oil prices ended the week little changed, despite being down more than 5% by early on Wednesday, as shifting reports on US-China trade, oil inventories, and potential OPEC cuts resulted in the most volatile trading since the Saudi drone attack...after rising less than 1% to $57.72 per barrel on conflicting China-US trade deal and crude inventory reports last week, prices of US light sweet crude for December delivery fell more than 1% on Monday, erasing the prior week’s gains while tumbling alongside U.S. stocks amid lack of progress on a U.S.-China trade deal and ended down 67 cents, or 1.2%, at $57.05 a barrel...prices then fell for the second straight day on Tuesday amid gloom on ongoing trade tariffs and rising U.S. oil inventories and then dropped to a loss of $1.84, or 3.2%, at $55.21 a barrel after reports that Russia was unlikely to agree to deeper output cuts at the coming OPEC meeting... December oil prices opened even lower Wednesday and briefly fell to $54.76 a barrel after the American Petroleum Institute's report of a larger than expected increase in US crude supplies, but then jumped back over $56 a barrel after the EIA contradicted the API in reporting a smaller than expected inventory build, and after Putin said that Russia and OPEC have ‘a common goal’ of keeping the oil market balanced, with the December delivery contract price rising $1.90, or 3.4%, to settle at $57.11 a barrel as trading in the December contract expired, while the contract price for January oil added $1.66, or 3%, to finish at $57.01 a barrel....now quoting prices for January oil, prices rose on Thursday following a Reuters report that OPEC and its allies are likely to extend output cuts through mid-2020 and then surged 2.8% to a two-month high at $58.58 a barrel after China invited U.S. trade negotiators for a new round of talks...but oil prices couldn't hold those gains on Friday as prices slid on continued skeoticism about any U.S.-China trade deal proposal and its potential global economic impact, with the price of January oil ending Friday 81 cents lower at $57.77 a barrel...while that price is 5 cents higher than oil price quotes referencing the December contract were at the end of last week, it's also 6 cents lower than the closing price of the January contract last Friday, which left the media confusingly reporting oil's change both as a price gain for the week and as 0.1% lower for the week...
meanwhile, natural gas prices ended the weekly slightly lower, but they too were up 6.6% from their mid-week nadir by the close on Friday....after falling 3.6% to $2.688 per mmBTU on moderating temperatures last week, the price of natural gas for December delivery crashed 12.2 cents to settle at $2.566/MMBtu on Monday as a forecast of warmer-than-usual temperatures was expected to lead to weaker demand...prices then fell another 5.6 cents Tuesday before recovering 4.9 cents of those losses on Wednesday, and another eight-tenths on Thursday as the EIA reported a withdrawal of gas from storage that was a bit above expectations...then on Friday, a change in the forecast to indicate colder than normal temperatures from Maine to California sparked a rally in natural gas, as prices rose 9.8 cents to finish at $2.665 per mmBTU, cutting the loss for the week to less than 1%...
the natural gas storage report for the week ending November 15th from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 94 billion cubic feet to 3,638 billion cubic feet by the end of the week, which still left our gas supplies 506 billion cubic feet, or 16.2% more than the 3,132 billion cubic feet that were in storage on November 15th of last year, but which meant our stores were now 60 billion cubic feet, or 1.8% below the five-year average of 3,698 billion cubic feet of natural gas that have been in storage as of the 15th of November in recent years....the 94 billion cubic feet that were withdrawn from US natural gas storage this week was 3 billion cubic feet more than the average forecast of a 91 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, and almost triple the average 32 billion cubic feet of natural gas that have been pulled from natural gas storage during the second week of November over the past 5 years...oddly enough, with the shift of the seasons, we seem to have gone from a period of consistently above normal injections into storage, to three weeks in a row wherein the change in our supplies was less than normal, which you should be able to see in the graphic below >>
the above graphic is a screenshot of an interactive graphic that's included on the EIA's weekly natural gas storage dashboard, and as the heading indicates, it shows the weekly change, in billions of cubic feet, of natural gas in storage in the lower 48 states...the blue dots represent the weekly changes of natural gas in storage for this year up to & including the current report, while the dark diamonds represent the 5 year average change of natural gas in storage for each week of the year over the 2014 to 2018 period, with markers above the "0" line representing additions, and markers below the zero line representing withdrawals of natural gas from storage...meanwhile, the shaded grey background to those markers represent the range of changes for each week of the year over that 5 year span....
what i'd like to point out on that graphic is that over the entire period from mid-March to late October, the blue dots for 2019 were consistently above the 5 year average for all but two weeks, certainly beyond what one would normally expect, no matter how anomalous the weather, which thus suggests an excess of natural gas production...however, over the last three weeks, we've seen that surplus to the norm reverse, in that the 2019 change, either positive or negative as in this past week, has been below the historical norm...we experienced much the same during the last heating season, but it was not as consistent as this summer's run...still, since it's only three weeks, it could be due to a run of unusually freaky weather, but the change certainly pays watching, since for one reason or another we may have entered a new normal, wherein both injections and withdrawals are greater than their previous norms...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending November 15th showed that because of a large draw from the Strategic Petroleum Reserve, there was a surplus of oil in the system that ultimately was added to our stored commercial supplies, which thus increased for the ninth time in the past ten weeks...our imports of crude oil rose by an average of 222,000 barrels per day to an average of 5,972,000 barrels per day, after falling by an average of 327,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 394,000 barrels per day to an average of 3,027,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 2,945,000 barrels of per day during the week ending November 15th, 172,000 fewer barrels per day than the net of our imports minus our 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 12,800,000 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 15,745,000 barrels per day during this reporting week..
meanwhile, US oil refineries were reportedly processing 16,435,000 barrels of crude per day during the week ending November 15th, 519,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net average of 85,000 barrels of oil per day were being pulled out from the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to show that our total working supply of oil from net imports, from oilfield production, and from storage was 605,000 barrels per day less than 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 (+605,000) 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 this week, it means that one or maybe even all of the oil metrics that the EIA has reported and that we have just transcribed have to be seriously off the mark...however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we continue to report them, just as they're seen & believed by most everyone else (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 rose to an average of 6,124,000 barrels per day last week, still 18.0% less than the 7,503,000 barrel per day average that we were importing over the same four-week period last year....the 85,000 barrel per day net withdrawal from our total crude inventories was due to a withdrawal of 282,000 barrels per day from our Strategic Petroleum Reserve, which was only partially offset by a 197,000 barrel per day addition to our commercially available stocks of crude oil....this week's crude oil production was reported to be unchanged at a record 12,800,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at a record 12,300,000 barrels per day, while a 10,000 barrel per day decrease to 481,000 barrels per day in Alaska's oil production was rounded away and did not impact the final rounded national total...last year's US crude oil production for the week ending November 16th was rounded to 11,700,000 barrels per day, so this reporting week's rounded oil production figure was 9.4% above that of a year ago, and 51.9% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 89.5% of their capacity in using 16,435,000 barrels of crude per day during the week ending November 15th, up from 87.8% of capacity the prior week, but still below normal for mid November...as a result, the 16,435,000 barrels per day of oil that were refined this week was still 2.5% below the 16,855,000 barrels of crude per day that were being processed during the week ending November 16th, 2018, when US refineries were operating at 92.7% of capacity....
even with the big increase in the amount of oil being refined, gasoline output from our refineries was somewhat lower, decreasing by 120,000 barrels per day to 10,053,000 barrels per day during the week ending November 15th, after our refineries' gasoline output had increased by 137,000 barrels per day the prior week....but even after this week's decrease in gasoline output, our gasoline production was fractionally higher than the 10,036,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 85,000 barrels per day to 5,124,000 barrels per day, after our distillates output had increased by 164,000 barrels per day over the prior week...but even with those increases in distillates output, our distillates' production for the week was still 1.5% below the 5,201,000 barrels of distillates per day that were being produced during the week ending November 16th, 2018....
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the 2nd time in eight weeks and for the 8th time in 22 weeks, rising by 1,756,000 barrels to 220,846,000 barrels during the week to November 15th, after our gasoline supplies had increased by 1,861,000 barrels over the prior week....our gasoline supplies increased this week even though our imports of gasoline fell by 164,000 barrels per day to 515,000 barrels per day and even though our exports of gasoline rose by 55,000 barrels per day to 889,000 barrels per day, because the amount of gasoline supplied to US markets decreased by 129,000 barrels per day to 9,192,000 barrels per day....after this week's increase, our gasoline supplies were still 2.0% lower than last November 16th's inventory level of 225,315,000 barrels, but rose to roughly 2% above the five year average of our gasoline supplies for this time of the year...
however, even with the increase in our distillates production, our supplies of distillate fuels fell for the 24th time in the past 34 weeks, decreasing by 974,000 barrels to 115,681,000 barrels during the week ending November 15th, after our distillates supplies had decreased by 2,477,000 barrels over the prior week...our distillates supplies fell by less this week than last because the amount of distillates supplied to US markets, an indicator of our domestic demand, decreased by 211,000 barrels per day to 4,323,000 barrels per day, and because our imports of distillates rose by 79,000 barrels per day to 315,000 barrels per day while our exports of distillates rose by 165,000 barrels per day to 1,255,000 barrels per day...after this week's inventory decrease, our distillate supplies were down by 2.9% from the 119,191,000 barrels of distillates that we had stored on November 16th, 2018, and fell to around 11% below the five year average of distillates stocks for this time of the year...
finally, despite this week's increase in refinery throughput and the jump in exports, the oil we pulled out of the SPR was enough to mean our commercial supplies of crude oil in storage rose for the eleventh time in twenty-three weeks and for the twenty-sixth time in 43 weeks, increasing by 1,379,000 barrels, from 449,001,000 barrels on November 8th to 450,380,000 barrels on November 15th...that increase meant our crude oil inventories rose to 3% above the five-year average of crude oil supplies for this time of year, and to 34.7% higher than the prior 5 year (2009 - 2013) average of crude oil stocks after two full weeks of November, 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 this year up until July, after generally falling until then through most of the prior year and a half, our oil supplies as of November 15th were 0.8% above the 446,908,000 barrels of oil we had stored on November 16th of 2018, but at the same time were 1.5% below the 457,142,000 barrels of oil that we had in storage on November 17th of 2017, and 7.9% below the 489,029,000 barrels of oil we had in commercial storage on November 18th of 2016...
This Week's Rig Count
the US rig count fell for the 13th time in 14 weeks and for the 36th time in 40 weeks over the week ending November 22nd, and is now down by 25.9% since the end of last year....Baker Hughes reported that the total count of rotary rigs running in the US fell by 3 rigs to a 32 month low of 803 rigs this past week, which was also down by 276 rigs from the 1079 rigs that were in use as of the November 23rd report of 2018, and 1126 fewer rigs than 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 number of rigs drilling for oil decreased by 3 to a 31 month low of 671 oil rigs this week, which was also 214 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 was unchanged at 129 natural gas rigs, a 35 month low which was down by 65 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 to those drilling for oil & gas, three rigs classified as 'miscellaneous' continued to drill this week; one on the big island of Hawaii, one in Washoe County, Nevada, and one in Lake County, California, in contrast to a year ago, when there were no such "miscellaneous" rigs deployed..
offshore drilling activity in the Gulf of Mexico was unchanged at 22 rigs this week, with all 22 of those drilling offshore from Louisiana...but that's 3 fewer than the Gulf of Mexico rig count of 25 a year ago, when 23 rigs were drilling in Louisiana waters and two were drilling offshore from Texas...since there are no rigs deployed offshore elsewhere, nor were there a year ago, the Gulf of Mexico count for both years is equal to the national total in each case..
the count of active horizontal drilling rigs was down by 3 rigs to 699 horizontal rigs this week, which was the least horizontal rigs deployed since April 7th, 2017 and hence is another 31 month low for horizontal drilling...that was also 230 fewer horizontal rigs than the 929 horizontal rigs that were in use in the US on November 23rd of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014.....meanwhile, the vertical rig count was unchanged at 50 vertical rigs this week, and those were down by 27 from the 77 vertical rigs that were operating during the same week of last year, while the directional rig count was also unchanged at 54 directional rigs this week, and those were down by 19 from the 73 directional rigs that were in use on November 23rd of 2018...
the details on this week's changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us 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 November 22nd, the second column shows the change in the number of working rigs between last week's count (November 15th) and this week's (November 22nd) count, the third column shows last week's November 15th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same 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 23rd of November, 2018...
the net 3 oil rigs that were pulled out of the Permian basin account for this week's decrease, and that happened as 6 rigs were pulled out of Texas Oil District 8, or the core Permian Delaware, while 3 rigs were added in Texas Oil District 7C, or the southern Permian Midland, and another rig began operating in Texas Oil District 8A, or the northern Permian Midland, while at the same time a Permian Delaware rig was taken down in southwest New Mexico...meanwhile, the Williston basin showed no net change because while one rig was being pulled out of North Dakota's Bakken, another rig began drilling in the westernmost reaches of the formation in Montana, where there are now two rigs deployed, still down from 4 year ago...the rig that was added in the Denver-Julesburg Niobrara chalk accounts for the Colorado increase, while the rig that was pulled out of Oklahoma's Cana Woodford was offset by the startup of a rig in an other Oklahoma basin that's not tracked separately by Baker Hughes, thus leaving the Oklahoma count unchanged...among natural gas directed rigs, 2 were added in northwest's Louisiana's Haynesville, one was pulled out of Pennsylvania's Marcellus, and one was shut down in a basin not tracKed separately by Baker Hughes...other than the aforementioned rig startup in Montana, this week also saw a rig startup in Mississippi among the states not shown above...however, the 3 rigs now deployed in Mississippi is still down from the 5 rigs that were drilling in the state a year ago...
DUC well report for October
Monday of this past week saw the release of the EIA's Drilling Productivity Report for November, which includes the EIA's October data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the eighth month in a row, this report showed a decrease in uncompleted wells nationally in October, 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 225 wells, the largest decrease on record, falling from a revised 7,867 DUC wells in September to 7,642 DUC wells in October, which still represents 1.6% more than the 7,522 wells that had been drilled but remained uncompleted as of the end of October of a year ago...this month's DUC decrease occurred as 1,148 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during October, down by 36 from the 1,184 wells that were drilled in September and the lowest since December 2017, while 1,373 wells were completed and brought into production by fracking, a decrease of 15 well completions from the 1,388 completions seen in September and the least completions since February....at the October 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, the same backlog as a month ago...
both oil producing regions and natural gas producing regions saw DUC well decreases in October, and no major basin saw an increase...the number of DUC wells remaining in the Oklahoma Anadarko decreased by 72, falling from 813 at the end of September to 741 DUC wells at the end of October, as 69 wells were drilled into the Anadarko basin during October 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 45, from 3,634 DUC wells at the end of September to 3,589 DUCs at the end of October, as 501 new wells were drilled into the Permian, while 546 wells in the region were being fracked....meanwhile, DUC wells in the Eagle Ford of south Texas decreased by 32, from 1,450 DUC wells at the end of September to 1,418 DUCs at the end of October, as 167 wells were drilled in the Eagle Ford during October, while 199 already drilled Eagle Ford wells were completed....at the same time, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 22 to 452, as 168 Niobrara wells were drilled in October while 190 Niobrara wells were completed....in addition, DUC wells in the Bakken of North Dakota fell by 20, from 759 DUC wells at the end of September to 739 DUCs at the end of October, as 104 wells were drilled into the Bakken in October, while 124 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 30 wells, from 522 DUCs at the end of September to 492 DUCs at the end of October, as 93 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 4 wells to 211, as 46 wells were drilled into the Haynesville during October, while 50 Haynesville wells were fracked during the same period....thus, for the month of October, 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 191 wells to 6,939 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 34 wells to 703 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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Investigation underway into Pepper Pike gas leak that caused fire - — Officials in Pepper Pike have provided an update following Friday's large fire that broke out after a natural gas main leak at Brainard Circle. A gas line exploded just before 1 a.m. and burst into flames. Residents were immediately evacuated and taken to the Beachwood Community Center for the night (they are allowed to return home), and Dominion Gas shut off the supply feeding the blaze. Pepper Pike Mayor Richard Bain and Police Chief Joe Mariola report that Dominion, Public Utilities Commission of Ohio and the State Fire Marshall of Ohio are conducting the investigation into how and why the natural gas main leak occurred. They add that the investigation could take several weeks.Once the investigation is complete, officials say the reconstruction of the natural gas line and roadway will commence, along with the repair of power lines, phone lines and cable lines. First Energy has restored power to all homes in the city.
State board approves Duke gas pipeline to run through Hamilton County — After a years-long debate, Duke Energy's controversial plan to build a new natural gas pipeline in Hamilton County wasapproved on Thursday by the Ohio Power Siting Board . The approximately 13-mile-long C314V Central Corridor Pipeline Extension Project, which passes through several communities in Hamilton County, will run from Golf Manor north of I-275. Residents at a town hall meeting on Thursday said they still have concerns. "I never really liked the idea of it, the idea of a pipeline just coming into basically my backyard," Evendale resident Cory Petersman said. The pipeline will soon become a permanent fixture in several Hamilton County neighborhoods, including Amberley Village, Blue Ash, Cincinnati, Evendale, Golf Manor, Reading and Sharonville. Duke Energy spokesperson Sally Thelen said the company will work with residents along the route and the pipeline will be constructed in right-of way areas, not backyards. "We're not going to do anything unless we certainly on the front end have everything communicated with the communities that would be impacted," Thelen said. She said Duke currently operates more than 14,000 miles of pipeline. Protests of the project have continued since its introduction in 2016. Opponents' initial concerns had to do with the possible danger associated with having a pipeline in a residential area .
Environmentalists question use of radioactive brine waste to treat roads - - Processed brine waste from oil and natural gas drilling could raise levels of radium — a radioactive metallic element found in the brine — in soil and groundwater when spread on winter roads, environmentalists warn. As temperatures continue to dip, it will be only a matter of time before road crews across the state head out in the wee hours to pre-treat roads for snow and ice.Many will use processed brine waste from oil and natural gas drilling. That concerns environmentalists, who say the practice could raise levels of radium — a radioactive metallic element found in the brine — in soil and groundwater from runoff that could take up to 1,600 years to decay.“This is just not something that should be spread around our communities haphazardly. It needs to be stopped, period. If you can’t find something better to do with this waste, then stop producing it,” said Teresa Mills, a member of the Buckeye Environmental Network, a nonprofit environmental-justice group. Radium-226 and radium-228, both found in brine waste, are known carcinogens and can lead to bone, liver, and breast cancer in humans if levels are high enough, according to the U.S. Centers for Disease Control and Prevention. Ohio law allows only brine produced from vertical, or conventional, wells to be spread as a de-icer.“The (Ohio Department of Natural Resources Division of Oil & Gas Resources Management) has collected brine samples from both brine hauler trucks and wells. These samples are helping the division to establish baseline radiological data on naturally occurring radioactive material in produced brine from different geological formations,” said ODNR spokesman Adam Schroeder.Data from state testing shows that in at least one case there were 9,602 picocuries per liter for combined amounts of radium-226 and radium-228. The lowest level was 66. Environmentalists note that Ohio law allows no more than 0.005 picocuries of radium per liter of oil and gas fracking waste to be placed in landfills in the state. Yet state law allows for processed brine waste to be spread on Ohio’s roadways without a cap on its radiation levels because the state claims it is a naturally occurring byproduct.
Gulfport Energy Cuts Jobs, Suspends Share Buybacks - U.S. shale and gas producer Gulfport Energy Corporation has cut staff and suspended its share repurchase program in efforts to cut costs, the company announced Monday.The Oklahoma City-based independent, which has operations in the Utica shale in Ohio and SCOOP play in Oklahoma, also said that two of its board members – Craig Groeschel and Scott Streller – will step down from the board by year-end.“Gulfport’s Board and management team are committed to taking timely and decisive action to build long-term sustainable value for all shareholders,” CEO David Wood, said in a company statement. “To that end, following discussions with our large shareholders and other stakeholders, we decided that accretive repurchases of our unsecured notes at discount represent an attractive allocation of our capital in the current market environment. We have also been taking a hard look at how to be more efficient across all areas of our business and as part of this effort recently reduced our staffing levels.”Gulfport cited current market conditions and a weak near-term gas price outlook as reasons for suspension of the company’s share repurchase program. Additionally, Gulfport recently completed a workforce reduction, accounting for about 13 percent of its headcount. Gulfport had nearly $2.1 billion in long-term debt, according to its third quarter 2019 earnings statement.
Ohio's Growing Shale Energy Industry Has Attracted Nearly $78 Billion in Investment Since 2011 - Total investment in Ohio's resource rich shale energy sector has reached $78 billion since tracking began in 2011, according to a Cleveland State University (CSU) study. Prepared for JobsOhio, the report represents the most recent data available and covers shale investment through the second half of 2018. Earlier in the year, IHS Markit released estimates that by 2040, the Utica and Marcellus shale region, of which Ohio is a significant part, will supply nearly half of all U.S. natural gas production. The study from CSU's Energy Policy Center at the Maxine Goodman Levin College of Urban Affairs, showed drilling investments were slightly down in the second half of 2018 compared to the first half, but total upstream investments were up. Total shale-related investment in Ohio for the second half of 2018, including upstream, midstream and downstream, was around $3.82 billion. Total investment from 2011-2018 totaled about $77.7 billion. Upstream activities, such as drilling or royalties, accounted for more than $3.5 billion of this total. According to the Ohio Department of Natural Resources Division of Oil and Gas, 117 new wells were drilled during the third and fourth quarters of 2018, 40 fewer than in the first half of the year. Yet longer laterals are resulting in higher production and increased investment per well. Data indicates that the volume of gas-equivalent shale production in the second half of 2018 was 17.7% higher than in the first half, with total upstream spending in the second half of 2018 exceeding that for the first half by around $173.4 million. In Ohio, with Belmont, Monroe and Carroll counties representing the most active areas, 117 wells were listed as "drilled, drilling or producing."
Other Ohio counties seeking benefit from boom — As drillers tap the natural gas reserves beneath Ohio’s easternmost counties, community leaders to the west hope to pump some of those profits into their own economies by developing ancillary industries. Ohio Rep. Adam Holmes, R-Nashport, met recently with representatives of JobsOhio and the Appalachian Partnership for Economic Growth to discuss ways that counties adjacent to the Marcellus and Utica shale region can capitalize on the activity that is taking place there. At the Zanesville meeting, Holmes said counties such as Muskingum — which lies just west of Guernsey County and within 50 miles of many parts of Noble, Monroe, Harrison and Belmont counties where much of the drilling is taking place — are ideal locations for support services related to the industry. Holmes suggested that because of its central location less than an hour east of the state capital and along Interstate 70, Muskingum County is a suitable spot for trucking companies to set up maintenance and repair facilities. He said the location is also ideal for pipe yards and manufacturing and storage for pipelining companies. He pointed out that the flatter terrain of Muskingum County, as opposed to the rolling hills of the more eastern counties, means it is easier to construct large buildings and facilities there. He referred to his legislative District 97, which includes Guernsey and Muskingum counties, as a“downstream area” in connection with the industry. Downstream operations include those that use the natural gas and related products such as ethane and propane in manufacturing, producing things such as plastics, chemicals, electricity, carpets and textiles, medical devices and more.
Pennsylvania's natural gas production growth continues to lead U.S. - Philadelphia Business Journal - Pennsylvania's natural gas production growth led the United States in 2018 — and helped set a national record. The Energy Information Administration said dry natural gas production rose 12 percent to 83.8 trillion cubic feet in the United States in 2018, the largest percentage increase since 1951 and the highest increase in volume as far as records go back. While Texas remained the top gas producing state with 6.8 trillion cubic feet, Pennsylvania was not far behind with 6.1 trillion cubic feet, according to EIA data. That's up from 5.4 trillion cubic feet in Pennsylvania in 2017. This occurred during a year of downturn in the natural gas industry and a move toward production cuts and drops in rig counts that continues this year and likely in 2020. There were 68,421 producing gas wells in Pennsylvania in 2018, down from 68,807 in 2017.
Pennsylvania families demand investigation into rare cancers (AP) — The families of young people diagnosed with a rare childhood cancer confronted Democratic Gov. Tom Wolf on Monday over what they called his administration’s insufficient response to a health crisis they blame on pollution from the shale gas industry. Dozens of children and young adults have been diagnosed with Ewing sarcoma and other forms of cancer in a four-county region of southwestern Pennsylvania where energy companies have drilled more than 3,500 wells since 2008. An investigation by the Pittsburgh Post-Gazette this year identified six Ewing cases in a single school district. The cause of Ewing sarcoma is unknown, and there’s been no evidence linking the Pennsylvania cases to drilling and hydraulic fracturing, the method that energy companies use to extract natural gas from shale rock. The American Cancer Society says there are “no known lifestyle-related or environmental causes” of Ewing, a rare bone cancer that’s diagnosed in about 200 children and teens across the U.S. each year. But the families, joined by anti-drilling activists, demanded that Wolf launch an environmental investigation into the cancers that have devastated their loved ones. “I want answers, and I want answers now. Give us the truth,” said Carla Marratto Cumming, whose 19-year-old brother, Luke Blanock, died of Ewing sarcoma in 2016. “What’s going on is killing our families, and it’s not OK.” The region’s lawmakers recently secured a $100,000 state grant for the University of Pittsburgh Medical Center to perform genetic testing of Ewing patients, but the families said it’s not enough. They gave Wolf an earful when he met with them in the hallway outside his office at the Capitol on Monday. Luke Blanock’s mother, Janice, invited Wolf to go on a tour of fracking sites “to see exactly how fracking is wreaking havoc on our kids, families, our homes, everything.” Breaking down, she continued: “You have to see it in person. You can’t even understand what we’ve gone through.”
When it comes to fossil fuels, Pa. is taking big steps — in the wrong direction | Philadelphia Inquirer Editorial - The news that the FBI has been investigating how Gov. Tom Wolf’s administration issued a construction permit for a $5.1 billion project to construct a cross-state pipeline carrying highly volatile gas liquids is a grim reminder that when it comes to energy policy, Pennsylvania is moving in the wrong direction. Last week, the Associated Press reported that for at least six months, the FBI has been investigating whether Wolf administration officials have pressured the Pennsylvania Department of Environmental Protection to approve the Sunoco Pipeline LP’s Mariner East 2 project — which traverses 17 counties — despite potential shortcomings in the permitting process. The Wolf administration has made natural gas a staple of its economic development plans and the project has garnered the support of labor unions and the energy industry. The federal investigation is the latest in the mounting challenges that include a joint investigation by the Pennsylvania Office of Attorney General and Delaware County District Attorney’s Office, as well as an investigation by the Chester County District Attorney’s Office. The Clean Air Council has challenged in court several water and air quality permits that the state issued to Sunoco. Environmental activists and residents near pipeline construction sites have long been protesting the project — an opposition that intensified following gas leaks,spills, and odors.Last week, the governor said he had nothing to hide and welcomed investigations. Frankly, though, these questions are not the most troubling aspect of the project. As we face a moment of reckoning to address climate change, instead of moving toward renewable energy, Pennsylvania is battling to grow the commonwealth’s dependence on fossil fuel. Mariner East is not the only example.A June fire at Philadelphia Energy Solutions refinery put the entire region at risk of exposure to deadly gasses. As a part of its court bankruptcy proceeding, it is accepting bids for the property; two of the 15 potential bidders propose using the site to produce fuel. Others would repurpose the site as a fuel terminal. In the western part of the state, the Pennsylvania Petrochemicals Complex is soon to be completed in part due to billions in tax credits. Instead of rolling back the footprint of the gas industry in an area of the state that is already seeing a cluster of rare childhood cancer — similar to Louisiana’s “cancer alley” next to refineries and petrochemical plants — the state is expanding it.
