others are in nearby areas. “These settlements represent a major victory for Pennsylvania’s citizens and our environment, today and into the future,” DEP Secretary Patrick McDonnell said in an agency news release. The wells around Beaver Run Reservoir included in the agreement are all unconventional wells. In all, there are more than 50 gas wells near the 11-billion-gallon reservoir. The settlement also covers 141 conventional coalbed methane and gas wells in Allegheny, Greene and Washington counties. The agreement announced Friday follows a July 2018 order by DEP to oil and gas operators to plug over 1,000 abandoned oil and gas wells across the state, based on required self-reporting of well production data for 2017. The state Oil and Gas Act requires owners and operators to plug wells upon abandonment. The act defines any well that “has not been used to produce, extract or inject any gas, petroleum or other liquid within the preceding 12 months” as abandoned.
Vote delayed on controversial Beech Hollow Energy plant in Washington County -- In 2016, Rodger Kendall signed an agreement with Ray Bologna of Robinson Power Co. LLC for construction of a natural gas pipeline across his property in Robinson, Washington County. That easement agreement also requires Mr. Kendall and his wife, Susan, to “reasonably cooperate [with Robinson Power] in obtaining any permits, licenses, permissions or approvals, including ... land-use permits” necessary for construction of Beech Hollow Energy Project’s gas-power plant just south of the intersection of routes 22 and 980. As it turns out, Mr. Kendall is chairman of the township board of supervisors. That board held a public hearing Monday on Robinson Power’s application for a township land-use permit to build the plant. But with a Dec. 22 deadline, the board decided Monday to delay taking action after the public hearing. For now, It’s unclear whether the vote will involve the initial 1,000-megawatt gas-fired power plant project that the state Department of Environmental Protection approved in October 2017, or the more recent modifications for a 1,065-megawatt power plant that DEP still is reviewing. Alan Shuckrow, serving as township solicitor during the hearing, said supervisors could approve the permit, on a condition that DEP approves project modifications. The land-use permit is necessary for the controversial power plant project to proceed.
We finally know what caused the refinery blast that rocked Philadelphia - The June 21 fire at the Philadelphia Energy Solutions refining complex was likely caused by a faulty pipe, a preliminary report from the U.S. Chemical Safety and Hazard Investigation Board has found. The fire, which raged for more than 24 hours, released 5,239 pounds of deadly chemicals into the air. The blaze broke out early in the morning on June 21st when an elbow pipe most likely failed, allowing flammable fluid containing propane and other chemicals to escape. The leaking fluid quickly turned into a vapor cloud, which ignited shortly thereafter. As the fire raged, at 4:15 a.m. the first of three explosions occurred. The second was four minutes later, and the third, which was by far the most powerful, occurred at 4:22 a.m.During the last and greatest explosion, a vessel within a unit containing highly flammable hydrocarbons ruptured, hurling fragments into the air. The blast was so powerful that a 38,000 pound barrel was launched 2,100 feet across the Schuylkill river, where it landed on the opposite bank. The fire illuminated the sky and sent shock waves for miles around the complex. Homes in South Philadelphia shook as debris rained down. Based on stamp marks found on the faulty piping, investigators estimate that it was installed around 1973. The elbow pipe that likely started the fire was so worn down that it was just 0.012 inches thick. As the report noted, this is about half the thickness of a credit card.According to estimates from Philadelphia Energy Solutions, 5,239 pounds of deadly hydrofluoric acid was released during the fire and subsequent explosion. The company estimated that it contained about 1,968 pounds within the refining unit by using water spray, which means that the larger share, or roughly 3,271 pounds, escaped into the atmosphere. Chemical Safety Board interim executive director Kristen Kulinowski said it was lucky that there were “no serious injuries or fatalities.”
Old, corroded pipe led to Philadelphia refinery fire: Chemical Safety Board - (Reuters) - An old, degraded piece of metal pipe that had not been tested for corrosion led to the June fire and explosions at the Philadelphia Energy Solutions oil refinery, the U.S. Chemical Safety and Hazard Investigation Board said on Wednesday. The pipe fitting gave way around 4:00 a.m. ET (0800 GMT) on June 21, releasing propane containing more than 3,200 pounds of highly toxic chemical hydrofluoric acid (HF) that escaped into the atmosphere, the CSB said in its first update on its investigation. Three separate explosions then hurled pieces of the refinery across the nearby Schuylkill River and onto highways, causing a blaze that was visible for miles and destroying an alkylation unit that uses HF to produce components of high-octane gasoline. No one was killed, and only five minor injuries were reported. However, Philadelphia Energy Solutions filed for bankruptcy a month later and shut down the 335,000 barrel-per day refinery, the largest on the U.S. East Coast. “We need to focus on making sure that this type of an explosion at a refinery doesn’t happen anymore because it’s just a matter of time before the facts are just a little bit different and people die or are critically injured,” CSB Interim Director Kristen Kulinowski said at a news conference.
Groups bidding for PES refinery due to tour fire-damaged site –sources (Reuters) - Groups vying for the idled Philadelphia Energy Solutions oil refinery have entered the second phase of the bidding process and are gearing up for visits to the plant, according to three sources familiar with the matter. Roughly a dozen parties are in the running to buy the refinery, a source familiar with the situation said, pitching various uses for the fire-damaged facility that has been used to store and process fossil fuels for the last 150 years. The effort began after PES closed its refinery and filed for bankruptcy on July 21, following a colossal blaze at one of its most dangerous fuel-producing units. Whoever wins the auction to purchase the 1,300-acre site will hold the keys to reopen the largest and oldest East Coast oil refinery or repurpose all or part of it for another use. Prospective buyers are seeking answers to a host of unanswered financial and legal questions, including potential environmental cleanup costs and uncertainty around insurance proceeds. Groups in the bidding process are being given more information about PES’ finances and operations and are expected to tour the site, three sources familiar with the plans said. They have also been asked to submit more detailed proposals, as opposed to limited initial bids, by late November. While the sale process is moving ahead, PES recently detailed in a court filing a way in which it could reorganize the company if it is able to reach agreements with creditors to swap debt obligations for shares in the company.
Mountaineer Gas preps platform to receive natural gas supply – Mountaineer Gas’ natural gas pipeline running from northern Morgan County into Berkeley County has gas in it, but the company doesn’t have any local customers yet. Workers are preparing the pipeline’s western end for a regulator station so it will be able to add more gas to the line in the future. Company officials said they don’t know right now whether gas supply will come from a planned Columbia Gas pipeline under the Potomac River from the north, or from some other source. Moses Skaff, Senior VP of Mountaineer Gas, told The Morgan Messenger last week that his company’s platform – a flat, graded area north of U.S Silica – is being prepared for a regulator station that will let the pipeline receive gas. Skaff confirmed that the recent spur of activity on the gas platform was tied to the September 23 decision by the National Park Service to grant a right-of-way under the C&O Canal to Columbia Gas. The company plans to build a gas pipeline west of Hancock and under the Potomac River. That line would bore under the canal and river. Skaff said his company is “just getting the platform ready” to receive gas. “We’re preparing the platform to take natural gas supply at some point. We don’t know where it’s going to come from at this time,” said Skaff. The local gas line has been “energized” for several months, meaning it is holding natural gas right now. Skaff said the line isn’t holding a large amount of gas, but has been put in service. Mountaineer Gas is doing regular inspections along the pipeline path, including on-the-ground visual inspection along the right of way and detection monitors. Mountaineer Gas doesn’t have any Morgan County customers right now, though U.S. Silica plans to be a customer, said Skaff. His company is interested in running the natural gas line to customers here when they have a bigger supply of gas to distribute. Right now, Mountaineer Gas can’t take on larger customers because the current gas supply coming in from Virginia can’t meet further demand. Skaff said the gas line platform along U.S. 522 can be used now, even without a Columbia Gas line coming in from Maryland. Once work is completed on the platform, the area can be an injection point for gas coming in by truck.
Appeals court puts Mountain Valley Pipeline permits on hold (AP) — A federal appeals court has put a hold on two permits needed for construction of the Mountain Valley Pipeline. The 4th U.S. Circuit Court of Appeals on Friday issued a stay of permits from the U.S. Fish and Wildlife Service while it reviews a lawsuit filed by environmental groups in August. The Sierra Club said in a statement Friday that the suspension effectively means that construction must stop on the 300-mile natural gas project. Natalie Cox, a spokeswoman for the pipeline, did not immediately respond to messages from The Associated Press seeking comment. Cox told The Roanoke Times that pipeline officials are “disappointed and disagree” with the 4th Circuit’s ruling. The lawsuit alleges that the Fish and Wildlife Service’s approval of the project failed to adequately protect endangered species along the pipeline’s path. After the lawsuit was filed, the pipeline developers suspended some construction activities. Pipeline officials told federal regulators in a letter in August that they had suspended construction in areas where the work could impact protected bat and fish species. Also on Friday, the company building the pipeline agreed to pay over $2 million and submit to enhanced monitoring to settle a lawsuit brought by Virginia officials. Virginia Attorney General Mark Herring’s office announced that a consent decree had been reached with Mountain Valley LLC that will resolve the lawsuit filed in December. Herring’s office said in a news release that Mountain Valley will pay a $2.15 million civil penalty and will submit to court-supervised compliance with environmental protections. It will also pay for additional third-party monitoring. State officials alleged that developers violated Virginia’s environmental laws and regulations by not controlling sediment and stormwater runoff.
Mountain Valley Pipeline to pay $2.15M to settle Virginia environmental lawsuit - Mountain Valley Pipeline, the natural gas pipeline that is owned by Pittsburgh-based EQM Midstream Partners, will pay a $2.15 million civil penalty to resolve a lawsuit filed over alleged environmental violations in Virginia.The settlement with the Commonwealth of Virginia also requires MVP to comply with court-ordered and other third-party monitoring of the pipeline project, which will take Marcellus and Utica Shale natural gas from Pennsylvania and West Virginia to Virginia. The 303-mile route in West Virginia and Virginia has been fraught with cost overruns, delays and court action.A news release from Virginia Attorney General Mark R. Herring said MVP will have court supervision to make sure it complies with state water, erosion and sediment control among other environmental laws along with additional layers of oversight. Future violations would violate the court order, according to a news release from Herring. MVP will be spending its own money to increase erosion control measures and monitor fish and wildlife, and is on the hook to remediate any further violations."This is one of the most significant financial penalties ever imposed in Virginia for this kind of case, and more importantly, we have secured significant new monitoring, supervision and enhanced standards for the duration of the project," Herring said in a statement.The agreement settles a lawsuit filed in December 2018 by the Virginia attorney general for the state's Department of Environmental Quality and the State Water Control Board in five counties in Virginia. The settlement has the approval of Virginia's governor and head of the Department of Environmental Quality, and will have 30 days of public comment before going to the Circuit Court of Henrico County for approval.A statement from MVP said all of the notices of violations have been addressed and most of them involved the large amount of rainfall in 2018. "The MVP project team will satisfy its civil administrative penalty and will implement additional measures of independent, third-party monitoring to ensure compliance with Virginia's court-ordered and court-supervised environmental protections that will further enhance the performance of ESC measures for the remainder of MVP's planned construction activities," MVP said in a statement.
Governor’s staff will address Atlantic Coast Pipeline permit - Gov. Roy Cooper’s office said members of his staff will answer questions about the Atlantic Coast Pipeline permit at a public hearing. But they won’t meet privately with investigators the Republican legislature has hired to dig into any connection between the permit and an environmental mitigation fund. Cooper’s office released letters Friday afternoon between his office and legislative Republicans. The correspondence sets the stage for a potential public hearing for the week of Nov. 4, when staff in the Democratic governor’s office will answer questions about the pipeline permit granted in early 2018. Republican lawmakers hired investigators last year to look into a possible connection between the pipeline’s North Carolina permit and an environmental mitigation fund Cooper set up. Republicans claimed the energy consortium developing the pipeline was pushed into paying $57.8 million into the fund in exchange for the permit. Last year, the legislature gave the money to school districts the pipeline would run through. Lawsuits have stalled the 600-mile natural gas pipeline designed to run from West Virginia to North Carolina. A letter to Cooper dated Friday from Sen. Harry Brown, a Jacksonville Republican, and Rep. Dean Arp, a Monroe Republican, outline three options for Cooper: allow all of his staff to speak to investigators; select employees to talk to a legislative subcommittee on the pipeline; or not allow anyone to speak. Their letter said investigators have nearly completed their interviews. Read more here: https://www.charlotteobserver.com/news/politics-government/article236049803.html#storylink=cpy
Enterprise to expand Appalachia-to-Texas ethane pipeline - Houston pipeline operator Enterprise Products Partners is moving forward with plans to expand a pipeline to move ethane from the natural gas fields of Appalachia to the company's processing plants and storage terminals in southeast Texas. In a statement released on Monday morning, Enterprise confirmed that it will proceed with the expansion of its Appalachia-to-Texas pipeline. Known as ATEX, the 1,200-mile pipeline moves ethane from the Marcellus Shale and Utica Basin of Pennsylvania, West Virginia and Ohio to Enterprise's natural gas liquids storage complex just east of Houston in Mont Belvieu. Estimated construction costs have not been disclosed but the decision comes after the completion of a 30-day open season for producers to book capacity on the expansion project. “The success of the open season reflects the demand for additional, reliable ethane takeaway capacity from the Appalachian region of the country,” Enterprise Senior Vice President Michael C. "Tug" Hanley said in a statement.. The expansion of ATEX will facilitate growing production from the Marcellus/Utica Basin and will provide access to attractive markets on the Gulf Coast through Enterprise’s integrated midstream network.” ATEX can currently move 145,000 barrels of ethane per day but the expansion project will boost that to 190,000 barrels per day. The extra capacity is expected to be achieved through improvements and modifications to existing infrastructure. If successful, the extra capacity will be available by 2022. Ethane is experiencing high global demand by petrochemical plants to make plastics. Enterprise already handles an estimated 80 percent of U.S. ethane exports. The company is building an export terminal at Morgan's Point to begin exports of ethylene, a chemical made from ethane that is also used to make plastics and other products.
Northeast gas prices take shoulder-season hits - Despite pipeline takeaway constraints being relieved this year, Northeast natural gas prices have averaged lower than last year through much of the injection season. They’ve been especially weak in recent weeks, with spot prices at Appalachia’s Dominion South hub averaging $1.27/MMBtu in October to date, which is about half of where they stood this time in 2018 and the lowest in two years. And earlier this month, on October 4, regional prices went into apocalyptic territory, plunging 30-50% to less than $1/MMBtu — reminiscent of the deep discounts of recent years when Marcellus/Utica producers were operating under severe pipeline constraints. Prices rebounded the very next trading day, but they remain depressed relative to last year. Today, we look at the fundamentals behind the recent price weakness. Starting today, you can also tune into an audio version of the current day’s blog. Click here to find out how to subscribe or start listening by clicking on the play button above.All in all, 2019 was set up to be a telling year for how this new “unconstrained” market would play out in the interim. And, as we said in that same early-summer blog series, the real test for the Northeast’s supply-demand balancing act would come during the low-demand months, typically spring and fall, when Northeast demand is at its lowest and the region is even more dependent on outflows to balance. That’s also the time when pipelines tend to schedule maintenance, which can periodically reduce available takeaway capacity. Well, we’re in the midst of one of those “shoulder seasons” now, and producers are being put to the test. To be clear, daily spot prices in the region had been trending weaker compared to last year for some months now. But year-on-year discounts widened further starting in August, and as of this month, the daily spot prices at Appalachia’s Dominion South hub, which is representative of the Marcellus/Utica supply region, are averaging just $1.27/MMBtu (dark-orange line in left graph in Figure 1), or half of where they stood this time last year and the lowest since October 2017, according to data from our good friends at Natural Gas Intelligence (NGI).
Is The US Gas Boom Already Over? - Natural gas production in the Marcellus and Utica shale plays is growing at a slower pace than before as low prices persist, but demand has yet to catch up to supply.S&P Global Platts reports that energy companies in the Appalachian Basin have started cutting back their new drilling, pressured by low gas prices on the one hand, and shareholder pressure for greater returns on the other.At the moment, spot prices at two gas hubs in the region—Columbia Gas Appalachia and Dominion South—are about $1 per mmBtu. That’s down from $2.50 per mmBtu at the start of the year. During that time, gas production in the Marcellus shale grew by some 1 billion cu ft daily while production in Utica grew by about half that, with the average for September actually lower than the average for August.Meanwhile, natural gas in storage is growing, too. The last gas inventory report by the Energy Information Administration showed the third weekly increase by a triple-digit number: 112 billion cu ft. That’s despite rising demand, too, which makes the outlook for gas producers even bleaker.The production decline is not a snap decision. Several gas producers operating in the Marcellus and Utica plays already warned they would begin cutting back on new drilling in the second half of the year. What’s more, if the low gas prices persist and the forecasts for lower oil prices as well come to pass, lower production would remain for longer.This is not necessarily bad, however. Investor pressure on U.S. energy companies does not only concern returns. Shareholders are increasingly worrying about the carbon, and more importantly methane, footprint of these companies. And still, the U.S. is on track to provide more than half of global gas supply by 2025. In a recent story for CNBC, Todd Wassermann reported that energy companies’ major bet on natural gas, the greener substitute for coal, could backfire because of that investor concern.“There’s a growing concern among investors that the oil and gas industry is making very big bets on natural gas as sort of the foundation for its long-term growth,″ Wassermann quoted a director from a shareholder advocacy group, Ceres, as saying.“If methane is not properly addressed, it really undercuts any claim natural gas has to being lower-carbon,” Andrew Logan said.
Natural Gas Prices Are Too Low -- Natural gas is one of the most volatile futures markets. Since the NYMEX first introduced the natural gas futures contract in 1990, the price traded from lows of $1.02 to highs of $15.65 per MMBtu.The natural gas market has matured over the past almost thirty years. Discoveries of massive reserves of gas in the Marcellus and Utica shale regions of the US and technological advances in fracking to extract the gas from the crust of the earth have increased the supply side of the market. At the same time, replacing coal with natural gas in power generation and processing the gas into liquid form for exportation around the world on ocean vessels have expanded the demand side of the fundamental equation.The growth of the natural gas market caused volume and the total number of open long and short positions in the futures market to increase dramatically. As the two metrics increase, volatility tends to contract. We have not seen a move to above $6.50 per MMBtu since 2008, and the price has remained above the $1.60 level since 1995. As we head into the peak season for demand each year over the coming weeks, natural gas at under the $2.30 per MMBtu level, the price could be too low. The United States Natural Gas Fund ETF product (UNG) tracks the price of the futures market on a short-term basis.October tends to be a month where the natural gas futures market begins to prepare for the peak season for demand each year. Injections into storage turn to withdrawals in November. On October 11, the price fell to a low at $2.187 per MMBtu. Last week, the price of nearby November natural gas futures settled at $2.214, near the low. The monthly chart highlights that at under $2.25 per MMBtu, the price of natural gas fell to its lowest level since 2015 in October. In October 2018, the low was at $3.001. In 2017, it was at $2.723, and in 2016 the bottom was at $2.627. 2015 was a year when natural gas inventories rose above the four trillion cubic feet level for the second time in history. In October 2015, the low price for the energy commodity was at $1.948 per MMBtu. Natural gas is heading into the peak season for demand at the lowest price since 2015. The long-term chart suggests that the volatile energy commodity could be ripe for a recovery over the coming weeks.
Natural Gas Price Fundamental Daily Forecast - EIA Storage Report Expected to Show Triple-Digit Build -- Natural gas futures are edging higher early Thursday on short-covering and position-squaring ahead of today’s weekly government storage report. Prices plunged the previous session, erasing earlier gains as traders raised doubts over the durability of the late October cold that had been creeping into the weather forecasts all week. Sellers also took control on the back of a forecast calling for a triple-inventory build.At 08:54 GMT, December natural gas futures were trading $2.502, up $0.007 or +0.28%.Prices were higher early Wednesday, but sellers took control at $2.564, putting in the intraday high slightly below the October 4 top at $2.568. Bespoke Weather Services also saw “some solid technical resistance.”Prices “then continued lower as the midday weather models showed less potential for strong, lasting cold,” the forecaster said. “The fundamental state, while marginally tighter the last couple of days, remains very weak, and without cold, easily still supports downside risk to current prices. It is up to cold to support the market.”Bespoke went on to s ay that the market will need to see a “solidly cold” pattern for late October into early November to sustain a rally.Early estimates are currently pointing to a triple-digit build from today’s EIA weekly storage report. This would mark the third 100 Bcf-plus injection in the past four weeks. Furthermore, an injection in the triple digits would also comfortably top both the year-ago 82 Bcf build and the five-year average 81 Bcf for this week, according to Natural Gas Intelligence (NGI). Bloomberg analysts are predicting a median 108 Bcf estimate. Intercontinental Exchange EIA Financial Weekly Index futures settled Tuesday at 108 Bcf. NGI’s model predicted an injection of 115 Bcf.
Reported Build In Today's EIA Report Slightly Under Market Consensus, But Provides No Boost To Prices - It was "EIA day" today, which usually means some solid price volatility, but price action today was rather muted in the wake of the number, which actually came in a little under the market consensus, almost dead on our internal estimate. Despite being under what the market expectation was, prices could not sustain the small rally seen right after the release of the report. The November contract did close 1.5 cents higher on the day, but was actually up more than that before the report. Why couldn't the market advance higher if the expectation was for a higher build? Well, a 104 bcf injection is still quite hefty, no matter how you look at it, and it is still reflective of loose supply / demand balances, just not as loose as those reflected in last week's report. Balances still need to show a considerable tightening trend from here in order to sustain a rally, at least in the absence of sustained cold. We do have some significant cold in the forecast as we move to the end of October, as seen in our 11-15 day forecast from this morning. This explains the recent "range-bound" nature of price action recently, as bullish weather trends battle the bearish backdrop of supply / demand balances. Until we see what the weather pattern has in store for November, this choppiness may continue.
US natural gas in underground storage flips to deficit to five-year average | S&P Global Platts— US working natural gas volumes in underground storage added 104 Bcf last week, flipping the deficit to the five-year average to a surplus for the first time in more than two years. Storage inventories increased to 3.519 Tcf for the week ended October 11, the US Energy Information Administration reported Thursday morning. The injection was less than an S&P Global Platts survey of analysts calling for a 108-Bcf addition. Survey responses ranged for an injection of 95 Bcf to 112 Bcf. Infographic: Strong South Central builds push region near five-year high for natural gas storage The build was more than the 82-Bcf injection reported during the corresponding week in 2018 as well as the five-year average addition of 81 Bcf, according to EIA data. As a result, stocks were 494 Bcf, or 16.3%, more than the year-ago level of 3.025 Tcf and 14 Bcf, or 0.4%, more than the five-year average of 3.505 Tcf. The NYMEX Henry Hub November contract added 5 cents to $2.353/MMBtu following the announcement. The NYMEX winter strip has once again moved toward a fairly bullish streak, although not to the same extent as was seen in mid-September, when its valuation rose above the $2.80 mark from $2.40 a few weeks earlier. This time, the contract strip has strengthened by about 10 cents over the last week, now trading at $2.52 for the season, up from $2.41 this time last week. The summer build-up has come from strong production, exacerbated by recent declines in power burn demand, according to data by S&P Global Platts Analytics. Those factors are likely to keep injections strong through October, until residential and commercial demand ramps up in November. Fundamentals for the week in progress effectively unwind the nearly 2 Bcf/d widening seen during the week ended October 11. Overall balances moved 2.3 Bcf/d tighter, mainly on stronger residential and commercial demand. Upstream, total supplies are up 0.4 Bcf/d to average 95.1 Bcf/d, mostly on stronger onshore and offshore production, but gains are being slightly pared down by a continued decrease in net Canadian imports. A forecast by Platts Analytics supply and demand model has storage volumes increasing by 85 Bcf for the week in progress, which would increase the surplus to the five-year average to 26 Bcf with several net injections remaining before the flip to heating season.
