Sunday, December 4, 2016

OPEC announces oil production cuts back to March levels, oil prices jump 14%

at their meeting in Vienna on Wednesday, the member nations of OPEC agreed to cut their oil production by 4.5% for a period to run 6 months, effective January 1st...the amount of oil output each member is expected to forgo is generally based on their October production, although for some countries, such as Iran, the baseline for the output cut has been adjusted for special factors...Libya and Nigeria, whose recent production has been disrupted by civil conflict, will be exempt from the cuts...Indonesia, an oil importer who would not agree to a cut, was suspended from OPEC, and what they would have cut was to be absorbed by other member....figures released by OPEC indicate they want a cut of almost 1.2 million barrels per day, or roughly in line with what we previewed last addition, OPEC announced that non-OPEC oil producers, who were not represented at the meeting, will contribute an additional output cut of 600,000 barrels per day... presumably, details on those non-OPEC oil production cuts will be worked out at a December 9th meeting at Doha, but since Russia is on board with a cut of 300,000 barrels per day, achieving that target should not be difficult....oil traders apparently believe that OPEC and other producers will be able to achieve what they've set out, because since the announcement of the deal, oil prices have risen 14%...

as you may recall, last week i was skeptical that such an agreement could be worked out, and thought that even if it were, it would quickly fall apart...i'm now of the opinion that their production cut will hold, and that it will be at least partially if not completely effective in reducing the global oil glut, and thereby push up the price of factor i hadn't counted on was the direct involvement of Vladimir Putin in the deal; originally, the Russian oil companies had only committed to give up the increase in production they planned for next year; now it appears they've also been pressured into participating in an actual 300,000 barrels per day cut in their own production...moreover, Putin himself acted as an intermediary between Saudi Prince Mohammed bin Salman and Iran's Ayatollah Ali Khamenei and President Hassan Rouhani to grease the skids for the deal that was eventually made, that allowed Iran's production figures to be overstated such that their "cut" actually amounts to a small increase from their current production...with the Saudis and Iranians waging proxy wars in both Syria and Yemen, that Putin could convince them to put their animosity aside and agree to a deal was a major breakthrough for OPEC...moreover, their strategy has already resulted an instant success, which will now convince all parties to hold the line irregardless of their personal differences...after agreeing to cut their production by 4.5%, oil prices immediately rose 14%, so they already have a gain of 9.5% on the oil that they will be producing over what they would have had otherwise....

to put this production cutback in perspective, we'll next include a series of graphics which should give you a decent idea how big this production cut is relative to OPEC's recent and earlier oil production, and relative to the global oil supply...first, we'll start with a graph of OPEC's monthly oil production over the past dozen years...

December 3 2016 OPEC oil production as of October

the above graph, taken from the 'OPEC oil charts" page at the Peak Oil Barrel blog, shows total oil production, in thousands of barrels per day, for the 14 members of OPEC for the period from January 2005 to October we pointed out last week, OPEC production has been spiking the past few months as member states pumped what they could to be better positioned for any percentage cutback resulting from this earlier planned meeting, and had reached 33.643 million barrels per day as of the October report...the agreed to production cuts will reduce their output to approximately 32.5 million barrels per day, which you should notice is about what they were producing in March and April of this year...

next, we have a table of oil production by each of the members of OPEC for the recent months, quarters, and years, which comes from the November OPEC Monthly Oil Market Report, which was released on November you can see that the total oil output for the first quarter of 2016 (1Q16) was 32,500,000 barrels per day, exactly what these "cutbacks in production" hope to get back to...for the Persian Gulf OPEC members, much of cut that will be close to their normal seasonal reduction anyhow, since they usually ramp up their oil production during the summer months to generate electricity for air conditioning...

December 3 2016 OPEC production table

note that the numbers shown in the October column above are close to the reference production levels on which the 4.5% production cuts are based...for instance, the Saudis will be cutting from 10,544,000 barrels per day back to 10,058,000 barrels per day, the Iraqis will be cutting from the 4,561,000 barrels per day shown above to 4,351,000 barrels per day, and the Kuwaitis will be cutting from 2,838,000 barrels per day to 2,707,000 barrels per day...the exception is for Iran, whose cuts are based on their production from Table 5.8: OPEC crude oil production based on direct communication in that same OPEC monthly report, wherein Iran reported oil production of 3,920,000 barrels per day in October...thus, when Iran cuts 4.5% from that level, their allowed production will be 3,797,000 barrels per day, actually 90,000 barrels per day more than their OPEC reference production...

the next graphic, as the heading tells us, shows both OPEC and world oil production monthly on the same graph, from November 2014 to October 2016, and it also comes from the November OPEC Monthly Oil Market Report...the pale blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the green graph represents global oil production in millions of barrels per day, and that's shown on the right oil production reached 96.32 million barrels per day in October, just short of last year's November record, and OPEC production represented 34.9% of what was produced globally...note that the June OPEC Monthly Oil Market Report indicates global production in May was at 94.51 million barrels per day, so if OPEC is successful in cutting their production by 1.2 barrels per day from October levels, and the non-OPEC producers cut another 600,000 barrels per day, global oil production will be reduced all the way back to the level that we saw in May of this year, when there was an acceleration of rebel attacks on oil facilities and pipelines in Nigeria and Canadian oil production was interrupted by the Alberta wildfires...

December 3 2016 world oil supply

lastly, instead of explaining in detail how oil prices moved this week, we'll just include a chart which shows oil prices for every hour, every day, for the 5 trading days in question...the graph below is a Saturday afternoon screenshot of the oil price graph at DailyFX, a trading news platform which specializes in foreign exchange (FX) trading...each bar on this graph represents oil prices for one hour of trading; when oil prices went up during a given hour, the bar will be green, with the starting price at the bottom of the bar and the price at the end of the hour at the top of the bar...during hours when the price of oil fell, the bar will be red, with the starting price at the top of the bar and the price at the end of the hour at the bottom of the bar...this variety of graph is called a candlestick, and the range of oil prices outside of the opening and closing price for any given period is indicated by a thin 'wick' above or below the "candlestick" part of the graph...thus we can see that in the wee hours of Wednesday morning, when it appeared neither Iran or Iraq would agree to a cut, oil prices fell below $45 a barrel, as some were even forecasting that oil prices would fall to $20 a barrel after the presumed OPEC meeting failure...oil prices then ran up to as high as $51.75 a barrel during the day on Thursday, before sliding back to close at $51.06...but the rally picked up again on Friday and oil closed the week with another gain at $51.68 a barrel, up 14.2% in the three days after the OPEC meeting..

December 3 2016 hourly oil prices

oil prices above $50 a barrel will likely accelerate the return of US drillers and frackers to the field, as we've already seen 5 months of steadily rising rig counts with oil prices stuck between $42 and $50 a barrel...also recall that two weeks ago, the Drilling Productivity Report for November showed that the count of drilled but uncompleted wells rose to 5,155 in October, with more than half of those in the Permian and the Eagle Ford, the two big shale oil fields of Texas...we would expect a pickup in completion of those wells, and an attendant increase in US oil production as prices rise, partially ameliorating the OPEC production cuts...and should oil prices top $60 a barrel, the Dallas Fed 3rd quarter energy survey of American oil and gas executives indicates that between 65% and 70% of oil execs would then pull out all the stops and start drilling everywhere again...

The Latest Oil Stats from the EIA

the US Energy Information Administration's release of oil data for the week ending November 25th indicated that our imports of oil were little changed, and that gasoline and distillates production and inventories rose, while our supplies of crude oil were slightly lower...the crude oil fudge factor that was needed to make the weekly U.S. Petroleum Balance Sheet (line 13) balance decreased to +384,000 barrels per day, from last week's +419,000 barrels per day, which still means that 384,000 more barrels of oil per day showed up in our final consumption and inventory figures this week than were accounted for by our crude production or import figures, meaning that one or several of this week's metrics were off by that amount...that's the 6th large positive adjustment in a row, but the cumulative daily average of that adjustment remains at +116,000 barrels per day, meaning the EIA's week figures remain out of balance for the whole we saw last week, much of that imbalance has been due to under-reported oil production

for the week ending November 25th, the EIA reported that production of crude oil from US wells rose by 9,000 barrels per day to an average of 8,699,000 barrels per day, the 7th increase in 8 weeks, as output from Alaskan fields rose by 11,000 barrels per day while production from well in the lower 48 states was 2,000 barrels per day lower....that left the week's domestic oil production 5.5% lower than the 9,202,000 barrels of crude we produced during the week ending November 27th of last year, and 9.5% below the record 9,610,000 barrels per day of oil production that we saw during the week ending June 5th 2015...

at the same time, the EIA reported that our imports of crude oil fell by an average of 30,000 barrels per day to an average of 7,548,000 barrels per day during the week ending November 25th, as the 4 week average of our oil imports reported by the EIA's weekly Petroleum Status Report (62 pp pdf) fell back to an average of 7.7 million barrels per day, now just 5.3% higher than the same four-week period last year...meanwhile, our exports of crude oil rose by an average of 5,000 barrels  per day to an average of 474,000 barrels per day for the week, in data that is not directly comparable to last year's exports of 445,000 barrels per day during the week ending November 27th...

meanwhile, the EIA also reported that the amount of crude oil used by US refineries fell by an average of 114,000 barrels per day to an average of 16,283,000 barrels of crude per day during the week ending November 25th, as our refinery utilization rate slipped back to 89.8% during the week, after last week's 90.8%, which left it way down from the refinery utilization rate of 94.5% of the week ending November 27th last year...US oil refining is now down 3.8% from the pre Labor Day high of 16,930,000 barrels per day, at which time refinery utilization rate had peaked at 93.7%...the rate of crude oil refined this week nationally is also down 3.1% from the 16,803,000 barrels of crude per day US refineries used during the week ending November 27th last year, and down a half percent from the 16,356,000 barrels per day that were being refined during the equivalent week in 2014... 

however, even with the decrease in the amount of crude oil being refined, refineries’ production of gasoline rose by 286,000 barrels per day to 9,986,000 barrels per day during the week ending November 25th, as we continue to see large swings in the fudge factor for gasoline, shown in Table 2 on page 7 of the U.S. Petroleum Balance Sheet, which the footnote tells us is an "adjustment to correct for the imbalance created by the blending of fuel ethanol and motor gasoline blending components"...that fudge factor fell by 307,000 barrels per day this week, from -339,000 barrels per day to -32,000 barrels per day, accounting for the apparent increase in production from last week's distorted figure...the year over year comparison now shows that our gasoline production was up 2.4% from the 9,752,000 barrels per day of gasoline produced during the same week a year ago, despite the lower refining throughput...the EIA also reported that refinery output of distillate fuels (diesel fuel and heat oil) rose by 136,000 barrels per day to 5,216,000 barrels per day during the week ending November 25th, the highest since last December 4th....that distillates output was 0.9% higher than the 5,168,000 barrels per day that was being produced during the week ending November 27th last year, and 3.7% higher than the 5,028,000 barrels per day of distillates produced during the equivalent week of 2014...     

with the jump in gasoline production, the EIA reported that our gasoline supplies rose by 2,097,000 barrels to 226,123,000 barrels as of November 25th, as both our domestic consumption of gasoline and our gasoline imports were little a result, our gasoline inventories as of November 25th were 4.3% higher than the 216,867,000 barrels of gasoline that we had stored on November 27th of last year, and 8.4% higher than the 208,567,000 barrels of gasoline we had stored on November 28th of the same time, our distillate fuel inventories rose by 4,957,000 barrels to 154,196,000 barrels by November 25th, the largest one week jump in distillate supplies since January 8th of this while our distillates inventories are still down by 10.8 million barrels over the past 10 weeks, they were 6.8% higher than the distillate inventories of 144,415,000 barrels of November 27th last year, and 32.7% above the distillate inventories of 116,174,000 barrels of November 28th, 2014…

finally, with our oil imports still below the recent mean, our inventories of crude oil fell by 884,000 barrels to 488,145,000 barrels by November 25th, which left them 4.7% below their April 29th peak of 512,095,000 barrels...however, we still ended the week with 6.8% more crude oil in storage than the 457,212,000 barrels we had stored as of the same weekend a year earlier, and 40.7% more crude oil than the 347,015,000 barrels we had stored on November 28th of 2014...  

This Week's Rig Count

because of last week's Thursday holiday, the Baker Hughes rig count report for the week ending December 2nd covers changes in drilling activity for the nine days from November 23rd to December 2nd.. for that period, they reported that drilling rig activity increased for the 10th time out of the last 11 weeks, as the active rig count rose by 4 rigs, from 593 rigs on November 23rd to 597 rigs on December 2nd....that was still down from the 737 rigs that were working as of the December 4th report last year, and down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014....noteworthy in this week's report was that Canadian drillers added 26 rigs, which brought their active rig total up to 200, surpassing the 177 rigs they had deployed a year ago at this time..

rigs deployed drilling for oil in the US rose by 3 rigs to 477 rigs during the week, which was the most oil rigs we've had working in any week since January 29th, as oil drilling activity has only been down once in the past 23 weeks...but oil drilling was still down from the 545 oil directed rigs that were working on December 4th a year ago, and down from the recent high of 1609 oil rigs that were drilling on October 10, the same time, the count of drilling rigs targeting natural gas formations increased by 1 rig to 119 rigs, which still left active gas rigs down from the 192 natural gas rigs that were in use a year ago, and down from the recent natural gas rig high of 1,606 natural rigs that were deployed on August 29th, rig that was classified as miscellaneous also remained active, an increase from a year ago, when no such miscellaneous rigs were working...

one of the rigs that had been working on a drilling platform offshore from Louisiana was shut down this week, which reduced the Gulf of Mexico rig count to 22, and also cut the total US offshore count to 22 rigs, down from the 25 rigs that were working in the Gulf of Mexico last year at this time, which was also the total for all US offshore rigs active a year addition, one rig that had been drilling through inland freshwater in southern Louisiana was also shut down, leaving just one rig working on inland waters, down from 2 such rigs a year ago...

the number of working horizontal drilling rigs increased by 10 rigs to 485 rigs this week, which was still down from the 569 horizontal rigs that were in use on December 4th of last year, and down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, six directional drilling rigs were pulled out and stacked, reducing the directional rig count to 46, which was down from the 64 directional rigs that were deployed during the same week last year...meanwhile, the vertical rig count of 66 rigs was unchanged from last week, but down from last year's deployment of 104 vertical rigs..

as usual, the details on this week's changes in drilling activity by state and by shale basin are included in our screenshot below of that part of the rig count summary from Baker Hughes which shows those changes...the first table below shows weekly and year over year rig count changes for the major producing states, and the second table shows weekly and year over year rig count changes for the major US geological oil and gas both tables, the first column shows the active rig count as of December 2nd, the second column shows the change in the number of working rigs between last week's count (on November 23rd) and this week (December 2nd), the third column shows last week's November 23rd active rig count, the 4th column shows the change in the number of rigs running this Friday from the equivalent Friday 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 case was for December 4th of 2015...   

December 2nd 2016 rig count summary

this week's variances show a return to the pattern we've being seeing for most of the past 5 months, wherein the biggest jump in drilling was again in the Permian basin of western Texas, which at 235 rigs now shows more drilling activity than the 217 rigs that were working there a year ago...since both the Dallas area Barnett shale and the south Texas Eagle Ford also saw two rig increases, that suggests that Texas saw an increase of 11 horizontal rigs, while other drilling rig types were pulled out...also note the increase of 3 gas directed drilling rigs in the Haynesville, generally a northwestern Louisiana field, although with the 4 rig decrease in that state, those additions could be in across the border in Texas too...also hard to square is the 4 rigs that were added in Wyoming; they weren't in any of the major basins, since the DJ Niobrara saw a 2 rig decrease...all in all, this week’s changes were not as immediately clear as we normally see...


Another Ohio renewable-energy freeze possible before Christmas, return to full-utility regulation delayed | -- Ohio lawmakers are continuing their race to a showdown with Gov. John Kasich over renewable energy. He wants it. They want to delay state rules requiring it until he after he leaves office. But lawmakers appear to have put off until early next year the even bigger question of whether to somehow put Ohio's electric utility industry back under regulation, protecting old coal and nuclear power plants from having to compete with new and more efficient natural gas-fired plants. Extending a 2014 freeze on state rules requiring power companies to provide renewable energy and use customer-paid dollars to offer energy efficiency programs will be the energy issue in the next few weeks. Both Senate and House committees are planning to hear testimony this week for and against bills written by Republican leadership that would, in effect, extend for another three years the state's freeze of rules requiring power companies to sell an annually increasing percentage of electricity generated by renewable technologies, such as wind and solar. The proposed bills -- Senate Bill 320 and House Bill 554 -- don't technically extend the freeze. In fact, the original rules approved back in 2008 would come back to life, annually increasing the percentage of renewable energy required, as well as annually increasing reductions in consumption due to efficiency.But compliance would be voluntary until 2020, meaning power companies would not have to prove they are complying until they file their reports with the Public Utilities Commission in 2021. And by then, Kasich will no longer be governor.

Athens activists take anti-fracking petition to Washington, DC - The Post -- Some residents in southeast Ohio took their complaints about the fate of the Wayne National Forest all the way to the nation’s capital. Parcels of Wayne National Forest, the only national forest in Ohio, is scheduled to be auctioned off for oil and gas purposes Dec. 13. The Bureau of Land Management’s decision could potentially lead to hydraulic fracturing, or fracking. The process of fracking includes injecting pressurized liquid to fracture rock and release gas. The notice allowed for a 30-day formal protest period which ended Nov. 14. After discovering a petition formed by two “tech-savvy guys” out of Cleveland on Facebook about a month ago, Roxanne Groff and Andrea Reik began to gather signatures. They have received more than 92,000 signatures on the petition which called for a halt to the auction. “It’s a beautiful national forest,” Reik, a member of the Athens County Fracking Action Network, said. “To see that it would be disrupted by oil and gas is upsetting. I believe in climate change, I believe we have to reduce our ethane in the air.”  On Nov. 14, about a month before the auction is scheduled to take place, Reik and Groff met in Washington, D.C. with the two men from Cleveland and delivered the petition to the Bureau of Land Management.  “We were informed that we would not be able to go into the office and they would meet us with security outside,” Reik said. “That I don’t understand. … (Two officers) told us we were not allowed to go into the BLM offices and they escorted down one of the administrators to hand it off. To me, I was surprised by the response. … I just thought it was interesting that there was a law enforcement response when all we wanted to do was drop off a flash drive.”  Reik and Groff also met with Barbara Eggers, the associate state director of the eastern states offices of the Bureau of Land Management, to hand off the petition. Davida Carnahan, a spokesperson for the bureau, confirmed the petition was delivered and is being included in the official administrative record.“It’s really a short-term boom and bust industry, but what it leaves behind is a devastated forest and wildlife that’s been disrupted, and contaminated water, and polluted air,” Reik said. After leaving the offices, Reik and Groff went to Sen. Rob Portman and Sen. Sherrod Brown’s D.C. offices to express the concerns of some of their constituents.

Students and residents organize to stop fracking at Wayne in emergency meeting - Concerned residents and students called an "emergency meeting" Wednesday night to discuss the upcoming auction of Wayne National Forest land for lease to oil and gas companies interested in hydraulic fracturing, or "fracking."   Ohio University students, Athens residents of all ages and people living in counties throughout Ohio strategized and shared their concerns. Caitlyn McDaniel, an Athens resident and OU alumna who works for the Buckeye Environmental Network, organized the meeting. "I’m angry and disillusioned, and it’s very frustrating, this whole process," McDaniel said. "But it’s good to know that we have community members who care about what’s going to happen." During the Dec. 13 auction, 33 parcels of land across over 1,600 acres in the Wayne National Forest will go up for lease to oil and gas companies, according to the Bureau of Land Management auction notice.  A Bureau of Land Management assessment found that there would be no significant environmental impact if that land was used for fracking. However, McDaniel and other activists believe fracking will damage the environment, and the Bureau of Land Management should reassess the environmental impact to account for public input and fracking's impact on climate change. McDaniel and community members discussed a wide range of effects they believe fracking could have on the local economy, environment and health. McDaniel included the phone number of Kathleen Atkinson, a regional forester with the U.S. Forest Service, on her slideshow and encouraged attendees to call Atkinson and tell her to pull Wayne National Forest parcels of land from the online auction.Roxanne Groff, a member of the Athens County Fracking Action Network, and another attendee demonstrated how advocates should speak to Atkinson's office staff when they call. "I'm sure that's what Kathleen Atkinson told you to say, but we all in Southeast Ohio know better," Groff said to someone playing the part of Atkinson's assistant after a fictional phone conversation. "So if you would send Kathleen Atkinson my regards ... I'm sure you're going to be receiving lots of phone calls from concerned citizens."

Protest Calls on BLM to Reject Fracking Plan in Ohio's Wayne National Forest - Center for Biological Diversity (press release) — Conservation groups just filed an administrative protest asking the Bureau of Land Management to halt an oil and gas lease auction next month in Ohio’s Wayne National Forest due to its failure to address concerns over fracking, climate change and effects on endangered species.The plan to allow dangerous hydraulic fracturing, or “fracking,” on 1,600 acres of the state’s only national forest would degrade streams and groundwater, fragment wildlife habitat and worsen climate change, the groups said. The BLM also ignored the likelihood that opening these parcels to development would facilitate more fossil fuel extraction on adjacent private land.The groups highlighted the Bureau’s failure to address groundwater and surface-water contamination risks from wastewater disposal and other fracking operations. “This will be bad for wildlife, bad for recreation and bad for the health of Ohio's only National Forest,” said Nathan Johnson of the Ohio Environmental Council. “Ohioans don't want heavy industrial development on their public lands. There’s a better path forward — one that builds clean energy jobs for local residents and doesn't destroy their air, land and water in the process.” “The BLM failed to do its duty to take a ‘hard look’ at the impact these new fossil fuel leases would have on other fracking on private land nearby. In fact, the agency seems to be actively facilitating this new extraction,” said Wendy Park, a senior attorney with the Center for Biological Diversity. “At this critical time, the Obama administration should act to halt all new leasing of public lands for oil and gas fracking.”

Feds Approve NEXUS Pipeline, Which Will Run Through Northeast Ohio | Scene and Heard: Scene's News Blog: The Federal Energy Regulatory Commission today approved the NEXUS pipeline project and its environment impact on Ohio communities. (The pipeline will also travel through Michigan to Canada; it was approved in its entirety.) As far as Northeast Ohio is concerned, the pipeline is planned to run through fairly dense, almost suburban portions of Stark, Summit, Medina and Lorain counties. The 36-inch pipeline covers 256 miles, all told. The FERC environmental impact statement admits there will be "some adverse environmental impacts." The commission will establish an environmental compliance inspection program as the NEXUS project continues, watching for parent company Spectra Energy's compliance with environmental regulations. Well before the route was given this approval, however — up until yesterday, in fact, in the city of Green — surveyors have been entering private property Northeast Ohio to prepare the construction job. In some cases, armed officers from the county sheriff's office have accompanied them. "Spectra Energy is all about timelines," Jon Strong, a Medina County resident and an organizer of the Coalition to Reroute NEXUS, tells Scene. "They're trying to do everything they can to short-cycle to when they can start digging and putting pipe in the ground. On their side of the fence, it's 'We need to get all our surveys done, come hell or high water, as soon as possible.'"

Feds find no major environmental issues with NEXUS pipeline (AP) — The Federal Energy Regulatory Commission has found no major environmental issues with the NEXUS Gas Transmission pipeline project, paving the way for construction to begin in early 2017. The findings were included in FERC’s 541-page final environmental impact statement, which the agency released on Wednesday. In addition, FERC determined that the pipeline does not have to follow any alternate routes proposed by the city of Green and a collective of Summit County landowners. The project consists of constructing more than 256 miles of 36-inch pipeline to carry natural gas fracked from the Marcellus and Utica shale regions of Ohio. Nearly 210 miles of the pipeline will cut through Ohio. NEXUS spokesman Adam Parker called FERC’s positive impact statement a major milestone for keeping the pipeline on track for final approval.