Pa. Senator Pat Toomey Introduces Bill To Prevent Presidents From Banning Fracking – CBS Pittsburgh (KDKA) — Referencing a social media post from a fellow senator, Republican Pat Toomey delivered a strong message to everyone in government. On Friday, Toomey introduced a bill to ban presidents from banning fracking. He introduced his resolution while standing next to a picture of a tweet from U.S. Sen. Elizabeth Warren that says she would ban fracking if elected president. “Number one, it reaffirms that states are the number one regulators of fracking on state and private lands,” Toomey said. “And it states very clearly that the President of the United States does not have the authority to ban fracking.” But the Pennsylvania director of Clean Water Action called Toomey’s action a political stunt and waste of time. “He knows that this is not going to go anywhere,” Myron Aronwitt told KDKA political editor Jon Delano on Friday. Aronwitt says the president does not currently have the authority to ban fracking, except maybe on federal lands. “Our understanding has always been that to completely ban fracking, you would need Congress to take action and the President would likely have to support that,” Aronwitt said. Toomey agrees, but says Democratic contenders like Warren, Bernie Sanders, and Kamala Harris think they can ban fracking by declaring a national emergency.“I don’t think they have the legal authority but apparently they do, and that’s why I think it’s important for Congress to go on record and make it clear — you do not have this authority,” said Toomey.
County leaders: Petrochemical industry welcome in western Pennsylvania - A group of about 20 county officials from Allegheny, Beaver, Butler, Fayette, Greene, Lawrence, Mercer Washington and Westmoreland counties issued a joint statement Wednesday showing support natural gas and petrochemical development in western Pennsylvania. Western Pennsylvania is open for business — even if the city of Pittsburgh isn’t. A group of about 20 county officials from Allegheny, Beaver, Butler, Fayette, Greene, Lawrence, Mercer Washington and Westmoreland counties issued a joint statement Wednesday showing support natural gas and petrochemical development in western Pennsylvania. “Pittsburgh is just one city, among nearly 500 other municipalities that make up the western region of Pennsylvania we represent,” officials said in the statement. “Our communities are home to workers, many of which have struggled to provide for their families over the past several decades — until the natural gas industry came to this region.” Among those signing the document are Beaver County Commissioners Daniel Camp, Tony Amadio and Sandie Egley and Allegheny County Chief Executive Rich Fitzgerald. The statement, spearheaded by the Beaver County Board of Commissioners, comes on the heels of last month’s comments by Pittsburgh Mayor Bill Peduto at the Climate Action Summit in downtown Pittsburgh. “Let me be the first politician to say publicly, I oppose any additional petrochemical companies coming to western Pennsylvania,” he told a crowd of climate activists and environmentalists at the summit. “We do not have to become the petrochemical/plastics center of the United States.” But petrochemical development has brought jobs to Beaver County and the region, the county officials wrote. “The Shell Petrochemical facility in Beaver County represents the largest investment made in this region since World War II, when western Pennsylvania led the country’s steel production,” the statement said. “This investment has brought families back to their hometowns, and has breathed life back into our communities.
Johns Hopkins researcher: Pa. should ban fracking- A scientist at Johns Hopkins University told a public health conference in Pittsburgh that Pennsylvania should ban fracking because of its impact on public health and climate change. Brian Schwartz has found through years of National Institutes of Health-funded studies that being close to fracking increases the likelihood of asthma,premature birth, headaches, and maternal stress levels. He said the evidence that fracking is bad for your health is clear enough.“What would I say now? I would say because of the regional and local health concerns and concerns about climate change, we should stop fracking–everywhere,” he said. The comment drew a round of applause at the normally staid annual conference, presented by the League of Women Voters of Pennsylvania and held at the University of Pittsburgh. The conference this year featured several public health scientists presenting research on fracking’s effects on maternal health, mental health, and heart problems, and the latest research on air and water impacts from fracking. Many local environmental activists were in attendance.
Anti-fracking protesters arrested in Dover - – At least 29 protesters were arrested by New York State Troopers on Saturday after blocking the entrance to the Cricket Valley Energy Center with a farm tractor while others went into the facility and climbed the 275-foot smokestack to protest the construction of the power plant that will use fracked gas to produce electric. The protesters, according to a statement released, came from all over the Northeast and included local farmers and were organized by “Resist CVE”. The smokestack climbers started their ascent around 5:00 am and they stayed up on the perch until approximately 5:00 pm. The tractor blockade began around 6:00 am and ended in the afternoon. As a result of the protest, construction workers building the plant were forced to leave after being on-site just a short time.According to Lee Ziesche, Organizer for Resist CVE, the construction of the 1,100 megawatt fracked gas power plant, one of the largest in the Northeast, is nearing completion and once up and running would cover the local community in 279 tons of nitrogen oxides, 570 tons of carbon monoxide, and more than 60 tons of sulfuric acid pollution. Local residents are particularly concerned that its location in the Harlem Valley, a narrow north-south corridor, will engulf the region with pollution. It will also emit 6 million tons of greenhouse gasses. Protesters climbed the smokestack around 5:00 am on Saturday. “Our valley has a lot of important resources, everything from our children, an elementary, middle and high school, to some of the largest freshwater deposits in New York State and our local farms, all which need clean air to survive and thrive,” said farmer Ben Schwartz, of White Pine Farm in Eastern Dutchess County. The plant is located close to the Connecticut border and residents there are also very concerned about the fracked gas pollution. The Connecticut residents had no say in the approval of the plant and now are forced to monitor their own air quality.
State fires National Grid auditor over alleged report irregularities -A consulting company hired by the state in 2018 to perform a comprehensive audit of National Grid’s gas and electric operations was fired in October for a series of irregularities in the draft report, including alleged plagiarism and a “lack of independent analysis,” according to a state filings. The contractor, Raymond G. Saleeby Consulting Group of South Orange, New Jersey, was notified of its firing in an Oct. 1 teleconference, just weeks before Gov. Andrew M. Cuomo publicly criticized National Grid and the Public Service Commission over a gas shortage facing the downstate region that led the British company to declare a moratorium on new gas hookups. But the state discounted any connection between the matters, even though a part of the report's scope was to examine gas supply. "Saleeby Consulting’s audit failures are not connected to problems related to National Grid’s failure to adequately address Long Island’s gas supply demands," Department of Public Service spokesman James Denn wrote in an email. But the audit report was supposed to examine local supply issues. A state document outlining the scope of work specifically requires auditors to "assess the readiness, capability and possible impediments to meeting increasing natural gas load, and possible alternatives to new long-term projects like pipeline capacity, including the ability of conservation, temporary compressed natural gas facilities, demand response or other programs to meet peak load requirements in the future." It's unclear how delays in finalizing the report, which will now be completed by department staff, could affect the state's plan to address the problems. Cuomo has given National Grid two weeks to respond to the supply crisis or risk losing its franchise to operate in New York.
Pressure mounts on National Grid for alternatives to moratorium — As winter sets in, state officials are turning up the heat on National Grid to find solutions to its moratorium on new natural gas service. Gov. Andrew Cuomo has threatened to start a legal process to revoke the utility's license — a negotiating tactic he’s used before, with some results — and Attorney General Tish James is gathering customer complaints in an ongoing investigation. A standoff over a controversial pipeline that Grid says is needed to meet demand continues, but the utility is expected to propose alternatives next week and offer a public defense of its actions.“We're currently working through all the different engineering solutions that could be a non-pipeline solution,” National Grid CEO John Pettigrew said during an earnings call with analysts last week. “So, for example, as we're looking at things like energy efficiency, demand side management, we're looking at things like compressed natural gas, vaporization, increased capacity on our [liquefied natural gas] facilities … Ultimately, our objective is to be able to serve the customers.”Cuomo has acknowledged there are long-term gas constraints in the downstate region, which National Grid and Con Edison have warned regulators about for years. Grid's abrupt imposition of a moratorium on new gas hookups after the Cuomo administration rejected a permit for the Williams pipeline in May has drawn the ire of local officials, business and labor groups and environmental activists alike.The Legislature had planned to hold a joint hearing on the topic on Tuesday, but Sen. Kevin Parker (D-Brooklyn), chair of the Energy Committee, said Cuomo asked him to postpone it to allow the company time to propose alternatives. A new date has not yet been set.“I think this moratorium by National Grid is a sham, and they need to end it right away,” Parker said. “I don’t think holding the city hostage does anything for their case for the need for natural gas.”
New York Feud Over Gas Hurtles Toward a Utility’s Expulsion- -- In five days, New York Governor Andrew Cuomo may decide to expel one of the world’s biggest utilities from the state’s most populous region. That threat is the culmination of an extraordinary showdown between Cuomo and British energy giant National Grid Plc over the future of natural gas. The clash, hinging on the utility’s refusal to connect new gas customers, has already delayed thousands of construction projects across Brooklyn, Queens and Long Island. And it all began with New York rejecting a single permit for a pipeline, which the utility says is crucial for meeting surging gas demand in the region. The fight lays bare just how fraught America’s relationship with gas has grown. As hydraulic fracturing, or fracking, has made the fuel cheap and plentiful, cities and states are pushing residents to switch to gas heating because it burns cleaner than oil. At the same time, left-leaning politicians argue pipelines will only prolong dependence on fossil fuel. While that debate is nationwide, nowhere has it become as explosive as in New York. “How unprecedented is it? It’s very,” Barclays Plc analyst Eric Beaumont said. “Both sides need to be willing to come to the table.” Time is fleeting. Cuomo has threatened to revoke National Grid’s license to operate its downstate gas business if it doesn’t have a plan by Nov. 26 to start connecting new customers. The two sides paint starkly different pictures of the problem. The utility -- which provides gas to more than 1.8 million homes and businesses in Brooklyn, Queens and Long Island -- says it doesn’t have a choice. Demand for gas is booming. Pipelines are full. Unless the state approves more, there’s not enough gas to serve new customers, the company says. “We’ve spent the last 10 years looking at the constraints associated with New York state,” National Grid Chief Executive Officer John Pettigrew said on a call with analysts this month. Cuomo says that’s bogus. In a letter last week, he blasted National Grid, saying its moratorium on new hookups was “either a fabricated device or a lack of competence.” The company, he said, hasn’t done enough to make its system more efficient and encourage conservation.
53 homes evacuated after contractor strikes gas line in Lawrence - Over 50 homes were evacuated in Lawrence Monday afternoon after a contractor struck a gas line, Lawrence firefighters said, triggering flashbacks to last year’s deadly outbreak of gas-fueled explosions and fires in the Lawrence area.A city contractor struck a low-pressure gas line at 15 Florence Ave. around 11:13 a.m., said Lawrence Fire Chief Brian F. Moriarty. Moriarty did not know which company the contactor worked for.“The gas has been shut off. No injuries, no fires, no explosions, but we’re setting up a shelter at the Arlington Street school because of the temperature. We don’t want people to get cold. The estimated repair time is 6 to 12 hours,” Moriarty said. Lawrence, Massachusetts, is the same community that was the site of a series of gas explosions in 2018.
Gas Pipes Have ‘Huge Vulnerability’ to Web Attack: Maine Senator - U.S. natural gas system should adhere to same cybersecurity standards as the power grid, Senator Angus King, an independent from Maine, says in a telephone interview.
- King, who is on Senate intelligence committee, said that while risks across the U.S. are great, gas pipelines in particular have “a huge vulnerability” and industry isn’t “paying sufficient attention to it”
- King has been helping to develop a national strategy for cyber attacks, intrusions across sectors
- “A catastrophic cyber Pearl Harbor is a huge risk I don’t think is fully appreciated,” King says. “Right now our adversaries feel no cost for attacking...
Kentucky Regulators Side With Bernheim In Fight Over Gas Pipeline - Kentucky’s Energy and Environment Cabinet has fired its opening salvo in the fight over a proposed gas pipeline through Bernheim Forest. Louisville Gas & Electric filed an eminent domain lawsuit against the state in September to overturn a conservation easement and acquire land to build the pipeline. On Friday, the state filed a motion to dismiss the condemnation suit, arguing LG&E didn’t make an offer to buy the state’s conservation easement prior to filing the lawsuit, as required under state law. The motion amounts to a procedural delay tactic, but signifies the state’s willingness to defend its interests in the Bernheim property against the desires of LG&E, which plans to build a 12-mile-long natural gas pipeline through the conservation lands. LG&E spokeswoman Chris Whelan said in an emailed statement the state’s argument is “baseless” and “contrary to existing law.” “We will be responding in due course,” she said. The state declined to comment, citing ongoing litigation. The lawsuit has statewide ramifications. Kentucky environmentalists say it is the first time a utility has attempted to overturn a conservation easement held by the state, and it could result in weakening protections for natural areas throughout the Commonwealth. LG&E has filed lawsuits against Bernheim, farmers and most recently, a Kentucky state board, in an attempt to acquire the remaining pieces of land necessary to build the pipeline.
Revenue official: Downturns in gas, coal battering state tax collections - A global oversupply of natural gas is creating a domino effect that is causing natural gas and coal prices -- and demand for coal -- to plunge, contributing to a $33.26 million state budget shortfall through October, Deputy Revenue Secretary Mark Muchow told legislators Monday. “There’s just a flood of natural gas out there. It’s keeping prices low, not only for natural gas, but for the coal industry,” Muchow told the interim Joint Committee on Finance. As a result, year-to-date state severance tax collections are down 44.5 percent from the same point last year, missing revenue estimates by $33 million. Coal production has remained relatively steady to date, but Muchow said he expects that to drop as power plant stockpiles max out. Demand for metallurgical coal, used in steel production, has also dropped, as the global economic slowdown has created steel stockpiles, he said. “There’s excess steel in the global market, and with excess steel, there’s less need for metallurgical coal,” he said. Muchow noted that natural gas and coal companies are “hurting significantly” with the drop in prices and production. “Certainly, in the stock market, the worst performing sector is energy,” he said. Natural gas is also contributing to a downturn in state personal income tax collections, which are running $37.47 below estimates for the 2019-20 budget year, as natural gas pipeline construction projects have wrapped up, or are being held up in litigation, he said. “Last year, we had a whole bunch of construction workers in the field,” Muchow said. “That’s not true now.” While tax collections in August, September and October leveled off after July collections started off the new budget year with a disappointing $33 million shortfall, Muchow said November tax collections will come up short because of timing issues.
Investigators question NC governor’s pipeline fund actions (AP) — North Carolina Gov. Roy Cooper appears to have “improperly used the authority and influence of his office” to pressure natural gas pipeline builders to agree to a $57.8 million mitigation fund under his control, private investigators reported Wednesday. The report’s authors, however, found no evidence that the Democratic governor personally benefited from the fund. Cooper’s office slammed the report as “full of inaccuracies and contradictions.” A Republican-controlled legislative committee hired the former federal agents a year ago to review the January 2018 side deal between the governor’s office and utilities working on the Atlantic Coast Pipeline. Cooper’s environmental department announced a key water permit had been issued the same day the mitigation fund “memorandum of understanding” with the governor’s office was unveiled. The money the pipeline operators — Duke Energy, Dominion Energy and others — had agreed to pay was intended for environmental mitigation, renewable energy and economic development projects along the proposed pipeline’s route in eastern North Carolina. Cooper and his aides have said repeatedly that the mitigation package wasn’t a prerequisite for the permit. But Republicans, unconvinced, turned to Eagle Intel Services to investigate, at a cost of $83,000. The report’s authors said their investigation didn’t focus specifically on whether crimes happened, and an investigative agency with more powers could potentially determine that. But the report said “the information suggests that criminal violations may have occurred.”
Years after starting signature collection, anti-fracking group continues legal effort to get on Michigan ballot - Supporters of a statewide ban on horizontal fracking in Michigan came up short on signatures when they attempted to qualify for the 2016 ballot.But the Committee to Ban Fracking in Michigan still hasn’t given up hope on making the ballot in 2020, continuing a years-long battle in the courts to compel the state to accept their ballot language.Under existing Michigan law, ballot initiatives must collect the requisite number of signatures - which are dictated by the number of votes received in the last gubernatorial election - within a 180-day window.The anti-fracking effort collected a little over 150,000 signatures of the 252,253 needed at the time during a 180-day window in an effort to make the 2016 ballot. Instead of starting from scratch or reigniting their attempt the next election cycle, the group kept going, collecting the needed amount by Nov. 5, 2018 - three years after they’d started. Previously, the Committee to Ban Fracking in Michigan filed a lawsuit challenging the state’s 180-day window, which was dismissed in 2016. The group is now asking state courts in a different suit to compel the Secretary of State to accept their petition signatures, which were rejected in part because the petition sheets still bear reference to the 2016 election, campaign director LuAnne Kozma said. That effort is currently before the Michigan Court of Appeals. The Attorney General’s office has argued the committee’s suit should be thrown out, stating in a brief filed with the Michigan Court of Claims earlier this year that the committee does not meet current signature gathering requirements, as the 2018 gubernatorial election increased the number of signatures required.
Oil pipeline divides Michigan Democrats, unions ahead of 2020 — A fight among key supporters of Michigan Democrats is raging inside the state Capitol, and some Democrats worry it could spill over into the 2020 election. The disagreement is over Enbridge's plans to construct a tunnel beneath the Straits of Mackinac to replace its Line 5 oil pipelines and attempt to prevent any catastrophe from a potential rupture. Environmentalists have opposed plans for the tunnel and want the line decommissioned as soon as possible, but some labor groups want the tunnel built. In the middle are Democratic lawmakers who usually have support from both sets of interests. The contentious battle comes as House Democrats have experienced a drop so far this year in contributions from building trades unions, according to a Detroit News analysis of campaign finance disclosures. Many of them care deeply about protecting the Line 5 tunnel project. The fight is also dividing Democrats when they are close to recapturing control of the House. If they flip four Republican seats next year, they would get control of the chamber for the first time since 2010. If they win three GOP seats, they would split control with Republicans. One lawmaker, Rep. Laurie Pohutsky, D-Livonia, said she'd been told Democrats who opposed the tunnel would no longer be considered allies of labor groups in the building trades. Labor groups, including the Operating Engineers, the Michigan Laborers and the Michigan Building and Construction Trades Council, want the tunnel built because it would generate jobs and an estimated $500 million investment. Supporters argue the tunnel would safeguard against an oil spill in the Straits of Mackinac. Line 5, which was built in 1953, carries up to 540,000 barrels of oil and natural gas liquids per day, according to Enbridge. Environmental groups, such as the Sierra Club, Clean Water Action and the Michigan League of Conservation Voters, oppose plans for the tunnel because they view Line 5 as a threat to the Great Lakes and want it decommissioned right away.
Nessel: Punishing Dems over Line 5 not a good idea — Punishing Democratic lawmakers for opposing the construction of a tunnel in the Straits of Mackinac "will not benefit" the building trades, Attorney General Dana Nessel cautioned Tuesday in a series of social media posts. "If unions in this state have learned anything over the last decade, it is this: Republicans in the state Legislature are not your friend," Nessel added. "Democratic majorities are essential to Michigan regaining its status as a state which supports workers and their families." Nessel sent out the tweets in reaction to a Detroit News report on division within the Michigan Democratic Party over plans to construct a tunnel beneath the Straits of Mackinac to replace the 66-year-old Line 5 oil pipelines. As some House Democrats have opposed the tunnel and court cases have left the project in limbo, building trades unions have decreased or halted their contributions to key House Democratic fundraising committees this year, an analysis of campaign finance records found. But Nessel defended Democrats' work to support the building trades on other matters. The Democratic Party is the party that worked for "decent wages and benefits" and safe working conditions for members of the trades, Nessel argued. "Punishing Dems who are determined to preserve the sanctity of the Great Lakes due solely to the issue of Line 5 will not benefit the trades," Nessel wrote. "It is the definition of cutting off one(')s nose to spite its face." Amid growing worries that Enbridge's Line 5 oil pipelines in the Straits of Mackinac could rupture and harm the Great Lakes, the Canadian company has proposed building the tunnel beneath the Straits to house its dual pipelines. Plans for the $500 million project have gained the backing of building trades unions that often support Democratic candidates in Michigan. The tunnel agreement was brokered by Republican former Gov. Rick Snyder and mostly GOP lawmakers.
Enbridge completes straits work, turns to tunnel design - Enbridge Energy finished its geotechnical work in the Straits of Mackinac on Sunday, concluding a phase that will serve as the foundation of boring and design plans for a more than four-mile tunnel to house the company’s controversial Line 5 oil pipeline. This sets the stage for the Canadian energy company to plan the design of the tunnel and set about getting more permits for a construction project that the Whitmer administration opposes. Enbridge extracted samples from 27 holes drilled on shore, in shallow, and at the deepest segments of the Straits. It capped the company’s $40 million investment in 2019 in the tunnel despite the state’s lawsuit seeking to stop it. Enbridge Energy extracted samples from 27 holes drilled on shore, in shallow, and at the deepest segments of the Straits of Mackinac, capping Enbridge’s $40 million investment in 2019 in preliminary work for a tunnel to house the Line 5 oil pipeline. “It’s with this data now that we’ll be able to make some of the most important decisions about how we’ll design and construct this tunnel,” said Amber Pastoor, project manager for the tunnel. The results will be particularly useful in determining the characteristics of the tunnel boring machine needed to complete the project as well as the exact alignment of the tunnel, Pastoor said. After years of concern from environmentalists about the 66-year-old pipeline, Enbridge Energy entered into a series of agreements with Michigan last year that would require the company to pay up to $500 million to build a tunnel below the Straits of Mackinac lake bed to house Line 5. The agreements made under Republican former Gov. Rick Snyder were challenged by Democratic Gov. Gretchen Whitmer and Attorney General Dana Nessel, who opined that the agreements were unconstitutional. When negotiations regarding a shorter construction period were unsuccessful, Enbridge asked the Michigan Court of Claims to find the agreements were constitutional. A judge rejected Nessel's argument, but the Democratic attorney general has appealed the decision.
Hard times for Wisconsin sand: Amid flagging sales, Hi-Crush writes off $215M in mine value - In a sign of the bleak economic conditions facing Wisconsin’s frac sand industry, one company has devalued two of its mines by more than $215 million. Hi-Crush Inc. last week announced the devaluation of its idled August and Whitehall mines by $109.7 million and $105.7 million each. That’s in addition to a $131 million write-off for rail cars, terminals, other assets and goodwill. The Texas-based company declared the asset impairments in an earnings report that tallied $268.5 million in losses during the third quarter.Impairment is an accounting tool used when the value of an asset on the books is less than the fair market value. “It’s an effort to move the balance sheet closer to reality,” said Brian Mayhew, professor of accounting at UW-Madison. “It’s them recognizing these mines aren’t worth what they paid for them.” The primary reason for asset impairment, Mayhew said, is to avoid misleading creditors with an inflated balance sheet. Hi-Crush said the decision resulted from a general oversupply of sand and a shift to locally produced sand in the highly productive oil fields of Texas and New Mexico. “We do not see this trend reversing and as a result our Northern White sand assets have been impacted,” Hi-Crush CFO Laura Fulton said during a conference call with investors. U.S. Silica, also based in Texas, lost $23 million in the third quarter. The company said in its quarterly report that it may have to impair assets if sand sales and prices continue to decline.
Evers signs bill making it a felony to trespass on pipelines (AP) — Gov. Tony Evers signed into law a bipartisan proposal Wednesday making it a felony to trespass or damage oil or gas pipelines in Wisconsin, a measure that opponents said would violate free speech rights and disproportionately affect Native Americans whose lands are often affected by pipeline projects. Evers said he had problems with the bill but signed it anyway. “I have said — and reaffirm today — that our Tribal Nations deserve to have a voice in the policies and legislation that affect indigenous persons and our state,” Evers said in a statement. “I expect that moving forward members of the Legislature will engage in meaningful dialogue and consultation with Wisconsin’s Tribal Nations before developing and advancing policies that directly or indirectly affect our Tribal Nations and indigenous persons in Wisconsin.” The new law builds upon a 2015 state law that made it a felony to intentionally trespass or cause damage to the property of an energy provider. The bill Evers signed expands the definition of energy provider to include oil and gas pipelines, renewable fuel, and chemical and water infrastructure. Those found guilty could face up to $10,000 in fines and six years in prison. The measure has broad support from both Republican and Democratic lawmakers, organized labor unions, utilities, the state chamber of commerce and a variety of trade groups representing farmers, restaurants, the paper industry and others. Supporters downplayed its intent, calling it the fix to an oversight from the earlier law.
Democratic bill sparks debate over mixing pipeline safety, climate policy | S&P Global Platts — Legislation offered by Democrats in the US House of Representatives that would inject climate policy into a periodic pipeline safety agency reauthorization has polarized parties over whether marrying these two issues represents environmental progress or cumbersome complication. The bill - introduced by Representatives Frank Pallone of New Jersey and Peter DeFazio of Oregon - immediately drew pushback because it was drafted without input from Republicans, raising questions about its viability in the GOP-controlled Senate and the breakdown of the historically bipartisan process. The legislation is also raising eyebrows because it explicitly aims to mitigate climate change. The legislation, which reauthorizes and funds the US Pipeline and Hazardous Materials Safety Administration, traditionally focuses on proposing measures to prevent infrastructure accidents in the energy and other sectors. Industry groups including the American Gas Association and Interstate Natural Gas Association of America immediately called on lawmakers to return to a cooperative process. "We encourage you to maintain the tradition of bipartisanship that has characterized pipeline safety legislation for decades. We worry that absent such an approach, PHMSA will remain unauthorized and important opportunities to enhance our nation's pipeline safety program will be forfeited," the heads of seven industry groups said in a letter to the House committees chaired by Pallone and DeFazio. The Pipeline Safety Trust, an advocacy group representing citizens, also raised concerns that lack of compromise could stand in the way of implementing measures to hold PHMSA and pipeline operators accountable and help the agency implement long-stalled rules.
Natural gas, false hope in climate change campaign? (AFP) - Natural gas is cleaner and produces fewer global warming emissions than other fossil fuels, making it key to our transition to a low-carbon future, but it comes with its own serious drawbacks. The International Energy Agency (IEA) said recently that natural gas is crucial to its sustainable development model which requires oil and coal use to fall sharply if we are to get anywhere near the Paris agreement climate change targets. Natural gas is relatively cheap, abundant and produces 50 percent less CO2 than coal, used widely, especially in Asia to generate electricity for fast growing economies. In its latest annual report, the IEA pencilled in a 10 percent increase in natural gas use through to the end of the 2020s while oil use would have to return to levels last seen in the 1990s. Some NGOs, however, attack the IEA -- set up after the first great oil shock in 1973-74 to advise countries how to manage their energy needs -- for being overly beholden to nae-say governments such as the United States, and the huge fossil fuel companies. Rather than recommending an increase in the use of natural gas, the IEA should be calling for a reduction, they say. Murray Worthy at Global Witness said "governments should not be misled... and should rather work on closing down existing oil and gas fields, and halting exploration for new reserves." Significantly, the European Investment Bank (EIB), the lending arm of the European Union, recently announced that it would halt funding new fossil energy projects, including natural gas, from 2022. For some, natural gas is the ideal transition fuel, with major companies such as Total and Shell producing increasing amounts and launching new projects which stretch for decades into the future.