US Natural Gas Inventories Beat Five-Year Average - Working natural gas inventories in the Lower 48 states totaled 3,519 billion cubic feet (Bcf) for the week ending Oct. 11, according to the U.S. Energy Information Administration’s (EIA) latest Weekly Natural Gas Storage Report (WNGSR). It’s the first week that Lower 48 states’ working gas inventories have surpassed the previous five-year average since Sept. 22, 2017. Weekly injections in three of the past four weeks all were higher than 100 Bcf, or 27 percent more than usual injections for that time of year. This week’s inventory level ends a 106-week streak of lower-than-normal natural gas inventories. Inventories in the Lower 48 started the winter of 2017–18 lower than the previous average. Cold temperatures during the winter of 2017–18—including a cyclone—prompted record storage withdrawals, spiking the deficit to the five-year average. In the subsequent refill season (usually April through October), warmer-than-normal temperatures grew electricity demand for natural gas. According to the EIA, increased demand slowed natural gas storage injection activity through the summer and fall of 2018. By Nov. 30, 2018, the deficit to the five-year average had ballooned to 725 Bcf. According to the EIA, for this week in 2019, the preceding five-year average is 124 Bcf lower than it was for the same week last year. As a result, the gap has closed partially based on a lower five-year average.
NY utility pushing pipeline says it will connect customers (AP) -- National Grid says it'll immediately begin connecting over 1,100 customers denied service after New York rejected an application for a new pipeline. The Public Service Commission order on Friday calls on the company to connect those customers. The commission's chair says the law requires utilities to provide gas service without delay when there's sufficient supply. Democratic Gov. Andrew Cuomo says the pipeline wouldn't be in service until at least next year. A National Grid spokesperson said Friday the utility will connect applicants identified in the order but said it's seeking solutions for the region's "very real gas supply constraints." National Grid is the region's second utility to impose a gas hookup moratorium citing limited pipeline capacity. The nearly $1 billion pipeline would bring natural gas from Pennsylvania's shale gas fields.
National Grid gas shortage warning questioned by pipeline critics Critics of a proposed $1 billion natural gas pipeline are using National Grid testimony and documents to rebut company warnings of gas shortages that are at the core of a moratorium on new gas hookups. A coalition of pipeline opponents made up of activist and green energy groups point to three recently canceled gas supply contracts for the existing Iroquois pipeline in Northport to argue that National Grid has "severely mismanaged or spectacularly misrepresented its gas supply." The coalition suggested the company manipulated the shortage by eliminating "one of Long Island's chief sources of gas." National Grid said it canceled the contracts for financial reasons, and denied the moves caused the downstate shortage. “We believe the Northeast Supply Enhancement Project is the most cost effective and environmentally sound heating supply option available for our customers to heat their homes and run their businesses,” National Grid spokeswoman Karen Young said. The 24-mile gas project would start in New Jersey and connect with existing infrastructure at sea beyond the Rockaways. National Grid gas customers on Long Island and the Rockaways this month received warnings in their monthly bills urging them to “call us before remodeling.” The insert says customers looking to “expand” gas service as part of home renovations should not expect to heat the new spaces with gas.
Columbia Gas vows to meet Friday deadline — With the threat of $1 million fines — per violation — hanging over them, Columbia Gas on Monday announced its plan to check 713 natural gas service lines throughout the Merrimack Valley by Friday as required by the state utility regulator.On Oct. 1, the Department of Public Utilities ordered the gas company to check gas meters that had been moved from inside homes and businesses to the exterior of buildings.When that switch was made, the company was supposed to have completed certain steps when abandoning old meters and the old services line that led into local buildings. The DPU ordered 713 lines to be checked by Friday and another 2,200 sites to be examined and stabilized by Nov. 15. The company has until Friday to check the 713 sites. Most — 417 — are in Lawrence, while there are 176 in Andover and 120 in North Andover. Any of the work not done after that will subject the company to $1 million fines per violation. According to a statement issued by Columbia Gas on Monday, “none of the 2,200 abandoned service lines that will be verified are connected to the active gas system. While Columbia Gas is not aware of any immediate safety concerns associated with these service lines, the company will continue to conduct continuous leak surveillance and remediation throughout the area.” The check of nearly 3,000 service lines follows a rebuild of the gas system in the wake of the 2018 gas disaster.After that crisis, which resulted from overpressurized gas lines, thousands of gas appliances were damaged and underground pipes throughout the region had to be replaced. The situation worsened on Sept. 27, when a massive gas leak erupted in South Lawrence, at the intersection of South Broadway and Salem Street. It caused evacuations, business closures and anxiety among the people affected, all of whom had also been traumatized by the 2018 gas disaster.
NATURAL GAS STORAGE Actions Needed to Assess Inspection Workload and Progress toward Safety Outcomes (pdf) GAO - In 2018, the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) set a goal for its natural gas storage inspection program to inspect all approximately 400 natural gas storage sites within 5 years, according to agency officials. PHMSA expected that all 25 eligible states would help inspect sites, but only 10 states agreed to partner with the agency. As a result, the agency’s inspection workload increased by almost 60 percent from when it set its goal, according to PHMSA data. Because of the increase in its inspection workload over its preliminary estimate, PHMSA does not have assurance that it has enough resources to meet its inspection goal. Furthermore, PHMSA has not used a workforce analysis to inform its budget requests. PHMSA officials said that the agency does not expect to have enough data until 2022 or 2023 to further inform analysis of its workforce. By analyzing factors affecting states’ willingness to partner with PHMSA and its workforce needs on an ongoing basis, the agency would have better assurance that it has the staff it needs to meet its inspection goal. Health effects have been reported related to chemicals that may be found in stored natural gas. Several federal agencies—including the Environmental Protection Agency and the Agency for Toxic Substances and Disease Registry —have documented potential health effects of chemicals that may be found in stored natural gas. In addition, some chemicals may be added to natural gas, such as sulfur odorants that give natural gas a distinct smell in case of leaks. The combination of such chemicals varies from one natural gas storage site to another, based on the attributes of that site such as its geologic type and the extent to which sulfur odorants are added to the natural gas before storage. Many of these chemicals have been linked to adverse health effects. However, research is limited on the health effects of exposure to stored natural gas in general and on the effects in particular from exposure to chemicals that may occur in natural gas storage leaks or be present at the storage sites. Reports linking health effects are available on specific chemicals but not in the context of natural gas storage, based on GAO’s literature review
Michigan AG focuses on clean energy, ratepayer support in shift for office --Dana Nessel is taking “a step up from previous attorneys general” on energy-related issues, one observer says. Michigan Attorney General Dana Nessel is on a mission to protect the Great Lakes from pollution and advocate on behalf of consumers against corporate interests. The energy sector provides her a venue to do both. In her first nine months in office, Nessel has emerged as an outspoken supporter of residential utility customers, clean energy, climate change action and — perhaps most noticeably — shutting down the Line 5 pipeline in the Great Lakes. As Nessel clashes with utilities and pipeline company Enbridge, though, critics say she is overstepping her authority and sending the wrong signals to the state’s business community through a politically driven agenda. She’s accused of being “reckless” on the Line 5 issue, and blustering when it comes to fighting with the state’s largest utilities over rate increases. Nessel, a Democrat, follows 16 years of Republican control of the department. Her supporters say she is a relief, both politically and in policy substance, with her vocal support of ratepayers and clean energy. “I think this office does have the ability to help frame some of those arguments and decisions down the road,” Nessel said of climate and clean energy advocacy during a recent extended interview with the Energy News Network. “I have a hard time thinking that I have this limited opportunity to be sitting in this seat and not have worked real hard to do something to prevent catastrophic impacts to our state in years to come.”
Natural gas price fixing case headed to trial; billions sought for Wisconsin businesses, institutions - After a 13-year legal battle that has been to the U.S. Supreme Court and back, Wisconsin customers who overpaid millions of dollars for natural gas nearly two decades ago are about to get their day in court. During the energy crisis of the early 2000s, natural gas prices soared as a result of what federal authorities determined was price manipulation. As a result, Wisconsin businesses, governments and other organizations that bought gas on the open market overpaid by more than $100 million. Eight organizations are seeking to recover triple the overpayment or the entire cost of the purchases, which could be as high as $2 billion, as part of a class-action suit that attorney Bob Gegios said could benefit the entire state. “It’s our view that there’s been a very significant harm in Wisconsin,” Gegios said, noting the money could have been used to pay salaries, fund research and expansion, build schools and roads or lower taxes. Deregulation in the 1990s had allowed large consumers to buy fuel directly from interstate pipelines and other wholesalers. To determine fair market value, customers relied on privately published price indexes based on information reported by natural gas traders. In 2003, the Federal Energy Regulatory Commission found the traders were reporting bogus data to inflate the price indexes. In some cases, this involved “wash trades,” agreements between two parties to sell something back and forth at the same price that don’t result in any change of ownership. In other cases, trades were simply fabricated.Eight Wisconsin companies — including Briggs & Stratton, Sargento Foods, the printing company Arandell, and Carthage College — sued 11 energy providers in 2006, seeking to recover damages on behalf of all the state’s customers who purchased fuel during the price fixing era.
Q&A: Michigan AG on her office’s shifting course on Line 5, climate advocacy --Critics of Attorney General Dana Nessel downplay her focus on ratepayer advocacy and say her motivations on clean energy issues are politically driven. Advocates say she is giving a powerful voice to those long ignored by Republicans.Either way, Nessel has undoubtedly shifted the course of Michigan’s Department of Attorney General during her nine months in office. She has taken legal action to shut down the Line 5 pipeline and has intervened in national clean energy-related lawsuits, most recently backing California’s stricter fuel economy standards for cars.Nessel is among a cohort of state attorneys general that use their office to promote clean energy, according to a recent report by the New York University School of Law. Nessel has joined 22 other attorneys general in a lawsuit against the federal government’s rollback of vehicle emission standards, as well as challenging the Trump administration’s Affordable Clean Energy rule. She has withdrawn the state from lawsuits — joined by former Republican Attorney General Bill Schuette — involving the Clean Power Plan and ExxonMobil’s climate change disclosures.Nessel says she is driven to act on climate change in the relatively short amount of time she’ll be able to serve as attorney general, and that she has a constitutional duty to protect the Great Lakes. Nessel recently spoke with the Energy News Network for an extended interview about advocating climate change issues, the case for shutting down Line 5, and being an outspoken supporter for residential utility customers. The interview has been edited for length and clarity.
US Supreme Court lets stand FERC rates for Transco gas pipeline expansions — The North Carolina Utilities Commission failed to get the US Supreme Court's help in its drive to challenge Transcontinental Gas Pipe Line's interstate natural gas pipeline expansions on the grounds that the projects negatively affected North Carolina. NCUC, in multiple pipeline dockets, has questioned whether the Federal Energy Regulatory Commission's approach considers whether pipeline returns reflect market conditions and produce recourse rates that serve their intended purpose of providing a check on a pipeline's market power in reaching negotiated rates with project shippers. But the state regulators lost on the question of their standing to make the challenge in the US Circuit Court of Appeals for the District of Columbia, when they sought to overturn FERC orders authorizing three Transco projects approved in February 2017. The projects at issue were the 1.7 Bcf/d Atlantic Sunrise expansion, the 448 MMcf/d Dalton expansion and the 250 MMcf/d Virginia Southside II expansion. Already in service, all three are part of Transco's effort to expand its mainline system, which overlaps key eastern US market areas where both supply and demand is growing fastest. Atlantic Sunrise was a predominantly producer-backed expansion designed to help unlock production from the prolific northeastern Pennsylvania producing area and send it to markets farther south. Dalton and Virginia Southside were primarily demand-pull projects aimed at bringing more low-cost supplies into growing demand markets in the Southeast and mid-Atlantic. After FERC approvals, the NCUC, joined by intervenor New York State Public Service Commission, asked the DC Circuit to set aside the FERC orders on the ground that the recourse rate FERC used relied on an outdated and inflated pre-tax return. The DC Circuit, in an unpublished judgment April 3, found that the state commissions lacked standing because they failed to provide sufficient evidence to establish injury in fact (North Carolina Utilities Commission v. FERC,18-1018). For instance, the court found neither party had shown a substantial probability that capacity from Atlantic Sunrise would flow into their respective states. The Supreme Court Tuesday declined to review that judgment on standing.
Dominion pipeline company in hot water for creek pollution - Since acquiring one of South Carolina’s major power companies this year, Dominion Energy has worked to improve the negative image SCE&G had developed for high electricity bills and a failed nuclear project. But Dominion, a Virginia-headquartered energy giant, recently had to explain why the company’s pipeline division broke South Carolina’s pollution control law when it let muddy, sediment-filled water run into a creek and an Upstate river that thousands of people rely on for drinking water. After months of investigation, state regulators have fined Dominion $4,200 for letting sediment run off a pipeline project the company was building in the Upstate. State regulators say the company illegally discharged sediment along the natural gas pipeline’s 55-mile long route between Spartanburg and Lake Greenwood. The sediment runoff was so significant that a Department of Health and Environmental Control spokesman said the pollution contributed to troubles at an Upstate water utility. At one point, the Woodruff Roebuck Water District had to buy water from another utility because sediment was clogging a river intake pipe near Spartanburg. Not everyone thinks the fine is stiff enough for a multi-billion dollar corporation, questioning whether it will do anything to make the company obey environmental laws.
Fugro completes deepwater AUV surveys for Shell in US Gulf of Mexico - Fugro has completed several high-resolution geophysical surveys in the US Gulf of Mexico for Shell International Exploration and Production Company. The project required data collection over multiple deepwater lease blocks in the greater Perdido and Mars development areas to support clearance of potential environmental, engineering, geological and archaeological hazards ahead of planned drilling activities. As the preferred contractor for this project, Fugro deployed a Hugin autonomous underwater vehicle (AUV) from its purpose-built survey vessel, the Fugro Brasilis. The Hugin AUV is depth-rated to 3000 m and equipped with multibeam echosounder, side scan sonar and sub-bottom profiling sensors. As such, Fugro was able to acquire critical seabed information over the project area safely and efficiently, despite the challenging water depths. Fugro also used a mix of onboard and in-house processing resources to meet an accelerated interpretation and reporting schedule.
U.S. Federal Gulf of Mexico crude oil production to continue to set records through 2020 - U.S. crude oil production in the U.S. Federal Gulf of Mexico (GOM) averaged 1.8 million barrels per day (b/d) in 2018, setting a new annual record. The U.S. Energy Information Administration (EIA) expects oil production in the GOM to set new production records in 2019 and in 2020, even after accounting for shut-ins related to Hurricane Barry in July 2019 and including forecasted adjustments for hurricane-related shut-ins for the remainder of 2019 and for 2020. Based on EIA’s latest Short-Term Energy Outlook’s (STEO) expected production levels at new and existing fields, annual crude oil production in the GOM will increase to an average of 1.9 million b/d in 2019 and 2.0 million b/d in 2020. However, even with this level of growth, projected GOM crude oil production will account for a smaller share of the U.S. total. EIA expects the GOM to account for 15% of total U.S. crude oil production in 2019 and in 2020, compared with 23% of total U.S. crude oil production in 2011, as onshore production growth continues to outpace offshore production growth.In 2019, crude oil production in the GOM fell from 1.9 million b/d in June to 1.6 million b/d in July because some production platforms were evacuated in anticipation of Hurricane Barry. This disruption was resolved relatively quickly, and no disruptions caused by Hurricane Barry remain. Although final data are not yet available, EIA estimates GOM crude oil production reached 2.0 million b/d in August 2019. Producers expect eight new projects to come online in 2019 and four more in 2020. EIA expects these projects to contribute about 44,000 b/d in 2019 and about 190,000 b/d in 2020 as projects ramp up production. Uncertainties in oil markets affect long-term planning and operations in the GOM, and the timelines of future projects may change accordingly.
Five million gallons spilled from Equinor oil facility --MORE than 100,000 barrels of oil - five million gallons - was spilled at the Equinor South Riding Point facility in East Grand Bahama during Hurricane Dorian, Environment Minister Romauld Ferreira said yesterday. To date, more than 35,000 barrels of oil have been recovered from the site. Speaking in the House of Assembly, Mr Ferreira said four thousand acres of forest have been surveyed and 175 acres have been confirmed as affected in some way by crude oil. "The final determination was 119,000 barrels of oil that was spilled during the passage of Hurricane Dorian. Everybody is aware the roof of the storage tanks blew off. Between wind, rain and tidal surge, oil spread out into the forest to the north and to the containment areas." Meanwhile, environment watchdog groups said the oil spill has contaminated water in critical wetland habitats, including an area more than one mile away from the spill. This is according to Waterkeepers Bahamas, Save the Bays, and Waterkeeper Alliance.The groups noted in a joint statement that they tested water samples at five locations near the Equinor spill site and sent 54 individual water samples to an environmental chemist to a certified water testing lab in Wilmington, NC. The water samples analysis displayed distinct petroleum components. The sample profile is distinct and consistent with the makeup of heavy-grade fuel oil, which is not supposed to be there, he noted. The press statement read: "The affected wetlands provide a vital ocean buffer for Grand Bahama, as well as habitat for migratory birds, such as the West Indian woodpecker and red-legged thrush. The wetland also provides a critical cleansing mechanism for the island's scarce groundwater.
Big U.S. liquefied natgas players move fast; smaller ones try to keep up - (Reuters) - A gap is emerging in the U.S. liquefied natural gas (LNG) industry as big players such as Exxon Mobil Corp and Cheniere Energy Inc race ahead to build export terminals with fewer long-term contracts, while smaller developers struggle to find financing for their first plants. LNG trade has traditionally been underpinned by long-term purchasing deals which finance multi-billion dollar terminals that liquefy natural gas by chilling it to -260 degrees Fahrenheit (-160 Celsius), load it onto ships, and regasify it when delivered. This is changing. As the market grows and pricing mechanisms diversify, some buyers do not want to commit to 20-year contracts. The growing prowess of oil majors such as Exxon and recent entrants such as Cheniere and trading houses means there are aggregators that can supply buyers more flexibly, making it harder for smaller players. “The industry is moving away from long-term agreements to justify construction of a new facility to a true commodity business,” said Charif Souki, co-founder and Chairman of Tellurian Inc (TELL.O). Dozens of LNG export terminals are being planned in the United States with a total capacity exceeding 300 million tonnes per annum (mtpa). That is equal to the world’s entire consumption of LNG last year. Globally, LNG demand is expected to rise 26% by 2024, far short of such an increase in export capacity, analysts said. “I’m not going to pick a winner or loser here, but I don’t think there is enough support for all of these projects by any means,” said Rich Redash, head of global gas planning, at S&P Global Platts Analytics. Tellurian has been seeking investors for its 27-mtpa Driftwood export terminal in Louisiana. Instead of trying to line up long-term purchase agreements, it offers customers the opportunity to invest in the company’s gas production, pipelines and liquefaction. The company has delayed the start of construction to early next year from a previous target of the first half of this year, according to company presentations. By contrast, Exxon and Qatar Petroleum decided this year to move ahead with their 15-mtpa Golden Pass project in Texas without substantial long-term agreements, while Cheniere is adding a sixth liquefaction train at its Sabine Pass terminal in Louisiana, initially supported by fewer long-term contracts than in the past.
Small Ships Next Big Thing for $150B LNG Market - Fifty-five years after the first commercial LNG tanker sailed from Algeria, this segment of the gas industry is pushing into ever more niche markets, upending the economics of energy supply in the process. Its next leap forward will be serving customers whose ports or budgets are too small to handle regular LNG tankers. Known as small-scale LNG, the idea is to make the fuel chilled to minus 160-degrees Celsius (256 Fahrenheit) accessible to factories, trucks, ships and even households. That’s set to spur production capacity growth of 58% over the next five years, more than double the pace of the industry in total. “We are just at the end of the beginning,” said Andrew Pickering, the chief executive officer of Avenir LNG Ltd. a London-based supplier set up less than a year ago to focus on the small end of the business. “Let the established players continue to develop large scale and see how we can connect the two.” LNG already is the quickest growing part of the fossil fuel industry as customers switch away from more polluting forms of energy like coal. The super-chilled fuel is helping reduce smog in cities, it’s bringing affordable energy to isolated markets and even become a bargaining chip in U.S. trade talks. The International Gas Union classifies a small-scale LNG vessel as one with capacity under 30,000 cubic meters. That’s about 1/7th of the biggest tankers from Qatar, the worlds’ biggest LNG producer. The traditional ships helped create a global trade in the fuel, building an alternative for utilities and industrial customers to gas that arrives by pipeline. Smaller tankers can help LNG reach a growing number of buyers that only need a fraction of the cargo that a regular tanker can carry. Gas burns more cleanly than coal, giving it less prominence in the debate about how to rein in climate change. Nations from China to the U.S. are investing in LNG as an alternative that allows the flexibility that doesn’t come with billion-dollar pipelines that link customers directly to often distant production fields. With an LNG terminal, customers can take shipments from any of the countries that produce the fuel -- a group as far flung as Australia, the U.S., Algeria, Angola, Qatar and Russia. As new LNG production plants come online, market players are searching for where to place the increasing supply and finding small customers can absorb great volumes.
Permian Serves As Oil Market Shock Absorber - For the oil market, the Permian Basin acts like a shock absorber. That is a key takeaway from a new report from Austin, Texas-based oil and gas software-as-a-service (SaaS) and data analytics firm Enervus. The report examines geopolitical and domestic impacts affecting the oil, natural gas, and natural gas liquids (NGL) markets. “Global incidents like the attack on Saudi oil facilities that used to send lasting ripples across the world and disproportionately harm the United States are now being dismissed,” Bernadette Johnson, vice president of strategic analytics at Enervus, said in a written statement emailed to Rigzone. “What used to trigger a major buy or sell in crude oil, or cause prices at the pump to skyrocket, are being shrugged off by the markets in a day.” Johnson pointed out that markets have abundant U.S. supplies – primarily from the Permian Basin – to thank. “Absorbing most of that impact is the Permian Basin, which has since jumped to 40 percent of total U.S. oil production, but capacity and bottlenecks continue to be a major problem there,” said Johnson. “The good news is relief is on its way with several planned pipelines expected to come online soon.” Beyond last month’s disruption in Saudi production, steep declines in crude output from Iran and Venezuela have failed to present physical oil markets from being well-supplied, Enervus also noted. “Preliminary data imply global petroleum stocks drew in the third quarter and stocks are expected to draw again in the fourth, but large supply/demand imbalances are in our outlook for early 2020 as total petroleum demand continues to soften and non-OPEC production ramps up further,” the firm stated. In fact, despite the ostensible slowdown in U.S. tight oil production, Enervus contends that production growth in Brazil and Norway will augment U.S. supplies and drive non-OPEC crude and condensate growth to 2 million barrels per day in 2020.
