oil prices ended higher for a 5th week in a row and for the eighth week out of the past nine, as US oil supplies fell much more than was expected while the US assassination of Iran's top general and the commander of the Iraqi Popular Mobilization Forces sparked fears of a major conflict in the Persian Gulf and subsequent supply disruptions ...after rising 2.1% to $61.72 a barrel last week on reports of falling US crude supplies, the benchmark price of US light sweet crude for February delivery opened higher on Monday and rose to a three-month high at $62.34, buoyed by optimism over U.S.-China trade deal, but backed off those highs later in quiet trading in the day to finish 4 cents lower $61.68 a barrel, thus snapping a four-day winning streak...oil prices again drifted lower throughout the session on the final day of 2019 and lost another 62 cents, finishing at $61.06 per barrel, but still managed a gain of 34% on the year, its largest annual advance since 2016...oil prices started the new year higher on Thursday, as warming US-China trade relations eased demand concerns and rising tensions in the Middle East fueled worries about supply, but then faded to move between gains and losses later in the session under pressure from a stronger dollar and ended the day up just 12 cents at $61.18 a barrel...but oil prices surged much higher on Friday after reports that a US drone strike had killed Iran's top military commander in a strike at the Baghdad airport, with the international benchmark Brent jumping $3 and US crude finishing $1.87 higher at $63.05 a barrel, as the EIA also reported the largest drop in US crude supplies in 6 months...oil prices thus ended 2.2% higher on the week, and finished at their highest in more than 7 months...
meanwhile, natural gas prices again finished lower, driven by milder weather and an abundance of supply...after trading of the contract for January natural gas expired at an all time low of $2.158 per mmBTU on record high temperatures across much of the US last week, the price of natural gas for February delivery fell 4.5 cents to it's own record closing low of $2.186 per mmBTU on Monday, as signs of sustained cold weather remained absent from the long-range forecasts...while natural gas prices managed to eke out a three-tenths of a cent gain to $2.189 per mmBTU on Tuesday, they still finished the year 26% lower, their largest annual percentage decline since 2014...the natural gas price slide resumed with the new year on Thursday, as both short and longer term forecasts indicated a lot of warmth for the heavily populated eastern half of the country, with the price of February gas falling 6.7 cents to another record low at $2.122 per mmBTU, as 'exceptionally bearish' weather kept pressure on prices...while prices moved more than 4 cents higher awaiting the storage report early on Friday, they slipped back to close with a gain of just eight-tenths of a cent at $2.130 per mmBTU, down 4.5% on the week, as the draw from natural gas inventories was below expectations..
the natural gas storage report for the week ending December 27th from the EIA indicated that the quantity of natural gas held in storage in the US decreased by 58 billion cubic feet to 3,192 billion cubic feet by the end of the week, which still left our gas supplies 484 billion cubic feet, or 17.9% higher than the 2,708 billion cubic feet that were in storage on December 27th of last year, but 38 billion cubic feet, or 1.2% below the five-year average of 3,230 billion cubic feet of natural gas that has been in storage as of the 27th of December in recent years....the 58 billion cubic feet that were withdrawn from US natural gas storage this week was somewhat below the average forecast for a 67 billion cubic feet withdrawal by analysts surveyed by S&P Global Platts, and was quite a bit less than the average 94 billion cubic feet of natural gas that have been pulled from natural gas storage during the fourth week of December over the past 5 years. but still way more than the 24 billion cubic feet withdrawal reported during the corresponding warm week in 2018...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending December 27th indicated that because of a sizable decrease in our oil imports, a record amount of oil exports, and an increase in demand for oil from refineries, we needed to pull oil out of our stored commercial supplies for the sixth time in the past sixteen weeks...our imports of crude oil fell by an average of 457,000 barrels per day to an average of 6,352,000 barrels per day, after rising by an average of 230,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 1,065,000 barrels per day to a record of 4,462,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 1,890,000 barrels of per day during the week ending December 27th, 1,522,000 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 unchanged at 12,900,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,790,000 barrels per day during this reporting week..
meanwhile, US oil refineries were reportedly processing 17,283,000 barrels of crude per day during the week ending December 27th, 303,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that an average of 1,638,000 barrels of oil per day were being pulled out of the supplies of oil stored in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports, from oilfield production, and from storage was 856,000 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 (+856,000) 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", thus suggesting an error or errors of that magnitude in the oil supply & demand figures we just transcribed...however, since the media treats these figures as gospel and since they drive oil pricing and hence decisions to drill for oil, we'll continue to report them, as they're seen & believed as accurate 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 6,657,000 barrels per day last week, still 10.8% less than the 7,446,000 barrel per day average that we were importing over the same four-week period last year....the 1,638,000 barrel per day net withdrawal from our total crude inventories was all from our commercially available stocks of crude oil, while the quantity of oil stored in our Strategic Petroleum Reserve was unchanged....this week's crude oil production was reported to be was unchanged at 12,900,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was unchanged at 12,400,000 barrels per day, while oil production from Alaska was 6,000 barrels per day higher at 487,000 barrels per day but still added the same rounded 500,000 barrels per day to the rounded national total....last year's US crude oil production for the week ending December 28th was rounded to 11,700,000 barrels per day, so this reporting week's rounded oil production figure was 10.3% above that of a year ago, and 53.1% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 94.5% of their capacity in using 17,283,000 barrels of crude per day during the week ending December 27th, up from 93.3% of capacity the prior week, and near the recent average capacity utilization for the fourth week of December...however, the 17,283,000 barrels per day of oil that were refined this week were still 2.7% below the 17,760,000 barrels of crude per day that were being processed during the week ending December 28th, 2018, when US refineries were operating at 97.2% of capacity....
even with the increase in the amount of oil being refined, gasoline output from our refineries was a bit lower, decreasing by 96,000 barrels per day to 10,173,000 barrels per day during the week ending December 27th, after our refineries' gasoline output had increased by 429,000 barrels per day over the prior week...but even after this week's decrease in gasoline output, our gasoline production was still 6.7% higher than the 9,533,000 barrels of gasoline that were being produced daily over the same week of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 83,000 barrels per day to 5,311,000 barrels per day, after our distillates output had increased by 322,000 barrels per day over the prior week...and after this week's decrease in distillates output, our distillates' production for the week was 5.0% below the 5,591,000 barrels of distillates per day that were being produced during the week ending December 28th, 2018....
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week increased for the eighth week in a row and for the 14th time in 28 weeks, rising by 3,212,000 barrels to 242,472,000 barrels during the week to December 27th, after our gasoline supplies had increased by 1,963,000 barrels over the prior week....our gasoline supplies increased by more this week because the amount of gasoline supplied to US markets decreased by 342,000 barrels per day to 8,961,000 barrels per day, while our exports of gasoline rose by 155,000 barrels per day to 1,025,000 barrels per day and while our imports of gasoline fell by 121,000 barrels per day to 473,000 barrels per day....after this week's increase, our gasoline supplies were 1.0% higher than last December 28th's inventory level of 239,996,000 barrels, while they remained roughly 5% above the five year average of our gasoline supplies for this time of the year...
likewise, even with the decrease in our distillates production, our supplies of distillate fuels increased for the 4th time in 14 weeks and for 14th time in the past 39 weeks, rising by 8,776,000 barrels to 124,944,000 barrels during the week ending December 27th, the largest increase since January 4th of 2019, after our distillates supplies had decreased by 152,000 barrels over the prior week....our distillates supplies increased this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, fell by 1,159,000 barrels per day to 3,055,000 barrels per day, the largest drop since 2016, and because our exports of distillates fell by 265,000 barrels per day to 1,185,000 barrels per day, while our imports of distillates fell by 65,000 barrels per day to 183,000 barrels per day....after this week's inventory increase, our distillate supplies were 3.3% higher than the 129,431,000 barrels of distillates that we had stored on December 28th, 2018, even as they were still 6% below the five year average of distillates stocks for this time of the year...
finally, with this week's record oil exports, combined with lower oil imports and another sizable increase in the amount of oil used by refineries, our commercial supplies of crude oil in storage fell for the fifteenth time in twenty-eight weeks and for the twentieth time in 48 weeks, decreasing by 11,463,000 barrels, from 441,359,000 barrels on December 20th to 429,896,000 barrels on December 27th, the largest draw from stores since June 21st....after that big decrease, our crude oil inventories were back to near the five-year average of crude oil supplies for this time of year, but were still more than 35% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the last weekend of December, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels....even though our crude oil inventories had generally been rising over this past year, except for during this past summer, after generally falling until then through most of the prior year and a half, our oil supplies as of December 27th were 2.6% below the 441,418,000 barrels of oil we had stored on December 28th of 2018, while remaining 1.3% above the 424,463,000 barrels of oil that we had in storage on December 29th of 2017, but at the same time were 10.3% below the 479,012,000 barrels of oil we had in commercial storage on December 30th of 2016...
since our record oil exports were the primary reason for the largest decrease in US crude supplies in over 6 months, we'll include a graph of their recent history below...
the above graph of US crude oil exports came from the EIA spreadsheet listing weekly weekly US oil exports since 1991 and it shows weekly US crude oil exports in millions of barrels per day from early 2016 to the current week...prior to January 2017, our oil exports were minimal, because by law they had been outlawed for 40 years, with the exception of oil exports to Mexico and Canada, which were allowed under provisions of the North American Free Trade Agreement (NAFTA)...since that time, however, our exports have steadily risen, often limited only by the number and size of ships that could be loaded in one week and the number of ports which could provide such loading (which also accounts for the volatility you see in the chart above)...note that while we've been exporting an average of around 2,981,000 barrels per day this year, up 51.5% from 2018, we have at the same time been importing an average of 6,812,000 barrels per day...the reason for oil coming & going like that is that most US refineries can't use most of the oil coming from US shale wells, which is light and sweet, because they are configured to use the sour and heavier oil that we had been importing before the shale boom...so we're exporting what is actually a premium quality oil from our own wells, while at the same time importing the poorer quality, heavier sulfuric oil from overseas that many less complex foreign refineries can't use...
This Week's Rig Count
the US rig count decreased for the 17th time in the past 20 weeks during the week ending January 3rd, and is now 26.5% below the count at the end of 2018...Baker Hughes reported that the total count of rotary rigs running in the US decreased by 9 rigs to a 33 month low of 796 rigs this past week, which was also down by 279 rigs from the 1075 rigs that were in use as of the January 4th report of 2014, and 1,133 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in an attempt to put shale out of business...
the number of rigs drilling for oil decreased by 7 rigs to 649 oil rigs this week, which was also a 33 month low for oil rigs, 207 fewer oil rigs than were running a year ago, and much less than the recent high of 1609 rigs that were drilling for oil on October 10th, 2014....at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 2 to 123 natural gas rigs, the fewest natural gas rigs deployed since December 2nd 2016, and hence a 37 month low for natural gas drilling, down by 75 gas rigs from the 198 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 rigs 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, compared to a year ago, when there were no such "miscellaneous" rigs deployed..
offshore drilling activity in the Gulf of Mexico decreased by one rig to 22 rigs this week, as another rig that had been drilling offshore from Louisiana was shut down this week...as a result, the 21 rigs that continued drilling in Louisiana waters plus the one that was drilling offshore from Texas matched the Gulf of Mexico rig count of 22 rigs a year ago, when 21 rigs were drilling offshore from Louisiana waters and one rig was drilling in Texas waters...since there are no rigs deployed off US shores elsewhere, nor were there a year ago, the Gulf of Mexico count for this year and last is equal to the national total in both cases..
the count of active horizontal drilling rigs was down by 2 rigs to 701 horizontal rigs this week, which was 244 fewer horizontal rigs than the 945 horizontal rigs that were in use in the US on January 4th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....at the same time, the vertical rig count was down by 5 rigs to 44 vertical rigs this week, and those were also down by 20 from the 64 vertical rigs that were operating during the same week of last year....in addition, the directional rig count was was down by 2 to 51 directional rigs this week, and those were down by 15 from the 55 directional rigs that were in use on January 4th 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 January 3rd, the second column shows the change in the number of working rigs between last week's count (December 27th) and this week's (January 3rd) count, the third column shows last week's December 27th 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 4th of January, 2018...
the first thing you might notice about this week's tables is that the decreases shown in the state counts fall well short of the nine rig decrease reported nationally this week...that's because all the rigs that had been running in deep south states not included in the table above were also shut down this week...that includes Mississippi, where three rigs were shut down this week to leave them with none, which is the first time on record there was no drilling in Mississippi whatsoever, and down from 2 rigs a year ago...elsewhere, the rig that was shut down in Alabama had just started up 3 weeks earlier, while a year ago the state also had two rigs deployed...and in Florida, the rig that was shut down leaves the state with no activity for the first time since mid-August, but it matches the state's null count through January of 2019...since those three states are not known for major shale plays, it seems likely that the 5 rigs pulled out of them account for this week's big drop in vertical rig deployment..
elsewhere, the only evident change in the Texas Permian was a one rig reduction in Texas Oil District 8A, or the northern Permian Midland, which means the New Mexico rig that was shut down had been operating in the eastern Permian Delaware, to thus account for the two rig drop in the Permian...in Oklahoma, rigs were shut down in the Cana Woodford and the Arkoma Woodford, while an oil rig began drilling in the Ardmore Woodford for the first time in nine weeks...for natural gas, rig reductions were seen in Oklahoma's Arkoma Woodford and Pennsylvania's Marcellus, thus accounting for the national drop of two rigs targeting natural gas..
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Utica Shale well activity as of Dec. 28 -
- DRILLED: 134 (136 as of last week)
- DRILLING: 150 (152)
- PERMITTED: 481 (482)
- PRODUCING: 2,422 (2,422)
- TOTAL: 3,187 (3,192)
Two horizontal permits were issued during the week that ended Dec. 28, and 12 rigs were operating in the Utica Shale.
Ohio sales / use tax: Statute expanding oil & gas exemption applies retroactively to purchases of hydraulic fracturing equipment - JD Supra --The Tenth District Ohio Court of Appeals recently applied a statutory amendment clarifying the oil & gas exemption for Ohio sales & use tax retroactively. Interestingly, while this appeal was pending at the Board of Tax Appeals, the legislature amended the statute to clarify the scope of the exemption for fracking equipment. Although legislation is generally applied prospectively, this amendment was considered remedial and expressly stated that it clarified existing law and applied retroactively, including to current appeals. R.C. 5739.02(B)(42)(q). Stingray Pressure Pumping, LLC v. Tax Commr. of Ohio, 2019-Ohio-5198. This decision opens up refund opportunities for taxpayers in the oil & gas industry, even those currently appealing an assessment.The particular issue in this case was whether a sales tax exemption applied to certain equipment used by Stingray Pressure Pumping, LLC in the production of crude oil and natural gas by fracking. The BTA initially denied exemption for equipment used to mix liquids and materials before being pumped into wells. Under previous case law, this type of property was taxable since it was considered adjunct to the drilling process, rather than used directly in the production of oil and gas.[1]However, while Stingray’s appeal of the BTA’s decision was pending, the General Assembly amended R.C. 5739.02(B)(42) to clarify the scope of the exemption for fracking equipment by identifying certain exempt property and activities that may not have been contemplated when the sales tax exemption was originally enacted decades earlier. See H.B. No. 430; R.C. 5739.02(B)(42)(q). Although amendments are generally prospective, since the statutory amendment expressly clarified the scope of an existing exemption, the amended statute applied retroactively to cases pending on appeal. The BTA did not have the opportunity to apply the clarified statute and, therefore, the Court remanded the appeal to the BTA to determine the taxability of the equipment under the clarified scope of the sales tax exemption.
NEXUS pipeline seeking tax cut in Sandusky County - Local school districts and government entities are still waiting to see how much they will get in tax revenues from the NEXUS pipeline. The natural gas pipeline, completed in 2018, has asked the state for a tax cut and has the option of paying 62.5% of the expected $668,000 in ad valorem taxes to Sandusky County while its appeal is being decided. Sandusky County Auditor Jerri Miller said NEXUS Gas Transmission filed a valuation appeal in late 2019 with the state's Department of Taxation and is seeking close to a 40 percent reduction in its public utility property taxes. Support local journalism. The NEXUS pipeline, which spans 32 miles across Sandusky County, had been expected to add about $668,000 in 2020 to the county’s general fund budget, Miller said. She said NEXUS has the option to tender pay (pay the lower amount of 62.5% of the expected tax revenues) while the appeal is being decided by the state. "If that happens the county general fund will receive a little more than $400,000," Miller said. Jan Day, the county's deputy auditor, said Friday that NEXUS will make two tax payments in 2020, with due dates in February and July. Adam Parker, a spokesman for NEXUS Gas Transmission, told the News-Messenger Friday via e-mail that the Ohio Department of Taxation recently issued a preliminary valuation notice to local tax officials for the newly constructed Nexus Gas Transmission pipeline. "Consistent with how individuals, homes and businesses are taxed, our property tax assessment should reflect the true market value of the pipeline. After reviewing the preliminary assessment, we have elected to file a petition for reassessment through the formal process established by the Ohio Department of Taxation," Parker said.
County opposing natural gas pipeline - The Union County Commissioners are filing an appeal to a project that would bring nearly five miles of gas line from Jerome Township and into Marysville. “While we are not so much opposed to what they are doing, we just don’t feel it goes far enough,” said Tim Hansley, Union County Administrator. In December, Columbia Gas submitted a Letter of Notification, indicating they intended to construct a 4.78 miles natural gas pipeline, known as the Marysville Connector, beginning at Watkins-California Road between U.S. 42 and Derio Road and ending on Industrial Parkway near Veyance Technologies. While Columbia Gas says the majority of the 12-inch natural gas main will be constructed within permanent private pipeline easements, paperwork from the company says it does not actually have any of those easements yet. In addition to the 4.78-mile length of the pipeline right-of-way, Columbia Gas says it will obtain land rights for staging areas that will be situated along the pipeline right-of-way and other areas needed during construction. If approved, Columbia Gas says it intends to begin the pipeline construction on Feb. 21, 2022, and have the project completed by the end of that year. Rather than go through the typical approval process, Columbia Gas is applying for an accelerated certificate. Local officials are saying the accelerated process is not appropriate for this project. Officials say the Marysville Connector is part of the much longer Northern Loop. The Northern Loop Project is “designed to bring natural gas from pipelines on the eastern side of Franklin County, where supplies are abundant, to areas north and west of Columbus.” In his response to the notification, Michael J. Settineri, an attorney for the Ohio Gas Access Partnership, Inc., argues that the Northern Loop, “will likely connect with the Marysville Connector.” “Columbia itself refers to the Northern Loop and the Marysville Connector as a single project,” Settineri wrote, noting that the overall project should not qualify for the accelerated project due to its size. The Ohio Gas Access Partnership, Inc. (OGAP) is a collaborative group of public and private entities in Union, Madison, Logan and Franklin counties, “and have an interest in pursuing long-term regional solutions to current natural gas capacity concerns.” “OGAP appreciate Columbia’s recognition that there are natural gas supply constraints in western Central Ohio, but believes that the project is not an effective or correct way to address those concerns,” according to Settineri’s comments.
Reader Responds to Fracking Impact Report - Editor’s Note: The following letter to The Business Journal was submitted Dec. 27 in response to a story published Dec. 20. By Lauren Schroeder – The article “Fracking Ban Could Cost Ohio $245B, US Chamber Reports” in the Youngstown Business Journal is disingenuous. The underlying article “What if Hydraulic fracturing was banned? The economic benefits of the shale revolution and the consequences of ending it” by the Global Energy Institute of the U.S. Chamber of Commerce does not mention the cost of global warming resulting from combustion of fossil fuels, including natural gas. These costs include increased flooding, intensity and frequency of storms, droughts, forest fires, desertification, disease outbreaks, and extinction of millions of species, migration of millions of people from coastal flooded areas or interior regions where climate warming reduces food production, direct hyperthermia deaths of millions of people and the list goes on. These consequences of climate warming attributed to burning fossil fuels from will far exceed the Chamber’s estimate of $245 billion national loss from a fracking ban.The Chamber’s report also failed to mention the economic benefits from an expanding renewable energy industry. An honest assessment of a hydraulic fracking ban must also take into account the external cost of climate warming and the economic benefits of an alternative fuel industry.
Gulfport sells non-core Utica operations - Gulfport Energy has shed some of its non-core Utica Shale operations. Gulfport Energy, based in Oklahoma City, recently sold some of its non-core operations and provided an update on the continuation of discounted debt repurchases.The company agreed to sell non-operated interests in the Utica Shale for $29 million. That deal was set to close before the year ended. Gulfport netted $7 million with the sale of royalty assets held in the Bakken Formation, which is in part fo North Dakota and Montana.In a separate deal, Gulfport will divest water infrastructure assets in Oklahoma to a third-party water service provider. The company expects to receive $50 million when the deal closes — likely in January — and could possibly net another $50 million over the next 15 years.Gulfport has repurchased $85.6 million of aggregate principal amount of unsecured senior notes for $60.1 million in cash. So far this year, the company has repurchased $190.1 million aggregate principal amount of unsecured notes for $140.4 million in cash. The repurchases will give Gulfport more that $7 million in annual interest savings.