NYMEX December natural gas crashes 12.2 cents on lower demand | S&P Global Platts— The NYMEX December natural gas futures contract slumped 12.2 cents to settle at $2.566/MMBtu Monday as a forecast of warmer-than-usual temperatures led to weaker demand. The front-month contract traded in a range between $2.551/MMBtu and $2.65/MMBtu Monday. The remainder of the winter strip - December 2019 through March 2020 - also weakened Monday, falling 11 cents to average $2.565/MMBtu. "We've had an early start to winter, but I think we are going to start returning to more normal temperatures for this time of year. Those warmer temperatures could keep us below $2.60 for as long as the weather holds," After averaging 110 Bcf/d for the last seven days, total US gas demand was expected to fall below 100 Bcf on Monday to 99.19 Bcf. Looking ahead, S&P Global Platts Analytics expects total gas demand to average 99.4 Bcf/d in the coming week and 100.5 Bcf/d in the week after that. Export demand is forecast to remain strong over the next week, with shipments to Mexico expected to average 5.3 Bcf/d and LNG feedgas demand set to average 7.3 Bcf/d. US-wide gas production was expected to fall 300 MMcf day on day to 92.2 Bcf, according to Platts Analytics. Despite the day-on-day decrease, Monday's production level was up 150 MMcf/d from its prior seven-day average of 92.05/MMBtu. Platts Analytics estimates gas production will average 92.3 Bcf/d over the coming two weeks. Looking ahead, the US National Weather Service's eight- to 14-day outlook shows normal temperatures across the Upper Midwest and along the East Coast. It shows warmer-than-normal temperatures in California and Florida, as well as colder-than-normal temperatures in the Rockies, Pacific Northwest, Southwest and Southeast.
US natural gas storage volume falls by 94 Bcf to 3.638 Tcf: EIA | S&P Global Platts — US working natural gas volumes in underground storage dropped by 94 Bcf week on week, decreasing by nearly triple the five-year average and marking the first net withdrawal of the year. The NYMEX Henry Hub winter strip fell about 1 cent following the number's release as much smaller draws loom. Storage inventories fell to 3.638 Tcf for the week ended November 15, US Energy Information Administration data showed Thursday morning. The pull was more than an S&P Global Platts survey of analysts calling for a 91 Bcf draw. Survey responses ranged from a withdrawal of 78 Bcf to 102 Bcf. The withdrawal was less than the 109 Bcf withdrawal reported during the corresponding week in 2018, but was much larger than the five-year average draw of 32 Bcf, according to EIA data. As a result, stocks were 506 Bcf, or 16%, more than the year-ago level of 3.132 Tcf and 60 Bcf, or 1.6%, more than the five-year average of 3.698 Tcf. The massive draw was driven by temperatures falling about 10 degrees below normal across the eastern half of the US. This resulted in residential and commercial demand gaining 10.3 Bcf/d week over week, according to data from S&P Global Platts Analytics. Total supplies increased by 0.8 Bcf/d to average 97.3 Bcf/d. Production stayed steady, and the increase in supply was led by a nearly 1 Bcf/d increase in net Canadian imports into the Northeast US, where colder weather boosted demand by more than 6 Bcf/d, accounting for roughly half of the overall US demand growth. The NYMEX Henry Hub December contract added 2 cents to $2.58/MMBtu following the announcement. The Henry Hub balance-of-winter contact strip traded roughly flat at $2.55, as the weekly storage report showed an inventory decline roughly in line with market expectations. The strip has continued shedding gains racked up during the early-winter demand spike seen in early November, and so far, prices have fallen by about 30 cents from the recent high of $2.85 on November 5. In the last week alone, winter gas prices have fallen by about 10 cents as weather forecasts point to mostly normal weather through the next two weeks.
US Weather Service forecast adds downside risk to gas demand, prices | S&P Global Platts— Above-average temperatures across much of the continental US this winter could limit gas demand for heating, a forecast published Thursday by the US National Weather Service showed. A series of outlooks extending from December to February predicted a 33% to 50% chance for warmer-than-normal weather in almost every US region, excluding portions of the Midwest and Plains. The forecast poses downside risk for gas prices during the coldest months of winter when the market has historically rallied to annual highs, which topped $4.70/MMBtu at the Henry Hub last season. After approaching $2.90/MMBtu earlier this month, the December-January-February forward strip price at the benchmark US gas hub has already witnessed a steady decline, settling Wednesday at an average $2.58/MMBtu, S&P Global Platts M2MS data shows. The Weather Service forecast now poses additional downside for gas prices this winter, especially in December when key heating-demand states including Illinois, Indiana, Ohio, Pennsylvania and New Jersey face a 40% chance for warmer temperatures. Through February, most of the Northeast is also facing a 33% chance for above-average temperatures, with an accompanying risk for heating demand. During a normal winter, the Northeast alone accounts for over 35% of US residential-commercial gas demand, according to S&P Global Platts Analytics. Averaging 35.8 Bcf/d in first-half November, US residential-commercial gas demand posted its strongest start to the heating season in over five years, but now appears to be facing headwinds. Over the past week, res-comm demand has averaged just 33.8 Bcf/d, trailing the prior five-year average by 2.7 Bcf/d or more than 7%, Platts Analytics data shows.
FERC poised to make permit decisions on four LNG export projects in Texas - Federal regulators appear poised to make permit decisions on the applications submitted by four liquefied natural gas export terminals in Texas. After more than three years of review, commissioners with the Federal Energy Regulatory Commission have placed permit decisions for the four projects on the agenda for the agency’s Thursday morning meeting. Three of the proposed projects are to build new LNG export terminals at the Port of Brownsville in the Rio Grande Valley while the fourth is for an expansion of Corpus Christi LNG, a South Texas export terminal owned by Houston liquefied natural gas company Cheniere Energy. Houston liquefied natural gas companies NextDecade, Annova LNG and Texas LNG are seeking to build brand new export terminals along the Brownsville Ship Channel, which is located just a few miles away from the U.S./Mexico border. As part of a planned third stage of expansion, Cheniere is seeking permission to add seven midscale LNG production units to its export terminal in nearby Corpus Christi. If approved, all four projects would take natural gas from the Permian Basin of West Texas, the Eagle Ford Shale of South Texas and others sources and then use massive plants to supercool the gas until it becomes a liquid that can be loaded on tankers and shipped to customers all over the world.
FERC signs off on four proposed US LNG export projects — Four proposed US LNG export projects, including three that would be built near the underutilized Brownsville, Texas, port, gained certificate approval Thursday from the Federal Energy Regulatory Commission. The approvals bolster the likelihood that the biggest obstacle for additional liquefaction capacity in the US may be developers' ability to secure sufficient commercial agreements to get financing for construction. The three Brownsville projects include NextDecade's Rio Grande LNG, which entails a terminal with up to six liquefaction trains, with a total design capacity of 27 million mt/year; Exelon-backed Annova LNG's 6 million mt/year project; and Texas LNG Brownsville, approved for 4 million mt/year and expected to include 2 million mt/year in the first phase. Also gaining approval was Cheniere Energy's Corpus Christi Stage III expansion, comprising up to seven midscale liquefaction trains capable of producing up to 9.5 million mt/year of LNG, one LNG storage tank, compression, and 21 miles of pipeline in San Patricio County, Texas. The vote on all the four projects was 2-1, with Commissioner Richard Glick dissenting. Glick had concerns about FERC's refusal to consider the significance of greenhouse gas emissions impacts, as well as on FERC's response to species impacts associated with the three closely related Brownsville projects. The action continues FERC Chairman Neil Chatterjee's focus on moving through FERC's large queue of proposed LNG projects, mostly proposed along the Gulf Coast. He commended staff for a "monumental achievement" of certifying 20.2 Bcf/d of liquefaction capacity over the last year, helping to ensure that "we don't miss this crucial period for developing an export market for US gas." In addition to that 20.2 Bcf/d, this year 2.8 Bcf/d of liquefaction capacity has entered service, bringing the total to 32 Bcf/d authorized, with 13 Bcf/d under construction, commissioning or preparing for development, Chatterjee said. After the three Brownsville LNG projects received their final environmental reports in the spring, they had been waiting for a final decision for months, raising some questions about whether cumulative impacts flagged -- for instance on federally listed wildcat and falcon species -- could have complicated FERC's decision-making. At the open meeting, Glick suggested FERC fell short in its order of considering the significant impacts identified against the benefits. "We just say there are significant impacts and we don't do anything," he said. The approvals also covered the 137-mile Rio Bravo pipeline from Agua Dulce to the Rio Grande terminal.
Federal regulators OK controversial South Texas gas export facilities - Federal energy regulators on Thursday greenlighted three liquefied natural gas projects proposed for the Rio Grande Valley that a coalition of local residents and indigenous and environmental groups have fervently rallied against. After several years of review, the three-member Federal Energy Regulatory Commission voted to authorize permit applications to build LNG terminals at the Port of Brownsville that would receive natural gas produced in West and South Texas and convert it to liquid form so it can be exported around the world. Commissioners also approved a permit application from Houston-based Cheniere Energy to increase production capacity at its existing LNG terminal at the Port of Corpus Christi. The Brownsville projects are known as Texas LNG Brownsville, Rio Grande LNG and Annova LNG. The first is a venture of an independent energy company by the same name. Rio Grande LNG is owned by Houston-based NextDecade, and Annova LNG is owned by out-of-state companies including Exelon, Black & Veatch, and Kiewit. The projects still must secure other permits from state and federal energy and environmental regulatory agencies before they can break ground, but Thursday's vote was a crucial step.
Headwinds Loom for LNG Consumption - The United States’ ascent to the top tier of global natural gas producers, and its more recent rise within the cadre of major liquefied natural gas (LNG) exporters, has effected an evolution in the gas market. “Tremendous U.S. natural gas growth, growing U.S. LNG exports, new pricing mechanisms and a global race for infrastructure buildout is intensifying competition in the LNG markets,” remarked Sarah Emerson, managing principal of ESAI Energy. “The changes coming will transform energy pricing and consumption in many parts of the world.” Noting that dramatic growth in LNG supplies from the U.S. represents a major driver in reshaping the global LNG market, ESAI analyst Chris Cote told Rigzone the oversupply situation is forcing new producers to maintain flexibility in supply contracts. He pointed out that “plenty of feedgas” is priced below the Henry Hub benchmark and above the Japan Korea Marker (JKM) and the Netherlands Title Transfer Facility (TTF) trading point. “U.S. liquefaction facilities remain flexible in what pricing mechanisms they use to get U.S. gas to the international market,” Cote said. Cote observed that LNG supply deals in 2019 have been indexed to JKM, Henry Hub and to the Brent crude oil price. He was quick to add, however, that U.S. LNG exporters could start to face pressure if JKM falls closer to Henry Hub and freight rates go up. Moreover, given the U.S. liquefaction capacity buildout, he noted the best-positioned project developers can do two things: secure more equity investment in their projects, and start up their facilities first. Project developers are applying more innovative financing arrangements to source low-cost feedgas from U.S. producers that lack international market access, Cote pointed out. To be sure, he underscored the importance of timing. In the case of siting, any delays tied to federal licensing and approval could put a project at a disadvantage and enable a competitor to get to market first, he said. Furthermore, he said that “brownfield” expansions – adding liquefaction trains to existing LNG facilities – present clear cost and timing advantages over new “greenfield” plants.
Chesapeake Energy's Long Fight For Survival Reaches A Critical Point - The company’s financial difficulties were highlighted again recently in the wake of Chesapeake management’s warning to investors in its Q3 2019 SEC filings that “substantial doubt” exists that the company will be able to continue as a going concern. There was a ray of hope on Wednesday, when Morgan Stanley said, “While we expect the company to successfully manage through the potential covenant breach in 2020, it will likely require strategic action and/or waivers,” even as it lowered its price target for Chesapeake from $2.25 to $1.25.Certainly, a major sale of some of the company’s assets would amount to a “strategic action.” Dallas Cowboys Owner Jerry Jones has made no secret of his desire for the company he controls, Frisco-based Comstock Resources, to become the biggest player in the Haynesville Shale region of northwest Louisiana and northeast Texas. In fact, thanks to Comstock’s June $2.2 billion acquisition of Covey Park, LLC, the company is already well along the way to reaching that goal.This week brought news, reported by Reuters, that Jones’s company is in the midst of negotiations to buy Chesapeake’s remaining Haynesville assets. Reuters reports that the deal “could be worth more than $1 billion” and that “the companies have settled on a structure for the deal and hope to reach an agreement by the end of the year.” Such a deal would amount to at least a band-aid that would provide cash to allow Chesapeake to pay down a portion of its $9.7 billion in debt, a monumental amount given that the company’s market cap as of mid-day on November 15 was $1.37 billion, as its stock was trading at $.70 per share.A potential Haynesville deal with Comstock would certainly qualify as a strategic action. On the other hand, it’s reminiscent of the multiple asset/interest sales the company deployed under previous management in order to service debt and keep hope alive. Whether one more sale can buy the company enough time to implement additional strategic actions that would enable a full return to corporate health remains to be seen.
Equinor estimates another six months for oil spill cleanup -- Equinor has begun to demobilize its heavy machinery as oil spill recovery efforts on Grand Bahama shift focus to the nearby impacted forest for the next six months. The company – formally known as Statoil – confirmed that 55,000 barrels of oil spilled at the South Riding Point facility in East Grand Bahama during the passage of Hurricane Dorian. Speaking to Eyewitness News on the status of that clean-up effort, Equinor’s Country Manager Tanya Rigby-Seymour said: “All the free-standing oil and oil liquid, that has all been recovered. “There will always be a few residuals, kind of very tacky sticky oil that’s weathered out there and we’ll leave that up to the environment such as the rain and the sun that will take care of that. “That we can’t actually take up but the majority almost all of the free-standing oil has been recovered.” Rigby-Seymour explained that the company has recovered just over 58,000 barrels of oily liquid which is made up of oil and rainwater. Last month, Save The Bays claimed water testing conducted at five locations near the facility, indicate critical wetland habitats have been contaminated. STB raised concerns that contamination will eventually make its way into freshwater resources, as the wetlands serve to filter water before it enters the water table. However, Minister of Environment Romauld Ferreira told Eyewitness News last week that the first round of testing from wells monitoring the spill revealed there has been no groundwater contamination. The company confirmed this in a statement yesterday. “Equinor has initiated a surveillance and monitoring program to ensure quality of the groundwater in the areas impacted by the oil spill from the terminal after the impact of hurricane Dorian,” the company said. “The first testing from 22 monitoring wells has now been completed without detection of any groundwater contaminant from the oil spill." “As far as the environmental impact, we still have the forest that has the oil on the trees and some of the shrubs. That’s our focus going forward. “So we estimate probably we will be in there in the area north of the terminal for probably another six months, manually pruning and sheering the trees, the oil vegetation.”At its peak, the company had over 350 people involved in the oil spill response. “We have not let go of any employees and we will continue to employ them throughout.” She added that the company does not know as yet the operation costs for cleanup and recovery efforts.
Coast Guard to oversee burn of oil discharge near Larose Monday - The Coast Guard is scheduled to oversee an in-situ burn for a crude oil discharge in Delta Farms, Louisiana, Monday.Watchstanders at Marine Safety Unit Houma received the initial report of the oil discharge in an unnamed canal southwest of Bayou Perot at 1:30 p.m. on November 9th.The source of the spill was determined to be from a flowline owned by Texas Petroleum Investment Company (TPIC).Approximately 340 gallons of crude oil was discharged, and the source has been secured.Containment boom was deployed to prevent the spread of oil; however, the oil is trapped within the floating marsh, in an area inaccessible for mechanical recovery. In-situ burning involves the controlled burning of discharged oil. It is one of several response options aimed at reducing environmental impact when responding to spills in marshland habitats. OMI Environmental Solutions and T&T Marine Salvage have been contracted to conduct the in-situ burn.Operations are scheduled to begin at 9 a.m. and is estimated to last until 3:30 p.m. Involved in the response are:
- Texas Petroleum Investment Company
- Coast Guard Marine Safe Unit Houma
- National Oceanic and Atmospheric Administration
- Coast Guard Gulf Strike Team
- Coast Guard Aids to Navigation Team Dulac
- Coast Guard Marine Safety Unit Morgan City
- Louisiana Oil Spill Coordinator’s Office
- Louisiana Department of Environmental Quality
- Louisiana Department of Wildlife and Fisheries
- Louisiana Department of Natural Resources
The cause of the incident is under investigation.
Coast Guard responding to oil spill near Port Arthur -Coast Guard Sector Houston-Galveston watchstanders received a report of a collision involving the offshore supply vessel Cheramie Botruc 22 and tug vessel Mariya Moran near the entrance to Sabine Pass Thursday morning. Personnel from Coast Guard Station Sabine, Coast Guard Marine Safety Unit Port Arthur, Texas General Land Office, Oil Spill Removal Organization, OMI Environmental Solutions and Environmental Safety and Health were launched to the scene and confirmed one of the vessel’s fuel tanks had been impacted. An estimate of 3,000 gallons of diesel fuel was spilled. The source of the release has been secured and the spill has been contained. Boom and sorbent material have been placed around the vessel while it remains anchored outside of the channel. The cause of the collision is under investigation. No injuries were reported. The Coast Guard and Texas General Land Office personnel will continue to monitor recovery efforts.
New study blames some fracking practices for Eagle Ford earthquakes - Earthquakes caused by hydraulic fracturing are more common in the Eagle Ford Shale of South Texas than previously thought, a new study reveals. Researchers with Miami University in Oxford, Ohio and the U.S. Geological Survey analyzed more than 2,800 earthquakes recorded in the South Texas shale play between 2014 and 2018.In a recently published study, the researchers revealed that more than 2,400 of those earthquakes could be linked to hydraulic fracturing activity and that certain industry practices were more likely to trigger them.Earthquakes were twice as likely to happen when operators simultaneously injected fluids into multiple nearby wells compared to when they injected fluids into multiple wells one at a time, the researchers determined. Out of the 2,823 earthquakes analyzed in the study, only 121 of them registered above a magnitude 2.0 on the Richter Scale, which would have been strong enough to be felt by some close to the epicenter.The Miami University study was released a month after researchers with the University of Texas at Austin published a study that linked hydraulic fracturing to some earthquakes in the Permian Basin of West Texas. Previous studies blamed the shale play earthquakes on an industry practice of injecting oil field wastewater deep underground. Those studies prompted the Railroad Commission of Texas, the state agency that regulates the oil and natural gas industry, to enact stricter rules and regulations for saltwater disposal wells. Favoring regulations based on science, Texas Oil & Gas Association President Todd Staples said his organization created a committee that allows members to work with seismologists, geologists and regulators to address the issue of earthquakes. “The oil and natural gas industry is actively working to mitigate impact through recommended practices including pre-completion risk assessment, proper monitoring, and mitigation protocols," Staples said in a statement.
Texas oil industry cutting payroll amid slowdown - Texas energy companies are cutting their workforces amid sluggish growth in the sector, the Texas Workforce Commission reported Friday.Payroll employment in the mining and logging sector, which is dominated by the oil and gas industry, fell by 2,000 jobs in October. The sector has shed jobs through much of the second half of 2019.Other indicators point to a slowdown for the Texas energy industry as well. The number of active oil and gas rigs in the United States fell by 11 this week as companies continue to pull rigs from operation because of a slowing global economy that has pressured energy demand and prices, which are mired between $50 and $60 per barrel. At the same time, as producers’ profits have suffered, investors have lost patience with the shale industry, known for overspending, and pulled their money out. In the Houston region, employers added 8,000 jobs from September, according to the Texas Workforce Commission. Over the year, the local economy has added 80,600 jobs, a growth of 2.6 percent.The local unemployment rate was 3.5 percent.The energy slowdown hasn’t appeared to have reached the office towers of Houston yet. Employment in oil and gas extraction grew by 2,900 jobs, or about 8 percent, over the year. But some experts are skeptical that the pace will stay positive much longer.“The jobs in the Permian are going to go first, but at some point that’s going to temper hiring here,” said Parker Harvey, an economist at Workforce Solutions. “How many additional lawyers, accountants and engineers do you really need (in Houston) when oil is in such a tight range?”
Approach Resources Files for Chapter 11 - Approach Resources Inc. and its subsidiaries have started a Chapter 11 bankruptcy case to explore strategic alternatives, including restructuring of its balance sheet or the sale of its business. The company has also received a commitment from its pre-petition lenders for $16.5 million in new money debtor-in-possession (DIP) financing. Approach plans to use its available cash along with the DIP financing to pay expenses related to the bankruptcy and for additional liquidity. The company will continue normal operations and says it expects to have enough liquidity to pay all employees, vendors and suppliers for services and products during the Chapter 11 process. Upon court approval, the DIP financing will be provided by its current syndicate of RBL lenders, with JPMorgan Chase Bank as administrative agent. The company also is asking for court approval of a variety of other “first day” motions to guarantee it can continue to operate in the ordinary course of business. Approach Resources focuses on developing oil and gas reserves in the Midland Basin of the greater Permian Basin in West Texas. According to its website, the company’s highlights include 11.2 MBoe/d 2018 average daily production, 180.1 MMBoe 2018 proved reserves and 165,000 gross acres in the Permian. Its assets as of 2018 were 60 percent oil and NGL proved reserves. As of press time, AREX shares were trading at 0.022 per share, down 31 percent from the market open price. According to Yahoo Finance, the latest 52-week change in the stock price saw a steep decline of 98 percent.
Lack of Credit Is Latest Blow to Shale Industry - -- Banks have begun trimming back the credit lines of America’s shale producers, further undercutting a beleaguered industry that’s been struggling to rebuild investor confidence. Laredo Petroleum Inc. and Oasis Petroleum Inc. are among at least six producers whose ability to secure short-term loans against their oil and natural gas reserves have dropped by 10% or more, according to data in earnings statements and filings. The declines offer the first hint of results from a semi-annual bank review of the industry’s borrowing capacity that generally runs through December. For the first time since 2016, an industry survey done prior to the review found most respondents expected to see declines. The noose is tightening at a time when producers have seen their market values plunge 21% this year. Meanwhile, at least 15 producers have already filed for bankruptcy during the year. A substantive decline in borrowing base “can be a good precursor to potential bankruptcy because as capital markets stay closed off for these companies, the borrowing base serves as the only source of liquidity,” Bondholders and other lenders are increasingly wary of what’s unfolding in shale. Chesapeake Energy Corp., once the nation’s largest gas supplier, warned earlier this month it may struggle to avoid bankruptcy. While fracking has turbocharged U.S. oil and gas output in recent years, that success has helped drive down oil prices to almost half what they were five years ago. In some cases, producers are struggling under debt loads accumulated in earlier, more heady times. But other issues are at play as well: Some have drilled their best locations and are now turning to lower-quality sites. And some have been drilling wells too close together, resulting in a loss of overall performance. At the same time, energy is the only sector yielding negative returns in the high-yield debt market, falling over 2% compared to a nearly 12% gain for its index.
Exxon Credit Rating Outlook Lowered by Moody's-- Exxon Mobil Corp. had the outlook on its top-notch debt rating lowered by Moody’s Investors Service Inc. to negative due to a “substantial” cash burn to fund growth. The oil major’s credit metrics will probably weaken over the next few years as it pursues a rebuild of its upstream portfolio, as well as new chemical facilities and refinery upgrades, Moody’s said in a statement Tuesday. The outlook on its Aaa rating was reduced from stable. “ExxonMobil’s negative outlook reflects the company’s substantial negative free cash flow and expected reliance on debt to fund its large growth capital spending program,” Peter Speer, a senior vice president at Moody’s, said in the statement. Debt will likely rise despite asset sales, he said. Over the past 10 quarters, Exxon has frequently spent more cash on its operations and dividends than it generated as it ramps up mega projects from Guyana to Mozambique. Chief Executive Officer Darren Woods says now is a good time to be investing while rivals are retreating. But investors are wary, with the stock underperforming rivals over the past five years. “The company’s high level of growth capital investments cannot be funded with operating cash flow and asset sales at projected levels given ExxonMobil’s substantial dividend payout,” Moody’s said. During the 2016 oil price crash, S&P Global Inc. stripped Exxon of its highest AAA credit rating for the first time in the producer’s history, cutting it by one notch to AA+. “The rating continues to be a reflection of the company’s consistent and prudent approach to financial management through a full range of business cycles,” a representative for Exxon said in an emailed statement.
Exclusive: Exxon aims to sell $25 billion of assets to focus on mega-projects – sources (Reuters) - Exxon Mobil plans to sell up to $25 billion of oil and gas fields in Europe, Asia and Africa in its biggest asset sales for decades, seeking to free up cash to focus on a handful of mega-projects, according to three banking sources. The sell-off would be a marked acceleration of the U.S. oil major's previous divestment plans. It would represent an ambitious attempt by Chief Executive Darren Woods to catch up with competitors who carried out sweeping portfolio reviews and sold swathes of assets following the 2014 market crash. Exxon's shares have underperformed its major rivals' in recent years. The disposals would help the company increase spending on new developments and appease investors unhappy with weak cash generation and oil output, which flatlined under Woods' predecessor Rex Tillerson. The sales would see Exxon effectively quit its upstream oil and gas business in Europe, according to the three banking sources with direct knowledge of the plans. They would free up cash to invest in new developments in Guyana, Mozambique, Papua New Guinea, Brazil and the United States. An Exxon spokesman declined to comment on specific assets offered for sale but noted it has told Wall Street its asset sales could reach $25 billion through 2025. Shares in the world's top listed energy company rose following the Reuters report and were up 1.5% at 1816 GMT. In recent months, the Texas-based company has drawn up an extensive list of assets that it wants to divest, spanning at least 11 countries, the sources said. The list, details of which have not been previously reported, would easily exceed its current divestment target which envisages it selling about $15 billion of assets by 2021.
The First Sign Of A Consolidation Wave In U.S. Shale - Fund manager Paulson & Co. Inc, a shareholder of Callon Petroleum, is dropping its opposition to a merger between Callon and Carrizo Oil & Gas that could be the start of consolidation among smaller shale players after the massive Occidental-Anadarko deal.Paulson & Co, which held 9.5 percent of Callon Petroleum earlier in November, said on Monday that it no longer opposes the deal and would vote in favor of the proposed all-stock merger, after the two energy companies revised the terms of the agreement to give a lower premium to Carrizo shareholders.Paulson will, however, cut its shares in Callon.The first announcement of the proposed merger was made in July. The terms of the initial deal valued Carrizo at US$1.2 billion.But Paulson has been opposing the terms of the proposed deal, saying that a standalone Callon would be less risky by focusing just on the Permian.In an effort to save the deal, Callon and Carrizo amended the terms of the deal last week, cutting the exchange ratio for the all-stock merger, which now implies a much lower premium for Carrizo shareholders—6.7 percent, compared to 25 percent premium in the initial terms of the deal. Paulson has argued that the initially proposed steep premium was not worth the spend, and Callon would no longer be a pure Permian play producer after picking up Carrizo. The revised merger terms were satisfactory to Paulson, which said today it no longer opposes the deal, but it cut its shareholding in Callon, although it was unclear by how much.