U.S. oil and gas jobs fall as drilling declines: Kemp - (Reuters) - U.S. oil and gas employment has started to fall as the sector contracts in response to lower prices over the last year – and further job losses are likely in the next few months as the rate of well drilling declines further. In 2017/18, the second shale-oil boom created almost 100,000 new high-paying jobs in oil and gas drilling as well as associated services such as site preparation, cementing, casing and pressure-pumping. Employment gains in the oil and gas sector also helped support tens of thousands more jobs along the supply chain including trucking, accommodation, retail and leisure services. The impact was felt intensively in some local areas – especially those overlaying the oil- and gas-rich Permian Basin in western Texas and eastern New Mexico. Non-farm employment in the Midland metropolitan area at the heart of the Permian in Texas surged at an annual rate of 15% in the first nine months of 2018, data from the U.S. Bureau of Labor Statistics shows. Non-farm jobs in the Odessa metro area, another Permian boom town, were up more than 10% in the first three quarters of 2018 compared with a year earlier (“Current employment statistics”, BLS, Oct. 4). But the persistent slump in oil prices since the start of October 2018 has brought job creation to a halt and replaced it with a gradual but steady trickle of layoffs (tmsnrt.rs/31e5YRC). Nationwide, the number of jobs at companies providing support services to the oil and gas industry, including site preparation and construction, has fallen progressively over the last year. Employment in oil and gas support activities, subsector 213112 in the North American Industry Classification System, had fallen by 14,000 or 5% between its cyclical peak in October 2018 and August 2019. Job losses have coincided with the downturn in activity shown in weekly drilling reports from oilfield services company Baker Hughes, but more job losses could still be on the way. Since November 2018, the number of rigs drilling for oil has fallen by 176 (20%) and for gas by 51 (26%), according to Baker Hughes. Job losses have been much smaller, so far. Oilfield services companies have kept busy completing the large inventory of oil and gas wells inherited from 2018 and putting them into production. Delayed completions of wells originally drilled in the second half of 2018 and early 2019 have largely sustained oilfield employment and ensured oil and gas output continues rising.
The Single Biggest Threat To U.S. Oil Jobs - When earlier this year Whiting Petroleum announced it would cut a third of its workforce, the news did not make a huge splash as it was lost among other cost-cutting efforts in the industry.But when earlier this month Halliburton said it was cutting 650 jobs, the signal became clearer: the U.S. shale boom is slowing and businesses are preparing for a bad-case scenario where the slowdown extends.Indeed, the U.S. oil and gas industry is bleeding jobs. Reuters’ John Kemp reports, citing official data, that the oil and gas support segment had shed 14,000 jobs between October last year and August this year. That’s a 5-percent decline and while it might not be worrying in itself, combined with other data from the industry, it does suggest a slowdown is in motion.New drilling rig additions between September 2018 and August 2019, Kemp wrote, fell by as much as 20 percent, or 176, according to data from Baker Hughes. Part of that may be better drilling efficiency, of course, but there is also the issue of drilled but uncompleted wells, or DUCs, that the EIA includes in its production forecasts as they can be completed and out into production relatively quickly.These forecasts, according to industry insiders, could be misleading precisely because of the DUCs. In an energy industry survey by the Federal Reserve of Dallas, half of the respondents from the oil industry said the EIA had been overestimating the number of drilled but uncompleted wells in the Permian. What’s more, a quarter of these respondents said the overestimation was significant, S&P Global Platts reported in late September. Some oil executives blamed this on the loose definition of a DUC. Kemp, for his part, notes the slowdown in completions as well. Earlier this year, he wrote, completions of wells drilled last year kept the ball rolling and production growing. Yet recently the number of completions has started falling as has the number of DUCs, which declined by 11 percent between January and August.
'Broken system' starves U.S. oil boom of immigrant workers (Reuters) - New Mexico oil man Johnny Vega laid out his predicament as his crew hoisted pipes from a well during the biggest oil boom in U.S. history. The son of a Mexican guestworker, Vega cannot find enough legal workers to meet demand for his oil well service rigs. There is no shortage of Hispanic and Latino immigrant workers without work permits he could hire in Lea County, New Mexico - the No.2 oil-producing county in the United States. But Vega says he wants to play by the rules, not least because of a heightened risk of company audits by U.S. Immigration and Customs Enforcement (ICE) under President Donald Trump. As a result, he has equipment that could be generating $700,000 a month standing idle in his yard. “They’re demanding more rigs, more swabbing units, but you don’t have enough employees,” said Vega, who runs Mico Services with around $17 million in annual revenues. “It’s a lack of a system to get legal workers, to have more of a workforce to pull from.” Employers like Vega in the Permian Basin oilfields of New Mexico and Texas say they feel caught between Trump’s support for their industry and his policies focused on tougher immigration enforcement. It’s a dilemma faced in other sectors of the U.S. economy that depend on foreign workers after ICE reported surges of between 300% to 750% in worksite investigations, audits and arrests in fiscal year 2018. Visas for temporary jobs in sectors like agriculture and hospitality have increased during the Trump administration. Oil companies complain of difficulties gaining work permits for immigrant oil workers, who do not qualify for these temporary visas. The Permian Basin, by far the most productive oil field in the United States, has helped make the country a net exporter of oil. Its output growth has recently slowed, but production is still at all time highs. The number of rigs drilling for oil in New Mexico hit a record 115 in early October and labor shortages are felt most keenly in service companies like Vega’s that help keep the oil flowing. The Permian Basin is short 15,000 workers, with demand met by paying overtime and shipping workers in and out, according to data from the Permian Strategic Partnership alliance of 19 energy companies. Thousands of immigrants, mainly from neighboring Mexico, have thronged to the decade-long boom. They often fill the hardest and most dangerous jobs few Americans want, such as using heavy equipment to lift oil well tubing or lay pipeline. For Bob Reid, immigrants provide a solution to labor shortages and a chance for boom-bust oil towns like Hobbs, New Mexico to build a more stable future. “The problem is a broken system that’s preventing them from coming in legally in a way that allows them to pursue a path to citizenship,”
New study blames some Permian Basin earthquakes on fracking - A new study from the University of Texas at Austin is blaming hydraulic fracturing activity on some earthquakes in the Permian Basin of West Texas. In a study released Tuesday afternoon, scientists with the TexNet Seismic Monitoring Program reported that some earthquakes in Reeves, Pecos and Culberson counties may be caused by hydraulic fracturing, a process of injecting water, sand and chemicals deep underground to unlock and oil natural gas reserves in shale geological formations. Previous studies had blamed the earthquakes in oil-producing regions across the state on saltwater disposal wells, which inject wastewater from drilling, hydraulic fracturing and production activities deep underground.“The research done through this new study in West Texas, using a statistical approach to associate seismicity with oil and gas operations, suggests that some seismicity is more likely related to hydraulic fracturing than saltwater disposal,” Alexandros Savvaidis, a research scientist and manager of the TexNet Seismic Monitoring Program, said in a statement. So far this year, TexNet seismographs have recorded 209 earthquakes across the Lone Star State with the strongest documented as a 3.8-magnitude near Synder on Oct. 1. The number of earthquakes recorded this year have already outpaced the 192 earthquakes recorded by TexNet in 2018. Saltwater disposal wells are regulated by the Railroad Commission of Texas, the state agency that regulates the oil and natural gas industry. Railroad Commission officials adopted stricter regulations for saltwater disposal wells in November 2014. Over the last five years, the agency has received 657 disposal well applications in areas of historic seismicity. Of those proposed projects, 302 permits were issued with special conditions that include reducing maximum daily injection volumes and pressures as well as being required to record volumes and pressures on a daily basis as opposed to monthly. Applications for 91 disposal sites were returned or withdrawn. Another 82 applications were sent to hearing while 25 permits were issued without special conditions and 157 applications are pending technical review.
U.S. oil output from 7 shale plays expected at 8.97 million barrels per day in November: EIA (Reuters) - U.S. oil output from seven major shale formations is expected to rise 58,000 barrels per day in November to a record 8.971 million bpd, the U.S. Energy Information Administration said in a monthly forecast on Tuesday. The largest formation, the Permian Basin of Texas and New Mexico, is expected to add 63,000 bpd to 4.547 million bpd, the tenth consecutive increase. Production declines are forecast in the Eagle Ford and Anadarko basins. Even though the number of rigs drilling new wells in the Permian and Bakken has declined since the start of the year, output in both basins has increased as the productivity of those rigs reached record levels. Oil production of new wells per rig has risen in most regions since the start of the year. Separately, U.S. natural gas output was projected to increase to a record 84.0 billion cubic feet per day (bcfd) in November. That would be up over 0.3 bcfd over the October forecast, putting production from the big shale basins up for a tenth month in a row even though the number of rigs in each region has declined since the start of the year. Output in the Appalachia region, the biggest U.S. shale gas formation, was set to rise about 0.1 bcfd to a record 33.3 bcfd. The EIA said producers drilled 1,184 wells, the least since February 2018, and completed 1,390 in the biggest shale basins in September, leaving total drilled but uncompleted (DUC) wells down 206 to 7,740, the lowest since November 2018. That was the biggest monthly decline in DUCs on record, according to EIA data going back to December 2013.
Climate change: fracking may be doing more damage than we thought - - As greenhouse gases go, methane gets less attention than carbon dioxide, but it is a key contributor to climate change. Methane doesn’t stay in the atmosphere as long as CO2 and is reabsorbed into terrestrial cycles via chemical reactions within 12 years or so. But while it’s up there, it’s much more potent, trapping heat at roughly 84 times the rate of CO2. Scientists estimate that around 25 percent of current global warming traces to methane.When it comes to reducing CO2 emissions, the chain between cause and effect is frustratingly long and diffuse. Reduced emissions today won’t show up as reduced climate impacts for decades. But with methane, the chain of causation is much shorter and simpler. Reduced emissions have an almost immediate climate impact. It’s a short-term climate lever, and if the countries of the world are going to hold rising temperatures to the United Nations’ target of “well below” 2 degrees Celsius above the preindustrial baseline, they’re going to need all the short-term climate levers they can get. In the real world, though, the news about methane is bad and getting worse. It turns out that a mysterious recent spike in global methane levels that’s putting climate targets at risk may be coming from US oil and gas fracking. If that’s true, it’s bad news, because there’s lots more shale gas development in the pipeline and the Trump administration is expected to release a proposed rule Thursday rolling back regulations on the industry, per the New York Times. Global methane emissions rose steeply in the last decades of the 20th century and then leveled off. But around 2006, they started heading up again. Why? What was the source? Scientists were baffled. There are two broad sources of methane emissions: biogenic (plant and animal-based) and fossil fuel production. The former is mainly about agriculture (cow burps, pig poop, rotting organic waste) and tropical wetlands. As for the latter, methane is leaked or deliberately “flared” (burned off) at virtually every stage of fossil fuel production and transport, a problem that is notoriously bad for fracked shale gas and tight oil. In a new paper released in Biogeosciences, Robert Howarth of Cornell University has proposed two facts he says previous studies have overlooked. First, 63 percent of the total increase in global natural gas production in the 21st century has come from shale gas. And second, shale gas production using modern hydrofracturing techniques tends to produce lighter methane than conventional natural gas drilling. Howarth finds that if the lighter methane of shale gas production is explicitly accounted for, “shale-gas production in North America over the past decade may have contributed more than half of all of the increased [methane] emissions from fossil fuels globally and approximately one-third of the total increased emissions from all sources globally over the past decade.”
Colorado Fracking Study Shows Toxic Chemicals Up to 2,000 Feet Away From Drilling Sites – Newsweek - Data from a Colorado study finds that people living near oil and gas fracking sites may have heightened risk of nose bleeds, dizziness, headaches and other short-term health effects, according to The Denver Post. Right now, state regulators have set a 500-foot minimum setback distance for residences. Evidence from the study finds that residents living between 500-2,000 feet of fracking sites are exposed to benzene and other chemicals. Chemicals, like benzene, toluene and ethyltoluenes were found at up to 10 times the recommended levels at a distance of 500 feet from fracking operations. Those levels were still unsafe at distances of 2,000 feet from some oil and gas fracking facilities.It is possible for the chemicals used during the fracking process to enter and contaminate drinking water sources. This water pollution can also occur during if flowback, the release of water used during fracking exiting the well, is not properly contained.Combustion, such as the burnoff of excess natural gas, can pollute the air. Diesel fumes from transport trucks and airborne sand particles can also negatively affect the air quality in fracking areas.While the number of studies concerning the health effects of fracking is limited, the NIH says there are three clear dangers from the process, mostly involving workers at well sites. The sand used in fracking can enter the respiratory system and causes diseases of the lungs. Accidental chemical spills can endanger the health of site workers. High levels of hydrocarbons can be emitted during flowback operations, allowing workers to be exposed to those toxins.
Sand deposit could be 'game-changer' for North Dakota oil industry — A deposit of sand in north-central North Dakota could be a boon to the state's oil industry. The sand — a variety specifically needed in the process of hydraulic fracturing — has been found in McHenry County, roughly 160 miles west of Grand Forks between the towns of Rugby and Minot. Another has been found in Mercer County, northwest of Bismarck. Fred Anderson, a North Dakota Geological Survey geologist, said the sand could be a "game-changer" for the state. “The reduction in cost would be high,” Anderson said. “It’s a huge deal for the state of North Dakota." Asgard Resources, of Williston, has received a permit to dig sand in McHenry County, the auditor’s office there confirmed. Asgard Resources also applied for a permit to excavate sand in Mercer County, the Mercer County auditor’s office said. . Sand, or “proppant,” is used in fracking to hold open the fracture in the rock so oil and gas can flow from the rock formation into the wellbore. The North Dakota Geological Survey began researching whether North Dakota sand could be used for fracking about 10 years ago, and learned it was marginal, Anderson said. The North Dakota “windblown,” or quartz, sand contains minerals, so it typically is not the proppant sand preferred for fracking. If oil companies can use North Dakota sand for fracking, it will mean they no longer must haul it in from other placeS, Anderson said. The change could boost the margin for the companies in western North Dakota. Bakken completions can require about 4,000 to 5,000 tons of sand per well, the North Dakota Department of Mineral Resources said. The sand can cost as much as $34 per ton, Anderson said.
Ranch hand beats oil giant in court -- A Harding County ranch hand’s five-year fight against a major oil company ended recently when the company paid him $278,320. Janvrin sued Continental Resources in 2014 for cutting him out of the trucking business in the Bakken oilfield of North Dakota. A jury awarded Janvrin compensatory and punitive damages at the conclusion of a 2017 trial. Continental Resources lost an appeal of the verdict this past August and decided to pay Janvrin rather than pursue a further appeal to the U.S. Supreme Court. Janvrin formed J&J Trucking in 2010. The company employed other local ranchers as truck drivers to haul drilling pipes for customers in the booming North Dakota oil industry. Most of J&J Trucking’s business came from CTAP LLC, an equipment supplier with a location in Bowman, North Dakota. The majority of CTAP’s business came from Continental, an Oklahoma-based, top-10 U.S. oil producer and the largest leaseholder in the Bakken region, according to documents filed in the lawsuit. During a February 2014 blizzard, a Continental Resources pickup that was passing through the Cave Hills area of northwestern South Dakota struck and killed two cattle that belonged to Janvrin’s relatives. A local newspaper, The Nation Center News, subsequently published a story about the oil boom’s role in increased vehicle-livestock collisions, and Janvrin was quoted in the story urging companies in the oil fields to slow down their drivers. A Continental supervisor in the company’s Harding County field office was miffed about the article. He quickly passed it up the Continental chain of command, where it reached someone who contacted CTAP. Four hours after Janvrin’s comments were published in the newspaper, a CTAP official called to tell him that CTAP would no longer do business with J&J Trucking. “One day we were going great guns, and the next day we were completely out of business,” Janvrin recalled. Janvrin had employed up to 29 people, many of them local ranchers who used the jobs to help pay bills on their ranches. Janvrin said a friend who had worked as a lawyer in Alaska, Tom Melaney, told him Continental’s conduct was illegal. Melaney’s advice led Janvrin to Kenneth Barker, a lawyer in Belle Fourche with experience in oil-industry cases. Barker filed a lawsuit on Janvrin’s behalf in July 2014, and the case was tried Jan. 10-12, 2017, at the federal courthouse in Rapid City. The jury awarded Janvrin his full request for compensatory and punitive damages.
Burgum administration renews push for petrochemical plant - (AP) — Gov. Doug Burgum and his administration are wooing the petrochemical industry to build a multibillion-dollar plant to convert natural gas liquids into plastic or other products, bringing value to the commodity that otherwise is being piped elsewhere or burned off as a byproduct of the state’s soaring oil production.Such a factory is far from a new idea and other proposals that were initially met with much fanfare fizzled. And any proposal continues to face long odds as the state continues to wrestle with flaring, which wastes gas and revenue and emits unnecessary carbon dioxide emissions blamed for global warming. North Dakota’s Commerce Department, at Burgum’s direction, has been trying to lure petrochemical companies to build a plant in the state.Shawn Kessel, the agency’s deputy director, said officials have been in contact with “two dozen” petrochemical companies, and narrowed that to a shorter list.“There is interest but I can’t say who we’re working with,” he said.Burgum said it was “premature” to discuss any proposed projects. He did estimate such a plant would cost about $10 billion to build but would not say whether he favors offering incentives beyond a host of tax breaks already available, including an additional sales tax break for such a project approved earlier this year by the Legislature. Burgum said no company yet has asked the state for any special incentives to set up shop in North Dakota.
Group Claiming to Speak for Rural Democrats is Tied to Fossil Fuel Lobbyists – During her time in the Senate, North Dakota’s Heidi Heitkamp was one of the most fossil fuel-industry friendly Democrats. She voted to block Congress from enacting a carbon tax, approve the Keystone XL pipeline, and expedite the approval of permits for drilling on public lands. Since being defeated by Sen. Kevin Cramer (R-N.D.) in 2018, Heitkamp continues to push a pro-fossil fuels agenda. Last week, during an interview recorded at a fossil fuel industry-sponsored conference, she encouraged Democrats and environmental philanthropists to take an all-of the-above approach to climate change and to not abandon fossil fuels. Heitkamp received more than $633,000 in campaign contributions from PACs and individuals in the oil and gas industry during her two Senate elections, including $49,300 from BP, $49,200 from ConocoPhillips, and $43,300 from Occidental Petroleum, according to data from the Center for Responsive Politics. In the two-year 2018 cycle, she raised more campaign money from the oil and gas industry than any other incumbent Senate Democrat. In April, Heitkamp donated $750,000 of her leftover campaign funds to start One Country Project, a 501(c)(4) nonprofit, formed with ex-Sen. Joe Donnelly (D-Ind.), that says its mission is to educate Democrats on how to appeal to voters in rural districts. Through polling and talking point memos, One Country Project urges Democrats to move to the right on a range of issues, including climate change. Heitkamp is a member of the organization’s board of directors. One Country Project’s executive director is Tessa Gould, Heitkamp’s former chief of staff who in March became a partner at Forbes Tate, a lobbying firm that represents clients in the natural gas and utilities industries. And the group’s ties to Forbes Tate go even deeper: Its website is registered to Forbes Tates’ director of operations and development, Elizabeth Gonzalez, according to an investigation by MapLight reporter Andrew Perez, and the two organizations appear to share the same D.C. address. Heitkamp paid Gould $55,000 in leftover campaign funds for “strategic consulting” in the first half of 2019, Federal Election Commission (FEC) records show. Forbes Tate lobbies for the Interstate Natural Gas Association of America, a trade group that represents companies in the gas pipeline industry such as Cheniere Energy, The Williams Companies, and Kinder Morgan. It also lobbies for electric utilities that burn oil, gas, and coal. Entergy, which Forbes Tate lobbies for on issues related to energy and water appropriations and the Nuclear Energy Innovation and Modernization Act, among other things, operates 23 power plants that burn either natural gas, oil, or coal located in several southern states. Entergy also operates two petroleum coke-fired facilities in Louisiana.
California governor signs bill limiting oil, gas development – (AP) — California Gov. Gavin Newsom on Saturday signed a law intended to counter Trump administration plans to increase oil and gas production on protected public land.The measure bars any California leasing authority from allowing pipelines or other oil and gas infrastructure to be built on state property. It makes it difficult for drilling to occur because federally protected areas are adjacent to state-owned land.The law sends a "clear message to (President Donald) Trump that we will fight to protect these beautiful lands for current and future generations," said Democratic Assemblyman Al Muratsuchi, who introduced it.Ann Alexander, an attorney with the Natural Resources Defense Council, praised the law and other environmental measures the governor has signed."These bills are important steps toward prioritizing California's communities over the oil industry." Alexander said. "In a perfect California, we wouldn't be producing or using oil at all, and we hope to get there soon. But in the California we live in now, the governor and the legislature have recognized the need to protect our citizens from the threats that the oil industry poses to our health and environment."Also on Saturday, the governor signed several immigration-related bills. Newsom signed a bill that bans the use of noncriminal information from the state's telecommunications database for immigration enforcement purposes, with some exceptions.
Mysterious fire burned in soil at California gas facility (AP) — A California utility is trying to find the source of a small ground fire at its large natural gas storage facility. A Southern California Gas Co. spokesman said the fire extinguished Tuesday did not appear to come from natural gas stored deep underground at Aliso Canyon outside Los Angeles. Chris Gilbride says the company discovered the flames while evaluating whether a wildfire last week caused damage. No damage or leaks have been reported. The storage area was the sight of the nation’s largest known methane release when a 2015 blowout lasted four months and forced 8,000 families to evacuate. The company will test the soil to find the source of the tiny blaze that burned in sandy soil on a steep hillside. The fire did not affect the company’s operations.
Explosion and Fire At Crockett Oil Refinery Shuts Down I-80 --A couple of 8,000-gallon tanks holding diesel fuel exploded Tuesday afternoon at the NuStar refinery in Crockett, shaking the areas of Rodeo, Hercules, and Pinole and sending thick, toxic black smoke into the air. Dual explosions occurred around 2 p.m., as KPIX reports, and in aerial footage two of the tanks appear to have "collapsed." A tanker driver at the site tells the station she had just arrived and filled out some paperwork when she heard a loud "rumbling" and saw "a bunch of people running." She then drove her truck off the property and "I got to the top of the Cummings Skyway and I could see the tops of two tanks completely engulfed in flames."The trucker, named Michelle, explains that the tanks don't contain oil or gasoline, but renewable diesel. As the Chronicle reports, I-80 is closed in both directions, from the Willow Avenue exit in Rodeo up to the Carquinez Bridge. A grass fire is burning in the vicinity as well, and crews are trying to keep the rest of the refinery's tanks cool to prevent any further explosions. The two tanks on fire are expected to continue burning for hours.Video from a YouTuber below shows the fire ongoing just after 2 p.m. The fire was burning, as KPIX explains, just "a few hundred feet from Interstate 80 just south of the Cummings Skyway in Crockett."The Contra Costa County Sheriff's Office issued a shelter-in-place order for the area, telling all residents to "Go inside, and close all windows and doors. Turn off all heaters, air conditioners, and fans... [and] Cover any cracks around doors or windows with tape or damp towels."The incident is reminiscent of the August 2012 fire at the larger Chevron refinery in nearby Richmond.