Gulfport Energy: Weak Natural Gas Prices May Limit Its Positive Cash Flow In 2020 - Gulfport Energy has continued to repurchase debt at a discount and also sold non-core assets. This helps reduce Gulfport's net debt, although weak natural gas prices are threatening its ability to both maintain production and generate significant positive cash flow in 2020. It is hedged on around 44% of its natural gas production in 2020, but has no natural gas hedges in place for 2021, so it needs substantial improvement in natural gas prices by then. Gulfport announced a couple asset sales that it had previously discussed that it was exploring. It sold its SCOOP water infrastructure assets to Bison for $50 million upfront and the potential to earn over $50 million in incentive payments over the next 15 years. It also sold some non-operated interests in the Utica Shale for $29 million.It does not appear that Gulfport mentioned the expected impact of these transactions to its production and financials. I am assuming that the SCOOP water infrastructure sale adds around $6 million per year (at current production levels) to Gulfport's costs. The initial $50 million payment would be a roughly 8.3x multiple to EBITDA in this case. I am also assuming that the non-operated Utica Shale sale reduces its Utica Shale production (which is around 97.5% natural gas) by around 15 MMCFE per day.Gulfport has also continued to do debt repurchases at a discount, repurchasing another $85.6 million in unsecured notes for $60.1 million in cash in Q4 2019. This results in over $3 million in annual interest savings, as debt with a roughly 6.375% interest rate gets replaced with 30% less debt (credit facility borrowings) with a 3.52% interest rate. Gulfport would now be expected to produce around 1,365 MMCFE per day in 2020 with a maintenance capex budget, proforma for the divestitures. The 2020 NYMEX strip for natural gas is now at around $2.29, resulting in Gulfport's estimated 2020 revenues coming down by a fair bit from earlier estimates. WTI oil prices have increased to near $60, but only a small amount (around 2%) of Gulfport's production is oil, so the oil price increase doesn't come close to offsetting the weak natural gas prices.
Pittsburgh’s fracking industry cut more than 400 jobs in 2019, with more cuts likely on the way - Last year, Pittsburgh’s fracking industry cut hundreds of jobs, and the outlook for 2020 could be even worse for the natural gas extraction field. Local natural gas players like EQT, Range Resources, and CNX have cut a combined total of more than 400 jobs since January 2019. EQT, which is headquartered in Pittsburgh, led the way with almost 300 job cuts last year. The energy company laid off about 100 last January and then announced an additional 196 job cuts last September. CNX, which is headquartered in Washington County, cut 70 positions last year, while Range Resources cut 40 jobs from its Pittsburgh regional offices. Range Resources, a Texas company, also cut 50 jobs from its headquarters in Houston. These job cuts have been blamed on an economic slowdown within the natural gas industry. According to Washington County's Observer-Reporter, the number of drilling rigs operating in Pennsylvania has dropped from 47 to 24. Analysts have noted that there is currently an oversupply of natural gas, meaning that more natural gas is being produced than demand requires, which leads to price drops. The prices have been dropping for the last four years, and the Wall Street Journal reported today that the slide is continuing into 2020. Andy Brogan, head of the oil and gas global sector at accounting giant EY, recently told the Pittsburgh Business Times he doesn’t expect that slide to turnaround immediately but says it could bounce back. “In the short term, the gas market is oversupplied and is likely to remain so for the next few years,” said Brogan. “It’s a cyclical business, and we’re at the bottom of the cycle.” But the slowdown has created casualties. Energy giant Chevron announced last month they would be pulling out of the Pittsburgh region entirely. That means Chevron is leaving its regional offices in Coraopolis, and the fate of its 400 Pittsburgh area jobs is uncertain.
Energy Transfer given $30M penalty for Beaver County pipeline explosion - The early morning landslide and pipeline explosion that lit up a Beaver County neighborhood in September 2018 has yielded a $30.6 million penalty for the pipeline owner, Energy Transfer Corp.Pennsylvania’s Department of Environmental Protection has signed an agreement with the Texas-based company that also allows Energy Transfer to resume getting environmental permits.The DEP had stopped issuing new permits in February — effectively holding up several big pipeline projects — because the company kept violating environmental rules while trying to stabilize soil around the ruptured Revolution pipeline and along the right of way for its major Mariner East natural gas liquids pipelines. The parallel Mariner East pipelines stretch across the southern part of Pennsylvania, bringing Marcellus and Utica shale gas to terminals near Philadelphia. Problems with underground drilling in the construction of the parallel pipes — a number of sinkholes in the eastern part of the state mobilized the attention of residents and lawmakers there — have already garnered more than $12 million in civil penalties for Energy Transfer. The settlement announced Friday means the company can also begin the process of repairing the Revolution pipeline, which links shale wells in Beaver and Butler counties to an Energy Transfer gas processing plant in Washington County. The Revolution pipeline was activated just days prior to the 2018 landslide and explosion. Its two major customers are embroiled in lawsuits with Energy Transfer, including one company that has filed for bankruptcy because of the explosion. Environmental regulators have been investigating the conduct of Energy Transfer and its contractors since the Revolution pipeline ruptured and have indicated that poor construction and oversight practices led to the disaster. For example, while the company knew as early as January 2016 that the explosion site had a “high susceptibility to slope failure,” it did not provide the report with this information to the engineers who submitted Energy Transfer’s pipeline permits. During construction, what would later become known as the explosion site was a problem months before the line was activated.In April 2018, according to an internal company report cited in DEP’s agreement, a landslide pushed soil off the right of way. An employee wrote that “there is a significant and very steep drop off on the edge of the ditch-line which will make it difficult to restore properly.” But Energy Transfer did not consult an engineer or geotechnical expert on how to stabilize the ground there. Instead, the crew on site dried out the drenched soil and moved it back uphill, installing underdrains without a permit. It was that fill — the soil that was placed there by the company — that slid and caused Revolution to rupture, according to a February 2019 consultant’s report commissioned by Energy Transfer.
Pennsylvania Officials Investigate Potential Link Between Fracking And Cancer Cases - AboutLawsuits.com - Health officials in Pennsylvania have opened an investigation into the health effects of fracking, following what appears to be a cluster of rare cancer cases affecting teens and young adults that may be linked to the natural gas mining operations. According to a report by the Wall Street Journal, the Pennsylvania Department of Health is looking into a potential link between hydraulic fracturing operations in the Washington County area and an unusual number of cases involving Ewing’s sarcoma diagnosed in the same area. More commonly referred to as “fracking”, hydraulic fracturing involves drilling and fracturing of shale rock to release oil and gas. Fracking results in the injection of water, sand and chemicals into wells at high pressures, to crack the surrounding rock, thus releasing the natural gas underground and allowing it to flow to the head of the well. Problems from fracking have previously been linked to negative environmental effects to the surrounding communities, due the impact on drinking water, as well as increased dust and exhaust from drilling rigs, compressors and the transportation of the water, sand and chemicals. The process has also been linked to increased earthquake activity. The extent of the potential harm to humans living close to these fracking sites has yet to be determined. Concerns in Pennsylvania come from an uptick in recent years of Ewing’s sarcoma. In a typical year, about 250 children in the U.S. are diagnosed with the disease, which affects bones or the surrounding soft tissue. However, in and around Washington County there have been at least 31 cases diagnosed from 2006 through 2017, including two cases in 2018. Since 2008, six cases occurred in one school district, according to the Wall Street Journal. In April, state investigators initially dismissed the cluster as statistically insignificant. But at the behest of parents in the area, Dr. Rachel Levine, the state’s secretary of health, agreed to move forward with the investigation. There are more than 1,800 fracking wells in Washington County, all tapping into what is known as the Marcellus Shale.
PennEast Pipeline seeks two-year in-service delay, citing permitting — PennEast Pipeline asked the Federal Energy Regulatory Commission for a two-year extension to put its federally approved 1.1 Bcf/d natural gas pipeline project in service after difficulties in obtaining permits and right of way in New Jersey and Pennsylvania. PennEast, backed by affiliates of Enbridge, Southern Company, New Jersey Resources, South Jersey Industries and UGI, sought a new deadline of January 19, 2022, in a request Monday. FERC issued Natural Gas Act certificates for the pipeline project January 19, 2018, and required the developer to put the pipeline in service by January 19, 2020. "As the commission has explained, good cause [for an extension] can be shown by a project sponsor demonstrating that it has made good faith efforts to meet its deadline, but has encountered unforeseeable circumstances, such as difficulties in obtaining permits," PennEast told FERC. One of the largest obstacles is a decision by the US Court of Appeals for the 3rd Circuit that not only limited pipeline companies' ability to use eminent domain to obtain right of way on lands in which a state holds an interest, but complicated PennEast's application for a Clean Water Act permit from New Jersey. Based on the court decision, the New Jersey Department of Environmental Protection denied the application. "PennEast continues to diligently pursue all available legal remedies in an effort to obtain the individual permit," including a planned petition to the US Supreme Court for review of the 3rd Circuit opinion, the company told FERC. For the part of the project in Pennsylvania, PennEast said it is working with the state and the US Army Corps of Engineers on permits and authorizations under the National Historic Preservation Act, the Rivers and Harbors Act, and the Clean Water Act. The pipeline would carry gas from the Marcellus Shale in Pennsylvania to East Coast markets and pipeline connections. The pipeline company said it is committed to placing the approximately $1 billion project in service "as soon as possible"
New Jersey utility gains access to Gateway gas pipeline extension - Natural gas infrastructure firm Williams has placed its Gateway Expansion pipeline project into service for several utilities in the New Jersey and tri-state region. PSEG Power and UGI Energy Services are among the customers for the Gateway Expansion, which ties into the interstate Transco Pipeline system owned by Tulsa-based Williams. The project was completed 11 months ahead of schedule, according to the company. Converting heating resources from oil to natural gas could be equivalent to removing about 590,000 metric tons of greenhouse gas emissions annually, according to Williams. Natural gas availability was a concern for many utilities in the northeast U.S. in recent past. Construction on the Gateway Expansion Project began in early 2019, with an original in-service projection of November 2020. The project minimized community and environmental impacts by maximizing the utilization of existing pipeline infrastructure, with virtually all project activities confined to Transco’s existing footprint in New Jersey. To facilitate the expansion, Williams added electric horsepower to an existing Transco meter station in Essex County, New Jersey and replaced an existing station in Passaic County. With this expansion, the Transco pipeline’s system-design capacity is increased to 17.3 million dekatherms per day. The system includes approximately 10,000 miles of pipeline between South Texas and New York City. According to the U.S. Energy Information Administration, natural gas has dramatically increased its share of the power generation mix in the nine northeast states. The share is now more than 40 percent, nearly double from 14 years ago.
Hanshaw pushes a new W.Va.-led investment fund to reopen door to China deal and more - — House Speaker Roger Hanshaw traveled to China last spring and heard a lot about the holdup on roughly $84 billion in proposed investments in West Virginia by China Energy. “One of the first things we learned on that trip to China was the reason we haven’t seen the kind of $84 billion investment that was promised in West Virginia was that there is uncertainty among the potential investors about how safe their investment would be here,” Hanshaw, R-Clay, said during an interview in his House of Delegates office earlier this week. “They were hungry for a vehicle that would make their investment in West Virginia safe.” So the first bill Hanshaw plans to introduce for the annual legislative session that kicks off next week is one — House Bill 4001 — aimed at renewing confidence in the China deal while also, potentially, kickstarting additional capital investment in West Virginia. The bill would establish a Mountaineer Impact Fund, using state financial assets that have been allocated already, so West Virginia could serve as an official partner in investment deals. In most cases, as Hanshaw envisions it, West Virginia’s state government would be a minor investor but could be the controlling partner, essentially the sponsor of the projects. In other words, West Virginia would be endorsing the investment with the state’s name. “The benefit to the state is we have some small presence. It will indeed be small,” Hanshaw said. “The honest to goodness upside is the downstream effects of investment in our state.” But, he acknowledged, “The criticism will come from people who say the state should not be picking winners and losers.” He said that won’t be the case, though. “What we are talking about is a vehicle to facilitate private investment in the state of West Virginia under our banner,” he said. He added, “The investors themselves will decide who wins and who does not, just as private capital always should.” China Energy and CFIUS Although the investment structure allowed under the bill would apply to a range of possible investments, its impetus was the enormous but dormant China deal. When the China investment opportunity was announced in late 2017 in Beijing, officials hinted at money flowing toward an Appalachian natural gas storage hub, ethane crackers, natural gas-fired power plants and more. But, a couple of years later, with no tangible results, people started asking why. National news outlets like CNBC, for example, declared last summer “West Virginia still waiting on $84 billion investment from China.” One of the factors CNBC hit on was the Committee on Foreign Investments in the United States. In case that entity, what you need to know is that CFIUS can intervene in foreign investment deals if it believes they affect national security.
US natural gas production reached record highs in 2018 - U.S. natural gas production saw the largest annual increase on record in 2018, according to the U.S. Energy Information Administration (EIA). Production grew by 10.0 billion cubic feet per day (Bcf/d), an 11 percent increase from 2017, marking a record high for the second consecutive year. U.S. natural gas production measured as gross withdrawals averaged 101.3 Bcf/d in 2018, which is the highest volume on record, according to EIA’s Monthly Crude Oil, Lease Condensate and Natural Gas Production Report. Production measured as marketed production and dry natural gas production also hit record highs of 89.6 Bcf/d and 83.4 Bcf/d, respectively. U.S. gross withdrawals of natural gas increased every month during 2018 except for June, reaching a record monthly high of 107.8 Bcf/d in December 2018. Marketed natural gas production and dry natural gas production also reached monthly record highs of 95.0 Bcf/d and 88.6 Bcf/d, respectively, in December. The volume of natural gas exports through pipelines and as liquefied natural gas (LNG) increased for the fourth consecutive year, reaching 9.9 Bcf/d, EIA said. Total natural gas exports grew by 14 percent in 2018, and LNG exports increased by 53 percent to 3.0 Bcf/d. Pipeline and LNG exports both reached record monthly highs in December of 7.7 Bcf/d and 4.0 Bcf/d, respectively. The United States again exported more natural gas than it imported in 2018, after doing so in 2017 for the first time in approximately 60 years. In September 2018, for the first time in nearly 20 years, the United States exported more natural gas by pipeline than it imported by pipeline. Forecasts in EIA’s Short-Term Energy Outlook suggest that natural gas exports by pipeline will surpass natural gas imports by pipeline in 2019 for the year
Natural gas industry ends 2019 on a (mostly) down note -Pennsylvania has about half as many natural gas rigs working at the end of the year as it did at the beginning of 2019.The latest tally from oilfield services firm Baker Hughes finds 25 rigs in the commonwealth, up one from last week. This year especially, with commodity prices stuck in the deep freeze at near-record lows, more natural gas producers have scaled back production.Pennsylvania, situated in the Marcellus and Utica shales, has seen that in particular: It began the year with 47 rigs, rising to 49 in early January. Things have declined ever since thanks to pricing.The drops are shown particularly in the Marcellus, which according to energy analysis firm Enverus is down 39 percent year to date.The other two Appalachian natural gas producing states are seeing their fortunes diverge, with West Virginia seeing a late-year increase while Ohio has fallen in rig activity.West Virginia has seen an increase of three rigs in December. There are 16 now, up from 13 at the beginning of the month. That’s higher than the 12 that it began 2019 with but still below the highwater mark of the year of 22 recorded as late as July, according to Baker Hughes data. Ohio, on the other hand, has seen a drop of two rigs during the month of December. It now has 11 compared to 13 at the beginning of the month. And that’s far below the 20 rigs that were running as of May, which was Ohio’s record for the year.
Natural Gas Ends The Year On A Sour Note -The United States Natural Gas Fund tracks the price of natural gas that trades in the NYMEX division of the CME in the futures market. The end of 2019 is turning out to be similar to late 2015, the last time the price of the energy commodity traded at such a low price during the beginning of the winter season. The monthly chart highlights that the last time the nearby natural gas futures chart traded as low as it has in December 2019 during the final month of the year was in December 2015 when the price fell to a low at $1.684 per MMBtu. In 2016, the low was in December was $3.24, following year it fell to $2.568 during the same month. Last year, the low was $2.93. Last Friday, the price declined to a low at $2.138 on the nearby futures contract.A larger than expected inventory withdrawal of 161 billion cubic feet for the week ending on December 20 lifted the price back over the $2.20 level by the end of the session. However, long-term price momentum and relative strength remain in oversold territory. A total of 3.250 trillion cubic feet in storage around the U.S. is keeping a lid on the natural gas market as there are plenty of stocks to meet demand during the peak winter season.Meanwhile, if this period is anything like 2015/2016, we will see lower levels for natural gas in the spring.The December 2015 low in the natural gas futures market led to a correction that took the price to a high at just under $2.50 in January. By March, the price dropped to a lower low at $1.611 per MMBtu, which was the lowest level since July 1998 at $1.61.Last August, the price fell to $2.029 before the uncertainty of the coming peak season lifted natural gas to just over the $2.90 level but buying dried up and selling pressure has been a dominant force since early November. Based on the level of stocks, and the overall sentiment in the natural gas arena, any corrective rally will attract sellers over the coming weeks. In the New Year, markets will look towards spring, and speculative shorts could push the price lower to challenge the $2 level and perhaps the March 2016 low at $1.611.
Once a booming industry, natural gas is in midst of a bust -The boom began in October 2004, although it didn’t resonate like a boom at the time. . Range Resources, a Texas-based oil and natural gas exploration company, found a spot in Mt. Pleasant Township, called it Renz Well 1, and drilled down a mile, then out laterally. It sent a mix of water, sand and chemicals to break up the rock and release gas hydrocarbons to the surface. . Suddenly and unofficially, the shale boom began in the basin, and suddenly, fracking became part of the tri-state lexicon. In a few years, the boom became a nationwide BOOM! – which grew with each succeeding year. Companies positioned themselves to take advantage of these resources. Larger firms bought smaller ones, investors spent billions of dollars to build terminals to export gas to China and Europe. Good times rolled for an extended period, and led to Pennsylvania becoming the nation’s No. 2 gas producer behind Texas. Then about four years ago, declining commodity prices began to hit the producers and continued to hit them. And is still hitting them, with prices half of what they were a year ago. Natural gas is still being produced, and there is now a serious glut, supply outstripping demand to the point that it is causing energy firms to slash costs. Some companies are shuttering drill sites, filing for bankruptcy protection, laying off employees and curtailing operations. In the past year, the number of drilling rigs operating in the Keystone State has plummeted from 47 to 24. Boom has, indeed, gone bust. “Natural gas is in the tank,” “We’re looking at a project right now of over 200 wells in Montana that are for sale, but they are uneconomic. Not only are the wells uneconomic, the gathering of the gas is uneconomic.” The industry’s quandary was underscored recently by the decision of Chevron Corp., the second-largest oil and gas operator in the United States, to market for sale its natural gas interests in the Appalachian Basin. Those assets include 890,000 acres in the Marcellus and Utica shale plays across the tri-state, valued at about $10 billion to $11 billion. The company, which employs about 400 at a regional office near Pittsburgh International Airport, attributed the sale directly to suppressed gas prices. This followed third-quarter layoff announcements at EQT Corp., Range Resources and CNX Resources Corp. – all major players locally. “By every measure, this is very tough news, as Chevron has been a true leader on any number of fronts in the communities across Pennsylvania and the broader region. “This difficult business decision ultimately reflects the fragile nature of the commodity landscape along with permitting, regulatory and tax challenges as well as the intense level of competition for limited capital resources not just in Pennsylvania or the tri-state, but across the country and the world.
Market, investor pressures to weigh on Appalachian natural gas production growth next year — Growing pressure on Appalachian producers from low prices, midstream constraints and a hawkish investor community could be enough in 2020 to finally pause a decade-long rise in the basin's natural gas production. While obstacles to growth are nothing new in Appalachia, the recent confluence of challenges has raised serious doubts for market observers about producers' capacity to keep output growing in the Marcellus and Utica shale plays during 2020. Perhaps the biggest test for producers has come from the market itself. Over the past nine months, gas prices at Appalachia's primary supply hub, Dominion South, have averaged less than $2/MMBtu, testing wellhead breakeven values, even for the most efficient, low-cost producers. The Northeast's low-price environment doesn't show much potential for improvement either. For calendar year 2020, the forward price curve at Dominion South is currently sitting at just $1.90/MMBtu with peak winter-season prices barely eclipsing the $2/MMBtu threshold. Lower liquids values have added to the recent price pain for Appalachian producers. In the fourth quarter, prompt propane prices at Mont Belvieu have averaged 50 cents/gal, which is down about 16 cents, or nearly 25%, compared to the first quarter, S&P Global Platts data showed. Other NGL prices have seen similar downward pressure this year. While the surplus in liquids should get some relief from winter heating demand through the early months of 2020, an oversupplied market is likely to return as that seasonal uptick ebbs in March.
Analyst expects more consolidations and less natural gas production growth for 2020 - Changing dynamics in the shale-dominated U.S. oil and gas industry are prompting predictions of a surge in company consolidations and a significant easing of natural gas production growth.Enverus, an on-demand software and data analytics company that follows the industry, made those predictions recently as part of evaluations it provides to clients.Potential sellers within the industry, Enverus states as part of its mergers and acquisitions analysis, continue to face tough capital-access conditions this year and may be willing to accept lower buyout values.And the analysis also states potential buyers — larger companies that spent the past year cutting costs and boosting efficiencies — are turning the corner by generating free cash flows, instituting dividends and buying back shares to reward investors.At the same time, their stock prices are rising because of those operational improvements and tailwinds from an improving global economic picture and rising oil prices.As investors grow more confident in a company’s ability to deliver on free cash flow, they also become more open to acquisitions, provided asset quality is high and the price is reasonable, Enverus’ market analysis states.In addition, larger exploration and production companies should be better positioned to deliver on returns to investors by leveraging economies of scale, more efficient development and more favorable service and midstream contracts.“We saw an uptick in December in the pace of deals and more positive investor reactions to acquisitions,” said Andrew Dittmar, Enverus’ senior mergers and acquisitions analyst. “That should bode well for mergers and acquisitions in 2020.”Enverus’ analysis noted shale company consolidations happen through acquisitions by multi-national companies or mergers among the smaller to midsize players like was seen in 2019.Enverus tracked $96 billion of U.S. oil & gas mergers and acquisitions in 2019, including $11 billion in the year’s final quarter.The biggest deal of the year, Occidental’s $57 billion acquisition of Anadarko, was the largest of the decade and the fourth largest ever.Outside of that, there were $39 billion in deals in 2019.