Are Investors Really Leaving Oil and Gas? -There has been a growing push for universities and the investment community at-large to divest from publically traded oil and gas companies. Advocates for stronger climate change policies demand that investors embrace environmental-social-governance, or ESG. The overarching goal is to install “sustainable” investment by forcing the oil and gas industry to report how CO2 reduction laws and more natural disasters from climate change will impact business operations. But at the most extreme, these advocates insist that, since oil and gas are major contributors to rising CO2 levels and climate change, investments should simply not be made in the companies that produce and/or transport them. For the industry itself, the obvious problem is that oil and gas are the very basis of their existence. Thus, the only way to fully comply with climate activists is to get out business entirely. The industry has mostly ignored calls for more climate disclosure, knowing full well that oil and gas are just too essential not to be produced. Activist shareholders, however, are growing more restless as more natural disasters get tied to climate change. Pension funds, loan institutions, insurance companies and religious organizations are also calling for oil and gas divestment. Cities such as San Francisco and New York have gone so far as to sue the oil and gas companies for keeping investors “in the dark” on climate change’s impact on their bottom line. And first-mover Norway’s $1.1 trillion sovereign fund wants to set the example by divesting from companies solely dedicated to oil and gas E&P. Yet make no mistake: oil and gas still overwhelm and supply nearly 65 percent of the world’s energy. As economic growth ensues, demand for these essential commodities grows along with it. For example, since 1990, annual global oil consumption has been rising by an average of 1.2 million b/d, with annual gas use up 6.6 Bcf/d. Fund managers understand this, of course, and they are obligated to return maximum performance and portfolio flexibility for their clients. This is why most university endowment boards have essentially just been giving lip service to divestment protestors.The oil and gas sector is a critical component of the world’s financial markets. It is way too big and diverse for major institutional investors to not incorporate.
Billionaires Are Licking Their Chops Over Distressed U.S. Oil And Gas Assets - Like the vultures Elizabeth Warren claims they are, billionaires are now circling over the soon-to-be dead corpses of companies in the U.S. oil and gas patch, as they look to pick up assets on the cheap. This comes at the same time that the volatility (read: decimation) of the oil and gas industry has scared off many other investors, according to Bloomberg. Names like Sam Zell, Tom Barrack Jr., and Jerry Jones are all being tossed around as investors who are looking at distressed assets. Zell has teamed up with Barrack Jr. to look at oil assets in California, Colorado and Texas. Jones' company, Comstock Resources, is looking to acquire natural gas assets from Chesapeake Energy. Companies are eager to sell at cheap prices to try and get ahead of an upcoming credit crunch. Zell said on Bloomberg yesterday: “I compared it recently to the real estate industry in the early 1990s, where you had empty buildings all over the place, and nobody had cash to play. That’s very much what we’re seeing today."The U.S. has become the world's largest oil producer due to the shale revolution, but the investors behind that drive have little to show for their efforts. Many companies have plowed through their cash while providing poor returns, as independent oil and gas drillers are down more than 40% since 2014. Easy money enabled the boom, and we have noted here on Zero Hedge over the last several years how poor resource allocation, crowded wells and overly optimistic estimates have caused a turn for the worse for U.S. oil and gas investors. Now, its time to face the consequences.
US oil, gas rig count up 1 ahead of holiday season start | S&P Global Platts — The US oil and gas rig count grew by one this week to 870, marking the first week-on-week gain in a month, according to consultants Enverus, as upstream activity cranked into a final wave ahead of the month-long holiday season. Oil-directed rigs moved up two to 703, while natural gas-oriented rigs stayed level week on week at 165. The number of rigs classified as neither oil nor gas dropped by one. Industry has laid down more than 365 rigs during the past 53 weeks since the recent peak of 1,237 in mid-November 2018, as WTI crude oil prices retreated from the mid-$70s/b in early Q3 2018. This month, WTI has mostly stayed in the $56/b to $57/b range. Of those rig losses, 126 were released in Q3 and 61 rigs have left the field so far in Q4, compared to just 41 in Q2 and 47 in Q1. "Our public customers spent about 54% of their budgets during the first half of the calendar year and released rigs on a net basis in calendar Q3," said Mark Smith, chief financial officer for driller Helmerich & Payne, on the company's Q3 call last Friday. Click here for full-size image Oil prices have fallen this week, according to S&P Global Platts Analytics: WTI averaged $56.77/b, down 26 cents; WTI Midland averaged $57.84/b, down 35 cents; and the Bakken Composite price averaged $52.04/b, down 68 cents. Gas price movements were mixed, as Henry Hub gas price averaged $2.57/MMBtu, down 17 cents, and Dominion South averaged $2.23/MMBtu, up 2 cents. H&P's Smith said a recent sampling of his company's customers suggests their capital budgets will decrease next year from 2019 levels. Also, the driller's own budgeting assumes calendar year 2020 activity levels that are "relatively flat" with second-half 2019, Smith added.
99 Oil Rigs Gone And Counting- Rig Count Falls Again - The US oil and gas rig count continued to fall this week, according to Baker Hughes, falling another 3 rigs for the week, according to Baker Hughes. For oil rigs, this week marks the twelfth decrease out of the last fourteen weeks, falling 99 rigs in that timeframe.The total oil and gas rig count now stands at 803, or 276 down from this time last year.The total number of active oil rigs in the United States decreased by 3 according to the report, reaching 671. The number of active gas rigs stayed at 129 for the second week. The last time oil rigs were this low was in March of 2017.By state, Texas has seen a drop of 126 year on year, while Oklahoma sunk by 92 to hit 52 rigs.Even though the number of oil rigs have declined by 206 this year alone, production has grown from 11.7 million bpd at the beginning of the year to an all-time high of 12.8 million bpd for the second week in a row.Oil prices were down on Friday ahead of the data, with WTI at 11:51am at $57.76 per barrel (-$0.82), which is absolutely flat from last week. Brent was trading down at $63.29 (-$0.68), which is also nearly flat week over week.Canada’s overall rig count increased this week, with oil and gas rigs gaining 3, after last week’s 6-rig decrease. Oil and gas rigs in Canada now stand at 137, down 67 year on year.
Baker Hughes partners with Silicon Valley to boost AI in the oil field - Oilfield service company Baker Hughes has entered into a three-way agreement and partnership to boost the adoption of artificial intelligence technology in the oil and natural gas industry. Baker Hughes, tech giant Microsoft and Silicon Valley artificial intelligence company C3:ai have signed an agreement to work together to develop and deploy the cost-cutting technology for industry customers across the globe, the companies announced on Tuesday morning. “Companies that adopt this technology will be the next Amazon and those that don’t adopt will be the next Sears,” C3.ai founder and CEO Tom Siebel told the Houston Chronicle. The agreement comes less than six months after Baker Hughes and C3:ai launched a joint venture to deploy artificial intelligence in the oil patch. The two will now be augmenting the technology they developed using Microsoft’s cloud computing platform Azure. Seeking to get ahead of the coming digital transformation in the oil and natural gas industry, Baker Hughes CEO Lorenzo Simonelli said artificial intelligence will make the oil field safer and more reliable. The partnership between the three companies, he said, allows each company to focus on their individual areas of expertise. “It’s very tough for an industrial company to be a software company and it’s very tough for a software company to have the domain experience of an industrial company, and it’s very tough to be at the cutting edge of artificial intelligence,” Simonelli said.
Court upholds class-action status for quake lawsuit -- The Oklahoma Court of Civil Appeals has upheld the class-action designation of a lawsuit against an oil company over damage caused by earthquakes near Prague in November 2011, including one of magnitude 5.7.
Wastewater from fracking: Growing disposal challenge or untapped resource? - Chemical & Engineering News - As the fracking industry improves its efficiency by drilling ever-longer horizontal wells, it also increases the amount of water it uses to fracture the rock to release the gas. The fracturing process uses on average about 45 million L of water for a single horizontal well, according to the Groundwater Protection Council (GWPC), a group of state oil and gas regulators and environmental protection agencies. Water pumped into fracking wells doesn’t all stay in the ground. Much of it comes back up along with extracted gas. The water that comes up has a much different chemistry than the water that goes down. Produced water typically includes salts from dissolution of the underlying rock, naturally occurring radioactive substances, and chemicals added during the drilling and fracking process. It is unclear exactly how much produced water the fracking industry generates. It is also difficult to characterize the chemical composition of produced water because many of the chemicals used by the fracking industry are proprietary, and the geology of natural gas formations varies widely across the US. The GWPC estimates that the US oil and gas industry generates approximately 3,400 billion L of produced water each year. The US Environmental Protection Agency predicts that volumes of produced water from the fracking industry will continue to increase as natural gas production rises. The EPA currently prohibits the discharge of produced water to surface waters and municipal wastewater treatment plants, with one exception. Companies may discharge produced water west of the 98th meridian—which runs through eastern North Dakota down through eastern Texas—if the water quality is good enough for agriculture or wildlife and is actually used for such purposes. It is unclear, however, what “good enough” means. Most produced water is disposed of by injecting it into deep underground wells, but the geology in some parts of the US is not amenable to such practices, and concerns about inducing seismic activity have the industry looking for alternatives. The EPA is considering changing its policy to give the fracking industry more options to discharge produced water. The agency released a draft document in May summarizing practices used by oil and gas companies to manage produced water. One of the biggest concerns is the lack of data on the chemical composition of produced water.
Spire gas company overcharged customers, court rules; company cancels earnings call - The St. Louis-based natural gas company Spire canceled its Wednesday earnings call, sending its stock tumbling, after a state appeals court ruled that the company improperly collected at least $4 million from ratepayers. The Missouri Western District Court of Appeals ruled on Tuesday that Spire collected unjustified surcharges tied to pipeline replacement efforts — including for relatively new plastic pipes that "are not worn out or in a deteriorated condition," the ruling said. The court ordered Spire to refund the money back to customers. Late on Tuesday, Spire announced it was canceling its earnings call to "assess the impact" of the ruling. Spire serves 1.7 million customers across Missouri, Mississippi and Alabama, touts itself as the country's fifth-largest publicly traded natural gas company and boasts an enterprise value of $6 billion.
U.S. Suspends More Oil and Gas Leases Over What Could Be a Widespread Problem --The Trump administration's relentless push to expand fossil fuel production on federal lands is hitting a new snag: its own refusal to consider the climate impacts of development.The federal Bureau of Land Management's Utah office in September voluntarily suspended 130 oil and gas leases after advocacy groups sued, arguing that BLM hadn't adequately assessed the greenhouse gas emissions associated with drilling and extraction on those leases as required by law.The move was unusual because BLM suspended the leases on its own, without waiting for a court to rule.Some environmental advocates say it could indicate a larger problem for the bureau. "It is potentially a BLM-wide issue," said Jayni Hein, natural resources director at the Institute for Policy Integrity at NYU School of Law, which has been involved in similar litigation in other states. "It could have the effect of suspending even more leases across the West, and not just for oil and gas, for coal as well."Officials in Utah had already pulled back several other lease sales earlier this year. In effect, BLM appears to be trying to get ahead of potential court rulings, advocates say. A series of court rulings have established that BLM must conduct a thorough analysis of the climate impacts of drilling before it allows development in order to comply with the National Environmental Policy Act (NEPA).In the latest ruling, a federal district court in Washington, D.C., in March ordered the bureau to redo its environmental analysis for a slate of leases in Wyoming to better assess climate impacts. In response, BLM suspended the Wyoming leases, as well as leases in Utah and Colorado that were included in the lawsuit but not directly addressed by the ruling. The new Utah suspensions cover a different set of leases, including many sold last year. In letters sent in September to energy companies that had bought the leases, BLM said it was suspending them "based on the parallels" between the lawsuit over them and the case that resulted in the March ruling in Washington, D.C. All told, nearly 1 million acres may now be suspended across the West, said Rebecca Fischer, an attorney with WildEarth Guardians, which filed the lawsuit in the Washington, D.C., circuit, including more than 460,000 acres covered by that lawsuit and some 300,000 acres that Utah's BLM office has suspended since the March ruling.
The Energy 202: This funny-looking bird is slowing down Trump's plans for oil development out West - The Washington Post - A strange-looking bird is standing between the Trump administration's plans to sell more land for oil and gas drilling. More than a third of a million acres of land scheduled to be leased in Nevada and Colorado have been taken off the auctioning block -- at least for now -- because this chickenlike creature is squatting over those oil deposits. It's the latest example of how the Trump administration's efforts to open up more of U.S. land and waters to energy development have been stalled by the greater sage grouse. A federal court threw a wrench into the Trump administration's latest plans. With a rule issued earlier this year, it sought to change the 2015 policy put in place under President Obama to protect the ground-nesting bird, known for its eccentric courtship dances, throughout the 11 Western states it resides. But last month, a federal court in Boise, Idaho issued a preliminary injunction: U.S District Judge Lynn Winmill said federal scientists need to do more analysis about how the bird may be further imperiled. That means that for now, the Obama administration plan is in effect in Idaho, Wyoming, Colorado, Utah, Nevada, California and Oregon — seven of the 11 states with ever-scarcer sage grouse populations. Now we’re seeing the results of that ruling: The Bureau of Land Management's Nevada office halted December's scheduled sale of 332,000 acres after seeing that more than half encroach too much into sage grouse habitat. The agency’s Colorado office came to the same conclusion last week, pulling about another 4,300 acres from auction in the northwest corner of that state, including some near the Arapaho National Wildlife Refuge. “It seems to me that the Trump administration is overreaching in its ‘energy dominance’ agenda in its zeal to develop inside the sage grouse habitat,” said Erik Molvar, executive director of the Western Watersheds Project, one of several environmental groups that sued to stop the sage grouse plan. But a representative from the oil and gas industry says it is confident the parcels will be back on the auction once the case is resolved. “I’m not terribly worried,” said Kathleen Sgamma, president of the Western Energy Alliance. “It’s just about complying with the ruling.”
Keystone Spill Has Affected Nearly 10x More Land Than Was Estimated -A spill at the Keystone Pipeline that began last month has affected nearly 10 times the amount of land than previously thought, state officials said Monday. The AP reported that regulators have revised their estimates of the spill to approximately 209,100 square feet of land affected. The pipeline's owner, TransCanada, says it has recovered more than 141,000 gallons of oily water. The spill, which is the second major spill from Keystone in a decade, has raised alarm over the past few weeks among residents of Montana, South Dakota and Nebraska living along the proposed route for theKeystone XL project. "We've been doing this for 10 years, and we've watched spills along the way for 10 years, so it's no surprise to us," Nebraskan Jeanne Crumly, who is an affected landowner for the Keystone XL proposed path, told NPR. "So the question isn't if it will spill, the question is, 'Where?' And when it does, are we protected?" As reported by the AP: Crude began flowing through the $5.2 billion pipeline in 2011. It's designed to carry crude oil across Saskatchewan and Manitoba, and through North Dakota, South Dakota, Nebraska, Kansas and Missouri on the way to refineries in Patoka, Illinois and Cushing, Oklahoma. It can handle about 23 million gallons (87 million liters) daily. It is part of a system that also is to include the proposed $8 billion Keystone XL pipeline designed to transport the oil from western Canada to terminals on the Gulf Coast.The proposed Keystone XL pipeline has drawn opposition from people who fear it will cause environmental damage. For Land affected: AP. Residents: NPR
Top House Democrats Urge GAO to Conduct Review After Third Major Keystone Pipeline Spill | Democrats, Energy and Commerce Committee – Today, Chairman of the House Committee on Transportation and Infrastructure Peter DeFazio (D-OR), Chairman of the House Committee on Energy and Commerce Frank Pallone, Jr. (D-NJ), Chairman of the Subcommittee on Railroads, Pipelines, and Hazardous Materials Dan Lipinski (D-IL), and Chairman of the Subcommittee on Energy Bobby L. Rush (D-IL) officially requested the U.S. Government Accountability Office (GAO) conduct a review of the operator of the Keystone Pipeline System as well as the federal agency that oversees it. The request comes on the heels of a crude oil spill in Edinburg, North Dakota, the third major spill from the pipeline in three years. “The public has a legitimate expectation that the Keystone Pipeline System managed by TC Energy operate safely and without repeated incidents that damage the environment and threaten the public’s health and security. Yet we are faced with the third occurrence of a significant pipeline leak that has devastating impacts to the both the environment and nearby communities. The frequency and severity of these incidents on the Keystone Pipeline System raises serious questions about both the integrity management program of TC Energy and whether adequate oversight and operating conditions have been put in place by PHMSA to ensure the safe operation of this high-pressure system. This is particularly concerning as TC Energy continues to pursue additional build-out of the Keystone Pipeline System with the Keystone XL Pipeline,” the Members wrote. On October 30, 2019, TC Energy notified the National Response Center of a crude oil spill from its Keystone Pipeline System. With this spill, the pipeline leaked an estimated 383,040 gallons. To date, the three major reported spills have released an estimated 609,840 gallons, endangering nearby wetlands and groundwater resources and leaving possibly irreversible damage in its wake. The Chairmen are requesting GAO complete a comprehensive review to examine whether TC Energy is in compliance with all of its special permitting requirements, as well as assessing if the Pipelines and Hazardous Materials Safety Administration (PHMSA) is exercising proper oversight of this pipeline. A full copy of the letter can be found here and below.
ONEOK Bringing Additional Natural Gas Processing Capacity On Line For North Dakota -- November 16, 2019 -- By January 2020, ONEOK Corporation will have constructed enough natural gas processing capacity that it will be able to handle nearly half of North Dakota's total production. The state topped 3 billion cubic of natural gas production per day in August, but ONEOK will soon have the capacity to process 1.4 BCF per day.Dick Vande Bossche, VP for Commercial Gas Supply with ONEOK Rockies Midstream, told members of the legislature's interim Energy Development and Transmission Committee this week that the company brought in service in October its Demicks Lake I plant in McKenzie County. The plant has the capacity to process 200 million cubic feet of gas per day.Vande Bossche said ONEOK is also on schedule to bring Demicks Lake II, a second plant capable of processing 200 MMcf/d, in service sometime in January 2020.A third plant - Bear Creek II with 200 MMcf/d capacity - is under construction in Dunn County and will be in service the first quarter of 2021.And Vande Bossche also told legislators that ONEOK has plans for yet another 200 MMcf/d capacity on the drawing board. "We filed certification with the PSC for another 200 million per day processing plant in McKenzie County, so that's working its way through the approval processes," Vande Bossche said. "We have interim funding to do some long lead item purchases as it relates to that 200 million a day processing facility."He said final execution of plans for the additional gas processing plant are contingent on board approval of the project. ONEOK is also nearing completion of its Elk Creek Pipeline that will move up to 240,000 barrels per day of natural gas liquids to processing facilities in Kansas and points south. It's expected to be fully operational by the end of 2019.
From The Saudis: A Technical Analysis Of The Bakken -- November 16, 2019 - Bruce Oksol - A reader sent this comment and the link to this peer-reviewed technical article: This says a lot what they are thinking in the Kingdom: https://www.preprints.org/manuscript/201908.0195/v1/download In a way some of the most interesting [data/conclusions] I ever have read about the Bakken system. And this is freaking great to see that that they have a fine forecast, but missing the goal. And you have a map of the core area in the middle Bakken and Three Forks. I nearly agree about that part. But my initial thoughts are that they think there will only be 8 wells in a spacing unit and no mention of the famous halo effect. But anyway its so great to see what the Kingdom thinks. And they will be surprised. . I was going to go through the article and make comments as I went along, but a) too technical for me; 2) the authors are experts (and I'm not); 3) the authors have access to databases, computer programs, and statistical analysis I cannot possibly do. The reader is correct: the authors assume a maximum of eight wells in each 1280-acre drilling unit. Perhaps that is accurate as an average across the entire Bakken but my hunch is that there will be a minimum of four wells in each 1280-acre unit in non-core North Dakota Bakken, but upwards of 12 to 24 wells in the core Bakken.
North Dakota September oil output falls to 1.44 million b/d: state agency — North Dakota's oil output fell to 1.44 million b/d in September, down about 37,000 b/d from August's record-setting average, the North Dakota Pipeline Authority reported Tuesday. In an interview with the PlattsCapitol Crude podcast Monday, Lynn Helms, the state's top oil and natural gas regulator, said oil output in September fell due to heavy precipitation throughout the month. "It was a very soggy month," Helms told reporters on a Tuesday conference call. Helms said on the call that two weeks of continuous rain in September caused numerous road closures, preventing pipeline construction, well completions, repairs and multiple other actions. Helms said heavy rain had caused as much as 84,000 b/d of September production to be shut-in. Oil production would likely return to record-setting levels into early 2020, but added that production growth would likely be stalled, potentially for years, as state officials ramped up enforcement of flaring restrictions, he said on the call. Statewide gas production averaged nearly 2.95 Bcf/d in September, down from about 3.01 Bcf/d in August, which was a record, the pipeline authority said Tuesday. An estimated 17% of gas was flared in September, down from 19% in August, according to the authority. The state permitted the drilling of 92 wells in September, down from 127 in August. The state permitted 126 in October, according to the state Department of Mineral Resources. The state's rig count has steadily fallen, however, from 62 in August to 61 in September and 49 in October, according to the agency. North Dakota's rig count was 55 on Tuesday.
North Dakota’s record oil growth to be upended by flaring rules – podcast -- On today's Platts Capitol Crude, Lynn Helms, director of the North Dakota Department of Mineral Resources, says Bakken oil output will continue to break records into 2020, but enforcement of gas capture rules will hinder growth, potentially for years. Helms, North Dakota's top oil and gas regulator, talks about why state regulators can no longer allow operators to exceed flaring limits and what is preventing growth of gas capture capacity in the state. Sami Yahya, a senior energy analyst with S&P Global Platts Analytics, also stops by to talk about the path forward for Bakken output, breakeven prices, the state of well efficiency in North Dakota and why flaring rules will be a major challenge for the shale play.
Crude oil spilled during transfer of 5 million gallons of oil in Washington state - The Washington Department of Ecology said that cleanup of a small crude oil spill in Fidalgo Bay finished early Sunday. "There were no impacts to the shoreline or wildlife," department spokeswoman Cheryl Ann Bishop said in an email. The spill happened Friday night when a Crowley Maritime barge was transferring 5 million gallons of oil to the Shell Puget Sound Refinery. The agency tweeted earlier Saturday that it and the US Coast Guard were responding. Approximately 20 gallons of oil were spilled but only 5 gallons reached the water and that oil was within an area that was boomed before the oil transfer started. The Department of Ecology reported the crude oil sheen on the water covered an area approximately 225 feet by 30 feet. The department said the cleanup was complete at 8:30 a.m. on Sunday. A state law that requires deploying a boom before an oil transfer over water was "in part" the reason why damage was limited and the clean-up so quick, Bishop said. A containment boom was in place and "responders are actively working to recover the spilled material," Shell Puget Sound Refinery said in a news release posted on its website earlier Saturday.
Oil Spill Prevention Law Helps Contain Leak at Shell Puget Sound Refinery - - The Washington Department of Ecology responded to an oil spill that took place Friday night when a Crowley Maritime Barge was transferring five million gallons of oil to the Shell Puget Sound Refinery,CNN reported. Around 20 gallons spilled, of which five entered the water, and that oil was contained within an area that was boomed before the transfer began. The cleanup was completed by 8:30 a.m. Sunday, the department said."There were no impacts to the shoreline or wildlife," department spokeswoman Cheryl Ann Bishop told CNN in an email.The spill occurred at around 11:45 p.m. in Anacortes, Washington, according to the department. The barge was transferring an Alaska North Slope crude-oil blend at the end of a pier that extends into Fidalgo Bay when crew members saw oil spilling from the barge, The Seattle Times reported. An oil sheen was visible on the water inside the containment boom, which covered an area of 225 by 30 feet, roughly the size of a tennis court. Washington state law requires that containment booms be put in place before transferring oil over water as a preventative measure, and Bishop told CNN that the law was one reason the spill was so successfully contained and cleaned.
No new California fracking without scientific review, governor says — In a victory for critics of California’s oil drilling industry, Gov. Gavin Newsom on Tuesday stopped the approval of new hydraulic fracturing in the state until the permits for those projects can be reviewed by an independent panel of scientists. Newsom also imposed a moratorium on new permits for steam-injected oil drilling in California, another extraction method opposed by environmentalists that was linked to a massive petroleum spill in Kern County over the summer. “These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said in a statement released Tuesday morning. “This transition cannot happen overnight; it must advance in a deliberate way to protect people, our environment, and our economy.” Along with halting the oil extraction methods, the Newsom administration plans to study the possible adoption of buffer zones around oil wells in or near residential neighborhoods, schools, hospitals and other facilities that could be exposed to hazardous fumes. The actions come just weeks after Newsom signed a new law revising the primary mission of a state agency that regulates the oil industry, now called the Geologic Energy Management Division, to include protecting public health and safety and environmental quality. Since taking office, Newsom has faced pressure from politically influential environmental groups to ban new oil and gas drilling and completely phase out fossil fuel extraction in California, one of the nation’s top petroleum-producing states. The Democratic governor pushed back on that pressure, however, promising to take a more measured approach that addressed the effects on oil workers and California cities and counties that are economically dependent on the petroleum industry.
Fracking Under Fire In California - California Governor Gavin Newsom just dealt a blow to the oil industry, placing atemporary moratorium on new fracking permits in the state until scientists complete an independent review of the practice.The action also included a temporary prohibition on new permits for steam-injected oil drilling, which comes in the wake of a major oil spill at a Chevron-operated site in Kern County earlier this year. The site leaked more than 1.3 million gallons of oil and water. Gov. Newsom also linked the actions to a broader shift away from oil in general. “These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said in a statement on Tuesday. “This transition cannot happen overnight; it must advance in a deliberate way to protect people, our environment, and our economy.”The moratorium on steam-injected drilling will remain in place until the Lawrence Livermore National Laboratory and Sandia National Laboratory study the process. “These oil leaks cannot be the cost of doing business,” California Natural Resources Secretary Wade Crowfoot said, according to the AP. “There needs to be a clear trajectory to eliminate them. Not reduce them in number, but fully eliminate them.”Importantly, in October, Newsom singed a law that renames the state agency that oversees the industry while also tweaking its mission. The Division of Oil, Gas, and Geothermal Resources will be known as the Geologic Energy Management Division in January, and its mission will include a focus on protecting public health, safety and the environment.Gov. Newsom came under pressure a few months ago when the Desert Sunreported that fracking permits had doubled in the first half of 2019, apparently without Newsom’s knowledge. The revelation led the governor to fire the oil regulator.Interestingly, however, Gov. Newsom said at the time that he did not think that he had the a uthority to place a moratorium on fracking, something that environmental groups have long demanded. The latest actions only affect permits for new projects. According to the AP, there are 263 pending permits on the desk of regulators, but none of them have been approved since July when the top official was removed.