Massive Fire At Crockett Fuel Facility Contained, Shelter In Place Lifted — An explosion and fire ripped through two fuel storage tanks at a facility in Crockett Tuesday, prompting shelter in place orders and a creating a traffic nightmare after a stretch of a major freeway was closed. The incident began at around 1:50 p.m. with an explosion at a storage tank farm at the NuStar Energy facility, which is nestled in the hills above the 90 block of San Pablo Ave. The fire ignited the vegetation on a hillside bordering the storage tanks. At least one of the tanks at the facility was filled with jet fuel. The shelter-in-place orders for Crockett, Rodeo and parts of Hercules were lifted at 9:45 p.m., the county Department of Public Health announced. The fire created a billowing black plume of smoke that filled the skies for hours in addition to forcing the extended closure of a stretch of Interstate 80 in both directions for much of the day. The busy roadway was reopened around 9:20 p.m., but commuters faced gridlock for hours, especially near Pinole. Cummings Skyway between I-80 and San Pablo Ave will remain closed for the NuStar incident command post throughout the night, Con Fire said. NuStar said in a preliminary statement that all personnel were safe and accounted for, and that the two tanks were holding low volumes of ethanol, less than 1% of tank capacity. Adjacent tanks were being cooled to minimize the risk of the fire spreading, the company said. NuStar also said around 8 p.m. that they are investigating whether Monday night’s 4.5 magnitude earthquake in Pleasant Hill could have contributed to the fire and explosion at the facility. Crocket Fire Chief Dean Colombo said the NuStar facility had been inspected a few months prior to Tuesday’s fire. But the facility does not have its own fire brigade or fire equipment, Colombo said. It does have fixed equipment to cool down tanks on the exterior in the event of a fire. The fire was burning just a few hundred feet from Interstate 80 just south of the Cummings Skyway in Crockett. Aside from I-80, authorities closed a number of roads in the area because of the fire.
Did Pleasant Hill quake trigger fuel tank explosion in Crockett? It’s one possibility - An explosion at an oil storage facility in Crockett on Tuesday afternoon sent a huge fireball into the air in west Contra Costa County, shaking buildings and rattling windows for miles around and igniting a fire that burned for hours. Officials were investigating whether the explosion was triggered by a 4.5 quake that struck Pleasant Hill in the central part of the county 15 hours earlier. “It is one of many things we will be looking at as we work with officials to identify the cause of the fire,” said Mary Rose Brown, a spokeswoman with NuStar Energy, the fuel-storage facility where at least one tank exploded just before 2 p.m.The force of the blast felt like an earthquake, residents who experienced it said. Officials said all workers in the area were accounted for and safe. Minutes after the explosion, emergency sirens activated in the area and officials ordered residents in Crockett and Rodeo to shelter in place due to potentially unhealthy air contaminants. The tiny community of Tormey, adjacent to the explosion site and home to about a dozen to 20 people, was evacuated.
Earthquake probed as possible cause of California fuel fire (AP) — Officials were trying to determine Wednesday if a 4.5 magnitude earthquake triggered an explosion at a fuel storage facility in the San Francisco Bay Area that started a fire and trapped thousands in their homes for hours because of potentially unhealthy air. The earthquake struck about 15 miles (24 kilometers) southeast from the NuStar Energy fuel storage facility in the Bay Area community of Crockett 15 hours before the Tuesday fire that consumed thousands of gallons (liters) of fuel. Aftershocks in the same area were still being felt Wednesday, including one with a 3.4 magnitude. State and local inspectors were investigating the fire that shut down the facility, which according to the company has 24 tanks capable of holding more than 3 million barrels of different kinds of fuels. The seven-hour blaze erupted in towering, stubborn flames Tuesday afternoon at the facility in Crockett, about 30 miles (50 kilometers) northeast of downtown San Francisco. Emergency sirens blared and a column of thick black smoke that could be seen for miles prompted Contra Costa County public health officials to order people in Crockett, neighboring Rodeo and part of Hercules to stay inside with fans and air conditioners off and to seal their windows and doors with tape or wet towels. The concern was that hazardous particulates might be spewing from the fire. County health officials late Tuesday lifted a shelter in place order affecting about 12,000 people. But at least four schools in the area closed on Wednesday as a precaution. The fire began at about 2 p.m. at the tank farm, one of several refining and fuel storage facilities in the Carquinez Strait, a major shipping thoroughfare and a key oil hub. Video footage of the fire showed flames leading up to an explosion so strong it blew the lid of one of the tanks high into the air. The fire badly damaged or destroyed two tanks containing about 250,000 gallons of ethanol, a gasoline additive. The facility also stores gasoline, diesel and aviation fuels, according to NuStar Energy LP. About 200 firefighters fought the flames with foam and water, trying to prevent it from spreading to other tanks containing jet fuel and ethanol. They would knock down the flames but they kept reigniting in the spilled fuel.
Gov. Gavin Newsom fires top official over fracking permits — but won’t ban the oil wells - Gov. Gavin Newsom on Friday defended firing California’s top oil industry regulator for issuing too many hydraulic fracturing permits, but offered no details on whether he plans to ban or limit the oil extraction process in the state.Newsom’s chief of staff fired Ken Harris, the head of the state Division of Oil, Gas and Geothermal Resources, on Thursday after revelations that, during the governor’s first six months in office, the state approved fracking permits at twice the rate it did in the year before under former Gov. Jerry Brown.Newsom, who opposes fracking, said he was unaware that so many permits had been issued by the agency, known as DOGGR. The Democratic governor said his administration is still in the process of reshaping California’s executive agencies, adding that he has been consumed with crafting his first state budget, dealing with the aftermath of the Pacific Gas & Electric bankruptcy, and other pressing issues. “There’s a lot of things that, unfortunately, come to your attention with a government as large as ours,” Newsom told reporters during a morning news conference inside his Capitol office. “I don’t think anyone who was paying attention, including the individual that’s no longer there, is unaware of my position on fracking. I’ve been very explicit about it.” Newsom’s actions follow a report by two environmental and consumer advocacy groups, FracTracker Alliance and Consumer Watchdog, which found that along with the increase in fracking permits, a number of California’s top oil regulators and officials held investments in major oil companies, including Exxon Mobil and Chevron. The findings were first reported by the Desert Sun newspaper. During his campaign for governor, Newsom vowed to “tighten” state oversight of fracking and oil extraction in California, which is the fifth-largest crude oil producer among the nation’s 50 states. When he took office he also promised to accelerate California’s transition to 100% renewable energy. Newsom has not taken action to curtail fracking. On Friday, the governor said he does not have the authority to impose a moratorium on permits for fracking, a process that uses drilling and large volumes of high-pressure water to extract gas and oil deposits.
U.S. shale oil output to rise to record 8.52 million barrels per day in July: EIA - (Reuters) - U.S. oil output from seven major shale formations is expected to rise by about 70,000 barrels per day (bpd) in July to a record 8.52 million bpd, the U.S. Energy Information Administration said in its monthly drilling productivity report on Monday. The largest change is forecast in the Permian Basin of Texas and New Mexico, where output is expected to climb by 55,000 bpd to a fresh peak at 4.23 million bpd in July. Production in North Dakota and Montana’s Bakken shale basin is also expected to climb by 11,000 bpd to a record 1.44 million bpd, the data showed. Output from the nearby Niobrara basin is expected to rise by 10,000 bpd to a record high of nearly 730,000 bpd. A shale revolution and production increases particularly from the Permian basin and the Bakken have helped make the United States the biggest crude oil producer in the world, ahead of Saudi Arabia and Russia. However, the EIA has revised lower its total U.S. crude oil production growth forecast. It said last week in a monthly report that output will rise 1.36 million bpd to 12.32 million bpd in 2019, 140,000 bpd less than previously forecast. That will top the current all-time high of 10.96 million bpd set in 2018. The rig count, an early indicator of future output, has declined over the past six months as independent exploration and production companies cut spending on new drilling as they focus more on earnings growth instead of increased output. More than half the total U.S. oil rigs are in the Permian basin, the biggest U.S. shale oil play, where active units decreased by five last week to 441, the lowest since March 2018, according to data from General Electric Co’s Baker Hughes energy services firm. The EIA said in Monday’s report that producers drilled 1,318 oil and gas wells, the least since April 2018, and completed 1,395 in the biggest shale basins in May, leaving total drilled but uncompleted wells down 77 at 8,283, according to data going back to December 2013. That was the biggest decline in drilled but uncompleted wells since March 2018 when they fell by 107.
Shale Wells 'Riding the Edge' of Profitability at Present Prices -- U.S. shale oil plays are “riding the edge of profitability” at current prices and the industry faces a significant slowdown in fracking activity if crude falls below $50 a barrel for a sustained period, according to BloombergNEF. The majority of American shale wells make money based on the $51.45 average futures price, or “strip,” for West Texas Intermediate crude over the next two years, BNEF analyst Tai Liu said in a report Thursday. But he added that the historical floor price for U.S. oil of $45, which in the past has been based on so-called half-cycle drilling costs, is likely to rise to $50 as investors use different metrics. “These firms are now being judged by their ability to generate free cash flow,” BNEF said of drilling companies. “Free cash flow sets a higher bar than half-cycle costs from a break-even perspective.“
America’s Great Shale Oil Boom Is Nearly Over -- America’s second shale boom is running out of steam. But don’t panic just yet, a third one may be coming over the horizon. The U.S. Energy Information Administration published its latest short-term energy outlook last week and has cut its forecast of oil production by the end of 2020 for the fourth straight month. It now expects American output to rise by just 370,000 barrels a day over the course of next year. That will be the slowest growth in four years and is yet another indicator that the latest period of rapid shale expansion is faltering. The number of rigs drilling for oil in the U.S. has fallen in each of the last 10 months, dropping by a total of 20% since November. And productivity gains are waning. Drilling in the Permian, the most prolific of the shale basins, fell by 11% in the nine months to August, according to the EIA. The development of the U.S. shale patch is a bit like that of a person. During the first growth spurt in the four years to 2014 the industry was in the toddler phase. Everything was new and exciting, the toddlers stuck their fingers (or in this case their drill bits) into everything, just to see what would happen, and they pushed the boundaries in every direction. The toddler developed quickly, but the outside world taught it a hard lesson with a crash in the oil price in 2014. The second boom from 2016 has been more like the adolescent phase. After picking themselves up and learning to live in their changed world, the young adults developed their muscles and concentrated only on the things that interested them (the sweet spots in the shale deposits) to the exclusion of everything else. This focus has brought bigger output gains than the first boom. In the three years between December 2016 and December 2019 output is expected to have increased by 4.2 million barrels a day, compared with 3.9 million barrels a day between December 2010 and December 2014. The biggest challenges of the second shale boom have been identifying and exploiting those sweet spots, consolidating acreage to enable the use of longer wells, and building infrastructure to move the gas and liquids to markets (including overseas). But with a WTI oil price of about $50 a barrel, some in the shale patch are struggling. Shale companies are being forced to produce more to service their high debts, but they aren’t making any surplus profit to cut their borrowing or pay shareholders. Now those investors are starting to demand more of a return. With the crude price seemingly stuck close to where it is — despite the tensions in the Persian Gulf region which flared up again on Friday — the next round of discussions between the shale producers and their lenders could be difficult.
Warren's Fracking Proposal Has Shale Investors Weighing Risks - The prospect of Elizabeth Warren becoming the 2020 Democratic presidential nominee, or the 46th president of the U.S., has energy investors worrying about risks to hydraulic fracturing. “What happens if Elizabeth Warren becomes president and bans fraccing?” was the most common question Sanford C. Bernstein received during recent marketing, analysts led by Bob Brackett said in note Tuesday. They don’t currently have a good answer. Concern on Wall Street has been rising along with Warren’s poll numbers, with sectors such as financials, health care and industrials as well as energy identified among those at risk from her policy proposals. In early September, Warren tweeted that she would ban fracking “everywhere” if she becomes president. The former part of Warren’s plan would have a modest longer-term impact given the “mature state” of areas such as onshore Alaska or the federal Gulf of Mexico, according to Bernstein. However, a fracking ban would offer “much more immediate consequences,” and be “incredibly bullish for both global oil prices and U.S. natural gas prices.” Federal leasing changes could have the most impact on shale drillers such as EOG Resources Inc. and Devon Energy Corp., Brackett said. Kosmos Energy, Hess Corp., Apache Corp. and ConocoPhillips may have little to worry about from a fracking ban, however. Still, any impact from a Warren win may be short-lived. “We have a government with checks and balances,” Brackett noted, pointing to processes which have caused executive orders to be moderated. He also highlighted the ability of E&Ps to re-allocate capital to mitigate effects. And, as RBC Capital Markets wrote earlier this week, most of the sectors seen to be at high risk “are already deeply undervalued versus the broader market.”
Exclusive: No choice but to invest in oil, Shell CEO says - (Reuters) - Royal Dutch Shell (RDSa.L) still sees abundant opportunity to make money from oil and gas in coming decades even as investors and governments increase pressure on energy companies over climate change, its chief executive said. But in an interview with Reuters, Ben van Beurden expressed concern that some shareholders could abandon the world’s second-largest listed energy company due partly to what he called the “demonisation” of oil and gas and “unjustified” worries that its business model was unsustainable. The 61-year-old Dutch executive in recent years became one of the sector’s most prominent voices advocating action over global warming in the wake of the 2015 Paris climate agreement. Shell, which supplies around 3% of the world’s energy, set out in 2017 a plan to halve the intensity of its greenhouse emissions by the middle of the century, based in large part on building one of the world’s biggest power businesses. Still, the amount of carbon dioxide emitted from Shell’s operations and the products it sells rose by 2.5% between 2017 and 2018. A defiant van Beurden rejected a rising chorus from climate activists and parts of the investor community to transform radically the 112-year-old Anglo-Dutch company’s traditional business model. “Despite what a lot of activists say, it is entirely legitimate to invest in oil and gas because the world demands it,” van Beurden said. “We have no choice” but to invest in long-life projects, he added.
The Little Canadian Oil Town Ravaged By Big Insolvencies - Fort McMurray, Alberta has officially turned into "the insolvency capital of Canada", according to Bloomberg. The small oil town's problems are exemplified by the number of people who show up every month at the Wood Buffalo Food Bank. A decade ago, the bank would see about 2,000 people per month, coming by for cans of soup and jars of peanut butter. Now, that number stands closer to 8,000 people per month. Many that come by now are men and women who were "living high before the bust." The Food Bank's director, Dan Edwards, said: “You never know who’s going to walk through your door. Individuals that have degrees and education and skills—but the jobs just aren’t what they were.”The tiny city of just 75,000 exemplifies the debt problems that are spreading across Canada. As large paychecks and robust overtime have dried up, the bill for many consumers' spending over the last decade has finally come due. In the Fort McMurray district, consumer insolvency filings were up 39% in 2018, the largest increase in Canada. Claims against property have been up about tenfold in the last three years. The 90 day delinquency rate on non-mortgage loans in the city is up 1.75% in the second quarter, compared to 1.12% nationally. The main driver of the bust has been the five year slump in oil prices, which have halved since 2014. Exacerbating things was a "crippling shortage" of pipelines out of the McMurray Formation, a reserve of crude-laden oil sands. Plans for new lines have been held up in court or by activists, including U.S. activists who have called the oil sands a "carbon bomb". Steve Richardson is a prime example of the area. After working at Suncorp for 5 years, he was let go in May. He had formerly earned 6 figures as a machine operator and would commute from Vancouver, working 14 days on and then 7 days off. Once travel reimbursements stopped, he moved his family closer to the job. But now, he's being forced to cut back across the board - including cutting things like his cable bill. Richardson said: “I spend a lot of time wondering what the next job is going to be. I never got into all the toys. I’m kind of fortunate that way, that I didn’t have to sell everything off like some other people. I’ve seen a lot of that. It’s like a fire sale.”
Journalist warns $260B worth of fracking liabilities could be dumped on taxpayers - Andrew Nikiforuk has dedicated himself to investigating the fracking industry in Canada, particularly in Alberta and British Columbia. Nikiforuk, who spoke in Lacombe on Tuesday as part of Burman University’s Herr Lecture Series, argues the oil and gas fracking industry has created a financial challenge. “It has driven down the price of both oil and gas. And at the same time, the technology is high cost,” Nikiforuk, an investigative journalist who has won seven National Magazine Awards and the Governor General’s award for non-fiction, said of fracking. “Most companies that have gone into fracking are short of cash, highly indebted and barely making a go of it.”Nikiforuk says indebted fracking companies are a problem for municipalities and the province because they don’t pay the taxes they owe, they do not reclaim aging oil and gas wells, and they do not pay their service leases to landowners. This has resulted in more than $260 billion in liabilities for the province of Alberta. “They are a drain on rural communities,” he said. Nikiforuk said that no Alberta government has had a strategy to address the issue. He said the current government has chosen to blame low commodity prices on the federal government and environmental groups.Nikiforuk said it is human nature to find a scapegoat, but believes liabilities will affect everyone. “Two-hundred-and-sixty billion dollars worth of liabilities is going to be dumped on taxpayers and that should not be happening. “The regulator said that wouldn’t happen. Well, I am sorry, guys — it is happening big time. The regulator didn’t do its job,” he said.
Venezuelan oil output could be halved without Chevron waiver extension: analysts — Venezuelan oil production, already averaging a historic low near 600,000 b/d, could quickly plummet below 300,000 b/d if the Trump administration allows a waiver for Chevron and four US oil services companies to expire next week, analysts told S&P Global Platts. "I think you'd see it go certainly to under 300,000 b/d within a month," said Neil Bhatiya, an associate fellow with the Center for a New American Security. "The question after that is whether and how fast there is backfilling by Chinese, or, more likely, Russian state firms. It will take a while though, so a Chevron-less Venezuela will probably be in the [sub-300,000 b/d] zone for the remainder of the calendar year." At issue is a general license issued by the US Treasury Department on January 28 as the administration unveiled its most punitive sanctions on Venezuela's oil sector. The waiver allowed Chevron, Halliburton, Schlumberger, Baker Hughes, and Weatherford International to continue certain work with PDVSA, Venezuela's state oil company, while those sanctions were in place. The waiver, which was granted a 90-day extension in July, expires on October 25. Joe McMonigle, an analyst with Hedgeye Risk Management, said that the 90-day extension Treasury granted Chevron and other companies in July was likely the last and only extension for the waiver and served as more of a "wind-down period" for those US companies to prep their departure from Venezuela's oil sector. Chevron "still prefers a waiver and most likely lobbying for it," McMonigle said. "But the reality is, the administration wants to ratchet up pressure and this is one of the few tools left in the toolbox." Any extension may require National Assembly leader Juan Guaido, who the US recognizes as Venezuela's legitimate president, to provide the administration "political cover" by publicly calling the Chevron extension a necessity for Venezuela's economy, "If the waiver expires it will certainly have an impact on operations and production for PDVSA," Chevron, a presence in Venezuela for nearly a century, currently works with PDVSA on four joint-venture operations in western and eastern Venezuela, including Petropiar in the Orinoco Belt, which produces about 200,000 b/d, including an estimated 40,000 b/d by Chevron and 160,000 b/d by PDVSA. Rosneft or a Chinese company may be willing to operate Petropiar if Chevron's waiver is allowed to expire, which could prevent oil output from falling more than 25,000 b/d to 50,000 b/d in the near term. But Venezuela's current constraint is sales, not production, Monaldi stressed.
Russia Ready To Seize Control Of The World's Largest Oil Reserves - The Venezuelan government is readying to hand over control over state oil company PDVSA to Russia’s Rosneft, a local newspaper has reported, citing sources from the industry. Russian TASS reports, quoting El Nacional, that the radical move is being discussed as a way of erasing Caracas’ debt to Moscow. The debt is sizeable: at the end of June this year, money owed to Rosneft alone stood at $1.1 billion. That’s down from $1.8 billion at end-March.Two years ago, Caracas and Moscow sealed a deal for the restructuring of another $3.15 billion debt to Russia over 10 years with minimum payments over the first six years. Since 2006, Russian loans to Venezuela have reached more than $17 billion in total.According to the El Nacional report, Moscow had reacted positively to the suggestion, and several commissions had been set up and sent to Venezuela to evaluate the situation at PDVSA. The first feedback from these commissions was reportedly that the company was too large and it needed serious layoffs to become more competitive.Competitiveness remains questionable, however. Most of the U.S. sanctions on Venezuela have targeted precisely PDVSA because of its vital role as the country’s—and the Maduro government’s—cash cow. Rosneft is the subject of U.S. sanctions, too.Rosneft is active in Venezuela in joint projects with PDVSA. However, these activities appear to not be in breach of U.S. sanctions, according to the U.S. Special Envoy for Venezuela Elliott Abrams. However, Abrams said last month that sanctions may be coming for the Russian company in the future. If the El Nacional report is confirmed, these will likely come sooner rather than later Caracas reportedly wants to hand control over to Rosneft without having to go through privatization. In any case, a change of ownership over PDVSA would need to be approved by the National Assembly, which is controlled by the opposition.
Indigenous Mapuche pay high price for Argentina's fracking dream -- The roar of the burning gas well could be heard almost a mile and a half away, from atop the high plateau where Albino Campo Maripe stood, looking down at the orange flames lapping the earth in the distance. When he was a child, the 60-year-old Mapuche chief used to ride there bareback. Those days are gone for ever. The once-pristine landscape is now dotted with fracking wells and the white patches of land cleared for even more. The panoramic view is nonetheless overpowering. Two crystal-blue lakes, whose far shores blend with the horizon, cling to the edge of an arid and wind-buffeted Martian landscape of red sandstone, rugged promontories and wide beaches. But the image quickly fades to the sight and sound of the fracking well that exploded on 14 September and burned continuously for 24 days, spewing hot gas and other elements into the air from nearly two miles below ground. The raging fire was finally put out on Monday by a team of experts who flew from Houston with 56 tons of special equipment. “This shouldn’t be happening,” Campo Maripe said, “but these are the consequences of fracking.” Fracking accidents happen regularly in Vaca Muerta (Dead Cow in Spanish), one of the world’s largest shale oil and gas reservoirs. In 2018 alone, there were an estimated 934 incidents at 95 wells. There have been leaks from drilling sites, and claims from local people of water pollution and increased ill health affecting them and their livestock. For Argentina’s leaders there is a bigger picture. They believe the shale reservoir can rescue the country from its ongoing economic crises. “This province will transform us into a world power,” the president, Mauricio Macri, said on Tuesday to a crowd of 3,000 people in Neuquén, referring to the nearly 2,000 fracking wells that have been drilled there since the discovery of the deposits was announced in 2011.Neuquén’s indigenous Mapuche people claim Vaca Muerta has brought them not wealth, but discrimination, dispossession and health problems.
How fracking is taking its toll on Argentina's indigenous people – video explainer | Environment | The Guardian - An oil fire burned for more than three weeks next to a freshwater lake in Vaca Muerta, Argentina, one of the world’s largest deposits of shale oil and gas and home to the indigenous Mapuche people. In collaboration with Forensic Architecture, this video looks at the local Mapuche community’s claim that the oil and gas industry has irreversibly damaged their ancestral homeland, and with it their traditional ways of life
Brazil oil spill- 2,000km of northern beaches contaminated (video) Brazil is in the middle of an environmental emergency, with crude oil washing up on once-spotless beaches along the northeast coast.Authorities have launched an enormous clean-up campaign but since the source of the spill cannot yet be found, recovery efforts are painstaking and slow. Al Jazeera's Gabriel Elizondo reports from the northeast State of Alagoas.