UPDATED: Original NEXUS route receives government OK - Chronicle Telegram - The Federal Energy Regulatory Commission’s final environmental impact statement on the NEXUS Gas Transmission pipeline project can be found at: The final environmental impact statement issued Wednesday by the Federal Energy Regulatory Commission eliminated proposed route alternatives from further consideration. FERC evaluated alternatives but found that “none of these would offer a major environmental advantage over the proposed route,” according to the statement.  The NEXUS Gas Transmission pipeline received a recommendation for approval from the federal government Wednesday of the original route.Environmental hurdles to building the $2 billion line can be adequately managed by the company and its partner, Houston-based Spectra Energy, the Federal Energy Regulatory Commission announced.The announcement came in the form of a 541-page “final environmental impact statement” or FEIS on the project that is to originate in Columbiana County in eastern Ohio and travel through 10 counties, including Medina and Lorain, to Michigan and then to a hub in Canada.The FEIS will be used as information for the three FERC commissioners to make a final decision on whether construction may begin as planned in early 2017, FERC spokeswoman Tamara Young-Allen said shortly after the statement was posted online.FERC Chairman Norman C. Bay, Commissioner Cheryl A. LaFleur and Commissioner Colette D. Honorable will use the impact statement to decide if:

  • the pipeline is needed
  • the project is environmentally sound
  • the rates for transport of natural gas from the Utica and Marcellus shale region in Ohio’s Appalachian Basin to markets in Michigan, Canada and elsewhere are “just and reasonable.”

Young-Allen said there is no deadline for a commission decision, but the early 2017 expected construction start likely means it will occur within weeks.

Potentially huge Texas shale field unlikely to affect Ohio's oil, gas industry - Columbus Dispatch --A vast swath of shale deep below western Texas could yield 20 billion barrels of oil, according to new estimates by the U.S. Geological Survey.In addition to being the largest source of shale oil ever assessed by the agency, the Wolfcamp Shale geologic formation also contains an estimated 16 trillion cubic feet of natural gas and 1.6 billion barrels of natural-gas liquids, the agency said in a news release. Still, experts say the discovery is unlikely to affect Ohio’s natural gas and petroleum production, or the region’s. “It’s a huge resource, and that’s really great news for America,” said Penn State geoscience professor Terry Engelder. Wolfcamp could help assure U.S. independence from foreign oil, he said.  In 2008, Engelder and Gary Lash, a geologist at the State University of New York-Fredonia, announced estimates that the Marcellus shale beneath eastern Ohio, West Virginia, upstate New York and parts of Pennsylvania could contain as much as 489 trillion cubic feet of recoverable gas.Two years later, the discovery of Utica shale deep beneath Ohio was announced, setting off a rush to introduce additional fracking in the state. But Ben Ebenhack, a petroleum-engineering professor at Marietta College, warned that the west Texas estimate remains just that — an estimate. The figures released this month anticipate the amount of oil the Wolfcamp plate might contain if it turns out to be bountiful, Ebenhack said. And the figures are not even the most likely outcomes.“Most undiscovered resource prospects tend to not have anything commercially successful,” he said. “It’s not a real prediction of what’s there; it’s a statement of what could be there. Only drilling will or won’t confirm that.”

NYMEX December gas contract settles at $3.232/MMBtu, up 14.7 cents - The NYMEX December natural gas futures contract, in its final day of trading Monday, jumped 14.7 cents to settle at $3.232/MMBtu as increasingly supportive weather forecasts bolstered the market. The December contract has rallied over the last seven trading sessions, rising 52.9 cents since November 17 to expire Monday at the highest prompt-month expiration price since the December 2014 contract expired at $4.282/MMBtu. Analysts at Tudor Pickering Holt in a market note Monday said that the weather/forecasts are "looking normalish" over the next three weeks, which could help to start the process of "pulling down storage overhang." In addition, despite a slow start to winter demand, the possibility still exists for gas prices "to see $3.75[/MMBtu] Q1 prices" if cold weather patterns persist, the analysts said.The latest six- to 10-day and eight- to 14-day outlooks from the US National Weather Service called for below-average temperatures across the western one-third of the country. Near-normal temperatures were forecast across much of the Northeast, which was a bullish departure from forecasts prior to the Thanksgiving holiday in the US. Above-average temperatures were expected to remain across the Upper Midwest and the Southeast. Over the next seven days, US demand is expected to total around 79.6 Bcf/d, up more than 4 Bcf from the prior week, Platts Analytics' Bentek Energy data showed. Looking further out, demand in the eight- to 14-day range is expected to rise even higher, reaching an estimated 92.9 Bcf/d. Meantime, US gas production is expected to hold flat over the next two weeks, reaching an estimated 71.6 Bcf/d, according to Bentek data. Further out on the curve, the January contract rose 11.8 cents to settle at $3.32/MMBtu the day before trading as the prompt-month contract starts.

Inside FERC Henry Hub December index rises 46 cents to $3.23/MMBtu - The December bidweek national average natural gas price rose 70 cents to $3.17/MMBtu, with prices in the US Northeast seeing the biggest increases, according to Inside FERC's Gas Market Report Thursday. The December bidweek price at benchmark Henry Hub rose 46 cents to average $3.23/MMBtu. That came as the NYMEX December gas futures contract expired at $3.232/MMBtu, up 46.8 cents from the November contract's close of $2.764/MMBtu. In the Northeast, Transcontinental Gas Pipe Line Zone 6 New York increased $1.96/MMBtu to average $3.87/MMBtu as expectations for colder temperatures and stronger heating demand drove prices higher.In premium New England markets, prices rose even more sharply as Algonquin Gas Transmission city-gates prices climbed $2.27 to $4.73/MMBtu. In the Northeast producing regions, Dominion, Appalachia December prices climbed $1.28 to $2.40/MMBtu. In the Upper Midwest, prices advanced, with Chicago city-gates rising 44 cents to average $3.25/MMBtu. Upstream, Rockies Express Zone 3 prices climbed 50 cents to $3.21/MMBtu. In the Midcontinent, December prices saw similar increases as the Panhandle pricing point rose 50 cents to average $3.04/MMBtu. Further west in the Rockies, Northwest Pipeline Rockies was up 37 cents to average $2.99/MMBtu. Along the West Coast, Southern California Gas December prices jumped 71 cents to $3.41/MMBtu.

Louisiana LNG Export Project Clears DOE Hurdle --The U.S. Department of Energy (DOE) on Thursday granted authorization for a proposed liquefied natural gas (LNG) terminal in Lake Charles, La., to export LNG to countries with which the United States has not entered into a free trade agreement (non-FTA approval)."Our Magnolia project team is very pleased to have successfully received this final piece of the regulatory framework enabling our Magnolia LNG project to export U.S.-produced natural gas to the global energy market," stated Greg Vesey, managing director and CEO of project developer Liquefied Natural Gas Limited (LNGL), in a press release announcing DOE's non-FTA approval.LNGL's Magnolia LNG, LLC is developing a four-train LNG export terminal at the Port of Lake Charles that will be capable of producing at least 8 million tonnes per annum of LNG using the company's proprietary OSMR process technology. KBR is leading a joint-venture team with SKE&C that is conducting engineering, procurement and construction efforts for the project on a fixed-price, turnkey basis, according to LNGL. Natural gas for the liquefaction terminal will arrive via the Kinder Morgan Louisiana Pipeline under a 20-year deal with Magnolia LNG."We recognize and appreciate the hard work and timely efforts put in by the DOE and other cooperating agencies in reaching this decision," continued Vesey. "Going forward, we are well underway in progressing on the final offtake milestones to enable us to move this leading energy efficient, innovative and low cost project into the construction and operations phases." LNGL has also proposed export projects in Canada and Australia.

The frack spread remains painfully low, but help is on the way. - The frac spread—the difference between the value of a typical basket of NGLs and the price of natural gas, in $/MMBtu—has averaged a paltry $2.28 for the past two years, by far the longest period of depressed NGL values since the start of the Shale Revolution. That’s bad news for natural gas processing economics, which are most favorable when NGL prices are strong and natural gas prices are weak. But things are about to get a lot better. Today we consider the currently low frac spread, what it means for natural gas producers and processors, and why a big turnaround may be in the offing.  The frac spread (short for “fractionation spread”) and its kissing cousin, the NGL-to-crude ratio, have been frequent topics in the RBN blogosphere, and for good reason. From the beginning, an underlying principal of RBN’s analysis of drill bit hydrocarbons (gas and liquids produced at the wellhead) has been our belief that the relationships between crude oil, natural gas and natural gas liquids (NGLs) have become far more important in the Shale Era than they were a generation ago. Now, what happens in oil markets impacts gas and NGL markets, and vice versa. (See “The Domino Effect” for a thorough review of how this interconnectedness has played out.) As we said in Do It Again, the NGL-to-crude ratio is a weighted average of OPIS/Mont Belvieu NGL prices divided by CME/NYMEX front month crude oil futures. The NGL mix that we use to calculate the ratio is 42% ethane, 28% propane, 11% normal butane, 6% isobutane, and 13% natural gasoline. For many years the NGL-to-crude ratio averaged about 60%, staying within a 50%-to-70% range most of the time, and rising to a frothy 76% in September 2011. This was The Golden Age of Natural Gas Processors, as we said in a blog series of the same name. But, as we’ve discussed often, rapidly growing natural gas production and increasingly oversupplied market conditions depressed natural gas prices in the early days of the Shale Revolution, which gave producers the incentive to shift their attention and resources toward “wet” gas shale areas that produced significant volumes of NGLs. The resulting NGL supply growth crushed NGL prices, which pushed the NGL-to-crude ratio down to a new plateau: since 2012 the ratio has averaged just over 40%, and even the collapse in oil prices since mid-2014 hasn’t changed the ratio much. (As of November 30, 2016, with NGL prices up in sympathy with the new OPEC deal, it stood at just 45.4%.)

EPA's late changes to fracking study downplay risk of drinking water pollution - Top officials of the U.S. Environmental Protection Agency last year made critical changes at the eleventh hour to a highly anticipated, five-year scientific study of hydraulic fracturing’s effect on the nation’s drinking water. The changes, later criticized by scientists for lacking evidence, played down the risk of pollution that can result from the well-drilling technique known as fracking. Documents obtained by APM Reports and Marketplace show that in the six weeks before the study’s public release, officials inserted a key phrase into the executive summary that said researchers did not find evidence of “widespread systemic impacts” of fracking by the oil and gas industry on the nation’s drinking water. Earlier draft versions emphasized more directly that fracking has contaminated drinking water in some places. The documents also show that the news release accompanying the scientific study was changed on June 3, 2015, the day before it was made public. A draft displayed a conclusion that the EPA had identified “potential vulnerabilities” to drinking water. But the final release dated June 4, concluded: “Assessment shows hydraulic fracturing activities have not led to widespread, systemic impacts to drinking water resources and identifies important vulnerabilities to drinking water resources.”  In a conference call with reporters about the study on the day it was released, the EPA’s deputy administrator, Tom Burke, highlighted the lack of “widespread, systemic impacts” as the agency’s top finding. In fact, scientists had found evidence in some places that fracking activity had polluted drinking water supplies. In all, the agency identified more than two dozen instances in which hydraulic fracturing had an impact on water resources. The agency also identified hundreds of other spills, many of which reached soil and water. It’s not clear precisely who inserted or ordered the new phrasing. But emails acquired via the Freedom of Information Act show EPA officials, including press officers, met with key advisers to President Obama to discuss marketing strategy a month before the study’s release. The emails also show EPA public relations people exchanging a flurry of messages between 4 and 11 p.m. on the eve of the study’s release.

EPA Watered Down Major Fracking Study to Downplay Water Contamination Risks -- A stunning new report from Marketplace and APM Reports reveals that top U.S. Environmental Protection Agency (EPA) officials made critical, last-minute changes to the agency's major fracking assessment to soft-pedal clear evidence that the controversial drilling process contaminates the nation's water supplies. We've already seen how fracking and drinking water do not mix , and even earlier versions of the EPA assessment said that spills are a problem. But on June 4, 2015, the agency released its executive summary and corresponding press materials with the misleading takeaway that "there is no evidence fracking has led to widespread, systemic impacts on drinking water resources." The EPA's pro-fracking spin baffled many experts and scientists and contradicted what many landowners were seeing in their chemically laden water. Major media outlets also went with headlines that put fracking in the clear, such as the New York Times " Fracking Has Not Had Big Effect on Water Supply, E.P.A. Says While Noting Risks ," NPR's " EPA Finds No Widespread Drinking Water Pollution From Fracking " and this CNN screenshot . Big Oil and Gas, meanwhile, applauded t he EPA's report, using it to push for more drilling. Erik Milito, a director at the American Petroleum Institute, told the New York Times that the EPA confirmed that "hydraulic fracturing is being done safely under the strong environmental stewardship of state regulators and industry best practices."

Marketplace: EPA's last minute changes to fracking report downplayed risks - StateImpact Pennsylvania -  New documents have emerged that show the EPA downplayed the risks of fracking in a landmark report on the process used to extract oil and gas from shale. The last minute changes made by the EPA are documented in a story by the public radio show Marketplace and APM Reports. The news outlets obtained documents that showed the EPA had changed language in the executive summary six weeks before its release to the public, which stated the agency did not find shale gas drilling resulted in “widespread systemic impacts” to drinking water. The documents also revealed similar changes to the accompanying press release. Questions remain on who made the changes and why.The EPA’s long-awaited report was supposed to settle the question once and for all on whether or not fracking for oil and gas damages water supplies, using science not politics. In Pennsylvania, there were already more than 250 documented cases in which fracking damaged private drinking water supplies.But when the EPA’s draft report was issued in June of 2015, the executive summary read that fracking did not cause “widespread systemic impacts” on drinking water. The report was cheered by industry, and spurned by environmentalists. Reading the body of the report, however, and the science told a different story. The EPA’s own Science Advisory Board then issued a critical review of the EPA’s headline, saying the language confused the public and needed clarification.  Michael Halpern, with the Union of Concerned Scientists, sought documents from the EPA through a right-to-know request. What Halpern got was a big stack of redacted documents. Halpern worries about scientific integrity at the EPA under a Trump administration. , “I’m very concerned that science that is critical to protecting public health and safety will be more vulnerable to spin and suppression.”

More False Claims About Fracking - - The chairman of the Senate environment committee falsely claimed that a new report “confirms” that “hydraulic fracturing has not impacted drinking water” in Wyoming. The report said a lack of water quality data predating oil and gas exploration prevented it from reaching “firm conclusions.”Sen. James Inhofe, who chairs the Senate Environment and Public Works Committee, made his remarks in astatement issued Nov. 10 — the day that the Wyoming Department of Environmental Quality issued a report on water-supply wells in Pavillion, a small town southeast of Yellowstone National Park.The industry-funded state report specifically looked at the “likelihood of impacts from oil and gas operations” on 14 water-supply wells used by residents living near Pavillion. Since the 1990s, residents in the area have “complained of physical ailments and said their drinking water was black and tasted of chemicals,” ProPublicareported.Inhofe, Nov. 10: The Wyoming DEQ’s thorough investigation over the past several years has come to a close and confirms what we’ve known all along: hydraulic fracturing has not impacted drinking water resources.But that’s not what the report said.The “fact sheet” for the Wyoming report said it’s “unlikely” that hydraulic fracturing had “any impacts” on these water-supply wells, but “[l]imited baseline water quality data, predating development of the Pavillion Gas Field hinders reaching firm conclusions on causes and effects of reported water quality changes.”In the next sections, w e’ll examine why it’s difficult to isolate fracking from other potential causes of water contamination, and why the Wyoming report didn’t reach “firm conclusions.” We’ll also review the U.S. Environmental Protection Agency’s research to date on fracking practices that take place across the country, and Inhofe’s unsupported claim that it is “abundantly clear” that fracking does not impact drinking water.

A Blade Strikes Steel, and the Blast Shocks a Nation’s Energy System - The men were there to conduct repairs. Just over a month before, the pipeline had sprung a leak, forcing a shutdown that caused gasoline reserves on the East Coast to fall from 64 million barrels to 55.5 million, the biggest one-week drop in U.S. history. Prices spiked at the pump in many cities from Atlanta to Jersey City. The leak had been fixed temporarily with a bypass, and now the crew was excavating about 5 miles from the original rupture to rebuild the stretch that had failed. They worked for a local contractor, L.E. Bell Construction, that the pipeline’s owner, Colonial Pipeline Co., had hired many times over the years. Among the team was Anthony Lee Willingham, a 48-year-old track hoe operator who would have known to operate the track hoe blade slowly, deliberately, without applying too much pressure. But somehow the blade struck steel, and the fuel ignited. The semi was obliterated, and the pickup trucks were on fire. Aftershocks quickly shuddered up the spine of America’s energy system. When gasoline traders realized that East Coast reserves were once again threatened, they started bidding up the price of fuel. In a matter of hours, the cost of a gasoline futures contract for December shot up 15 percent, the highest jump since the financial crisis in late 2008. Merchants scrambled to secure supplies from tankers carrying imported fuel, causing the cost of cargo freight from the Atlantic to surge more than a third, to about $17 per metric ton, according to data compiled by Bloomberg.The chaos revealed something millions of Americans had long been able to ignore: They depend on a single pipeline to deliver the gasoline that fuels their everyday lives. And that pipeline is operated by a single, little-known company with an increasingly troubled safety record. Built in 1962, the Colonial was the largest private-sector infrastructure project of its time. Roughly half of all refined fuel products used in cities from Georgia to New Jersey run through its 5,500 miles, which branch out from oil refineries in Texas and on the Gulf Coast to gas stations in America’s most populated corridor.

Oil and Water: 11,700 Gulf oil spills since BP raise new fears -  Recent discoveries of illegal, unreported oil discharges and systematic dumping of chemicals from rigs and platforms have raised new fears about environmental damage in the Gulf of Mexico, more than six years after the worst oil spill in U.S. history. Tracking of federal data by the environmental watchdog group SkyTruth shows more than 11,700 oil spills have been reported in the Gulf of Mexico since the BP oil spill ended in July 2010. But the rate of spills also has slowed significantly, from 245 a month in 2012 to 80 in October 2016. As a part of its series “Oil & Water,” WWL-TV is taking a fresh look at how these often-overlooked spills – and an unknown number that never get reported at all – might affect the Gulf environment. The station aired shocking video last month from a whistleblower who recorded his supervisors on an oil rig in 2014 opening a valve on a deep sea oil pipe and brazenly letting pollutants flow into the Gulf for 90 minutes, then talking about how they could cover it up.  The evidence was used to convict the oil company, Walter Oil & Gas, of a felony. There have been several other illicit violations of the Clean Water Act prosecuted by the U.S. Attorney’s Office in New Orleans in the years since BP. Gifford Briggs of the Louisiana Oil & Gas Association said such illegal actions are “inexcusable,” but he doubts they are widespread. “Our employees live in coastal Louisiana and when they get off the platform, they get in their boat and they go hunting, and they go fishing, and they go into the wetlands, and that’s where they raise their families, so we are as committed to the environment as anybody is,” he said. He also said there’s no proof that the many smaller spills since the BP disaster have had any significant impact on the environment.

Perryville Hub's pivotal role in transforming US natural gas flows, part 2 - Demand for U.S. natural gas exports via Texas is set to increase by close to 6 Bcf/d over the next few years.  At the same time, Texas production has declined more than 3.0 Bcf/d (16%) to less than 17 Bcf/d in the first half of November from a peak of over 20 Bcf/d in December 2014, and any upside from current levels is likely to be far outpaced by that export demand growth. Much of the supply for export demand from Texas will need to come from outside the state, the most likely source being the only still-growing supply regions—the Marcellus/Utica shales in the U.S. Northeast. Perryville Hub in northeastern Louisiana will be a key waystation for southbound flows from the Marcellus/Utica to target these export markets along the Louisiana and Texas Gulf Coast, particularly given the hub’s connectivity and prime location. Today, we look at the pipeline expansion projects into Perryville that will make this flow reversal possible. While it is not located within the Lone Star State, the Perryville, LA gas hub is an important interconnection point for a significant portion of the Marcellus/Utica gas that has begun moving to the Gulf Coast—in both Louisiana and Texas, and that soon will be helping to supply new LNG export terminals along the Texas Gulf Coast along with growing demand from power plants and other gas customers in Mexico. As detailed in our latest Drill Down report, by fourth quarter of 2019, Texas will have 3.2 Bcf/d of all-new LNG export capacity along its Gulf Coast (see also Catch a Wave and Last Mile of the Way), as well as six new pipeline projects with the capacity to deliver another 8.0 Bcf/d to Mexico (see It Takes Two, Part 2). Even if, as we expect, only about 6.0 Bcf/d of that new export capacity gets used, that still is a significant increase in demand in the state in relatively short order.

Texas Is Flipping From A Net Producer To A Net Demand Region -- RBN Energy -- The natural gas flow patterns that characterized the U.S. energy-delivery sector for the decades preceding the Shale Revolution are gradually being undone, and few, if any, states are more affected by these changes than Texas. The state remains the nation’s largest natural gas producer, and it still produces nearly twice as much gas as its consumes within its borders. But traditional Northeast and Midwest markets for Texas gas are being ceded to Marcellus/Utica producers, and more and more Northeast gas is flowing south/southwest to the western Gulf Coast, drawn by power/industrial demand, new LNG export terminals and rising pipeline-gas exports to Mexico. Today we begin a look at the dramatic shifts in gas flows out of Texas through key gas pipeline exit points. To get a sense of the impact the combination of increased Marcellus/Utica natural gas production, booming gas sales to Mexico, and rising LNG exports is having on the Lone Star State, look no further than changing flows on Texas’s network of interstate and intrastate pipelines. As we said recently in the third episode of our four-part Drill Down Report, “I Saw Miles and Miles of Texas,” Northeast gas production now averages about 22 Bcf/d (roughly as much as Texas and Louisiana combined) and is likely to continue rising under all but the most pessimistic price scenarios. Export demand—via LNG-laden ships to South America, Europe and Asia, and via pipelines to Mexico—is pulling increasing volumes of Marcellus/Utica gas south/southwest, and in the process is undoing historical gas flow patterns in Texas. These changing flow patterns also reflect the fact that Texas gas production is off about 10% (or 1.9 Bcf/d, to ~18 Bcf/d) so far in 2016 versus the same period last year, mostly due to output declines in the Eagle Ford, the Barnett Shale, the Gulf Coast region, and Texas’s part of the Granite Wash—declines that, taken together, far exceed production gains in the Permian Basin, the only part of the state that’s seen gas-output growth lately (see It Takes Two).

Adding To The Oil Glut, Part 4, Delaware Basin Production Increases 52.5% Per Well In 2015 - Summary:

  • The Bakken, Eagle Ford, Delaware and Midland have all shown a very large increase in production per well for 2015.
  • Production per well improvements can be attributed to high-grading, but well design to a higher degree.
  • The increased production per well has helped to offset the decline in completions, and the reason US production remains higher than analyst expectations.
The Bakken, Eagle Ford and Permian are the main unconventional oil plays in the US. One could mention the Niobrara as the fourth. We could talk about emerging plays like the Powder River Basin, STACK/SCOOP, and Tuscaloosa. All differ in resource percentage, well costs and economics. Today the Bakken, Eagle Ford, and Permian see the largest cap ex. Therefore, the effect has been greater by the drop-in oil price.

Fossil Fuel Industry Has Known Since 1967 That Injection Wells Cause Earthquakes, Despite Denials - Truth-Out -On August 9, 1967, a 5.5 magnitude earthquake struck Northglenn, a northern suburb of Denver, Colorado. The Associated Press wrote that it was "the severest earthquake ever recorded" in the city's history. Building foundations cracked, windows broke, bricks flew off of downtown rooftops. A year later in the prominent academic journal "Science," geophysicist J.H. Healy and his associates proposed that humans, not nature, were responsible for the quake."We attempt here to present the statistical evidence for correlating the two events -- fluid injection and earthquakes -- and to develop a hypothesis relating the two as cause and effect," Healy wrote. The "fluid injection" Healy was referencing had been taking place two miles from Northglenn at the U.S. Army's Rocky Mountain Arsenal manufacturing plant. In 1961, the army drilled a "disposal waste well" through 2.2 miles of sedimentary rock, and had begun injecting it with contaminated industrial wastewater.  Seismic activity increased immediately, and then slowed after the army enacted an injection hiatus between October 1963 and August 1964. When the army started the injections back up again, the earthquakes followed. Healy presented the following chart as evidence:  Healy's analysis became common knowledge in scientific circles, in seismology and geology. It was proven scientifically that injecting millions of gallons of wastewater into the deep earth could induce seismic activity. Fast forward to 2008, as the fossil industry began to expand rapidly through the use of hydraulic fracturing to drill wells in shale formations in states that had never been fracked before -- or had any significant earthquake activity in modern history.In Texas, in 2008, there was a sudden spate of tremors near where injection wells were being filled with hundreds of thousands of gallons of drilling wastewater. In upstate New York, in 2009, citizens expressed concerns about the sudden increase in earthquakes, worrying that the new seismic activity might be related to fracking. In Arkansas in 2011, and in Ohio in 2013, similar surges in earthquakes were reported, and in each instance concerns about their connections to fracking were denied.