California Drilling Ban Is Fueled By Indifference - It would be understandable if your first reaction to news that California’s governor has slapped restrictions on fracking was: They frack in California?California actually ranks seventh in terms of state oil output, just behind Alaska.(1) Yet California is usually noted more for its thirst for the stuff, with its legions of drivers consuming more gasoline than in any other state. In terms of production, you’re more likely to associate California with barrels of Cabernet than crude.Which goes a long way to explaining why Governor Gavin Newsom made his move. Newsom hasn’t banned fracking in California — indeed, he says he isn’t empowered to do that unilaterally. Rather, in response to oil spills in Kern County, he has ordered regulators to assess the safety of a different technique for stimulating wells, called cyclic steam-flooding, use of which has surged in California. However, he has also taken the opportunity to order that new permits for fracking be subject to scientific review and that the whole permitting process undergo an audit by the state’s Department of Finance. Phrases like “subject to review” and “undergo an audit” are most unwelcome in the planning departments of oil producers. Few things undercut the value of a project quite like time or uncertainty. So anything that delays drilling outright or puts enough doubt in the mind of the operator (or their financiers) about the viability of doing so effectively does one thing: raise the cost of capital. Exhibit A is what Newsom’s announcement on Tuesday did to the stock of California Resources Corp: There’s a similar dynamic at play in Colorado. Last November, the state’s voters rejected a ballot measure that, again, wouldn’t have banned fracking outright but would have instituted minimum distances between buildings and wells that would have severely curtailed fracking anyway. Yet even though proposition 112 failed to pass, the state announced last month it would impose additional scrutiny on wells drilled within 2,000 feet of homes anyway, in response to a study finding heightened risk of benzene exposure within that distance. Hence, stocks of Colorado-exposed drillers remain under pressure:
Why is California approving so many new oil wells? - As Donald Trump’s administration pushes to expand oil extraction in California, the state’s governor, Gavin Newsom, has signed bill after bill limiting the practice. In October, new laws banned federal oil extraction on state lands, removed the terms “oil” and “gas” from the name of the state’s department of energy, and expanded its mandate to include public health and safety. “California is a leader in the fight to transition away from fossil fuels,” Newsom said in a statement. “These bills put intentions into action … and fight against the Trump administration’s efforts to expand oil extraction in California.” But since taking office in January, Newsom’s own department of energy management has approved 33 percent more new oil and gas drilling permits than were approved under Newsom’s predecessor Jerry Brown over the same period in 2018—a median of 174 permits to drill new oil, gas, and cyclic steam wells approved a month, based on Geologic Energy Management Division (CALGEM) reports analyzed by CityLab. The rate of fracking permits approved also soared at the start of the year, up 109 percent through June. The fact that fracking approvals in California had spiked in the new year was first reported in July by the FracTracker Alliance and Consumer Watchdog. Newsom responded quickly to the news, firing the head of the approving agency for employing regulators who owned stock in oil companies, and directing the department to stop approving fracking permits. Since June 28, California hasn’t cleared any new hydraulic fracturing projects. Even with the cut-off of fracking approvals, California is still on track to end the year with a higher rate of oil and gas-related drilling permits overall. Still, permitting doesn’t correlate to actual oil extraction, experts note: the production of crude oil across California has steadily dropped since 1985, falling more than 50 percent by 2017 and bringing the state from the third-highest producer to the sixth.
US agency to consider expanded drilling in Alaska reserve (AP) — The Trump administration will consider a new management plan and expanded oil drilling for the National Petroleum Reserve-Alaska, an Indiana-size area that former Interior Secretary Ken Salazar characterized as an “iconic place on our Earth.” The Bureau of Land Management announced Thursday it will take public comment through Jan. 21 on four alternatives for the reserve in northern Alaska. Two alternatives could allow lease sales on lands previously designated as special conservation areas under the Obama administration. The goal of a new management plan is increased energy production and greater energy security for the nation, BLM Alaska director Chad Padgett said. The reserve is home to two caribou herds and provides ecologically significant wetlands used for breeding by migratory waterfowl from around the world. Its entire coastline is habitat for threatened polar bears. Kristen Miller, conservation director at Alaska Wilderness League, said the Interior Department spent years working on the plan with tribal and local governments, conservation organizations, the state of Alaska and others. “Abandoning this science-based, common sense approach in favor of oil and gas interests is recklessly short-sighted and will place at risk local indigenous communities and the region’s diverse wildlife that rely on this vital piece of our nation’s public lands,” she said.
Russia's Putin says shale oil technologies are 'barbaric' - Russian President Vladimir Putin has sharply criticized nations like the U.S. for ignoring the environmental impact of shale oil and gas production, describing it as a “barbaric” process that the Kremlin has no interest in pursuing.Speaking at a business conference in Moscow Wednesday, Putin said: “Today’s technology of shale oil production and shale gas are without any doubt … barbaric.”“These technologies destroy the environment,” he explained via a translation, before adding that the areas affected by the extraction process were typically left in a “precarious situation.”“In spite of all of the economic benefits, we do not need it and we will never do this,” Putin said. The U.S. Department of Energy was not immediately available for comment when contacted by CNBC on Wednesday. Output increases in the Permian Basin of Texas, as well as other major formations, have helped the U.S. become the world’s largest producer of oil.
Vigilante Offers $100,000 Bounty To Hack Oil & Gas Companies - One of the world’s most influential hackers is offering up to US$100,000 in cryptocurrency to hackers who break into oil firms and banks to leak information of public interest. According to a new manifesto, “Hacktivist Bug Hunting Program,” the well-known vigilante hacker would pay other hackers if they hack companies and leak documents that could be of public interest. Oil services giant Halliburton—alongside South African mining companies and an Israeli spyware vendor—are among the examples the hacktivist has mentioned as potential targets in their manifesto.“Hacking to obtain and leak documents with public interest is one of the best ways for hackers to use their abilities to benefit society,” Motherboard quoted the manifesto as saying.“I’m not trying to make anyone rich. I’m just trying to provide enough funds so that hackers can make a decent living doing a good job,” the hacktivist says. Hacktivism is a powerful tool to “fight inequality and capitalism,” according to the hacktivist who goes by the nickname Phineas Fisher.Companies and software developers themselves often launch the so-called ‘bug bounty programs’, rewarding hackers for uncovering potential bugs and vulnerabilities on their systems, in order to bolster their cyber security against attacks, hacks, or leaks.Just last week, Mexico’s state oil firm Pemex was hit by a ransomware attack, which caused administrative operations at the company to grind to a halt, but work was restored soon after.The incident highlighted once again the growing importance of cybersecurity in the oil and gas industry and all its critical infrastructure across the globe. Pemex has no intention of paying the ransom that cyber attackers have requested, Mexico’s Energy Minister and Pemex board chair Rocio Nahle said a day later. The attackers had demanded they be paid US$5 million in ransom in bitcoin, according to various media reports last week.
Traders say crude prices stable as Canada's largest operator goes on strike | S&P Global Platts — The differential for Western Canada's benchmark heavy crude has remained stable following news that workers at Canada's largest rail operator went on strike Tuesday, potentially disrupting crude flows to the US Midwest and the US Gulf Coast as negotiations continue. More than 3,000 Canadian National Railway, or CN, workers went on strike after midnight Tuesday, according to their union, the Teamsters Canada Rail Conference. CN carries the bulk of Western Canada's crude-by-rail exports, which reached 310,146 b/d in August, according to latest data from the National Energy Board. Alberta's Minister of Energy Sonya Savage said Tuesday CN ships more than 170,000 b/d of crude from the province. "We are disappointed that the Teamsters Canada Rail Conference has initiated strike action," CN said in a statement Tuesday to S&P Global Platts. "We will return to the negotiating table today, with the assistance of federal mediators." A Calgary-based trader said Tuesday morning that there had been "absolutely nothing" to indicate differentials for Western Canadian Select, the benchmark heavy crude, had reacted to the CN strike. "It just depends on how long the strike goes for," the trader said. "It's logical to expect some kind of weakness."
The Five Biggest Enemies Of Oil & Gas - The oil and gas industry used to be untouchable. It’s not anymore. Enemies have surrounded it in a pincer movement, and now, it’s all-out war. From public sentiment to government meddling, we’ve outlined the five most ruthless adversaries the global industry faces today in a war in which it just might be its own worst enemy.
- Enemy #1: The Oil and Gas Industry. Being one’s own worst enemy may sound cliché, but in this case it is particularly apt. The oil and gas industry has done a pretty good job of making itself out to be the bad guy. It has not performed its environmental duties admirably. Exxon, BP, Enbridge--all responsible for tarnishing the public perception for the industry at large. And we don’t even need to point out why. No one can forget. We doubt if in hindsight, any of those responsible for sizeable environmental disasters would have made identical choices, but the fact remains, the environmental disasters that a handful of companies have perpetrated will likely be remembered forever. Is it even possible to rebrand?
- Enemy #2: If It Weren’t For Those Meddling Kids! Millennials are changing the world, and the oil and gas industry will be profoundly affected by this generation. Millennials are waging a silent war against all things dirty, against all things unshareable, against all things morally reprehensible, and on all things that fail to live up to some unrealistic ideal. This generation has the power to bring about positive change, but if you’re the oil industry, look out, because the millennials are coming for you, and the generation behind them is even more passionate about sending you to your grave.
- Enemy #3: The Rise of the Electric Vehicle, We’re not talking about Teslas. No, it’s much bigger than that. Tesla is the spark, but big auto--and all their big bucks--will be the sonic boom that follows. The transportation sector in the United States accounts for 69% of all petroleum consumed in this country--and as the transportation sector goes, so goes the oil sector.
- Enemy #4: Government Ineptitude. The number of governments that have worked against their own oil industry is staggering--and shameful given the industry’s potential for single-handedly financially supporting entire countries. Recent examples include Brazil’s failed oil auctions; Libya’s prolonged instability; Canada’s utter flop with critical pipeline projects and its impotence in decisively quashing oil-related spats between Alberta and BC; South Sudan’s stubborn refusal to agree on anything except civil war; Venezuela’s corruption, refusal to spend money to keep its industry going, the citizens’ inability or refusal to oust Maduro, and heavy borrowing from China and Russia; Mexico’s failure to recruit foreign talent to exploit its deepwater oil riches and its push to undo promising oil deals with foreign oil companies, Angola’s use of its oil industry as a personal piggy bank, Algeria’s political uncertainty--the list is so extensive that it’s impossible to complete. Still, this short version highlights sufficiently just how dangerous governments can be to their own oil and gas industries.
- Enemy #5: Hollywood A-Listers. Hollywood actors and actresses have propelled climate issues into the latest cause célèbre--from anti-oil pipeline causes to anti-Exxon ones, and from the Paris Accords to clean living. Hollywood’s A-listers never miss an opportunity to get arrested for the cause, often conveniently in front of a camera. (Especially the older ones who need a career boost). These A-listers have a following, for sure, and so some of their passion for the environment leeches over into their specific fan base. But thankfully for the oil and gas industry, these A-listers have failed for the most part to project this anti-oil agenda onto the big screen for the masses to consume.
Why Tesla doesn't scare the fracking industry - Midland, Texas, home of the boom in US oil and natural gas production, is more than 300 miles from the nearest Tesla store, but it feels even farther away: The projected growth in electric vehicle sales doesn't worry industry leaders."We use about 100 million barrels of oil in the world a day," said Scott Sheffield, CEO of Pioneer Natural Resources, one of the largest players in the oil and gas field known as the Permian Basin. "Roughly 25 million of that is used for gasoline automobiles. If we convert all 25 million barrels a day overnight to electric vehicles, we're still going to need a lot of hydrocarbons."By 2040 more than half of new car sales will be electric vehicles, according to forecasts. But it will take a much longer time before they make up half of cars on the road, as gasoline powered cars slowly wear out and are scrapped. Much of the world's expanding population is in parts of the world where electric vehicles will have trouble taking hold, Sheffield said. "In Africa, where a lot of that growth is, they can't go immediately to electric vehicles. They just don't have the infrastructure. It will take a long time for EVs to replace the gasoline engine in my opinion," he said. Beyond that, much of the electricity that will be used to recharge electric vehicles in the future will come from natural gas being produced by the US industry. "In the Permian, 40% of our production is natural gas," said Sheffield. "Natural gas will continue to capture [electricity generation] market share." Much of the growth of natural gas used to generate electricity is due to fracking, which has driven down the cost of gas. Sheffield's lack of concern about the growth of electric vehicles is echoed by others in the industry. "When folks talk about energy transitions, these are significant shifts that will take a long period of time," said Frank Macchiarola, vice president of downstream and industry operations at the American Petroleum Institute, the trade group for both the oil and natural gas industries. "Based on independent analysis, two things are clear," he said. "One: Natural gas will be a significant source of power generation in the United States. Two: Oil will continue to be used a primary source of transportation fuel," he said.
Supermajor Asset Sale Could Fetch $27B - Oil and gas supermajors are looking to sell assets that could fetch a total of $27.5 billion, according to Rystad Energy’s latest assessment. As part of its latest study, the independent energy research company outlined a number of asset packages on offer from ExxonMobil, Chevron, BP, Total, Shell and ConocoPhillips. ExxonMobil had the most assets up for grabs out of all the supermajors, according to Rystad Energy. Exxon plans to divest assets worth $15 billion by 2021 as it focuses on developing oilfields in Guyana and the Permian Basin, as well as gas projects in Mozambique and the U.S. Gulf of Mexico, Rystad Energy highlighted. “The expected transactions mean some of the majors are poised to exit certain regions, giving regional players and independents a chance to buy into key fields and help keep them profitable through production-life extensions and new developments,” Ranjan Saxena, an analyst on Rystad Energy’s upstream team, said in a company statement. “While oil and gas majors increase their focus on core areas and divest mature assets and interests in geopolitically unstable regions, observers will be following closely to see how investors react and what other steps these energy giants will take to keep stakeholders interested amid rising climate concerns and geopolitical volatility,” Saxena added. Last month, Rystad Energy revealed that BP and Shell occupied the top spots on opposite ends of the company’s M&A ranking for the oil and gas sector. This ranking highlighted the share of resources traded globally from 2015 through July 2019. According to the analysis, BP had seen the most resource growth from M&A across all supply segments, adding nearly 6.5 billion barrels of oil equivalent. On the sell side, Shell topped the list “by a wide margin”, Rystad noted.
Interactive: Not all oil is equal – Presenting the Platts Periodic Table of Oil | S&P Global Platts - Understanding crude quality has never been more important, following the dramatic rise in US shale output, which has transformed the composition of the global oil market.There are hundreds of different grades and varieties produced around the world, from medium-sour Hungo in Angola to Norway's light-sweet Ekofisk and Mexican heavy-sour Maya crude.The Market Insight team at S&P Global Platts has created a "periodic table of oil" cataloguing 120 of the most important grades on international markets.The interactive chart below will for the first time allow readers to find key information in one place on region of origin, price, trade volumes, sulfur content, viscosity and trade flows.Click here to access the interactive Platts Periodic Table of Oil
BC taxpayers subsidized fracking companies to the tune of 1.2 billiion in two years - Fossil fuel companies drilling for gas in B.C. are benefitting from massive provincial subsidies that allow them to reduce the amount of royalties paid to the province, research by the Canadian Centre for Policy Alternatives has found. Companies drilling and fracking for natural gas in northeast B.C. were bankrolled by the province to the tune of $703 million last year, a 45 per cent increase over the previous year when companies were handed more than $485 million in credits. As deep well credits are used to reduce the amount of royalties companies pay to the province when the production process has ended, that means B.C. is increasingly out of pocket even though the amount of gas produced in B.C. has risen more than 70 per cent over the last decade. The total in the deep well credit account now amounts to $2.2 billion. Last year, natural gas royalties flowing into the provincial treasury amounted to $102 million compared to $1.3 billion a decade earlier and, although the decline is partially due to falling market prices for gas, the deep well credits are partially responsible for the shrinking revenues, says Ben Parfitt, CCPA resource policy analyst. “And, with a combined $2.62 billion in credits sitting in the credit account, thanks to the credit program’s 17-year duration, those anemic revenues will be a fixture for years to come,” Parfitt, who is also a contributor to The Narwhal, said. “That’s a huge sum of money and it’s getting bigger each year. It’s high time the province explained why such subsidies are necessary or, if they are not, why they continue,” he said. The ongoing loss of revenue means less available funds for healthcare, education and other public services, said Parfitt, who spearheaded a battle to force the provincial government to release the data, which was being kept a closely guarded secret.
Anti-fracking protesters forcefully removed during dawn raid on private land - A dozen anti-fracking protesters have been forcefully removed from a drill site during a dramatic dawn raid on private land. Specialist eviction officers descended on the site in the early hours of yesterday morning to turf out 12 illegal trespassers. The protesters had set up a number of camps on the land, which is a mile from a site being drilled by oil and gas company Cuadrilla. It is thought some the apprehended individuals were not only protesting, but also living on the private land for the past three years. They are members of anti-fracking group New Hope Resistance, which was set up two years ago to protest against leading shale gas company Cuadrilla. The group’s website says the land which they occupied until yesterday will one day become “the largest gas field in Western Europe”. The government recently announced a moratorium on fracking, until or unless the activity is proven safe.
Venezuela Is Using Invisible Oil Tankers To Skirt Sanctions - U.S. sanctions on Venezuela have been squeezing the life out of its economy in an attempt to remove the government of Nicolas Maduro from power, but so far those sanctions haven’t been entirely successful. The reason: Venezuela is still exporting oil. So far in November, according to OilX data, Venezuela has exported an average of 530,000 bpd, up from 523,000 bpd in October.Bloomberg reports, citing shipping data, that Venezuela had loaded almost 11 million barrels of crude in just the first 11 days of November, which is more than twice as much as it did in the same period last month. Most of the oil seems to have gone to India and China, with half of the vessels transporting it turning their transponders off to avoid detection.This is the now-standard tactic used by Iran to export its oil amid U.S. sanctions, too. Turning off the geolocation device is what Iranian tankers do when they leave port—or in the open sea—and they only turn them off when they approach their port of destination. This and ship-to-ship transfers have helped Tehran continue taking in oil revenues despite the sanctions. These same tactics are being used by Venezuela now as well.Venezuela’s crude oil production in September averaged just 644,000 bpd, according to OPEC’s latest Monthly Oil Market Report. That’s down from 727,000 bpd in August and an average 975,000 bpd over the first half of the year. In September 2018, Venezuela was pumping more than twice the October level, at 1.354 million bpd. This goes to show that sanctions are working to curb oil production, but they have not been able to stifle Venezuela’s exports to zero. The country has oil-for-cash agreements with China and Russia, and although it struggles to repay this debt with its limited amount of oil, it is paying down some of it—apparently without violating any sanctions.One vessel Bloomberg’s data detected recently was the Dragon—a Liberian-flagged Very Large Crude Carrier, whose last GPS signal came off the French coast. The tanker, however, turned out to be offshore Venezuela where it loaded 2 million barrels of local crude for Russia’s Rosneft, one of Caracas’s biggest creditors. Both the Russian company and the operator of the Dragon told Bloomberg that they have not violated any sanctions. One way Rosneft is doing this is by selling the oil on and getting paid in fuel. This is how India has been getting some of its Venezuelan oil shipments despite pressure from Washington to cut these imports off completely.
Black tide in Brazil - The oil first appeared on the beaches of Brazil’s Paraiba state at the end of August. Since then, it has surfaced in nine states in the northeast, soiling pristine beaches, reefs, mangroves and wildlife in what is proving to be the country’s worst oil spill. The culprit is still not known, although a Greek-flagged tanker is suspected of causing the catastrophe. To get photos of the disaster, which was affecting areas far from state capitals where most of the press is based, AFP’s Rio de Janeiro bureau found talented local photographers. Here are some of their stories:
- Leonardo Malafaia, Pernambuco: On October 21, I was taking photos on Itapuama beach. I love this beach, it’s where I first learned how to surf. One of the pictures that I took was of a local teenager, Everton Miguel dos Anjos, as he emerged from the black water with an oil-stained plastic trash bag across his chest, his face despondent. His mother owned a food stall on the beach and he had come to help clean it up. When the photo chief in Rio told me that my photo had been appearing all over the world, I couldn’t believe it. It went viral, was chosen as one of the best photos of the week in media both in Brazil and internationally, These beaches are an integral part of our identity and it’s sad to see them soiled. I grew up on this coast, my grandfather was a fisherman here. These beaches are a lifeline for hundreds of people, who will feel the effects of this for years to come. To see this happening is revolting.
- Antonello Veneri, Bahia state - The oil gets everywhere. You try to get it off your body, but you can’t. It clings to your skin, to your equipment, to everything. I have been in the Bahia region for about 10 years. The first images that I took of the spill were with my smartphone on Pituba beach in Salvador, the capital of Bahia state. I concentrated on the work of the volunteers who were helping with the clean-up efforts. For most of the Afro-Brazilian religions, this region is sacred. I have spent so much time here and it breaks my heart to see the beaches and its rocks covered with oil.
- Mateus Morbeck, northern Bahia - It is a horror and a disaster and I found myself cleaning up the beach as I was taking photos. At first, we didn’t know how to get rid of the oil. We didn’t have any protection, no gloves, no masks, nothing. People were trying to do it with their bare hands and some began to faint and vomit. Eventually, we learned to protect ourselves. Now I carry two bags — one with my camera equipment and a drone and another with oil protection equipment. I have a gas mask, gloves and boots. I have a feeling that I’m mopping up ice cream. We don’t know who is the enemy and how long it will continue to attack us. The volunteers created a WhatsApp group to coordinate their efforts and to meet at the place where the oil appears. I have been busy since.
Petrobras on Track to Become Largest Oil Producer - Petrobras is on track to become the world’s largest oil producer among publicly listed companies by 2030. That’s according to Rystad Energy, which outlined that, during the course of 2019, Petrobras has evolved from fifth place to become the third-largest oil producer. “As it stands, Rosneft and PetroChina top the list over the world’s largest public exploration and production companies,” Rystad Energy said in a company statement. “Based on Rystad Energy’s latest forecasts, Petrobras could be poised to overtake PetroChina over the next few months and potentially dethrone the ruling Russian producer Rosneft over the next decade, thanks in no small part to its latest acquisitions,” Rystad Energy added. Petrobras gained nearly full control of more than eight billion barrels of oil in the Buzios field as part of Brazil’s oil auctions in November, the energy research and intelligence company highlighted. “To develop these and other resources off the coast of the South American country, Brazil is set for a whopping $70 billion offshore capital investment spree between 2020 and 2025, solely on field development,” Rystad Energy stated. “This program will have a monumental effect on Petrobras,” Rystad Energy added. Rosneft places second on Rystad Energy’s 2030 oil production table, with ExxonMobil in third. Shell is fourth, BP is fifth, PetroChina is sixth and Chevron and Total occupy the seventh and eighth spots, respectively. According to Rystad Energy, Petrobras has a potential peak output of almost 3.8 million barrels per day.
Asia's Richest Man Breaks into Oil Elite Club -- Reliance Industries Ltd., run by Asia’s richest man Mukesh Ambani, has eclipsed BP Plc to break into an elite club of energy supermajors. The Indian conglomerate is now valued at $138 billion, compared with the British energy giant’s $132 billion value at the close of trading on Tuesday. Reliance’s shares have increased at three times the pace of India’s benchmark index this year after its billionaire owner in August announced plans to cut the company’s net debt to zero in 18 months through measures including a stake sale in the oil-to-chemicals business to Saudi Aramco. The surge in shares gives Ambani a net worth of $56 billion, making him Asia’s richest person, above Alibaba Group’s Jack Ma, according to the Bloomberg Billionaires Index. Reliance’s market value briefly surpassed BP for the first time at the end of last month, and it has now regained the lead over the British company after its shares hit a fresh high in Mumbai on Wednesday. It also narrowing the gap with PetroChina Co., currently Asia’s biggest oil firm by value, and is within a whisker of becoming the first Indian company to hit the 10 trillion rupee market-cap milestone. Reliance has rallied 40% this year, compared with BP’s 1.2% gain as it works on cutting high debt levels. Oil companies have struggled because of swings in crude prices and as uncertainty persists over future energy demand. Reliance, meanwhile, has benefited in a number of ways. It operates the world’s biggest oil-refining complex in western India, which can process low-quality crude and turn it into higher-grade fuels, partly protecting it from volatility in prices.
OPEC's share of Indian oil imports in October hits lowest since 2011 - (Reuters) - OPEC’s share of India’s oil imports fell to 73% in October, its lowest monthly share since at least 2011, tanker data from sources showed, as refiners shipped in fuel from the United States and other suppliers. India, which usually imports about 80% of its needs from members of the Organization of the Petroleum Exporting Countries (OPEC), has been diversifying its sources of oil as local refiners have upgraded plants to process cheaper crude grades. India, the world’s third-biggest oil importer, shipped in 4.56 million barrels per day (bpd) of oil in October, about 3.3% less compared with a year ago, data showed. Of that, it bought 3.43 million bpd from OPEC. OPEC’s share of India’s imports in September was about 81% although total volumes were lower, as the South Asian nation cut imports to a three-year low due to maintenance at some refineries. OPEC oil output dipped to an eight-year low in September after attacks on Saudi oil plants led to production cuts, a Reuters survey showed. The kingdom’s output has since recovered. In October, Iraq replaced Saudi Arabia as India’s top oil supplier, tanker arrival data showed, with refiners cutting purchases of the more expensive Saudi oil. Sources who supplied the data asked not to be named. “Saudi had raised its official selling price (OSP). That led to some buyers migrating to Iraqi and other producers,” said Ehsan Ul Haq, an analyst with Refinitiv. Saudi Arabia raised its October OSP for its Arab Light grade for Asia by $0.60/barrel compared to a $0.35/barrel increase in Iraq’s Basra Light.
Asian Gas Glut Forces Key Buyers To Cancel Orders - A Singaporean buyer of a U.S. cargo of liquefied natural gas (LNG) has canceled the loading, the company told Reuters on Tuesday, as both Asia and Europe are facing an LNG glut as the winter heating season starts to set in.Pavilion Energy, a Singapore-based natural gas importer and trader, has canceled the loading of a U.S. cargo but will still pay for it, industry sources have told Reuters. The company was originally scheduled to load the cargo from the Cameron LNG plant in Louisiana, according to the sources.“Pavilion Energy evaluated scheduling and other commercial matters, then took the decision not to lift the cargo in full coordination with the supplier,” a spokeswoman for the company told Reuters, without providing further details.Some other customers of U.S. LNG cargoes are also reportedly considering paying for those cargoes but not loading them, traders told Reuters.Weak LNG and natural gas prices in Asia and in Europe have weighed on gas importers and traders who find themselves unable to resell the cargoes they have bought because of ample gas inventories and a glut of LNG supply from newly started projects around the world.Storage in Europe is full, as low LNG spot prices amid abundant supply and weaker Asian spot demand have helped Europe to fill its storage tanks to more than average levels this summer.In Asia, milder weather in the world’s top two LNG importers—Japan and China—leads to weaker demand amid ample supply. Last week, Asian LNG spot prices dropped for a fourth consecutive week, with traders telling Reuters that further drops could be expected.