Origin of Oil Killing Brazil's Turtles is Mystery -- More than a month since oil started washing up on some of Brazil’s most touristic beaches, dotting sand with black patches, killing sea turtles and scaring off fishermen, the origin of the crude is still a mystery. “We don’t know the oil’s origin, where it came from or how it got here,” Energy Minister Bento Albuquerque said at an offshore exploration auction in Rio de Janeiro on Thursday. The crude probably leaked from a ship in the ocean, he ventured, adding that it has characteristics similar to Venezuelan heavy crude -- which doesn’t mean it comes from there. Venezuela’s state oil company categorically denied having anything to do with the slick, saying there were no reports of incidents at its facilities or from clients, nor evidence of leaks that could have led to damages in Brazil. The massive spill has already spread along the coasts of all nine states in Brazil’s northeast. Over a dozen sea turtles have been found dead, covered in crude, local newspaper O Estado de S. Paulo reported. Some 800 baby turtles that hatched were kept from going into the sea, the newspaper said, citing Projeto Tamar, one of Brazil’s best-known wildlife conservation projects. The nation’s environmental agency said the oil found on the beaches was not produced by Brazil, and that the country’s Navy and federal police are investigating the spill. On Wednesday, Environment Minister Ricardo Salles said the oil likely originated from Venezuela, citing a report from state-controlled oil company Petroleo Brasileiro SA about the characteristics of the crude. Petrobras Chief Executive Officer Roberto Castello Branco said Tuesday that the spill could have come from an oil tanker that sank, an accident when loading oil from one tanker to another, or from a criminal act. President Jair Bolsonaro has said for days that the oil spill was probably criminal, without elaborating further.
Brazils Petrobras collects 200 tonnes of oil residue - - Brazilian state-run oil firm Petroleo Brasileiro SA said on Wednesday it has collected 200 tonnes of oil residue from the country’s Northeastern coast since Sept. 12. In a statement, Petrobras, as the company is known, said 1,700 environmental agents were mobilized to clean the area affected by the oil spill. Another 50 employees were involved in planning and executing cleaning operations, it added. Petrobras also reiterated that the oil found in the northeastern coast of Brazil does not belong to the company, which will be reimbursed for the expenses related to the cleaning effort.
Brazils Bolsonaro suggests oil spill could be attempt to sabotage auction (Reuters) - Brazilian President Jair Bolsonaro questioned on Friday whether a far-reaching oil spill on the nation’s northeastern shore may have been a criminal act designed to harm a major oil auction scheduled for November. “Coincidence or not, we have the transfer-of-rights auction,” said Bolsonaro in a Facebook Live video, referring to an oil bidding scheduled for Nov. 6, in which an array of major oil players will compete for $26 billion worth of production rights in large offshore oil areas of Brazil. “I wonder, we have to be very responsible about what we say - could it have been a criminal act to harm this auction? It’s a question that’s out there.”Bolsonaro offered no evidence for his statements. Oil has been washing up on the shore of northeastern Brazil for two months, but its origin has remained a mystery so far. On Wednesday, Brazilian state-run oil firm Petroleo Brasileiro SA said it had cleaned up some 200 million tonnes of the oil from Brazil’s beaches. On Thursday, the head of Brazil’s environmental regulator said tests had proved the oil was Venezuelan. He said that the cause of the spill was criminal in nature, as it would otherwise have been reported.
Venezuela denies responsibility for oil spills on Brazil beaches(Reuters) - Venezuela’s government on Thursday said the OPEC-member country was not responsible for oil spills that have contaminated beaches in Brazil, after a Brazilian official said the crude was likely from Venezuela. In a joint statement, the oil ministry and state oil company Petroleos de Venezuela said PDVSA had not received any reports from clients or subsidiaries about any oil spills near Brazil. “We consider the statements unfounded,” the statement read, noting the spills were located about 6,650 kilometers (4,132 miles) from its oil infrastructure. “There is no evidence of any crude spill in Venezuela’s oil fields that could have caused damage to our neighbor’s marine ecosystem.” On Wednesday, Brazilian Environment Minister Ricardo Salles said thick crude oil that had been mysteriously washing up on hundreds of kilometers of beaches in nine northeastern states is “very likely from Venezuela.” Authorities have been probing the origin of the oil for more than a month. On Thursday, Brazilian Mines and Energy Minister Bento Albuquerque said the government had not confirmed the origin of the oil, but noted that it had properties similar to Venezuelan petroleum. Researchers at the Federal University of Bahia, one of the states hit by the oil pollution, said on Thursday that their lab studies found a “strong correlation” between slicks spilled off Brazil coast and one of the types of oil produced in Venezuela. “None of the types of oil produced in Brazil have characteristics of the samples analyzed,” the university’s Institute of Geosciences said in a statement.
Exclusive: India's Nayara supplying fuel to Rosneft in exchange for Venezuelan oil - sources - (Reuters) - India’s Nayara Energy has been using Russian giant Rosneft as an intermediary to acquire Venezuelan oil, paying it in fuel rather than cash to avoid violating U.S. sanctions, three sources with knowledge of the transactions said. The United States in January prohibited U.S.-dollar transactions for oil sales from Venezuela’s PDVSA or its units, a measure intended to cut off cash flows and increase pressure on President Nicolas Maduro, whose 2018 re-election has been dismissed as a sham by Washington. The sanctions have made some banks wary of processing any transaction for Venezuelan oil, even if the seller is not the state-run company. They have also scared away some of PDVSA’s customers, while prompting others to buy Venezuelan crude from intermediaries like Rosneft, the sources said. In exchange for the Venezuelan oil, Nayara, part-owned by a Rosneft-led consortium, is shipping cargoes of gasoline and gasoil to the Russian firm, according to the sources, who declined to be named as they are not authorized to speak to media. The United States further tightened sanctions on Venezuela in August, threatening non-U.S. companies with punitive action if they ‘materially assist’ Maduro’s government. But Washington has said that firms, including Rosneft, that take Venezuelan oil to monetize loans are not violating sanctions as long as cash does not reach Maduro’s coffers. Rosneft declined to comment. Nayara Energy and PDVSA did not reply to requests for comment.
Russia Considers Energy Exports In Euros, Rubles As Putin's De-Dollarization Continues --Russia's de-dollarization efforts continue, in line with Putin's promise to lower the country's vulnerability to the ongoing threat of US sanctions, with officials eyeing energy exports next. “We have a very good currency, it’s stable. Why not use it for global transactions?” Russian Economy Minister Maxim Oreshkin said in an interview with the Financial Times on Sunday. “We want (oil and gas sales) in roubles at some point,” he said. “The question here is not to have any excessive costs from doing it that way, but if the broad ... financial infrastructure is created, if the initial costs are very low, then why not?” Oreshkin mused. Despite less than 5% of Russia's $687.5 billion in annual trade being with the US, it remains that over half of that trade still relies on the dollar, according to Bloomberg figures.But US sanctions now routinely delay Western companies' business with Russia, given they have to check with the US over whether those transactions are allowed. Reuters summarized of the economy minister's latest statements further that "Russia will be able to sell its energy exports in local currency given the popularity of the country’s domestic bonds among foreign investors, who own 29% of its rouble debt."
South Sudan to replace oil pipelines after leakage in northern region - (Xinhua) -- South Sudan said on Friday it will commence replacement of old oil pipelines after it lost about 2,000 barrels of oil in the recent oil spill in the Panakuc area of northern Ruweng state. Daniel Awow Chuang, minister of petroleum, said the government aims to start the renovation of the aging pipelines in a bid to mitigate future oil leakage. "We expect that the pressure in the pipeline will increase within the next few weeks. We should be able to make renovation to the pipelines so that it does not cause any burst in the future," Chuang told Xinhua in Juba. The oil spill occurred last month in blocks 1, 2 and 4 in Ruweng. Chuang also disclosed that the oil spill is under control in the surrounding areas. South Sudan plans to host the upcoming oil and power conference starting Oct. 29-30 in the capital which will see the launching of new tenders for companies through the open bidding process. The oil-dependent country which relies on oil revenue to finance 98 percent of its fiscal budget, recently discovered a new oil well in the Adar area. South Sudan is aiming to boost oil production from the current 175,000 barrels a day to 200,000 BPD by 2020.
Nigeria Demands $62B from Oil Majors-- Nigeria is seeking to recover as much as $62 billion from international oil companies, using a 2018 Supreme Court ruling the state says enables it to increase its share of income from production-sharing contracts. The proposal comes as President Muhammadu Buhari tries to bolster revenue after a drop in the output and price of oil, Nigeria’s main export. It’s previously targeted foreign companies, fining mobile operator MTN Group Ltd. almost $1 billion for failing to disconnect undocumented SIM-card users, and suing firms including JPMorgan Chase & Co. in a corruption scandal. In the latest plan, the government says energy companies failed to comply with a 1993 contract-law requirement that the state receive a greater share of revenue when the oil price exceeds $20 per barrel, according to a document prepared by the attorney-general’s office and the Justice Ministry. The document, seen by Bloomberg, was verified by the ministry. While the government hasn’t said how it will recover the money, it has said it wants to negotiate with the companies. In its battle with MTN, the fine imposed on the company was negotiated down from an initial penalty of $5.2 billion. Nigerian presidency spokesman Garba Shehu didn’t answer three phone calls or respond to a text message requesting comment. Under the production-sharing contract law, companies including Royal Dutch Shell Plc, ExxonMobil Corp., Chevron Corp., Total SA and Eni SpA agreed to fund the exploration and production of deep-offshore oil fields on the basis that they would share profit with the government after recovering their costs. When the law came into effect 26 years ago, crude was selling for $9.50 per barrel. The oil companies currently take 80% of the profit from these deep-offshore fields, while the government receives 20%, according to the document. Oil traded at $58.29 a barrel on the London-based ICE Futures Europe Exchange. Most of Nigeria’s crude is pumped by the five oil companies, which operate joint ventures and partnerships with the state-owned Nigerian National Petroleum Corp.
Oil spill from Iranian Suezmax tanker under control after explosion— Oil leakage from Suezmax tanker, the Sabity, is coming to an end and the situation is under control, its owner National Iranian Tanker Company said in a statement Friday, and denied reports of fire in the vessel. The oil leakage has stopped and "reached the least," state news agency IRNA quoted reports received from NITC. Shipping industry sources earlier told S&P Global Platts the Sabity was on fire after being hit by "a foreign object" near Jeddah and was spilling oil. "Again, it is necessary to emphasize that there was no fire in the vessel. All the crew is safe and healthy. The general situation of the ship is under control too," the report said. "In two separate explosions, probably by missile hits, at 05:00 and 05:20 [local time], 60 miles from Saudi Arabian Jeddah port, the oil tanker's body exploded," NITC said in a statement. The incident damaged two main tanks of the vessel, NITC said. "The oil tanker has not resumed its course yet...we will shift the oil tanker course to exit the Red Sea," said NITC's managing director Nasrollah Sardashti, who was quoted by IRNA as saying. Iran's state television said the explosion was "probably a terrorist attack." "The ship laden with a million barrels of crude was hit by an object which could be a missile or a mine and this has resulted in a explosion that is causing an oil spill," a source with direct knowledge of the matter told Platts earlier. The explosion and oil spill comes close on the heels of another separate attack on Saudi oil installations on September 14 that has dragged down the country's production and exports. Oil tankers were also attacked in the Persian Gulf in June and such incidents have already pushed up the freight rates and triggered additional war risk premia, which in turn increased the delivered costs of crude and refined oil products.
U.S. sanctions hit global oil fleet as traders shun nearly 300 tankers - (Reuters) - Nearly 300 oil tankers globally have been placed off limits as companies fear violating U.S. sanctions against Iran and Venezuela, driving freight rates to new highs, industry sources said. The move has taken roughly 3% of the global oil tanker fleet out of the market, according to industry sources and data on Refinitiv Eikon, sending rates soaring to secure tankers to ship oil, particularly to Asia. “Freight rates are going through the roof and people are getting very nervous with the cost of shipping,” Unipec, the trading arm of China’s Sinopec, Swiss trader Trafigura, oil firm Equinor ASA, Exxon Mobil Corp are shunning 250 crude and oil products tankers which have carried Venezuelan oil in the past year. Oil companies are also avoiding 43 oil tankers owned by COSCO Shipping Tanker (Dalian) after the United States last month imposed sanctions on two units of Chinese shipping giant COSCO for allegedly transporting Iranian crude. COSCO Dalian also owns 3% of the global very large crude carrier (VLCC) fleet and the absence of its ships was a key driver for supertanker freight rates which hit new highs daily over the past two weeks, traders and shipbrokers said. “This is now a handicapped set of vessels which are difficult to trade,” Anoop Singh, regional head of tanker research at ship broker Braemar ACM, said, referring to the COSCO Dalian tankers. Disruptions from the recent attacks on Saudi oil facilities and the ban on ships that called on Venezuelan ports in the past year have exacerbated tightness in the tanker market, he added. Braemar estimates another 23 VLCCs are also out of service to install emissions cleaning equipment to meet stricter global marine fuel rules from January 2020.
U.S. 'deeply concerned' about untrackable China ships carrying Iran oil: officials - (Reuters) - The White House is warning Chinese shipping companies against turning off their ships’ transponders to hide Iranian oil shipments in violation of U.S. sanctions, two senior administration officials said. “We’ve been messaging very heavily to the shipping companies, you don’t want to do this, it’s not worth it,” said one official, who spoke to Reuters on condition of anonymity. “It’s incredibly dangerous and irresponsible behavior.” China is the largest remaining buyer of Iranian oil after U.S. President Donald Trump reimposed sanctions on Tehran’s main export. Trump tightened U.S. sanctions in May in an effort to drive Iran’s oil sales to zero. The sanctions are aimed at quashing Iran’s nuclear ambitions, ballistic missile program and influence in Syria, Iraq and other countries. Its oil exports have fallen to less than 400,000 barrels per day from about 2.5 million bpd. On Sept. 25, the U.S. imposed sanctions on five Chinese individuals and two Chinese COSCO Shipping Corp subsidiaries, saying they had shipped Iranian crude oil in violation of the sanctions. Days later, 14 COSCO Shipping Tanker (Dalian) vessels, about one-third of its fleet, stopped sending location data from their automatic identification system (AIS) between Sept. 30 and Oct. 7, ship tracking data on Refinitiv Eikon showed. The administration said on Tuesday it had independently confirmed that COSCO had been shutting off AIS on its ships. All but three of the ships have become traceable since Reuters’ report ran on Oct. 9. The latest locations for Very Large Crude Carriers (VLCC) Yuan Shan Hu and Cosglad Lake were still unavailable between Oct. 8 and Oct. 16, while Aframax-sized tanker Yang Mei Hu has been untraceable since Oct. 11, data showed.
In "Obscene" Move, Oil Tanker Rates Explode To Record Levels Amid Flurry Of Geopolitical Risks - In a world where multiple-sigma events now happen with daily regularity, few people seemed to notice an unprecedented event taking place in the oil tanker industry, where spot charter contacts for very large crude carriers (VLCCs) exploded above $300,000 as the industry digested the fallout from the US focusing its spotlight on sanctions on oil, especially China's Cosco Shipping company, and from the latest security incident in the Middle East. As Lloyd's List notes, the Baltic Exchange Dirty Tanker Index, which aggregates global shipbroking charter rates, reported that by Friday afternoon, rates for West Africa to China VLCC routes had almost doubled within a day to reach $278,057. Middle East Gulf to Singapore and China routes had reached $305,998 and $300,391 respectively, marking an almost 100% day-on-day increase. Clarkson's take was even more shocking, reporting that the weekly VLCC tanker rate exploded nearly 15x in hours, soaring from $25,000 to $350,000. "We are seeing record levels today,” said Evercore marine transportation analyst Jonathan Chappell last Friday. "$300,000 VLCC rates are unprecedented, at least in the last 20 years." "VLCC rates have now climbed to levels not recorded before, with spot earnings quoted above $300k/day - and brokers expecting the current activity level to continue,” said Pareto analyst Eirik Haavaldsen, adding that he expects "the product tankers to start benefiting from the obscene crude tanker markets, as more LRs are switching to dirty mode." VLCC rates have been rising sharply since the US imposed sanctions on units of Cosco Shipping. As Lloyds List adds, crude oil tanker rates have increased in recent weeks "as US sanctions have effectively squeezed tonnage out of the market." As a reminder, in late September, the US government sanctioned some of Cosco’s tankers for importing Iranian crude oil in violation of US sanctions. The sanctions not only knocked out those specific vessels from general availability, but also contaminated those in joint ventures where Cosco has a presence. And even though oil traders have again started booking supertankers operated by the Chinese shipping giant, rates have continued to climb. A spike in geopolitical risk in the Middle East also helped: Iran recently said that missiles hit one of its ships in the Red Sea, amid a recent surge in political tensions in the gulf. The attack on the Iranian ship has added to risk premiums that were already high following the attack in Saudi Arabia last month.
Asian oil buyers grapple with rising costs as global freight rates jump - (Reuters) - Asian oil refiners are grappling with a jump in global freight rates that shows no sign of abating, driving up costs of crude imports from all regions in the fourth quarter, industry officials said. The cost of shipping crude from the Americas, Europe, Africa and the Middle East to Asia has surged over the past two weeks as companies shunned nearly 300 tankers on fears of violating sanctions against OPEC members Iran and Venezuela. Higher freight rates and a jump in crude premiums after the Saudi oil attacks in mid-September have so far added about $3 a barrel to November-lifting oil cargoes from the Middle East to China, trade and shipping sources said. Oil tanker freight rates are expected to keep rising while COSCO Dalian’s ships remain under sanctions, the sources said. The United States imposed sanctions on units of the Chinese shipper, alleging involvement in ferrying crude out of Iran. “We’ve been in a net loss for most months so far this year, and the fourth quarter doesn’t look good either, as premiums for Middle Eastern grades are high and freight rates have more than doubled,” an official with a Chinese state-owned refinery said.
Asia’s Top Refiner Hit Hard By Iran Sanctions - The largest oil refiner in Asia and in China, Sinopec, is considering cutting refinery run rates as of November as soaring freight rates have eaten away at refining margins, people familiar with the plans told Bloomberg on Tuesday. The global shipping industry has seen freight rates soar over the past few weeks as traders and shippers stay away from booking oil tankers owned by Chinese tanker companies that fell prey to U.S. sanctions for dealing with oil from Iran. At the end of September, the U.S. imposed sanctions on several Chinese tanker owners for shipping Iranian oil, including units of Cosco, who owns more than 40 oil tankers, including 26 supertankers, or the so-called very large crude carriers (VLCCs).The cost of chartering supertankers to carry crude oil from the Middle East to Asiasoared by double digits overnight on the day following the announcement of sanctions as oil traders and shippers scrambled to understand the extent and impact of the U.S. sanctions.Refining margins have yet to catch up with the surge in freight costs and currently, refiners are the ones that have to bear the higher shipping costs.This dramatic increase in procurement costs for oil has led to Sinopec considering reducing refinery runs in November by one million tons, which would be equal to 5 percent of Sinopec’s refining output, one of Bloomberg’s sources said.Some refiners in China and India have reduced spot oil purchases because of the surge in tanker rates, according to Bloomberg.Sinopec is also considering cutting its oil imports for December, four sources familiar with the issue told Reuters on Tuesday. “Refineries are facing strong pressure as spot premiums are high and freight rates have jumped, so it’s not economical to import crude,” one of the sources said.
China Makes A Move On OPEC’s No.2 - Following a political backlash in Iran over details of its plans to make Iran effectively a client state through various multi-layered oil and gas deals, China has switched its attention – for the time being at least – to Iran’s equally oil and gas-rich neighbor, Iraq. China has the advantage in Iraq that the northern part of the country – the semi-autonomous region of Kurdistan – is already under the control of its increasingly close ally, Russia, with its corporate proxy Rosneft having secured control over Kurdistan’s oil and gas infrastructure in a deal in November 2017. Bridging this gap beautifully is the new development that in the long-running dispute between the south and the north regarding budget disbursements from Baghdad to Erbil in exchange for oil supplies from Erbil to Baghdad, China is to be appointed by Baghdad as its mediator in negotiations, a senior source who works closely with Iraq’s Oil Ministry told OilPrice.com last week. As it was, the negotiations between Baghdad and Erbil over the budget-for-oil deal have been going nowhere and have been in a constant state of flux ever since the original deal was struck back in 2014. This deal involved the government of the Kurdistan region of Iraq (the KRG) agreeing to export up to 550,000 barrels per day (bpd) of oil from its own fields and those in and around Kirkuk via Baghdad’s State Oil Marketing Organization (SOMO). In return, Baghdad would send 17 percent of the federal budget after sovereign expenses per month in budget payments to the KRG. This agreement was superseded by another in October 2018 that required Baghdad to transfer sufficient funds from the budget to pay the salaries of KRG employees in exchange for the KRG handing over the export of at least 250,000 bpd of crude oil to SOMO. Since the beginning of this year, Baghdad has purportedly delivered on its side but the KRG has not. The sticking point from the KRG side has been the changing metric that Baghdad sought to impose for determining the budget disbursement levels following the independence referendum held in Kurdistan in September 2017. Although from the legal perspective the vote was not mandatory, the overwhelming support for independence – well over 90 percent of the Kurdish population in the north – catalyzed popular support against Baghdad until it was quelled, with the help of Iran. At that point, Baghdad took back on-the-ground control over the Kirkuk and surrounding fields and only held off from further expanding its military footprint across the KRG area because the U.S. signaled that this would not be a welcome development.
One Month After Worst Oil-Supply Halt, Aramco Says All Clear - In the early hours of a sweltering Saturday in September, a volley of missiles pierced the heart of Saudi Arabia’s oil industry, knocking out 5% of global production. A month later, it’s as if the attack never happened. Saudi Aramco says it’s currently pumping 9.9 million barrels a day, the same as before the Sept. 14 attacks at Abqaiq, the world’s biggest oil-processing facility, and the field at Khurais. While the attacks laid bare Saudi Arabia’s vulnerability to major disruptions, Brent crude has slid below where it was beforehand, trading Monday at less than $60 a barrel. Shiny, freshly painted spherical tanks that separate oil from natural gas and water are back at work at Abqaiq, company officials told reporters touring the damaged sites on Saturday. On an earlier visit to Abqaiq one week after the assaults, gaping holes showed where projectiles had punctured the same tanks. More repairs await; several crude stabilization towers are still charred and encased in scaffolding. “It was very important for the Saudis to restore their position as the world’s reliable supplier,” said Richard Mallinson, an analyst at consultant Energy Aspects Ltd. in London. “The Saudis launched a very active effort to get things back on line and a very big push to maintain their normal supply to markets.”