2020: A Year of Pipeline Court Fights, with One Lawsuit Headed to the Supreme Court - After years of mounting opposition to the increasing build-out of oil and gas infrastructure, 2020 is shaping up to be the year that pipeline opponents get their day in court.One case headed to the U.S. Supreme Court takes a closer look at whether parts of the Appalachian Trail are off-limits to fossil fuel infrastructure and may determine the fate of two multi-billion-dollar pipelines. A defeat there, the industry argues, would severely limit its ability to get natural gas from the Marcellus shale to East Coast cities and export terminals. Another case weighs state sovereignty against pipeline interests and could have implications nationwide.Meanwhile, a question of potentially greater significance looms: Can pipeline companies continue to justify taking private land as the public benefits of fossil fuel pipelines are increasingly questioned and the risks they pose to the environment and climate increase? The rise of hydraulic fracturing, or fracking, launched a natural gas boom that has fueled a rush of pipeline construction in recent years, with pipeline companies spending an average of $10 billion per year on expanding their pipeline network, according to the U.S. Department of Energy. That rush has racked up environmental violations in several states, and it has triggered a pushback by states, environmental groups and landowners.Even in oil- and gas-rich Texas, where fossil fuel interests dominate state politics, landowners are pushing back on pipeline companies' use of eminent domain. In the case headed to the U.S. Supreme Court, the fossil fuel industry argues that its very ability to ship natural gas from the sprawling Marcellus and Utica shale basins to the East Coast is at risk. The Supreme Court is expected to hear oral arguments on Feb. 24 related to a key permit for the Atlantic Coast Pipeline LLC's proposed $7.5 billion natural gas pipeline from West Virginia to eastern portions of Virginia and North Carolina. It would cross the Appalachian National Scenic Trail, and that's where the pipeline has run into trouble. Justices will consider whether the U.S. Forest Service has the authority to grant permits for pipelines that cross the iconic backcountry footpath, which runs from Georgia to Maine and is part of the National Park System. Attorneys representing the Trump administration are also a part of the suit, arguing that the Forest Service does have jurisdiction to grant permits across the trail. In a brief filed Dec. 2, federal attorneys added that the pipeline would lie "more than 600 feet below" the surface of the Trail and would be constructed using a "horizontal directional drilling technique" with entry and exit points on private lands not be visible from the Trail.
Natural Gas' Slide Continues Into The Turn Of The New Year --The turn of the new year did nothing to stop the downward move in natural gas prices, with the prompt month February contract currently down nearly 6 cents as of this writing. It is not too difficult to see why when taking a look at the latest weather forecast maps. That is a lot of warmth at typically our coldest time of the year, not good if looking for above normal natural gas demand, as our forecast Gas-Weighted Degree Day (GWDD) chart shows relative to normal. It is for this reason that we alerted clients in our early morning report that risks to prices were still to the downside despite the already very low price environment, taking a "slightly bearish" stance for the day. This worked out well so far, as prompt month prices have fallen 5 cents since the report was issued. While weather wins at this time of the year, it is interesting that we still are seeing production at levels well under the high set in late November. This decline is keeping supply / demand balances tighter, which will become important if the weather is able to shift out of this very warm mode, even if only to a more "normal" background state.
US working natural gas in underground storage decreases by 58 Bcf: EIA — US natural gas in storage fell by less-than-expected levels last week as the NYMEX Henry Hub February contract dipped to its lowest price for this time of year since 1998. Storage inventories fell 58 Bcf to 3.192 Tcf for the week ended December 27, the US Energy Information Administration reported Friday morning. The pull was below an S&P Global Platts' survey of analysts, which called for a 67 Bcf draw. Responses ranged for a draw between 54 Bcf and 78 Bcf. The pull was stronger than the 24 Bcf draw reported during the corresponding week in 2018, but below the five-year-average draw of 89 Bcf, according to EIA data. As a result, stocks were 484 Bcf, or 18%, above the year-ago level of 2.708 Tcf and 38 Bcf, or 1.2%, below the five-year average of 3.230 Tcf. The draw was weaker than the 161 Bcf pulled from working gas in storage reported for the week ended December 20. US supply and demand balances were looser compared with the week before on widespread demand declines over the holiday break, particularly in the Midwest. Total demand fell 12.9 Bcf/d week on week to an average 104.4 Bcf/d for the week ended December 27, according to S&P Global Platts Analytics. In contrast to the large demand swings seen in the past few weeks, upstream supplies have been notably static, falling only 0.4 Bcf/d during the reference week, mostly from lower Canadian imports. The NYMEX Henry Hub February contract remained flat at $2.125/MMBtu following the weekly storage report. The balance of winter NYMEX Henry Hub strip continues to reflect a market in oversupply, with February and March trading at $2.12/MMBtu and $2.10/MMBtu, respectively. The February contract has dropped by nearly 10 cents this week alone on a consensus, warmer-than-normal weather outlook. Click here for full-size infographic. The February contract is at its lowest price at this time of the year since 1998. Even during the downturn of 2016 the contract at this time in January was trading around $2.30/MMBtu. But it closed at a monthly low of $2.09/MMBtu January 18, 2016. A forecast by Platts Analytics' supply-and-demand model calls for a draw of 55 Bcf for the week ending January 3. If the forecast holds, the withdrawal would be less than one-third of the five-year-average pull of 184 Bcf.
US oil, gas rig count down by 4 to 836, lowest since early 2017: Enverus— The US oil and gas rigs count dropped by four on the week to 836, the lowest total since early February 2017, consultants Enverus said Thursday, in the first rig tally of the 2020s. The number of rigs chasing crude oil for the week ended January 1 was down by three to 670, while gas-oriented rigs moved up by one to 163. Totals for rigs not classified as either oil or gas dropped by two. The total domestic rig count has lost just over 400 rigs, or 32%, since the recent peak of 1,237 in mid-November 2018. The US rig count fell 27% this year, starting at 1,145 rigs before shedding 309. In the coming months, S&P Global Platts Analytics forecasts "subtle" rig declines across the board, analyst Taylor Cavey said, before totals "hold relatively flat." "Some producers are taking a maintenance-mode approach and are dropping rigs here and there, whereas other operators plan to keep drilling steady and grow production slightly via further efficiency gains," Cavey said. Activity-wise, operators ushered in the new year and decade on a low note for some of the US' largest oil and gas basins. The number of rigs in the Permian Basin of West Texas and New Mexico was up by one on the week to 396, but last week's 395 was the lowest number in the giant play since July 2017. In recent weeks, the Marcellus Shale, mostly sited in Pennsylvania, and the Haynesville Shale, in East Texas and Northwest Louisiana, have also hovered at levels last seen in 2017. On Thursday, the Haynesville was up one rig on the week to 48, while the Marcellus had dropped by two to 37. Specifically, the Dry Marcellus (18 rigs) and Wet Marcellus (19 rigs) were each down one. Most basins either gained or lost a rig or two over the Christmas-to-New Year holiday week.Click here for full-size image. The Denver-Julesburg Basin in Colorado gained two rigs on the week for a total 20, while the Williston Basin (54 rigs), in North Dakota and Montana, and the SCOOP-STACK (42 rigs), in Oklahoma, each gained one. The Eagle Ford Shale in South Texas lost two rigs leaving 79, and the Utica Shale, mostly in Ohio, slipped by one to 11. While the Eagle Ford was mostly range-bound with a rig count in the 70s and 80s for most of 2019, that was not true of the SCOOP-STACK, which fell 60% over the full year. The Oklahoma basin began 2019 at 105 rigs. Apart from recent weeks, the last time it posted rig counts in the low 40s was in August 2016. Many operators with acreage in that play have opted to shift capital dollars to the Permian, which is more productive.
Directional Drilling Market Research Report (2019-2026) By Business Growth, Trend, Segmentation, Top Key Players, Revenue and Industry Expansion Strategies - Increasing demand for onshore exploration activities is expected to boost the global directional drilling services market value to US$ 18 bn by 2026 from US$ 9 Bn in 2018, reveals Fortune Business Insights in its report, titled “Directional Drilling Market Size, Share and Global Trend By Type (Conventional, Rotary Steerable System), By Service (Logging-While-Drilling, Measurement-While-Drilling, Rotary Steerable System, MUD Motors, Others), By Application (Onshore, Offshore), and Geography Forecast Till 2026.” The report also incorporates valuable analysis of the market trends and key factors that will play an influential role in the forecast period. According to the report, the global directional drilling services market is projected to register a CAGR of 9.52% till 2026. Directional drilling is targeted drilling which involves attacking wells from multiple angles and to better access oil and gas reserves. The process uses different instruments such as mud motors, whip stocks, 3D measuring devices, and drill bits. This type of drilling also allows for boring of multiple wells using the same vertical bore, which reduces the environmental impact of the process.
As Shale Wells Age, Gap Between Forecasts and Performance Grows – WSJ- Thousands of shale wells are on track to produce less oil and gas than companies projected to investors, a Wall Street Journal analysis shows The early promises of blockbuster shale wells that many fracking companies made to investors are looking even more suspect as the wells age. For years, frackers touted estimates of how much oil and gas their wells would produce as they sought to raise capital and entice shareholders. Many of those estimates are falling short.
U.S. shale producers to tap brakes in 2020 after years of rapid growth - Spending cuts and production declines common to shale wells mean U.S. output growth is expected to brake from 2019’s pace that pushed domestic production past 13 million barrels per day (bpd). Some analyst forecasts for next year call for growth to slow, potentially to a rate of just 100,000 new bpd. Over the latest decade, the shale revolution turned the United States into the world’s largest crude producer and a force in energy exports. Yet the revolution did not translate to higher stock prices. The S&P 500 Energy sector only gained 6% for the decade, far less than the 180% return for the broader stock market. The decade-long oil expansion failed to boost profits, which has discouraged investors. The shale industry was squeezed by an OPEC price war that began in 2014, sending U.S. crude prices below $30 per barrel at one point. Production temporarily slowed, but accelerated into the end of the decade as companies cut costs and grew more efficient. Now, with investor returns flagging, the industry no longer believes in drilling its way to success even at higher prices. “The drumbeat has been loud and uniform from investors,” said Parsley Energy (PE.N) Chief Executive Officer Matt Gallagher. The shale producer’s spending next year will drop about 15% and will not rise even if oil prices do, instead using higher returns to pay down debt, he said.
Is The Shale Boom Running On Fumes? - Shale drilling does not produce as much oil and gas as the industry promised, raising questions about the productivity, profitability and, ultimately, the longevity of the fracking boom.The Wall Street Journal published a damning investigation into the productivity of thousands of shale wells, finding that as time has passed, oil and gas production from shale wells has proved to be more disappointing than previously thought. The report adds more evidence to the conclusion that the WSJ came to nearly a year ago, which raised serious questions about problems endemic to shale drilling.After an initial burst of production, shale wells decline rapidly, a fact that has been widely known since the fracking boom began more than a decade ago. However, companies promised that these wells would stay online for years, perhaps even decades, even though they would produce at a small fraction of their initial peak.But as time has passed, wells drilled years ago are now producing a lot less than previously thought. The WSJ collected data on the 29 largest shale producers. A year ago, the WSJ found that wells produced from those companies were on track to extract 10 percent less oil and gas over their lifespans than the companies promised. Now, with new data, the WSJ finds that those wells could produce 15 percent less than initially advertised.That adds up to a gap of around 1.4 billion barrels of oil and gas over 30 years, the WSJ says, or around $60 billion at current prices. Put another way, the 29 largest shale companies are set to produce $60 billion less value than they initially told investors. The WSJ pointed to the example of Whiting Petroleum, which told investors that each of its wells drilled in North Dakota in 2015 would produce a cumulative 700,000 barrels of oil and gas over their full lifetimes. In early 2019, using data from Rystad, the WSJ found that the real figure might be more like 590,000 barrels. As 2019 comes to a close, the WSJ found that the most up-to-date data now pegs that estimate at 540,000 barrels. In other words, Whiting’s wells are on track to produce nearly a quarter less than previously thought.There are some serious implications from this revelation. Shale companies may not be as valuable as investors previously thought. Shale drilling in general may be less profitable than previously thought, and it has long been dogged by a questionable business model. Moreover, to keep output from falling, companies will have to spend more and drill at a faster rate. In the end, the U.S. may not produce as much oil and gas as expected. Critics of the shale industry have raised similar concerns in the past. For instance, the Post Carbon Institute has repeatedly published reports questioning the longevity of the shale boom. The latest analysis came in November, in which author J. David Hughes said the EIA’s reference case for U.S. oil and gas production from each shale basin through 2050 is “extremely optimistic for the most part, and therefore highly unlikely to be realized.”
Shell Makes Haynesville Shale Deal - Castleton Commodities International LLC’s subsidiary, Castleton Resources LLC (CR), has acquired the East Texas and North Louisiana Haynesville shale assets of Shell’s subsidiary, BG US Production Company LLC. As a result of the deal, CR will hold approximately 222,400 net acres in the region and produce approximately 334 million cubic feet equivalent per day (net), according to CR. The value of the deal was not disclosed by CR. “Castleton Resources will execute this transaction with no increase in ongoing general and administrative expenses,” Craig Jarchow, president and chief executive officer of CR, said in a company statement.. In parallel with the Shell transaction, Tokyo Gas America Ltd. will increase its interest in Castleton Resources from 30 percent to approximately 46 percent. “We are pleased to complete this important transaction and take yet another step towards becoming a leading gas producer in the region,” Jun Tabei, president and chief executive officer of Tokyo Gas America Ltd, said in a company statement..
Magnolia LNG's supply deal with Vietnam takes another step forward - A liquefied natural gas supply deal between the proposed Magnolia LNG export terminal in Louisiana and the Vietnamese government took a major step forward. In a Dec. 19 decision, the Vietnamese government added the Bac Lieu LNG-to-Power project to its National Power Development Plan. Under the plan, Singapore-based Delta Offshore Energy will build a natural gas-fired power plant in Bac Lieu province and a supporting offshore LNG import terminal. LNG Limited, the Australia and Houston-based company developing Magnolia LNG export terminal in Lake Charles, landed a 20-year deal in September to supply 2 million metric tons of liquefied natural gas per year to Delta's 3,200-megawatt power plant. The addition of the project to Vietnam's National Power Development Plan clears the path for Delta to negotiate and finalize the power purchase agreement for the natural gas-fired power plant, which had originally been planned as a coal-fired facility. Magnolia LNG has yet to be built, but the company holds a federal permit to build a plant that will produce 8 million metric tons of LNG per year. LNG Limited is seeking permission to boost that production by another 800,000 metric tons per year; the Vietnamese supply represents one-fourth the proposed plant's currently permitted production.Delta Offshore Energy plans to build a natural gas power plant in Bac Lieu province as well as an offshore LNG import terminal, known in the industry as a floating storage regasification unit, or FSRU. Tankers from Magnolia LNG will arrive at the planned FSRU, where the supercooled liquid fuel will be converted back into its gas form and fed into an underwater pipeline that will move the natural gas to the onshore power plant.
Interior: Lack of alert system worsened 2017 Gulf spill -- Friday, January 3, 2020 --A 2017 oil spill that leaked 16,000 barrels of crude into the Gulf of Mexico wasn't stopped sooner because there was no alert system to flag the unfolding crisis nearly a mile beneath the water's surface, according to a panel investigation. Investigation- Fuel spill at diesel storage facility — Clean-up crews, with absorbent pads and an excavator, are currently working at Eastern Propane's bulk storage facility on Twombley Road in North Berwick. A spokesman from the Maine Department of Environmental Protection tells NEWS CENTER Maine a 700-gallon diesel fuel spill was 'promptly' reported the day before Thanksgiving. A DEP Responder and Members of the Division of Technical Services Tech Services were called to the scene and Clean Harbors remained at the facility while remediation is ongoing. Eastern Propane, based out of New Hampshire, did not immediately return calls for comment. A NEWS CENTER Maine investigation unveiled this isn't the first time crews have responded to this address for a spill. There have been two separate incidents while the property was owned by Falls and Webb Oil, Inc. and Falls, Inc. in 2008 and 2007 respectively. A full spill report filed in the Bureau of Remediation and Waste Management Hazadarous and Oil Spill System shows on Dec. 31, 2007, a leak was reported. Crews disposed of over 4,000 tons of contaminated soil and recovered 2,400 gallons of oil. The report says 415,000 gallons of groundwater was treated as a result.
Enbridge retrieves rod from bottom of Straits of Mackinac (AP) — Enbridge Inc. said Monday that it retrieved a 45-foot steel rod that was resting against an underwater oil pipeline where lakes Michigan and Huron converge. The debris had been at the bottom of the Straits of Mackinac since September, when a borehole collapsed during geotechnical work in advance of the construction of a tunnel to surround the Line 5 pipes. Enbridge deployed a remote-operated vehicle to remove the rod on Saturday night, said spokesman Ryan Duffy. “Favorable weather conditions at the Straits in recent weeks prevented the water from icing over, providing Enbridge a window of opportunity to complete this work,” he said. The rod had moved from its original position near the pipeline and was found resting on the west leg. It never posed a safety or environmental risk to Line 5, the water or ship traffic, Duffy said. The Canadian-based company’s initial decision to wait two months to report the incident irked state regulators. The twin pipes are part of Line 5, which carries crude oil and natural gas liquids used to make propane. The underground line runs between Superior, Wisconsin, and Sarnia, Ontario. The Straits of Mackinac segment is divided into two adjacent pipes.
What’s Behind Big Oil’s Promises of Emissions Cuts? Lots of Wiggle Room. --The oil and gas industry seems to have entered a state of cognitive dissonance. Like never before, energy companies are publicly acknowledging the threat posed by climate change and the need for society to reduce greenhouse gas emissions. At the same time, oil and gas production in the U.S. and globally continues to soar. Major oil companies have announced a series of commitments to reduce their emissions, even as they continue to invest in new projects that will boost production of the very fossil fuels that are driving climate change. This tension has given rise to statements that seem to defy logic. In October, Michael Rubio, Chevron's general manager for environmental, social and governance engagement, told The New York Times that "you can increase your fossil-fuel production, deliver superior returns for your shareholders, and still be compliant with Paris.""Paris" is the Paris climate accord, by which countries worldwide agreed to reduce emissions to slow global warming. To meet its goals, fossil fuel burning will have to peak and fall rapidly within a couple of decades.Instead, the world is on track to produce more than 40 percent more oil and gas by 2040 than would be consistent with the Paris goal of limiting warming to less than 2 degrees Celsius, aUnited Nations report published in November found. Another recent report, published by the climate and financial think tank Carbon Tracker Initiative, found that the largest investor-owned oil companies had recently invested billions in new projects that are not consistent with that goal.If all that oil and gas is produced as planned, dangerous levels of warming become likely, if not a sure bet. If it is not all produced—if nations do start to bend the emissions curve sharply downward—the oil and gas industry will have a problem: Its business model depends on growing demand for oil and gas.
Big oil asks government to protect its Texas facilities from climate change - As the nation plans new defenses against the more powerful storms and higher tides expected from climate change, one project stands out: an ambitious proposal to build a nearly 60-mile "spine" of concrete seawalls, earthen barriers, floating gates and steel levees on the Texas Gulf Coast.The plan is focused on a stretch of coastline that runs from the Louisiana border to industrial enclaves south of Houston that are home to one of the world's largest concentrations of petrochemical facilities, including most of Texas' 30 refineries, which represent 30 percent of the nation's refining capacity.Texas is seeking at least $12 billion for the full coastal spine, with nearly all of it coming from public funds. Last month, the government fast-tracked an initial $3.9 billion for three separate, smaller storm barrier projects that would specifically protect oil facilities.That followed Hurricane Harvey, which roared ashore last Aug. 25 and swamped Houston and parts of the coast, temporarily knocking out a quarter of the area's oil refining capacity and causing average gasoline prices to jump 28 cents a gallon nationwide. Many Republicans argue that the Texas oil projects belong at the top of Washington's spending list.But the idea of taxpayers around the country paying to protect refineries worth billions, and in a state where top politicians still dispute climate change's validity, doesn't sit well with some. "The oil and gas industry is getting a free ride," said Brandt Mannchen, a member of the Sierra Club's executive committee in Houston. There's all this push like, 'Please Senator Cornyn, Please Senator Cruz, we need money for this and that.'" Normally outspoken critics of federal spending, Texas Sens. John Cornyn and Ted Cruz both backed using taxpayer funds to fortify the oil facilities' protections and the Texas coast. Cruz called it "a tremendous step forward." Texas has not tapped its own rainy day fund of around $11 billion. According to federal rules, 35 percent of funds spent by the Army Corps of Engineers must be matched by local jurisdictions, and the GOP-controlled state Legislature could help cover such costs. But such spending may be tough for many conservatives to swallow. "Texans are proud of their conservatism, but, unfortunately, when decisions get made in Washington, that frugality goes out the door."
