OPEC cuts and rising demand reducing global oil supply; US distillates supply falling despite seasonal record production..

oil prices finally fell this week, for the first time in the past six weeks, but a rally on Friday put the downturn in jeopardy until the last hour of trading...after trading just off a two year high most of last week, US oil for December delivery added another 2 cents a barrel on Monday, closing at $56.76 a barrel, as the ongoing geopolitical tension from the Saudi royal purge and regional saber rattling offset concerns about rising US output...oil prices then tumbled $1.06 to $55.70 a barrel on Tuesday, after the International Energy Agency in Paris lowered its forecast for demand by 100,000 barrels a day for 2017 and 2018, more than offsetting OPEC's prior forecast of higher demand...oil prices were then down another 37 cents to $55.33 a barrel on Wednesday, after the EIA reported an unexpected increase in crude oil and gasoline stockpiles, along with record crude production...oil prices ended lower again after a choppy session on Thursday, on ongoing concerns about growing U.S. production and inventories, despite expectations that OPEC would extend a supply-cut deal when they meet in Vienna at the end of the month, closing down another 19 cents at $55.14 a barrel...oil prices then rallied and rose steadily on Friday, after Saudi Arabia's energy minister Khalid al-Falih reiterated that further production cuts are necessary to continue rebalancing the market, with oil prices trading as high as $56.68 a barrel before closing up $1.41, or 2.6%, to finish the week at $56.55 a barrel, down just 21 cents from the prior month's close...

with the likelihood of further OPEC production cuts moving oil prices again, we'll start by reviewing OPEC's November Oil Market Report (covering October OPEC & global oil data), which was released on Monday of this past week....the first table from this report that we'll look at is from page 64 of that OPEC pdf, and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures...    

as we can see from this table of official oil production data, OPEC oil output decreased by 150,900 barrels per day in October, to 32,589,000 barrels per day, from a September production total of 32,740,000 barrels per day, a figure that was originally reported as 32,748,000 barrels per day (for your reference, here is the table of the official September OPEC output figures before this month's revisions)...as you'll note in the far right column above, the main reason that OPEC's output fell by 150,900 barrels per day was the 131,000 barrel per day drop in oil output from Iraq; also contributing was a 54,400 barrel per day decrease in output from Nigeria and a 43,600 barrel per day decrease in output from Venezuela, who's crude output was at a 28-year low...on the other hand, note the 69,800 barrel per day increase in output from Angola, which was thus producing well above their agreed to quota...and other than Angola, Iraq's oil output is again above their agreed quota, despite October's big cutback, as can be seen in the table below:  

the above table is from the "OPEC guide" page at S&P Global Platts: the first column of numbers shows average daily production in millions of barrels of oil per day for each of the OPEC members over the first ten months of this year, and the 2nd column shows the allocated daily production in millions of barrels of oil per day for each member, as was agreed to at their November 2016 meeting, and the 3rd column shows how much each has averaged over or under their quotas for the ten months of this year that the OPEC pact to curtail production has been in effect...as you can see from the above, most OPEC members are pretty close to meeting their commitment to cutting their production back 4%, except for Iraq, whose production has averaged nearly 2% higher than what they committed to...however, cuts in excess of what was agreed to by the Saudis, Venezuela, and other OPEC countries have more than made up for the 83,000 barrels per day that Iraq has been overproducing, so the organization as a whole has kept their commitment to reduce supply.... 

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from November 2015 to October 2017, and it comes from page 65 of the November OPEC Monthly Oil Market Report....the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale... 

OPEC's preliminary data indicates that total global oil production rose to 96.71 million barrels per day in October, up by .53 million barrels per day from a September total of 96.18 million barrels per day, which was revised .32  million barrels per day lower from the 96.50 million barrels per day global oil output for September that was reported a month ago...global oil output for October was still 0.39 million barrels per day higher than the 96.32 million barrels of oil per day that was being produced globally in October a year ago (see last November's OPEC report for the year ago data)... OPEC's October production of 32,589,000 barrels per day represented 33.7% of what was produced globally, down from their revised 34.0% share of September global output, as oil output increases by Mexico, Norway, the UK, Brazil, Canada, Malaysia and China more than made up for OPEC's decrease...OPEC's October 2016 production, excluding ex-member Indonesia, was at 32,921,000 barrels per day, so even after their production cuts, the 13 OPEC members who were part of OPEC last year, excluding new member Equatorial Guinea, are only producing 1.0% less oil than they were producing a year ago, at a time when they were considered to be producing flat out... 