EIA Further Cuts Oil Price Forecast- The U.S. Energy Information Administration (EIA) has further cut its Brent oil price forecast, the organization’s latest short-term energy outlook (STEO) has revealed. Brent spot prices are now expected to average $59 per barrel in the fourth quarter of this year and $63.37 per barrel for the whole of 2019. The commodity is forecasted average $59.93 per barrel in 2020. “Despite the recent increase in supply disruptions, EIA expects downward oil price pressure to emerge in the coming months as global oil inventories rise during the first half of 2020,” the EIA stated in its latest STEO, which was released on Tuesday. “EIA forecasts balances to tighten later in 2020 and expects Brent prices to rise to an average of $62 per barrel in the second half of next year,” the EIA added. “EIA’s October forecast recognizes a higher level of oil supply disruption risk than previously assumed, more-than-offset by increasing uncertainty about economic and oil demand growth in the coming quarters, resulting in a lowered oil price forecast,” the EIA continued. In its September STEO, the EIA forecasted that Brent spot prices would average $60 per barrel in 4Q and $63.39 per barrel for the whole of 2019. The September STEO also forecasted that Brent would average $62 per barrel in 2020. In August, the EIA projected that Brent would average $65 per barrel in 4Q, $65.15 per barrel in 2019 and $65 per barrel in 2020. Back in July, the EIA forecasted that Brent would average $67 per barrel in 4Q, $66.51 per barrel in 2019 and $67 per barrel in 2020. Last month, analysts at Fitch Solutions Macro Research (FSMR) further cut their Brent oil price forecasts. The analysts now expect Brent to average $64 per barrel this year, before dropping to an average of $62 per barrel in 2020. In August, FSMR analysts expected prices to average $67 per barrel this year and $65 per barrel in 2020. In July the analysts forecasted an average of $70 per barrel in 2019, and $76 per barrel in 2020.
Oil prices edge up, supported by Iran ship attack and US-China trade detente -- Oil prices were little changed on Monday, holding onto 2% gains from Friday amid renewed geopolitical tensions in the Middle East, while a detente in the U.S.-China trade war buoyed market sentiment. Brent crude futures rose 9 cents to $60.60 a barrel by 1208 GMT, while U.S. West Texas Intermediate (WTI) crude futures was at $54.79 a barrel, up 9 cents. Both contracts rose more than 3% last week, their first weekly gain in three weeks. Most of the gains were posted on Friday after an Iranian oil tanker was attacked off Saudi Arabia’s coast in the Red Sea. Investigations are underway to determine if the tanker was hit by missiles, which could ratchet up tensions between Tehran and Riyadh if confirmed. The emergence of a phase 1 trade deal between the United States and China and a goodwill move by Washington to suspend threatened tariffs on Chinese products also lifted global financial markets. Investors remained cautious given that few details emerged from the talks, while it may take another five weeks for the two countries to sign a pact. “Traders view the deal in a tentative light as a tariff detente falls well short of bridging the critical trust gap which is an implicit removal of a significant chunk of existing tariff,” said Stephen Innes, Asia Pacific market strategist at AxiTrader in a note. “This baby-step agreement could take weeks to iron out.”
Oil falls more than 2% on U.S.-China trade deal doubts, stronger dollar (Reuters) - Oil prices lost about 2% on Monday on worries that global crude demand could stay under pressure as few details about the first phase of a U.S.-China trade deal did little to assure a quick resolution to the tariff fight. Oil prices also felt pressure as the U.S. dollar .DXY, which has an inverse relationship with crude prices, gained as waning trade deal hopes and ongoing concerns over Britain’s exit from the European Union attracted safe-haven investments. Brent crude LCOc1 settled at $59.35 a barrel, shedding $1.16, or 1.92%, while U.S. West Texas Intermediate (WTI) crude CLc1 settled at $53.59 a barrel, losing $1.11, or 2.03%. “The complex is in (the) process of relinquishing a major portion of the late week trade inspired gains as conflicting indications out of the U.S. and China regarding trade progress is reducing risk appetite,” said Jim Ritterbusch of Ritterbusch and Associates. Late on Friday, Washington and Beijing outlined the first stage of a trade deal and suspended this week’s scheduled U.S. tariff hikes. Brent and WTI rose more than 3% last week, their first weekly increase since the week starting Sept. 20, on signs of progress toward a trade deal that would boost crude demand. But optimism that the trade negotiations would prove successful faded, as China indicated further discussions were needed and U.S. Treasury Secretary Steven Mnuchin said the next round of tariffs on Chinese imports are still set to take effect on Dec. 15 if a deal has not been reached by then. But existing tariffs remain in place and officials on both sides said much more work was needed before an accord could be agreed.
Oil Markets Bearish Despite Rising Geopolitical Risk -- Oil prices fell more than 2 percent on Monday on diminished excitement surrounding the partial trade agreement between the U.S. and China. Following last week’s jolt, investors grew skeptical of the agreement as it became clear that Washington and Beijing had different interpretations of the outcome of last week’s talks. “It’s clearly a market that is very macro-focused right now,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen. “Speculators have been quite aggressive sellers during the past couple of weeks.” . Natural gas production in the Marcellus and Utica shales continues to inch higher, but production could begin to slow as drillerscut back in the face of weak prices. EQT announced last month that it would lay off nearly a quarter of its workforce. The Labour Party in the UK proposed to ban sales of the internal combustion engine by 2030. Cuadrilla has begun removing equipment from its only testing area following the last round of earthquakes in August. There are no plans to resume fracking in the area, and local residents and opponents of the company say that fracking in the UK is now dead. After the uproar and massive resistance to the proposed cut in fuel subsidies, Ecuador’s President Lenin Morenoreversed course, agreeing to scrap the proposal. Indigenous groups cheered and called an end to protests following the decision. But Ecuador now won’t be able to realize the budgetary savings from reduced subsidies, raising questions about how it will undertake reforms. ConocoPhillips agreed to sell its northern Australian assets to Santos for $1.39 billion. Conoco will exit the Darwin LNG plant. California passed legislation that bars any California leasing authority from allowing pipelines or other oil and gas infrastructure on state land. The legislation comes in response to the Trump administration’s aggressive leasing of public lands for mining and drilling.
Oil falls on weaker economic growth forecasts and swelling U.S. crude stocks (Reuters) - Oil prices fell on Tuesday, as investors worried that the unrelenting U.S.-China trade war would keep squeezing the global economy, and that swelling U.S. crude inventories would further pressure prices. Losses were limited by optimism about a potential Brexit deal and signals from OPEC that further supply curbs are possible. Global benchmark Brent LCOc1 futures lost 61 cents, or 1.0%, to settle at $58.74 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 fell 78 cents, or 1.5%, to settle at $52.81. Earlier in the session, both Brent and WTI fell by more than $1 a barrel following a report overnight that China’s factory gate prices in September declined at the fastest pace in more than three years. Also, customs data on Monday showed Chinese imports contracted for a fifth straight month. The U.S.-China trade war will cut 2019 global growth to its slowest pace since the 2008-2009 financial crisis, the International Monetary Fund warned, but it said output would rebound if dueling tariffs were removed. “The market continues to focus on a weakening global economic growth path that appeared little disturbed by last week’s apparent lack of significant progress at the US-China trade talks,” . On Friday, Trump said China had agreed to purchase $40 to $50 billion worth of American agricultural goods in a first phase of an agreement to end the trade war.
WTI Tumbles After Huge Crude Inventory Build -- Oil prices rebounded today after a 2-day slump on hopes for a US-China deal and Brexit again, despite equity market weakness, weaker global growth (IMF) and plenty of supply (EIA forecasts US shale production surge) sparking concern.“The encouraging headlines surrounding the U.S.-China trade war and Brexit seem more optimistic,” said Pavel Molchanov, a Houston-based analyst at Raymond James & Associates Inc.“In that sense, it’s perfectly reasonable for oil prices to show a bit of a bounce.” But tonight, the algos will be focused on inventories. API:
- Crude +10.5mm (+3mm exp) - biggest build since Feb 2017
- Cushing +1.6mm
- Gasoline -934k
- Distillates -2.9mm
Analysts expected crude inventories to rise for the 5th week in a row and they did... massively - a 10.5mm build is the largest since Feb 2017 “The market has plenty of supply in the short-term,” said Phil Flynn, senior market analyst at Price Futures Group Inc. in Chicago. Investors are “expecting a big increase in supply this week because the refinery runs are so low.” WTI traded down to around $53.20 ahead of the API data, and tumbled to a $52 handle as the data hit...
Oil Prices Mixed As OPEC Hints More Output Cuts - Oil prices were mixed on Wednesday as Brexit uncertainty continued and investors fretted about weaker demand for fuel due to slowing global growth. Benchmark Brent crude slipped 0.2 percent to $58.63 a barrel while U.S. West Texas Intermediate (WTI) crude futures were up 0.2 percent at $52.91. The IMF has cut its forecast for growth in both 2019 and 2020, reflecting increased pessimism about the global economy. "With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot," Gita Gopinath, the IMF's economic counsellor, said in the half-yearly World Economic Outlook foreword. Meanwhile, Brexit talks are at an impasse as EU and U.K. officials resume Brexit talks later today ahead of a summit of EU leaders on Thursday. On the positive side, oil prices received some support from reports suggesting that OPEC and its allies are committed to maintaining oil market stability beyond 2020. OPEC, Russia and other oil producer allies will do whatever is possible within their powers to ensure relative stability is sustained beyond 2020, OPEC Secretary-General Mohammad Barkindo said on Tuesday.
WTI Rallies Despite Big Crude Build, Record Production Perhaps some of the reason for the relief rally is that U.S. refiners are still deep in maintenance, with runs the lowest since Sept. 2017.. Oil prices have been volatile in the hours since last night's major crude inventory build, reported by API, bouncing back on more Brexit and US-China optimism headlines and chatter of OPEC+ deal extension. “The encouraging headlines surrounding the U.S.-China trade war and Brexit seem more optimistic,” said Pavel Molchanov, a Houston-based analyst at Raymond James & Associates Inc. “In that sense, it’s perfectly reasonable for oil prices to show a bit of a bounce.” But if DOE confirms the huge build, we suspect those gains will evaporate rapidly... DOE":
- Crude +9.28mm (+3mm exp) - biggest build since April 2019
- Cushing +1.276mm
- Gasoline -2.562mm
- Distillates -3.823mm
This is the 5th weekly build in crude stocks - longest streak since February - and largest weekly build since April 2019. Distillates have drawn down stocks for 4 straight weeks... Crude production rose again to a new record high, despite the collapse in rig counts....
Oil rises 1% on hopes OPEC will extend supply cuts - Oil rose 1% on Wednesday, gaining support due to signs that OPEC and allied producers will continue to curb supplies in December, a weaker U.S. dollar and as traders covered short positions ahead of an industry report on U.S. crude inventories. Brent crude, the global benchmark, rose 1% to $59.34 a barrel. U.S. crude gained 55 cents, or 1%, to settle at $53.36. The Organization of the Petroleum Exporting Countries and its allies meet on Dec. 5-6 in Vienna to review output policy. Market participants believe the group known as OPEC+ could decide to extend production cuts “and wait until world demand catches up with the supply situation,” said Andy Lipow, president of Lipow Oil Associates in Houston. OPEC Secretary-General Mohammad Barkindo has said deeper output cuts are an option. On Tuesday, he said OPEC would do what it could with allied producers to sustain oil market stability beyond 2020. OPEC, Russia and other producers have agreed to cut oil output by 1.2 million barrels per day until March 2020. “You did see the OPEC secretary general say OPEC could act to keep the market stable, and if we come back under pressure again we might see that again,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. In early trading, prices had slipped because of concerns about weaker demand for fuel due to slower economic growth and forecasts of a further rise in U.S. crude inventories. The dollar weakened after U.S. retail sales data disappointed investors. Oil is traded in U.S. dollars, so oil typically rises when the dollar falls.
Oil falls but losses limited by new Brexit deal - Oil prices fell on Thursday as industry data showed a larger-than-expected build-up in U.S. inventories but losses were limited after the United Kingdom and the European Union announced they had reached a deal on Brexit. Global benchmark Brent crude oil was down by 66 cents at $58.76 a barrel. U.S. WTI crude oil was down 48 cents at $52.88. U.S. crude inventories soared by 9.3 million barrels to 434.9 million barrels in the week to Oct. 11, the U.E. Energy Information Administration. Analysts had estimated U.S. crude inventories rose by around 2.8 million barrels last week. “The U.S. sanctions imposed on the Chinese shipping company COSCO are seriously denting demand for imported crude oil... This has a profound impact on U.S. crude oil inventories as reflected in last nights API report,” “U.S. refinery maintenance is not helping to reverse the current trend and further builds in U.S. crude oil inventories can be expected in the next few weeks.” The United States imposed sanctions on COSCO Shipping Tanker (Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co for allegedly carrying Iranian crude oil. Adding to concerns about the global economy - and therefore oil demand - data from the United States showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity. Still, the new Brexit deal helped limit the fall in oil prices. Prime Minister Boris Johnson said that Britain and the EU had agreed a “great” new Brexit deal and urged lawmakers to approve it at the weekend. European Commission President Jean-Claude Juncker also said Britain and the EU had agreed a deal. However, the Northern Irish party Johnson needs to help ratify any agreement has refused to support the deal. Hopes of a potential U.S.-China trade deal also supported crude prices. China’s commerce ministry said on Thursday that China hoped to reach a phased agreement with Washington as early as possible, and make progress on canceling tariffs on each others’ goods.
Oil reverses early losses, gains 1% as dollar falters - Oil rose 1% on Thursday, boosted by a weaker dollar and the announcement that the United Kingdom and the European Union had reached a deal on Brexit. Industry data did show a larger-than-expected build-up in U.S. inventories. Global benchmark Brent crude oil settled 52 cents higher at $59.94. U.S. WTI crude oil was up 65 cents, or 1.2%, to settle at $53.99. U.S. crude inventories soared by 9.3 million barrels to 434.9 million barrels in the week to Oct. 11, the U.E. Energy Information Administration said. Analysts had estimated U.S. crude inventories rose by around 2.8 million barrels last week. “The U.S. sanctions imposed on the Chinese shipping company COSCO are seriously denting demand for imported crude oil... This has a profound impact on U.S. crude oil inventories as reflected in last nights API report,” said Tamas Varga, an analyst at PVM Oil Associates. “U.S. refinery maintenance is not helping to reverse the current trend and further builds in U.S. crude oil inventories can be expected in the next few weeks.” The United States imposed sanctions on COSCO Shipping Tanker (Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co for allegedly carrying Iranian crude oil. Adding to concerns about the global economy - and therefore oil demand - data from the United States showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity. Still, the new Brexit deal helped limit the fall in oil prices. Prime Minister Boris Johnson said that Britain and the EU had agreed a “great” new Brexit deal and urged lawmakers to approve it at the weekend. European Commission President Jean-Claude Juncker also said Britain and the EU had agreed a deal. However, the Northern Irish party Johnson needs to help ratify any agreement has refused to support the deal. Hopes of a potential U.S.-China trade deal also supported crude prices. China’s commerce ministry said on Thursday that China hoped to reach a phased agreement with Washington as early as possible, and make progress on canceling tariffs on each others’ goods.
Oil falls as China economic concerns outweigh rising refinery runs - (Reuters) - Oil prices edged lower on Friday, as concerns about China’s economy outweighed bullish signals from its refining sector, but losses were limited on hopes for progress toward a U.S.-China trade agreement. Benchmark Brent crude oil futures LCOc1 fell 49 cents to settle at $59.42 a barrel. U.S. West Texas Intermediate (WTI) crude CLc1 futures lost 15 cents to settle at $53.78 a barrel. For the week Brent fell 1.8%, while WTI lost 1.7%. China’s economic growth slowed to 6% year-on-year in the third quarter, its weakest in 27-1/2 years and short of expectations due to soft factory production and continuing trade tensions with the United States. China’s September refinery throughput, however, rose 9.4% year on year, a signal that petroleum demand from the world’s biggest oil importer remained robust despite economic headwinds. U.S. and Chinese trade negotiators are working on nailing down a Phase 1 trade deal text for their presidents to sign next month, U.S. Treasury Secretary Steven Mnuchin said on Wednesday. “For now, trade related concerns over a slowed global economic growth path have been pushed to the sidelines as markets await additional guidance regarding U.S.-Chinese trade negotiations,” The ongoing dispute has increased worries about a global recession that would dent demand for oil. The Forties oil and gas pipeline system (FPS) in the British North Sea reopened as planned on Friday after being halted for a few hours by a power surge resulting from a lightning strike, operator Ineos said. The system transports the Forties crude oil stream that makes the biggest contribution to the Brent benchmark. In the United States, falling product stocks countered higher U.S. crude oil stocks, which rose by 9.3 million barrels in the week to Oct. 11. U.S. energy firms this week increased the number of oil rigs operating for a second week in a row for the first time since June. Companies added one oil rig in the week to Oct. 18, bringing the total count to 713, Baker Hughes energy services firm said on Friday.
Oil Prices Down for the Week | Rigzone - West Texas Intermediate (WTI) and Brent crude oil futures edged downward during late-week trading. The November WTI contract shed 15 cents Friday to settle at $53.78 per barrel. It peaked at $54.62 and bottomed out at $53.35. Compared to the Oct. 11 settlement, the WTI is down 1.9 percent. Brent crude for December delivery also ended the day lower, losing 49 cents to settle at $59.42 per barrel. Brent is down 1.8 percent week-on-week. “Oil prices this week moved up-and-down in-sync with the daily change in perspectives on both a U.S./China trade deal and a final UK Brexit plan,” said Tom Seng, Assistant Professor of Energy Business with the University of Tulsa’s Collins College of Business. “What at first seemed to be major progress between the U.S. and Chinese trade negotiators turned out to be only a minimal advance in concessions by both parties.” Seng noted the U.S. stock market rose and fell as daily expectations for a trade deal moved from optimism to pessimism and crude prices followed suit. He added that global markets closely monitored Brexit talks. “While Prime Minister (Boris) Johnson seems to have gotten a deal approved, the Ireland question looms large as he will need the full support of the majority party from that region,” Seng said, adding that gains in the British Pound over Brexit optimism helped weaken the U.S. Dollar and maintain a floor for crude prices. In addition, Seng observed that U.S. and global manufacturing data have indicated a general slowdown in recent weeks – and further depressing the outlook for energy demand. Also, he noted this week’s Weekly Petroleum Status Report from the U.S. Energy Information Administration (EIA) showed:
- Commercial oil inventories rose by 9.3 million barrels (Bbl) last week, compared to forecasts calling for a 4 million-Bbl increase and American Petroleum Institute figures showing a 10.5 million-Bbl build
- 435 million Bbl of total crude in storage, or two percent higher than the five-year average
- 43 million Bbl of crude stored at the Cushing, Okla., hub, representing a 1.3 million-Bbl build and approximately 56 percent of capacity
- A 2.6-percent drop in refinery utilization to 83.1 percent, equating to 15.4 million Bbl per day (bpd) and a 220,000-bpd decrease
- An 18-percent year-on-year drop in crude imports
- Steady U.S. oil production at 12.6 million bpd.
Seng also pointed out that EIA, OPEC and the International Energy Agency (IEA) have lowered their oil demand growth forecasts for the remainder of the year and increased their projects for inventory gains.
Selling Aramco: The Wall Street A-Listers on the Oil Giant's IPO - Saudi Aramco has enlisted the help of a former Donald Trump national security adviser and an ex-House of Representatives majority leader to pull off the world’s biggest IPO. One-time Trump staffer Dina Powell, a partner at Goldman Sachs Group Inc., and Moelis & Co. Vice Chairman Eric Cantor are among scores of Wall Street veterans hired to sell shares in the kingdom’s state oil firm. The roster of bankers reads like a who’s who of finance, underscoring the importance of Saudi Arabia a year after the murder of government critic Jamal Khashoggi prompted a brief spell of skittishness over doing business with the country. At the end of the month, many of Aramco’s bankers are expected to converge at the Future Investment Initiative -- an annual jamboree to showcase the kingdom’s aspirations that’s been dubbed Davos in the Desert. The Saudi government is set to give the official green light for the IPO at a meeting on Thursday, aiming to raise about $40 billion for the kingdom’s sovereign wealth fund, and a formal announcement is expected to follow on Sunday. Aramco has hired about 25 institutions to sell the stock. Many bankers have spent years wooing officials to get a lucrative spot on the listing, making intense pitches multiple times to Aramco executives and maintaining ties even as it was delayed. While the selection of firms such as HSBC Holdings Plc and JPMorgan Chase & Co. -- which have long dominated dealmaking in the kingdom -- was expected, other mandates were more surprising and highlight how personal relationships and loyalty matter more than ever. Even though many investors are expected to come from inside the kingdom, more than 300 bankers are now working on selling the deal worldwide. Aramco has been targeting a valuation of at least $2 trillion -- more than double that of Apple Inc.
Yemeni Attack on Aramco Facilities Costs Saudi $2bln Worth of Oil Output - Saudi Arabia has lost $2 billion worth of its oil production after Yemen's retaliatory attacks on the kingdom's vital energy infrastructure last month, according to a report by the Financial Times. The country's output fell by nearly 1.3mln barrels a day in September, from the previous month, according to data submitted to the Organization of Petroleum Exporting Countries (OPEC) by analysts and consultants, which is used by the cartel to set official production targets. Saudi Arabia told OPEC’s research arm that production was only hit by 660,000 bpd, according to a monthly oil market report published on Thursday. Riyadh has sought to emphasize its ability to bring production back to normal levels and the resiliency of the state energy group Saudi Aramco, FT reported. The country has tried to maintain its exports using oil in storage. However, energy consultants, analysts and industry executives have questioned the ability of the country’s production and exports to recover to above 9mln bpd within weeks. It is also unclear how Saudi officials are going to stop such attacks from happening again. The attack by Yemeni forces last month shut down 5.7 million bpd of Saudi Arabia’s oil production, which represents more than half of the kingdom’s or five percent of global output. Energy analysts have stated the raid was akin to a massive heart attack for the oil market and global economy. It has already plunged OPEC's oil production to the lowest level since 2011. The attacks would also cause a decline in Saudi Arabia’s economic growth this year, the World Bank has announced in a report.
The World Turned Upside Down — When a still-bewildered General Earl Charles Cornwallis surrendered his entire army to George Washington and to the Comte de Rochambeau at Yorktown in 1781, according to legend, a British military band heightened the humiliation by playing a ballad called, “The World Turned Upside Down.” In a time without speed of light communications, telegraph wires, radio or Internet, the fall of the British Empire in America still rocked the entire world. It was celebrated and welcomed from the Emir of Kuwait to the Tsarina Catherine in St. Petersburg. Yet when the Houthi rebel movement that controls much of Yemen wiped out three Saudi Brigades and inflicted at least 2,500 casualties at the end of September, the Western media ignored it. The outstanding analysis of Frederico Pierracini on this web site still stands virtually alone in offering unparalleled assessment of that event. It is out of fashion among Western commentators to admit that any “decisive battles” can happen anywhere unless they are safely in the past and the United States has won them. But when the Nazi Wehrmacht overthrew the legendary French Army in six weeks of operations in 1940 and when the Red Army wiped out the elite combat forces of the Nazis at Stalingrad in the fall of 1942, those battles were indeed decisive and the clock could never be turned back from them. The humiliating defeat that the Houthis have just inflicted on the Saudis is of comparable epochal significance. It does far, far more than confirm the victory of the Houthis in the long, needlessly prolonged civil war in Yemen that has killed at least 100,000 civilian dead over the past four years. The Houthis are now poised to bring the Kingdom of Saudi Arabia itself crashing down. There is dark poetic justice to this development. The House of Saud will fall as it rose, by a clash of arms in which a young, harsh but dedicated revolutionary movement challenged a worthless old reactionary regime supported by the great imperial power of the day and then destroyed it. Payback is coming. And it will not stop at the borders of Saudi Arabia and Yemen. The world is about to turn upside down again.