In a decade, Oklahoma's earthquakes will be normal again   -- Earlier this month, a disaster threatened the American economy—but no one much noticed it because of the presidential election.  On the evening of Sunday, November 6, a 5.0-magnitude earthquake shook Cushing, Oklahoma. The trembling dislodged bricks, broke windows, and forced 40 people out of their homes. Some of the city’s downtown remains closed three weeks later. Yet the quake could have had farther-reaching consequences. Cushing, an 8,000-person city in the state’s center, is also one of the largest oil trading hubs in North America. Crude oil from Texas and the lower Midwest is stored at Cushing on its journey to refineries and the coasts, filling the hundreds of circular towers that surround the plains around the city. On any given day, more than 60 million barrels of crude sits in or around Cushing. Oklahoma’s earthquakes had suddenly become more than a threat to local property and human life. Given how much American economic power rests on the fossil fuel business, they had become, as Bloomberg puts it, a national-security issue. The Cushing quake also seemed like a discouraging sign. It’s increasingly understood that Oklahoma's earthquakes are caused by the underground injection of wastewater from fracking and other mining operations. After the Oklahoma state government started to regulate wastewater injection in May of this year, earthquakes have generally been on the decline. Though a 5.8-magnitude earthquake struck Pawnee in September—the largest earthquake ever measured in the state—the number of smaller quakes has fallen. Was the Cushing quake an end to that trend?   A new study, published Wednesday in Science Advances, says no, and it asks Oklahoma to stay the regulatory course. In five to 10 years, the state should return to experiencing a normal number of earthquakes.

North Dakota’s pipe dreams are the key to its future  -- By Dec. 1, construction of the 1,172-mile Dakota Access Pipeline will be all but finished. The only thing left to build, says its owner, Energy Transfer Partners, will be about 1,100 feet of pipe to be laid beneath Lake Oahe, a sliver of water south of Bismark, N.D. The U.S. Army Corps of Engineers is reviewing the easement application by Energy Transfer, which spent much of the past two years quietly laying miles of pipe in four states before running into a national protest movement camped out near the Standing Rock Sioux Reservation.  To the protesters, stopping the pipeline is an assertion of American Indian rights and a means of ensuring that an oil spill never threatens aquifers. There are also economic and environmental stakes that reach beyond Standing Rock. Without the Dakota Access Pipeline, North Dakota’s abundant but hard-to-reach oil resources likely won’t be fully developed, potentially leaving millions of barrels in the ground.  About 200 miles northwest of the protest camp, the pipeline coils around the town of Williston, following a semicircle around the heart of the Bakken oil field, which stretches from North Dakota into eastern Montana. For years the Bakken was the fastest-growing source of crude in the U.S., with output jumping to a peak of 1.2 million barrels a day in December 2014, from less than 100,000 in 2005. The boom turned North Dakota into the second-largest oil-producing state in the U.S., behind Texas.  Unlike Texas, which has pumped oil for more than a century and is home to thousands of miles of pipelines, North Dakota never had a reason to build much energy infrastructure. As oil gushed out of remote areas miles from any town or pipeline, wildcatters, middlemen, and traders raced to get it out by truck, train, and barge. By 2015, 800,000 barrels of crude a day was being railed out of North Dakota. Moving oil by train costs a lot more than pumping it through a pipeline, but when world crude prices hovered around $100 a barrel—as they did for several years—there was enough profit to go around. Now that prices have fallen, those transportation costs have become critical. Refineries on the East Coast, once among the biggest buyers of Bakken crude, have reverted to importing foreign oil rather than paying to ship it halfway across the country.

Cheyenne River Sioux Tribe Reacts to U.S. Army Corps of Engineers Eviction Notice: Your Letter Makes a Grave & Dangerous Mistake -- Cheyenne River Sioux Tribe Chairman Harold Frazier was quick to respond to the U.S Army Corps of Engineers’ letter, dated November 25, 2016, that will evict the water protectors who are camping at  Oceti Sakowin camp. The 10-day eviction notice came one day after Thanksgiving where thousands have come to show solidarity with the water protectors who oppose the Dakota Access pipeline. FRAIZER WRITES: “This decision, coming on the heels of the Thanksgiving holiday, is not only disrespectful, but continues the cycle of racism and oppression imposed on our people and our lands throughout history.  We ask that the Corps and the United States reconsider this decision.  Treaties are the supreme law of the land and the Constitution of the United States demands that they be respected.  Furthermore, your letter dangerously and profoundly misunderstands the basic function and status of a tribal government and its elected leaders.  I am the chief executive of a sovereign nation that is comprised of individual citizens with physical territory within the exterior boundaries the State of South Dakota.  Under the laws of the United States, my government lacks jurisdiction at Cannonball; but more importantly, I no more control the acts and behaviors of Cheyenne River Sioux Tribal members or non-member water protectors at the Cannonball site than you do, Col. Henderson. Perhaps the most terrifying aspect of your letter is your acknowledgement of the stark reality that that the confrontation between our peaceful water protectors and law enforcement could result in death or serious injury, a fact demonstrated by the brutal attack on Sophia Wilansky by North Dakota police last week.  But in the very next paragraph you guarantee that further confrontations will occur by promising that these peaceful people will be trespassing on closed areas and you threaten that they will do so “at their own risk” and will “assume[] any and all corresponding liabilities for their unlawful presence and occupation of such lands.”I take your letter as issuing a direct and irresponsible threat to the water protectors.  It appears to further empower the militarized police force that has been brutalizing and terrorizing our water protectors while imposing the blame and the risk on unarmed peaceful people.  We have pleaded for the protection of the United States.  Your letter makes a grave and dangerous mistake.  Federal efforts to de-escalate the violence should be aimed at the wrongdoers, not at our peaceful people”

Standing Rock Pipeline Protesters Have No Intention of Leaving after After Authorities Issue Ultimatum -- The U.S. Army Corps of Engineers issued an ultimatum on Friday to protesters at the Standing Rock reservation in North Dakota: vacate by December 5, or face charges for trespassing. In a letter to protest leaders, the corps said it will close access to federal land north of the Cannonball River where the protest site is located, mainly to keep spectators and the general public away from clashes that have escalated between protesters and law enforcement. In order for them to do that, the protesters need to vacate, the authorities said.  But the leaders of the protest have no intention of backing down. “We are staying here committed to our prayer,” Dallas Goldtooth, an organizer with the Indigenous Environmental Network, told Reuters. “Forced removal and state oppression? This is nothing new to us as native people.” There are smaller camps south of the river that won’t be restricted by the Army Corps, and the letter stated that a free speech zone would be established somewhere for protesters to gather.  “Our Tribe is deeply disappointed in this decision by the United States, but our resolve to protect our water is stronger than ever,” Dave Archambault, Tribal Chairman of the Standing Rock Indian Reservation in North Dakota, told the Los Angeles Times. He also said that he doesn’t see the letter as a strict eviction, and that he and his tribe will continue to exercise their right to free speech.  Last weekend, law enforcement turned hoses on about 400 protesters while the air outside was below freezing. The Obama administration allowed a delay of construction so that tribal leaders and engineers could discuss the situation, but so far an agreement hasn’t been reached and the violence and tension has only increased.

Army Corps Clarifies Eviction Notice to Standing Rock - The U.S. Army Corps of Engineers, which sent an eviction notice to Standing Rock Tribal Chairman Dave Archambault on Friday, released an update Sunday to clarify their plans to close the Oceti Sakowin Camp, which lies just north of the Cannonball River in southern Morton County, North Dakota. The Army Corps said they have no plans to forcibly remove anyone, though those who stay, the agency said, do so at the risk of being ticketed or arrested. "We fully support the rights of all Americans to exercise free speech and peacefully assemble, and we ask that they do it in a way that does not also endanger themselves or others, or infringe on others' rights," Omaha District Commander Colonel John Henderson said in a statement.  The Army Corp's update on the eviction came the same day that a coalition of groups—Camp of the Sacred Stones, International Indigenous Youth Council, Indigenous Environmental Network and Honor the Earth—released a new statement, which said, "We will not be moved."  The statement went on to say:  "We stand united in defiance of the black snake and are committed to defense of water, our Mother Earth, and our rights as Indigenous people. We call on all people of conscience, from all Nations, to join the encampments and stand with us as we put our bodies on the line.  "The Army Corps has no authority to evict us from these lands. The Oceti Sakowin encampment is located on the ancestral homeland of the Lakota, Mandan, Arikara and Northern Cheyenne—on territory never ceded to the U.S. government, and affirmed in the 1851 Treaty of Ft. Laramie as sovereign land belonging to the Great Sioux Nation.  "We call on the White House to deny the easement now, revoke the permits, remove the DAPL construction workers and order a full environmental impact statement in formal consultation with impacted tribal governments."

Authorities say no plans to forcibly remove North Dakota protesters | Reuters: U.S. authorities said on Sunday they had no plans to forcibly remove activists protesting plans to run an oil pipeline beneath a lake near the Standing Rock Sioux reservation in North Dakota, despite telling them to leave by early December. The U.S. Army Corps of Engineers, which manages the federal land where the main camp protesting the Dakota Access pipeline is located, said last week it would close public access to the area north of the Cannonball River on Dec. 5 On Sunday, the agency said in a statement that it had "no plans for forcible removal" of protesters. The statement said anyone who remained would be considered unauthorized and could be subject to various citations. It also said emergency services might not be adequately provided to the area. "The Army Corps of Engineers is seeking a peaceful and orderly transition to a safer location," the statement said. "This will reduce the risk of harm to people in the encampments caused (by) the harsh North Dakota winter conditions." A representative for the agency could not be immediately reached on Sunday to provide further clarification on its plans. Organizers told a news conference on Saturday at the main protest site where about 5,000 people are camped that they had no intention of moving. There are smaller camps on land not subject to the planned restrictions, including an area south of the Cannonball River where the Corps said it was establishing a free-speech zone.

People are treating the DAPL protest like Burning Man - Demonstrators at North Dakota’s Pipeline protest have spoken out about the amount of white people who have turned up to “colonise” the camp.  The concerns have been raised by protestors in a series of tweets and Facebook posts. According to them, people have turned up to the Standing Rock demonstration to soak up the “cultural experience”, and are treating the camp like it is “Burning Man” festival or “The Rainbow Gathering”.“White people are colonising the camps. I mean that seriously. They are coming in, taking food, clothing... and occupying space without any desire to participate in camp maintenance and without respect of tribal protocols,” said protestor Alicia Smith on Facebook. “I even witnessed several wandering in and out of camps comparing it to festivals. Waiting with big smiles expectantly for us to give them a necklace or an ‘indian’ name while our camp leader was speaking.”  Playing acoustic guitars when no one asked them to, not helping out, and acting as though they're on some kind of camping trip #NoDAPL— StandUp4StandingRock (@radbrains) November 8, 2016 She added that many protestors appeared to be living off the native Americans, and were taking full advantage of the donations that people had been sending in for the cause. This was a trend noticed by another Twitter user, who witnessed one protestor turn down tap water to spend donations on “fluoride free” water. “They are literally subsisting entirely off of the generosity of the native people... who are fighting to protect their water just because they can,” Smith wrote. “Some literally will not even prepare food but will take food that is prepared, again, having not done anything else all day.”

ND senators tell pipeline protesters to vacate camp | TheHill: North Dakota Sens. John Hoeven (R) and Heidi Heitkamp (D) are calling on protesters to leave federal lands where they have been encamped to demonstrate against the Dakota Access Pipeline.  The well-being and property of ranchers, farmers and everyone else living in the region should not be threatened by protesters who are willing to commit acts of violence," Hoeven said in a statement on Friday, according to the Associated Press. Heitkamp struck a more conciliatory tone, but similarly blamed protesters for an “escalation of violence.” “Safety must remain the top priority for everyone, and to help make that possible, it’s critical protestors peacefully and lawfully move off of the Corps land north of the Cannonball River and to the identified federal and tribal lands,” Heitkamp said in her own statement. “There has been an escalation of violence among some of the protestors that puts their lives, as well as the lives of law enforcement, residents, and land owners in jeopardy." The Army Corps of Engineers on Friday told the leader of the Standing Rock Sioux tribe that the federal lands that protesters are camped on will be closed over safety concerns posed by winter weather.

North Dakota Governor Orders 'Emergency Evacuation' of Pipeline Protesters - North Dakota Gov. Jack Dalrymple issued an "emergency evacuation" order today to remove thousands of Dakota Access Pipeline protestors from the Oceti Sakowin camp, citing "harsh winter conditions."  The Republican governor's order was effective immediately and he said it would remain in force "until rescinded." The order stated, "Winter conditions have the potential to endanger human life, especially when they are exposed to these conditions without proper shelter, dwellings or sanitation for prolonged periods of time" and that the area is "not zoned for dwellings suitable for living in winter conditions."  Standing Rock Sioux Tribe's Chairman, Dave Archambault II, said in response to the evacuation order:  "This state executive order is a menacing action meant to cause fear, and is a blatant attempt by the state and local officials to usurp and circumvent federal authority. The USACE has clearly stated that it does not intend to forcibly remove campers from federal property. The governor cites harsh weather conditions and the threat to human life. As I have stated previously, the most dangerous thing we can do is force well-situated campers from their shelters and into the cold.  "If the true concern is for public safety than the governor should clear the blockade and the county law enforcement should cease all use of flash grenades, high-pressure water cannons in freezing temperatures, dog kennels for temporary human jails and any harmful weaponry against human beings. This is a clear stretch of state emergency management authority and a further attempt to abuse and humiliate the water protectors."

North Dakota governor orders pipeline protesters expelled  (Reuters) - North Dakota's governor ordered the expulsion of thousands of Native American and environmental activists camped on federal property near an oil pipeline project they are trying to halt, citing hazards posed by harsh weather as a blizzard bore down on the area. The "emergency evacuation" order from Governor Jack Dalrymple came days after the U.S. Army Corps of Engineers, which manages the site, set a Dec. 5 deadline for the demonstrators to vacate their encampment, about 45 miles (72 km) south of Bismarck, the state capital. The Army Corps has insisted, however, that it has no plans to forcibly remove protesters, many of them members of the Standing Rock Sioux Tribe. The agency instead urged a "peaceful and orderly transition to a safer location." Late Monday, Standing Rock Chairman Dave Archambault II denounced Dalrymple's order as a "menacing action meant to cause fear," and accused the Republican governor of trying to "usurp and circumvent federal authority." Archambault noted that the evacuation order, which the governor said he issued for the campers' well-being in the face of dangerous winter weather, came a week after police turned water hoses on protesters in sub-freezing temperatures. Activists have spent months protesting against plans to route the $3.8 billion Dakota Access Pipeline beneath a lake near the Standing Rock Sioux reservation, saying the project poses a threat to water resources and sacred Native American sites. The governor did not specify how he intended to enforce his order other than by directing state and local agencies to refuse emergency assistance and other services to anyone who remained at the site. He said the order was effective immediately and would stay in force "until rescinded." But Standing Rock Sioux spokeswoman Phyllis Young told a news conference Monday night the tribe would stand its ground. "We have lived for generations in this setting. That is our camp. We will continue to provide for our people there," she said. "This is Lakota territory. This is treaty territory, and no one else has jurisdiction there."

Water Protectors Sue Police for Brutality + Bernie Sanders Speaks Out on Treaty Rights Violations -- Water protectors in North Dakota filed on Monday a class-action lawsuit against Morton County, Sheriff Kyle Kirchmeier and other law enforcement agencies for using excessive force the night of Nov. 20 , when peaceful demonstrators were trapped on a bridge and assaulted with impact munitions.   The lawsuit seeks to block the Morton County Sheriff's Department and other police agencies from using such weapons—including rubber bullets, water cannons, teargas grenades and other weapons—against the protectors. The suit, brought by the Water Protector Legal Collective, a project of the National Lawyers Guild, was filed on behalf of people injured on Nov. 20 and the early morning of Nov. 21 as police descended on the Dakota Access Pipeline (DAPL) protest camps.  Among the plaintiffs is Jade Kalikolehuaokakalani Wool, who was hospitalized after two flash-bang grenades exploded near her, sending shrapnel into her head. Another, David Demo, who was filming the raid, was blasted with a water cannon and shot in the hand with a munition, breaking several bones and sending him to the hospital for reconstructive surgery. Israel Hoagland–Lynn was shot in the back of the head with a munition and needed 17 staples for the wound. Many others were also sprayed with water cannons, tear gassed, and shot with munitions, and several were hospitalized.

Robert F. Kennedy, Jr: 'I'll See You at Standing Rock' --In 1966, my father held Senate hearings to investigate violent attacks by growers against pickers in the produce fields surrounding Delano, California. A young United Farmworkers organizer, Cesar Chavez, was orchestrating peaceful protests by Filipino and Chicano farmworkers against meager pay and brutal working conditions. My father only reluctantly attended the hearings. While he was sympathetic with the farmworkers' plight, he already had a full plate of issues ranging from the Vietnam War, rioting cities to starvation in the Delta and education on Indian reservations. He didn't think he had bandwidth for another cause."Why do I need to fly all the way to California," he complained to his aid, Peter Edelman, on the airplane out. But then something made him mad; A Kern county sheriff explained to the committee that he had imprisoned the peaceful protestors "for their own protection" to safeguard them from violent growers and their hired thugs. The prospect of law enforcement officials deploying the states police power on behalf of lawbreaking corporations against law abiding citizens whose only crime was their poverty and powerlessness made him steam. My father despised bullies and believed in rule of law. He gaveled the morning session to a close. "May I suggest that during the luncheon period of time that the sheriff and the district attorney read the Constitution of the United States?" That afternoon, he joined the farmworkers on their picket line. Chavez became his closest political and moral ally. On Sunday, the U.S. Army Corps issued a declaration to the Standing Rock Sioux Tribe that might have been penned by the Kern county sheriff. The Corps Colonel John Henderson told Standing Rock Chairman Dave Archambault II that the agency was evicting the Dakota Access Pipeline (DAPL) protesters from their camp for their own protection. The Obama administration has the power to end this conflict, overnight, simply by declaring that the pipeline company comply with existing federal law and complete an environmental impact statement before DAPL is allowed to proceed. In the meantime, Americans who care about freedom and justice are flocking to Standing Rock to support the Sioux, just as justice loving Americans of an earlier generation went to Selma to Jackson and to Delano. "I'll see you at Standing Rock" has become the battle cry for Americans who still share an idealistic vision for our country.

Literally Too Many Veterans Have Signed Up To Join DAPL Protests - Last week, the newly formed group “Veterans Stand for Standing Rock” called on veterans to nonviolently stand up to militarized law enforcement at the site of the Dakota Access Pipeline protests. Since its initial call to action, the veterans’ movement has grown exponentially. Last week, the Facebook event, which was launched by Army veteran Wesley Clark Jr. and former Marine and Baltimore cop-turned-reformist, Michael A. Wood Jr., received widespread media attention. This boost helped increase the number of attendees from a couple hundred veterans to their maximum capacity of 2,000. A standard email response from the group (as of Saturday) reads: “We are happy to announce our small campaign has grown to 2,000 Veterans from every corner of the US [and] will be joining us to stand in peace with our brothers and sisters in Standing Rock.” Their event page states they have over 2,100 veterans signed up and are exploring options for a second trip. The group has a strict no weapons policy but is stocking up on body armor and protective gear like gas masks to withstand potential attacks from the heavily militarized police, who have arrested at least 400 of protesters so far. According to on-site medics, hundreds of protesters have also been injured. Last week, a 21-year-old woman wasreportedly hit with a concussion grenade, leading to a severe injury that may require her arm to be amputated. Though police have blamed protesters for what happened to her, at least one witness claims law enforcement’s version of events is untruthful. Outrage against incidents like these, as well as attacks on journalists via tasers, rubber bullets, and felony charges has made the ongoing situation ripe for outside intervention. “This country is repressing our people,” Wood Jr. said last week. “If we’re going to be heroes, if we’re really going to be those veterans that this country praises, well, then we need to do the things that we actually said we’re going to do when we took the oath to defend the Constitution from enemies foreign and domestic.” With 2,100 veterans signed up to make a stand, it appears police will be forced to reconcile their aggressive behavior with the nonviolent show of veterans, who intend to march toward police on site.

Trump Team Confirms Dakota Access Support Has "Nothing To Do With Personal Investments" In Pipeline Builder --'Winter is coming' in North Dakota but as over 2000 veterans arrive to provide a human shield for the 'water protestors', president-elect Donald Trump said for the first time that he supports completion of the pipeline project near a North Dakota Indian reservation. Reassuringly his team confirmed that his support "has nothing to do with his personal investments" in Energy Transfer Partners - the company building the pipeline. As we noted yesterday, US military veterans continued to arrive at the Indian reservation, braving snow and freezing temperatures to support the protesters... (as Reuters reports)Matthew Crane, a 32-year-old Navy veteran who arrived three days ago, said the veterans joining the protest were "standing on the shoulders of Martin Luther King Jr and Gandhi" with the their plans to shield protesters."I bought a one-way ticket," he told Reuters as he worked to build a wooden shelter at the main camp. "Hopefully we can shut this down before Christmas."However, not all veterans were supportive of these actions...Several members of the North Dakota Veterans Coordinating Council, which represents five veterans organizations in the state, held a news conference to decry the involvement of veterans in a protest that has damaged property and asked veterans not to participate in the demonstration."We agree that it is our constitutional right to assemble and to peacefully protest," council President Russ Stabler told reporters at the West Fargo VFW Post 7564 building. "However, protests over the last 100-plus days in North Dakota have been less than peaceful."Participating in this kind of assembly even as a peaceful bystander or participant will only mar the image of the North Dakota veterans and the veterans of our nation," he added as he stood surrounded by about a dozen veterans from the region.Additionally, North Dakota Governor Jack Dalrymple on Wednesday told reporters it was"probably not feasible" to reroute the pipeline, but he would try to rebuild a relationship with Standing Rock Sioux leaders, and U.S. President-elect Donald Trump on Thursday said for the first time that he supports the completion of the pipeline, and as Reuters noted, Trump's transition team also said Trump supported peaceful protests.

The Real Reason to Oppose the Dakota Access Pipeline -- The ongoing protest over the Dakota Access Pipeline near Standing Rock Indian Reservation makes for some good theater, but the protesters have as yet been unable to demonstrate that the pipeline actually trespasses on Indian lands or that it will likely lead to groundwater pollution.  Both trespassing and water pollution are serious issues that would rightly open up the owners — in this case, Energy Transfer Partners — to crippling lawsuits.  Defenders of the pipeline like to point all this out. But, those same defenders also conveniently ignore that other parts of the pipeline, including parts that pass through Iowa, rely on eminent domain to secure land rights for the pipeline owners.  The Daily Caller reports: Eminent domain was used in other portions of the route in Iowa, prompting farmers to sue the Iowa Utilities Board (IUB) in an effort to prevent the company from gaining the right to use the property-seizing tool. A judge eventually allowed the DAPL use of the land.In May 2016, farmers began suing the pipeline developers in an effort to prevent the use of eminent domain to seize private property for the benefit of the pipeline owners. There are 1,295 properties along the 346-mile route through Iowa.  As of November 2016, the owners of 17 parcels have sued over the fact that the State of Iowa has handed over 200 pieces of land under eminent domain laws.  In October, according to farmer Cyndi Coppola, pipeline developers trespassed on her farm in Calhoun County, Iowa and began digging up the topsoil for pipeline construction. Coppola was arrested on her own property for protesting the dig. In spite of the blatant violation to private property that eminent domain presents, many conservative politicians — the same ones who claim to support property rights — also support eminent domain. Indeed, during the Republican debates this year, Republican candidates expressed unwavering support for eminent domain when pressed on the topic of oil pipelines.  Republicans have even begun supporting eminent domain for seizure of private lands for private uses. Historically, eminent domain was restricted (at least in theory) to public uses such as highways. The use of eminent domain for private uses, such as a Trump hotel in one case and privately-owned shopping centers in others, has long been seen as an abuse.