Friends (And NGL Storage) In Low-Lying Places, Part 4 - MPLX's BANGL, Fracs And Exports Plan -- Over the past two years, MPLX has been ramping up its midstream development activity in the Lone Star State, or more specifically in the “Permian-to-Gulf” market, where it’s been building or buying into gathering systems, gas processing plants, and crude and natural gas takeaway pipelines, among other things. Marathon Petroleum Corp.’s midstream-focused master limited partnership also has been in hot pursuit of a number of possible NGL-related projects, including MPLX’s proposed Belvieu Alternative NGL (BANGL) Pipeline and three big fractionation plants in the Sweeny, TX, area, and a planned LPG export terminal in Texas City, TX. As a group, these projects would require millions of barrels of underground salt-cavern storage capacity for y-grade and NGL purity products along the Texas coast, as well as multiple pipeline connections to move the stuff to where it needs to be. Today, we continue our series on Gulf Coast NGL storage with a look at the NGL side of the MLP’s Permian-to-Gulf strategy. Texas’s Gulf Coast is in the midst of a major build-out of new fractionation plants (or “fracs”), steam crackers and LPG export facilities, all spurred by rising U.S. production of natural gas liquids. As we said in Part 1 of this series, this incremental NGL output and these new projects have been putting serious pressure on existing NGL pipeline and storage infrastructure, and prodding the development of new salt-cavern storage capacity for mixed NGLs and NGL purity products such as ethane, propane, normal butane, isobutane and natural gasoline. The most economical and practical way to transport and store these commodities is in their liquid state, which necessitates that the transport and storage occur under high pressure. And the most cost-effective way to provide large volumes of storage capacity at high pressure is to develop underground storage caverns within salt dome formations. There is currently about 260 MMbbl of NGL-related storage capacity in place at the NGL hub in Mont Belvieu, TX (red star in Figure 1). Elsewhere along the Texas coast, there is a total of about 100 MMbbl of NGL storage capacity, much of it tied to either fractionators or steam crackers. The companies holding the bulk of this “non-Mont Belvieu” storage capacity — at places like Stratton Ridge, Markham, Clemens Caverns and Hull (blue stars) — include Dow with about 40 MMbbl, Chevron Phillips Chemical with ~20 MMbbl, and Keyera, Phillips 66, Texas Brine, BP and others with ~10 MMbbl or less each for a combined 40 MMbbl.
Plains All American's Cactus II Ramps Up Corpus Deliveries - Permian oil prices are significantly stronger than they were at the end of 2018, averaging more than $60/bbl over the past week, compared to around $40/bbl this time last year. Some of that gain has been driven by an overall increase in world oil prices, a topic we will reserve for another time. However, much of the strength has been the result of Permian oil no longer needing to carry a huge discount to other domestic hubs as shippers compete for super-scarce pipeline space. For example, in December 2018, prices for West Texas Intermediate (WTI) at the Midland trading hub in the Permian were more than $12/bbl lower than the price of similar quality crude oil at the Magellan East Houston (MEH) hub along the Texas Gulf Coast. This year, that spread has narrowed to just over $2.00/bbl, while absolute prices on the coast are up almost $10/bbl. What’s driving this change? There are a variety of factors at play, but chief among them is the new pipeline infrastructure that has helped lift Permian producers’ oil price realizations. Today, we check in on the status of one of the major new pipelines that have contributed to the seismic shift in the Permian oil market this year. In Part 1 of this series, we discussed the prospective market impacts of one of the capacity additions: Plains All American’s new Cactus II Pipeline. Here, we provide an update on Cactus II, take a look at its most recent flow data, and begin to explore how its operation is affecting crude oil flows from the Permian. Cactus II (dark green line in Figure 1) consists of 575 miles of new 26-inch-diameter pipeline and extends from McCamey, TX, in the southern Midland Basin to delivery points near Corpus Christi. Note that Cactus II can also access the oil hub at Wink, TX, in the Delaware Basin via a capacity lease on another Plains-operated pipeline (segment under the dashed black oval). Cactus II can also source barrels from across the extensive Plains pipeline system in the Permian, although we have left those pipelines off Figure 1. Cactus II closely follows the route of Plains’ original Cactus Pipeline (light green line), and runs to Ingleside, TX, which is just across the bay from Corpus Christi. A final segment of Cactus II (dashed lime green line between Taft and Corpus) is expected to be completed to the Corpus Christi Ship Channel by the end of the first quarter of 2020.
Crude inventories plunge from record-high exports amid Iranian tensions --The nation’s stockpiles of commercial crude oil plunged by 11.5 million barrels last week thanks to record-high crude exports, adding more bullish news to oil prices that already were spiking worldwide amid an escalating U.S. conflict with Iran. Crude inventories plunge from record-high exports amid Iranian tensions- oil and gas 360 Source: Houston Chronicle The U.S. exported nearly 4.5 million barrels of crude per day last week – easily a new weekly record – as concerns of a new war brewed in the Middle East. The big drop in crude inventories was offset by gains in refined motor gasoline – 3.2 million barrels – and in distillate fuel oil – 8.8 million barrels – that’s used to make diesel and heating oils. However, drops in other grades of oils contributed to a cumulative dip of 2.9 million barrels of total U.S. petroleum stocks. This new year is the first in which the U.S. is expected to become a net exporter of petroleum, including refined products. But the U.S. will remain a net importer of crude oil. The U.S. is churning out an estimated record high of 12.9 million barrels of crude oil per day and exporting – at least last week – more than one-third of those supplies. Crude prices jumped about 4 percent Thursday evening and Friday morning after President Trump ordered the targeted killing of a top Iranian general and an allied Iraqi militia leader. The U.S. benchmark for oil traded well above $63 a barrel on Friday – its highest level in nearly nine months. The killings – and the potential Iranian counterattacks – put the U.S. and Iran on the brink of a broader conflict and potential war.
The US Crude Export Chronicles: December 2019 – Argus - Last month we devoted the entire blog to the Port of Corpus Christi and its emergence as a key outlet for US crude exports. Why? Some big new pipelines — including Cactus 2 and Epic — started service to that port.Blog post - The US Crude Export Chronicles: November 2019 US crude exports hit a record high of about 3.4mn b/d in October, according to the latest Census Bureau trade data. And that number will likely continue to climb. Keep in mind that the latest major pipeline from the Permian to Corpus Christi – Phillips 66’s 900,000 b/d Gray Oak pipeline, did not start initial service until late November, so expect more record highs as trade data is released in the new year. Gray Oak will also have destinations near Houston when it goes into full service in the first quarter of 2020. Lots of big midstream news lately as port expansions and crude carrier projects become the next frontier to move more US crude to global markets. Epic has loaded an Aframax-sized vessel with crude at its converted dock on the Inner Harbor of the Corpus Christi Ship Channel. Epic repurposed the former grain facility to export crude while a larger export terminal is under construction. The larger terminal will load Suezmax tankers and is expected to start service in the third quarter of 2020. Further out on the water, we may be seeing the first signs of consolidation in the race to build offshore very large crude carrier (VLCC) ports. Enbridge is joining Enterprise’s project to develop a VLCC terminal off the coast of Freeport, Texas. The two companies have executed a letter of intent agreeing to negotiate a deal which would allow Enbridge to buy into the project after it receives a deepwater license from US regulators. The VLCC projects tend to have catchy names and the Enterprise port is no exception – going by “SPOT” which is short for Sea Port Oil Terminal. Enbridge is also part of a competing project with Oiltanking with another memorable name, Texas Colt — short for the Texas Crude Offshore Loading Terminal. Enbridge said that it will work to market and seek customers for SPOT first "while positioning Texas Colt or a similar project to proceed in the future if the export market grows to require it."
Burn, Pay, Or Shut It Down- Three Evils For Permian Drillers - There was a time when natural gas was a welcomed byproduct of crude oil drilling, and drillers in the prolific Permian basin enjoyed this consolation prize--at least when natural gas prices were on the rise. All good things come to an end, though, and the amount of natural gas now exceeds the capacity to get rid of it. With pipeline capacity fully exploited and natural gas prices squarely in the red, Permian drillers today are faced with three lousy choices: burn off the natural gas, pay to have the gas removed, or slow oil drilling activities to staunch the flow of natural gas. Now, there is simply too much natural gas, and drillers in the American shale patch must face the not-so-pleasant music, with only one question remaining: which shale drillers can hold on until more pipeline capacity comes online? The first option for drillers trying to weather the natural gas storm is to burn it off. This is flaring--and it’s a rather unpopular method, publicly speaking, due to the negative impact on the environment. For drillers, though, it’s a cost-effective way of dealing with the glut, and since they all must answer to shareholders and lenders, flaring is the first choice when it comes to watching the bottom line. According to Rystad Energy, flaring and venting in the Permian basin reached an all-time high from July to September 2019--at 750 million cubic feet per day. Venting and flaring may be the cheapest option for oil and gas companies, but it’s also the most harmful to the environment, with flared and vented gas contributing to greenhouse gas emissions. Venting releases methane into the atmosphere, while flaring--which gets rid of the methane--still releases carbon dioxide into the air.Another method open to oil and gas companies in the Permian is to have their natural gas taken away. Oil drillers who come up with natural gas as a byproduct can--and do--pay to have it removed. Typically, as producers pay pipeline companies for use of the pipeline. They recoup their cost through natural gas profits, and those will longer term deals are essentially immune. For those companies who don’t have long-term contracted rates and contracted shipments, they are now paying others who have allotted space to take it--and at a huge loss, which has recently been considered a rather unpleasant cost of doing business in the oil industry. Finishing off our list of terrible options for oil drillers is to slow production until more pipeline capacity can be brought online. Oil production in the United States has increased by 1 million barrels per day from the beginning of the year. In the Permian specifically, oil production has increased from less than 2 million barrels per day just three years ago to nearly 5 million bpd today. And according to the EIA’s Monthly Drilling Productivity Report, January is expected to increase by 48,000 bpd over December. With every month, the natural gas problem grows. And as oil prices climb, the thought of shutting wells in looks less and less attractive.
Department of Environmental Quality sees declines in oil industry -- The Department of Environmental Quality says they've seen a decline in oil industry issues since 2013. They don't handle all oil spills, they split jurisdiction with the Department of Mineral Resources. They've seen a decline of more than 30 cases per year, and millions less in fines since 2013. Though it spiked in 2017."Designs are getting better, the companies are beginning to understand what's expected of them, and that we also have field inspectors that will go out and follow, if there's a report of a spill, that we will follow up on that and make sure on that it wasn't bigger than they've identified," said David Glatt, director.The director says that it isn't about bringing in money for the state, instead encouraging better protection of the environment. They allow companies to pay up to half of their fines on environmental improvement projects.
US judge rejects bid to kill Keystone pipeline lawsuits (AP) — Environmentalists and Native Americans can proceed with lawsuits challenging President Donald Trump’s approval of the Keystone XL oil pipeline from Canada, a federal judge in Montana ruled Friday. U.S. District Judge Brian Morris expressed skepticism over government arguments that Trump has unilateral authority to approve the $8 billion pipeline. In a separate ruling, the judge said the Rosebud Sioux and Fort Belknap Indian tribes had valid claims that approval of the line violated their treaty rights. But Morris denied a request from environmentalists to impose a court injunction blocking preliminary work on the pipeline, since no such work is planned until spring 2020. Morris had blocked work on the line in 2018, prompting Trump to issue a new permit in March in an attempt to circumvent the courts. The 1,200-mile (1,930-kilometer) pipeline would transport up to 830,000 barrels (35 million gallons) of crude daily from western Canada to terminals on the Gulf Coast. Opponents worry burning the tar sands oil that will be carried by the line will make climate change worse, and that it could break and spill into water bodies such as Montana’s Missouri River. TC Energy of Canada first proposed the project more than a decade ago but has been unable to get past the numerous lawsuits against it. Trump has been a strong supporter and revived Keystone XL after it was rejected under President Barack Obama.
Dakota Access pipeline owners want to pump more oil through Illinois. Critics worry the move will increase the risk of leaks or a devastating spill. Oil has been flowing through the Dakota Access pipeline across Illinois since the summer of 2017, traveling underground from the Mississippi River to a hub in a tiny central Illinois town. Every day, an average of 560,000 barrels of oil flows through the pipeline. Now the company that owns the pipeline, which begins in North Dakota, wants to nearly double the volume, pumping up to 1.1 million barrels from the oil-rich Bakken region through South Dakota and Iowa into Illinois. To increase the flow, the company wants to build a series of new pump stations along the 1,172-mile route, including in western Illinois, and upgrade its facilities where Dakota Access links up with other Midwestern pipelines. In Illinois, the oil companies filed a petition for the upgrades with the Illinois Commerce Commission, seeking authorization to build a new pump station in Hancock County, north of Quincy, and replace and add pumps at the oil tank complex in Patoka, about 80 miles east of St. Louis. The petition also requests authorization to build a new pump station on another pipeline at the southern edge of Illinois, near the town of Joppa on the Ohio River. But the June filing drew objections from two environmental groups and a landowner with property near the pipeline. Save Our Illinois Land and the Sierra Club filed objections to block the expansion, arguing that pumping more oil through the pipeline will increase the risk of spills and leaks along the rural route. “I don’t trust these people to operate in a safe and rational manner,” said Bill Klingele, who owns farmland adjacent to the pipeline in Brown County in western Illinois.
Federal agencies are required to consult with tribes about pipelines. They often don’t. - In Montana, the Keystone XL pipeline’s proposed path cuts underneath the Missouri River at the edge of the Fort Peck Reservation’s southwestern border. The Fort Peck Reservation is home to several bands of the Assiniboine and Sioux tribes, and a spill from the pipeline could contaminate their main source of drinking water. Federal agencies are required by law to work with Native American tribes that might be affected by oil and gas projects. But there hasn’t been a single public hearing on the Fort Peck Reservation yet, even though the pipeline has been a source of controversy for about a decade. There are similar stories in Virginia, New Mexico, and elsewhere across the country, according to Indian law experts tracking oil and gas projects. Tribal officials say they try to contact federal agencies and don’t hear back, or that agencies make key decisions before contacting them. Sometimes an agency sends letters asking for tribes’ input to the wrong address or never contacts them at all. “It’s difficult for tribes to know what to expect when they get into the process because some agencies are not fulfilling their obligations,” said Marion Werkheiser, a founding partner at the law firm Cultural Heritage Partners, which works with tribes, developers, and local governments on cultural and historic preservation. The Monacan Indian Nation, a federally recognized tribe that Werkheiser represents, sent several letters in 2019 to the Federal Energy Regulatory Commission, the agency responsible for approving an extension of the Mountain Valley Pipeline through southern Virginia and central North Carolina. They’re worried about protecting burial sites and cultural resources along the pipeline’s route. But the agency hasn’t responded, Werkheiser said. Last year, the Bureau of Land Management announced that it’s considering leasing land near the Chaco Culture National Historical Park in New Mexico for oil and gas leasing. In a letter to the agency, Brian Vallo, governor of the Pueblo of Acoma, said that at the time nearby tribes had not been notified about it. He also said that calls by tribal members to local field offices went unanswered. The Government Accountability Office contacted officials from 57 tribes about their experience working with the federal government and laid out a range of problems in a report last year. It found a lack of communication between agencies and tribes, a lack of respect for tribal sovereignty, and little accountability. That’s despite requirements to “consult” with tribes enshrined in two federal laws as well asexecutive orders by presidents Bill Clinton and Barack Obama.
Crews work to contain fuel spill, recover locomotives after train derails into Kootenai River - A rock slide damaged and blocked BNSF train tracks along the Kootenai River late on New Year’s Day, sending two train operators, the lead locomotive, two other train engines and six empty rail cars into the waterway. The train operators were rescued from atop the sinking locomotive around 9 p.m. after Boundary County sheriff’s rescue crews maneuvered a boat alongside it 10 miles east of Bonners Ferry. Neither operator was injured. Boundary County declared a local emergency due to the incident and enacted an emergency order that closes all boat traffic on the stretch of the Kootenai River from the Rocky Point Boat Launch upriver to the Montana border, except for emergency response personnel, through Wednesday. Crews deployed containment booms into the water to contain the fuel leaking from the lead engine, according to Boundary County Emergency Management. BNSF officials estimated the engine contained at least 2,000 gallons of diesel fuel but did not know how much may have leaked into the river. “There are crews in boats on the river right now who are doing that investigation,” Boundary County emergency management spokesman Andrew O’Neel said on Thursday afternoon. “At this point it doesn’t look like there’s a whole lot that’s being captured … it doesn’t look like it’s leaking a lot right now,” O’Neel said. “They’re looking for places where there’s a collection of diesel fuel that they can then clean up.” O’Neel said it won’t be known how much fuel leaked until the locomotive is removed from the water. Removing all of the engines will take days at least, O’Neel said.
Sunken tugboat carrying 8K gallons of diesel pulled from Port of Stockton— Officials brought in two crane barges to pull a sunken tugboat from the Port of Stockton. The 64-foot tugboat, which was carrying an estimated 8,300 gallons of diesel, sunk Christmas Day, according to the state Office of Spill Prevention and Response. The crane barges were brought in from the Bay Area to lift the boat Sunday. Before pulling the boat out of the water, crews collected an oil sheen above the ship. Officials said that no "visibly oiled" wildlife was seen. It's not yet known why the boat sunk.
FERC makes Cal-ISO gas constraint tool permanent as Aliso Canyon limitations persist — California Independent System Operator has received the go-ahead to make its maximum gas burn constraint a permanent operational tool to help avoid blackouts in Southern California amid continued limited operations at the Aliso Canyon natural gas storage facility. When conditions warrant, the constraint allows Cal-ISO to limit the amount of natural gas that can be burned by power plants in the Southern California Gas and San Diego Gas & Electric regions. Cal-ISO was previously authorized to use the tool on a temporary basis. The Federal Energy Regulatory Commission Monday approved the grid operator's October 31 proposal (ER20-273) to make permanent three tariff provisions associated with the constraint. One of the tariff provisions authorizes enforcement of the constraint, while another gives Cal-ISO the authority to override competitive path assessments based on actual system conditions in order to deem certain transmission constraints uncompetitive when the gas constraint is enforced. The last provision permits Cal-ISO to suspend virtual bidding if the bids are introducing adverse market outcomes in conjunction with the use of the gas constraint. When Cal-ISO applied for the permanent extension, it asserted that using the maximum gas constraint provides itself and market participants "with a least cost market solution for dispatch of resources when the gas system is constrained, and it provides a more effective tool for managing the system reliably than exceptional dispatch." FERC agreed, finding that permanent implementation of the tariff provisions at issue would "help ensure that [Cal-ISO] continues to have the tools necessary to address risk associated with the potential impacts of the continued limited operability of Aliso Canyon on the reliability of [Cal-ISO's] system." Pacific Gas & Electric filed comments expressing concern with the financial impact on customers from real-time imbalance offset costs generated when the gas constraints are enforced. But FERC sided with Cal-ISO's argument that those uplift costs correlated to high gas costs in Southern California, not use of the constraint. Because allocation of those costs was not up for review, FERC found PG&E's comments to be beyond the scope of this proceeding. "Moreover, ... the use of exceptional dispatch, which is the alternative to using the constraint, also generates uplift costs that may extend beyond Southern California," FERC said.
US oil sector could face headwinds amid 2020 election uncertainty — Oil markets may be underestimating the risks to US production and export growth from the upcoming 2020 US presidential election, analysts told S&P Global Platts. Analysts expect that if a Democrat wins in November, the incoming administration will likely introduce new regulations limiting fracking, flaring, offshore drilling, and possibly exports, but it remains unclear how far these initiatives may go. "The market has become a little complacent in pricing in re-election for President Donald Trump," OANDA senior market analyst Edward Moya said. "The risks are pretty high. While Trump is still favorite, we still could see a progressive candidate come out with the nomination. It would be bad news for the US oil industry." Among the highest polling candidates, populists Senator Elizabeth Warren (D, MA) and Bernie Sanders (I, VT) have pushed hardest for policies aimed at severely limiting the US oil sector, including a ban on exports, fracking and leasing on federal waters. Other candidates, including frontrunner Senator Joe Biden (D, DE), have taken a more measured approach, not committing to all-out bans, but indicating that new limits and additional regulation would be considered. "If [President Donald] Trump wins it is status quo, but any Democrat - even if it's not a populist - would be under tremendous pressure to throw the base a bone and this is a bone they could throw," Confluence Investment Management chief market strategist Bill O'Grady said. US oil output has surged in recent years following the lifting of a decades-old crude oil export ban in late 2015 that allowed producers to ship surplus barrels abroad. Previously, most US production had to be consumed domestically by refineries, the bulk of which are tooled to run cheaper heavy, sour crude imports from the Middle East and Venezuela. This limited domestic appetite effectively put a ceiling on the mostly light, sweet crudes being produced in the Permian and other tight oil plays. The build-out of significant US Gulf Coast pipeline infrastructure during the Trump administration further incentivized US production by de-bottlenecking West Texas oil plays and propelled US crude output and exports to records heights in 2019. US crude production steadily increased in 2019 to more than 12.8 million b/d in December from around 11.8 million b/d in January, and exports soared to a weekly peak of 4.46 million b/d in late December, according to US Energy Information Administration.
2020: The Year Of The Oil Bankruptcies - A bankruptcy boom has hit the oil and gas industry, and it’s just getting started. Investors have lost their appetite for shale, and energy debt has become among the least desirable in the market. The industry has been teetering on the verge of mass hysteria for much of 2019 as a record number of energy companies folded. According to Energy and Restructuring law firm Hayes and Boone’s, a grand total of 50 energy companies filed for bankruptcy during the first nine months of the year, including 33 oil and gas producers, 15 oilfield services companies and two midstream companies.In contrast, 43 oil and gas companies filed for bankruptcy for the whole of 2018. The biggest oil and gas bankruptcy of the year--indeed, the biggest since 2016--was EP Energy, which filed for bankruptcy in October, unable to pay back some $5 billion in debt. Now, some observers are warning that the shakeout will pick up serious momentum in 2020. During the latest shale boom, the putative class valedictorian of the modern energy industry, American drillers binged on mountains of readily available debt as they capitalized on investors and financiers willing to gamble on the premise that fracking operations could be significantly cheaper and more efficient than conventional drillers.Before long, oil markets were flooded with a deluge of the commodity far outstripping demand. In what few could have foreseen, the US became the world’s largest oil producer, with its nearly 13 million b/d output turning it from a net importer to a net exporter of crude. Predictably, prices tanked by a sizable margin, dropping to levels well below the breakeven points of many drillers.Suddenly, investors became wary of the shale industry and energy debt became anathema.They have good reason to be scared. Companies with junk-rated bonds have been defaulting on interest payments at record levels, while dozens of smaller drillers that had saddled themselves with too much debt have been dropping like flies.Now analysts see this taking an even sharper turn, with more mergers and more debt restructurings required to get the industry back in shape. As Ken Monaghan, Amundi Pioneer co-director of high yield, has told CNBC: “We’re at the early stages [of the shakeout]. The problem is some of these companies still have a bit of rope to go. they don’t have [debt] maturities that are coming up in 2020 and 2021. They’re going to try to outrun the clock and hope that oil prices move higher.” Michael Bradley, energy strategist with Tudor, Pickering, Holt, has expressed a similar sentiment, saying that the market is no longer rewarding energy companies with aggressive expansion schemes, preferring instead to see profits and money returned to shareholders.