Pipeline Explosion Kills 7, Injures 25 in Bangladesh - At least seven people were killed when a gas pipeline exploded in Bangladesh Sunday, and another 25 were injured, the Associated Press reported. The blast collapsed portions of the boundary wall of a building in the city of Chittagong while residents were getting ready for work in the morning, according to local police chief Mohammed Mohsin."So far we have confirmed about seven dead bodies, including one child, four males, and two females who were severely burned on the spot," Bijoy Boshak, deputy commissioner of the Chottogram Metropolitan Police (North), told Anadolu Agency.The seven who died were all members of one family, Indus News reported. Boshak told Anadolu Agency that the seven who died were rushed to the hospital, where they were pronounced dead on arrival. Among the injured, one suffered burns, and the rest were wounded when the walls collapsed, according to reports from local channel Shomoy TV shared by Anadolu Agency. Boshak said the death toll could rise, since some of the people admitted to the hospital were in critical condition.The gate of a nearby building and a minibus in its garage were also damaged by the blast.Fire service official Amir Hossain told Reuters that the cause of the explosion was not yet known, but was being investigated. "We primarily came to know that due to the gas pipeline blast, a part of a building collapsed," Boshak told Anadolu Agency. The explosion comes one month after seven children died when a gas cylinder used for inflating balloons exploded in the Bangladeshi capital of Dhaka, Reuters noted. The news agency further pointed out that poorly monitored gas pipelines and cylinders are a frequent cause of accidents in Bangladesh.
ExxonMobil urges Nigeria to end oil sector uncertainty to bolster production | S&P Global Platts - The Nigerian government needs to end the air of uncertainty around the country's oil sector to attract much-needed investment that will bolster production, ExxonMobil said Tuesday. The two critical Nigerian oil sector needs are certainty and business competitiveness, Paul McGrath, chairman and managing director of the ExxonMobil Nigeria producing unit, said during a meeting in Abuja with Nigeria's oil minister, Timipre Sylva, according to an oil ministry statement. "There is nobody who doesn't want to invest in Nigeria," McGrath said. The ExxonMobil executive, who also is chairman of the Oil Producers Trade Section, the umbrella body for oil companies operating in Nigeria, said he hoped the Nigerian oil minister would make these two critical factors priorities. Oil companies have strongly opposed Nigeria's plans to increase taxes on its deepwater oil production after Nigeria amended the fiscal terms for existing production-sharing contracts. That decision came as other producers in the region sweetened their fiscal terms to attract foreign investment to the beleaguered oil sector. Angola recently improved fiscal terms for some oil contracts, giving international oil companies higher returns and opening up offshore and onshore basins. Sylva said the amendment to the production-sharing law was "deemed necessary in recognition of the current realities in the sector."
Turkey And Europe On Collision Course Over Energy Agenda -Turkey’s location has always given it a key geostrategic advantage. Its proximity to the Middle East and the Caspian as well as its position on the Black Sea make it an indispensable member of NATO. In recent years, however, Ankara’s diplomatic relations with its Western allies have cooled. Now, the discovery of major energy deposits in the Eastern Mediterranean are adding to tensions. Cyprus is one of the countries that could benefit significantly from the new-found natural gas wealth. The island nation currently imports all of its energy, but the discovery of gas deposits could improve Cyprus’ energy security while at the same time making it an energy-exporting nation. Nicosia’s fraught relations with its large northern neighbor, however, could hamper the development of its energy sector.The Turkish invasion of 1974 separated the island between an internationally recognized Cyprus and the Turkish Republic of Northern Cyprus which is only recognized by Turkey. To make matters even more complicated, Nicosia is a member of the EU while Ankara’s membership request is still pending. Turkey wants a share of the newfound energy wealth to go to the Turkish inhabitants of the island. Furthermore, Ankara has sent exploratory vessels to Nicosia’s EEZ which has evoked a sharp rebuke from the EU.Brussels has made its position very clear, stating that Cyprus is an independent nation with widespread international recognition and that Turkey has repeatedly used force to deter energy companies from exploring the island nation’s EEZ.Last week, the foreign ministers of the EU agreed on economic sanctions over Turkey’s actions in Cyprus’ waters. These include asset freezes and travel bans. Also, technical and material support for drilling activities is prohibited. The recent decision follows a previous round under which arms sales were banned following the country’s invasion of Syria.But there is only so much the EU can do when it comes to influencing Ankara’s decision making. Turkey is sheltering approximately 3.5 million displaced persons. The EU is providing financial support to Ankara in exchange for preventing the continuation of the refugees’ journey to Europe. President Erdogan has already threatened to flood Europe with the displaced persons who for several years have called Turkey their "home". According to some Greek officials, Ankara has the capability to immediately “send” 500,000 refugees over into Europe.
Russia Plans To Boost Crude Oil Exports - Russia expects to increase its crude oil exports by around 400,000 bpd-500,000 bpd to more than 5.6 million bpd within five years, Energy Minister Alexander Novak said in an article in Russian-language magazine Energy Policy. Russia will not only keep its position on the global energy markets, but it expects to be able to boost its crude oil exports by up to 500,000 bpd, the equivalent of 25 million tons as the minister wrote. Russia’s total crude oil exports in five years could grow to 280 million tons, or 5.62 million barrels per day, according to Novak. Russia’s crude oil exports rose by 2.9 percent on the year in 2018, to 260 million tons, or 5.22 million bpd, according to the TASS news agency.Russia exports a large part of its crude oil production, mainly to Europe, although China has emerged as a big buyer of Russian crude in recent years as Beijing’s oil demand continues to grow. China is the biggest buyer of Russian oil outside Europe, while Russia became the largest supplier of crude to China in 2016, surpassing Saudi Arabia for the first time on an annual basis, EIA estimates show.For two years after 2016, Russia was the single biggest supplier of crude oil to China, but Saudi Arabia has recently regained its number-one supplier status to China. In September, Saudi Arabia kept its number-one supplier spot, ahead of Russia and Iraq.
Oil price will have a 'significant influence' on Russia's growth story, wealth fund chief says -Oil prices will have a major impact on the direction that the Russian economy will take, according to the chief executive of the Russian Direct Investment Fund (RDIF), but the country’s alliance with major oil producer group OPEC (known as OPEC+) is “ready to act” if necessary, he said.“We’re quite optimistic about the Russian market going forward. We believe the oil price will be a significant influence going forward but due to our agreement with Saudi Arabia we believe that oil prices will be stable and the Russian market (is) poised for continuous growth,” Kirill Dmitriev, CEO of Russia’s sovereign wealth fund RDIF, told CNBC on the sidelines of the Russia Calling investment forum in Moscow Wednesday.Earlier on Wednesday, Andrey Kostin, the head of Russia’s second largest lender, VTB Bank, told CNBC that the biggest risk to the Russian economy in 2020 would be lower oil prices, which, as a major oil producer and exporter, Russia still relies on despite efforts to diversify its economy. Asked by CNBC’s Dan Murphy if he agreed with this risk outlook, Dmitriev conceded that he did “agree somewhat that if there are trade wars and other shocks, we could have some issues on the demand side.” “But on the supply side we have a great agreement with OPEC+ members that are ready to act whenever there is a demand shock. So I believe oil prices will remain stable and of course trade wars are negative for the economy and can soften demand but OPEC+ will be ready to respond,” he said. As the world’s second largest natural gas producer, and third largest oil producer, Russia has been able to lean on its energy exports as international sanctions have curtailed other parts of its economy. Oil prices have also risen since late 2016 in no small part due to Russia’s pact with OPEC to curb oil output in order to balance supply and demand
Russia to continue cooperation with OPEC to keep oil market balanced: Putin - President Vladimir Putin said on Wednesday that Russia and OPEC have ‘a common goal’ of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal. The Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.“Our (common with OPEC) goal is for the market to be balanced, acceptable for producers and consumers and the most important - and I want to underline this - predictable,” Putin told a forum on Wednesday.Saudi Arabia’s King Salman said on Wednesday that the kingdom’s oil policy aims to promote stability in global oil markets, and serves consumers and producers alike. It plans to announce pricing for an initial public offering of its crown asset, Saudi Aramco, also on Dec. 5.In October, Russia cut its oil output to 11.23 million barrels per day (bpd) from 11.25 million bpd in September but it was still higher than a 11.17-11.18 million bpd cap set for Moscow under the existing global deal.Putin told the forum that Russia’s oil production was growing slightly despite the supply curbs deal but Moscow was not aiming to be the world’s No. 1 crude producer. Currently, the United States is the world’s top oil producer.
Who Actually Controls the World's Oil? - The answer to the question posed is a tricky one. If we simplistically look at proven oil reserves, the answer is obvious: mostly OPEC and Russia. According to BP, the global authority on the subject, this collective group of 16 countries owns 1.35 trillion barrels of proven oil reserves, or nearly 80 percent of the world’s total. Yet to be sure, there are outside questions as to how much oil OPEC in particular actually has. Unlike the U.S. reserves, which get monitored by the Securities and Exchange Commission, those in OPEC’s Member Countries are not independently verified. In short, BP and other reporting agencies must simply take them at face value. In any event, reserves are just a subset of the much larger oil resource. They represent how much oil can be produced today under prevailing prices and technologies. Both of these factors are always in flux, however, and their changes can lift more of the resource into the reserve category. For example, although recognized for holding 10 percent of the world’s proven oil, most of Canada’s massive oil sands deposits in Alberta only become accessible if prices are high enough. In the U.S., the emergence of shale shows how oil that was unavailable just a few years ago can become reachable as extraction technologies relentlessly advance. The EIA reports that the world has 420 billion barrels of recoverable tight oil, potentially offering other nations such as Argentina and China, for instance, a chance at better control. The next assessment in global oil control is the actual production of the commodity itself. Not surprisingly, OPEC and Russia control 50-55 percent of all output. Even with the U.S. shale revolution, the influence of this bloc remains undeniable: its 1.2 million b/d production cut agreement has put a floor under the global market. Even more importantly, Russia and OPEC’s de facto leader Saudi Arabia control a combined 25-30 percent of all exports. This is essential leverage for these two oil-obsessed nations because nearly 75 percent of total oil usage is internationally traded. But, as the world’s largest liquids producer at 15-16 million b/d, huge export plans for the U.S. will give the country a firmer grip on the global market. Also giving the U.S. outsized influence is the fact that its dollar is the global currency used in trading oil. Indeed, America’s shale boom will continue to act as a counterweight to OPEC and Russian control. Regardless of who controls the world’s oil, however, we know that new investments in finding and producing more are required. To avoid a potential shortfall and price spike, IEA estimates that some $700 billion is needed in annual E&P spending for decades to come.
Oil Short-Selling Unwinds -- Hedge-fund managers unwound bets that crude will fall at the fastest pace in 16 months as the prospects for a trade war truce and a slowdown in shale drilling helped futures rebound. Oil short-sellers slashed their bearish positions on West Texas Intermediate crude by 41% in the week ended Nov. 12, data released Friday show. As they come into the market as buyers to close positions, they are contributing to oil’s 10% rebound since early October. “We saw a pretty significant amount of short covering this last week,” said Daniel Ghali, a TD Securities commodity strategist. “That’s in line with recent optimism we have seen, much of which was driven by optimism on the trade file, and also a relatively more recent narrative that the shale patch is not going to be able to sustain its output profile.” While U.S. explorers are still pumping crude at a record clip, drilling has plunged to the lowest level in more than two years as companies come under increasing pressure to cut spending, with many strapped for cash. That means an eventual slowdown in output. It also helps that the U.S. is signaling a truce with China, with White House economic adviser Larry Kudlow saying Thursday that trade negotiations were coming down to the final stages. WTI ended the week at $57.72 a barrel, the highest in almost two months. Money managers’ WTI net-long position, or the difference between bullish and bearish bets, rose 32% to 153,174 futures and options, according to U.S. Commodity Futures Trading Commission data. The more bullish stance was entirely due to the short-selling slump, though, as long-only bets fell 3.3%. This signals that the price rebound may be short-lived, especially because there are still concerns about the global economy and imminent supply influxes from places like Brazil and Guyana.
Oil price rally squeezes bears, but bulls keep powder dry (Reuters) - Hedge fund managers continued to scale back short positions in crude last week amid receding fears of a global recession and increasing signs of a slowdown in U.S. oil production growth next year. Hedge funds and other money managers were net buyers of positions equivalent to 41 million barrels in the six major petroleum futures and options contracts in the week to Nov. 12 (https://tmsnrt.rs/32RR4RK). Funds have purchased 176 million barrels in the last five weeks, after selling 206 million in the previous three weeks, according to ICE Futures Europe and the U.S. Commodity Futures Trading Commission. In the most recent week, funds reduced existing bearish short positions by 31 million barrels while adding 10 million barrels of new long positions. Portfolio managers were buyers of NYMEX and ICE WTI (+40 million barrels) and Brent (+28 million) but sold U.S. gasoline (-8 million), U.S. heating oil (-6 million) and European gasoil (-13 million). But the preponderance of short positions closed, rather than long positions opened last week, suggests most recent changes are being driven by reduced pessimism rather than any great optimism about the economy. The rotation out of refined fuels and towards crude also suggests caution about the health of oil demand and a focus on production losses as a result of the slump in prices over the last year. Short positions in NYMEX WTI have fallen by almost 62 million barrels (49%) since Oct. 22 as fund managers’ have become less pessimistic about the price outlook. Hedge funds’ bullish long positions outnumber bearish short ones by a ratio of 3.76:1, but that is down from 4.39 at the end of September and far below 8.68 in April, underlining fund caution.
Shell Traders Rake In $1B Profit in Fuel Oil Market -- Royal Dutch Shell Plc has made $1 billion from trading fuel oil this year, making it one of the standout winners from rules designed to make the shipping industry greener. Shell said last month that it made substantial money in fuel-oil trading in the third quarter, but the company didn’t disclose the size of the profits. Shell traders celebrated hitting the $1 billion mark so far, likely the biggest by any one company in fuel oil this year, by ringing a bell on the company’s trading floor in London earlier this month, people familiar with the matter said. Shell declined to comment. The fuel-oil market has been shaken this year by the so-called IMO 2020 new regulations that ban the use of high-sulfur fuel oil, known as HSFO, to power ships. The rules are aimed at combating human health conditions such as asthma and environmental damage including acid rain. Prices are collapsing because the global shipping fleet, which burns more than 3% of the world’s oil, will instead have to consume very low sulfur fuel-oil, or VLSFO. Although better known for its oil fields, refineries and pump stations, Shell runs an in-house trading business that’s larger than the better-known independent oil traders like Vitol Group, Glencore Plc and Trafigura Group, handling 13 million barrels of oil equivalent per day. The company describes itself as “one of the largest and most experienced energy merchants in the world” with major trading floors in Houston, London, Dubai, Rotterdam and Singapore. Europe’s largest oil company told investors that its downstream business, which includes refining, oil trading and fuel stations, benefited during the third quarter from “stronger contributions from oil-products trading and optimization, mainly fuel oil.” In a conference call with analysts, Jessica Uhl, Shell’s head of finance, said the company’s traders benefited from “the change in the fuel standards” linked to IMO 2020, the name by which the ship-fuel rules are widely known. It’s unclear exactly how Shell’s traders made their profit, but premiums for fuel that’s lower in sulfur have surged this year, potentially benefiting those companies that produce more of the product. Shell’s refining system is a relatively sophisticated one, something that could put the company in a better position as the regulations enter into force. The margin to produce high-sulfur fuel oil in Europe recently slumped to a more than 10-year low, according to the International Energy Agency.
Oil prices flat with markets on hold for progress in US-China trade talks Oil falls more than 1% as trade uncertainty, oversupply concerns weigh - Oil prices fell more than 1% on Monday, erasing last week’s gains and tumbling alongside U.S. stocks on uncertainty over a trade deal between the United States and China. Brent crude futures fell 95 cents, or 1.5%, to settle at $62.35. West Texas Intermediate (WTI) crude fell 67 cents, or 1.2%, to settle at $57.05. Wall Street’s three main stock indexes also fell from last week’s record highs following a report that stoked concerns a U.S.-China trade deal might not get through, which pushed oil prices lower, analysts said. “Crude has become highly reactive to whichever way the wind is blowing in the (U.S.-China) trade talks. When it falters, prices get punished,” said John Kilduff, a partner at Again Capital LLC in New York. “This headwind of slack demand growth keeps holding us back.” The 16-month trade war between the world’s two biggest economies has slowed global growth, prompting analysts to lower forecasts for oil demand growth and raising concerns that a supply glut could develop in 2020. China and the United States had “constructive talks” on trade in a high-level call on Saturday, state media Xinhua reported on Sunday, but it gave few other details. On Monday, CNBC quoted a Chinese government source saying the mood in Beijing about a trade deal was pessimistic due to U.S. President Donald Trumps reluctance to roll back on tariffs. “The souring trade situation has put a halt to the rally,” . Expectations of lower seasonal demand for gasoline in the United States also weighed on oil prices. Concerns about plentiful crude supplies in 2020 weighed on the market, which expects OPEC to extend production cuts in early December to help avoid a new global glut. The Organization of the Petroleum Exporting Countries (OPEC) said last week it expected demand for its oil to fall in 2020, supporting a view that there is a case for the group and other producers like Russia - collectively known as OPEC+ - to maintain limits on production.
Oil ends lower amid lack of China trade progress trade; Natural-gas prices skid to November nadir - Oil futures settled lower on Monday, after posting back-to-back weekly gains on rising hope for a so-called phase-one U.S.-China trade deal. “Trade optimism continues to play a major role in what has been a generally bullish run since early October, but the lack of concrete progress should challenge further speculative support,” said Robbie Fraser, senior commodity analyst at Schneider Electric. “Ultimately, a lack of a signed phase one deal — however preliminary — will likely look to unwind some of crude’s recent gains.” West Texas Intermediate crude for December delivery US:CLZ19 fell 67 cents, or 1.2%, to settle at $57.05 a barrel on the New York Mercantile Exchange, while January Brent crude BRNF20, +1.76% lost 86 cents, or 1.4%, at $62.44 a barrel on ICE Futures Europe. Both crude benchmarks tallied gains in each of the last two weeks and their dollar and percentage losses Monday were the largest single-session declines since Nov. 6, according to Dow Jones Market Data. Further headwinds come from last week’s Energy Information Administration inventory data, which revealed a “moderately stronger than expected build” for U.S. crude stocks for the week ended Nov. 8, along with preliminary production figures showing a climbed to a new all-time high at 12.8 million barrels a day, said Fraser, in a daily note. “That jump comes amid expectations of a prolonged slowdown in growth in the coming years, but that may not materialize until producers cross the 13 [million barrels a day] threshold.” On Monday, EIA said in a monthly report that crude-oil production from seven major U.S. shale plays is forecast to climb by 49,000 barrels a day in December to 9.133 million barrels a day. Oil output from the Permian Basin, which covers parts of western Texas and southeastern New Mexico, is expected to see the biggest increase, up 57,000 barrels a day in December from November. Natural-gas futures, meanwhile, marked their lowest settlement month to date, with December natural-gas futures NGZ19, -0.39% down 12.2 cents, or 4.5%, to $2.566 per million British thermal units. Prices had already lost 3.6% last week. Prices for the fuel took heavy losses to start the week “as the probability of colder-than-normal temperatures over the 6- to 14-day period has fallen significantly,” said Christin Redmond, commodity analyst at Schneider Electric. “Despite a cold start to November, which has already begun to draw down inventories at a rapid rate, production levels remain strong, keeping prices in check as temperatures look to return to normal.”
Oil eases amid concern over US-China trade talks dragging on - U.S. oil prices fell for the second straight day on Tuesday amid market jitters over limited progress between China and the United States on rolling back trade tariffs, while rising U.S. inventories also jangled nerves. West Texas Intermediate (WTI) crude dropped 27 cents or 0.47% to $56.78 a barrel by 0549 GMT, slipping further away from an eight-week high hit last Friday when hopes for the trade deal rose. Brent crude futures were down 20 cents, or 0.32%, at $62.24. A Chinese government source was quoted by broadcaster CNBC on Monday as saying there was gloom in Beijing about prospects for a trade deal, with Chinese officials troubled by U.S. President Donald Trump’s comment that there was no agreement on phasing out tariffs. “We had reports overnight that the mood in Beijing was pessimistic,” said Michael McCarthy, chief market strategist at brokerage CMC Markets in Sydney. “The lack of announcement is really concerning for the demand outlook ... the market is very nervous about the trade talks.” The lingering trade battle that has seen the world’s two biggest economies impose tit-for-tat tariffs on each other has hit global growth prospects and clouded the outlook for future oil demand. Meanwhile a preliminary Reuters poll on Monday showing U.S. crude oil stockpile were seen rising for the fourth straight week also squeezed prices. “Unless we get further concrete signs of global growth rally or an extension in production cuts by OPEC+ (the Organization of the Petroleum Exporting Countries and associated producers including Russia), WTI will struggle to attempt to recapture the $60-a-barrel mark,” . One possible factor supporting prices going forward was a renewal in geopolitical tensions, with news from Dubai that armed members of Yemen’s Iran-aligned Houthi movement had seized a vessel towing a South Korean rig at the southern end of the Red Sea over the weekend.
Oil Sinks As Trade War Sentiment Turns Sour - Oil prices fell at the start of the week on fears of ongoing oversupply and a more pessimistic outlook on the trade war. The trade negotiations continue to drive market sentiment and an agreement is looking increasingly unlikely. U.S. shale drillers are set to cut spending by around 13 percent next year, according to an estimate from Cowen & Co. Stubbornly low prices, financial stress and pressure from shareholders for cash flow are forcing shale E&Ps to cut capex and lay off workers. . Iran was rocked by protests after the government announced fuel price increases. The price increases come as U.S. sanctions have crippled Iran’s oil production and exports. Natural gas prices fell by 4.5 percent on Monday, and dipped at the start of trading on Tuesday, due to forecasts for mild temperatures. “The lack of significant cold in the upcoming period is bad news for a market dependent on continual, stronger-than-normal heating demand to keep oversupply at bay this winter,” wrote analysts at Gelber & Associates in a Monday note. . Saudi Aramco will proceed with a domestic-only IPO, selling 1.5 percent of the company and aiming for a valuation between $1.6 and $1.7 trillion. The IPO will now depend on local investors, and lending standards have been loosened so that investors can borrow money in order to buy into the IPO. “Institutional investors are unlikely to find this valuation range attractive,” analysts at Sanford C. Bernstein said in a research note Sunday. Following challenges by environmentalists, the U.S. Bureau of Land Management in late Septembersuspended drilling operations on 117 plots of leased land in Utah while also restricting the sale of another 130 tracts due to litigation. The issue hinges on whether or not BLM adequately considered greenhouse gas emissions. The issue could be just the tip of the iceberg. “It is potentially a BLM-wide issue,”
WTI Holds Worst Loss In 7 Weeks After Bigger Than Expected Crude Build --Oil prices plunged most in seven weeks today as US-China talks appeared to stall.“We are going into this wee k with another storage build expected in the EIA’s report,” said Bob Yawger, director of futures division at Mizuho Securities USA. “The trade deal has soured and the vibe on the deal has turned a bit negative and that will affect demand too.” API:
- Crude +5.954mm (+1.5mm exp)
- Cushing -1.351mm
- Gasoline +3.354mm
- Distillates -2.19mm
After last week's mixed bag (API reporting a draw and DOE reporting a build), API appears to be playing catch up with a much bigger than expected build...
Oil prices steady after two-day drop as growth concerns weigh / Oil prices extend losses on supply, trade war fears - Oil prices slipped for a third day on Wednesday as a surge in U.S. stockpiles reinforced concerns about lackluster global economic growth, while hopes ebbed for any movement on the U.S.-China trade war. West Texas Intermediate (WTI) crude futures erased early gains to be down 6 cents, or 0.1%, at $55.15 a barrel by 0631 GMT, after falling more than 4% over the previous two sessions. Brent crude futures were at $60.71 a barrel, down 20 cents, or 0.3%. Brent dropped 3.8% during the prior two sessions. Crude inventories in the United States, the world’s biggest oil user, rose 6 million barrels in the week to Nov. 15 to 445.9 million, data from industry group the American Petroleum Institute showed late on Tuesday. The increase added to concerns about crude oversupply after Reuters reported that Russia, the world’s second-biggest producer, was unlikely to back deepening output cuts when the Organization of the Petroleum Exporting Countries (OPEC) meets on Dec. 5-6 in Vienna. Russia and other oil producers have agreed with OPEC to cut 1.2 million barrels per day of output through March to bolster prices, a producer group known as OPEC+. “The API data also showed U.S. inventories posted a rather robust increase last week, which if confirmed by the EIA report, we could see oil prices continue to slide,” said Edward Moya, an analyst at brokerage OANDA. Official U.S. government inventory data from the Energy Information Administration is due at 10:30 a.m. EST (1530 GMT) on Wednesday. U.S. crude demand has slowed during a protracted trade war with China. Hopes for an end to the dispute in the signing of a so-called Phase 1 agreement between the sides has dimmed amid disagreements over the removal of tariffs. China on Wednesday also condemned legislation passed by the U.S. Senate aimed at protecting human rights in Hong Kong amid a crackdown on a pro-democracy protest movement. ″(The) fear here is still the trade talk with a lot of pessimism starting to filter through,” said Stephen Innes, market strategist at AxiTrader. “If we don’t get a significant roll-back on tariffs, that’s quite negative.”
WTI Jumps Back Above $56 After Smaller Than Expected Crude Build - Oil prices are rebounding modestly this morning after the biggest drop in seven weeks yesterday and following weakness (to a $54 handle for WTI overnight) after last night's bigger than expected API-reported crude build. “Refineries should show more progress and be further back on online,” says John Kilduff partner at Again Capital in New York.“Then, we are only weeks away from the IMO2020 situation and the distillate category keeps plummeting so we have to see how big the drawdown is there and if that could possibly lend support more to the market”But, oil inventories are poised to rise for the week ended Nov. 15, even as refinery utilization increases, underlining the risks of slowing economic growth and reduced demand DOE:
- Crude +1.379mm (+1.5mm exp)
- Cushing -2.295mm
- Gasoline +1.776mm (-750k exp)
- Distillates -974k
Refinery crude runs should be rising as the fall maintenance season draws to a close and gasoline stocks rose for the second week (expectations were for a draw). Official crude inventories rose less than API reported and less than expected...
Oil Prices Higher Despite Bearish Inventory Data - Crude oil prices rose slightly after the Energy Information Administration reported a crude oil inventory build of 1.4 million barrels for the week to November 15. At 450.4 million barrels, the EIA said, inventories were some 3 percent above seasonal limits. Analysts had expected a build of 1.062 million barrels, after the EIA reported yet another weekly inventory increase for the first week of November, at 2.2 million barrels. With last week’s build, the total increase in U.S. crude oil inventories over the past two months comes in at more than 32 million barrels. Besides rising crude stocks, the EIA also reported a 1.8-million-barrel rise in gasoline stockpiles for the week to November 15, and a 1-million-barrel decline in distillate fuel inventories. This compares with a 1.9-million-barrel build in gasoline inventories for the week before, and a decline of 2.5 million barrels in distillate fuel inventories. Refineries last week produced 10.1 million bpd of gasoline, down from 10.2 million bpd a week earlier. Distillate fuel production averaged 5.1 million bpd, compared with 5 million bpd a week earlier. The average crude oil processing rate last week was 16.4 million bpd, compared with 15.9 million bpd a week earlier. The EIA report followed the American Petroleum Institute’s weekly inventory estimate that said these had added 5.95 million barrels last week. This added pressure on prices already struggling under the double weight of concern about the global economy and diminishing hopes of a U.S.-Chinese trade deal. It’s worth noting that protests in Iraq and Iran have so far failed to exert any upward pressure on oil prices despite the fact that Iraq is OPEC’s second-largest explorer and escalating protests would eventually threaten production. Iran’s problems with protesters are less likely to influence prices because of U.S. sanctions that have shrunk the country’s oil exports, but the always present risk of escalation and spillage across borders is a potential tailwind for prices.