Riyadh holds talks with Houthis in effort to break Yemen deadlock -Saudi Arabia has been holding talks with Houthi rebels for the first time in more than two years in a sign Riyadh wants to de-escalate hostilities in Yemen in the wake of last month’s attacks on its oil facilities. The “back-channel” negotiations began after the Iran-aligned Houthis announced on September 20 that they would cease drone and missile attacks on the kingdom, people briefed on the talks said. A week earlier, the Houthis had claimed to have launched the strikes that hit Saudi Arabia’s biggest crude processing facility and the Khurais oilfield, temporarily knocking out half of oil production in the world’s top oil exporter and underscoring the vulnerability of its energy infrastructure. The US and Saudi Arabia blamed Iran for the attack. Tehran denied any involvement and backed the Houthi claims that it was in self-defence for Saudi Arabia’s involvement in the Yemen war, where it leads an Arab coalition fighting the rebels. A western diplomat said the missile and drone attacks on the Saudi oil facilities were key to the shift in Riyadh’s position. “If the Yemen war hadn’t existed, Iran wouldn’t have been able to distract away from its responsibility for the attacks,” the diplomat said. Another factor behind Riyadh’s shift has been the weakening of its coalition after the United Arab Emirates, Saudi Arabia’s main ally, announced in July that it was drawing down its troop presence in Yemen, people familiar with the matter said. The UAE deployed thousands of soldiers in Yemen and trained local forces, making it the coalition’s most important actor on the ground. In contrast, Saudi ground troops have been mostly concentrated in the kingdom’s border region, while Riyadh has used its air force to bombard Houthi-controlled areas. The conflict, which morphed into proxy war between Saudi Arabia and Iran, has been deadlocked for years and experts have persistently said there is no military solution. After the Houthis said they would halt missile and drone attacks into the kingdom, Riyadh agreed to halt its bombing raids over four Houthi-held cities, including Sana’a, the capital. The Houthis, meanwhile, have released nearly 300 prisoners, including three Saudis.
Holes in Iranian oil tanker hit by two missiles revealed for first time as Putin visits Saudi Arabia --Damage done to an Iranian oil tanker struck by two suspected missile strikes off the coast of Saudi Arabia has been revealed in new images. Images released yesterday by Iran's National Iranian Oil Tanker Company (NITC) showed two gaping holes in the side of the vessel. For the first time the alleged damage done to the Iranian-flagged tanker showed the square-shaped impacts just above the water line of the Sabiti. Russian President Vladimir Putin visited Saudi Arabia today, where he will seal oil agreements as well as use his influence to defuse rising tensions in the Gulf. The meeting with King Salman and Crown Prince Mohammed bin Salman comes following attacks on Saudi oil installations that Riyadh and the US have blamed on Iran, an ally of Moscow. Oil will be 'the main topic of discussion' between the leaders, Russian political analyst Fydor Lukyanov said, as a deal between the 24 members of the Organization of the Petroleum Exporting Countries (OPEC) is due to expire next spring.
Iranian official says oil tanker attack will not go unpunished - A senior Iranian security official said Saturday that an attack on one of the country's oil tankers won't go unpunished, the official IRNA news agency reported. Ali Shamkhani, secretary of Iran's Supreme National Security Council, said a day after two missiles struck the Iranian tanker Sabiti as it traveled through the Red Sea off the coast of Saudi Arabia that "vicious behavior in international waterways will not go without a response." Shamkhani said an Iranian committee had gleaned some information on the attack from video images from the Sabiti. Also on Saturday, Cabinet spokesman Ali Rabiei said Iran is investigating the case while "avoiding hastiness. The mysterious attack, which came amid months of heightened tensions at sea across the wider Mideast, damaged two storerooms aboard the tanker. Iran said the tanker will arrive at one of its ports in about 10 days. Saudi Arabia, meanwhile, broke its silence Saturday on the incident, saying through its state-run news agency that authorities received an electronic message Friday from the captain of the Sabiti "that the front of the vessel has been broken, resulting in an oil spill in the sea from the cargo and tanks of the vessel." It said the Sabiti continued moving and turned off its electronic tracker without offering more information. "The kingdom affirms its commitment to the security and safety of maritime navigation, as well as international agreements and norms," the statement on the state-run Saudi Press Agency said.
Pompeo Can't Blame Iran For Attacking Itself - Luongo- Just when you thought it was safe to go back in the water someone poked a couple of holes in an oil tanker belonging to Iran. This sent oil prices up briefly in the vain hope of stabilizing them. But, strangely, Secretary of State Mike Pompeo was silent. This was a warning to Iran from someone on the Saudi/Israeli/U.S. side, “You won’t win without costs.” Well, of course, that’s true. The big question everyone is asking is, of course, “Who did this?” Details are sketchy with a lot of back and forth. Iran initially reported missile strikes. But Iran’s national tanker company, the owner of the boat, is now ruling out missiles. But who did this is honestly not even relevant at this point. It could be Israel, the Saudis, rogue U.S. or British agents, etc. Once we started down this path of sanctions, attacks on oil assets, and the like, it opened up the possibility of anyone with an axe to grind creating an incident for their purposes and blaming someone else for it. There are so many conflicting priorities on all sides of this issue that all it takes is the right suitcase of money to start a war, or spike oil prices for a few hours, or whatever. I can spin a dozen motivations out of my head right now whereby everyone involved has motive to attack an Iranian tanker. And they would all sound plausible, including the one that you know Mike Pompeo is just itching to waddle away from the buffet table to announce, that Iran attacked itself. And the less that evangelical crazy-man says about this, the better everyone will be. In fact, it is Pompeo’s silence is deafening, since he never misses an opportunity to bash Iran. It makes you wonder just how much he may or may not know about this.
Iran Claims To Have Video Evidence Of Oil Tanker Attack - Iran has claimed that it has footage of last week’s attack on its oil tanker while off the Saudi Arabian Jeddah port, and it proves that the attacks were carried out by Israel, Saudi Arabia, and the United States, according to Mehr news agency, who quoted Abolfazl Hassan Beigi, Iran’s National Security and Foreign Policy Commission member.This evidence, Hassan Beigi said, will be provided to the UN and Security Council.“Saudi Arabia and the U.S. are trying to put the blame on the ISIL [Islamic State] or the Taliban for the attack, but the documents dismiss such a notion as no ISIL or Taliban terrorists are present in the Red Sea," Hassan Beigi said, adding that both ISIS and the Taliban were created and sponsored by Saudi Arabia and Israel.Iran’s President Hassan Rouhani on Tuesday, in his first media conference in over a year, that the attack on the tanker would not go unpunished, adding that it was “carried out by a government” rather than an individual.Rouhani stopped short of naming that state actor, however. “If a country thinks that it can create instability in the region without getting a response, that would be a sheer mistake,” Rouhani said.The Iranian tanker, the Sabiti, was attacked last Friday in the Red Sea, damaging the vessel and causing oil to spill into the water. The Sabiti belongs to the National Iranian Oil Company. The attack on the Iranian oil tanker follows the September 14 attack on Saudi Aramco’s oil infrastructure that took offline nearly 6 million bpd of production. Tensions in the Middle East have been flaring up as the United States continues to sanction Iran’s oil industry for noncompliance with the nuclear deal.
Exclusive: U.S. carried out secret cyber strike on Iran in wake of Saudi oil attack: officials - (Reuters) - The United States carried out a secret cyber operation against Iran in the wake of the Sept. 14 attacks on Saudi Arabia’s oil facilities, which Washington and Riyadh blame on Tehran, two U.S. officials have told Reuters. The officials, who spoke on condition of anonymity, said the operation took place in late September and took aim at Tehran’s ability to spread “propaganda.” One of the officials said the strike affected physical hardware, but did not provide further details. The attack highlights how President Donald Trump’s administration has been trying to counter what it sees as Iranian aggression without spiraling into a broader conflict. Asked about Reuters reporting on Wednesday, Iran’s Minister of Communications and Information Technology Mohammad Javad Azari-Jahromi said: “They must have dreamt it,” Fars news agency reported. The U.S. strike appears more limited than other such operations against Iran this year after the downing of an American drone in June and an alleged attack by Iran’s Revolutionary Guards on oil tankers in the Gulf in May. The United States, Saudi Arabia, Britain, France and Germany have publicly blamed the Sept. 14 attack on Iran, which denied involvement in the strike. The Iran-aligned Houthi militant group in Yemen claimed responsibility. Publicly, the Pentagon has responded by sending thousands of additional troops and equipment to bolster Saudi defenses - the latest U.S. deployment to the region this year.
Oil Aside, Putin’s Saudi Bromance Yet to Yield Dividends - Russian President Vladimir Putin’s visit on Monday to Saudi Arabia, only his second since he came to power two decades ago, underscores the new depth in ties between the Kremlin and the traditional U.S. ally. Yet there’s also growing frustration in Moscow at the lack of tangible economic benefits. Putin has built a personal bond with the de facto Saudi ruler, 34-year-old Crown Prince Mohammed bin Salman, famously sharing a high-five greeting with him at the Group of 20 summit last year. Geopolitically, Russia hopes to capitalize on its ability to navigate between arch-foes Saudi Arabia and Iran. But since the landmark deal with OPEC, under which Russia anchored itself to the Saudi-dominated oil cartel in order to stabilize prices, promises of multi-billion-dollar investments and other deals have largely failed to materialize. The Russian Direct Investment Fund said it will sign deals for more than $2 billion of Saudi investment in the agricultural, petrochemicals and other sectors during Putin’s trip. Even so, the fund’s unlikely to take part in the most important deal at hand - Saudi Aramco’s IPO. RDIF Chief Executive Officer Kirill Dmitriev declined to comment. Russia’s Sibur Holding is weighing petrochemical complex in Saudi Arabia worth more than $1 billion, Putin reiterated in a joint interview to Al Arabiya, Sky News Arabia and RT Arabic, RIA Novosti newswire reports. “The Russian-Saudi relationship is good on the surface but it’s lacking substance,” said Alexey Potemkin, chief executive officer of Moscow Policy Group, a consultancy that advises on Russia-Gulf cooperation. “The Saudis promised in return for the OPEC+ deal, Russia would get lucrative investments and great business opportunities, which unfortunately has not happened as the Russians expected.”
Russia, Saudi Arabia Seal Billions In Deals During Putin's Visit --Russian President Vladimir Putin has held talks with Saudi Arabia's king and crown prince in Riyadh as Moscow seeks to increase its presence across the Mideast. Putin and King Salman presided over a signing ceremony on a string of billions of dollars of investment contracts between the two countries, targeting sectors such as aerospace, culture, health, and advanced technology, AFP reported. The deals included an agreement to "reinforce" cooperation among the so-called OPEC+ countries -- the Organization of the Petroleum Exporting Countries plus 10 nonmembers of the cartel -- according to Saudi Energy Minister Prince Abdulaziz bin Salman. Russia is not an OPEC member but it has worked closely with the group to limit supply and push up prices after a 2014 slump that wreaked havoc on the economies of Russia and cartel heavyweight Saudi Arabia. Putin said that Russia "attaches particular importance to the development of friendly, and mutually beneficial ties with Saudi Arabia." During a meeting with Crown Prince Muhammad bin Salman, Putin noted that the Saudi Arabian Public Fund has allocated $10 billion for joint foreign direct investment projects in Russia, a statement said on the Kremlin's website. The 83-year-old king told him that Riyadh looks forward to working with Moscow "on everything that will bring security, stability and peace, confront extremism and terrorism, and promote economic growth."
Compromise Or Genocide - Putin's 'Deal Of The Century' Rapidly Unfolding In Syria - "Putin is capitalizing on the chaotic retreat of the US and Turkey's brutality toward the Kurds in order to assert Russia's leadership," Syria analyst Joshua Landis observed of a newly published Vladimir Putin interview. "He contrasts how Russia has stood beside its beleaguered ally, Syria, while the US has abandoned both its allies, the Kurds and the Turks," Landis added. Putin said in the interview: "Syria must be free from other states' military presence. And the territorial integrity of the Syrian Arab Republic must be completely restored."Given this weekend's rapidly unfolding events, with state actors Turkey and the Syrian Army squaring up on front lines, Russia's role in all this is probably still the greatest unknown, but what do we know at this point? Precisely one week since Trump first unveiled a US troop exit from northeast Syria while essentially giving a green light to invading Turkish forces, events are unfolding at blistering speed, possibly toward a major Syrian Army clash with pro-Turkish forces, and no doubt toward a complete and final American withdrawal from Syria altogether. Currently Syrian Army convoys — including tanks and artillery — have begun deployment to northern Syrian battlefronts at a moment US troops have been confirmed in retreat. Syrian state media affirmed that Damascus is set to “confront a Turkish aggression” on Syrian territory, after what appears to be a major deal struck between Damascus and the main US-backed Syrian Kurdish groups.Reuters revealed on Sunday t hat Damascus and the Kurdish-led Syrian Democratic Forces (SDF) have been in direct negotiations, with crucial Russian participation. "The source close to the Syrian government said meetings between the SDF and Damascus had taken place before and after the latest Turkish offensive," according to the report.
Russia denies US news report it bombed 4 Syria hospitals in 12 hours - (AFP) - Russia on Monday denied a US newspaper report that its warplanes bombed four hospitals in rebel-held territory in Syria over a period of 12 hours this year. The Russian defence ministry rubbished the claim in a report by The New York Times, saying "the alleged 'evidence' provided by the NYT is not worth even the paper it was printed on". The May strikes -- which the newspaper tied to Moscow through Russian radio recordings, plane spotter logs and accounts by witnesses -- are part of a larger pattern of medical facilities targeted by forces supporting Syrian President Bashar al-Assad in the country's devastating civil war. Nabad al Hayat Surgical Hospital -- which staff had fled three days earlier in anticipation of the facility being bombed -- was one of those struck during the 12-hour period beginning on May 5, according to the Times' investigation. A Russian ground controller gave the exact coordinates of the hospital to the pilot, who reported having it in sight a few minutes later, the newspaper said. The controller gave the go-ahead for the strike at the same time that a spotter who was tasked with warning civilians about impending strikes logged a Russian jet in the area. The pilot then reported releasing bombs, and local journalists filming the hospital recorded three bombs going through its roof and exploding. Kafr Nabl Surgical Hospital -- just a few miles (kilometers) away -- was bombed multiple times shortly afterwards. As with the earlier strike, a spotter registered one of Moscow's jets circling, and a Russian air force transmission recorded a pilot saying he had "worked" the target before delivering three strikes that were confirmed by a doctor, the Times said. The Kafr Zita Cave Hospital and Al Amal Orthopedic Hospital were also bombed by Russian aircraft during the 12-hour period. All four facilities had provided their coordinates to the United Nations for inclusion on a list to avoid strikes.
Turkey-Syria offensive: Syrian army heads north after Kurdish deal - BBC News - Syria's army has started to reach the north of the country, hours after the government agreed to help Kurdish forces facing Turkey.State media said government forces, which are backed by Russia, had entered the strategic town of Tal Tamer, 30km (19 miles) south of the Turkish border.The deal came after the US, the Kurds' main ally, said it would withdraw its remaining troops from northern Syria.Turkey's offensive aims to push Kurdish forces from the border region.Areas under the control of the Kurdish-led Syrian Democratic Forces (SDF) came under heavy bombardment over the weekend, with Turkey making gains in the key border towns of Ras al-Ain and Tal Abyad.Dozens of civilians and fighters have been killed on both sides. On Sunday, US Defence Secretary Mark Esper announced the Pentagon was moving up to 1,000 troops away from the north, citing fears that US forces would end up stuck between "two opposing advancing armies". The Turkish offensive and US withdrawal have been internationally criticised, as the SDF were the main allies of the West in defeating the Islamic State (IS) group in Syria. There are fears about a possible resurgence of the group and the escape of prisoners amid the instability.
Betraying the Kurds - Trump’s greenlight to Turkey to go ahead and exterminate the Kurds in Syria is despicable — a betrayal of perhaps the only good thing that’s come out of this horrible war. But it’s also a perfect example of how nationalist and sectarian movements can be weaponized in the interests of empire. You back them when it suits your interests and throw them to the wolves when it doesn’t. The reason the Kurds are constantly used and betrayed is simple: they have the misfortune of being strategically placed and nationless. For the past century, by dint of fate, their various tribes and peoples have been spread among large chunks of landlocked real estate that does not “belong” to them: Turkey, Syria, Iraq, and Iran — all countries where America and other not-so-friendly players have their sticks in the proverbial geopolitical fire. And so over the years, it’s made strategic sense for America (and its allies) to weaponize the Kurds’ desire for national independence against whoever America at the time decided was its enemy, and then to turn on the Kurds when they were no longer needed.In short: Running an empire is a nasty business. And cynically exploiting national and sectarian groups is a big part of the job. —Yasha Levine
Merkel tells Erdoğan to halt Syrian offensive - Turkey's military offensive in Syria threatens to destabilize the region and boost ISIS, German Chancellor Angela Merkel told Turkish President Recep Tayyip Erdoğan in a phone call Sunday."The chancellor spoke in favor of an immediate end to the military operation,"said Ulrike Demmer, a spokesperson for Merkel, adding that the Turkish leader had requested the call.The call came after Berlin moved to suspend some arms exports to Turkey on Saturday after Ankara launched an offensive against Kurdish militias in northern Syria last week following U.S. President Donald Trump's withdrawal of troops from the region.Merkel also warned Erdoğan that, despite Turkish security interests along the land border, the offensive would likely displace large sections of the population in northern Syria, Demmer said. EU foreign ministers are meeting early this week ahead of a summit of heads of state, with both sessions set to address the situation in Syria.Germany's Foreign Minister Heiko Maas told Bild am Sonntag that Berlin has moved to restrict arms sales to Turkey since 2016. The government in Berlin also recently extended an arms export ban to Saudi Arabia. Merkel and Erdoğan also discussed gas exploration in the eastern Mediterranean, Demmer said.
Germany, France to curb arms sales to Turkey over Syria operation -Germany and France said Saturday they would not export any more weapons to Turkey that could be deployed in the country's military operation in Syria. “Against the backdrop of the Turkish military offensive in northeastern Syria, the federal government will not issue new permits for all armaments that could be used by Turkey in Syria," German Foreign Minister Heiko Maas told newspaper Bild am Sonntag. France announced a similar measure on Saturday evening and reiterated its condemnation of the Turkish offensive. "France has decided to suspend all export projects of armaments to Turkey that could be deployed as part of the offensive in Syria," the French government said in a statement. "This decision takes effect immediately." European governments and the European Union as a whole have spoken out against Turkey's military offensive against Syrian Kurdish forces since it began on Wednesday. British Prime Minister Boris Johnson expressed "grave concern" about the offensive to Turkish President Recep Tayyip Erdoğan in a phone call on Saturday evening, the U.K. government said. A statement from Johnson's office said "the Prime Minister was clear that the UK cannot support Turkey’s military action. He urged the President to end the operation and enter into dialogue." Germany's Maas told Bild am Sonntag that Berlin has been taking a very restrictive line on arms exports to Turkey since 2016, and particularly after a Turkish military operation in the northern Syrian region of Afrin last year.Last year, German armaments deliveries to Turkey amounted to €242.8 million — almost a third of all the country's exports of weapons of war, according to the newspaper.
Video appears to show alleged atrocities by Turkish-back militias against Kurds – NBC News - As Turkish forces drive forward into Syria, video appears to show alleged atrocities carried out by Turkish-backed Arab militias, including the execution of a Kurd. Multiple U.S. officials tell NBC News that the video and photographs appear to be genuine.
US military carries out ‘show of force’ in Syria after Turkish-backed fighters get close to American forces, official says - Turkey pressed ahead with its offensive in northern Syria on Tuesday despite U.S. sanctions and growing calls for it to stop, while Syria’s Russia-backed army moved on the key city of Manbij that was abandoned by U.S. forces. Reuters journalists accompanied Syrian government forces who entered the center of Manbij, a flashpoint where U.S. troops had previously conducted joint patrols with Turkey. Russian and Syrian flags were flying from a building on the city outskirts and from a convoy of military vehicles. Russia’s Interfax news agency, citing Moscow’s Defense Ministry, said later that Syrian forces had taken control of an area of more than 1,000 square km (386 miles) around Manbij, including Tabqa military airfield. Turkish President Tayyip Erdogan said an attack from Manbij that killed one Turkish soldier was launched by Syrian government forces in the region. U.S. President Donald Trump’s unexpected decision to withhold protection from Syria’s Kurds after a phone call with Erdogan a week ago swiftly upended five years of U.S. policy on Syria. As well as clearing the way for the Turkish incursion, the U.S. withdrawal gives a free hand to Washington’s adversaries in the world’s deadliest ongoing war, namely Syrian President Bashar al-Assad and his Russian and Iranian allies. The Syrian army deployments into Kurdish-held territory amount to a victory for Assad and Russia, giving them a foothold in the biggest remaining swathe of Syria that had been beyond their grasp through much of its eight-year-old war.
US Troops Can Fire Back If Turkey Attacks Positions Again, Pentagon Says --Defense Secretary Mark Esper told "Face the Nation" on Sunday that remaining US troops were caught between Turkish forces and the SDF and that it would be “irresponsible for me to keep them in that position.” Revealing that Trump has ordered “a deliberate withdrawal” from Northern Syria “as safely and quickly as possible,” which includes some 1,000 troops — Esper further addressed controversy surrounding a Friday incident where a US base in Kobani came under Turkish artillery fire."And so we find ourselves, we have American forces likely caught between two opposing advancing armies, and it's a very untenable situation," Esper said. According to defense officials speaking to The Washington Post this weekend, the Army believes Turkish artillery fire on American positions in Kobani were deliberate, specifically accusing Turkey of 'bracketing' U.S. forces by firing on both sides of the observation post.Esper was asked about this dangerous escalation, to which he responded that US troops "have the right to self defense and we will execute it if necessary" — thus indicating that American forces in Syria have been given the green light to fire back if fired upon. “A senior Pentagon official said shelling was so heavy that the U.S. personnel considered firing back in self-defense,” a prior report cited. "A contingent of U.S. Special Forces has been caught up in Turkish shelling against U.S.-backed Kurdish positions in northern Syria," Newsweek initially reported of the Friday incident. The Newsweek report cited an "Iraqi Kurdish intelligence official and senior Pentagon official" to say that "Special Forces operating in the Mashtenour hill in the majority-Kurdish city of Kobani fell under artillery fire from Turkish forces" amid operations related to 'Operation Peace Spring'. "We had been there for months, and it is the most clearly defined position in that entire area," an Army officer told the Post. Multiple 155mm shells fell "within a few hundred yards of the base on Mistenur Hill," the officer said.