First Nation looks ahead after court sides with natural gas company -- A hereditary chief with the Wet'suwet'en First Nation says the community is expecting further police action after the British Columbia Supreme Court ruled in favour of a natural gas company that wants to build a pipeline through its territory. Na'moks, who also goes by John Ridsdale, said he wasn't surprised that the court granted Coastal GasLink an interim injunction against members of the First Nation and others who oppose the pipeline. The Dec. 31 ruling came just under a year after the RCMP enforced an injunction granted by the same court that drew international attention with the arrest of 14 people on Jan. 7, 2019. "We do expect the RCMP to bring it to another level. They did it last year, they'll do it again this year," he said in a telephone interview. The RCMP said in a statement that it respects the ruling and the judicial process, but it would not say if or when police would enforce the latest injunction. "The RCMP respects the rights of individuals to peaceful, lawful and safe protest and we are committed to facilitating a dialogue between all parties. We are impartial in this dispute and it is our hope that this can be resolved peacefully," Corp. Madonna Saunders said. The $6.6-billion Coastal GasLink pipeline would transport natural gas across 670 kilometres from northeastern B.C. to the LNG Canada export terminal in Kitimat. The company has said it signed agreements with all 20 elected First Nations councils along the path, however five hereditary chiefs of the Wet'suweten First Nation say the project has no authority without their consent. Na'moks said the First Nation is also exploring options for court action, including an appeal of the decision and a constitutional challenge. "We have a number of avenues open to us that we're looking at right now." The latest ruling expands the existing interim injunction. Following police enforcement last year, the hereditary chiefs reached an agreement with RCMP that Na'moks said at the time was to ensure the safety of local members. Under the agreement, the company must give the First Nation 24-hour notice of workers entering the site, he said. The agreement did not represent consent for the project and Na'moks said members remain firm in their opposition. "Our stance hasn't changed," he said Thursday. "Our people have said no to this, so we've said no."
The US sanctions on the Nord Stream 2 pipeline and the danger of World War III - The decision by the US Congress to impose sanctions on companies involved in the construction of the Nord Stream 2 gas pipeline underscores the sharp divisions between the imperialist powers and the acute danger of world war. In the past, the cutting off of energy supplies was considered an act of war. The US sanctions have brought the almost completed $10 billion project to a standstill, after the withdrawal of the Swiss firm Allseas, which was providing specialised ships to lay the pipeline. Russia plans to complete the pipeline with its own ship. But the vessel is currently docked in a Pacific harbour and must be refitted for the job, meaning that the completion of the pipeline, if it ever takes place, will be delayed by at least a year. The US sanctions not only target Russia, which relies on the income generated by gas exports, but also Germany, which views the pipeline as a strategic project that is essential for its energy security. Nord Stream 2 directly connects Russia and Germany across the Baltic Sea. The US has attempted in the past to impose its will on other states through sanctions. But these were directed against weaker states, like Iran or Venezuela, that Washington had declared to be its enemy, not against a NATO partner and the fourth largest economy in the world, after the US, China, and Japan. The reactions from Berlin, which range from accusations of interference in internal affairs to calls for retaliatory measures, have been predictably furious. But Germany is not the innocent victim it is claiming to be. Germany has been rearming for years in order to play a role on the world stage that corresponds to its economic might, and to enforce its imperialist interests independently of, and if necessary against, the United States. German arms exports reached a new record high last year. But the conflict over Nord Stream 2 is not the only one between Germany and the US. Germany, together with France and Britain, also rejected US sanctions on Iran and sought to bypass them. There are also sharp differences over China policy. Despite significant pressure from Washington, Berlin has to date rejected calls to exclude Chinese company Huawei from the building of its 5G network. There are also disagreements over the Chinese automaker BAIC’s plan to invest in Daimler. The US is seeking to prevent BAIC from purchasing a 10 percent stake in the German automaker, 10 percent of which is already owned by Chinese automaker Geely.
Russia Strikes $3B Deal With Ukraine on Gas Transit — In line with a recent deal for Moscow to supply Europe with gas through Ukraine for at least five years, Russian energy company Gazprom announced Friday that it paid $2.9 billion to Ukraine’s state-owned oil company Naftogaz.The deal marks a major settlement between the countries. After Moscow’s annexation of the Crimean Peninsula in 2014 escalated tensions, the two arbitrated over gas prices and transit fees for years in Stockholm. Naftogaz confirmed receipt of the payment.“Today, Naftogaz of Ukraine has received from Gazprom $2.918 billion, which includes the outstanding portion of the compensation awarded by the Stockholm Arbitral Tribunal in February 2018 and accrued interest,” the company said on its website Friday. “In total, Naftogaz received $5 billion from Gazprom in the result of the transit arbitration.”The new agreement dictates that Gazprom, which provides Europe with more than a third of its gas, can send 225 billion cubic meters (bcm) of gas using Ukraine’s pipelines. Ukraine, in return, is expected to withdraw its claims in all remaining arbitration litigation.“The parties [will] continue to negotiate conditions of further cooperation after 1 January 2020 when the current contract expires,” the Naftogaz release notes.Alexey Miller, chairman of the Gazprom management committee, announced on Dec. 21 that the contract would restore “the balance between the interests of [both] parties.”Russian President Vladimir Putin had noted earlier this month at his annual end-of-year news conference that Moscow wanted to continue to transport gas through Ukraine, despite Russia having built its own pipelines to Europe since it last struck a deal with Ukraine in 2010.“The question is the volume of this gas and the dates of the contract,” he said, maintaining that Russia was interested in giving Ukraine the business. Ukraine takes in close to $3 billion per year by sending Russian gas to Europe. Transit issues between the two countries began after the fall of the Soviet Union in 1991. Although Ukraine held control of the pipeline structures, Russia cut off its gas supplies several times in the 1990s.
Russia Goes For Global Gas Dominance - Despite the newly announced U.S. sanctions against the Nord Stream 2 project, Russia says it will build and launch next year the natural gas pipeline that has divided Europe for half a decade. With Nord Stream 2, Russia’s President Vladimir Putin will have several major natural gas projects completed in the past few years, Bloomberg Opinion’s Europe columnist Leonid Bershidsky writes.These projects will complete Putin’s plan to have Moscow not only continue holding a large share of gas supplies to Europe, but branch out Russian gas exports to the fastest growing gas import market, China, and seize a growing share of the global liquefied natural gas (LNG) market.Nord Stream 2 is the latest project in Putin’s plan for energy and geopolitical dominance in the world. Russia already holds a third of Europe’s gas imports. Nord Stream 2, when completed—because Russia believes it will be completed next year despite the sanctions—is set to further solidify Moscow’s reach into the north European market bypassing Ukraine.Before Nord Stream 2, Russia will have launched TurkStream, through which Russia’s gas giant Gazprom will carry pipeline gas to Turkey and south and southeastern Europe—a region already heavily dependent on Russian gas supplies. Putin and Turkish President Recep Tayyip Erdogan are set to officially launch the TurkStream gas pipeline on January 8.Early in December, Gazprom—which also leads the Nord Stream 2 project to carry Russian gas to Germany—launched the huge Power of Siberia pipeline project to deliver gas to China, whose gas consumption and imports are only set to increase over the coming years and decades. While Gazprom is launching new pipelines east and west, Russia’s largest private gas producer Novatek is boosting its presence on the global LNG market. Novatek, which already exports LNG from the Yamal LNG plant, gave in September the go-ahead to its second large LNG project, Arctic LNG 2 on the Gydan Peninsula.This year, Russia has supplied large volumes of LNG to Europe, apart from its pipeline supplies which account for a third of the European Union’s (EU) gas imports.In Q2 2019, thanks to the LNG supply glut and converging prices, the EU’s LNG imports jumped by 102 percent on the year, with Russia accounting for 19 percent of LNG imports, second only to Qatar with 30 percent, and ahead of the U.S. with 12 percent, the European Commission’s Quarterly Report on European Gas Markets shows.
Russian oil, condensate output surges to record-high in 2019 - (Reuters) - Russian oil and gas condensate production C-RU-OUT hit a record-high 11.25 million barrels per day (bpd) in 2019, beating the previous record of 11.16 million bpd set a year earlier, Energy Ministry data showed on Thursday. The figures show Russia continues to ramp up its oil and gas condensate production despite the impact of a tainted oil crisis earlier in the year which constrained output, as well as voluntary production cuts under a global deal to prop up prices. The ministry did not separate out figures for crude oil production and gas condensate production, which was excluded from output reduction quotas under its deal with the Organization of the Petroleum Exporting Countries (OPEC). Russian oil production has been rising for the past decade thanks to the startup of new fields and the introduction of new technologies at mature deposits. In tonnes, Russian oil and gas condensate output rose to 560.2 million last year, up from 555.84 million in 2018, as small-sized oil producers cranked up their output. According to the data, oil and gas condensate output at small producers jumped last year by almost 3% to 83.612 million tonnes, or 1.68 million bpd. In December, total oil and gas condensate stood at 11.262 million bpd, up from 11.244 million bpd in November, according to the data. In tonnes, oil output reached 47.629 million last month versus 46.019 million in November. Russian Energy Minister Alexander Novak expects Russian oil and condensate production of between 555 million tonnes and 565 million tonnes in 2020, or 11.12-11.32 million bpd using a conversion rate of 7.33 barrels per tonne of oil. Novak has said that Russia reduced its oil output excluding gas condensate by 240,000 bpd in late December compared with levels in October 2018, the baseline for the global deal.
NLNG takes Train 7 FID -Nigeria LNG Ltd. (NLNG) has taken final investment decision (FID) for its Train 7 project at its Bonny liquefaction plant. The project will increase capacity of NLNG’s plant to 30 million tonnes/year (tpy) from 22 million tpy.Award of contracts for engineering, procurement, and construction activities will follow closure of financing, and finalization of commercial agreements, expected in early 2020.Construction will take about 5 years, with first LNG expected in 2025. NLNG is joint venture of Nigerian National Petroleum Corp. (49%), Shell Gas BV (25.6%), Total Gaz Electricite Holdings France (15%), and Eni International NA NV S.ar.l (10.4%).
Nigerian communities struggle with devastating oil spills - Martha Alfred used to harvest 20 bags of cassava each year before an oil spill forced her to abandon her field and hawk roasted fish to survive. Her smallholding at Ikarama-Okordia, a community in southern Nigeria's Bayelsa state, became unfit for growing crops after crude from a nearby Shell facility spewed into the environment last August, she says. Today, the 33-year-old mother of two looks angry and helpless, her woes compounded by downpours during the last rainy season that flooded her land. "The soil has become infertile because of the spills," Alfred told AFP. "Each time I remember the spills and now the floods, my heart bleeds," she said. "People from Shell came and promised to do something for me. Up until now I have not heard from them." Ikarama-Okordia, a collection of villages, is one of the most polluted sites in the oil and gas-rich Niger Delta. A major pipeline that passes through the fishing and farming community of 50,000 people has been the subject of spills and militant attacks for over 20 years. Shell said it recorded a total of 21 spills in the area between 2009 and 2018. Overall, rights groups say that millions of barrels of crude have leaked out across the Niger Delta region over the years. The oil companies blame most of the leaks on sabotage from local residents and criminal gangs stealing the crude. But under Nigerian laws, the firms are obliged to clean up all spills whatever their cause. Villagers argue some spills are due to operational factors. "It's not completely true all the incidents are caused by sabotage. Some of them are due to equipment failures," Ikarama community leader Morris Lamiengha told AFP. Asked about the allegations from the residents of Ikarama-Okordia, Shell insisted it meets its obligations on all clean-ups and helps affected communities whatever the reasons for the leakages.
Brazilian northeast beaches hit by second oil spill (Reuters) - Crude oil smudges have been spotted at some Brazilian beaches in the northeast state of Ceará, the country’s navy said on Monday, almost two months after the area was hit by another oil slick. That was part of a broader spill, whose origin remains a mystery, that stained hundreds of beaches on Brazil’s northeast coast between September and November, threatening marine life, tourism and fishing. The navy said samples of the new spill were being sent for analysis to a marine studies institute, adding that sailors, volunteers, members of environmental agency IBAMA and others were recovering the oil traces from the beaches.Tourism operators in the community of Caetanos de Cima, in Ceará state, also expressed concern about the spill. “There was a lot of oil in the beaches in the morning. It seems to be more than we saw the first time that this happened, in early November,” said Helena Soares, who works with community tourism in the area. Rivelino Cavalcante, an ocean researcher at the Federal University of Ceará, told news website G1 that a large quantity of the same oil that appeared on beaches earlier this year still lay in the seabed and was moving to shore because of ocean currents. Brazilian government officials have said that tests indicated Venezuela as the probable origin of the oil. The country dismissed that assertion.
Mysterious oil washes up on Brazilian shores - For the past three months, thick crude oil blobs have washed up on beaches along more than 4,400 kilometers (2,700 miles) of Brazil’s coastline, mangroves and reefs in the worst oil spill in the country’s history. The exact date the oil first reached Brazil’s shores is unclear, but government reports point to August 30. As of December 18, the oil had polluted more than 950 beaches, including some of the country’s most famous, such as Porto de Galinhas, in the state of Pernambuco, and Praia do Forte, in Bahia. The sludge had reached 127 municipalities and 11 states, according to the federal environmental agency Ibama. An estimate of 5,000 tonnes of oil have been removed but new areas continue to be affected. Lab tests conducted by the Brazilian Navy indicated that the oil washing ashore shared the same properties as crude originating from Venezuela. Caracas and state oil firm PDVSA have denied any involvement in the spill. Despite identifying the oil’s characteristics, authorities and experts were unable to identify the origin of the spill. An unproven prevailing theory is that the oil came from a botched “ship-to-ship” transfer when oil was piped between ships at sea. Tracking the oil is especially difficult because the oil is heavy crude so dense that it does not float. Instead, it travels below the water’s surface, making it almost impossible to gauge the full scale of the spill. “Because the oil doesn’t appear on satellite images, we can’t predict the areas it’s going to affect,” said Cristiane de Oliveira, Ibama’s environmental risk prevention and management coordinator. “This is an unprecedented incident in the world in terms of characteristics and dimension.” In October, the engineering institute of Rio de Janeiro’s federal university Coppe conducted a study to simulate possible points of origin of the oil. Considering factors like ocean currents and winds during the 80 days before the first clumps appeared, the study identified three areas between 300 and 600 kilometers away from the shore that could be where the oil first originated. Researchers are comparing that information with ship tracking data but have not released findings. Recent studies conducted by the Brazilian National Institute for Space Research (INPE), however, indicate that the oil would have moved from the coast of southern Africa in April to the Brazilian coast in September.
PPL discovers Balochistan hydrocarbons - Pakistan Petroleum Ltd. (PPL) has made a hydrocarbons discovery from its first Margand block exploratory well, Margand X-1, in Kalat district, Balochistan province. Margand X-1 spudded June 30, 2019, and reached 4,500-m MD inside Chiltan limestone. Modular dynamics testing proved the presence of hydrocarbons. During drillstem tests the well flowed 10.7 MMcfd of gas at 1-in. choke size with flowing well head pressure of ~516 psi and 132 b/d of liquid. The liquid’s makeup is being investigated. The well has potential to flow at higher rates after acid stimulation. This is the first gas discovery on Kalat plateau, according to PPL, which also said the discovery has opened a new sub-basin for further hydrocarbon exploration.
Indonesian farmers seek $21b in Montara compensation - Indonesian seaweed farmers and fishermen have filed a formal claim with the United Nations for $US15 billion ($A21 billion) in compensation from Australia over the environmental damage from the Montara oil spill. A blowout on the Montara rig off Western Australia on August 21, 2009, spewed oil and gas into the Timor Sea between the two countries. The West Timor Care Foundation, representing the Indonesian claimants, says the spill killed the livelihoods of more than 100,000 people, caused the communities "strange diseases" and destroyed coral reefs. "These claims are not excessive and are based on a credible socio-economic loss count," the organisation said in a statement. A class action brought in June 2016 against PTTEP Australasia (Ashmore Cartier) Pty Ltd, a subsidiary of the Thai state company that operated the rig during the spill, is still being heard in the Federal Court in Sydney.
OPEC Aims to Prop Up Oil Prices - At December’s meeting in Vienna, OPEC plus agreed production cuts of 500,000 barrels a day for the first quarter of 2020. This is over and above the production cut of 1.2 million b/d (m b/d) announced a year ago. Furthermore, Saudi Arabia continues to shoulder most of the extra voluntary cuts in output, in an attempt to balance the market and support crude prices. However, in reality both Nigeria and Iraq will continue to produce more than their allotted quota thus reinforcing the Paris based IEA ‘s projection that, even if all OPEC members and Russia were to comply 100 percent, global oil inventories could still rise by 700,000 barrels a day in the first quarter, due to weak demand in the global economy. This would hold prices down. Oil traders are not very impressed with OPEC’s decision, which in truth; just made official the unofficial extra production cuts they have made for much of the past year. In addition, Rystad Energy market research modelling suggests that in order to balance the market, OPEC would need to reduce crude production to 28.9 million bpd – a drop of 0.8 million bpd from the level seen in the fourth quarter of 2019-levels. This projection is based on forecasts for demand, estimates of non-OPEC supply increases from Brazil, Canada, Norway and Guyana, as well as the impact of new International Maritime Organisation 2020 regulations on oil used as fuel for ships. Therefore, global output will continue to exceed OPEC and its alliance’s production cuts. The flood of crude will arrive even as concerns about climate change are growing and worldwide oil demand is slowing. And it is not coming from the usual producers, but from Brazil, Canada, Norway and Guyana, countries that are either not known for oil, or whose production has been lacklustre in recent years. Together, these four countries alone stand to add nearly a million barrels a day to the market in 2020 and a further million more in 2021. That boost in production, along with global efforts to lower emissions, will almost certainly push oil prices down. But above all, on the supply side is the emergence of the U.S. as a major oil producer, which has turned the country into a net oil exporter for the first time in decades. Burgeoning shale oil has succeeded in holding down crude prices to between $60-$70 a barrel. However, some traders are betting that U.S. shale production could slow in 2020, after a period of lower prices and signs that the industry is no longer prepared to spend so aggressively to fund growth.
‘Big uncertainty’ over US oil output will be key to oil prices in 2020, analysts say - The question of how much crude U.S. producers may be able to add this year could be pivotal for oil prices in 2020, analysts told CNBC, while warning of the potential for “vicious corrections” in the coming months. Speaking to CNBC’s “Squawk Box Europe” on Thursday, Chris Weafer, a senior partner at Macro-Advisory, suggested three “critical factors” were set to have the greatest influence over crude futures this year. The first two factors were identified as oil demand growth and the current deal between OPEC and its allied partners. The group, often referred to as OPEC+, agreed to cut oil production by an additional 500,000 barrels per day (b/d) from Jan. 1, further deepening their previous cut of 1.2 million b/d. “The big uncertainty this year — and it is already beginning to be talked about — is: Can or will U.S. producers be able to continue to add as much extra volume as they have been for the last seven or eight years?” “This is a huge question,” Weafer said. The International Energy Agency projected last month that total U.S. oil production growth will slow to 1.1 million b/d in 2020, down from 1.6 million b/d in 2019. In such a scenario, Weafer said that, assuming the OPEC+ deal remains in place, oil prices should trade in the $60 to $70 price range. Nonetheless, he warned many were becoming concerned that U.S. production growth might have passed its peak, amid speculation the industry will not be able to increase production at the same rate in 2020 as it has done in previous years.
Oil prices are at a three-month high, buoyed by expected U.S.-China trade deal - Oil prices rose on Monday to three-month highs, lifted by optimism over an expected China-U.S. trade deal and upbeat industrial data, while traders kept a close watch on the Middle East following U.S. air strikes in Iraq and Syria. International benchmark Brent reached US$68.99 a barrel, while U.S. crude futures hit US$62.34 a barrel, both the highest since Sept. 17. For the year, Brent has risen around 27 per cent in 2019, and the U.S. benchmark is up about 36 per cent. Futures eased during the session, with Brent crude futures rising 28 cents to settle at $68.44 a barrel. West Texas Intermediate (WTI) crude futures fell 4 cents to settle at US$61.68 a barrel. White House trade adviser Peter Navarro told Fox News in an interview that the U.S.-China Phase 1 trade deal would likely be signed in the next week. He cited but did not confirm a report that Chinese Vice Premier Liu He would visit this week to sign the deal. “Washington has sent an invitation and Beijing has accepted it,” the South China Morning Post quoted a source as saying. “U.S.-China trade optimism continues to spur demand for risky assets such as oil, other industrial commodities, equities,” Jim Ritterbusch, president of trading advisory firm Ritterbusch and Associates, said in a note. In China, factory activity likely expanded again in December although markets await details on the trade truce, a Reuters poll showed. Elsewhere, investors are closely watching events in the Middle East after the United States carried out air strikes on Sunday against the Kataib Hezbollah militia group, while protesters in Iraq on Saturday briefly forced the closure of its southern Nassiriya oilfield. READ MORE: U.S. slams ‘coercive’ ongoing detentions of 2 Canadians as China row continues Libyan state oil firm NOC said it is considering closure of its western Zawiya port and evacuating staff from the refinery due to clashes nearby.