Oil extends gains on smaller-than-expected US inventory build - Oil prices turned positive on Wednesday, reversing two days of losses, following a smaller-than-expected build in US inventories. Prices also moved higher as Iran-related tensions escalated but receding hopes for a quick solution to the U.S.-China trade war which has dented global growth dragged on prices. West Texas Intermediate crude futures gained $1.04, or 1.9%, to trade at $56.25 a barrel. Brent crude futures were at $61.97 a barrel, up $1.06, or 1.7%. Crude inventories in the United States increased by 1.4 million barrels from the prior week, the U.S. Energy Information Administration said on Wednesday. The U.S. aircraft carrier strike group Abraham Lincoln on Tuesday sailed through the vital Strait of Hormuz through which a fifth of the world’s oil flows as leaders in Iran blamed days of protests over fuel price hikes on foreign enemies. Tensions in the Gulf have risen since attacks on oil tankers this summer, including off the coast of the United Arab Emirates, and a major attack on key Saudi energy plants which briefly crippled from the world’s top oil exporter. Iran’s President Hassan Rouhani on Wednesday claimed victory over protests which have left scores reported dead. “These events contribute to a sense of increasing tensions in the Middle East and explain why we have an uptick in the oil price today,” said SEB chief commodities analyst Bjarne Schieldrop. “It’s all part of a continuous row of incidents revolving around Saudi Arabia and Iran that have still not been resolved.” Meanwhile crude inventories in the United States rose by 6 million barrels last week to 445.9 million, industry group the American Petroleum Institute said on Tuesday. “The API data ... showed U.S. inventories posted a rather robust increase last week, which if confirmed by the EIA report, could see oil prices continue to slide,” said Edward Moya, an analyst at brokerage OANDA. U.S. crude demand has slowed during a protracted trade war with China. Hopes for an end to the dispute in the signing of a so-called Phase One agreement have dimmed amid disagreements over the removal of tariffs. China on Wednesday also condemned legislation passed by the U.S. Senate aimed at protecting human rights in Hong Kong amid a crackdown on a pro-democracy protest movement.
Oil prices settle about 3% higher as U.S. crude supplies rise less than expected - Oil futures finished higher on Wednesday, following a U.S. government report that showed domestic crude supplies up a fourth straight week, but by less than the six million-barrel jump reported by a trade group the day before. The Energy Information Administration on Wednesday reported that U.S. crude supplies rose by 1.4 million barrels for the week ended Nov. 15. That followed increases in each of the past three weeks. The latest climb, however, was a bit smaller than the 1.6 million-barrel rise expected by analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a climb of roughly 6 million barrels. The EIA crude supply numbers “were basically in line with estimates,” with prices extending gains since they did not come in as high as the large build reported by the API Tuesday, West Texas Intermediate crude for December delivery added $1.90, or 3.4%, to settle at $57.11 a barrel on the New York Mercantile Exchange, after settling below its 50-day moving average of $55.59 on Tuesday, according to FactSet data. The day’s dollar and percentage rise was the biggest since Nov. 1, according to Dow Jones Market Data. The December contract expired at Wednesday’s settlement. WTI oil for January delivery, the new front-month contract, tacked on $1.66, or 3%, to $57.01 a barrel. January Brent crude BRNF20, +1.60% gained 1.49, or 2.5%, to settle at $62.40 a barrel on ICE Futures Europe, following its 2.5% decline on Tuesday. The fourth consecutive weekly rise in crude inventories came “despite a large jump in refining activity,” said Matt Smith, director of commodity research at ClipperData. “It is the seasonal trend that refinery runs clamber out of fall maintenance at this time of year, hence despite the rise in refinery runs, they remain 420,000 [barrels per day] below year-ago levels,” “Lower flows as a result of the Keystone pipeline outage mean ongoing draws to Cushing [Okla.] inventories, but a rebound in imports and another [Strategic Petroleum Reserve] release has encouraged a modest build on the aggregate.” The EIA data also showed a supply rise of 1.8 million barrels for gasoline, but distillate stocks fell by 1 million barrels. The S&P Global Platts survey showed expectations for a supply climb of 750,000 barrels for gasoline, while distillates were forecast to fall by 1.4 million barrels On Nymex, December gasoline rose 3.3% to $1.6563 a gallon and December heating oil added 1.9% to $1.8921 a gallon. December natural gas settled at $2.559 per million British thermal units, up 2%.
Oil dips on worries US-China trade deal could slip to next year - Oil prices retreated on Thursday as a spat over added to worries of a delay in any U.S.-China trade deal, after posting steep gains in the previous session on bullish U.S. crude inventory data. The trade war between the world’s two biggest economies has dominated the outlook for future oil demand, and trade experts have warned the completion of a “phase one” U.S.-China trade deal could slip into next year. Brent crude futures fell 25 cents, or 0.4%, to $62.15 a barrel by 0138 GMT. The international benchmark rose 2.5% on Wednesday. West Texas Intermediate (WTI) crude futures dropped 20 cents, or 0.4%, to $56.81 per barrel. U.S. crude closed up 3.4% in the previous session. “The trade talks are driving prices. I think you can draw a straight line vector between the price of oil and sentiment around trade,” said Stephen Innes, market strategist at AxiTrader. “I view the (U.S.-China) deal as massive. A trade deal would allow held-back business investment decisions to move forward and possibly turn around the faltering momentum in Indian oil import demand, which could soak up a large portion of the supply glut.” Among the latest trade row hurdles, China condemned a U.S. Senate bill aimed at protecting human rights in Hong Kong, while U.S. President Donald Trump said he is inclined to raise tariffs on Chinese imports if a trade deal is not reached. A big draw down of crude stocks at the U.S. delivery hub of Cushing, Oklahoma, however, propelled oil prices higher on Wednesday. Crude stocks at the Cushing fell by 2.3 million barrels, while U.S. crude inventories rose by 1.4 million barrels in the week to Nov. 15, compared with expectations for an increase of 1.5 million barrels, data from the Energy Information Administration showed.
Oil hits two-month high on hopes of longer OPEC cuts, continuing US-China talks - Oil prices rose more than 2% on Thursday following a Reuters report that OPEC and its allies are likely to extend output cuts until mid-2020, while fresh signs emerged that China had invited U.S. trade negotiators for a new round of talks. Brent crude futures gained $1.57, or 2.5%, to settle at $63.97 a barrel, while West Texas Intermediate crude futures surged to a two-month high, gaining 2.8% to settle at $58.58, according to Dow Jones. To support oil prices, the Organization of the Petroleum Exporting Countries and its allies are likely to extend output cuts to June when they meet next month, according to OPEC sources. OPEC meets on Dec. 5 at its headquarters in Vienna, followed by talks with a group of other oil producers, lead by Russia, known as OPEC+. The current supply cuts deal runs through to March 2020. The sources told Reuters that formally announcing deeper cuts looked unlikely for now although a message about better compliance with existing curbs could be sent to the market. Russian President Vladimir Putin said on Wednesday Russia and OPEC had “a common goal” of keeping the oil market balanced and predictable, and Moscow would continue cooperation under a global deal cutting oil supply. Also supportive for the markets, the Chinese commerce ministry said China will strive to reach an initial trade agreement with the United States as both sides keep communication channels open. A Reuters report on Wednesday said completion of a “phase one” U.S.-China trade deal could slide into next year. Amid the long-drawn trade war between the United States and China, U.S. President Donald Trump is expected to sign two bills passed by Congress intended to support protesters in Hong Kong, a move likely to anger China.
Oil falls from two-month high as US-China trade doubts dominate - Oil prices were toppled from their highest in nearly two months on Friday by doubts over future demand for crude as uncertainty continues to shroud a potential U.S.-China trade deal, and along with it the health of the global economy. That was more than enough to offset news of a likely extension of production cuts among major producers that drove prices higher in the previous session on the prospect of tight crude supply. By 0159 GMT, Brent crude futures had slid 30 cents, or 0.5%, to $63.67 a barrel. West Texas Intermediate crude was at $58.24 a barrel, down 34 cents or 0.6%. “The key factor for the demand outlook for oil is the (U.S.-China) trade negotiation currently going on,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking in Sydney. “With oil near the top of recent trading ranges it’s no surprise to see a bit of selling pressure during the session today.” Prices had touched their highest since late September on Thursday after Reuters reported that the Organization of the Petroleum Exporting Countries (OPEC) and Russia are likely to extend existing production cuts by another three months to mid-2020 when they meet on Dec. 5. Oil was also buoyed by comments from China’s commerce ministry on Thursday that it will strive to reach an initial agreement with the United States to end the pair’s long-running trade war, allaying fears that talks might be unraveling. However, the completion of a phase one deal could slide into next year. News that last week saw the biggest draw down in three months for U.S. crude stock stockpiles at Cushing, Oklahoma also underpinned prices earlier this week. Cushing is the delivery point for WTI futures. Elsewhere, traders are also keeping a keen eye on the impact on oil production at OPEC countries Iran and Iraq amid ongoing protests.
Oil retreats from a 2-month high, with U.S. prices ending the week lower - Oil futures fell on Friday, after settling at a two-month high a day earlier, with U.S. prices ending the week with a modest loss. The market saw “a bit of a pullback after the last two days” of gains for oil, said Phil Flynn, senior market analyst at Price Futures Group. Prices “hit resistance” when China’s President Xi Jinping said Friday that “he wanted some respect,” as that resurfaced worries about the lack of a trade deal, he told MarketWatch. Xi said Beijing wants to work with the U.S. for a trade deal, but was not afraid to “fight back” to protect its own interests, according to the Associated Press. Oil prices had found support early Friday on growing expectations the Organization of the Petroleum Exporting Countries and its allies will agree to extend production cuts when they meet next month. West Texas Intermediate crude for January delivery CLF20, +0.28% fell 81 cents, or 1.4%, to settle at$57.77 a barrel on the New York Mercantile Exchange, while January Brent crude BRNF20, +0.17%, the global benchmark, lost 58 cents, or 0.9%, at $63.39 a barrel on ICE Futures Europe. The front-month U.S. benchmark WTI contract ended 0.1% lower for the week, while Brent, the global benchmark, saw weekly gain of roughly 0.1% weekly gain. Both grades ended Thursday at their highest levels since Sept. 23.
Oil Prices Show Tiny Gains After Volatile Week | Rigzone -- West Texas Intermediate (WTI) and Brent crude oil capped off a volatile week Friday with very modest day-on-day gains. January WTI futures lost 81 cents Friday, settling at $57.77 per barrel. The light crude marker traded within a range from $57.50 to $58.74. Compared to the November 15 settlement, the WTI is up by well under one percent. Brent crude for January delivery declined 58 cents to end the day at $63.39 per barrel. It also showed a very slight gain week-on-week and is up just one-tenth of one cent. “It was another roller-coaster ride for crude oil this week as the daily saga of U.S.-China trade relations ebbed and flowed while a bullish inventory report, a continuing decline in drilling activity and a weaker U.S. Dollar helped push prices higher on the week,” commented Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business. Seng pointed out that data on manufacturing activity in Europe and Asia showed a lessening decline – and helped to buoy stocks in those areas. Also, he noted the U.S. Dollar – down for most of the week – rebounded Friday and added some weakness to oil prices. Additionally, citing the latest U.S. Energy Information Administration (EIA) Weekly Petroleum Status Report, he noted:
- Domestic commercial crude inventories rose by 1.4 million barrels, compared to the 1.1 million- and 1.6 million-barrel builds projected by Wall Street Journal and S&P analysts, respectively; meanwhile, the American Petroleum Institute reported a 6 million-barrel increase in oil stocks.
- Total crude oil in storage stands at 450 million barrels, three percent higher than the five-year average for this time of year.
- The volume of oil stored at the Cushing, Okla., hub dropped by 2.3 million barrels to a total of 44.2 million barrels – approximately 58 percent of capacity.
- Refinery utilization increased by 0.7 percent to 87.8 percent, or 16.4 million barrels per day (bpd).
- Oil imports were down 18 percent year-on-year.
Could The Aramco IPO Kill OPEC? - - The global oil market could be entering unchartered waters in the coming weeks. After the US shale revolution, which threatened OPEC’s hold on and the stability of the market, a new danger is lurking around the corner.The Aramco IPO, the largest IPO in history, will not only impact OPEC but will also have repercussions for the Kingdom, Crown Prince Mohammed bin Salman, and the entire GCC region.Most analysts have pointed out that there are some major issues with the company’s financials, its valuation and possible returns for the Kingdom. International banks are presenting their own IPO valuations, indicating a wide range of price targets, leaving a lot of room for speculation. At the same time, Aramco’s IPO prospectus indicates some threats which seem not to have been included in most analyses, such as the impact of flattening oil demand growth, potential legal repercussions if listed on Western stock exchanges and the potential lack of interest from US and European institutional investors.And the financials are just one thing analysts are reviewing. Legal risks, including the 9/11 bill, the attitude of the U.S. congress, and the NOPEC bill could pose a major threat to the future of Aramco. The possibility of investing in an oil company that could be sued for so-called terrorism or violent actions taken by third parties may be new but oil companies have always been targets of legal cases.
Saudi Arabia Cuts Aramco Valuation -- Saudi Arabia set a valuation target for Aramco’s initial public offering well below Crown Prince Mohammed bin Salman’s goal of $2 trillion and pared back the size of the sale to ensure the world’s largest oil producer successfully lists on the Riyadh stock exchange next month. The Saudi central bank also relaxed lending limits to boost demand from local investors after bankers were unable to convince many international money managers of the merits of the deal. Aramco will sell just 1.5% of its shares on the local stock exchange, about half the amount that had been considered, and seek a valuation of between $1.6 trillion and $1.71 trillion. While that would allow Aramco to overtake Apple Inc. as the world’s biggest public company by some distance, the plans are a long way from Prince Mohammed’s initial aims: a local and international listing to raise as much as $100 billion for the kingdom’s sovereign wealth fund. At the lower end of the price range, the offer would fall short of a record, coming in just below the $25 billion raised by Alibaba Group Holding Ltd. in 2014. The lackluster response from investors outside the kingdom meant Aramco decided shares won’t be marketed in the U.S. and Canada as originally planned. Japan is also off the list. But bankers working on the deal said they were confident that there was more than enough local demand to ensure the deal’s success at the proposed valuation.
Saudi Aramco flotation is a failure before it has even begun - By all the main advertised yardsticks of success, the flotation of Saudi Aramcocan be called a failure even before the shares have started trading. Once upon a time, the word’s most profitable company was going to be worth $2tn (£1.5tn), the number coveted by the Saudi Arabian crown prince, Mohammed bin Salman. That’s not happening. The official price range for the initial public offering (IPO) was set at the weekend at $1.6tn to $1.7tn.A secondary goal was to insert Aramco shares into the portfolios of international investors. A few outsiders will still buy, but the Aramco IPO has morphed into a smaller affair in which the main targets are locals and other Gulf investors. Saudi banks have even been issuing loans to local retail investors to buy stock. Meanwhile, Aramco’s management has cancelled marketing roadshows in the US, Asia and Europe. You can see the effect in the dwindling proportion of shares to be sold via the listing. A couple of years ago, it was imagined that 5% of Aramco could be sold in the first offering. Expectations were managed down to 2%-3% in recent weeks. In the event, only 1.5% will be sold.The third original ambition has almost been forgotten: it was to get Aramco listed on a foreign stock exchange as well as the local Tadawul market. But the IPO was redesigned as a Tadawul-only affair a while back and there is no timetable for when, if ever, a secondary listing on a foreign exchange will be pursued.The Saudis could argue that the IPO is at least happening, which is an achievement of sorts. Yes, receipts from selling even 1.5% of the company will still be about $25bn, a useful sum with which to start reforming the Saudi economy. And, yes, Aramco will still be the world’s most valuable company.But most of those milestones could have passed without the need to recruit a small battalion of western investment banks. One can speculate on the reasons for the tepid demand from outside the region. Revulsion at the killing of the journalist Jamal Khashoggi in the Saudi consulate in Istanbul in October last year? Worries about Aramco’s governance? Concern about attacks on refineries? Or a fundamental difference of opinion about valuation given that shares in BP, Shell, Chevron and Exxon offer higher dividend yields? Probably all of the above. The IPO will roll on, and a great triumph will presumably be declared for official purposes. But it’s nothing of the sort. Instead, pitching Aramco to an international audience has been filed under “too difficult for now”.
Aramco Scraps US And London IPO Roadshows Amid Too Many Uncertainties - Saudi Aramco has withdrawn from IPO roadshows in the US and London after it's likely they don't want to disclose oil reserve totals to Western banks and regulators. Meanwhile, it's becoming a giant circle-jerk for the Saudis, the IPO is expected to list on the Tadawul exchange, while the Saudi Arabian Monetary Authority (SAMA) is expected to double the amount it would lend out to domestic "buyers" for IPO purchases, reported Bloomberg. Aramco set a price range Sunday for its IPO between $1.6 to $1.7 trillion, far below the $2 trillion levels the Saudi crown prince had imagined, but priced higher than most what most institutional analysts thought was possible. Besides the US and London, the IPO roadshow was also canceled in Canada and even in major financial hubs across Europe this week. Aramco said Sunday it would sell 1.5% of its shares (3 billion shares) for around $8 per share, valuing the IPO around $25.6 billion. Over $25 billion would be a record-breaking IPO value amount, which would eclipse the amount Alibaba Group Holding Limited raised in its 2014 IPO debuted.
Aramco IPO Raises $20 Billion In Orders -The Saudi Aramco IPO has garnered $19.47 billion (73 billion riyals) in institutional and retail orders so far, Saudi Arabia’s Samba Financial Group reported on Thursday afternoon, according to Reuters.The orders came from 1.8 million retail subscribers who contributed $3.7 billion into the IPO. Reuters had reported earlier that the institutional tranche of the IPO had been oversubscribed, but that preliminary estimates, according to Reuters, show that that it is not.“Retail and Institutional subscription levels for the first five days of the offering have reached an unprecedented scale, demonstrating the confidence of investors in Saudi Aramco,” Rania Nashar, vice chairman of Samba Capital, told Reuters, adding that the bank expected “further increases in subscription levels during the remainder of the offering period.”Samba Financial Group, a Saudi Arabia local lender, is managing investor orders for the IPO along with National Commercial Bank and HSBC Holdings PLC, Bloomberg reported yesterday, after other foreign banks found themselves with smaller roles after Saudi Arabia chose to focus on the local bourse only.Aramco is planning to meet investors in Dubai’s Ritz Carlton on November 24 in hopes of raising $25.6 billion through its share sales. The following day, Aramco will meet investors in Abu Dhabi as well. But its tour will no longer include New York and London, since Aramco decided not to sell its Aramco shares to developed-market investors. Aramco’s top valuation figure is $1.7 trillion—a disappointment for Saudi Arabia who had held out hope for years for a $2 trillion valuation. Aramco plans to sell 1.5% of the company, which would work out to be roughly 3 billion shares. The total value of the IPO is expected to come in somewhere near $25 billion in what will be the world’s largest IPO to date.
Trump Notifies Congress More Troops Headed To Saudi Arabia As Carrier Enters Hormuz - So much for drawing down in the Middle East. President Trump notified Congress on Tuesday that more American troops are en route to Saudi Arabia, which will bring their overall numbers to about 3,000 in the kingdom. "These personnel will remain deployed as long as their presence is required to fulfill the missions described above," the president said in a letter.The official White House notification of Congressional members described the American military presence there as essential in countering Iran's influence in the region. Forces were deployed “to assure our partners, deter further Iranian provocative behavior, and bolster regional defensive capabilities,” the letter addressed to the House of Representatives stated.Last month the Pentagon announced the extra troop deployments as well as military hardware, including Patriot missiles to the kingdom, after the prior September drone attacks on Saudi Aramco facilities.Interestingly, that prior announcement took place just as Trump controversially pushed to withdraw US forces from Syria, something which ended in merely moving troops from the Turkish border and into Syria's oil fields east of the Euphrates. “Iran has continued to threaten the security of the region, including by attacking oil and natural gas facilities in the Kingdom of Saudi Arabia on Sept. 14, 2019,” Trump said in the letter. Today U.S. Navy's USS Abraham Lincoln (CVN 72) - a Nimitz-class aircraft carrier - escorted by air defense and guided missile destroyers- enters the Strait of Hormuz. Abe Lincoln can field up to 90 aircraft pic.twitter.com/ugYqVlRJeV — Nader Uskowi (@nuskowi) November 19, 2019 The president said missiles and radar equipment will “improve defenses against air and missile threats” and includes expeditionary wing to assist Saudi aircraft (which, it should be noted, were also purchased from the US).
Houthis Rebels Hijack Saudi Ship Carrying Oil Rig - The Iranian-aligned Houthis in Yemen have seized a vessel that was towing a South Korean drilling rig that was in the Red Sea, the Saudi-led collation said on Monday, in what is an apparent escalation of tensions in the Middle East following drone attacks and other ship seizures in vital oil shipping lanes. The vessel, the tugboat Rabigh-3, was seized on Sunday, according to the Saudi coalition as reported by Reuters—a development that was confirmed by a Houthi official, who said the vessel would be released if the vessel was confirmed that it was of South Korean origin and not from “countries of aggression”.Saudi Coalition spokesperson Colonel Turki al-Malki characterized the incident as a hijacking “by terrorist elements affiliated to the Houthi militia.”The Rabigh-3 flies under the Saudi Arabian flag. The current destination of the Rabigh-3 is listed as the SALEEF port in Yemen.South Korea is demanding the release of its rig and its crew, and Yemeni Foreign Minister Mohammed Al-Hadrami and South Korean Ambassador Pak Woongchul are meeting to discuss the incident. The Houthi rebel group was eager to claim the incident on September 14 where Saudi Aramco oil infrastructure was attacked, taking offline millions of barrels of oil per day off the market. However, questions were raised immediately about the veracity of those claims, with many analysts and experts pointing the finger directly at Iran instead. Regardless of the perpetrator of the attacks, the incident raised concerns as to the security of Saudi Arabia’s oil industry in the run up to its local IPO.
"Alarming" Leaked Intel Report: Qatar Had Prior Knowledge Of Iran Attack On Vessel - A leaked US intelligence report is making its rounds suggesting that Qatar knew ahead of time that Iran would attack four tankers in the Gulf of Oman in May, yet failed to notify its at-risk allies, Fox News recently reported.The May attacks targeted two Saudi Arabian oil tankers, both near the critical oil chokepoint of the Strait of Hormuz, and both of which sustained “significant” damage according to an official Saudi statement at the time. Iran denied the attacks. The other two vessels were a Norwegian tanker and a UAE bunkering ship. The intelligence report, which has not been made public, has apparently made its way to at least one French Senator who said she was “very concerned” and a British lawmaker who said the contents of the report were “very alarming”. Both were sending the report up their respective chains for a closer look.No one from inside the US intelligence community has officially acknowledged the report or its contents. If Qatar did, in fact, know that Iran would attack the vessels and declined to warn its allies, there may be geopolitical repercussions for the tiny Middle Eastern country that finds itself sandwiched precariously between Saudi Arabia and the UAE — both of which have participated in a long-running blockade of Qatar. Qatar has, in recent years, purchased a significant number of arms from France, and the United States’ Central Command station in Qatar and its 10,000-strong military presence in Qatar’s Al Udeid Air Base is a nice security feature that Qatar boasts — for now.But things can turn on a dime. US President Trump has already flopped on Qatar, first calling it a “funder of terrorism at a very high level” and later saying that the ruling emir was “a friend of mine”. Qatar has denied any prior knowledge of the attacks.
Series Of Blasts Target Mass Protest Gathering In Baghdad, Multiple Dead & Wounded A series of explosions ripped through central Baghdad on Friday night, and appeared to target protests which have raged since early October, killing at least three people. Some unconfirmed reports have cited four dead and a dozen wounded in a developing situation where the casualty toll is expected to climb. The final in a string of blasts was identified according to early reports and video as a car bomb in Tahrir Square, which did the worst damage, killing and wounding multiple protesters. Second explosion in Baghdad. Minutes earlier at least 4 killed and 11 heavily wounded by a car bomb #Iraqpic.twitter.com/dQNNHeSeux "A large number of people injured by the booby-trapped car bomb were taken by the drivers of the Tek-Tik wheels to hospitals near Tahrir," a source told Arabic media. Another blast was reported in nearby Tayaran Square as well, which may have also resulted in casualties. Though anti-corruption and anti-government demonstrations have witnessed violent clashes with police, resulting at this point in over 300 dead and an estimated 15,000 wounded, the bombing escalates things to a new level of violence. Some among the string of blasts as well as the aftermath caught on video: الصور الأولى للانفجار الذي هز وسط #بغداد بالقرب من #ساحة_التحرير وأدى إلى سقوط عدد من القتلى والجرحى#شاهد_سكاي pic.twitter.com/NjqcrRRDHA In the moments before the explosions Tahrir Square appeared packed with tens of thousands of demonstrators. Both protest leaders and international media have blamed security forces for the ratcheting violence due to occasions where they've used live fire to disperse crowds.
Over 100 Protesters Killed In Iran Amid Largest Internet Shutdown In Nation's History - Now five days into widespread protests in some one hundred Iranian cities after a dramatic gas price hike last Friday, Amnesty International reports that at least 106 have been killed. However, “The organisation believes that the real death toll may be much higher, with some reports suggesting as many as 200 have been killed,” Amnesty said in a statement.This as the government has cut off internet access across much of the country, resulting in few videos of clashes with police reaching the West, as in the early couple of days of the unrest. A statement from the global outage monitor Oracle's Internet Intelligence called it the largest blockage ever observed in Iran:Protesters took to the streets shortly after the government announced an increase in fuel prices by as much as 300%. Social media images showed banks, petrol stations and government buildings set ablaze by rioters. Some protesters chanted "down with Khamenei," according to videos, referring to the country's Supreme Leader Ayatollah Ali Khamenei.The internet blackout started on Saturday evening and continued through Monday, according to internet watchdogs. Oracle's Internet Intelligence called it the "largest internet shutdown ever observed in Iran."The United Nations is now urging Iran to lift the internet blockage and to show restraint after what the international body called the “clearly very serious” extent of casualties.The UN high commissioner also acknowledged it is looking into reports of live ammunition being used on demonstrators, which activists say there's ample video evidence for. The government-imposed internet block began on Saturday, leaving some 80 million citizens without online access. “We are especially alarmed that the use of live ammunition has allegedly caused a significant number of deaths across the country,” UN spokesman Rupert Colville said. With the information blackout he described it as “extremely difficult” to get an accurate overall death toll.