More than 2,000 US military veterans to form a human shield protecting Dakota Access protesters - Business Insider: More than 2,000 U.S. military veterans plan to form a human shield to protect protesters of a pipeline project near a Native American reservation in North Dakota, organizers said, just ahead of a federal deadline for activists to leave the camp they have been occupying. It comes as North Dakota law enforcement backed away from a previous plan to cut off supplies to the camp – an idea quickly abandoned after an outcry and with law enforcement’s treatment of Dakota Access Pipeline protesters increasingly under the microscope. The protesters have spent months rallying against plans to route the $3.8 billion Dakota Access Pipeline beneath a lake near the Standing Rock Sioux reservation, saying it poses a threat to water resources and sacred Native American sites. Protesters include various Native American tribes as well as environmentalists and even actors including Shailene Woodley. State officials issued an order on Monday for activists to vacate the Oceti Sakowin camp, located on U.S. Army Corps of Engineers land near Cannon Ball, North Dakota, citing harsh weather conditions. The state's latest decision not to stop cars entering the protest site indicated local officials will not actively enforce Monday's emergency order to evacuate the camp issued by Governor Jack Dalrymple. Dalrymple warned on Wednesday that it was "probably not feasible" to reroute the pipeline, but said he had requested a meeting with the Standing Rock Sioux Tribal Council to rebuild a relationship.

Veterans plan 'human shield' to protect DAPL protesters (VIDEO) - More than 2,000 US military veterans have formed Veterans Stand for Standing Rock and plan to act as a human shield around protesters demonstrating against the Dakotas Access Pipeline.  Over 2,000 members of Veterans Stand for Standing Rock are planning to travel to a campsite near Cannon Ball, North Dakota, to create a human barrier between protesters and law enforcement this weekend. The news comes just a day following the US Commission on Civil Rights accusing law enforcement of using “military-style equipment and excessive force” against Native American protesters. ‘Excessive military-style force’ used on #DAPL protesters, -US Commission on Civil Rights Erick Lizandro Marroquin, one of the Veterans Standing for Standing Rock members, told RT America’s Ed Schultz that they acknowledge the risks of coming into conflict with law enforcement or other authorities that have been accused of excessive force. "When we get there, we're not just Latinos, blacks or whites, we are veterans," Marroquin stated. "So, they will be shooting or threatening the uniform of the United States military. But it doesn't have to get to this point."The veterans are not only hoping to offer some protection to the protesters, but also a respite from demonstrating."We want to give them a moment of peace so we can take a little bit of pressure off," Ashleigh Jennifer Parker, a Coast Guard veteran and spokeswoman for Veterans Stand for Standing Rock, told USA Today.The veterans will be going to the Oceti Sakowin campsite, which has been the target of a number of recent orders from the government. This weekend will be a critical time for the camp, as the US Army Corps of Engineers announced that it would close the protest camp on Saturday. While authorities say they do not plan to forcibly remove protesters, all remaining persons would be subject to prosecution and arrest.

As winter nears, Dakota Access faces frigid weather and costly delays | Reuters: Delays to the Dakota Access Pipeline have added millions of dollars to Energy Transfer Partners' construction tab - but even if the line is approved, the freezing temperatures will bring their own challenges to finishing the drilling process. Frigid weather makes some aspects of pipeline construction more difficult, though not impossible, engineers and experts interviewed by Reuters said this week. While the majority of the construction on the 1,100-mile (1,770 km) line is complete, work on a one-mile segment in North Dakota was halted in September following protests from the Standing Rock Sioux tribe and others, who said it could desecrate sacred lands and contaminate drinking water. That stretch would be expected to take 90 to 120 days to finish, ETP has said. Construction equipment used to bore under rivers can break through any layer of frost, said Eric Hansen, the director of environmental services at Westwood Professional Services, a surveying and engineering firm in the U.S. upper Midwest. At issue, however, is the fluid construction companies use to lubricate the drill head. That drilling fluid, which circulates to clear out debris and keep parts lubricated, freezes at air temperatures between 10 and 20 degrees Fahrenheit (-12 to -7 Celsius). To avoid this, pipeline crews will keep equipment running nonstop, which allows them to avoid warming up equipment that's been turned off in cold weather, said an engineer who has done work in North Dakota but declined to be named. The median temperature in Morton County, North Dakota, near the pipeline route is 13 degrees F between December and February, according to the National Weather Service. The NWS is forecasting a 60 percent chance that temperatures will be lower than that median for the next three months.

Proposed crude oil terminal in Hoquiam would receive 17.8 million barrels a year  — As the small city of Hoquiam considers a key permit for a proposed terminal that would move millions of barrels of crude oil through Grays Harbor, opponents are raising concerns about the potential for oil spills and impacts on tribal fishing rights. Westway Terminal, recently renamed Contanda, wants to expand its existing methanol facility in Washington state to receive up to 17.8 million barrels of oil a year and store up to 1 million barrels of crude oil. The project would bring crude oil by train from the Bakken region of North Dakota and Montana or diluted bitumen from Alberta where it would be stored in tanks and then loaded onto tankers or barges for shipping to refineries in the Puget Sound area or California. The Quinault Indian Nation and environmental groups say the environmental and safety risks are too great. They're urging Hoquiam to deny the project a shoreline development permit. Houston-based Contanda says the project would bring jobs and economic benefits to the region and the facility would be built to the strictest local, state and federal safety and environmental protocols.An environmental review completed by the state and Hoquiam in September proposed dozens of measures to offset or reduce impacts, but said there would be significant impacts to tribal resources and to health and safety if a crude oil spill, fire or explosion occurs that could not be avoided even with such measures in place. "The variety of impacts that are discussed and disclosed give the city of Hoquiam the evidence it needs to deny the permit," said Kristen Boyles, an attorney with Earthjustice representing the Quinault, whose reservation sits about 30 miles up the coast from the proposed site. The tribe says moving millions of gallons of crude oil by train and tankers through the region put the tribe's safety, treaty-reserved fishing rights and way of life at risk. An environmental review found that increased vessel docking and traffic in the navigation channel would restrict access to tribal fishing areas, and that proposed measures such as giving advance notice of vessels would reduce but not eliminate that impact.

City eyes key permit for oil terminal on Washington coast  (AP) -- As the small city of Hoquiam considers a key permit for a proposed terminal that would move millions of barrels of crude oil through Grays Harbor, opponents are raising concerns about the potential for oil spills and impacts on tribal fishing rights. Westway Terminal, recently renamed Contanda, wants to expand its existing methanol facility in Washington state to receive up to 17.8 million barrels of oil a year and store up to 1 million barrels of crude oil. The project would bring crude oil by train from the Bakken region of North Dakota and Montana or diluted bitumen from Alberta where it would be stored in tanks and then loaded onto tankers or barges for shipping to refineries in the Puget Sound area or California. The Quinault Indian Nation and environmental groups say the environmental and safety risks are too great. They're urging Hoquiam to deny the project a shoreline development permit. Houston-based Contanda says the project would bring jobs and economic benefits to the region and the facility would be built to the strictest local, state and federal safety and environmental protocols. "We're confident that we can safely build and operate the facility in a way that protects our employees, our neighbors, and the environment, using the environmental impact statement as a guide," Contanda spokesman Paul Queary said in a statement.

State Senator Slams Soros, Proposes Bill To Charge Protesters As "Economic Terrorists" --Last week, Washington State Senator Doug Ericksen announced plans to propose a bill in January that would criminalize certain protests as “economic terrorism,” to be punishable as a Class C Felony. The proposed bill would penalize protesters who engage in “unlawful disruption of transportation and commerce,” and if passed, those found in violation of the law could face punishment of up to five years’ imprisonment, a fine of up to $10,000, or both.The proposed bill would also go after organizations and funders backing the protests by forcing them to pay restitution at a rate of three times the calculated amount of damage. In an interview with the Seattle Times, Ericksen specifically named philanthropists George Soros and Tom Steyer, as well as the Sierra Club organization, as intended targets of the legislation.  “We are not just going after the people who commit these acts of terrorism,” Ericksen said in his press release. “We are going after the people who fund them. Wealthy donors should not feel safe in disrupting middle class jobs.”  Ericksen, who is chairman of the Senate Energy, Environment & Telecommunications Committee, has historically positioned himself as an ally to the fossil fuel industry. His proposal came just days after a group of anti-fracking protesters calling themselves “Olympia Stand” set up an encampment that blocked a rail line from the Port of Olympia. The police later forcibly disbanded the encampment and arrested 12 protesters on November 18th.  While the Washington Times reports that this bill would be unlikely to pass both in Senate and Democratically run-house, Ericksen’s proposal is just one in an increasing trend of legislation that criminalizes and limits the rights of protestors.  Ericksen’s proposal came in the same week that Iowa State Representative Bobby Kaufmann announced plans to propose legislation he calls the “Suck it up Buttercup” bill in response to anti-Trump organizing and protests. The two-part bill would withhold funding from universities that organize election-related grief counseling or sit-ins. It would also establish increased penalties for protesters who shut down highways or roads.

Oil-By-Rail Regulators Consider Crude Oil Volatility Limits That Would Require Oil Stabilization - The Federal Railroad Administration told DeSmog that two samples of the oil from the accident in Culbertson, Montana were taken and the Reid vapor pressure for those samples were 8.73 psi and 9.23 psi.   Reid vapor pressure is used to quantify the volatility of substances like crude oil and gasoline. If there are more natural gas liquids in the crude mixture — like propane and butane — it will have a higher Reid vapor pressure (RVP).  In comparison, the oil involved in the massive fire and explosion in Mount Carbon, West Virginia had an RVP of 13.9 psi according to the Wall Street Journal. Samples taken from the train derailment and fire in Lynchburg, Virginia averaged RVPvalues over 14 psi.  While the initial oil-by-rail regulations released in 2015 refused to address the issue of vapor pressure and volatility, the Pipeline and Hazardous Materials Safety Administration (PHMSA) announced earlier this month that it was “considering revising the Hazardous Materials Regulations (HMR) to establish vapor pressure limits for unrefined petroleum-based products.”  According to the announcement “PHMSA is currently assessing the merits of a petition for rulemaking submitted by the Attorney General of the State of New York regarding vapor pressure standards for the transportation of crude oil. The petition requests that PHMSA implement a Reid Vapor Pressure (RVP) limit less than 9.0 pounds per square inch (psi) for crude oil transported by rail.”  9.0 psi is the industry standard for stabilized oil that is moved in pipelines or on ocean-going tankers and in the petition from the New York Attorney General it notes that pipeline operators in Texas have the right to reject oil with a vapor pressure higher than 9.0 psi.   The high vapor pressure and volatility of the Bakken oil moved by rail has clearly created a concern for regulators ever since the disaster at Lac-Megantic. Secretary Foxx had asked that the original oil-by-rail regulations include volatility limits but was informed by the White House that this would not happen in the rule.

The dilemma posed by Alaska North Slope's stranded gas - Every day, crude oil producers on Alaska’s North Slope re-inject nearly 7.8 Bcf of natural gas into their wells, enough gas to supply the entire U.S. West Coast—California, Oregon and Washington State. If only there were some way to monetize that gas supply, to move it to market. The problem is that there isn’t, at least in today’s gas/LNG market, which is characterized by ample supply and relatively low prices. This same market also favors infrastructure projects that are simple and low-cost; no one wants to make multibillion-dollar commitments when natural gas prices and margins are so low. Today we conclude our series on the tough times ahead for Alaska’s energy sector with a look at the state’s vast natural gas reserves and the challenges associated with tapping them. Alaskans and the energy companies that do business there would like nothing better than to reinvigorate the state’s once-vibrant energy production sector. As we said in Part 1 of this series, crude oil production in the Alaska North Slope region has fallen well below 500 Mb/d, less than one-quarter ANS’s peak output of more than 2 MMb/d in 1988. That’s left the 2.1-MMb/d Trans Alaska Pipeline System (TAPS) from the North Slope to Valdez, AK running at a fraction of its capacity, and that’s posing a problem of its own. As we said last time, as the volumes on TAPS ratchet down from 550 Mb/d to 350 Mb/d (ANS production averaged only 443 Mb/d as of August 2016), more and more mitigation will be needed to keep the oil flowing through the pipe (due to freezing, wax buildup and other problems that come with lower flows). Worse yet, if and when volumes on TAPS fall much below 350 Mb/d or so, all bets would be off on whether the pipeline could continue to operate without a major re-do.

Fracking industry shows signs of a turnaround - The oilfield service companies that supply everything from sand to sophisticated robot rigs are seeking a new lease on life as America's fracking fortunes begin to turn. Shale drillers have added 158 rigs since May, according to Baker Hughes. At the same time, companies such as Chesapeake Energy and EOG Resources have been increasing their efficiency by cramming more and more sand into individual wells, aiming to extend their reach miles further. That's boosted sand prices roughly 25 percent to about $24 a ton, according to IHS Inc. It's an early sign that oilfield services, hard hit by a two-year slump in crude prices, are seeing the first hints of a turnaround. With spending by drillers in the lower 48 states now forecast to be $1 billion higher than analysts expected in the final three months of 2016, pricing talks are heating up as servicers face off against explorers fearful of uncertain oil prices ahead. "Sand certainly led the way here, and that's starting to make its way into other product lines," James West, an Evercore ISI analyst in New York, said in a telephone interview. "It's going to be a much more rigorous pricing recovery as we go into 2017, given the very ambitious drilling programs and production forecasts from the North American E&P industry." Oil-services companies sell explorers everything from the sand, water and chemicals they pump into the ground to the diesel that powers their equipment. Their services can include mapping pockets of underground oil, cementing wells in place and even breathing new life into old reservoirs.

Shale fracking rebound starts with costlier grains of sand - Crain's Cleveland Business: The oilfield service companies that supply everything from sand to sophisticated robot rigs are seeking a new lease on life as America’s fracking fortunes begin to turn. Shale drillers have added 158 rigs since May, according to Baker Hughes Inc. At the same time, companies such as Chesapeake Energy Corp. and EOG Resources Inc. have been increasing their efficiency by cramming more and more sand into individual wells, aiming to extend their reach miles further. That’s boosted sand prices roughly 25% to about $24 a ton, according to IHS Inc. It’s an early sign that oilfield services, hard hit by a two-year slump in crude prices, are seeing the first hints of a turnaround. With spending by drillers in the lower 48 states now forecast to be $1 billion higher than analysts expected in the final three months of 2016, pricing talks are heating up as servicers face off against explorers fearful of uncertain oil prices ahead. “Sand certainly led the way here, and that’s starting to make its way into other product lines,” James West, an Evercore ISI analyst in New York, said in a telephone interview. “It’s going to be a much more rigorous pricing recovery as we go into 2017, given the very ambitious drilling programs and production forecasts from the North American E&P industry.” With West Texas Intermediate crude prices now up by about 80 percent from this year’s low, the industry is starting to use higher sand prices and the added activity in oil fields ranging from Texas’s Permian Basin to the Scoop and Stack plays of Oklahoma as an excuse to reopen conversations over how much they’ll be paid, said Samir Nangia, an IHS analyst. Already, leases for more-efficient rigs that can walk from well to well and drill out several miles sideways, are up by as much as $5,000 a day, about one-third more expensive since May, according to Evercore. Spending to drill and complete wells in the lower 48 states will be $13 billion, or about $1 billion more than previously forecast, for the final three months of the year .

Biofuel Quota Insults Injured Refiners — The refining sector has had an up and (mostly) down year, and last week the Environmental Protection Agency (EPA) made an announcement that ensures the group will face more headwinds in 2017. In a move that surprised many industry observers, the EPA finalized 2017 renewable fuel requirements under the Renewable Fuel Standard (RFS) program that are 6% above the 2016 quota. It was a surprise because the EPA had previously proposed a 4% increase over 2016 volumes — and refiners complained loudly about that potential increase. The RFS has been law since the  Energy Policy Act of 2005. Its purpose is to increase the use of biofuels in the U.S., and the EPA requires obligated parties — which means those who supply fuel — to demonstrate compliance. The mechanics of verifying compliance were explained previously in RIN and Bear It.   In a nutshell, the RFS forces refiners to subsidize biofuel producers. Refiners have complained bitterly about the costs imposed upon them by the RFS. In the first half of the year, the top 10 refiners spent $1.1 billion to comply with the mandate. Those costs eat into refiners’ margins, and are partially passed on to consumers via higher gasoline prices. Valero noted in its Q3 earnings release that it had incurred $198 million of costs to meet biofuel blending obligations for the third quarter. This is a significant amount relative to Valero’s Q3 net income of $613 million. Responding to the EPA’s decision, Tesoro vice president Stephen Brown, called the new quota “unworkable” and said that it highlights the need for a legislative overhaul of the program. Billionaire investor Carl Icahn, who indirectly owns the majority of independent refiner CVR, has warned that the current system threatens to bankrupt some refiners. Although the RFS was instituted by a Republican president, it has also enjoyed the favor of the Obama Administration. Trump has repeatedly indicated his desire to eliminate some regulations on the oil and gas industry, and Icahn was a vocal Trump supporter who is sure to let Trump know his views on the RFS.

Trump faces dilemma as U.S. oil reels from record biofuels targets | Reuters: The Obama administration signed its final plan for renewable fuel use in the United States last week, leaving an oil industry reeling from the most aggressive biofuel targets yet as President-elect Donald Trump takes over. The Renewable Fuel Standard (RFS) program, signed into law by President George W. Bush, is one of the country's most controversial energy policies. It requires energy firms to blend ethanol and biodiesel into gasoline and diesel. The policy was designed to cut greenhouse gas emissions, reduce U.S. reliance on oil imports and boost rural economies that provide the crops for biofuels. It has pitted two of Trump's support bases against each other: Big Oil and Big Corn. The farming sector has lobbied hard for the maximum biofuel volumes laid out in the law to be blended into gasoline motor fuels, while the oil industry argues that the program creates additional costs. Balancing oil and farm interests is likely to prove a challenge for Trump, who has promised to curtail regulations on the oil industry but is already being reminded by biofuels advocates of the importance of the program to the American Midwest, where he received strong support from voters on Nov. 8. Oil groups are renewing their calls to change or repeal the program following Wednesday's announcement, when the Environmental Protection Agency (EPA) set record mandates for renewable fuels - for the first time hitting levels targeted by Congress nearly a decade ago.. The EPA plan is "completely detached from market realities and confirms once again that Congress must take immediate action to remedy this broken program," said Chet Thompson, President of the American Fuel and Petrochemical Manufacturers, in a statement. It is unclear what Trump's plans for the program will be and his transition team did not respond to Reuters' requests for comment.

Trump pledges to 'cancel job-killing' energy restrictions - President-elect Donald Trump has pledged to lift restrictions that he believes have hampered job growth in the energy sector. In a video message posted on Monday, Trump said he plans to “cancel job-killing restrictions on the production of American energy,” including regulations governing shale oil and gas production as well as coal mining. Trump said reducing regulations will create “many millions of high paying jobs” in the energy sector.“That’s what we want, that’s what we’ve been waiting for,” Trump added. Trump has not disclosed details about the regulations his administration would lift or alter.The global oil and gas industry has seen several massive waves of layoffs since oil prices began declining in the summer of 2014.   According to data collected by Continental Resources seen by Forbes, global oil and gas companies shed over 200,000 jobs as of October 2015. U.S. services firms, including Schlumberger and Halliburton, accounted for tens of thousands of those job cuts. Services firms has been particularity hard hit by layoffs as upstreams delayed projects and cut spends to cope with low crude prices. Trump has made energy sector jobs a centerpiece of his plans for his first 100 days in office.\ According to a plan for his first 100 days seen by NPR, Trump intends to “lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal.” While on the campaign trail, Trump proposed lifting restrictions governing oil and gas drilling on federal lands. Trump has also suggested he will overhaul the Environmental Protection Agency and has called environmental enforcement a “self-inflicted wound” on U.S. energy production.

Two More Trump Cabinet Picks Value 'Fossil Fuel Profits Above All Else' -- Sources close to the Trump transition team told Politico that Oklahoma Gov. Mary Fallin is the frontrunner for the Interior secretary position. Fallin, who is a climate change denier and was one of the first governors to oppose the Clean Power Plan, met with Trump last week in New York, where their conversation focused on the energy industry and Native tribes. According to Politico, Fallin is an "advocate of oil and gas development, she signed a bill last year that would prevent Oklahoma cites from enacting bans on drilling."Meanwhile, Trump announced Elaine Chao, former labor secretary under Bush II, as his pick for secretary of transportation; Chao, who is married to Kentucky Sen. Mitch McConnell, left the board of Bloomberg Philanthropies in early 2015 after the charity announced it would be increasing its donations to the Sierra Club's Beyond Coal campaign."As secretary of transportation Elaine Chao will spearhead a Trump plan to plunder the government for Trump's friends and family's financial gain," Friends of the Earth climate and energy program director Benjamin Schreiber said. "A massive corporate welfare plan for contractors is not an infrastructure plan, it's a travesty and a threat to the planet. Avoiding the worst impacts of climate change will require a radical reshaping of our transportation system to move us away from fossil fuels. The U.S. urgently needs a secretary of transportation who will lead this transition. As secretary of labor, Chao dismantled critical mine safety regulations and showed that she values fossil fuel profits above all else. She is the wrong choice to lead the transition to a green energy economy that will provide lasting jobs and protect the planet."

Trump's "Contract" promises to lift roadblocks to allow Keystone XL, other pipelines --  Amidst Dakota Access Pipeline (DAPL) protests, Keystone XL rises from the dead. Many didn’t think it would ever happen after a denial of necessary permits for its completion by President Obama and the State Department. The Keystone Pipeline System, commissioned in 2010, would run from the so-called “tar sands” in Alberta, through Montana (just west of the Bakken oil field) to refineries in both Illinois and Texas. You might remember that the first section of the Keystone pipeline, from Alberta to Illinois, was completed in 2010. The second section, from Steele City, Nebraska to Cushing, Oklahoma was done in 2011. The “Gulf Coast Extension” that brings oil from Cushing to Port Arthur, Texas, on the Gulf Coast was done in January 2104. The contentious extension, the Keystone XL, was approved in 2014 by both the Senate and the House, but President Obama vetoed it. The veto was disappointing to many who have interest in the Bakken oil fields, whether they worked there or invested in some way in Bakken oil. Even restaurants and schools saw big changes from the oil boom. The Keystone XL would have eliminated some of the truck traffic and railway congestion resulting from the increased oil production in the Bakken. Although the price of oil is down significantly from 2014 highs, production still remains close to a million barrels of oil per day in the Bakken. With production holding stead, there still needs to be a way for oil to get transported from Western North Dakota to downstream facilities for processing. However, the Keystone XL doesn’t seem to be a ghost of the past anymore. The proposal might just be back on the table. At the end of November, President-elect Donald Trump laid out his plan, which he calls “Donald Trump’s Contract With The American Voter,” for the first 100 days in office. Among items affecting the energy industry was a direct reference to the Keystone XL. The second section of his “contract” that included “seven actions to protect American workers,” in which Trump said he would “lift the restrictions on the production of $50 trillion dollars’ worth of job-producing American energy reserves, including shale, oil, natural gas and clean coal.” And then, he would “lift the Obama-Clinton roadblocks and allow vital energy infrastructure projects, like the Keystone Pipeline, to move forward.”