Oil ends slightly lower, snapping 4-day winning streak - Oil futures ended with small losses Monday, snapping a four-day winning streak in quiet trading in the next-to-last trading session of the year. West Texas Intermediate crude for February delivery CLG20, -0.02% on the New York Mercantile Exchange fell 4 cents, or less than 0.1%, to end at $61.68 a barrel. March Brent crude UK:BRNG20, the most-active contract, fell 20 cents, or 0.3%, to close at $66.67 a barrel on ICE Europe. Monday marked the expiration day of the February Brent contract CLG20, -0.02%, which rose 28 cents, or 0.4%, to close at $68.44 a barrel. Both grades traded at their highest levels for most-active futures contracts since mid-September, when a drone attack on Saudi oil facilities caused crude prices to spike. WTI crude, the U.S. benchmark, and Brent, the global benchmark, are up around 11.8% and 10.4% this month, respectively. That puts WTI on track for a 36% gain so far this year, while Brent is up around 24%. “Both the Brent and WTI oil markets have rallied nearly 20% over the past couple of months of trading to three-month highs just below $69.00 and just above $62.00 in Brent crude and WTI oil, respectively, as easing fears of slowing global oil and fuel demand growth underpinned by a U.S.-China trade agreement, increased OPEC plus output cuts, and fears of Middle East supply disruption propelled the markets to levels not seen since the middle of September,” wrote analysts at TFS Energy, in a note. “However, expectations of increased non-OPEC production growth in the coming year will likely provide resistance to rising oil prices in the coming months.”
Oil prices steady, on track for biggest yearly rise since 2016 - Oil prices held steady on the final day of the year on Tuesday, heading for their biggest annual rise since 2016, supported by a thaw in the prolonged U.S.-China trade dispute and supply cuts. Brent crude futures for March delivery, the new front month contract, were at $66.66 a barrel, down 1 cent, by 0258 GMT. Brent for February delivery closed on Monday at $68.44 . U.S. West Texas Intermediate (WTI) crude for February was down 3 cents at $61.65. Brent has gained about 24% in 2019 and WTI has risen roughly 36%. Both benchmarks are set for their biggest yearly gain in three years, backed by a breakthrough in U.S.-China trade talks and output cuts pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies. The White House’s trade adviser said on Monday that the U.S.-China Phase 1 trade deal would likely be signed in the next week. “Oil prices have followed the general de-risking drift into year-end despite a rise in Middle East tensions and last week’s bullish-for-oil-price inventory draws as the broader markets appear to be losing some of that holiday cheer,” said Stephen Innes, chief Asia market strategist at AxiTrader. Tensions remain high in the Middle East after U.S. air strikes on Sunday against the Katib Hezbollah militia group in Iraq and Syria. Operations resumed at Iraq’s Nassiriya oilfield resumed on Monday after protesters briefly halted production. Looking ahead, U.S. crude inventories are expected to fall by about 3.2 million barrels in the week to Dec.27, heading for a third consecutive weekly fall, a preliminary Reuters poll showed on Monday. U.S. stockpiles fell by 5.5 million barrels in the week to Dec. 20. The figures will be released on Friday. Innes said traders would also closely watch the EIA’s U.S. October crude production figures, set to come out later on Tuesday. “It’s expected to show robust continuous growth in the agency’s short-term outlook,” he said. The United States is on track to become a net petroleum exporter on an annual basis for the first time in 2020, with output expected to rise by 930,000 barrels per day (bpd) to a record 13.18 million bpd next year, the EIA said earlier this month.
Oil Prices Fall on Final Day of 2019 - West Texas Intermediate (WTI) and Brent crude oil prices finished lower on the final day of 2019. The February WTI contract price lost 62 cents Tuesday, settling at $61.06 per barrel. It traded within a range from $60.63 to $61.88. Brent crude for March delivery ended the day 67 cents lower at an even $66 per barrel. Oil markets had traded flat Monday, with WTI closing at $61.68 per barrel as traders contemplated potential supply risks following U.S. airstrikes on Iranian-backed militia in Iraq Sunday, Monday’s settlement was down less than 0.2 percent from the Christmas holiday-week close. He added that Brent was down marginally as well for the same period, losing 0.4 percent to close at $66.62. “Oil market participants are working to understand if the first major use of U.S. air power in Iraq under the Trump administration – and the first since American forces were reinstated there in 2014 – substantially changes Middle East supply risk,” “The relatively flat oil-price response so far might be an indication that U.S.-Iran tensions are already factored into pricing assumptions.” Scott also suggested that two recent positive supply developments from Guyana may have offset concerns about the situation in the Middle East: pre-Christmas first oil from the Liza field and Shell’s securing the rights to lift and market the first cargoes. “Markets are also trying to incorporate the implications from recent – and apparently well-researched – reports indicating U.S. independently operated shale oil wells are, on the net, producing less oil than originally predicted,” continued Scott. “Meanwhile, our recent research at AlixPartners conducted in the Permian and Eagle Ford shows productivities and recoveries per horizontal footage drilled has increased over the last five years among several operators. Unfortunately, more challenged operators typically have higher debt loads and are drilling to drive volumes and related revenues to service current debt payments – which in turn contributes to their lower capital efficiency.” Scott added that drilling could accelerate overall if crude prices stay firm – and in part if capital markets reopen or exploration and production players find “innovative” financing options or merger partners. “Overall, we anticipate considerable uncertainty remaining well into the new year,”
Oil Dips as 2019 Ends; Big Gains on Year, Big Challenges Ahead - Oil prices fell on the last day of 2019, but still rounded the year out with the biggest annual gains in three. A rebound forecast in U.S. shale crude production could, however, pose greater challenges for the market in 2020. New York-traded West Texas Intermediate, the U.S. crude benchmark, settled down 62 cents, or 1.0%, at $61.06 per barrel. Despite that drop, WTI rose 11% for December, its largest monthly gain since January. London-traded Brent, the global oil benchmark, settled down 67 cents, or 1%, at $66.65 per barrel. Notwithstanding Tuesday’s slide, the U.K. crude standard settled up 7% for December, its largest monthly advance since April. For the year, WTI rose 34% while Brent had a 24% gain, the biggest annual gains since 2016 for both benchmarks. Oil’s 2019 rally was largely helped by production cuts carried out by OPEC. Since January, the Saudi-led OPEC, joined by its ally Russia under the OPEC+ alliance, has tried to observe a daily production cut of 1.2 million barrels. In December, as that arrangement was about to expire, OPEC+ said it would deepen those cuts to 2.1 million barrels per day from the start of 2020. Despite its plan for stiffer production cuts, OPEC+ could have a tougher time keeping oil prices up in 2020 as U.S. shale oil output could rebound next year, some long-time traders in oil said. While U.S. crude production as a whole hit a record high of 12.9 million barrels per day in 2019, shale oil output, which accounts for more than half of U.S. total production, has been somewhat restrained this year. U.S. crude producers as a whole cut the number of actively-operating oil rigs in the country to 677 this year from 885 at the end of 2018, a drop of 208 rigs, or 24%. “The main reason for the 24% cutback in actively-drilling U.S. oil rigs this year was the price uncertainty that persisted midyear,” WTI hovered between $50 and $55 during most of the summer months, weighing on the broader oil market. Kilduff said with the OPEC decision to double down on production cuts taking effect only in early December, it will take U.S. drillers some time to turn their spigots back on in full and plow ahead with production. “With oil prices being the way they are, one can bet on more challenges ahead for production,” Kilduff added. “WTI at above $60 is very, very remunerable to U.S. shale. OPEC will have to take a lot more off the market to face that wall of shale supply headed the global market's way.”
Oil surges 35% in 2019 and hedge funds are betting on more gains next year - West Texas Intermediate crude futures have rallied 13% this quarter and nearly 35% this year, posting oil’s best annual performance since 2016. And now big investors are starting to get on board with the trade. “Hedge funds have swung from extreme bearishness to extreme bullishness,” Ned Davis Research energy strategist Warren Pies said in a note Monday. “In two months, hedge fund short positioning in crude oil futures has gone from above 35% to below 9%.” That said, it is important to note that much of the current quarter’s gain is retracing a decline that started at the end of September and stretched into the current quarter. Brent crude futures climbed nearly 23% this year. One of the factors boosting prices is the deeper-than-expected cut that OPEC and its allies announced on Dec. 5. The cartel said it was cutting production by an additional 500,000 barrels per day through the first quarter of 2020, bringing the total production cut to 1.7 million barrels per day. WTI on Tuesday was trading at $61.16, down 52 cents on the day. Following the larger-than-expected OPEC cut, Goldman Sachs raised its 2020 Brent crude and West Texas Intermediate crude forecast by $3 to $63 and $58.50 per barrel respectively, due to “more favorable inventories” following the cut. Pies said that he heading into the end of the year he remains “officially bullish on crude oil,” especially since the long and short term trends — key technical indicators — are rising. That said, he noted that the bull case is weakening and that investors should keep an eye on inventory reports going forward. RBC’s Helima Croft said that an improving macro outlook should continue to boost oil prices going forward. “The fact that the trade war is not dominating the headlines, the fact that people see light at the end of the tunnel, that’s a really important story for oil right now because the macro story was really holding oil back,” she said.
Oil Enters 2020 With Bullish Trend -Oil closes out 2019 on a bullish note, pushed higher by renewed economic optimism, the OPEC+ cuts and a thawing U.S.-China trading relationship. “Prices ended the year with optimism close to 70$ /bbl for Brent and we expect them to stay supported through Q1,” OilX chief executive Florian Thaler told Oilprice. “In March all eyes will remain on OPEC and OPEC+ and whether the action of production adjustment will be extended further.” Royal Dutch Shell sold off its last position in the Haynesville shale, selling about 55,000 net acres to Castleton Resources. “The divestment is part of Shell’s ongoing strategy to optimize its shale portfolio and direct capital toward developing our high-margin assets located in the Permian, as well as in Canada and Argentina,” a Shell spokesman said in a prepared statement. The massive Leviathan gas field in offshore Israel finally came online. The $3.6 billion project has been a decade in the making. Noble Energy and Delek Drilling said the project would double Israel’s gas production, and gas will soon flow to Egypt and Jordan. “Israel is now an energy powerhouse, able to supply all its energy needs and gaining energy independence,” said Delek Drilling Chief Executive Yossi Abu. Outraged after U.S. airstrikes struck an Iranian-backed Iraqi militia over the weekend, protestors broke through the outer wall of the heavily-fortified U.S. embassy in Baghdad. They did not enter the main embassy, but the protests are another sign of a deteriorating security situation in Iraq, which follows on the heels of massive protests in Basra. The U.S. said that any attempt to hurry up work to complete the Nord Stream 2 pipeline will be met with sanctions. President Trump recently signed into law new sanctions on any companies working on the pipeline, although privately, U.S. officials have admitted that they probably won’t be able to stop the project from reaching completion. The outgoing governor of the Bank of England, Mark Carney, said that companies and financial institutions need to justify ongoing investment in fossil fuels. He also warned that many assets could end up being “worthless” as the world transitions to renewables. “If we were to burn all those oil and gases, there’s no way we would meet carbon budgets. Up to 80% of coal assets will be stranded, [and] up to half of developed oil reserves,” Carney said. “A question for every company, every financial institution, every asset manager, pension fund or insurer: what’s your plan?” Permian premium comes to an end. The premium paid for deals in the Permian has decidedly come to an end, Bloomberg reports. Acquisitions in the Permian were met with investor skepticism this year. “The market does not want to see large premium deals get done,” Steve Trauber, Citigroup Inc.’s global head of energy, told Bloomberg. “The market has reacted negatively, in some cases violently so, when those deals are announced.”
Oil climbs on US-China trade optimism, Middle East tensions - Oil prices kicked off the new year higher on Thursday as warming trade relations between the United States and China eased demand concerns, while rising tensions in the Middle East fuelled worries about supply.Global benchmark Brent crude futures, were up 22 cents, or 0.3%, to 66.22 a barrel by 0430 GMT. U.S. West Texas Intermediate (WTI) crude was up 18 cents, or 0.3%, at $61.24 per barrel.Oil markets were closed on Wednesday for New Year's Day.Both benchmarks ended higher in 2019, posting their biggest annual gains since 2016, buoyed at the end of the year by a thaw in the prolonged trade dispute between the United States and China - the world's two largest economies - and a deeper output cut pledged by the Organization of Petroleum Exporting Countries (OPEC) and its allies."Oil remains supported by the back-burner trade truce and the uptick in political unrest in Iraq," said Stephen Innes, chief Asia market strategist at AxiTrader.The U.S. military carried out air strikes against Iran-backed Katib Hezbollah militia group over the weekend. Angry at the air strikes, protesters stormed the U.S. Embassy in Baghdad on Wednesday, although they withdrew after the United States deployed extra troops.In 2020, Brent is forecast to average $63.07 a barrel, up from December's estimate of $62.50, while WTI is forecast to average $57.70 a barrel, up from December's estimate of $57.30, as the OPEC-led supply cuts and the expectations of a U.S.-China trade deal boosted analysts' views on the prospects for the year, a Reuters poll showed.U.S. President Donald Trump said on Tuesday the U.S.-China Phase 1 trade deal would be signed on Jan. 15 at the White House.January also marks the start of the deeper output cuts by OPEC and its partners, including Russia. OPEC and its allies have agreed to cut a further of 500,000 barrels per day (bpd) from Jan. 1, on top of their previous cut of 1.2 million bpd that started on Jan. 1 a year ago.A fall in U.S. crude inventories last week also supported prices. U.S. crude stocks fell 7.8 million barrels in the week ended Dec. 27, compared with analysts' expectations for a decrease of 3.2 million barrels, according to data from the American Petroleum Institute (API) released on Tuesday.Official data from the Energy Information Administration (EIA) is due on Friday as the release has been delayed by two days by the New Year's holiday.
Oil moves between gains and losses, boosted by trade hopes; pressured by stronger dollar - Oil prices moved between gains and losses on Thursday, supported by signs of improving Washington-Beijing trade relations and rising tensions in the Middle East but pressured by a strong U.S. dollar. Brent crude futures were unchanged at $66.00 per barrel, while U.S. West Texas Intermediate crude was shed 13 cents to trade at $60.93 per barrel. The dollar rose 0.44%, recovering from a six-month low after a downbeat December left the index virtually unchanged for 2019. A stronger dollar makes oil more expensive for holders of other currencies. Losses in oil prices were limited by optimism that a trade truce between the world’s two largest economies will support energy demand. U.S. President Donald Trump has said Jan. 15 would mark the signing of the U.S.-China Phase 1 trade deal. “Any delays could put a pullback in the market here,” said Bob Yawger, director of futures at Mizuho in New York. January also marks the scheduled start of deeper output cuts by the Organization of the Petroleum Exporting Countries and its partners, including Russia. The group agreed to cut output by a further 500,000 barrels per day (bpd) from Jan. 1, on top of their previous cut of 1.2 million bpd.
Brent jumps nearly $3 after U.S. air strike kills Iran, Iraq officials - (Reuters) - Brent crude futures jumped close to $3 on Friday to their highest since September after a U.S. air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies. Brent crude futures LCOc1 jumped nearly $3 to hit a high of $69.16 a barrel, the highest since Sept. 17. The front-month Brent March contract was at $68.25 a barrel, up $2.00, or 3%, by 0258 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 rose $1.76, or 2.9%, to $62.94 a barrel. Earlier, it touched $63.84 a barrel, highest since May 1. “The supply side risks remain elevated in the Middle East and we could see tensions continue to elevate between the U.S. and Iran-backed militia in Iraq,” said Edward Moya, analyst at brokerage OANDA, in an e-mail to Reuters. An air strike at the Baghdad International Airport early on Friday killed Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis, an Iraqi militia spokesman told Reuters. The Pentagon later confirmed it was a U.S. air strike that killed Soleimani. Oil prices were also lifted by China’s central bank saying on Wednesday it was cutting the amount of cash that banks must hold in reserve, releasing around 800 billion yuan ($115 billion) in funds to shore up the slowing Chinese economy. This came shortly after data showed China’s production continued to grow at a solid pace and business confidence shot up.
WTI Holds Overnight Gains After Huge Crude Draw, Record Exports - With oil prices surging on fears from possible "severe retaliation" after the killing of Iran's Soleimani, some wonder if this morning's inventory and production data will impact prices at all. We suspect it will.“This is more than just bloodying Iran’s nose,” Stephen Innes, chief market strategist at AxiTrader Ltd. said in a note. “This is an aggressive show of force and an outright provocation that could trigger another Middle East war.”Analysts are expecting another crude draw in the last week (the 4th in the last 5 weeks) after API reported a major drop in crude inventories. DOE:
- Crude -11.46mm (-3mm exp) - biggest draw since Aug 2018
- Cushing -1.449mm - 8th weekly draw in a row
- Gasoline +3.212mm - 8th weekly build in a row
- Distillates +8.776 - biggest weekly build since Jan 4th 2019
As a reminder, historically, December would be when the Texas oil industry drains crude stocks ahead of year-end tax assessments, known also as ad valorem. However, the massive 11.46mm barrel crude draw is exceptional and we note that Distillates inventories exploded higher (most in a year)
Oil settles more than 3% higher after U.S. airstrike kills Iranian military commander - Oil futures rallied Friday, lifting U.S. prices to their highest finish in more than seven months, after a U.S. airstrike in Iraq killed one of Iran’s top military commanders, sparking fears of an escalation of tensions in the Middle East that could disrupt the flow of crude. “Of concern is that Iran has been pushed so much in the corner by President [Donald] Trump, that it has nothing to lose, and therefore may weigh extraordinary steps in response,” said Manish Raj, chief financial officer at Velandera Energy. Still, Friday’s relatively “modest WTI price jump reflects [the] market’s base case assumption that the conflict will continue, but without any disruption to oil production or distribution,” he told MarketWatch. “If there is an actual disruption in production...then WTI price would jump to the 70’s and Brent to the 80’s.” West Texas Intermediate crude for February delivery CLG20, -0.02% on the New York Mercantile Exchange rose $1.87, or 3.1%, to settle at $63.05 a barrel, paring some of their earlier gains after trading as high as $64.09. The settlement was the highest for a front-month contract since May 20, according to Dow Jones Market Data. For the week, prices added roughly 2.2%. The global benchmark, March Brent crude rose $2.35, or about 3.6%, to $68.60 a barrel on ICE Europe after trading as high as $69.50 a barrel. The settlement and intraday levels were the highest since the aftermath of a September attack on Saudi oil infrastructure widely blamed on Iran. For the week, Brent oil rose 2.6%.
Iraq’s 550,000 Bpd Oil Deal Is In Jeopardy -The much-vaunted deal involving the transfer of oil from the semi-autonomous region of Kurdistan in Iraq’s north in exchange for budget disbursements from the federal government is in Baghdad in a lot of trouble for a lot of reasons. Not only are both sides of the country in the midst of enormous domestic political upheaval but also both find themselves in a tug of war between disparate foreign powers, each looking for a piece of the enormous oil and gas resources spread across the region. In fact, it will be Russia, China, and Iran that will decide whether the oil-for-budget-payments deal goes ahead.Just a month or so ago, there was the usual fanfare of optimistic comments that accompanies the announcement of all resumptions of the oil-for-budget-payments deal. The longstanding framework for this was the deal struck between the two sides in November 2014 in which the government of the Kurdistan region (the KRG) agreed to export up to 550,000 barrels per day (bpd) of oil from its own fields and Kirkuk via Baghdad’s State Oil Marketing Organization (SOMO). In return, Baghdad would send 17 per cent of the federal budget after sovereign expenses per month in budget payments to the KRG.Since then, both sides have relentlessly cheated on the deal. The KRG has at various times stopped all oil shipments to SOMO, preferring instead to try to sell it to a range of other countries, including much of the energy-starved Former Soviet Union states, Turkey, and Israel, among others. Baghdad has sought to take the KRG to court repeatedly to stop such activity on the basis that it is illegal.In fact, it is absolutely unclear what the legal position of such unilateral sales is. According to the KRG, it has authority under Articles 112 and 115 of the Iraq Constitution to manage oil and gas in the Kurdistan Region extracted from fields that were not in production in 2005 - the year that the Constitution was adopted by referendum. Baghdad, however, believes that under Article 111 of the Constitution, oil and gas are under the ownership of all the people of Iraq in all the regions and governorates and consequently the oil cannot be sold off and the proceeds kept by just one of those regions.
Iraq condemns U.S. air strikes as unacceptable and dangerous – (Reuters) - Iraqi Prime Minister Adel Abdul Mahdi on Monday condemned U.S. air strikes on Iranian-backed Iraqi militia bases, a move that could plunge Iraq further into the heart of a proxy conflict between Washington and Tehran. The United States military carried out air strikes on Sunday against the Kataib Hezbollah militia in response to the killing of a U.S. civilian contractor in a rocket attack on an Iraqi military base, officials said. Iraqi sources said at least 25 militia fighters were killed and 55 wounded. “The prime minister described the American attack on the Iraqi armed forces as an unacceptable vicious assault that will have dangerous consequences,” his office said.Tensions have risen between Tehran and Washington - Iraq’s two main allies - since last year when President Donald Trump pulled out of a 2015 nuclear deal and reimposed sanctions. Earlier this month, U.S. Secretary of State Mike Pompeo blamed Iranian-backed forces for attacks on bases in Iraq and said any attacks by Tehran or proxies harming Americans or allies would be “answered with a decisive U.S. response.” U.S. officials said Washington had exhibited patience amid escalating provocations from Iran and its allies, but that it was time to re-establish deterrence against aggression. “After so many attacks it was important for the president to direct our armed forces to respond in a way that the Iranian regime will understand,” U.S. special representative for Iran Brian Hook said in a news briefing.