US Launched Airstrikes On Its Abandoned Ammo Storage & Command Center In Syria - In what appears a final major parting shot as the United States continues its rapid draw down from Syria, the Pentagon has revealed it conducted an airstrike on a munitions storage bunker at a US base on Wednesday to "reduce the facility's military usefulness" after invading Turkish forces threatened it. An official US coalition statement identified the strike on a US military compound located between Kobani and Ain Issa near the Turkish border, specifically at the sprawling Lafarge Cement Factory, which had served as a de facto anti-ISIS coalition command center for the last couple years of the war since it had been wrested from Islamic State terrorists. The military described that a pair of F-15 jets "successfully" conducted the targeting of the ammo storage site, destroying what the Pentagon wanted to ensure didn't get left behind, calling it a “pre-planned precision airstrike” before Turkish-backed fighters could take control.This also included HQ facilities such as "latrines, tents and other parts of the Syria headquarters" which the US didn't want utilized by hostile forces. It was part of the "show of force" against nearby Turkish-backed groups, which had been described in reports Wednesday as having come "too close" amid the 'deliberate' draw down of US forces. "On Oct. 16, after all Coalition personnel and essential tactical equipment departed, two Coalition F-15Es successfully conducted a pre-planned precision airstrike at the Lafarge Cement Factory to destroy an ammunition cache, and reduce the facility's military usefulness," coalition spokesman US Army Col. Myles Caggins said. Lafarge factory before the war, and even for the first few years into the conflict, had been Syria's largest cement factory, owned and operated by a French company.
US Military Unlikely To Withdraw From Syria's Key Oil Fields- Report - The U.S. Armed Forces are not withdrawing from the eastern Euphrates River Valley region of Deir Ezzor or its plethora of oil fields, a military source in Damascus told Al-Masdar News. According to the source, the U.S. Armed Forces won’t withdraw from these areas because of Iran’s presence in eastern Syria and the reality that Damascus would again have access to Deir Ezzor’s vital oil fields. He would add the United States' two largest military bases in Syria are in the east near some of the country’s largest oil fields like Al-Omar.Damascus has wanted the Al-Omar and Conoco oil fields to be returned to their government; however, with the U.S.’ large military presence in the eastern countryside of Deir Ezzor, they have found themselves blocked from these critical petrol supplies.Furthermore, with the ongoing sanctions against the Syrian government, the U.S. administration sees the return of these oil fields to Damascus as a benefit to the state and their allies like Iran. Syria has been under an economic siege for several years now, leaving much of the country in dire need of resources like medicine, gas, and other vital items.Meanwhile, the Syrian Arab Army (SAA) is preparing to enter Raqqa city in northern Syria for the first time since 2013, a military source told Al-Masdar News. According to the source, the army has begun moving its troops to the area around the city as they have been given the green light to enter once the U.S. Armed Forces withdraw.
Hundreds of ISIS prisoners are escaping from camps in northern Syria amid Turkish offensive - Islamic State fighters are seizing a chance to escape and regroup as U.S.-allied Kurdish forces turn their attention from guarding thousands of captive extremists to defending themselves from Turkey’s assault. More than 800 suspected IS detainees escaped the Ayn Issa camp in northern Syria on Sunday, Kurdish forces said in a statement, five days into Turkey’s military incursion into norther Syria. Jelal Ayaf, co-chair of Ayn Issa camp, told local media that 859 people “successfully escaped” the section of the camp holding foreign nationals. He also said attacks were already being carried out by “sleeper cells” that had emerged from inside the camp, which holds IS prisoners, internally displaced persons and families or affiliates of IS fighters. While some escapees could be recaptured, he described the situation in the camp as “very volatile.” CNBC could not independently verify the numbers. At least 10,000 Islamic State prisoners are in camps across northeastern Syria, according to Kurdish and U.S. officials. About 2,000 are foreign fighters and the rest Iraqi and Syrian. As Turkish jets bombard the area, many of the personnel responsible for containing those prisoners are being forced to the front to defend themselves or their families, Kurdish forces say. The news comes as the Turkish military expands its offensive into Syria, which began shortly after President Donald Trump announced a U.S. troop withdrawal from the Turkish-Syrian border area and handed responsibility for the area — and the IS fighters within it — to Ankara. Turkey views the Kurdish fighters as a security threat and indistinguishable from a separate Kurdish group that has waged a decades-long insurgency inside Turkey.
Syrian troops enter Kurdish fight against Turkish forces - Syrian troops have begun sweeping into Kurdish-held territory on a collision course with Turkish forces and their allies, a day after the beleaguered Kurds agreed to hand over key cities to Damascus in exchange for protection. The deal, which Kurdish leaders emphasised they had made reluctantly after four days of bombardment by Turkish artillery and jets, threatens to open a new front in Syria’s nearly nine-year civil war, and signals the likely end of US and European military deployments in the country’s north-east. There were several flashpoints across north-eastern Syria on Monday. Syrian rebel groups loyal to Ankara launched an assault on the Kurdish-held city of Manbij with support from Turkish artillery and an air strike, a rebel commander told the Guardian. The militiamen – including many fighters who hailed from the city and fled years ago – clashed not only with Kurdish fighters but Syrian regime troops, fighting together for the first time since Sunday’s deal. US troops were understood to still be on the ground in pockets of north-east Syria, including al-Saediya village, about 4 miles (7km) west of Manbij. US armoured vehicles were also stationed on a bridge into Kobane, sources said, trying to deter the Syrian regime’s entry into the city where Kurds and the US cooperated to inflict Islamic State’s first major defeat in 2015. Further to the east, the Syrian army said it had reached the town of Tal Tamr, bringing it to within 20 miles of the Turkish border. Syrian state television on Monday afternoon showed government soldiers entering the town of Ain Issa, about 21 miles away from the border. Unconfirmed reports said Syrian army troops had clashed overnight with Kurdish fighters in the city of Qamishli, which was not surrendered to Damascus in Sunday’s Russian-brokered agreement. The final terms of the deal appeared to still be under discussion on Monday, with several contradictory reports of its contents emerging. Meanwhile, Turkish fighters and their allies were continuing to attack Tel Abyad and Ras al-Ayn, two cities that have been the focus of Ankara’s mission to push Kurdish fighters – whom it considers to be terrorists – away from its southern border and create a 20-mile buffer zone where it says it will resettle at least 1 million Syrian refugees.
Erdogan Lashes Out: Saudis & Egypt's Sisi Are "Murderers" - Claims Assad Killed 1 Million People - Turkish President Recep Tayyip Erdogan unleashed a verbal attack against the Saudi and Egyptian governments in statements made Thursday after the latter two states criticized Ankara’s new military incursion in Syria. “Saudi Arabia has to look in the mirror before it criticizes the peace process,” Erdogan said in a speech during an expanded meeting of the Justice and Development Party (AKP), as quoted by the Anatolia news agency. “Who brought Yemen to this situation, except Saudi Arabia, and the Egyptian president in particular, has no right to speak at all, he is a killer of democracy in his country,” Erdogan continued.“I will remind them of the names, and invite them to be honest. I will start from Saudi Arabia, and say you have to look in the mirror, who brought Yemen to this situation? How is the situation in Yemen now? Did thousands of people not die in Yemen? You have to first calculate that,” he said to the audience.“Yemen is currently suffering from extreme poverty. You have destroyed every place. You have to calculate that first. You cannot interfere with us about the operation we launched in Syria to fight terrorism and preserve the territorial integrity of Syria,” he concluded about Saudi Arabia.“As for the president of the Egyptian regime. Don’t ever speak about us! You are a murderer of democracy in your country. You are a murderer!”
Pentagon Confirms Manbij Handed Over To Russia As US Forces Filmed Departing - A stunning development in the key northern Syrian city of Manbij — the Pentagon has confirmed a planned handover to Russian military forces is underway amid a Turkish military assault on the region. This also hours after President Trump tweeted that Assad "wants naturally to protect the Kurds" and that the problem should be left to local powers. Late Monday the main US base in Manbij was filmed empty of US forces, and American convoys were also spotted hastily pulling out of the city as Syrian national forces entered, following Sunday's historic deal between the Kurdish-led Syrian Democratic Forces (SDF) and the Assad government. Newsweek reports the developments follows: The U.S. military has begun a hasty exit from Syria's northern city of Manbij, and is set to help Russia establish itself there amid a Turkish attempt to defeat Kurdish-led, Pentagon-backed fighters at the strategic location, Newsweek has learned. As the Syrian national flag went up over multiple previously US-backed SDF towns on Monday, it was as yet unclear what Russia's role in all this would be. Through Monday there were also widespread rumors that Russian jets were circling over key border posts as Turkish forces shelled Kurdish positions below. The Newsweek report suggests, as we predicted, the blistering fast developments clearly are being driven by significant Russian deal-making among all parties, surprisingly including the US, apparently: A senior Pentagon official told Newsweek that U.S. personnel, "having been in the area for longer, has been assisting the Russian forces to navigate through previously unsafe areas quickly."A Pentagon official says #Manbij will be handed over to #Russia as Russian journalist Oleg Blokhin films a video of the abandoned #US military base in the town.
EU Backs Off Turkey Arms Embargo As Erdogan Holds All The Cards... 3.6 Million Of Them -If you've been paying attention you might have picked up on the irony that Turkey now appears the most powerful country in Europe thanks to the refugee threat. It's further appeared unfazed that the EU has appeared ready to ban all arms deliveries to Ankara over its internationally condemned military incursion into Syria, following Germany and France over the weekend announcing a temporary suspension, fearing weapons would be used against Syria's Kurds. But alas on Monday the EU proved once again its position is too weak to act: "European Union countries committed on Monday to suspending arms exports to Turkey, but stopped short of the EU-wide arms embargo that France and Germany had sought," Reuters reported. “Member states commit to strong national positions regarding their arms export policy to Turkey,” EU foreign ministers said, stopping short of a Europe-wide weapons embargo.Speaking to Deutsche Welle on Germany's imposed ban which took effect Saturday, Turkish Foreign Minister Mevlut Cavusoglu said any such move would “just strengthen us.” Not only does Ankara appear unfazed, also as Europe is likely to do nothing really of substance to halt the Turkish operation, it clearly has all the leverage. As one op-ed commented related to German Chancellor Angela Merkel's Sunday phone call demanding that Erdogan put an “immediate end” to 'Operation Peace Spring', why would he listen?... "After all, he has 3.6 million reasons not to."Erdogan threatened last week, not for the first time: "Hey EU, wake up. I say it again: if you try to frame our operation there as an invasion, our task is simple: we will open the doors and send 3.6 million migrants to you," he said.
Turkish-Backed Free Syrian Army Is Deliberately Releasing ISIS Prisoners - As Turkey wages a violent campaign against Kurdish fighters and civilians across northeastern Syria, Turkish-backed proxy forces with ties to extremist groups are deliberately releasing detainees affiliated with the Islamic State from unguarded prisons, two U.S. officials confirmed to Foreign Policy. Backed by Turkey, the Free Syrian Army (FSA), a decentralized band of Syrian rebels that has been linked to extremist groups, has launched a bloody assault on northeastern Syria, executing Kurdish prisoners and killing scores of unarmed civilians and Kurdish fighters with the Syrian Democratic Forces (SDF). Over the weekend, a group of Turkish-backed forces ambushed a female Kurdish politician driving on the M4, the main highway through Syria and Iraq, forced her from the car, and killed her.The group even deliberately targeted U.S. troops in Kobani on Friday, two U.S. officials, speaking on background to discuss sensitive operations, said separately. On Oct. 11, Pentagon spokesman Capt. Brook DeWalt confirmed reports that U.S. troops there had come under artillery fire from Turkey, adding that they were unharmed. “It is not a mistake,” one senior U.S. administration official said. “They are trying to push us out.” The FSA, also known as the Turkey-supported opposition (TSO), began in 2011 as a loose rebel group composed mainly of Syrian army defectors who were dedicated to bringing down the government of Syrian President Bashar al-Assad. In 2013, FSA fighters reportedly began defecting to the Nusra Front, an Islamist organization with ties to al Qaeda that was also fighting Assad. At the time, news reports quotedanonymous senior military officials saying the Pentagon estimated that extreme Islamist groups constituted more than half of the FSA.The CIA reportedly began recruiting FSA fighters to counter the Islamic State in 2014 when the militant group swept into Iraq and Syria. But the FSA was still entangled with the Nusra Front, and members began exhibiting extremist ideology, said Melissa Dalton, an expert at the Center for Strategic and International Studies. The United States ultimately discontinued its relationship with the FSA because the group lacked organization and proved to be a less viable partner for fighting the Islamic State than the SDF, Dalton said.During Turkey’s 2018 assault on Afrin, in northwestern Syria, Turkish-backed FSA proxies allegedly committed war crimes, including mutilating the bodies of Kurdish fighters and destroying places of worship. Now the group appears to be employing similar tactics in northeastern Syria. In addition to killing unarmed civilians, as Turkey captures territory from the SDF, the TSO is deliberately releasing Islamic State detainees previously held by the Kurdish fighters, U.S. officials say.
US Officials- Turkey Deliberately Releasing ISIS Prisoners, Then Blaming Kurdish Forces - Invading Turkish-backed forces are freeing Islamic State prisoners, according to Foreign Policy, also "executing Kurdish prisoners and killing unarmed civilians, videos show."On Monday a senior U.S. administration official told reporters that Turkey's Syrian Islamist ground proxies are "going to unguarded prisons and releasing ISIS detainees - then blaming Syrian Democratic Forces." And following prior reports since the start of Turkey's 'Operation Peace Spring' of mass ISIS prison breaks as Kurdish positions came under Turkish artillery fire, more former US captives are taking advantage of the chaos. “The Kurdish-led Syrian Democratic Forces (SDF) and Syrian Observatory for Human Rights said Sunday that close to 800 members of a camp holding the families of ISIS fighters had escaped after Turkish shelling,” according to an NBC News report. ISIS jail breaks have been reported in places like Ain Issa and Qamlishi city, near the Turkish border, among others. After President Trump last week said Erdogan assured him Turkey would be taking charge of ISIS prisoners amid its incursion into northeast Syria, the president has since issued a statement as part of newly announced sanctions on Ankara, saying "Turkey must ensure the safety of civilians, including relgious and ethnic minorities, and is now, or may in the future, responsible for the ongoing detention of ISIS terrorist in the region."On Monday morning Trump echoed the talking points of Turkish officials in a tweet, who have alleged the Kurds themselves are purposefully letting ISIS terrorists go free, speculating, "Kurds may be releasing some to get us involved." Trump has since implied that it's now also Assad and Russia's problem to clean up the ISIS threat and "protect the Kurds":
Erdogan Holding 50 US Tactical Nukes 'Hostage' As Trump Authorizes Sanctions - Amid all the media and pundit outrage since Turkey's President Erdogan launched his so-called 'Operation Peace Spring' into northeast Syria last week, vowing to wipe out Syrian Kurdish forces who've long held the border areas, what's been largely missing is acknowledgement of the uncomfortable fact that NATO ally Turkey has long hosted a major portion of America's nuclear Cold War-era arsenal stored across Europe. And as Erdogan threatens to "open the doors and send 3.6 million migrants" to Europe while under increased international criticism for the rapidly rising civilian death toll in Syria, The New York Times reports the following bombshell Monday: some 50 US tactical nukes are "now essentially Erdogan’s hostages". The Times cites growing alarm by top State and Energy Dept. officials over what the publication likens as a "disastrous" and confusing break from US policy in northern Syria, given not only further expected destabilization in the region, but worsening and unpredictable ties with Erdogan's Turkey, given Trump is now preparing to sign into effect severe sanctions with the aim of attempting to "limit" his military incursion. According to the report: And over the weekend, State and Energy Department officials were quietly reviewing plans for evacuating roughly 50 tactical nuclear weapons that the United States had long stored, under American control, at Incirlik Air Base in Turkey, about 250 miles from the Syrian border, according to two American officials. Turkey is among a handful of European NATO allies which play host to the extensive US nuclear arsenal on European soil — a remnant and continuation of the historic Cold War build-up — when Washington was locked in battle to deter Soviet expansion in Europe, which also allowed US allies to not have to pursue their own nukes. The further irony in all this is that Incirlik Air Base is precisely where during the opening years of the war in Syria, US intelligence and military officials teamed up with their Turkish counterparts to wage proxy war against Assad, which involved fueling the jihadist insurgency which birthed the very groups now slaughtering Syrian Kurds and Christians in the country's northeast.
US claims “ceasefire” deal in Turkey’s invasion of Syria - The Trump administration claimed Thursday that it had achieved a major diplomatic victory by negotiating a “cease-fire” in the eight day old Turkish offensive against the Kurdish YPG militia in northern Syria. The US president had himself green-lighted the invasion in an October 6 phone call with his Turkish counterpart Recep Tayyip Erdogan, and then pulled back US Special Forces troops deployed on the Syrian-Turkish border to facilitate the operation. Announced at a press conference convened by US Vice President Mike Pence and Secretary of State Mike Pompeo at the US embassy in Ankara, the existence of a “cease-fire” was immediately denied by Turkish officials, who asserted that they would never reach such a deal with “terrorist” forces. Ankara regards the YPG, which served as the Pentagon’s main proxy ground forces in the so-called war on the Islamic State of Iraq and Syria (ISIS), as a branch of the PKK, the Kurdish separatist movement in Turkey, against which it has waged a brutal counterinsurgency campaign for the past three decades. The Turkish Ministry of Foreign Affairs released a 13-point “Joint Turkey US Statement on Northeast Syria” Thursday afternoon. Nowhere does the document mention a cease-fire, instead stating that Turkey will “pause” its offensive in Syria for 120 hours “to allow the withdrawal of the YPG.” Once the Kurdish militia is driven from the Syrian-Turkish border—the principal objective of the Turkish invasion—the military campaign dubbed Operation Peace Spring will be halted, according to the terms of the agreement. The document begins by affirming the status of the US and Turkey as NATO allies and goes on to declare Washington’s understanding of Ankara’s “legitimate security concerns on Turkey’s southern border” and to affirm a commitment to “protecting NATO territories and NATO populations against all threats.” Mevlut Cavusoglu, Turkey’s foreign minister, said after the meeting between Erdogan and the US officials, “We got what we wanted ... This means that the US has approved the legitimacy of our operations and aims.” The deal also promises that no new US sanctions will be imposed against Turkey, and that existing sanctions will be lifted once the military operations in Syria are brought to a halt. The invasion by the Turkish army has killed several hundred and sent at least 200,000 Syrian Kurds fleeing south for their lives. Atrocities have been attributed to Turkish-backed Islamist militias, drawn from the same Al Qaeda-linked forces that were previously armed and funded by the CIA in the regime change war against the government of President Bashar al-Assad. Preening before the cameras in Fort Worth, Texas, Trump asserted that “millions of lives” had been saved, as if the shaky pause in the fighting on Syria’s northern border meant an end to the country’s eight year old conflict. He credited the deal to his “unconventional” approach and “rough love.” In a rare statement of truth, Trump blamed the Obama administration for having “lost more than half a million lives in a very short period in the same region” during the protracted regime change operation launched in 2011.
Turkey to suspend Syria offensive 'to allow Kurdish withdrawal - Turkey has agreed to a ceasefire in northern Syria to let Kurdish-led forces withdraw. The deal came after US Vice-President Mike Pence and Turkey's President Recep Tayyip Erdogan met for talks in Ankara. All fighting will be paused for five days, and the US will help facilitate the withdrawal of Kurdish-led troops from what Turkey terms a "safe zone" on the border, Mr Pence said. It is unclear if the Kurdish YPG will fully comply, however. Commander Mazloum Kobani said Kurdish-led forces would observe the agreement in the area between the border towns of Ras al-Ayin and Tal Abyad, where fighting has been fierce. "We have not discussed the fate of other areas," he said. UK-based war monitor the Syrian Observatory for Human Rights (SOHR) said clashes were continuing in Ras al-Ain despite the ceasefire announcement. It said 72 civilians had been killed inside Syria and more than 300,000 displaced over the past eight days. What prompted the offensive? Turkey launched the cross-border offensive last week, after US President Donald Trump announced he was pulling US forces out of the Syria-Turkey border region. Its goal was to push back a Kurdish militia group - the People's Protection Units (YPG) - that Turkey views as a terrorist organisation. Turkey had hoped to resettle up to two million Syrian refugees in the border area, but critics warned that could trigger ethnic cleansing of the local Kurdish population. President Trump was accused by some of abandoning a US ally, as the Syrian Democratic Forces (SDF) - a group dominated by the YPG - fought alongside the US against the Islamic State (IS) group in Syria. But on Wednesday he said the Kurds were "not angels", and declared: "It's not our border. We shouldn't be losing lives over it."
US-Brokered Ceasefire In Syria Already Shattered By New Turkish Airstrikes - In an entirely unsurprising development, it only took hours for Turkey to break the US-brokered deal for a 5-day ceasefire in northern Syria. The late Thursday newly inked ceasefire was announced by Vice President Mike Pence following a lengthy meeting with President Erdogan; it crucially involved allowing Kurdish fighters to evacuate battleground border towns and in exchange Turkey would agree to halt its offensive.But new Turkish air strikes near the border town of Ras al-Ain have shattered the apparently fragile agreement. "Five civilians were killed in Turkish air strikes on the village of Bab al-Kheir, east of Ras al-Ain," one Syrian war monitoring group cited in the AFP said. Four SDF fighters were also reported killed in that strike, according to the report. In an official statement the SDF condemned what it called a clear violation of the terms of the US-Turkish agreement. "Despite the agreement to halt the fighting, air and artillery attacks continue to target the positions of fighters, civilian settlements and the hospital" in Ras al-Ain, spokesman Mustefa Bali said.This despite no Syrian Kurdish representatives being part of the closed door, last minute deal-making in Ankara on Thursday, and despite international pundits noting neither Washington nor the US-backed Syrian Kurds received anything significant in their favor.Indeed one Turkish official in the immediate aftermath of the deal had boasted to Middle East Eye "We got exactly what we wanted out of the meeting."
Israeli settlers vandalize Palestinian property in West Bank – A group of Israeli settlers has vandalized Palestinian-owned property in the occupied West Bank. According to a local sources, dozens of extremist Israeli settlers damaged several cars and sprayed racist graffiti on them as well as on the walls of Palestinian-owned buildings in Marda Village, north of Salfit, in the West Bank, adjacent to the Israeli settlement of Ariel, early on Sunday. It added that Israeli settlers also punctured the tires of at least five Palestinian cars. Back in April, Israeli settlers committed similar crimes in Beit Hanina neighborhood in East Jerusalem al-Quds. They also broke the windows of a number of private vehicles. The acts of vandalism and violence by Israeli settlers against Palestinians are known as “price tag” attacks, which also target Muslim holy sites. Palestinian activists and rights groups say Israel is fostering a “culture of impunity” for the Israelis who commit such violent acts against Palestinians. The Israeli NGO B’Tselem says settler vandalism in the occupied West Bank is a daily routine and is fully supported by Israeli authorities.
The US military used more bombs and missiles in Afghanistan last month than it has since 2010 - U.S. military aircraft dropped more bombs and fired more missiles in Afghanistan last month than it has in nearly a decade, Air Force statistics show. In September the U.S. military dropped 948 munitions in Afghanistan, according to U.S. Air Forces Central Command's latest summary of wartime missions. The last time so much ordnance was used in Afghanistan was October 2010, when the coalition tracked 1,043 weapons releases.Both President Donald Trump and Defense Secretary Mark Esper have said the U.S. military has escalated attacks against the Taliban following the breakdown of peace talks in early September. "We did pick up the pace considerably," Esper told reporters on Oct. 4 while returning from a visit to Wright Patterson Air Force Base, Ohio, and Louisville, Kentucky. "The president did want us to pick up response. You had the heinous attacks that the Taliban and others conducted throughout Afghanistan."
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