How Trump Can Dismantle 10 Years of Fossil Fuel Regulations in 100 Days – Last Monday, President-Elect Donald Trump announced in his first video address that he will begin to cut energy regulations that block job growth, including rules regarding the production of shale and coal.The initiative was listed among his “first 100 days” goals, and falls in line with his campaign promises to increase coal-related jobs and to cut US environmental regulations. “I will cancel job-killing restrictions on the production of American energy, including shale energy and clean coal, creating many millions of high paying jobs,” Trump said in his address Monday. Trump didn’t elaborate on what those “job-killing restrictions” are, but there are a few regulations the Obama Administration put into place—and a few the president nixed—that Trump might be eager to tackle:

  • The Keystone XL Pipeline and Dakota Access Pipeline -These two major pipeline projects have been largely put on hold. President Barack Obama vetoed the Keystone XL Pipeline bill in 2015, citing safety and environmental concerns, but Trump has stated in his speeches that one of his goals would be to that project moving.
  • Clean Energy Act - The EPA added six greenhouse gases, including carbon dioxide, to its list of hazardous pollutants in 2009, allowing the agency to regulate carbon emissions under Clean Energy Act. Trump has stated he plans to eliminate the EPA and is eyeing climate skeptic Myron Ebell as a choice for EPA director.
  • Energy Independence and Security Act - The 2007 energy bill, signed by President George W. Bush, was passed to move the US toward greater energy independence and increase the transition to “clean renewable fuels” at a time when the US . was in the middle of the Iraq War. If Trump is looking to increase demand for fossil fuel, reducing requirements to increase dependence on biofuels such as ethanol could be one path.
  • Clean Power Plan/Cap and Trade - The EPA’s Clean Power Plan established a federal cap and trade program in 2015.
  • Offshore Drilling - The Obama Administration has blocked attempts to reopen offshore drilling in the Outer Continental Shelf in the Atlantic Ocean for years, citing environmental and human health concerns from drilling and oil spills. Even after Obama considered opening the Atlantic to offshore drilling, that idea was nixed last year under pressure from East Coast residents.
  • Fracking - Fracking site owners are required to follow regulations regarding where they place their wastewater disposal wells (to protect local drinking water), the permits fracking sites require if they use diesel fuel, water quality standards that the wastewater must meet before it can be discharged, and air quality regulations from the natural gas that is released during pumping—among many other rules.Since many of these regulations are enforced by the EPA, it’s unknown what dismantling the department could do to these protections

Harold Hamm Rejects Trump’s Offer of Energy Secretary - Energy mogul Harold Hamm will not be taking President-Elect Trump up on his offer to name him Energy Secretary, according to Fox News. Hamm, who yesterday cleared a cool $3 billion in less than three hours off his shares in Continental Resources Inc. after the Organization of Petroleum Exporting Countries (OPEC) announced that it had finally agreed to cap its production at 32.5 million barrels per day, also serves as the CEO of Continental Resources, which is clearly a full-time gig when he’s not busy raking in billions on the back of OPEC deals. Hamm, whose net worth was previously estimated to be $13.8 billion, has served as Donald Trump’s energy advisor and has long been considered a front runner for the position of Energy Secretary. “I am not considering the job,” Hamm said to Fox Business Network on Thursday. According to Hamm, he’s happy assisting Trump from the sidelines, and is optimistic about America’s oil and gas industry under the new administration, which he sees as less regulation happy—particularly around fracking—and less tax happy. Before the elections, Hamm called these regulations “death by a thousand cuts.” And Hamm would know, because Continental Resources was a pioneer in making oil from shale rock profitable in North Dakota. Speaking of North Dakota, in his stead, Harold Hamm offered Trump an alternative Energy Secretary nominee: Rep. Kevin Cramer from North Dakota. In fact, Hamm said he thought Cramer would do a better job than he would. "Kevin's a great guy, and he would be a perfect candidate, as well. I've put his name forward.” Cramer has served as a congressman in North Dakota since 2012, and before that, he served as North Dakota’s utility regulator. Like Hamm, Cramer has been an advisor to Donald Trump on energy policy, writing two papers on the subject for him. Cramer considers himself a climate-change skeptic, but would likely steer Trump towards more neutral territory from his brash comments during the campaign about how the whole climate change thing is a hoax.

The Koch brothers, big oil, and Texas utilities are already shaping Trump’s environmental agenda  - As President-elect Donald Trump and his team seek to find their ideal candidate to run the Environmental Protection Agency, a troubling picture of his energy and environment experts is emerging. “The early sign is that Trump ran as a climate denier and is starting to surround himself with climate deniers, and that’s just the wrong direction to go,” said Shannon Fisk, managing attorney for the coal program at Earthjustice. “The science is clear on this: Climate change is happening and human activity is causing it.” Despite the fact that, as Fisk told ThinkProgress, “there are many Republicans out there who do not deny the climate science, who are on board with realizing the economic promise of clean energy,” Trump’s budding administration seems tightly linked to a Texas-based fossil fuel advocacy group and it’s parent organization, the far-right Texas Public Policy Foundation.The chair of TPPF’s Fueling Freedom Project, Doug Domenech, has already been tapped by the incoming administration as head of the Interior Department transition team, and a senior fellow, Kathleen Hartnett White, is a rumored candidate for head of the EPA.Fueling Freedom’s mission is explicitly anti-environmental. The project’s goals include explaining “the forgotten moral case for fossil fuels” and ending the EPA’s regulation of carbon dioxide. (The EPA has the authority — and, indeed, must — regulate carbon dioxide as a pollutant. Not only is carbon dioxide a greenhouse gas that fuels climate change, it also contributes to ocean acidification. Significantly reducing greenhouse gas emissions is likely the only way humanity can avoid triggering catastrophic climate disruption.) Fueling Freedom is part of a multi-organizational effort to fight the Clean Power Plan, an EPA rule that curbs carbon emissions from power plants. The Clean Power Plan is seen as one of the strongest federal actions against climate change.

Obama's dirty secret: the fossil fuel projects the US littered around the world - This unprecedented backing of oil, coal and gas projects is an unexpected footnote to Obama’s own climate change legacy. The president has called global warming “terrifying” and helped broker the world’s first proper agreement to tackle it, yet his administration has poured money into developments that will push the planet even closer to climate disaster. For people living next to US-funded mines and power stations the impacts are even more starkly immediate. Guardian and Columbia reporters have spent time at American-backed projects in India, South Africa and Australia to document the sickness, upheavals and environmental harm that come with huge dirty fuel developments.In India, we heard complaints about coal ash blowing into villages, contaminated water and respiratory and stomach problems, all linked to a project that has had more than $650m in backing from the Obama administration. In South Africa, another huge project is set to exacerbate existing air pollution problems, deforestation and water shortages. And in Australia, an enormous US-backed gas development is linked to a glut of fracking activity that has divided communities and brought a new wave of industrialization next to the cherished Great Barrier Reef.  While Obama can claim the US is the world’s leader on climate change – at least until Donald Trump enters the White House – it is also clear that it has become a major funder of fossil fuels that are having a serious impact upon people’s lives. This is the unexpected story of how Obama’s legacy is playing out overseas.

Oil Industry Anticipates Day of Reckoning - WSJ: This month, European oil company MOL Group delivered a stark message to investors: Demand for fuel in its key markets is bound to fall. So-called peak oil demand is a mind-bending scenario that global producers such as Royal Dutch Shell PLC and state-owned Saudi Aramco are beginning to quietly anticipate. But MOL has a transformation plan that is among the most explicit responses to the trend, indicating how the landscape may change for big energy providers over the next decade. The Hungarian company is rethinking its traditional focus on fuel supply and shifting investment to petrochemicals, the key ingredient of everyday plastic products and a sector where MOL believes growth will continue even when its fuel business falters. Big oil players such as Exxon Mobil Corp, BP PLC and Saudi Arabia—which is leading recent efforts by the Organization of the Petroleum Exporting Countries to boost oil prices—are also anticipating significant shifts in demand, though there is no consensus on the timing and their moves have been gradual. They are increasing their investment in petrochemicals, pumping more natural gas, driving down costs and even diversifying into alternative energy sources like solar power.Last month Shell finance chief Simon Henry caused a stir when he said the company sees oil demand peaking in five to 15 years. Shell’s latest published forecasts have consumption flattening toward the end of that period. State-owned China National Petroleum Corp. quietly issued a report in the summer predicting that China’s oil consumption—a major driver of growth in recent decades—will begin to fall by 2030, if not sooner. Global demand is expected to follow suit. The International Energy Agency, which advises industrialized countries on energy policy, says consumption will continue to rise for decades in its most likely scenario. But that picture shifts radically if governments take further action to limit global warming to less than 2 degrees Celsius with more stringent policies like carbon pricing, strict emissions limits and the removal of fossil-fuel subsidies. If that happens, oil demand could peak within the next 10 years, the IEA says. “The question is more a question of when, rather than if,” Dominic Emery, BP’s vice president for long-term planning and policy, told the Economist Energy Summit in London this month. BP says oil demand could fall by the late 2020s if tougher emissions laws are enacted.

Oil Industry Worries About Peak Oil, as in Peak Demand -  Yves Smith - Despite the considerable inertia of consumers and businesses, the widespread reliance on the internal combustion engine, and the reluctance to increase energy taxes in a weak global economy, oil companies increasingly forecast that a peak in oil demand is not all that far away.  Admittedly, how quickly that takes place depend on when national government get (more) religion about curbing greenhouse gas emissions. According to the Wall Street Journal, the International Energy Agency has a default of oil demand continuing to rise in the face of collective inaction. However, it’s worth noting that the IEA’s shorter-term forecasts have a bullish bias; will this prove to be true of their long-term scenarios? For instance, young people in the US are not only not keen about car ownership but some are even are ambivalent about having children. They are concerned the combination of environmental decay and escalating conflicts over resources means any children would have a poor quality of life.  Put it another way: I’m skeptical of simple linear projections over periods of decades, which is what the top line in this chart amounts to: The Wall Street Journal describes how a number of small and large oil companies are worried about peak demand for oil, starting with Hungary’s MOL Group, which plans to reorient its business over the next decade to focus on petrochemicals, which it sees as having sustained demand, and away from fuel products. From the Journal: Last month Shell finance chief Simon Henry caused a stir when he said the company sees oil demand peaking in five to 15 years. Shell’s latest published forecasts have consumption flattening toward the end of that period. State-owned China National Petroleum Corp. quietly issued a report in the summer predicting that China’s oil consumption—a major driver of growth in recent decades—will begin to fall by 2030, if not sooner. Global demand is expected to follow suit… Peak demand “will be later than the common dates that are being thrown around, but if it does happen, because we’re building multiple engines for the economy and we’re planning for an economy beyond oil, we’ll be ready,” Saudi Arabia’s energy minister, Khalid al Falih, told a conference in Istanbul last month.  Needless to say, other big firms, such as Exxon, remain optimistic, and OPEC forecasts that demand will grow beyond 2040. But BP and Total, among others, are hedging by building up alternative energy businesses.

From Peak Oil to Peak Oil Demand in Just Nine Years - Justin Fox - Peak demand for oil is the big new thing. True, the International Energy Agency, in the annual World Energy Outlook it released earlier this month, didn't envision a peak coming before 2040 barring a big acceleration in anti-climate-change efforts. But at least it's talking about the possibility, and forecasting a slowdown in demand growth in the meantime.Others think the big day is coming much sooner. Simon Henry, the chief financial officer of Royal Dutch Shell, recently predicted a demand peak "between five and 15 years hence.” And as Bloomberg's Javier Blas and Laura Blewitt pointed out last week, even the IEA thinks that demand from passenger cars, long the biggest users of oil, has already peaked.So that's pretty exciting! The peaking of oil demand would mark a major historic turning point. Still, it's impossible not to get a little wary when the words "peak" and "oil" are thrown together. Here, for example, is something I wrote nine years ago, when concerns about "peak oil" (meaning peak oil supply) seemed to be migrating from the apocalyptic fringe to the mainstream: The chief executives of ConocoPhillips and French oil giant Total both declared that they can't see oil production ever topping 100 million bbl. a day. The head of the oil importers' club that is the International Energy Agency warned that "new capacity additions will not keep up with declines at current fields and the projected increase in demand." What happened to make these worries go away? The biggest thing was a global economic downturn in 2008 and 2009 that threw off everybody's demand forecasts. But increases in oil supply -- notably in the U.S., where crude-oil production went from 5 million barrels a day in 2008 to 9.4 million barrels a day in 2015 -- have played a big role, too. World oil production is currently at 97.2 million barrels a day (up from 85.6 million barrels a day in 2007), and could surely go higher if demand were higher. That makes me wonder what could go wrong with the forecasts of peak oil demand, or just slowing demand growth. The baseline IEA forecast is something called the "new policies" scenario, which assumes that governments around the world will follow through with current pledges to reduce carbon emissions and increase the use of renewable energy. Here's how that scenario breaks down for oil demand:

Trudeau Approves Kinder Morgan Plan, Rejects Northern Gateway Pipeline: — Prime Minister Justin Trudeau approved two major oil pipeline expansions Tuesday, including the deeply controversial Trans Mountain line through suburban Vancouver, while maintaining his government remains on course to meet its international climate commitments. The announcement ends the new Liberal government's year-long high wire act seeking to balance environmental stewardship and expansion of Canada's resource economy. "We are under no illusions that the decision we made today will be bitterly disputed by a number of people across the country who would rather we had made another decision," Trudeau — flanked by a number of his senior cabinet ministers — told a news conference in Ottawa. "We took this decision today because we believe it is in the best interests of Canada and Canadians."The Liberals have been setting the stage for pipeline approvals for months, highlighting environmental policy moves like a national carbon price while making the case that the jobs, economic boost and government revenues from fossil fuel exports are critical to the transformation to a low-carbon future. It's been a tough sell. Kinder Morgan's Trans Mountain expansion has become a lightning rod for climate protests from coast to coast, with opponents from among Trudeau's own caucus of Liberal MPs and his political ally, Vancouver Mayor Gregor Robertson. Climate campaigners and indigenous groups immediately attacked the government decision as a betrayal, while B.C. Environment Minister Mary Polak issued an anodyne statement noting the province's own environmental assessment of Trans Mountain continues. The fight overshadowed quieter deliberations about Enbridge's proposed replacement of Line 3, a half-century-old pipeline from Alberta to the United States that Trudeau approved Tuesday, effectively doubling its current working capacity.

Canada Approves Kinder Morgan, Enbridge Pipelines Despite Fierce Opposition -- Canadian PM Justin Trudeau announced Tuesday that the Canadian government would approve two major tar sands pipeline projects, including expansion of the controversial Kinder Morgan Trans Mountain pipeline.  The Kinder Morgan pipeline has come under fire from activists and aboriginal groups. "Apparently Justin Trudeau's sunny ways mean dark days ahead for climate action and Indigenous reconciliation in Canada," Greenpeace Canada spokesperson Mike Hudema said. "In approving this ecosystem-destroying pipeline, Canada's leaders have ignored the threats to the Salish Sea, its marine species, and its 8 million people, including 29 Tribes and First Nations," Marcie Keever, Friends of the Earth's oceans and vessels program director, exclaimed.  Reuters reports that the opposition has "drawn inspiration" from the the current Dakota Access protests and stalled Keystone XL project.  Speaking of Keystone, senior Trump transition adviser Kellyanne Conway will reportedly tour the tar sands region in Alberta a week before the president-elect's inauguration, which may signal that the incoming administration will prioritize the pipeline's approval. "Today's announcement may as well have said that Canada is pulling out of the Paris climate agreement," Aurore Fauret, tar sands campaign coordinator for , said. "By approving the Kinder Morgan and Line 3 pipelines, there is no way Canada can meet those commitments. Justin Trudeau has broken his promises for real climate leadership, and broken his promise to respect the rights of Indigenous peoples."

Justin Trudeau approves two big oil sands pipeline expansions - In an announcement on November 29, 2016, Canadian Prime Minister Justin Trudeau approved two new major pipeline expansions for Canadian bitumen. Altogether, the two projects will add over a million barrels per day to Canada's export capacity.At the same press conference, Trudeau rejected the application for the Northern Gateway pipeline, which would have provided 525,000 barrels per day of transportation from Alberta to the Pacific Ocean through the northern British Columbia coast, near Kitimat.  The proposed export route would have involved tanker transport through fjords and treacherous seas in an area of protected wilderness known as the Great Bear Rainforest. Trudeau promised a legislated ban on all oil tankers on the BC Coast north of Vancouver Island. The Northern Gateway project was fiercely resisted by First Nations. The Trans Mountain Expansion project involves the twinning and expansion of an existing pipeline that runs from Edmonton, through Jasper National Park, to the Pacific coast at Vancouver. The project currently has a capacity of 300,000 barrels per day and will be expanded to have a total capacity of 890,000 barrels per day. Around 400 Aframax tankers per year will transport diluted bitumen from the Westridge Marine Terminal, through Vancouver's Burrard Inlet, then down narrow passages, with strong tidal currents, between the Gulf Islands, and finally through the busy shipping lane of the Strait of Juan de Fuca to the open ocean and markets around the Pacific. The project should be completed in 2019. Line 3 will replace a 50-year old pipeline with a new, larger capacity one. The new pipeline will carry 760,000 barrels per day with potential to expand to 915,000 bopd. The old pipeline was restricted to 390,000 bopd for safety reasons. The Canadian section of this line runs from Edmonton, across Saskatchewan to Gretna, Manitoba, on the US border. The operator, Enbridge will also replace the US portion of the pipe, which runs from Neche, North Dakota to Superior, Wisconsin. Because this pipeline is an existing one, no presidential approval is required, unlike for Keystone XL. The project is expected to be operational in 2019. Altogether, these two projects will add 1.06 to 1.20 million barrels per day of export capacity. Additional export pipeline proposals include Energy East, a 1.1 million per day pipeline that will reach the Atlantic coast of Canada and the possibly soon-to-be-resurrected Keystone XL pipeline that will add about 800,000 barrels per day capacity to the US Gulf Coast. All in all, nearly 3 million barrels per day of additional bitumen capacity from the Athabasca oil sands, enough to more than double the current production of around 2.5 million barrels per day.

Canada Oil Pipeline: Trudeau Just Knocked Over the First Domino - naked capitalism - Jerri-Lynn here:  This post reminds us that while we’ve all been fixating on US pipeline policy, both current– e.g. DAPL — and future– under president-elect Trump, the US has no monopoly on poor pipeline decisions that in the long-run will only exacerbate climate change. Canadian Prime Minister Justin Trudeau’s decision to approve a major expansion of the Kinder Morgan Trans Mountain pipeline has major international implications, as author Kevin Grandia spells out below… Canadian Prime Minister Trudeau’s decision this week to approve a major expansion of the Kinder Morgan Trans Mountain pipeline has negative implications that go well beyond the borders of the Great White North. Canada is currently the largest importer of oil to the United States. We import more oil than Saudi Arabia, Venezuela and Mexico combined. We are a secure, stable and reliable trading partner with the US for a product that can make or break their economy. Right now, Canada has almost zero ability to transport its oil to anywhere other than the United States. There is no big spigot off of our east, west or north coasts that allows for overseas export to other markets, particularly in Asia. Approving the Kinder Morgan Trans Mountain pipeline expansion changes all of that, and for the first time Canada might be capable of shipping significant amounts of oil to markets other than the United States (assuming the project is actually completed — a big question mark given ongoing First Nations’ legal challenges and resistance from British Columbians). I would bet this announcement is on President-elect Trump’s radar. Trump has promised to renegotiate or even terminate the North American Free Trade Agreement with Canada and Mexico. Trump has also promised to restart the process of building the Keystone XL pipeline that would significantly expand transport capacity for tar sands oil from Canada to the United States and foreign export markets via the Gulf of Mexico. While there is no doubt a benefit to Canada diversifying the customer base for its oil products, it may come at the expense of ticking off our biggest customer to the south. In the complicated world of geopolitics and oil, who knows where this could lead. Here is a graph showing the largest proposed oil and gas projects in the world, along with the carbon emissions they will put into our atmosphere:According to a report earlier this year by Oil Change International, if these projects are built, we are toast. Burnt toast that is. It is crucial to the earth’s climate that the projects represented in this graph are never built. Canada is in that top five as you can see, and you can also see that some not-too-cooperative countries are also in the top five, including Russia and Iran.

Minister signals ban on fracking to continue in Ireland - The prohibition on fracking is to continue in Ireland. Fracking is the extraction of natural gas by pumping high pressure water and chemicals into shale formations deep underground. Environmental groups welcomed the decision of the Minister responsible for the area, arguing that the activity represented a substantial risk to health. Minister for the Environment Denis Naughten’s decision came as the Environmental Protection Agency (EPA) released a report on fracking. The report noted many of the environmental problems related to the process could be overcome. But its authors also stated there were three important areas where there was too little information available to ensure the protection of human health. Until this information gap is filled, fracking should not be allowed to proceed, the report stated. The findings “justify the continuing prohibition on the licensing of hydraulic fracturing”, said Mr Naughten. The report would be referred to the Joint Oireachtas Committee on Communications, Climate Action and the Environment for consideration, he said.  “I hope this will assist at the committee stage debate of the proposed hydraulic fracturing legislation to be progressed by the Oireachtas next year.”

Fracking poses too high a risk of pollution warns EPA - A ban on fracking should remain in place to protect the environment, after a major report found it presented risks to water quality. A ban on fracking should remain in place to protect the environment, after a major report found it presented risks to water quality. The Environmental Protection Agency (EPA) said that, although fracking was possible, there was a widespread risk and further study was required before it was allowed. Climate Change and Energy Minister Denis Naughten said the report's findings justified the continued ban on fracking in Ireland, which has been in place since 2013. The Dáil has recently agreed to a permanent ban in principle. "I believe the report's findings justify the continuing prohibition on the licensing of hydraulic fracturing," he said. "I am on record as having raised concerns with regard to the use of hydraulic fracturing. I am pleased that these matters of concern have been addressed in the report." Fracking involves drilling down into the earth before a high-pressure mixture of water and chemicals is used to shatter shale rock to release natural gas. Deposits of shale gas are believed to be available in Leitrim, Clare and Fermanagh, but no exploration has been allowed until the research programme from the EPA was complete. The Joint Research Programme on Environmental Impacts of Unconventional Gas Exploration and Extraction (UGEE) looked at the impact of fracking on water, seismicity and air quality, as well as a review of operational practices around the world.

Government accused of 'dirty tricks' over controversial fracking report   - Ministers deliberately delayed a controversial fracking report it was being forced to publish until after crucial council decisions on planning permission, according to newly revealed documents. The documents also show ministers acknowledged they were open to a charge of double standards, having granted local communities the final say over windfarm applications but overruling fracking decisions. The documents reveal “dirty tricks” and “deceit”, according to shadow ministers, councillors and green campaigners, which strengthen fears that the government is determined to force shale gas exploration on communities. The report on the impact of fracking on the rural economy was produced by the Department of Environment, Food and Rural Affairs (Defra) and published in 2014 in heavily redacted form. But Greenpeace used freedom of information rules (FOI) to force the publication of the full report a year later. The report said fracking could cause house prices to fall and risk damage to health and the environment, but that it could also generate new jobs. Lancashire county council (LCC) was considering the UK’s first major planning applications from shale firm Cuadrilla in June 2015 and requested to see the full report. But new documents released by the energy department to Greenpeace under FOI rules show Andrea Leadsom, then energy minister, asked to delay the publication of the full report until after the LCC decision. An email on 15 June from Leadsom’s private secretary to the then energy secretary Amber Rudd and media officers said: “[Leadsom] suggests we do nothing before Cuafrilla’s [sic] planning decision if we have time.”