Iraqi protesters storm US embassy compound in Baghdad - Iraqi protesters and militia fighters angry over recent deadly US airstrikes on an Iran-backed Shiite militia group attacked the heavily fortified US embassy in Baghdad on Tuesday. Hundreds of men waving Iraqi and militia flags torched a security post and hurled stones at security forces, as embassy guards fired stun grenades and tear gas to disperse crowds that breached the outer wall of America's largest embassy. There were no reports of casualties, but the breach was one of the worst attacks on a US embassy in recent memory. The Pentagon said it had deployed extra troops to protect the mission. Meanwhile, the State Department said there were no plans to evacuate the compound. US President Donald Trump blamed Iran for "orchestrating" the attack and said Tehran would be held "fully responsible." "We expect Iraq to use its forces to protect the Embassy," Trump tweeted. The militiamen were demonstrating against US airstrikes in Iraq and Syria on Sunday targeting Kataeb Hezbollah, an Iran-backed Iraqi militia. At least 25 militiamen were killed. Iraqi security forces allowed thousands of protesters to march to the heavily-fortified Green Zone after a funeral held for those killed, letting them pass through a security checkpoint leading to the area. Many in the crowd shouted "Down, Down USA!'' and "Death to America'' and "Death to Israel'' outside the embassy compound as they threw objects over its walls.The US blamed Kataeb Hezbollah for a rocket barrage on Friday that killed an American defense contractor and wounded four US soldiers at the K1 Iraqi military base in Kirkuk in the north of the country. Since late October, at least 11 attacks have targeted Iraqi military bases where US soldiers or diplomats are deployed. There were no casualties in any of the attacks. The US has blamed Iran-backed militia and warned of retaliation.
Protesters at US embassy in Baghdad gear up for sit-in - Hundreds of pro-Iran protesters surrounded the United States embassy in Baghdad on Tuesday to demand an end to US "intervention" in the country. Raising flags of the powerful paramilitary group Hashd al-Shaabi (Popular Mobilization Forces), the crowds chanted "down, down USA". Tuesday's rally was completely distinct from the recent, months-long protest movement which has seen tens of thousands of Iraqis demonstrate against the political establishment. Most at the US embassy were supporters of the Hashd Al-Shaabi. Dressed in army fatigues, they gathered around the heavily fortified embassy in the Green Zone, where government buildings and foreign embassies in Baghdad are based, arguing in favour of a state-backed militia. Within hours, dozens had broken into the embassy compound after smashing a main door and setting fire to the reception area, according to witnesses. Protesters told Al Jazeera that they stormed the embassy in response to US air attacks over Kataib Hezbollah positions in Iraq and Syria. At least 25 members of Kataib Hezbollah forces, which belongs to the PMF, were killed and 51 others were injured in the attacks on Sunday. The US said it launched the air attacks in retaliation to a rocket attack on Friday near Kirkuk - a raid that killed an American civilian contractor, and that Washington blamed on Kataib Hezbollah. "We are the Hashd and we are here to take revenge," said a protester in his 40s, who refused to give his name for security reasons. "We [are] protesting here to condemn the US strikes on the Hashd," said Haydar, a protester in his 20s. "The Hashd are the ones who protected Iraq against terrorism."
US caught off guard as protesters storm Baghdad embassy: analysts Hundreds of protesters breached the outer walls of the heavily fortified US embassy compound in Baghdad on Tuesday, setting parts of its parameter on fire - an angry reaction to deadly US air raids days earlier against Kataib Hizbollah, an Iran-backed militia. Most of the protesters, members of the paramilitary group Hashd al-Shaabi (Popular Mobilisation Forces, or PMF), were clad in military fatigues. PMF is an umbrella organisation of several armed militia groups – including Kataib Hezbollah - funded and armed by Iran, but with formal links to the Iraqi armed forces. Shouting "Down, Down USA!", the crowd hurled rocks and water bottles and vandalised security cameras outside the embassy grounds. The US said it launched the attacks on Sunday - killing at least 25 fighters - in Iraq and Syria in response to a rocket attack on Friday near Kirkuk, which killed an American civilian contractor - an assault Washington blamed on Kataib Hezbollah. Iraqi caretaker Prime Minister Adel Abdul Mahdi warned the protesters to leave the compound in an effort to bring the increasingly volatile situation under control. But Mahdi's warning appeared to have come too late. Government security forces did not block militia members and their leaders from entering the heavily fortified Green Zone where the US embassy is located, a sign that the Iraqi government may not have full control over the current events. With US personnel holed up at the embassy and exposed to risk, President Donald Trump issued a stern warning to Iran and Iraq, writing on Twitter: "Iran has orchestrated the attack on the US embassy in Baghdad". He warned the US would "hold Iran for responsible" for the rapidly unfolding events in the Iraqi capital. US Secretary of State Mike Pompeo warned Prime Minister Mahdi and President Barham Salih that the US "will protect and defend its people, who are there to support a sovereign and independent Iraq", the State Department said in a statement. A US government official told Al Jazeera, on the condition of anonymity because he was not authorised to speak to the media, that "we are not going to mess around" in terms of protecting US personnel and facilities.
The Backfiring Iran Obsession and the Baghdad Embassy Protests - The growing Iraqi backlash to the recent U.S. airstrikes escalated significantly with a massive protest that broke into the American embassy in Baghdad. Kelley Vlahos has already discussed this on our State of the Union blog: Protesters have stormed the U.S. embassy in Baghdad and reportedly set fire to the main entrance area, shouting “Death to America” and “Down, Down, USA”. The protesters are made up of members of the Popular Mobilization Forces, and they are demanding the expulsion of U.S. forces from Iraq. Far from “restoring deterrence,” the airstrikes have provoked a massive and hostile reaction that puts U.S. forces in greater jeopardy and completely undermines whatever influence the U.S. still had in Iraq. I said yesterday that this was Trump’s big Iraq blunder, and that may have understated how significant it was. The New York Times reports on the protests: Protesters broke into the heavily guarded compound of the United States Embassy in Baghdad on Tuesday and lit fires inside to express their anger over American airstrikes that killed 24 members of an Iranian-backed militia over the weekend. The men did not enter the main embassy buildings and later withdrew from the compound, joining thousands of protesters and militia fighters outside who chanted “Death to America,” threw rocks, covered the walls with graffiti and demanded that the United States withdraw its forces from Iraq. The situation remained combustible, with protesters vowing to camp outside the compound indefinitely. Their ability to storm the most heavily guarded zone in Baghdad suggested that they had received at least tacit permission from Iraqi security officials sympathetic to their demands. The president has feebly insisted that the Iraqi government protect the embassy after ordering an attack that went against their wishes and violated their country’s sovereignty. It is a bit rich that he invokes international conventions when the president has made a habit of trampling on them and tearing them up. The host government should protect all diplomatic facilities, but then most host governments haven’t just been subjected to an armed attack on their security forces by the same state that now demands protection. You can’t violate another country’s sovereignty on Sunday and expect them to respect yours on Tuesday. For all of Trump’s national sovereignty rhetoric, it has always been clear that he thinks of sovereignty as a one-way street where the U.S. gets to do what it wants to everyone else and the rest just have to take it. More dangerously, the president has blamed Iran for the consequences of his own bad decisions:
A New Year and a New Trump Foreign Policy Blunder in Iraq -It’s a new year, and the U.S. has found a new enemy – an Iraqi militia called Kata’ib Hezbollah. How tragically predictable was that? So who or what is Kata’ib Hezbollah? Why are US forces attacking it? And where will this lead?Kata’ib Hezbollah is one of the Popular Mobilization Units (PMU) that were recruited to fight the Islamic State after the Iraqi armed forces collapsed and Mosul, Iraq’s second-largest city, fell to IS in June 2014. The first six PMUs were formed by five Shiite militias that all received support from Iran, plus Muqtada al-Sadr’s Iraqi nationalist Peace Company, the reincarnation of his anti-occupation Mahdi Army militia, which he had previously disarmed in 2008 under an agreement with the Iraqi government.Kata’ib Hezbollah was one of those five original Shiite militias and it existed long before the fight against IS. It was a small Shiite group founded before the US invasion of Iraq in 2003, and was part of the Iraqi Resistance throughout the US occupation. In 2011, it reportedly had 1,000 fighters, who were paid $300 to $500 per month, probably mainly funded by Iran. It fought fiercely until the last US occupation forces were withdrawn in December 2011, and claimed responsibility for a rocket attack that killed 5 US soldiers in Baghdad in June 2011. Since forming a PMU in 2014, its leader, Abu Mahdi al-Muhandis, has been the overall military commander of the PMUs, reporting directly to the National Security Adviser in the Prime Minister’s office.In the fight against IS, the PMUs proliferated quickly. Most political parties in Iraq responded to a fatwa by Grand Ayatollah al-Sistani to form and join these units by forming their own. At the peak of the war with IS, the PMUs comprised about 60 brigades with hundreds of thousands of Shia fighters, and even included up to 40,000 Sunni Iraqis.In the context of the war against the Islamic State, the US and Iran have both provided a great deal of military support to the PMU and other Iraqi forces, and the Iraqi Kurdish peshmerga have also received support from Iran. Secretary of State John Kerry met with Iranian Foreign Minister Mohammad Zarif in New York in September 2014 to discuss the crisis, and US Ambassador Stuart Jones said in December 2014, “Let’s face it, Iran is an important neighbor to Iraq. There has to be cooperation between Iran and Iraq. The Iranians are talking to the Iraqi security forces and we’re talking to Iraqi security forces… We’re relying on them to do the deconfliction.” US officials and corporate media are falsely painting Kata’ib Hezbollah and the PMUs as independent, renegade Iranian-backed militias in Iraq but they are really an official part of the Iraq security forces. As a statement from the Iraqi prime minister’s office made clear, the US airstrikes were an “American attack on the Iraqi armed forces.” And these were not just any Iraqi military forces, but forces that have borne the brunt of some of the fiercest fighting against the Islamic State.
4,000 US Troop Surge To Middle East Could Be Imminent Amid Baghdad Chaos - Three U.S. defense officials told Fox News on Tuesday that the U.S. Army's 82nd Airborne Division's alert brigade has been given orders to deploy to Kuwait amid the social unrest in Baghdad. Even though all supporters of Iran-backed militias have withdrawn from the heavily fortified U.S. Embassy in Baghdad on Wednesday, the reinforcement of U.S. troops could be imminent. Defense Secretary Mark Esper said in a statement on Tuesday that 750 troops are immediately deploying to the Middle East because of the attack on the U.S. embassy. The US says it’s sending 750 troops to Iraq after its embassy in Baghdad was stormed by protesters. Read more: https://t.co/iqHquUIrsA pic.twitter.com/14RUzxTYWD — Al Jazeera English (@AJEnglish) January 1, 2020 Esper said he had authorized the deployment of an infantry battalion from the Immediate Response Force (IRF) of the 82nd Airborne Division. "This deployment is an appropriate and precautionary action taken in response to increased threat levels against U.S. personnel and facilities, such as we witnessed in Baghdad today," Esper said in a statement.Apart from the rapid deployment, the three sources told Fox that approximately 4,000 paratroopers could be deployed to the region in the coming days.There are 5,000 US troops currently stationed in Iraq supporting local forces, among the more than 60,000 troops positioned in military bases across the Middle East.President Trump blamed Iran for the attack on the U.S. embassy in Baghdad in a tweetstorm on Tuesday. "Iran killed an American contractor, wounding many. We strongly responded, and always will," tweeted Trump. "Now Iran is orchestrating an attack on the U.S. Embassy in Iraq. They will be held fully responsible.""In addition, we expect Iraq to use its forces to protect the Embassy, and so notified!" he added.Trump said, "....Iran will be held fully responsible for lives lost, or damage incurred, at any of our facilities. They will pay a very BIG PRICE! This is not a Warning, it is a Threat. Happy New Year!" It appears that Trump isn't pulling out of the Middle East after all, but rather a massive surge in troops into the region could be seen in the coming days. Is conflict with Iran nearing?
Iran, Russia and China hold joint naval drills in Indian Ocean amid US war threats- Iranian, Russian and Chinese warships are finishing today a four-day naval exercise in the Gulf of Oman, near the Iranian coast and the oil-rich Persian Gulf. The exercise marked the first time that Moscow and Beijing sent warships for joint maneuvers with Iranian forces in the Indian Ocean. The chief of the Iranian fleet participating in the exercise, Rear Admiral Gholamreza Tahani, said that its purpose was to demonstrate the close relations between Iran, Russia and China. “The message of this exercise is peace, friendship and lasting security through cooperation and unity, and its effect will be to show that Iran cannot be isolated,” Tahani said. He added, “Us hosting these powers shows that our relations have reached a meaningful point and may have an international impact.” The exercises were in fact a signal sent to ruling circles in Washington and in the imperialist capitals in Europe that a US-led war with Iran could rapidly escalate into a direct, all-out conflict involving the world’s major nuclear powers. In June, after Iran shot down a US drone over its territorial waters in the Persian Gulf, Trump tweeted that he had aborted US missile strikes ten minutes before they were to begin. With Iran, Russia and China all facing stepped-up military threats and pressure from Washington, Beijing and Moscow decided to send warships to strategic waters off Iran’s coast to signal that a US or NATO war with Iran would not remain confined to the Middle East. The exercise itself unfolded under the shadow of growing US and Israeli war threats against Iran, which have escalated since Washington unilaterally scrapped a six-party nuclear treaty with Iran last year and re-imposed devastating sanctions on Iran’s economy. As Russian warships arrived in Iran on Wednesday, Israel’s Army Chief of Staff Aviv Kohavi called for military action against Iran. “It would be better if we weren’t the only ones responding to them,” Kohavi said, in what the Times of Israel called a rebuke to Washington, the Saudi monarchy and other Persian Gulf oil sheikdoms for not attacking Iran earlier. Kohavi added that Israeli forces would operate openly as well as clandestinely across the area, “even at the risk of war.” Russian and Chinese officials guardedly expressed concern over possible war and their support for Iran. Russian Foreign Ministry spokeswoman Maria Zakharova said: “We are dealing with the issues of maintaining stability in the region, security and the fight against terrorism. This co-operation and interaction are built on both a bilateral and multilateral basis but exclusively on a legal basis.”
Japan to deploy military forces to aid US operations against Iran - On Friday, the Japanese cabinet of Prime Minister Shinzō Abe approved plans to dispatch naval personnel to the Middle East, ostensibly to protect oil vessels in the region. The deployment consists of a destroyer with helicopters, as well as one of two P-3C patrol aircraft from its base at Djibouti on the Horn of Africa, Japan’s only overseas military base. The deployment could begin as soon as January and will last for at least one year, according to government sources. Japan’s Chief Cabinet Secretary Yoshihide Suga meets with former United States Assistant Secretary of State for East Asian and Pacific Affairs Daniel Russel in September 2013 (State Department photo by William Ng/Public Domain) Tokyo claims the mission will be limited to intelligence gathering to ensure “peace and stability” in the Gulf of Oman, the Gulf of Aden and the northern Arabian Sea. It also claims that this will be done independently of other nations. However, speaking at a news conference, Chief Cabinet Secretary Yoshihide Suga said these operations could be conducted in “coordination with relevant countries”—i.e., the United States. Since Washington ratcheted up its pressure on Iran by abandoning the 2015 nuclear agreement in May 2018 and then accusing Iran of carrying out attacks in the region this past summer, the Trump administration has pushed allies like Japan to contribute forces in preparation for a military conflict. Japan has been reluctant to join this operation as nearly 90 percent of its oil comes from the Middle East and, unlike Washington, Tokyo maintains friendly relations with Tehran. The previous week, Abe met Iranian President Hassan Rouhani in Tokyo, where the prime minister reportedly briefed his counterpart on the deployment. Tokyo is attempting to show the deployment as a compromise between the demands of Washington and relations with Tehran, stating that the Japanese military will not join US patrols through the Strait of Hormuz, although this has not been ruled out in the future. “We cannot abandon Japan-related vessels,” a government source stated in relation to the possibility of more aggressive actions in the region. The Abe administration is using the deployment as another opportunity to further its militarist agenda. While Article 9 of Japan’s post-World War II constitution, known as the pacifist clause, legally bars Japanese governments from maintaining a standing military or deploying it overseas, Tokyo has for decades used “reinterpretations” to allow Japan to operate the Self-Defense Forces (SDF), the formal name of Japan’s military.
Iran's Soleimani and Iraq's Muhandis killed in air strike: militia spokesman – (Reuters) - Iranian Major-General Qassem Soleimani, head of the elite Quds Force, and Iraqi militia commander Abu Mahdi al-Muhandis were killed late on Thursday in an air strike on their convoy in Baghdad airport, an Iraqi militia spokesman told Reuters.“The American and Israeli enemy is responsible for killing the mujahideen Abu Mahdi al-Muhandis and Qassem Soleimani,” said Ahmed al-Assadi, a spokesman for Iraq’s Popular Mobilization Forces umbrella grouping of Iran-backed militias.
Ayatollah Vows "Severe Retaliation" Against "Criminals" Responsible For Killing Iranian General -Iran's supreme leader, the Ayatollah Khamenei, warned in a statement that the "criminals" responsible for the death of a top Iranian general will face "severe revenge", and that his work fighting on behalf of the Iranian people "won't be stopped by his martyrdom," according to a statement published on Twitter. The statement was issued in response to Friday morning's "game changing" drone strike (the attack took place late Thursday evening in the US) that killed Iran's most revered and respected military commander, General Qasem Suleimani, the leader of the IRGC's Quds Force - a powerful regional player responsible for overseeing Iran's proxy war in Yemen, as well as Iran-backed forces in Iraq, Lebanon and elsewhere. The statement was published in English by an unverified but widely-cited Twitter account, and though Zero Hedge hasn't personally verified whether the statement is genuine, it is being reported as legitimate by many media outlets around the world, including the Washington Post, which cited part of it. The statement reads as follows:
Iran Deploys F-14 Fighter Jets, Places Ballistic Missile Bases On 'High Alert' - Tehran has deployed Grumman F-14 Tomcat fighter jets to its borders hours after the U.S. killed Iranian General Qasem Soleimani in an airstrike at Baghdad international airport, according to Sputnik News. NBC News Tehran Bureau Chief Ali Arouzi tweeted that "Iranian f14 fighters jets maneuvering on the western skies and on alert and patrol." Al-Mayadeen news tweeted: "Iran: Revolutionary Guard Agency of Iran: Armed forces in the army and Revolutionary Guard are awaiting orders from the highest command." In other related news, Iranian Supreme Leader Ali Khamenei warned in a statement that the "criminals" responsible for the death of a top Iranian general will face "severe revenge," and that retaliation could be a regional war.And defense analyst Babak Taghvaee tweeted that the Islamic Revolutionary Guard Corps (IRGC) "has put all of its ballistic missile bases on high-alert. #IRGC affiliated news media of #Iran's Islamic Regime claim that they are ready to launch missiles at several airbases which host #USAF airplanes in #UAE, #Qatar, #SaudiArabia & #Jordan!"
American Oil Workers In Iraq Exiting Country At US Government Request - Hours after the US drone attack which killed IRGC Quds Force General Qasem Suleimani, the US State Department issued an emergency alert urging all American citizens currently in Iraq to depart the country "immediately" due to "heightened tensions" in the region.While urging Americans to take the earliest flights out of the country, it also informed citizens they must stay away from the US Embassy in Iraq, after earlier this week the Green Zone compound was stormed by pro-Iranian protesters and the outer walls set on fire. The US Embassy in Baghdad has already suspended all public consular activities. #Iraq: Due to heightened tensions in Iraq and the region, we urge U.S. citizens to depart Iraq immediately. Due to Iranian-backed militia attacks at the U.S. Embassy compound, all consular operations are suspended. U.S. citizens should not approach the Embassy. pic.twitter.com/rdRce3Qr4a Some European countries have also begun issuing travel alerts for their citizens in Iraq, with the French government informing people to avoid any public or large gatherings, and to stay "prudent and discreet" while also avoiding taking photographs in public venues. Additionally, foreign oil workers have begun departing Iraq, with Iraq’s Oil Ministry confirming early Friday that “a number of employees with US citizenship” working for oil companies in the south are readying to depart the country “in response to the request of their government.”“The ministry asserts that the conditions are normal in oil fields throughout Iraq. Production and export were not affected,” the statement added, underscoring that the request for Americans to evacuate oil fields did not come from Baghdad authorities, but from Washington.
Round Two: US Drone Airstrikes Kill Six Pro-Iran Militia Commanders - Trump appears to be on a rampage to recreate the end of The Godfather. Less than 24 hours after a US drone shockingly killed the top Iranian military leader, Qasem Soleimani, resulting in equity markets groaning around the globe in fear over Iranian reprisals (and potentially, World War III), the US has gone for round two with Reuters and various other social media sources reporting that US air strikes targeting Iraq’s Popular Mobilization Units umbrella grouping of Iran-backed Shi’ite militias near camp Taji north of Baghdad, have killed six people and critically wounded three, an Iraqi army source said late on Friday. Iraqi official media has also confirm that two vehicles were targeted north of Baghdad, carrying commanders of the pro-Iran militias in the PMUs. Iraqi officials media now confirm that two vehicles were targeted north of Baghdad, carrying commanders of the pro-Iran militias in the PMUs. #iraq #QassemSuleimani — Hassan Hassan (@hxhassan) January 3, 2020 Two of the three vehicles making up a militia convoy were found burned, a Reuters source said, as well as six burned corpses. According to unconfirmed reports, a US MQ-9 Reaper drone targeted a convoy carrying several high ranking officials of PMU (Hashd al-Shaabi) in Taji, North of Baghdad. The casualties are said to be mostly among members of the IRGC-backed Asaib Ahl al-Haq. It is not known whether Qais al-Khazali is dead or alive. Separate reports claim that Shibl al-Zaidi, a commander of Kataib Imam Ali brigades, an Iranian-backed militia and the PMU's 40th Brigade, is among those the six who were killed in the strike.