Iraqi protesters cut roads, retake third strategic bridge - Anti-government protesters in Iraq seized control of a third strategic Baghdad bridge on Sunday, while others blocked roads with burning tyres in parts of central and southern Iraq, halting traffic and paralysing work following a call for a national strike.Protesters retook control of half of Ahrar Bridge, which leads to the other side of the Tigris River near the heavily fortified Green Zone, the seat of Iraq’s government. Security forces deployed on the other side of the bridge and erected concrete barriers to keep protesters from pushing into the area.At least 320 people have been killed and thousands wounded since the unrest in the capital and the mostly Shia southern provinces began on Oct 1. Protesters have taken to the streets in the tens of thousands over what they say is widespread corruption, lack of job opportunities and poor basic services despite the country’s oil wealth.Bridges leading toward the Green Zone have been a frequent flashpoint in the protests. Demonstrators had taken control of these bridges earlier this month but were later repelled when security forces took harsh suppressive measures. Ahrar Bridge was the third retaken by the protesters, after seizing part of Sinak Bridge and central Khilani Square the previous day following fierce clashes. They were also present in Jumhouriyya Bridge adjacent to Tahrir Square, the epicentre of the protest movement.Iraqi security forces withdrew from Khilani Square after firing live ammunition and tear gas against protesters trying to tear down a concrete barrier blocking entry to the square. Protesters also took control of a five-story parking garage adjacent to the bridge, giving them a bird’s eye view over the Green Zone and the street below, mirroring tactics employed in Tahrir Square, where they occupied an iconic 14-story Saddam Hussein-era building that has become a reference point for demonstrators. In the southern port city of Basra and in cities like Nasiriyah, Amara and Kut, protesters set tires ablaze to close off roads, keeping employees from reaching their work places. Schools, universities and other institutions closed for the day.In parts of Baghdad, particularly the sprawling Sadr City neighbourhood, protesters sat in the middle of the streets to prevent employees from getting to their workplaces. They also blocked roads with motorcycles and tuk-tuks, snarling traffic. There will be no offices open until the last corrupt person is removed, one protester said, declining to be identified for security reasons. Only then we will pull out from here.
A Spy Complex Revealed - The Intercept - IN MID-OCTOBER, with unrest swirling in Baghdad, a familiar visitor slipped quietly into the Iraqi capital. The city had been under siege for weeks, as protesters marched in the streets, demanding an end to corruption and calling for the ouster of the prime minister, Adil Abdul-Mahdi. The visitor was there to restore order, but his presence highlighted the protesters’ biggest grievance: He was Maj. Gen. Qassim Suleimani, head of Iran’s powerful Quds Force, and he had come to persuade an ally in the Iraqi Parliament to help the prime minister hold on to his job. Now leaked Iranian documents offer a detailed portrait of just how aggressively Tehran has worked to embed itself into Iraqi affairs, and of the unique role of Suleimani. The documents are contained in an archive of secret Iranian intelligence cables obtained by The Intercept and shared with the New York Times for this article, which is being published simultaneously by both news organizations. The unprecedented leak exposes Tehran’s vast influence in Iraq, detailing years of painstaking work by Iranian spies to co-opt the country’s leaders, pay Iraqi agents working for the Americans to switch sides, and infiltrate every aspect of Iraq’s political, economic, and religious life. Many of the cables describe real-life espionage capers that feel torn from the pages of a spy thriller. Meetings are arranged in dark alleyways and shopping malls or under the cover of a hunting excursion or a birthday party. Informants lurk at the Baghdad airport, snapping pictures of American soldiers and keeping tabs on coalition military flights. Agents drive meandering routes to meetings to evade surveillance. Sources are plied with gifts of pistachios, cologne, and saffron. Iraqi officials, if necessary, are offered bribes. The archive even contains expense reports from intelligence ministry officers in Iraq, including one totaling 87.5 euros spent on gifts for a Kurdish commander. According to one of the leaked Iranian intelligence cables, Abdul-Mahdi, who in exile worked closely with Iran while Saddam Hussein was in power in Iraq, had a “special relationship with the IRI” — the Islamic Republic of Iran — when he was Iraq’s oil minister in 2014. The exact nature of that relationship is not detailed in the cable, and, as one former senior U.S. official cautioned, a “special relationship could mean a lot of things — it doesn’t mean he is an agent of the Iranian government.” But no Iraqi politician can become prime minister without Iran’s blessing, and Abdul-Mahdi, when he secured the premiership in 2018, was seen as a compromise candidate acceptable to both Iran and the United States. The leaked cables offer an extraordinary glimpse inside the secretive Iranian regime. They also detail the extent to which Iraq has fallen under Iranian influence since the American invasion in 2003, which transformed Iraq into a gateway for Iranian power, connecting the Islamic Republic’s geography of dominance from the shores of the Persian Gulf to the Mediterranean Sea.
Hassan Rouhani warns protest-hit Iran cannot allow ‘insecurity’- President Hassan Rouhani warned on Sunday that "anarchy and rioting" would not be tolerated after fuel price rises led to deadly mass protests throughout Iran. An estimated 87,000 people took part in the demonstrations, the semi-official Fars news agency reported, and at least two people were killed. Dozens of banks and shops were set on fire or damaged in the violence and about 1,000 arrests were made. "People have the right to protest, but that is different from riots," Rouhani was quoted as saying. "We cannot let insecurity in the country through riots." Iran's elite Revolutionary Guards echoed Rouhani's statement on Monday, warning of "decisive" action if unrest does not cease, according to state television. "If necessary we will take decisive and revolutionary action against any continued moves to disturb the people's peace and security," the statement carried by state media said. It is unclear how many people have been killed or wounded as videos from the protests have shown people gravely wounded. Access to the internet was also severely curtailed by the authorities. Iran's intelligence ministry said in a statement the protest leaders had been identified and "appropriate action" was being taken. The United States on Sunday condemned the use of "lethal force" and "severe communications restrictions" against demonstrators in Iran.
Iran petrol price hike: Protesters warned that security forces may intervene - Iran's Interior Minister has warned security officials will step up action against protesters taking to the streets over a new petrol policy. Protests have erupted across Iran after the government unexpectedly announced it was rationing petrol and increasing its price. At least one person has been killed and others injured in the violence. Officials say the changes, which have seen prices rise by at least 50%, will free up money to help the poor. Iran is already suffering economically due to stiff sanctions imposed by the US after Washington decided to pull out of the 2015 Iran nuclear deal. Protests erupted hours after the new policies were announced on Friday - with fresh demonstrations on Saturday in some cities. There are also reports that access to the internet may have been restricted, Reuters reported citing a web monitoring group. Interior Minister Abdolreza Rahmani-Fazli, speaking during an interview with state television on Saturday, warned that law enforcement and security officials will have "no choice" but to step in and restore calm if "illegal" actions continue. Mr Rahmani-Fazli criticised a "limited number" of people whom he accused of abusing the public mood to create "intimidation and terror".
Mired in a Trump-Fuelled Recession, 20 Iranian Cities erupt with Gasoline Price Protests -- – Deutsche Welle reports that the tripling of the price of gasoline by the Iranian government very early Friday morning provoked protests throughout Iran, in at least 20 cities. In Sirjan, a protester was killed. The government drastically slowed down or even cut off the internet. The biggest rallies were in Ahvaz, Sirjan and Kerman. Smaller protests broke out in Shiraz, Bandar Abbas, Isfahan, Khorramshahr, Birjand, Shoshtar, Behbahan and even in the clerical shrine city of Qom, a center of power for Iran’s ruling ayatollahs.The background of these protests is that ordinarily in Middle Eastern oil states gasoline is heavily subsidized for consumers. This policy is a sort of bribe proffered to the people by authoritarian regimes in return for which the public is expected to suffer along with dictatorship.In fact, there is a weird belief among publics in the Middle East that somehow they all partially own the petroleum, so even governments such as Morocco or Egypt that have little or no petroleum feel a need to subsidize gasoline.So, tripling gasoline prices in one day is a very serious violation of the regional moral economy.On top of all that, Iran’s economy is expected to contract by 9% this year and inflation in general is already running at 35%.The Trump administration’s economic blockade of the Iranian economy has cut the country’s petroleum exports from 2.5 million barrels a day to less than a million (most of it now goes to China at a steep discount). It is the shortfall in government oil revenues that caused it to reduce fuel subsidies. The alternative would be to print extra money without any increase in productivity, which would cause even greater inflation. Inflation especially hurts the poor, students and others on fixed incomes, and affects goods imported from abroad above all. This Twitter post purports to show video of Iranian security personnel fleeing protesters in the southwestern city of Shiraz, a provincial capital. Informed Comment cannot verify its accuracy:
Iran loosens internet restrictions after protest shutdown - Iran began restoring internet access in the capital and a number of provinces after a five-day nationwide shutdown meant to help stifle deadly protests over fuel-price hikes. The country's elite Revolutionary Guard security force said calm had now returned across Iran on Thursday, state TV reported. "The internet is being gradually restored in the country," the semi-official news agency Fars reported, quoting unidentified "informed sources". The National Security Council that ordered the shutdown approved reactivating the internet in "some areas", it said. According to news reports, fixed-line internet was restored in Hormozgan, Kermanshah, Arak, Mashhad, Qom, Tabriz, Hamadan and Bushehr provinces, as well as parts of Tehran. "We again have internet as of an hour ago," a retired engineer, who declined to be named, said by telephone from the capital. Iran was rocked by nationwide protests sparked by growing anger and frustration after authorities rolled out a petrol-rationing scheme and slashed subsidies in a move that sent prices soaring by 50 percent. A top cyberspace security official in Iran told journalists on Thursday he believed the country's internet would be fully turned on "within the next two days".
Iran’s ‘only crime is we decided not to fold’ – Pepe Escobar - Just in time to shine a light on what’s behind the latest sanctions from Washington, Iranian Foreign Minister Mohammad Javad Zarif in a speech at the annual Astana Clubmeeting in Nur-Sultan, Kazakhstan delivered a searing account of Iran-US relations to a select audience of high-ranking diplomats, former Presidents and analysts.Zarif was the main speaker in a panel titled “The New Concept of Nuclear Disarmament.” Keeping to a frantic schedule, he rushed in and out of the round table to squeeze in a private conversation with Kazakh First President Nursultan Nazarbayev.During the panel, moderator Jonathan Granoff, President of the Global Security Institute, managed to keep a Pentagon analyst’s questioning of Zafir from turning into a shouting match.Previously, I had extensively discussed with Syed Rasoul Mousavi, minister for West Asia at the Iran Foreign Ministry, myriad details on Iran’s stance everywhere from the Persian Gulf to Afghanistan. I was at the James Bond-ish round table of the Astana Club, as I moderated two other panels, one on multipolar Eurasia and the post-INF environment and another on Central Asia (the subject of further columns).Zarif’s intervention was extremely forceful. He stressed how Iran “complied with every agreement and it got nothing;” how “our people believe we have not gained from being part of” the Joint Comprehensive Plan of Action; how inflation is out of control; how the value of the rial dropped 70% “because of ‘coercive measures’ – not sanctions because they are illegal.” He spoke without notes, exhibiting absolute mastery of the inextricable swamp that is US-Iran relations. It turned out, in the end, to be a bombshell. Here are highlights.
ISIS Secrets Spilled in Rare On-Camera Interviews: “We Just Walked Into Syria”— Over the years of the war in Syria, an overwhelming amount of evidence has amassed documenting that the so-called ‘Islamic State’ caliphate was established after tens of thousands of ISIS and other foreign fighters were allowed to pour across Turkey’s southern border into Syria. That NATO’s second largest military with the help of its allies such as the US, Britain, France, and Gulf countries like Saudi Arabia and Qatar facilitated what the State Department in 2014 described as the largest mass movement of jihadist terrorists in modern history should be a scandal of monumental importance, yet the mainstream media predictably ignored it and “moved on.”And now more bombshell proof of state sponsorship behind the prior rapid rise of ISIS: below are details exposed during unprecedented on-camera interviews of imprisoned ISIS members in Syria spilling all. They confess openly that Turkish military and intelligence simply let them “just walk into Syria.” Award-winning journalist Lindsey Snell, who’s been widely published in outlets ranging from MSNBC to ABC to Foreign Policy and others, gained unprecedented access to ISIS prisoners at a facility administered by the Kurdish-led SDF in Hasakah province in northeast Syria: Abdullah granted us access to a prison in Hasakah that holds around 5,000 ISIS members from 28 different countries. We were able to spend five hours there, touring the various sections and interviewing ISIS militants. Abdullah’s first request to us was that we refrain from telling the prisoners that Abu Bakr al-Baghdadi, ISIS’ leader, had recently been killed in Idlib. “They don’t know. And no good will come from them knowing,” he said. Those interviewed confessed that their arrival in Syria years prior without doubt had the cooperation of Turkish authorities. Watch the interviews and video report here:
The Hugely Important OPCW Scandal Keeps Unfolding. Here's Why No One's Talking About It - Caitlin Johnstone - The Organisation for the Prohibition of Chemical Weapons is now hemorrhaging evidence that the US and its allies deceived the world once again about yet another military intervention, which should be a front-page story all over the world. Yet if you looked at American news media headlines you’d think the only thing that matters right now is indulging the childish fantasy that Donald Trump might somehow magically be removed from office via supermajority consensus in a majority-Republican Senate. CounterPunch has published an actual bombshell of a report by journalist Jonathan Steele containing many revelations about the OPCW scandal which were previously unknown to the public. Steele is an award-winning reporter who worked as a senior foreign correspondent for The Guardian back before that outlet was purged of all critical thinkers on western imperialism; he first waded into the OPCW controversy last month with a statement made on the BBC revealing the existence of a second whistleblower on the organisation’s investigation into an alleged chemical weapons attack in Douma, Syria.If you haven’t been following this story you can click here for a timeline of events to fully appreciate the significance of these new revelations about the Douma incident, but just to quickly recap, in April of last year reports surfaced that dozens of civilians had been killed in that city by chemical weapons used by the Syrian government under President Bashar al-Assad. This immediately drew skepticism from people who’ve been paying attention to the narrative manipulation campaign against Syria, since Assad had already won the battle for Douma and had no strategic reason to employ banned weapons there knowing that there would be a military strike in retaliation from western powers. True to form, a few days later the US, France and the UK launched airstrikes on the Syrian government.The OPCW released its final report on Douma in March of this year, but that report has been contradicted by two separate whistleblowers from the Douma investigation. The first surfaced in May of this year with a leaked Engineering Assessment claiming the chlorine cylinders found at the crime scene were unlikely to have been dropped from the air, and that it was far more likely that they were manually placed there, i.e. staged, by the occupying opposition forces in Douma. The second whistleblower came forward last month with a day-long presentation in Brussels before a panel of experts assembled by the whistleblowing defense group Courage Foundation, the findings of which were published by WikiLeaks.
Wide-Scale Israeli Strike On Damascus Kills 23 After Alleged Iranian Rocket Attack - During the night Tuesday Israel conducted a “wide-scale” strike on Syria, focused in and around Damascus, resulting in a soaring casualty count according to the AP."A Britain-based war monitoring group said the Israeli airstrikes killed 11 people, including seven non-Syrians who are most likely Iranians," the AP initially reported, though Syrian state media cited two civilians killed among multiple wounded. That number was revised Wednesday morning to at least 23 people, most said to be "non-Syrians" — likely Iranians, according to reports.The Israeli military said it had hit multiple targets belonging to Iran’s elite Quds force, specifically missile and weapons warehouses, after the Israeli Defense Forces (IDF) said rockets were "fired at Israel by an Iranian force in Syria".International reports have described the attacks as the most intense since a similar operation last January. Over the past months what were previously somewhat frequent Israeli raids inside Syria had grown quiet. The Israeli military said its fighter jets hit multiple targets belonging to Iran’s elite Quds force, including surface-to-air missiles, weapons warehouses and military bases. After the Syrian military fired an air defense missile, the Israeli military said a number of Syrian aerial defense batteries were also destroyed. Damascus residents are outraged after a direct hit on a civilian home Wednesday night, which included children among the wounded, as the AP reports:Syria’s state SANA news agency said the two civilians were killed by shrapnel when an Israeli missile hit a house in the town of Saasaa, southwest of Damascus. It said several others were wounded, including a girl in a residential building in the suburb of Qudsaya, also west of the Syrian capital.Syrian air defenses were active during the assault, with the Syrian Army saying it downed multiple inbound Israeli rockets. Official media said Syrian anti-aircraft missiles were able to successfully "intercept and destroy most of the hostile missiles before reaching their targets."
Israeli airstrikes on Syria threaten wider Mideast war - The Israeli Air Force carried out a major assault on Syria in the early morning hours Wednesday, striking more than 20 targets on the outskirts of Damascus and leaving at least 23 people dead. Those killed in the air raids reportedly included Syrian government soldiers, allied militiamen and members of the Iranian Quds Force advisory mission sent to assist the government of President Bashar al-Assad in its eight-year-long war against Western-backed Islamist militias. At least two civilians were killed in the attacks—a tailor, Hayoub Safad, and his wife—when an Israeli missile destroyed their home. Several other civilians were wounded by shrapnel, including a young girl, whose home in the suburb of Qudsaya, west of the Syrian capital, was hit, the Syrian state government news agency SANA reported. The Israeli government cast the onslaught as retaliation for the firing of four missiles from Syria into the Israeli-occupied Syrian territory of the Golan Heights on Tuesday. Those missiles, however, had themselves been launched in response to an Israeli attack the day before on a convoy of vehicles belonging to a Shia militia aligned with Iran in eastern Syria. The Israeli aggression in Syria came amid signs of an escalation of the US campaign against Iran, which Washington has targeted as a principal obstacle to its drive to assert unhindered US imperialist hegemony over the oil-rich Middle East. An aircraft carrier strike group led by the USS Abraham Lincoln sailed through the strategically vital Strait of Hormuz into the Persian Gulf on Tuesday. The 21-mile-wide waterway is almost entirely in Iran’s territorial waters and is a choke point for the transit of one-fifth of the world’s oil trade and one-third of its liquefied natural gas. A series of recent incidents in close proximity to the Strait, including attacks on tankers as well as the downing of a US drone in June and the ordering of US retaliatory air strikes called off by US President Donald Trump at the last minute, have sharpened tensions in the area. This was followed by devastating strikes on key Saudi Arabian oil facilities in September, for which Yemen’s Houthi rebels claimed responsibility, while Washington blamed them on Tehran. Trump Tuesday addressed a letter to the US House and Senate informing them—in what passes for compliance with the War Powers Act—that another 3,000 US troops are being sent into Saudi Arabia. The latest US military deployment in the Middle East is part of a continuous escalation by Washington since last May, when it dispatched an aircraft carrier battle group, an air strike group led by nuclear-capable B-52 bombers and additional US troops to the region, supposedly in response to threats from Iran.
US says Israeli settlements are no longer illegal - The US has shifted its position on Israeli settlements in the occupied West Bank, no longer viewing them as inconsistent with international law. US Secretary of State Mike Pompeo said the status of the West Bank was for Israelis and Palestinians to negotiate. Israel welcomed the move - a reversal of the US stance under President Donald Trump's predecessor, Barack Obama. Settlements are communities established by Israel on land occupied in the 1967 Middle East war. They have long been a source of dispute between Israel and the international community, and the Palestinians. "After carefully studying all sides of the legal debate," Mr Pompeo told reporters, "the United States has concluded that "the establishment of Israeli civilian settlements in the West Bank is not, per se, inconsistent with international law". "Calling the establishment of civilian settlements inconsistent with international law hasn't worked. It hasn't advanced the cause of peace," he added. Can the Jewish settlement issue be resolved? Chief Palestinian negotiator Saeb Erekat said the US decision was a risk to "global stability, security, and peace" and said it threatened to replace international law with "the law of the jungle".
Russia Slams US Backing For Israeli Settlements As New Dangerous Escalation - Reuters reports that Russia’s Ministry of Foreign Affairs on Tuesday condemned the US move to reverse decades-long official policy which viewed Israeli settlements in the occupied West Bank as illegal. “The Trump administration is reversing the Obama administration’s approach towards Israeli settlements. U.S. public statements on settlement activities in the West Bank have been inconsistent over decades,” Secretary of State Mike Pompeo announced Monday, effectively overturning the State Department's 41-year-old legal opinion that Israel's West Bank settlements are illegal. Russia condemned the drastic policy reversal as a severe blow to the peace process, saying "We consider this Washington’s decision as another step aimed at ruining an international legal basis of the Middle East settlement that will exacerbate tensions in Palestinian-Israeli relations," according to the foreign ministry statement. "We are urging all concerned parties to refrain from any steps that could provoke a new dangerous escalation in the region and impede the creation of conditions for resuming direct Palestinian-Israeli talks," the statement emphasized. Russia underscored it still sees as valid and binding the United Nations Security Council Resolution 2334 which states that "the establishment by Israel of settlements in the Palestinian territory occupied since 1967, including East Jerusalem, has no legal validity and constitutes a flagrant violation under international law and a major obstacle to the achievement of the two-State [Palestine-Israel] solution and a just, lasting and comprehensive peace."
Trump is systematically ending the viability of a future Palestinian state - Secretary of State Mike Pompeo’s announcement on Monday – that the US will no longer consider Israeli settlements in the occupied Palestinian territories a violation of international law – is, in many ways, a near-perfect encapsulation of the Trump administration’s approach to Israel-Palestine. Couched in grotesque doublespeak, it claims to advance “the cause of peace” while signaling US approval of Israel’s brutal, perpetual military rule over the roughly 3 million Palestinians living in the West Bank. It is part and parcel of the Trump administration’s ongoing, concerted efforts to undermine international legal frameworks for addressing human rights violations (and not just in Israel-Palestine). And it is yet more proof, not that more was needed, that the Trump administration is actively pursuing a post-two-state-solution agenda.Indeed, for an administration marked by erratic decision-making and sudden reversals, Trump’s has been thoroughly systematic when it comes to ending the viability of a future Palestinian state. This, of course, is no surprise. In a clear harbinger of what was to come,rightwing pro-Israel operatives close to Donald Trump – among them David Friedman, now US ambassador to Israel, and Jason Greenblatt, former special envoy to the Middle East – successfully removed support for a two-state solution from the 2016 Republican party’s platform. Since its inauguration, the Trump administration has taken draconian measures against key Palestinian institutions, from shuttering the PLO office in Washington to slashing funding to UNRWA, the UN body that distributes vital aid to over 5 million Palestinian refugees across the Arab world. In 2018, the Trump administration moved the US embassy in Israel from Tel Aviv to Jerusalem. (East Jerusalem, which Israel unilaterally annexed in 1967 and which the international community considers unlawfully occupied, was once intended as the capital of a future Palestinian state.) Last March, President Trump formally recognized Israeli sovereignty over the Golan Heights – occupied by Israel in 1967 and, in violation of international law, unilaterally annexed in 1981.
Israel's Prime Minister Benjamin Netanyahu indicted on charges of bribery, fraud, breach of trust - The Washington Post — Prime Minister Benjamin Netanyahu was formally charged with bribery, fraud and breach of trust on Thursday, making him the first Israeli premier to be indicted while in office and sending Israel’s already stalemated political system into further disarray.Israeli Attorney General Avichai Mandelblit capped almost three years of investigation and months of speculation by handing down a 63-page indictment against the country’s longest-serving prime minister and its center of political gravity for the last decade.The cases against Netanyahu center on allegations that the prime minister and his wife, Sara, accepted more than $260,000 worth of luxury goods in exchange for political favors and that Netanyahu interceded with regulators and lawmakers on behalf of two media companies in exchange for positive news stories.ADNetanyahu, 70, has steadfastly denied wrongdoing during a wide-ranging probe that he has dismissed as a politically motivated “witch hunt.”In October, the prime minister’s legal team spent four marathon days in front of prosecutors arguing that the charges should be reduced or dismissed, an effort that apparently had little effect.“I made this decision with a heavy heart but with a whole heart and a sense of commitment to the rule of law,” Mandelblit said at a news conference aired live on Israeli television. “Law enforcement is not a discretionary matter. It is an obligation that is imposed on us. It is my duty to the citizens of Israel to ensure that they live in a country where no one is above the law and that suspicions of corruption are thoroughly investigated.”Few here expect the pugnacious prime minister to do anything other than ferociously fight the counts that emerged. Many predict he will seek a vote in parliament granting him some measure of immunity. In a combative address Thursday night, Netanyahu called the indictment “a coup attempt” driven by a corrupt set of prosecutors. He demanded that an independent body to review the prosecution. Of immediate concern is how the indictments will scramble his standing in Israel’s chaotic political standoff.“We are in a historical and unprecedented situation with new legal questions almost every day,” said Suzie Navot, a professor of constitutional law at the Haim Striks Law School in Rishon LeZion.
Israeli PM Netanyahu defiant after being charged with corruption - A defiant Benjamin Netanyahu rejected all allegations of graft on Thursday, vowing to stay on as the leader in Israel despite being indicted on a series of corruption charges. Netanyahu denounced what he called the "false" and "politically motivated" allegations, hours after being charged by the attorney general with bribery, fraud and breach of trust. He denied all wrongdoing. "What is going on here is an attempt to stage a coup against the prime minister," Netanyahu said. "The object of the investigations was to oust the right-wing from government." Attorney General Avichai Mandelblit announced the indictment earlier on Thursday, calling it a "heavy-hearted decision" based only on solid legal evidence. But Netanyahu said the investigators "weren't after the truth, they were after me". In a 15-minute speech, Netanyahu railed against his political rivals and state institutions, accusing the police and judiciary of bias. The veteran politician argued it was time for an "investigation of the investigators". He vowed to continue on as prime minister despite potential court dates and intense political pressure. "I will continue to lead this country, according to the letter of the law," he said. "I will not allow lies to win." Political chaos The charges raise more uncertainty over who will ultimately lead a country mired in political chaos after two inconclusive elections this year. Israeli law does not require Netanyahu to step down from the post of prime minister if indicted. The entire process of an indictment and trial could take two years. As prime minister, he would only be forced to resign from the post if he is eventually convicted, where he could face up to 10 years in prison and/or a fine for bribery charges alone, while fraud and breach of trust carry a prison sentence of up to three years. Hugh Lovatt, Israel-Palestine analyst at the European Council on Foreign Relations, said the indictment may still not be "the end of the story". "Israel will now have to brace for a political roller-coaster ride over the coming months. Now more than ever Netanyahu will be fighting for his political and personal life," The allegations against Netanyahu range from receiving gifts worth thousands of dollars to a deal to change regulatory frameworks in favour of a media group in exchange for favourable press coverage. Case 1,000 alleges Netanyahu and his wife wrongfully received gifts from Arnon Milchan, a Hollywood producer and Israeli citizen, as well as from Australian billionaire James Packer, in return for political favours.
Leaked Chinese Government Documents Prove Muslims Are Being Detained In Massive Numbers - There's now substantial evidence - in the Chinese government's own words - that they are detaining Muslims in massive numbers. 403 pages of internal documents have been leaked to the New York Times that describe a clampdown in Xinjiang - a resource-rich territory located on the border of Pakistan, Afghanistan and Central Asia - where authorities have "corralled as many as a million ethnic Uighurs, Kazakhs and others into internment camps and prisons over the past three years." In Xinjiang, Muslim ethnic minority groups make up more than half the region's population of 25 million. The largest group is the Uighurs. Beijing has fought with the Uighurs for decades, who have offered resistance to Chinese rule. The current crackdown began after a surge of antigovernment and anti-Chinese violence, including ethnic riots in 2009 in Urumqi, the regional capital, and a May 2014 attack on an outdoor market that killed 39 people just days before Mr. Xi convened a leadership conference in Beijing to set a new policy course for Xinjiang. The Chinese government has called these camps "job training centers" to fight Islamic extremism, but the documents seem to confirm the coercive nature of the crackdown in the words of the Chinese government. The campaign is being called "ruthless and extraordinary". Senior party leaders are recorded ordering "drastic and urgent" action, including mass detentions. The leaked papers show how the country carried out its "most far-reaching internment campaign since the Mao era."
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