Can An OPEC Deal Save Venezuelan Oil From Total Collapse? -- With the nation's currency in full-fledged hyperinflationary collapse,'s Nick Cunningham notes that at times it seems that Venezuela’s economic crisis cannot get any worse. Food shortages, electricity blackouts, and scarce medical supplies have created a humanitarian disaster in Venezuela. However, with each passing month the situation deteriorates, and the crisis appears to be entering a dangerous new phase. Venezuela’s currency has lost about 60% of its value so far in November, the worst monthly decline on record. Inflation is thought to be hovering at around 400 percent, according to Bloomberg, although some analysts put it as high as 1,500 percent. “Inflation is going to keep rising, there’s a risk of default, and the political situation is becoming more tense each day. People prefer to protect their money,” Asdrubal Oliveros, director of Caracas-based economic consultancy Ecoanalitica, told Bloomberg. The horrific humanitarian crisis is only deepening, with food shortages becoming so acute that Venezuelans are starting to flee in large numbers, heading to Colombia, or Brazil, or evensetting sail on small boats to seek food, shelter and work on some Caribbean islands. This could yet turn into a major refugee crisis. Venezuela is dangerously short on medical supplies, and the conditions in the country’s hospitals are some of the worst in the world outside of Syria. The government of Venezuelan President Nicolas Maduro is hoping it will soon get some relief. China has decidedto invest $2.2 billion into Venezuela’s decrepit oil sector, in exchange for a larger share of the country’s output. By some estimates, China has dumped $65 billion into Venezuela over the past decade, making the South American country too big to fail for Beijing. Venezuela has been paying that toll back in oil, earmarking some 550,000 barrels per day in output for China. But the latest deal will bring that obligation up to 800,000 barrels per day. Venezuela needs the investment to repair crumbling energy infrastructure, which is leading to steady declines in oil production. Venezuela’s refineries are also in a sorry state. Anexplosion recently engulfed a PDVSA refinery. Also, Reuters reports that the country’s refining network is operating at just a third of capacity.

Indonesia has 'mixed feelings' on OPEC reaching output deal -- Indonesia's energy minister Ignasius Jonan said Tuesday he had "mixed feelings" as to whether OPEC would strike an output deal at its formal meeting in Vienna on Wednesday, raising further doubts that the 14 member group can get a crude production agreement over the line. The newly appointed energy and mines minister said the net importer was still undecided as to whether they will join in on any freeze or reduction to production, stressing the importance of a "fair deal" for all members. With a deadline looming, OPEC members are making a last-minute push to negotiate the terms of a deal that aims to tighten the global oil balance and firm prices. However, there have been some worrying signs including non-OPEC countries not attending a technical meeting on Monday and UAE OPEC governor Ahmed Mohamed Alkaabi saying after the meeting that "some concerns" remain about the treatment of Iraq and Iran under the proposal that will be put forward.  Indonesia, which reactivated its membership of OPEC on 1 January 2016, has been producing a steady 730,000 b/d in recent months according a survey by to S&P Global Platts. Indonesia's Pertamina owns and operates seven oil refineries with a total installed capacity of 1.05 million b/d. However, that is not enough to meet refined product demand of 1.5 million-1.6 million b/d, and the company imports oil products on a term and spot basis to supplement its own production.

Can demonetization derail India's energy, commodities demand growth?: podcast - The Indian government's move to demonetize 80% of the country's currency in November resulted in a cash shortage and triggered panic buying of essential commodities. Consumers eagerly snapped up oil products such as gasoline and diesel, but appetite for other goods was not as healthy. S&P Global Platts senior editor for oil news and analysis Sambit Mohanty delves into how the demonetization of Rupee 1,000 and Rupee 500 notes is affecting various commodity markets in India.

Massive Explosion Rocks One Of Italy's Largest Oil Refineries -- According to local press, a massive explosion has rocked one of Italy’s biggest oil refineries in Sannazzaro de' Burgondi, near Pavia, about 40km south of Milan. Local authorities have ordered residents to stay indoors while an emergency plan is activated. #BREAKING Explosion was reported at one of Italy's biggest oil refineries some 40 km south of Milan, residents warned to stay indoors The Department of Civil Protection in the Province of Alessandria says nearby emergency centers have been activated for monitoring and supervision, but people are advised to remain indoors in the meantime. Local authorities are warning that the clouds of smoke are being pushed by winds towards Voghera, about 30km (19 miles) south of Sannazzaro, and are expected to remain over the site for the coming hours. The fire at the Eni refinery broke out at around 3.40 p.m. generating a ball of fire tens of meters high, according to eyewitnesses cited by Il Giorno. Images and footage from the scene show an enormous column of black smoke rising overhead. Eni has issued a statement saying efforts are underway to extinguish the fire and there have been no reports of any injuries. The company also said the cause of the blast is under investigation.

Even If OPEC Gets Deal, It Risks Reviving Battered Oil Rivals - For two years, OPEC tried to bury a growing army of upstart producers by flooding the markets with crude. Reversing course might hand a lifeline to the battered survivors like Premier Oil Plc who are rushing to reap the rewards. The London-listed company, whose 60,000 barrels a day of output amounts to a rounding error for OPEC, expects to use hedges to lock in 2017 prices of at least $50 a barrel, a level Brent has only touched briefly this year. That means Premier Oil has adapted well enough to the assault to at least break even at half the price it received on the futures market in 2015. Across the industry, from rural America to the Siberian tundra, producers are hoping the Organization of Petroleum Exporting Countries will trigger a rally that would allow them to secure funds to boost drilling. Without a deal, prices, now at $47, could test the $30 level breached in January, as OPEC and non-member Russia ramped up output to defend market share, analysts say.The oil club wants to create a “Goldilocks” zone of between $50 and $60, “high enough to increase revenue for beleaguered oil producers but not too high to trigger a wave of new output from the U.S. shale patch,” said Walid Khadduri, an OPEC watcher at the Arab Gulf States Institute in Washington. It’s a delicate balancing act.

OPEC Deal Disintegrates After Iran Press Accuses Saudi Arabia Of "Reneging" On Agreement --On Friday, after reading the latest shift in the ever-changing, always fluid OPEC narrative, according to which Saudi Arabia now was demands Iranian oil production cuts contrary to the agreement reached at the end of September in Algiers, in which Iran was granted an exemption from the upcoming supply cut negotiation in Vienna on November 30, we were confused:   This morning there is less confusion because according to Iran's semi-official Mehr news agency, the OPEC agreement is effectively dead with Iran's government mouthpiece reporting that "on the eve of OPEC Meeting, Saudi Arabia has officially declared a war on oil prices by releasing a tactical letter as well as applying pressure on certain OPEC members."As the news report - which likely telegraphs the position of Iran's oil ministry - lays out, Iran is now once again lashing out at Saudi Arabia and raising a diplomatic scandal over the terms of the November 30 OPEC meeting just days in advance, in what will likely lead to a substantial renegotiation if not outright failure of the deal. Here are the key excerpts from the report:On the verge of the 171st Ordinary OPEC Meeting to convene on November 30 in Vienna of Austria and at a time when the world's major producers and exporters of crude oil are preparing to adopt one of the most historic decisions on freezing oil prices, Saudis seem to have reneged on earlier promises.  During the earlier informal meeting of OPEC ministers in Algeria in late September, members of the Organization of Petroleum Exporting Countries (OPEC) reached a consensus on putting a cap on production levels and the session urged participants to prepare for freezing or even reducing OPEC's aggregate oil output to 32.5 million barrels per day by holding expert meetings and forming a common working group.Over the past few weeks, several meetings at expert level were held among member states in different parts of the world and even non-OPEC states like Russia, Kazakhstan, Azerbaijan and Oman voiced readiness to stabilize or decrease their production levels. Nevertheless, Saudi Arabia has questioned all agreements and negotiations on freezing oil prices by publishing a political and planned letter ahead of the forthcoming OPEC meeting.

OPEC Scrambles To Salvage Oil Deal In 11th Hour As Tensions Spike -- One day after Saudi Arabia raised the prospect that Wednesday's OPEC summit in Vienna may conclude without a deal (which also was spun as optimistic as the market would still revert to "equilibrium", however it was unclear at what price), OPEC members tried on Monday to rescue a deal to limit oil output as tensions grew among the producer group and non-OPEC member Russia. OPEC experts started a meeting in Vienna at 0900 GMT (4:00 a.m. ET) and were due to make recommendations to their ministers on how exactly the Organization of the Petroleum Exporting Countries should reduce production when it meets on Nov. 30. At the same time, the Algerian and Venezuelan oil ministers flew to Moscow on Monday and Tuesday in a final attempt to persuade Russia to take part in cuts instead of merely freezing output, which has reached new highs in the past year. In September, OPEC, which accounts for a third of global oil production, agreed to cap output at around 32.5-33.0 million barrels per day versus the current 33.64 million bpd to prop up oil prices, which have more than halved since mid-2014. The meeting on Nov. 30 was expected to rubber-stamp that deal, with Russia and some other non-OPEC producers such as Azerbaijan and Kazakhstan also contributing. However, two months later, "doubts emerged in recent weeks" as OPEC's No.2 and 3 producers, Iraq and Iran, expressed reservations about the mechanics of output reductions and Saudi Arabia voiced concern about Russia's willingness to cut Reuters muses. On Friday, OPEC canceled an experts meeting with non-OPEC producers scheduled for Nov. 28 after Saudi Arabia said the organization needed to sort out its differences first, sending oil tumbling by over 3%. Adding to concerns, on Sunday, Saudi Energy Minister Khalid al-Falih said oil markets would rebalance even without an output-limiting pact. That contrasted with his previous statements, in which he had said Riyadh was keen for a deal.

Goldman Sachs Turns Bullish On Oil - Goldman Sachs is known to make outlandish calls on crude oil. First came a forecast of $200 a barrel back in March 2008, which fell flat on its face within months. The second was a call of $20 a barrel made in September 2015: To be fair, though crude did not actually make it to this catastrophic low, it did come down to $27 a barrel. It was close. Now, in a recent report, analysts including Damien Courvalin at Goldman have turned “tactically bullish,” forecasting $55 a barrel for the first half of 2017, up from their earlier forecast of a range-bound market between $45 and $50 a barrel for that period. However, they have not upgraded their annual average of $52.5 a barrel for next year. While the first half’s forecast for 2017 has been upgraded, the forecast for the second half of next year has been downgraded from $55-$60 a barrel to $50 a barrel, as the bank expects OPEC to resume production and U.S. shale oil supply to increase.Even without the OPEC production cut, Goldman sees the second half of next year tip over to a deficit. Hence, the bank believes that a production cut by OPEC will not hurt them for more than six months, as they can return to their normal production by the second half of next year.“With greater confidence that the global oil market can finally shift into deficit later next year, we now believe that there is a strong rationale for low-cost producers to deliver a swift production cut to normalize inventories,” the analysts said, as cited by Bloomberg.  Let’s examine the possibility of a deal on November 30 and the likely effect on oil prices.  Though a pop above $52 a barrel in WTI is not inconceivable, sustenance and a huge rally is unlikely, regardless of a cut.

Oil prices may plunge to $20 if OPEC fails to clinch deal - Two months ago, OPEC took the market by surprise by saying that it "agreed to agree" on a deal to cut production to between 32.5 and 33.0 million in a bid to reduce oversupply and lift oil prices. Two months later, exactly to the date, the cartel has not yet reached any agreement on the specifics of a possible deal. A marathon meeting of OPEC experts on Monday failed to reach an agreement for OPEC ministers to discuss on Wednesday. For two months OPEC officials and non-OPEC producers such as Russia have been vague on details and grand on hollow comments, hints, suggestions, and optimism that a deal will be reached. Analysts are a bit more optimistic now than they were in late September. However, it seems that the rift between OPEC’s biggest three — Saudi Arabia on the one hand, and Iran and Iraq on the other hand — is just as wide as it was two months ago. The chances of OPEC ministers reaching a deal on Wednesday are still pretty much 50/50, Amrita Sen, chief oil analyst at Energy Aspects, said in an interview with Bloomberg on Monday. Should a deal fail, however, the oil market will see a “sharp correction” and oil prices may plunge to $20, Sen noted. A no-deal would be met with a very negative perception by the market, and the impression OPEC would be leaving is that this is the end of the cartel, the analyst said. Essentially, all want to cut but there are no details, the analyst went on to comment on OPEC’s bumpy road to the Vienna meeting.

Saudi Arabia Should Threaten Massive Production Cut (Video) --We discuss the current OPEC power struggle in this video. Saudi Arabia is losing the power struggle within OPEC. Saudi Arabia has tried threatening upping production to motivate Iran and Iraq to agree to a Production Cut Framework Deal, but this hasn`t worked.Maybe if they switched strategies and threatened a massive production cut of their own, so big that the oil market would need Saudi Oil bad, and then enforce favorable contracts with customers, i.e., reducing Russian and Iranian Market Share through contract terms, and this reinstates Saudi Arabia as the Power Player in the Oil Markets and makes them again the swing producer. They need to reverse the current psychology in the market with their oil peers in OPEC. They can lay the ultimatum out on the table and say to Iran, Iraq and Russia that there is another way they can force production cuts and gain market share through withholding Saudi Oil from customers as they are the only country capable of withdrawing that sizable amount of oil production. The irony is that it would work because Saudi Arabia would get the same amount of revenue from half the production as oil prices would double in price in two weeks, and as oil prices keep rising Saudi is again the swing producer in the oil markets.Saudi Arabia needs to reverse the psychology of the oil market right now which is in a never ending negative feedback loop. Just without 5 million barrels per day of oil production, and oil is $85 a barrel in two weeks and climbing and all the sudden customers will cut any deal with Saudi Arabia for the other 4 to 5 Million Barrels of spare capacity, i.e. agree to buy less Iranian and Russian Oil on the margin.

Defiant Iran Turns Tables, "Proposes" Saudis Cut Production By Over 1MM Barrels, Invokes Donald Trump - In what appears to be a material shift in the perceived OPEC balance of power, while Iran (and Iraq) have so far refused to concede to Saudi demands for production cuts, moments ago Reuters reported that in what can only be described as a demonstration of power, Iran proposed that it be Saudi Arabia that foots the entire proposed production cut, by reducing its own production to 9.5 million barrels.   As a reminder, in October Saudi Arabia produced 10.625mmbpd, implying that according to Iran it is Saudi Arabia that should foot the entire production cut "agreed" upon in Algiers. And at roughly the same time, Iran's Shana news agency, issued an article titled "Irregularities of Regular OPEC Meeting", in which Iran invoked none other than Donald Trump. This article takes a sketchy look into general condition of the oil market, focusing on stances of three important OPEC and non-OPEC states, including Saudi Arabia, Iraq and Russia. Saudi Arabia's stances are specially worth contemplating because it has reduced its oil production due to economic conditions and problems facing its oil industry, while trying to compromise with Iran. However, due to political competition of the country with Iran and the tough conditions that election of US President Donald Trump has posed to Saudi Arabia, the country might seek an excuse to harm Algeria agreement and accuse Iran and perhaps Iraq and Russia of defeating OPEC conference in cutting the production ceiling and restoration of stability in the oil market around the acceptable prices. Global oil prices are affected by a collection of fundamental and non-fundamental variables, including world political developments that affect oil prices through forming expectations in the financial markets.

Oil Tumbles As OPEC Deal Seen Increasingly Unlikely: SBC Says "Very Low Chance" Of Agreement -- One day ahead of OPEC's much anticipated meeting in Vienna, oil has slide back under $46 on rising pessimism that an oil production cut deal, taken widely for granted as recently as last week, is not going to take place. Here is the latest rundown of events heading into the Wednesday meeting. As Bloomberg highlights, Russia’s absence from discussions in Vienna is creating complications for OPEC members that insist on participation of non-members in supply cutbacks with one day to go before OPEC ministers meet to decide policy.  Earlier today, Russian Energy Minister Alexander Novak said he has no plans to visit Vienna on Wednesday, but Russia is ready to talk with OPEC once group reaches an internal consensus Meanwhile, as reported yesterday, Iran, Iraq continued to express objections to cutting their own supply during lengthy meeting of OPEC officials Monday, as talks failed to bridge differences, one delegate said. In Monday’s talks, Saudi offered proposal for Iran to freeze its own output at 3.707m b/d; Iran offered to cap its output at 3.975m b/d: delegates; at the same time mediator Algeria proposed that Iran freeze at 3.795m b/d, and amount which was greater than the 3.69m b/d Iran pumped in October according to secondary sources. Yesterday's unsuccessful talks also didn’t reach agreement on Iraq; Algeria proposed Iraq cut 240k b/d from its October level That said, in keeping an appearance of optimism, Iraq’s minister told reporters in Vienna Tuesday he’s still very confident about OPEC meeting. Surprisingly, today's dose of cold water came from an unexpected source, when Indonesia energy minister Ignasius Jonan told reporters in Vienna that he has “no expectation” ahead of the OPEC meeting, and that his country has “mixed feelings” about the meeting, but will listen to major players in group. He is expected to meet his Iranian counterpart tonight. “There are growing thoughts that after much rhetoric and bullish chatter, OPEC won’t be able to find an accord,,” says Nick Williams, commodities futures broker at GF Financial Markets. “The Indonesian minister’s comments only added to that.”

OPEC Discord Sends Oil Prices Lower - WSJ: Oil prices plunged to a two-week low Tuesday as traders expressed doubt that months of negotiations would lead major oil-producing nations to reach a deal to cut output at OPEC’s Wednesday meeting. Anticipation of action to limit output has boosted the crude market in recent weeks. But comments from officials ahead of the meeting sowed doubts over the Organization of the Petroleum Exporting Countries’ ability to come to an agreement. Light, sweet crude for January delivery declined $1.85, or 3.9% to $45.23 a barrel on the New York Mercantile Exchange, its lowest close since Nov. 14. Brent, the global benchmark, settled down $1.86, or 3.9%, at $46.38 a barrel. A key concern for investors leading up to the meeting has been whether OPEC members Iran and Iraq will cooperate in the planned production cuts. While officials said Tuesday that the two countries have expressed willingness to keep output steady, worries over a potential deadlock are pressuring oil prices. “With member delegations already gathered in Vienna ahead of [Wednesday’s] formal meeting, it is increasingly clear that key divisions still remain,” Germany’s Commerzbank said the main hurdle for the meeting will be resolving conflicting demands from Saudi Arabia and Iran, with Saudi Arabia’s insistence that Iran cap production while Iran seeks an exemption from the cuts. Other members have expressed mixed feelings going into the meeting, contributing to volatility in the oil market. Sentiment has reversed substantially from a week ago, said Donald Morton, senior vice president at Herbert J. Sims Co., who runs an energy-trading desk. “Wall Street has completely flip-flopped,” Mr. Morton said. “I’ve never seen so many changes in opinion in such a short period of time.” Goldman Sachs analysts said the oil market reflects a 30% probability that the cartel will come to a deal Wednesday. On Tuesday, Macquarie analysts said the probability of a deal has fallen but still expect the cartel to arrive at an agreement.

WTI Plunges Near $44 Handle After Iran Oil Minister Says "No Cut In Production" -- Iran just hammered another nail in the coffin of an OPEC 'deal' when oil minister Bijan Namdar Zanganeh told reporters in Vienna ahead of OPEC meeting on Wednesday that "Iran won't cut oil production." Despite confident comments from Algeria, WTI plunged to within a tick of a $44 handle to 2-week lows...

Russia, Iran agree to coordinate steps in oil market ahead of OPEC talks - Russia's President Vladimir Putin and his Iranian counterpart Hassan Rouhani agreed to continue coordinating steps in global hydrocarbons markets in a phone conversation late Monday ahead of Wednesday's OPEC meeting, according to the Kremlin. "The presidents agreed to continue coordinating steps in global hydrocarbons markets, including as part of the energy dialog between Russia and the Organization of the Petroleum Exporting Countries," the Kremlin said in a statement. The leaders underlined "the crucial nature of OPEC measures to limit crude production as a key factor for stabilizing the oil market," it added. The statement came two days before 14 OPEC countries' ministers meet in Vienna to try to clinch what would be its first coordinated crude output cut since 2008, to help accelerate the market's rebalancing. They are expected to be joined by non-OPEC producers such as Russia, which has repeatedly said it will join any action agreed within OPEC.Putin said in October Russia is ready to join a coordinated production limit, but sees output freeze rather than a cut as sufficient. Russia's production stands at record levels of 11.2 million b/d. While Moscow has made attempts to secure a production deal in the past, such as at the producers' meeting in Doha in April, Tehran's position has been a major stumbling block in reaching an agreement. Iran did not send a representative to the April meeting, causing the talks to flop, has been among the countries asking for exemption from restrictions, and insisted on its right to regain its pre-sanctions market share of some 4 million b/d first. Putin's conversation with Rouhani came the day OPEC delegates held a technical meeting in Vienna, which resulted in an output proposal to the producer group's 14 ministers for approval at Wednesday's meeting but still left individual country quotas unsettled.

WTI Crude Shrugs Despite Biggest Cushing Inventory Build In 21 Months -- With OPEC headlines driving every tick today (and machines seemingly going to sleep late on), we suspected tonight's API inventory data would be a non-event and the reaction was indeed muted as crude inventories drewdown 717k barrels (against expectations of a 577k build). The bigger deal was much more than expected builds at Cushing (biggest build since March 2015) and also notable builds in Gasoline and Distillates. API

  • Crude -717k (+577k exp)
  • Cushing +2.3mm (+26k exp) - biggest since Mar 2015
  • Gasoline +3.36mm (+1.19mm exp) - biggest since Jan 2016
  • Distillates +2.24mm (+1.45mm exp) - biggest since Sept 2016

The biggest Cushing build since March 2015 and despite a small crude draw, products also saw notable builds...

Saudis Said To Take "Big Hit" On Output As OPEC "Close" To Condition Deal Involving Russia --Oil continued to rise higher, now over 7% sending Brent above $50 for the first time since October, after Saudi Energy Minister Khalid al-Falih said on Wednesday OPEC was close to clinching a deal to limit oil output, adding Riyadh was prepared to accept "a big hit" on its own production and agree to arch-rival Iran freezing output at pre-sanctions levels.The comments was interpreted as a compromise by the Saudis who in recent weeks insisted that Iran fully participate in any cut. OPEC was said to be "close" to reaching a deal to cut supply by 1.4 mmbpd, assisted by a 600kbpd cut coming from non-OPEC nations. However, as Reuters adds, if such a deal is agreed it would be conditional on non-OPEC involvement as OPEC would need non-OPEC members, such as Russia to agree to the 600kbpd and may require another meeting as early as December.This may be problematic as according to a Bloomberg headline blast, Russia would be willing to consider a 200kbpd cut if there is an OPEC deal, suggesting that any subsequent meeting may once again prove "problematic."Furthermore, assuming OPEC does agree to a 1.4mmbpd production cut, it is still unclear how it will be achieved and if indeed, the Saudis will be forced the bulk of the production cut.While the details so far remain unclear, Falih also said that OPEC was focusing on reducing output to a ceiling of 32.5 million barrels per day, or cutting by more than 1 million bpd, and hoped Russia and other non-OPEC members would contribute a cut of another 0.6 million bpd."It will mean that we (Saudi) take a big cut and a big hit from our current production and from our forecast for 2017. So we will not do it unless we make sure that there is consensus and an agreement to meet all of the principles," Falih said.

Crude rises on remarks by Iran ahead of OPEC meet - Crude oil futures rose in mid-afternoon trade in Asia Wednesday on the back of fresh remarks from Iran in support of a deal in the hours before a crucial OPEC meeting. At 3:38 pm Singapore time (0738 GMT), January ICE Brent crude futures were up 61 cents/b (1.32%) from Tuesday's settle at $46.99/b, while January NYMEX light sweet crude was up 57 cents/b (1.26%) at $45.80/b. Iranian oil minister Bijan Zanganeh said early Wednesday in Vienna he has received "acceptable proposals" ahead of the OPEC meeting set for later in the day. OPEC ministers later Wednesday will consider a recommendation to cut 1.2 million b/d from its collective October output level, as determined by secondary sources, except for Angola, Libya and Nigeria, sources familiar with the proposal told S&P Global Platts on the eve of the meeting. Markets responded bullishly to the supportive remarks from Iran, as a source close to the negotiations had earlier said Iran's abstinence from a deal made the matter "tricky"."Iranian rhetoric has a big impact on oil prices, such as the remarks this morning," said IG Market Strategist Pan Jingyi. "However, this is still early news and prices may move in either direction based on how much progress is reported towards a production cut deal," she added.In his remarks, Zanganeh dismissed the idea of cutting Iranian output under any deal, saying: "This is not up for discussion at all."