U.S. reportedly strikes pro-Iran convoy in Iraq ahead of funeral for Soleimani– A fresh airstrike hit pro-Iran fighters in Iraq early Saturday, as fears grew of a proxy war erupting between Washington and Tehran a day after an American drone strike killed a top Iranian general. The killing of Quds Force commander Gen. Qassem Soleimani in Baghdad on Friday was the most dramatic escalation yet in spiralling tensions between Iran and the United States, which pledged to send more troops to the region — even as President Donald Trump insisted he did not want war. Iran’s ambassador to the United Nations, Majid Takht Ravanchi, told CNN that the killing was an “act of war on the part of the United States.” A new strike on Saturday targeted a convoy belonging to the Hashed al-Shaabi, an Iraqi paramilitary network dominated by Shiite factions with close ties to Iran. The Hashed did not say who it held responsible but Iraqi state television reported it was a U.S. airstrike.
Strait of Hormuz, the world’s biggest oil chokepoint, in focus as Iran tensions flare - The Strait of Hormuz, a narrow waterway in the Middle East that marks the most sensitive transportation choke point for global oil supplies, was back in focus Friday after a U.S. airstrike killed a top Iranian military commander and heightened fears of a confrontation between the two countries. A U.S. airstrike at Baghdad’s airport killed Qassem Soleimani, leader of the foreign wing of Iran’s Islamic Revolutionary Guard Corps. The Pentagon said President Donald Trump ordered the strike in a defensive action, alleging that Soleimani had planned to direct attacks on U.S. diplomats and service members in the region. Iran’s supreme leader, Ayatollah Ali Khamenei, declared three days of mourning for Soleimani’s death and said that a “hard revenge awaits criminals.” Oil prices jumped, with West Texas Intermediate crude, the U.S. benchmark, rising to an eight-month high, and Brent crude, the global benchmark, trading at its highest level since September when an attack on Saudi Arabia’s oil infrastructure, widely blamed on Iran, temporarily knocked half of the country’s output offline. Global stocks sold off, with the Dow Jones Industrial Average DJIA, -0.81% dropping more than 300 points in early action. The Dow remained off by around 210 points, or 0.7%, at midday, while the and S&P 500 lost 0.6%. Iran is widely expected to retaliate, and analysts see the potential for renewed attacks on the waterway off of the country’s southern coast. Attacks on ships around the strait last year caused temporary jumps in crude oil prices. Here’s a look at the Strait of Hormuz and why it’s a key concern for oil traders:
Reprisals against US to come at time and place of Iran’s choosing - Iran has spent decades preparing for a moment like this, developing methods and networks around the world that give Tehran the widest possible choice when it comes to taking revenge. In the weeks immediately after the airstrike that killed Iran’s most powerful general, the threat against Americans and their allies will be greatest in the Middle East, but the risk will balloon out across the globe over the months and years to come. Any US outpost in Syria and Iraq, military or diplomatic, is vulnerable to attacks, likely to come from Iranian-backed militias linked to Kata’ib Hezbollah, which has served as Tehran’s most reliable fist in Iraq. In Iraq, there will be even less protection from the state, which is furious about the attack outside Baghdad airport. The second ring of possible reprisals could follow an already familiar path, targeting oil shipments through the Persian Gulf. The leadership in Tehran will be conscious that one avenue of revenge against Donald Trump would be strike at his chances of re-election. An oil price spike, coupled with a backdrop of global instability and US vulnerability, would certainly hurt his campaign. In Afghanistan, Iran has longstanding ties with Hazara militias and solid basis for operations in Herat. In Lebanon, Hezbollah has long been Iran’s right arm, and can strike Israel and US regional interests at any time. And Hezbollah has networks much further afield where there are pockets of Lebanese Shia diaspora, for example in Latin America and West Africa. Iranian intelligence has carried out assassinations in Europe, and there are a string of other attacks globally in which Iran or Hezbollah is suspected but not proven to be involved. US intelligence certainly believes Hezbollah was behind the bombing of an Israeli-Argentinian cultural centre in Buenos Aires in 1994, and the bombing of a bus full of Israeli tourists in Burgas, Bulgaria, in 2012. The CIA was also convinced that Iran was involved in the bombing of Pan Am flight 103 over Lockerbie in 1988, in reprisal for the accidental downing of an Iranian airliner, Iran Air 655, five months earlier. While Tehran has ample choices, it also has limitations. It will want to avoid triggering an all-out war with the US and its allies. It may now decide to build up a covert nuclear arsenal, no longer bound by the 2015 nuclear deal which Donald Trump walked out of. It would be harder to go down that road in the middle of a firefight. And each act of retribution could use up the political capital Iran has around the world, most importantly backing from Russia and China. But while Iran is likely to choose its targets carefully, with an eye to deniability, there is little doubt that reprisals will come at a time and place of Tehran’s choosing. The constant sense of insecurity that Americans and allies will feel will be part of the revenge. “I frankly have never seen the Iranians not respond – tit for tat. It’s just never happened,” said Robert Baer, a former CIA officer. “It’s so in their DNA, [as is using] a proxy, which makes it more difficult to respond to. And their options are unlimited.”
Saudi Arabia Arrests 200 People for Violating 'Public Decency' - Saudi Arabia has arrested more than 200 people for violating "public decency" - including by wearing immodest clothing - and "harassment", police said, in the first such crackdown since the conservative kingdom began easing social norms.Some 120 men and women have been arrested over the past week for offending public morals, including wearing "inappropriate clothes", Riyadh police said in a series of statements on Twitter since Tuesday. It added that unspecified penalties were imposed on the violators. Another 88 people were arrested in various harassment cases, police have added in separate statements, after several women complained on social media that they were harassed at the MDL Beast music festival in Riyadh earlier this month. The electronic music festival, which drew tens of thousands of fans, was billed by organisers as the biggest ever to be hosted in the kingdom. Police did not offer any further details, including the duration of the detentions. This marked the first such mass crackdown since de facto ruler Crown Prince Mohammed bin Salman began easing social restrictions in the ultra-conservative kingdom, lifting decades-long bans on cinemas and women drivers while allowing gender-mixed concerts and sporting extravaganzas.
Media’s Deafening Silence On Latest WikiLeaks Drops Is Its Own Scandal -- Caitlin Johnstone --WikiLeaks has published yet another set of leaked internal documents from within the Organisation for the Prohibition of Chemical Weapons (OPCW) adding even more material to the mountain of evidence that we’ve been lied to about an alleged chemical weapons attack in Douma, Syria last year which resulted in airstrikes upon that nation from the US, UK and France. This new WikiLeaks drop includes an email from the OPCW Chief of Cabinet Sebastien Braha (who isreportedly so detested by organisation inspectors that they code named him “Voldemort”) throwing a fit over the Ian Henderson Engineering Assessment which found that the Douma incident was likely a staged event. Braha is seen ordering OPCW staff to “remove all traces, if any, of its delivery/storage/whatever” from the organisation’s secure registry. The drop also includes the minutes from an OPCW toxicology meeting with “three Toxicologists/Clinical pharmacologists, one bioanalytical and toxicological chemist”, all four of whom are specialists in chemical weapons analysis. According to the leaked minutes from the toxicology meeting, the chief expert offered “the possibility of the event being a propaganda exercise” as one potential explanation for the Douma incident. The other OPCW experts agreed that the key “take-away message” from the meeting was “that the symptoms observed were inconsistent with exposure to chlorine and no other obvious candidate chemical causing the symptoms could be identified”. Like all the other many, many, many, many different leaks which have been hemorrhaging from the OPCW about the Douma incident, none of the important information contained in these publications was included in any of the OPCW’s public reports on the matter. According to the OPCW’s Final Report published in March 2019, the investigative team found “reasonable grounds that the use of a toxic chemical as a weapon took place. This toxic chemical contained reactive chlorine. The toxic chemical was likely molecular chlorine.” We now know that these “reasonable grounds” contain more holes than a spaghetti strainer executed by firing squad. This is extremely important information about an unsolved war crime which resulted in dozens of civilian deaths and led to an act of war which cost taxpayers tens of millions of dollars and had many far-reaching geopolitical consequences. Yet the mass media, freakishly, has had absolutely nothing to say about this extremely newsworthy story.
Narrative Managers Claim White Helmets Founder Was Driven To Suicide By Syria Skeptics - Caitlin Johnstone - Imperialist spinmeisters are trial-ballooning a new Syria narrative that is so breathtakingly stupid it needs its own article solely for the purpose of mockery. On Christmas Eve PBS aired a bizarre segment on the death of James Le Mesurier, the former military intelligence officer who founded the extremely shady propaganda construct known as the White Helmets. The segment makes relentless, ham-fisted appeals to emotion, even attempting to associate the White Helmets with Armistice Day using wistful camera pans over poppy flowers and misty war memorial art exhibits, but by far the most yogurt-brained part is its repeated suggestions that Le Mesurier killed himself because people had been accusing him of being a propagandist. “And now a story of a humanitarian trying to help Syria: the suspicious death in Turkey last month of James Le Mesurier, the co-founder of the White Helmets rescue organization in Syria,” opens PBS News Hour’s Judy Woodruff. “Friends and colleagues fear that he may have been murdered or driven to suicide by a campaign of character assassination.” “Whatever the cause, Le Mesurier was a victim of a very modern war,” the special’s narrator solemnly intones.“There is no hiding place in cyberspace. Le Mesurier was at the epicenter of a propaganda war, and his friends are appalled at what they regard as a campaign of character assassination.” “The amount of abuse, the amount of ill-placed propaganda, disinformation that’s on social media and the Internet coming out of Russian bots and Syria, Syrian regime, and others was unbearable,” Col. Hamish de Bretton-Gordon mourns. This ridiculous narrative was picked up and run with by Syria narrative managers on Twitter. It is true that both Beeley and the Working Group on Syria, Propaganda and Media have accused Le Mesurier of running a propaganda operation on behalf of western governments using western government funding. But if Ahmad truly believed that accusing people of conducting propaganda caused them to kill themselves, he should turn himself in for attempted murder, because he accuses people of being propagandists constantly. Here’s a link to Ahmad calling journalist Max Blumenthal a “propagandist for Maduro”. Here’s a link to Ahmad calling Beeley a “pro-regime propagandist”. Here’s a link to Ahmad calling award-winning journalist Jonathan Steele “a fabricator and a propagandist”. Here’s a link to Ahmad calling CIA whistleblower John Kiriakou “a propagandist for Putin”. Talk about “lethal disinformation”, Idrees.
Netanyahu to seek immunity from criminal charges - Washington Post — Prime Minister Benjamin Netanyahu announced Wednesday that he would ask the Israeli parliament to grant him immunity in three criminal cases, tying up further the already lengthy legal proceedings against him in a political system that has been gripped by deadlock for the past year. Netanyahu’s immunity request to the Knesset would shield him from prosecution at least while he remains in office. It also pitches the country’s political establishment against the legal system ahead of an unprecedented third general election in less than a year. That election is set for March 2. Twice in 2019 Netanyahu failed to form a government following earlier rounds of voting in April and September. Part of the stalemate is the reluctance of his political rival, Benny Gantz — former military chief of staff and head of the centrist Blue and White faction — to join a coalition with a leader charged with crimes. In November, Attorney General Avichai Mandelblit concluded that there was enough evidence to prosecute Netanyahu in three cases involving allegations that he and his wife, Sara, accepted more than $260,000 worth of luxury goods in exchange for political favors and that he interceded with regulators and lawmakers on behalf of two media companies in exchange for positive news coverage. Netanyahu has criticized the prosecution as a politically motivated “coup” to oust him from office. But the allegations have cast a shadow over his legacy and forced him to justify why and how he can continue to run for office. In a statement broadcast live Wednesday on Israeli television, Netanyahu said that he was not trying to escape prosecution and that the immunity provision would only last for the duration of the next parliament’s term. In the address, Netanyahu said that the criminal cases were an attempt to frame him and that it was up to the public and not the courts to decide whether he should continue leading the country.
"Why Don't They Open The Gates?" Erdogan Questions Europe As 250,000 Flee Idlib - As Russian and Syrian jets have dramatically stepped up their bombardment of jihadist-held Idlib over the past three weeks, Turkish President Recep Tayyip Erdogan has again warned a massive wave of refugees is headed into Turkey, but that his country is without help and thus is seeking to prevent the new influx. “Right now, 200,000 to 250,000 migrants are moving toward our borders,” Erdogan said while addressing a conference in Ankara. “We are trying to prevent them with some measures, but it’s not easy. It’s difficult, they are humans too.”This after the UN on Monday said that of Idlib province's some 3 million civilian population, up to 284,000 are currently on the move. International reports commonly put the current numbers of Syrian refugees hosted by Turkey at about 3.7 million, which Erdogan has of late constantly reminded Europe of as he seeks support for foreign military intervention in places like northeast Syria and now even Libya. During his latest comments, Erdogan actually put the number of refugees across all provinces of Turkey at a whopping 5 million — which would be larger than many small countries. Crucially, during his speech on Thursday, he alluded to his prior threats to "open the gates" and allow refugees to flood into Europe, starting with Greece and other Mediterranean nations:
Foreign Fighter 'Rat Line' In Reverse- Turkey Sends Syrian 'Rebels' To Libya -Bloomberg has confirmed on Friday the prior rumors that Turkey will be sending mercenaries to Libya — where it is propping up the UN-backed government in Tripoli (the GNA) — are true. "Turkey is preparing to deploy troops and naval forces to support the internationally-recognized Libyan government, joining a planned push by Ankara-backed Syrian rebels to defeat strongman Khalifa Haftar," reports Bloomberg. Though Ankara has yet to confirm or deny the new reports, Erdogan's Turkey has for years overseen a Libya-to-Turkey-to-Syria arms "rat line" which saw both heavy weaponry and jihadists fighters transported for the purpose of toppling Assad. But now with Erdogan's eyes set on defeating Benghazi-based General Khalifa Haftar, it appears this arms and jihadist rat line has conveniently been reversed. This also as President Erdogan in a speech on Thursday presented plans to send Turkish national troops bolster Tripoli as well.Possibly thousands from among the so-called Turkish Free Syrian Army (formerly the FSA), with most of its fighters currently attacking Syrian Kurds in the ongoing 'Operation Peace Spring', will now be sent into Libya.There are reports suggesting Turkey is ready to pay $2,000 a month for each Syrian 'rebel' willing to go to Libya.
Turkey's Gunboat Gambit In The Mediterranean - Turkey, since 2011, has been waging a pro-Sunni proxy war in Syria, in the hope of one day establishing in Damascus a pro-Turkey, Islamist regime. This ambition has failed, costing President Recep Tayyip Erdoğan's Turkey violent political turmoil on both sides of Turkey's 911-km border with Syria and billions of dollars spent on more than 4 million Syrian refugees scattered across the Turkish soil.In Egypt, in 2011-2012, Erdoğan aggressively supported the failed Muslim Brotherhood government and deeply antagonized the incumbent -- then-general but now president -- Abdel Fattah al-Sisi. Since Erdoğan's efforts in Syria and Egypt failed, his Sunni Islamist ambitions have found a new proxy-war theater: Libya.On December 10, Erdoğan said he could deploy troops in Libya if the UN-backed Government of National Accord (GNA) in Tripoli (which Turkey supports) requested it. Erdoğan's talks with GNA's head, Fayez al-Sarraj, who is fighting a war against the Libyan National Army (LNA) of General Khalifa Haftar, produced two ostensibly strategic agreements: a memorandum of understanding on providing the GNA with arms, military training and personnel; and a maritime agreement delineating exclusive economic zones in the Mediterranean waters.Greece and Egypt protested immediately while the European Council unequivocally condemned the controversial accords. Meanwhile, the deals apparently escalated a proxy competition between Turkey's old (Greece) and new (Egypt and the United Arab Emirates) rivals.With the al-Sarraj handshake, Erdoğan is apparently aiming to:
- minimize Turkey's isolation in the Mediterranean, one which has gradually worsened since 2010, following one diplomatic crisis after another with Israel;
- counter strategic cooperation between Cyprus, Greece, Egypt and Israel, including joint diplomatic, energy and military initiatives;
- cut into the emerging Cypriot-Greek-Egyptian-Israeli maritime bloc;
- push back against Arab (Egyptian and UAE) pressure on al-Sarraj;
- fill the European vacuum in Libya; and
- emerge as a deal-breaker in the Mediterranean rather than a deal-maker.
Turkey's Parliament Authorizes Military To Deploy Troops In Libya - At a time when pro-Haftar Libyan forces have reportedly made advanced near Tripoli International Airport, Turkey's parliament has voted to approve Erdogan's next controversial foreign military adventure — sending troops to Libya to bolster the government under Prime Minister Fayez al-Sarraj based in Tripoli. Turkish lawmakers approved the motion (325 to 184) at an emergency session on Thursday to grant a one-year mandate for troop deployment, despite the clearly ratcheting destabilization in the North African country which has been in essentially a state of anarchy since US-NATO regime change aimed at decades-long ruler Muammar Gaddafi. Interestingly, among the key arguments that supporters of deeper Libya involvement advanced during Thursday's parliament vote is that national security would be weakened by continued fighting in Libya. “A Libya whose legal government is under threat can spread instability to Turkey,” ruling party legislator Ismet Yilmaz argued. “Those who shy away from taking steps on grounds that there is a risk will throw our children into a greater danger.” Turkey's main opposition party, CHP, argued that it would unnecessarily embroil the country into a complicated conflict with no end in sight that would inevitably contribute to the further "shedding of Muslim blood." One option considered is to simply expand Turkish military training to GNA Libyan troops.
Libyan Rebels Shoot Down Turkish Plane Moments After Ankara Approves Sending Troops -A mere hours after Turkey's parliament in an emergency session voted to authorize its military to send troops to war-torn Libya in order to stave off advancing pro-Haftar forces on the capital, there are new reports rebel forces have downed a Turkish plane, likely a drone, south of Tripoli. Benghazi-based General Khalifa Haftar had already long ago essentially declared he would enforce a No Fly Zone for all foreign aircraft, especially Turkish aircraft. Sky News Arabia was the first to report Thursday: "Based on our sources, the Libyan army shoots down Turkish plane to the south of the capital Tripoli." And in a statement immediately after the Turkish aircraft downing of what appears to be a UAV drone, a spokesman for Haftar's Libyan National Army (LNA), said according to Sky News:We reject the existence of any foreign power in Libya no matter what.Though details are as yet unclear, if confirmed it would be the second Turkish military aircraft within three weeks brought down by the LNA, after a drone was shot down on Dec.14. The timing is clearly meant to send a message given earlier in the day Turkish lawmakers approved a controversial motion (325 to 184) at an emergency session to grant a one-year mandate for troop deployment to fight advancing Haftar forces.
Somalia Truck Bomb Attack Rocks Capital During Rush Hour, At Least 90 Dead -At least 90 people are reported dead and 125 more wounded after a massive car bomb was detonated at a busy intersection in the Somali capital of Mogadishu on Saturday. The apparent suicide attack happened during rush hour traffic at about 8am, according to early reports, and authorities are cautioning that the death toll is expected to rise as area hospitals continue to fill. Among the dead are 17 Somali police officers, CNN reports, while most have been described as university students on their way to classes. It's the deadliest attack in Mogadishu since the 2017 twin truck bombings that killed more than 500 people and leveled a hotel. Though initial reports put the death toll at 78 or more, Reuters has cited local sources who say it's actually more than 90 killed.Rescuers carried bodies past the twisted wreckage of a vehicle and a minibus taxi smeared with blood. A report by the international organization, which did not want to be named, said the death toll was more than 90.A Somali MP also tweeted that he had been told the death toll stands at more than 90, including 17 police officers. — ReutersSpecifically Saturday's car bomb went off on a busy street outside a tax collection center. The truck reportedly barreled into a security checkpoint manned by over a dozen police, killing scores of both civilians and security forces. Suicide-bomber driving a car laden with explosives detonates at #Mogadishu’s Ex-control Afgoye. Casualties of this horrific blast is yet to clarify. #Somalia. pic.twitter.com/BaHeG44zV2 — Bashiir Maxmud (@BashiirMaxmud) December 28, 2019Details are as yet uncertain, but local eyewitness say gunfire erupted just before or after the blast. "Dozens of injured people were screaming for help but the police immediately opened fire and I rushed back to my house," 55-year-old Sabdow Ali told Reuters.No group initially claimed responsibility for the deadly attack; however, likely authorities are eyeing Al-Qaeda-linked militant group al-Shabab, which has carried out similar attacks in the recent past.
Russia says its hypersonic missile is now in active service -- Russia's vaunted hypersonic missile is now in service -- though to what degree isn't clear. The country's Ministry of Defense has announced that the Avangard system is in use with its first regiment as of the morning of December 27th. The addition theoretically gives Russia the ability to strike targets around the world with relative impunity. The weapon launches like a conventional ballistic missile, but the re-entry vehicle glides into the atmosphere at extreme speeds while staying highly maneuverable at high altitudes -- it could be virtually impossible to stop using existing anti-missile systems.The news comes as an apparent response to earlier concerns that trouble finding carbon fiber could lead to Avangard missing its planned 2019 debut.As with earlier claims, it's difficult to tell how ready the technology really is. How many missiles are there, and how quickly could they be put into use? Will they work as well as claimed? American experts were allowed to inspect the Avangard system on November 26th under the terms of a 2010 nuclear arms treaty, but it's not clear if the US believes this to be a credible threat. If there are only a handful of missiles or there's a protracted launch sequence, the missile might not be as intimidating as it sounds.Still, the claimed deployment is bound to make other countries nervous. Countries like the US, Australia and China are working on their own hypersonic missile systems, but none has reached active duty. Russia's rush to be first theoretically gives it a bargaining chip with any country that would dare challenge its agenda -- do what we say or you're guaranteed to face casualties. Unfortunately, that may lead to other countries stepping up their own efforts and reproducing the arms race of the Cold War era.
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