OPEC Agrees To Cut Oil Production By 1.2 Million Barrels A Day, Details Pending --The much anticipated headline is out and, as Bloomberg reports, OPEC has reached a deal agreeing to cut oil production by 1.2 million barrels per day to 32.5mmbpd, according to a delegate. OPEC AGREES TO CUT OUTPUT BY 1.2M B/D TO 32.5M B/D: DELEGATE We now await the details of who will cut and by how much, how will the production cuts be implemented and supervised, and whether the deal is conditional on Non-OPEC, mostly Russia, participation. Having soared over 7% in advance of the announcement, crude remained near its highs of the day.  The front-month Brent contract also resumes climb, trading $3.55 higher at $49.93.

OPEC Reaches Deal to Limit Production, Sending Prices Soaring - NYTimes: After years of trying fruitlessly to prop up energy markets, OPEC on Wednesday finally reached a consensus on production cuts, sending oil prices soaring. The problem is, the euphoria may not last. With prices still at less than half the levels of two years ago, the Organization of the Petroleum Exporting Countries agreed this fall to lower collective production. But it could not figure out how to spread the cuts among the countries. The path to consensus has been complicated by Saudi Arabia and Iran, whose longstanding mutual enmity encompasses religious, political and economic competition. When it comes to oil, Saudi Arabia, OPEC’s top producer, has fought to maintain its market share, while Iran has worked to protect its nascent comeback as a power broker in the cartel, a role it lost in recent years under nuclear sanctions. They overcame their differences on Wednesday, with OPEC deciding to cut production next year by about 4.5 percent, or 1.2 million barrels a day. It will be the first cut in eight years.With the prospect of less pumping, oil prices, which began rising earlier in the day in anticipation of the deal, were up more than 8 percent, to nearly $50 a barrel. Rising prices could lift the troubled economies of oil-dependent nations like Nigeria and Venezuela, and bolster the fortunes of smaller American energy producers that have been shaken by the weakness. The deal shows that “the weight and resilience of OPEC is still there and will continue to be,” Qatar’s energy minister, Mohammed bin Saleh al-Sada, said at a news conference on Wednesday.

Oil complex rallies after OPEC strikes deal to cut output - Crude futures settled sharply higher Wednesday after OPEC producers finalized an agreement at their highly anticipated meeting in Vienna to freeze output at 32.5 million b/d, requiring a collective cut of 1.2 million b/d from current levels. NYMEX January light sweet crude settled $4.21 higher at $49.44/b, having risen as high as $49.90/b shortly before the end of the trading session. ICE January Brent rose $4.09 to settle at $50.47/b. The agreement -- OPEC's first coordinated cut since the depths of the financial crisis in 2008 -- was reached after Saudi Arabia agreed to cut its production by 486,000 b/d from its October levels, as estimated by OPEC's secondary sources, to 10.046 million b/d. Iraq, which had agitated in the weeks leading up to the meeting for an exemption, agreed to cut 209,000 b/d from its October levels to 4.351 million b/d.Iran, meanwhile, will be allowed to produce 3.797 million b/d, an increase from its October production level of 3.69 million b/d, according to OPEC's secondary source estimates. Iran had long insisted on regaining its pre-sanctions output level of some 4 million b/d before agreeing to any output restraints. Crude futures jumped overnights as rumors of the agreement swirled and were largely steady throughout the US trading session, but pushed higher after the deal was announced, likely due to the surprise participation of Russia and other non-OPEC countries who agreed to cut 600,000 b/d. Russia agreed to absorb 300,000 b/d of the non-OPEC cut, albeit "gradually," its Energy Ministry said. "Perhaps most surprising, however, was that this is in addition to an agreement from non-OPEC countries to also cut production by 600,000 b/d, 300,000 b/d of which is to come from Russia," Tony Starkey, a Platts Analytics energy analysis manager, said. "In total, that represents a 1.8 million b/d cut in total crude production, far surpassing anyone's expectations."

Oil jumps over 10 percent as OPEC finalizes output cut deal - Yahoo Finance: (Reuters) - Oil soared more than 10 percent on Wednesday to over $50 a barrel and its highest in a month as some of the world's largest producers agreed to curb production for the first time since 2008 in a bid to support prices. Crude prices rose nearly 5 percent for the month. However, they are unlikely to skyrocket further in reaction to the deal and the rally may even be short-lived, traders and analysts said. The Organization of the Petroleum Exporting Countries, which accounts for a third of global oil supply, agreed to cut production from January by around 1.2 million barrels per day (bpd), or over 3 percent, to 32.5 million bpd. The cut will put production at the low end of a preliminary agreement struck in Algiers in September, and will reduce output from a current 33.64 million bpd. The group's de facto leader Saudi Arabia said it would take the lion's share of cuts - reducing output by almost 500,000 bpd to 10.06 million bpd - to get the deal done. Iraq, OPEC's second largest producer which had previously resisted cuts, providing a hurdle to a deal, agreed to reduce output by 200,000 bpd to 4.351 million bpd. Iran was allowed to boost production slightly from its October level. This was a major victory for Tehran, which has long argued it needs to regain market share lost under Western sanctions. Non-OPEC member Russia, which had long resisted cutting output and pushed its production to new record highs in recent months, agreed to cut output by 300,000 bpd. OPEC will meet with non-OPEC producers on Dec. 9. U.S. West Texas Intermediate crude futures for January delivery settled up $4.21 to $49.44 a barrel, a 9.6 percent gain. They earlier rose 10 percent, the largest one-day move since February. Brent crude futures for January delivery settled up $4.09 a barrel or 8.82 percent at $50.47 a barrel. The contract expires Wednesday, and the February contract rose 8.9 percent to $51.51

Oil Soars as OPEC Agrees to Cut Output - WSJ: Oil prices surged to one-month highs after OPEC agreed to reduce its output by more than 1 million barrels a day, a cut that many market participants say could be significant enough to push oil supplies below demand levels sooner than expected. The 14-nation Organization of the Petroleum Exporting Countries agreed to cut combined oil production by 1.2 million barrels a day, from its current 33.6 million barrels. OPEC’s cut would erase more than 1% of global output. Both U.S. and international oil posted their largest percentage gains since February on the news. The Brent benchmark broke above $50 a barrel for the first time in a month.Despite the gains, many traders say they are skeptical about whether the deal will last beyond six months and how it will be enforced. OPEC members have a history of cheating and exceeding their own production quotas, so even if the deal cuts deep and the agreement is firm, it may be months before its impact on the market, if any, becomes clear, money managers said. OPEC’s new course is a stark reversal in strategy from their last big change in November 2014, when the group essentially lifted all output quotas so its members could compete with a global boom in oil production. That decision led OPEC to record-high production, adding more supply to an already flooded market and eventually dropping prices below $30 a barrel, so low that many worried it could fuel a global recession. Cutting back now, especially if Russia and other international rivals join OPEC, could solve one of the market’s biggest problems in recent weeks, another surge in global output. OPEC and Russian production grew to new records this autumn, and U.S. production ended a long, slow decline, trends that briefly sank oil to two-month lows.

Vienna Shocker: Indonesia Suspended From OPEC --As expected, the OPEC headlines continue to come in hot and heavy, with Reuters reporting first that Saudi Arabia has agreed to an output cut of roughly 500kbps to 10.06mmbpd. This brings Saudi production to levels last seen in January. Additionally, Iran is said to have agreed to a production cap of just under 3.8MM bpd, which also appears to be below what was speculated just moments ago, or 3.9mmbpd. But the most shocking announcement is that Indonesia appears to have been suspended from OPEC, and that its oil output, which according to the latest OPEC monthly report was 722kpd, will be distributed among other OPEC nations, in what may amount to a production "shuffle" not a cut: The question then arises if Indonesia was suspended from OPEC because they wouldn't agree to cuts?  Since all votes must be unanimous under OPEC rules, this might be a way to force a deal. If they won't cut (or, in the case of Iran, be allowed to increase to 3.975), then they're out. Also, with its share being redistributed, does that now mean that the production freeze cap is effectively 700kpd higher than prior to the expulsion. Finally, according to a JBC report, OPEC output rose once gain in November, hitting 34.06mmbpd, up from the official 33.643mmbpd as of October.

Indonesia's oil supply security unlikely to be affected by OPEC withdrawal - Indonesia's withdrawal from OPEC membership is unlikely to affect the country's oil supply security, given the limited benefits seen since it rejoined the group on January 1 this year, industry observers said Thursday. The net importer of crude oil had expected OPEC membership re-activation as a step towards energy security, but saw little benefit in terms of price and supply from other group members. Indonesia reactivated its OPEC membership in order to have direct access to crude oil exporters, energy and mines ministry spokesman Sujatmiko said Thursday, adding that with access routes having been opened, the membership did not offer anything more to the country. "The OPEC membership for Indonesia is useless as we have to pay Eur2 million [in annual fees] but we cannot get cheap crude imports," said Komaidi Notonegoro, an analyst with the ReforMiner Institute."The only benefit of the membership is rapid information about crude supply from producers," he added. Indonesia's withdrawal from OPEC follows a disagreement with the decision Wednesday to freeze the group's collective output at 32.5 million b/d. OPEC asked Indonesia to cut its production by 5%, or about 37,000 b/d, which was difficult for the country, energy and mines minister Ignasius Jonan said in a statement Thursday. "The production cut would have been a risk for Indonesia, which depends on crude for revenue," Notonegoro added. "Indonesia's need of revenue [from oil and gas] is still huge and in the 2017 draft state budget it was decided to cut oil production by 5,000 b/d," Jonan said.

OPEC oil production agreement will be for 6 months: ministers - OPEC rivals Saudi Arabia, Iran and Iraq on Wednesday signaled their willingness to compromise on an output deal, but did not offer any specific details, as any individual country production cuts are still being negotiated. "We have agreed on a cut but have not defined the numbers," Iraqi oil minister Jabbar al-Luaibi said in an OPEC press briefing. "We have not agreed on figures, we have agreed on principle only and we will discuss the figures." Saudi energy minister Khalid al-Falih told reporters that he would find it acceptable for Iran to produce at pre-sanctions levels, a condition that Iran had insisted on before signing on to any deal. Falih said he was receptive to one proposal to cut OPEC's collective production to 32.5 million b/d, excluding volume fluctuations from Libya and Nigeria. Iran too has "been offered to freeze at pre-sanctions levels." "It will mean that we take a cut and a hit from our current production and from our forecasts for 2017. We will not do it unless we make sure that there is consensus and an agreement to meet all the principles I just mentioned," he said. Rolling over with no deal would not be a bad outcome to the meeting either, Falih said given the slowdown in non-OPEC production growth. "It will accelerate more with an OPEC, non-OPEC agreement, but it is not imperative," he said. Iranian minister Bijan Zangeneh said his country was "ready to compromise" on a deal, and he agreed that any production policy should be based on secondary sources, an issue Falih would not deal with directly to reporters. Luaibi, who had protested the use of secondary sources and, like Iran, had been resistant to cutting production, said his country was ready to reduce output under an OPEC deal.

OPEC Deal Hinged on 2 a.m. Phone Call and It Nearly Failed - After months of meetings from Doha to Moscow, it was a 2 a.m. phone call between two of the most powerful men in the global oil industry that finally broke the impasse. On the eve of the Nov. 30 meeting of the Organization of Petroleum Exporting Countries, the odds of finishing a deal to reduce supply and ease a global oil glut didn’t look good. Members remained deadlocked over how much each should reduce. They had been forced to cancel talks aimed at getting other suppliers like Russia and Brazil to play a part. But in the small hours of the morning of Nov. 29 Riyadh and Moscow time, Saudi Arabian Energy Minister Khalid Al-Falih and Russian counterpart Alexander Novak had talked. Novak promised that Russia was willing not simply to freeze its output, as it had long insisted, but to cut, contributing half of the total supply reduction OPEC was seeking from competitors around the world, according to officials and ministers directly involved in the talks. In return, Al-Falih had to press the organization the next day to submit hard numbers for their own production curbs. Al-Falih would make good on his word. At about 5 p.m. local time on Nov. 30, OPEC announced from its Vienna headquarters that it would decrease output for the first time since 2008, by 1.2 million barrels a day. In addition, officials proudly declared that Russia and other oil producers outside the group would cut 600,000 barrels of their own. Oil prices then surged more than 15 percent to above $50 a barrel, with Brent reaching its highest level in more than a year. “After a couple of failed attempts, OPEC finally managed to deliver,” said Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland.

Oil Mixed After Biggest Cushing Build Since March 2015 --Following last night's API reported surge in product and Cushing inventories, DOE confirmed massive builds in Cushing (biggest since March 2015) and Distillates (biggest since Jan 2016). Of course, with all eyes on Vienna the price action is tough to discern. Production rose very modestly. API

  • Crude -717k (+577k exp)
  • Cushing +2.3mm (+26k exp) - biggest since Mar 2015
  • Gasoline +3.36mm (+1.19mm exp) - biggest since Jan 2016
  • Distillates +2.24mm (+1.45mm exp) - biggest since Sept 2016


  • Crude -884k (+577k exp)
  • Cushing +2.419mm (+26k exp) - biggest since Mar 2015
  • Gasoline +2.097mm (+1.19mm exp)
  • Distillates +4.957mm (+1.45mm exp) - biggest since Jan 2016

While overall crude inventories dropped very modestly for the 2nd week, the huge builds at Cushing (and in products) are a concern...

OilPrice Intelligence Report: Oil Gains 14% On OPEC Deal – Analysts See Further Gains: The two-and-a-half-year oil bust could be coming to an end, thanks to OPEC. The oil cartel pulled off a surprise agreement, snatching victory from the jaws of defeat. The deal calls for collective cuts from 13 members (Indonesia suspended its membership), reducing output by 1.2 million barrels per day to 32.5 mb/d. Also, non-OPEC countries will cut output by 600,000 barrels per day, including 300,000 bpd from Russia. The deal will take effect in January. WTI and Brent shot up on the news, rising by more than 14 percent since Tuesday. On Friday, investors took a breather, pocketing some profits. WTI and Brent hovered at $51 and $53 per barrel, respectively, during early trading hours. Brent crude is on track for its biggest weekly increase since 2009. Oil analysts around the globe see further price gains in the next few months. Bloomberg reports that the negotiations came down to the wire. With a gulf still between several OPEC members, the breakthrough came from a 2 a.m. phone call on the eve of the final meeting from Russian energy minister Alexander Novak to Saudi energy minister Khalid al-Falih. Novak told his Saudi counterpart that Russia was not only willing to freeze but to actually cut output, a surprise concession that jolted the talks back to life. Al-Falih then went to his colleagues in OPEC and demanded concrete reductions. With Russia on board, others were willing to play ball.The WSJ reports on Saudi Arabia’s motivation for departing from its strategy over the past two years and deciding to pursue a production cut. Saudi Arabia needs oil prices to average $70 per barrel for its budget to breakeven. With prices much lower, Riyadh is running large budget deficits and burning through cash reserves. Meanwhile, the oil kingdom is trying to diversify its economy to develop non-oil sources of revenue. But in the interim, it needs oil revenues to make the necessary investments.  Another constituency pleased with higher oil prices is the banking sector, which will benefit from improved prospects of loan repayment to energy companies. Banks have had to set aside cash reserves to cover from expected defaults on their loans. Earlier this year, 15 of the largest U.S. banks stockpiled $6 billion in cash to cover energy losses, however, as the WSJ reports, defaults have not been as bad as expected. Higher oil prices will likely mean that most banks will emerge in decent shape from the two year oil bust.

Non-OPEC Producers To Cut An Additional 600000 Bpd Next Week? - OPEC will discuss and possibly finalize a deal with producers outside the cartel to reduce global crude oil supply on December 10 in Russia’s capital Moscow, Reuters reported on Friday, citing two OPEC sources. Earlier reports had put the date and place of the OPEC-non-OPEC meeting for December 9 in Doha, Qatar. When OPEC said on Wednesday it agreed to cut the cartel’s total production to 32.5 million bpd, effective January, it hinged the deal on persuading non-OPEC producers to cut around 600,000 bpd. Russia, which had previously said it would agree to a freeze at current levels, has promised to shave 300,000 bpd off its production, which, it emerged today, hit a high of 11.21 million bpd in November. Deputy energy minister Kirill Molodtsov said Russia would use the November figures in “OPEC agreements”. His boss, energy minister Alexander Novak said on Thursday that all Russian oil companies are on board with the 300,000-bpd cut. If Russia sticks to its pledge, the other non-OPEC producers would have to distribute among themselves the remaining 300,000-bpd cut that OPEC is asking for. Novak said yesterday that other non-OPEC nations, including Azerbaijan, Kazakhstan, Mexico, Oman, and Bahrain, were also ready to join in the cut.

Opec agreement: the winners and the losers (FT) Opec has won a deal that should, if properly implemented, go a long way towards easing a supply glut that has hammered prices for two-and-a-half years. But it will not come for free, and some members of the cartel will pay a higher price than others. Saudi Arabia and its Gulf Arab allies, including Kuwait, United Arab Emirates and Qatar, have agreed to shoulder the bulk of the cuts. They are banking on a quick recovery in price to ensure they do not lose revenues or surrender market share to other suppliers. Iran and Iraq, which sit outside the Gulf bloc in the Middle East, have sacrificed less. Most oil analysts see the limited concessions they made to let the deal succeed as largely face-saving technical measures to placate the Saudis. Other members from Venezuela to Angola, which have agreed to cut part of their output in support of a 1.2m-barrel-a-day reduction, have a patchy record of compliance with past deals. Despite Wednesday’s price surge, they may need an ongoing recovery to be convinced to do their share. Opec observers rushed to analyse the numbers behind the deal — which on the whole should be a proportional 4.5 per cent cut across all countries bar Libya and Nigeria. The devil was quickly spotted in the details. The figures released by Opec do indeed show an agreement for a cut of almost 1.2m b/d. This would be led by Saudi at 486,000 b/d and 300,000 b/d from its Gulf allies, the UAE (139,000 b/d), Kuwait (131,000 b/d) and Qatar (30,000 b/d).Iraq reluctantly agreed to use third-party numbers used by Opec to calculate production and cut 210,000 b/d. This was a key sticking point for the country which believes its own data show its production to be higher. Analysts are uncertain where it will actually make the cuts, with lots of production partly run by international companies. For Iran, the matter is even more complicated and involves using numbers that many analysts believe are based more on perception than reality. Because Iran spent years under sanctions, Opec agreed to award it an output baseline of 3.975m b/d — the highest pre-sanctions level it produced in 2005 — unlike most others whose baseline is what they pumped in October. A 4.5 per cent reduction from this level arrives at almost 3.8m b/d, which delegates say is an average level at which it has finally agreed to freeze for six months from January. Iran’s current output is closer to 3.7m, which gives the country room for an increase of at least 90,000. Due to what analysts think is a clerical error around Angola’s production, Opec’s final total production level may actually be off by about 200,000 b/d, hitting close to 32.7m b/d rather than 32.5m b/d. Angola was allowed to use its September baseline because of field maintenance in October. Analysts think Opec forgot to account for this.

Analysis: OPEC output deal a bet on Saudi Arabia's market calculations -  The oil market's euphoria over OPEC's momentous decision Wednesday to cut production was on pause a day later, as traders digested the agreement, which represents a major gamble for kingpin and deal driver Saudi Arabia that supply and demand were indeed on the path to rebalancing. The agreement, which calls for OPEC to cut some 1.2 million b/d from October output levels for six months, contains numerous ifs, conditions, and risks, with no guarantees Saudi Arabia will gain the revenue boost it seeks without sacrificing the market share it has so fiercely defended. OPEC members have a notorious history of cheating on their allocations, and previous attempts to coordinate policy with other countries, notably Russia, have also been plagued by noncompliance, a salient point as the organization seeks cuts of 600,000 b/d from major non-OPEC producers. "Where prices ultimately end up at the end of 2017 hinges on many moving pieces outside of the proposed cuts," "In a worst case scenario, the likes of Saudi Arabia may not get as much price uplift as intended should demand underperform, US shale outperform, Libya and Nigeria outperform, or any combination thereof," he added. Libya and Nigeria have been granted exemptions from the deal due to their production having been hit by militancy. Both countries could add a combined 600,000 b/d or more in the coming months if internal problems ease. Still, most analysts were largely in agreement that the output deal -- if fully implemented -- would induce stock draws in 2017 and hasten the market's rebalancing, as OPEC desires. Even if some producers cheat on their assigned quotas, the deal includes some cushion in output levels that could still obtain an effective result.

Here Is OPEC Production Cut Table, And It Has An "Error" - Shortly after the conclusion of today's Vienna meeting, OPEC released the following table which lays out the breakdown of what the current reference production level is by nation, as well as the proposed adjustment to get to a 1.2 million barrel per day reduction, as well as the "pro forma" production number that will be effective on January 2017. Two quick observations. As noted previously, Indonesia is no longer in OPEC after it "suspended" its membership, effectively giving it a full right to pump as much as it wants relative to its most recent October baseline production level of 722K per the OPEC monthly book. The reason for Indonesia's departure, according to the Nigeria oil minister, is that it was "unable to contribute a large enough cut." More notably, Iran was in such a rush to declare victory and state that it is the only nation to be allowed to boost production that someone forgot to check the math in the table, because the 90,000 upward adjustment appears to be an error: the country's Reference Production level of 3,975tb/d is actually well higher than the January production level of 3,797tb/d. However, for political and optical purposes, it was meant to give Iran a domestic "victory" over the Saudis, by giving Iran leeway to announce it was the only nation to be allowed to boost production in the face of Saudi opposition, when in reality it appears to have been a math glitch. However, even more notable is that if one compares the OPEC production level per the "deal" relative to January output, is that total production appears to be higher by over 800,000 barrels. Keep in mind that both Libya and Nigeria are set to boost production higher, potentially to 1mmb/d and 2mm/d respectively, and expanding total OPEC production back over 33mmbpd in just a few months. This happens at a time of modest seasonal production reduction by the Saudis and modest cuts by other members, while the exempt nations are ramping up. One wonders how long until the market does this math and realizes that basically the strategy since February was to jawbone prices higher, ramp up throughout and then adjust to seasonal levels in January 2017 and call it a cut?

OPEC in first joint oil cut with Russia since 2001, Saudis take 'big hit' | Reuters: OPEC has agreed its first oil output cuts since 2008 after Saudi Arabia accepted "a big hit" on its production and dropped its demand on arch-rival Iran to slash output, pushing up crude prices by around 10 percent. Fast-growing producer Iraq also agreed to curtail its booming output, while non-OPEC Russia will join output cuts for the first time in 15 years to help the Organization of the Petroleum Exporting Countries prop up oil prices. "OPEC has proved to the skeptics that it is not dead. The move will speed up market rebalancing and erosion of the global oil glut," said OPEC watcher Amrita Sen from consultancy Energy Aspects. The cut did not come without a casualty, however. Indonesia, the producer group's only East Asian member, said it would suspend its membership after rejoining only this year as it was not willing to comply with the output cuts sought. Following news of the deal, the price for Brent crude futures, the international benchmark for oil prices, surged to settle up nearly 9 percent. They eased slightly in early Asian trading on concerns that other producers, especially U.S. shale drillers, could fill any gap. The agreement came despite huge political hurdles. Iran and Russia are effectively fighting two proxy wars against Saudi Arabia, in Yemen and Syria, and many skeptics had said the countries would struggle to find a compromise. Saudi Energy Minister Khalid al-Falih said ahead of the meeting that the kingdom was prepared to accept "a big hit" on production to get a deal done. "I think it is a good day for the oil markets, it is a good day for the industry and ... it should be a good day for the global economy. I think it will be a boost to global economic growth," he told reporters after the decision.

Meet The Man Who Made The OPEC Deal Possible --Going into the Algiers OPEC meeting in late September, the prevailing sentiment among the analyst community was that there is no way any deal will get done: after all there was no secret that the recent animosity between Iran and Saudi Arabia had recent reached unprecedented levels, with both side directly involved across from each other in the Syrian proxy war. However, the deal did happened, surprising virtually everyone, and based on a new Reuters report, it was thanks to one man. Russian President Vladimir Putin was the mediator who played a crucial role in helping OPEC rivals Iran and Saudi Arabia set aside differences to forge the cartel's first deal with non-OPEC Russia in 15 years.The interventions ahead of Wednesday's OPEC meeting came at key moments from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran's Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani, OPEC and non-OPEC sources said. According to Reuters, Putin’s role as intermediary between Riyadh and Tehran was pivotal, and is a"testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago."  It started when Putin met Saudi Prince Mohammed in September on the sidelines of a G20 gathering in China. The two leaders, who realized they stand to benefit more from cooperating in order to push prices higher, agreed to work together to help world oil markets clear a glut that had more than halved oil prices since 2014, pummeling Russian and Saudi government revenues.  The financial pain made a deal possible despite the huge political differences between Russia and Saudi over the civil war in Syria. "Putin wants the deal. Full stop. Russian companies will have to cut production," said a Russian energy source briefed on the discussions. Of course, Russia's energy minister Novak has already said that it will take a long time before Russia's fulfills its production cut quota of cutting 0.3tb/d from its current production level of 11.2tb/d due to "technical complications" suggesting that Russia is perfectly happy to sit back and watch how the world reacts to the OPEC cut first before engaging following through on its promises. After all, there is potential Saudi market share to be gained.

Russia Refuses To Disclose From What Level It Will Cut Production; Will Cut "Only Gradually Due To Technical Issues" -- Today's "OPEC deal" snowjob continued with the statement by Russian energy minister Novak, who moments ago have a press conference in which he praised the production cut conclusion, however, two key aspects of Russia's contribution to the non-OPEC stood out. First, the energy minister said that Russia would cut production "only gradually because of technical issues", and he also refused to note from what level Russia production will be cut. The last is important, because in the past week Russia hinted that instead of actually cutting from a historical reference level, it would "cut" from a level proposed in its 2017 budget, all of which are higher than the October, or November, levels.

A Second Look At The OPEC Deal: Here's What Can Go Wrong -Defying numerous skeptics, today's historic OPEC decision to cut production, a first since 2009, marks a clear turning point in cartel, and especially Saudi Arabian, politics: individual country quotas have been allocated to all members, a third-party production verification process has been established, and the world’s largest crude oil producer Russia has committed to freeze production.At least, that's what the deal looks like on paper. For those who missed today's fireworks, which saw oil soar as much as 10%, here are the key details.The OPEC deal features explicit country level production adjustments that target a reduction in OPEC crude production to 32.7 mb/d, down 1.2 mb/d from October (as measured from secondary sources). Libya, Nigeria and Indonesia (an oil importer) are exempt from any adjustment and apart from Iran, the remaining country production decline is 4.6% vs. October (September for Angola). Iran's participation, while essential to this deal, still leaves questions unanswered with the agreement allowing for a 90 kb/d increase in production when compared to October OPEC secondary sources, but requiring a 180 kb/d cut from October production when measured through direct communication. While no details were provided, non-OPEC countries are expected to join this deal with a target of reducing supply by 0.6 mb/d and Russia expected to commit to a 0.3 mb/d production cut.  While Russia embraced the deal, it made it clear it would be very slow in cutting production due to "technical issues", and refused to explain from what level it would make the 0.3mb/d cut - The ultimate goal of the OPEC production cut is to normalize excess inventory levels but not to target outright high prices, as that would prompt a surge of shale production. As the Nigerian oil minister Kachikwu admitted in Vienna today, OPEC sees $60/bbl as the "perfect" price for oil as at this price "it would not bring too much shale oil." As Goldman further explains, normalization of inventories is key to low-cost producers as: (1) it generates backwardation which removes hedging gains from high-cost producers and helps low-cost producers grow market share, and (2) it reduces oil price volatility which increases the valuation of the debt and equity they are issuing. In our view, the goal of normalizing inventories should however not target elevated oil prices as the flattening of the oil cost curve and the unprecedented velocity of the shale supply response would likely make such an endeavor rapidly self-defeating above $55/bbl.

Leaner and meaner: U.S. shale greater threat to OPEC after oil price war | Reuters: In a corner of the prolific Bakken shale play in North Dakota, oil companies can now pump crude at a price almost as low as that enjoyed by OPEC giants Iran and Iraq. Until a few years ago it was unprofitable to produce oil from shale in the United States. The steep slide in costs could encourage more U.S. shale output if OPEC members cut supplies, undermining the producer group's ability to boost prices. OPEC ministers meet Wednesday to weigh output cuts to end a two-year glut that has pressured global oil prices.In shale fields from Texas to North Dakota, production costs have roughly halved since 2014, when Saudi Arabia signaled an output free-for-all in an attempt to drive higher-cost shale producers out of the market. Rather than killing the U.S. shale industry, the ensuing two-year price war made shale a stronger rival, even in the current low-price environment. In Dunn County, North Dakota, there are around 2,000 square miles where the cost to produce Bakken shale is $15 a barrel and falling, according to Lynn Helms, head of the state's Department of Mineral Resources. Dunn County's cost is about the same as Iran's, and a little higher than Iraq's. Dunn County produces about 200,000 barrels of oil a day, about a fifth of daily production in the state. It is North Dakota's sweet spot because it boasts the lowest costs in the state, yet improved technology and drilling techniques have boosted efficiency for the whole state and the entire U.S. oil industry.

OPEC agrees to cut production, US producers prepare to respond - Have you been watching the price of oil? As this story is being written, WTI Crude sits at $51.37, up 31 cents. Yesterday, according to Reuters, Brent crude was at its highest in 16 months. Why the jump? Because the Organization of Petroleum Exporting Countries agreed to its first oil output reduction since 2008. Members pledged to remove 1.2 million barrels a day (b/d) from global oil production if non-OPEC countries, like Russia, would also participate in a production cut, which is still not solidified. The Economist reports: The [price] rally’s continuation depends on non-OPEC members such as Russia reliably committing to cut output at a meeting on December 9th. It also hinges on the speed at which American shale producers step up production, and on Donald Trump’s dream of oil self-reliance. The Economist also notes that Saudi Arabia, OPEC’s biggest producer, is likely to benefit despite since the price of oil is projected to increase. OPEC argues that a cut now will “spur investment in new sources of crude that will prevent harmful oil shortages in the future. Investments are key to a diversification of Saudi Arabia’s economy that will prevent the reliance on oil as the country’s only source of wealth. The cuts will take effect January 1 and last for six months. Even though the short-term oil market has rallied with the projected cuts, some analysts are skeptical the increase in price will be sustained. Head of the International Energy Agency, Fatih Birol, warned of “greater volatility after the OPEC deal,” Reuters reports. “Unlike in the past OPEC decisions, if prices move to around $60, a substantial amount of oil in United states is ready to come to the markets,” Birol said. Goldman Sachs analysts agreed, stating: We do not believe that oil prices can sustainably remain above $55 per barrel, with global production responding first and foremost in the U.S. The question remains, if oil prices go back up, will U.S. producers rally and increase production? Will this undo the positive impact of an OPEC cut to increase global prices, or will an increase in U.S. production have a minimal impact?   South Texas Energy & Economic Roundtable President and CEO Omar Garcia told the San Antonio Business Journal that the production cuts are welcome news after two years of record-low oil prices caused by OPEC members refusing to cut production. Garcia said oil prices will need to stay above $50 per barrel to have any real impact on drilling activity. According to the Business Journal, Garcia said: We’ve been seeing movement for the last several months, but in order for us to get back into the 50, 60 or 70 rig count, we’ve got to see sustained prices above $50 per barrel. Vox reporter Brad Plumer discussed the complicated relationship between the OPEC cuts and the shale industry. Even though production in the U.S. has dropped significantly since 2014, shale producers in the Bakken, Eagle Ford and Permian Basin, for example, have figured out ways to cut operational costs and improve efficiency in order to operate at lower oil prices. Plumer reports: But if OPEC successfully throttles back on production and hikes prices, that could induce some fracking companies in Texas or North Dakota to start drilling again. At that point, supply would rise and prices would fall. OPEC would be right back where it started — except it would have lost market share.

US tight oil producers get lifeline in OPEC deal, but remain cautious - - US tight oil producers in struggling basins like the Bakken and Eagle Ford got a lifeline from OPEC's agreement to cut production, with analysts expecting their declines to start moderating if oil holds at $50/b while output would rebound at $60/b. The Permian is expected to keep leading US production even if the OPEC deal falls apart and prices take another downturn, analysts said Thursday. Any recovery in US offshore production remains years away, but an analyst said the OPEC cuts could accelerate that activity by a year. Despite the optimism for recoveries in the Bakken and Eagle Ford, US producers will likely remain cautious well into next year while watching crude prices and the massive storage glut before moving rigs back into place, analysts said. "The OPEC deal puts a fairly strong floor in $40s instead of leaving a trap door in the $30s without a deal," said Fred Lawrence, vice president for economics for the Independent Petroleum Association of America. "It will be interesting to see how the first half goes, but my guess is there's still going to be capital discipline and companies are going to be continuing to set themselves up for what most of them believe are stronger prices going into 2018," Lawrence said. Stephens analyst Matt Marietta urged clients to "avoid sharp recovery hype" surrounding US production because the oil market has a long way to go in rebalancing supply and demand. Even with a 1 million b/d supply cut, it will take 1.5 years for OECD inventory levels to stabilize, he said.

The Saudi Big Short Squeeze - The United States Oil  - Summary

  • Since the OPEC Algiers meeting in September, it has been manipulating oil prices to its advantage.
  • The OPEC cut isn't the issue as it caused oil prices to increase so operators would hedge then pushed prices down to create a larger move after its cut.
  • There is no organization to provide oversight to OPEC and even if there was the world feels comfortable with OPEC moves to manipulate prices.
  • The new Saudi Petroleum Minister has changed how it looks at oil prices and will continue to do anything with in its means to inflate prices.
  • Even after the short squeeze is over, it may not be wise to short the USO, XLE, or XOP, as a long bullish trend is possible for the industry.

OPEC Deal Sends Crude Curve Into Backwardation For First Time Since 2014 - Following OPEC's agreement to cut prodiction for the first time in 8 years, front-end prices have spiked (above $50) but perhaps more notable is the unusual 'stability' in the crude curve around $54 from July 2017 to Nov 2019. For the first time since October 2014, the belly of the crude curve is in backwardation (far-months cheaper than near-months). WTI Dec. 2017 contract was trading at -$1.35 discount to Dec. 2018 at market open yesterday; has now flipped to premium, or backwardation...Perhaps of note is that the backwardation in Oct 2014 seemed to catalyze an acceleration in the plunge in crude prices but for now we note that hopeful bulls eying a return to old norms may be disappointed as so much of the medium-term appears hedged and wedged.

OPEC Crude Cut Could Push Oil to $75 Per Barrel  - Following months of global oil market angst, OPEC has pledged to cut its production by almost 1.5 million barrels per day (MMbpd) – a greater target than proposed when the cartel last met in Algeria.  This first OPEC accord in eight years is designed to accelerate the rebalancing of a market that has shown some signs of tightening. Inventories could reach equilibrium in as few as six months, analysts say.   Critically, analysts at Barclays said in a research note, market participants may price this into their calculations before the actual inventories drop. Barclays said that as a result, oil prices could increase with the emergence of evidence that the market is truly tightening.“This is not to say that the current environment is easy for the industry – it isn’t – but with OPEC back and effective … it does appear that the worst of the downturn has passed.” Details Of The Deal:

  • OPEC will reduce its production to 32.5 MMbpd – about 200,000 bpd more than initially proposed.
  • Saudi Arabia will cut the most – about 40 percent of the total – which comes to 500,000 bpd.
  • Iraq will adjust down by 210,000 bpd.
  • Russia, coy throughout the discussions, appears to have come onboard with a cut of 300,000 bpd.
  • No specifics on waivers for Libya or Nigeria. Indonesia suspended its OPEC membership.
  • The deal begins Jan. 1 and runs fox six months. Production levels will hold if market conditions dictate it.
  • A meeting Dec. 9 will confirm non-OPEC participation.

The bottom line is this: A chop of almost 1.5 MMbpd to volumes will get inventories down to normal levels by next summer, which would grow confidence that oil could price at $75 per barrel in 2017, David Pursell, Tudor Pickering Holt & Co. managing director, told investors.

Texas adds 7 rigs; Dec. 2 rig count totals 597 - U.S. oil producers, especially in shale plays across the region, are likely crossing their fingers that OPEC’s commitment to cutting production will help oil prices to inch higher—and stay there. In the meantime, rig counts have inched up slightly. As reported by Baker Hughes, the number of rigs exploring for oil and natural gas went up a total of four this week for a total of 597 rigs nationwide, with 477 rigs exploring for oil and 119 for natural gas. There was one miscellaneous rig. Last year at this time, there were 737 active rigs. Just last May, the rig count was at the lowest it’s ever been at 404. Rig count changes by region:

  • Texas: +7
  • Wyoming: +4
  • Oklahoma: +2
  • Louisiana: -4
  • Colorado: -2
  • North Dakota: -2
  • Utah: -1

U.S. Oil Rig Count Climbs To A 10-Month High  - This week’s Baker Hughes count shows a three-site increase for the United States oil rig count, bringing the number of active oil rigs to its highest point since the end of January. The oil count now stands at 477 rigs – up 25 of the past 27 weeks – but still 68 rigs lower than the same time period last year, when the oil rig count stood at 545. Gas rigs rose by a single rig, marking four straight weeks of increases after a dual rig drop in the November 11th report.  State-wise, Louisiana lost four rigs, while Colorado, North Dakota and Utah lost one or two rigs each.  Texas gained seven oil and gas rigs, Wyoming gained four, and Oklahoma gained two.Activity in the Permian basin gained seven rigs—the biggest winner this week which likely comes as no surprise. Rigs in the Permian now stand at 235—which is 18 rigs more than this time last year—and has the distinction of being the only basin other than Cana Woodford to have more rigs in production now than a year ago. The Haynesville basin saw an increase of three rigs, and Eagle Ford and Barnett saw an increase of two new sites each.  DJ-Niobrara and Williston lost two rigs each.  The Canadian rig count jumped up by 26 rigs, following a series of major jumps over the past month. The November 11th report showed a 22-site hike in the northern neighbor’s drilling activity. The week after, the count jumped by 8 rigs. While it lost 10 rigs last Wednesday, this week’s 26-rig gain brings Canada up to 200 rigs, which is 23 more rigs than they had in operation a year ago.  Last week’s report, which came out on November 23rd, showed a three-site oil rig jump in the United States, while the gas rig count rose by two sites.

Saudi central bank net foreign assets shrink by $10.8 billion in October | Reuters: Net foreign assets at Saudi Arabia's central bank shrank by $10.8 billion from a month earlier to $535.9 billion in October, as the government liquidated reserves to cover a large budget gap caused by low oil prices, official data showed on Monday. Assets tumbled by 16.3 percent from a year earlier to their lowest level since December 2011. They reached a record high of $737 billion in August 2014 before starting to fall. The assets are believed to be held mainly in U.S. dollars, in the form of securities such as U.S. Treasury bonds and deposits with banks abroad.

Iran Loses Nuclear Device, Sparks GCC Concerns - The Gulf Cooperation Council (GCC) is concerned over a missing radioactive device from Iran’s Bushehr nuclear reactor, Saudi-owned Arab newspaper Asharq al-Awsat reported on Thursday. Furthermore, as's Tsvetana Paraskova notes, aside from the security concerns,at the forefront in the GCC’s mind is what impact the radioactive device - wherever it may be today - could have on water supplies.  According to the newspaper, the device went missing after the car transporting it was stolen. Thankfully, the vehicle was recovered, but the radioactive nuclear device was not so lucky.The GCC has contacted the International Atomic Energy Agency (IAEA) over the incident - both organizations are concerned that Iran’s nuclear program may pollute the waters in the Gulf, Asharq al-Awsat quoted GCC Emergency Management Center chairman, Adnan al-Tamimi, as saying.Most members of the GCC – which includes Saudi Arabia, Kuwait, the UAE, Qatar, Bahrain, and Oman – desalinate sea water from the Gulf. If contamination from the device were to reach desalination stations, an already critical situation becomes even more critical.The missing device is set to lose half of its power after 74 days of inactivity, Tamimi said, noting that it still should be handled with care even after that period.Speaking to Asharq al-Awsat, the Arab official criticized Iran’s low security and safety levels at the Bushehr reactor, adding that the lack of Iranian transparency about its nuclear program adds further concerns and anxiousness for the Arab Gulf states.

CIA chief warns Trump: Scrapping Iran deal 'height of folly' - BBC News: The director of the CIA has warned US President-elect Donald Trump that ending the Iran nuclear deal would be "disastrous" and "the height of folly". In a BBC interview, John Brennan also advised the new president to be wary of Russia's promises, blaming Moscow for much of the suffering in Syria. In his campaign, Mr Trump threatened to scrap the Iran deal and also hinted at working more closely with Russia. In the first interview by a CIA director with the British media, John Brennan outlined a number of areas where he said the new administration needed to act with "prudence and discipline" - these included the language used regarding terrorism, relations with Russia, the Iran nuclear deal and the way in which the CIA's own covert capabilities were employed.Mr Brennan offered a bleak assessment of the situation in Syria, arguing that both the Syrian regime and the Russians were responsible for a slaughter of civilians, which he described as "outrageous". The administration of President Barack Obama has pursued a policy of backing moderate rebels fighting the Assad regime in Syria. The CIA director said that he believed the US needed to continue that support to help rebels withstand what he called an "onslaught" carried out by Syria, Iran, Hezbollah and Russia. Russia continued to hold the key to Syria's future, he said, but he expressed scepticism about its willingness to come to any kind of deal. He said Moscow had been "disingenuous" in negotiating tactics, seeking to draw the process out in order to "choke" Aleppo. "I do not have confidence that the Russians are going to relent until they are able to achieve as much tactical battlefield successes as possible," he said. The incoming Trump administration has suggested it may try to work more closely with Russia on a number of issues. "I think President Trump and the new administration need to be wary of Russian promises," Mr Brennan told the BBC, arguing Moscow had failed to deliver in the past.

Syrian government drives rebels from swathe of Aleppo | Reuters: The Syrian army and its allies announced the capture of a swathe of eastern Aleppo from rebels on Monday in an accelerating attack that threatens to crush the opposition in its most important urban stronghold. Two rebel officials said the insurgents, facing fierce bombardment and ground attacks, had withdrawn from the northern part of eastern Aleppo to a more defensible front line along a big highway after losses that threatened to split their enclave. The Syrian Observatory for Human Rights said the northern portion of eastern Aleppo lost by the rebels amounted to more than a third of the territory they had held, calling it the biggest defeat for the opposition in Aleppo since 2012. Thousands of residents were reported to have fled. A rebel fighter reached by Reuters said there was "extreme, extreme, extreme pressure" on the insurgents. Part of the area lost by the rebels was taken over by a Kurdish militia from Aleppo. Capturing eastern Aleppo would be the biggest victory for President Bashar al-Assad since the start of the uprising against him in 2011, restoring his control over the whole city apart from a Kurdish-held area that has not fought against him. For Assad, taking back Aleppo would shore up his grip over the main population centers of western Syria where he and his allies have focused their firepower while much of the rest of the country remains outside their control. It would be seen as a victory for his allies, Russia and Iran, which have outmaneuvered the West and Assad's regional enemies through direct military intervention.

Assad On Verge Of Biggest Victory Since Start Of Syrian War With Imminent Capture Of Aleppo --The battle for one of the most contested Syrian cities in the nation's long-running civil war, Aleppo, is approaching its climax. According to Reuters, the Syrian army and its allies announced the capture of a large swath of eastern Aleppo from rebels on Monday - by some estimates as much as 40% of the militant held part - in an accelerating attack that threatens to crush the opposition in its most important urban stronghold.In a major breakthrough in the government's push to retake the whole city, regime forces captured six rebel-held districts of eastern Aleppo over the weekend, including Masaken Hanano, the biggest of those. On Sunday, the 13th day of the operation, they also took control of the adjacent neighborhoods of Jabal Badra and Baadeeen and captured three others.As is customary, when it comes to describing events in Syria, one has two biased narratives to choose from: one from the perspective of the Western forces, for whom the protagonist are the Syrian rebels, and Assad is the enemy, and then there is the Syrian/Russian point of view, in which the rebels are aligned with the Islamic State (and are supported by the US) and the liberation of the country entails removing both at the same time. Covering the former "angle" first, Reuters writes that two rebel officials said the insurgents, facing fierce bombardment and ground attacks, had withdrawn from the northern part of eastern Aleppo to a more defensible front line along a big highway after losses that threatened to split their enclave. The Syrian Observatory for Human Rights - a UK funded "think tank" operated by just one man, who in 2013 was responsible for the Assad "chemical attack" fabricated YouTube clip - said the northern portion of eastern Aleppo lost by the rebels amounted to more than a third of the territory they had held, calling it the biggest defeat for the opposition in Aleppo since 2012. Thousands of residents were reported to have fled.   Meanwhile, the same narrative from a biased Russian angle, as reported earlier by RT, sounds as follows:  More than 3,000 civilians have left the eastern part of the besieged Syrian city of Aleppo in the last 24 hours, the Russian Center for Reconciliation said. It later reported that about 40 percent of the militant-held part of the city has been liberated. Some 3,179 people, including 1,519 children – among them 138 newborn babies – have left Eastern Aleppo through the ‘humanitarian corridors’ set up by Syrian government forces, Russian Reconciliation Center said on Monday. The center reported that 12 neighborhoods, comprising roughly 40 percent of the territory previously controlled by the militants, have been cleared.

What Is Happening In Syria? Russia Asks West To Stop Its 'Geopolitical Engineering' In Middle East: The West must abandon its attempts of “geopolitical engineering” in Syria, Russia’s Foreign Minister Sergey Lavrov said in an interview published Wednesday. Lavrov also called for Russia’s western and regional allies to respect the “sovereignty and territorial integrity” of the middle-eastern country. “The Syrian conflict can only be settled by the Syrians themselves. In this regard, we reiterate our calls on our western and regional partners to abandon attempts of geopolitical engineering in this region, respect sovereignty and territorial integrity of the Syrian Arab Republic and work together to help achieve the main goal of life becoming peaceful again in this country,” Lavrov reportedly told Italy’s Corriere della Sera newspaper. His comments come at a time when Syrian forces backed by Russia-led airstrikes have ravaged the country, leaving in its wake a battered Aleppo, Syria’s largest city and once the war-torn country’s industrial hub. The continuous bombardment of rebel-held Aleppo has killed hundreds and displaced thousands. Lavrov continued in his interview that with a new president coming to power in the U.S., Washington will take a more practical approach in its foreign policy. President-elect Donald Trump had said on the campaign trail that his administration will work closely with Russia’s President Vladimir Putin.

Youth and the Economic Future of Arab States - Tim Taylor - "Most recent statistics indicate that two-thirds of the Arab region’s population is below thirty years of age, half of which falling within the 15 - 29-year age bracket. This age category defines “youth” according to the report, which estimates the number of young people in the region at over one hundred million. This unprecedented demographic mass of young people at the prime of their working and productive abilities constitutes a huge potential for advancing economic and social development if given the opportunity. ... The report asserts that today’s generation of young people is more educated, active and connected to the outside world, and hence have a greater awareness of their realities and higher aspirations for a better future. However, young people’s awareness of their capabilities and rights collides with a reality that marginalises them and blocks their pathways to express their opinions, actively participate or earn a living. As a result, instead of being a massive potential for building the future, youth can become an overwhelming power for destruction." This comment comes from a report just published by the United Nations Development Programme, the Arab Human Development Report 2016, which is subtitled "Youth and the Prospects for Human Development in a Changing Reality."  The report ranges over a wide array of issues, including gender, health, armed conflict, the role of religion, and others. Here, I'll focus on the economic challenge. The most visible problem is a need for job creation to reduce sky-high levels of youth unemployment in the region. But the solutions require confronting what this United Nations report calls the "failure of the Arab development model." Here's the unemployment problem in Arab countries (footnotes omitted for readability): Unemployment among youth in Arab countries is the highest in the world, 29 percent in 2013, versus 13 percent worldwide. First-time job seekers account for around half the unemployed, also the highest rate in the world. Youth unemployment is hugely costly to the region’s societies and requires a major turnaround in policy thinking about jobs. The region needs to create more than 60 million new jobs in the next decade to absorb the large number of workforce entrants and stabilize youth unemployment. ... Job creation, particularly decent and sustainable job creation, is the most challenging issue facing the region. If the workforce continues to grow at current or similar rates, 60 million new jobs will need to be created in the next decade to absorb the large number of workforce entrants

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