however, even after the increase in global oil output that we can see on the above graph, there was again a deficit in the amount of oil being produced globally, in part due to an upward revision of the OPEC estimate of global demand for oil, as the next table from the OPEC report will show us..  

the table above comes from page 37 of the October OPEC Monthly Oil Market Report, and it shows regional and total oil demand in millions of barrels per day for 2016 in the first column, and OPEC's forecast for oil demand by region and globally quarterly over 2017 over the rest of the table...on the "Total world" line of the fifth column, we've circled in blue the figure that's relevant for October, which is their estimate for global oil demand for the fourth quarter of 2017...  

OPEC's estimate is that over the 4th quarter of this year, all oil consuming areas of the globe will be using 98.08 million barrels of oil per day, which is an upward revision from their prior 4th quarter estimate of 97.91 million barrels of oil per day.....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, after the OPEC and non-OPEC production cuts, the world's oil producers were only producing 96.71 million barrels per day during October, which means that there was a shortfall of around 1,370,000 barrels per day in global oil production vis-a vis demand during the month...

also note that we have highlighted the estimates for the first 3 quarters of 2017 for global demand in green, so as to point out the other revisions that came with this report, which means our previous computations of global surplus or deficit oil for the past 9 months should also be revised...global oil demand for the third quarter was revised 230,000 barrels per day higher, to 97.72 million barrels per day, while demand for the second quarter was revised 70,000 barrels per day higher, to 96.28 million barrels per day, and global demand for the first quarter was revised 80,000 barrels per day higher, to 95.67 million barrels per day...

global oil production estimates for September were concurrently revised lower, to 96.18 million barrels per day, so that now means there was also a deficit of 1,540,000 barrels per day in September global output, which we had previously figured to be a global oil deficit of around 990,000 barrels per day...with higher demand estimates for the third quarter, the August global shortfall would now be revised up to 1,630,000 barrels per day, while July's global oil production of 97.16 million barrels per day would be 560,000 barrels per day less than the new 3rd quarter demand figure of 97.72 barrels per day...

with the caveat that we've now revised figures for prior months this year several times, and hence increasing the chance of a dumb arithmetic error, the 70,000 barrels per day upward revision to second quarter demand reduces the June global surplus that we had computed to 850,000 barrels per day, and increases the May deficit to 360,000 barrels per day, and increases the April global oil deficit to 670,000 barrels per day...prior to that the global oil surplus during March would now be revised down to 390,000 barrels per day, and average surpluses over January and February would be reduced to around 610,000 barrels per day....taken together, this reports data means that after ten months of OPEC production cuts, the global oil glut has been reduced by roughly 72.66 million barrels of oil since the 1st of the year, up from the global deficit of 27.4 million barrels for 9 months that we had computed based on last month's figures...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering details for the week ending November 10th, indicated another a substantial increase in our oil refining, which was more than matched by an increase in imports, and hence we managed to have a modest amount oil left to store for the 2nd week in a row....our imports of crude oil rose by an average of 521,000 barrels per day to an average of 7,898,000 barrels per day during the week, while our exports of crude oil rose by 260,000 barrels per day to 1,129,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 6,769,000 barrels of per day during the week, 261,000 barrels per day more than the net imports of the prior week...at the same time, field production of crude oil from US wells rose by 25,000 barrels per day to another record high of 9,645,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 16,414,000 barrels per day during the reported week... 

during the same week, US oil refineries were using 16,639,000 barrels of crude per day, 334,000 barrels per day more than they used during the prior week, while over the same period 164,000 barrels of oil per day were being added to oil storage facilities in the US....hence, this week's crude oil figures from the EIA seem to indicate that our total supply of oil from net imports and from oilfield production was 389,000 fewer barrels per day than what refineries reported they used and what was added to storage during the week...to account for that discrepancy, the EIA needed to insert a (+389,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the data for the supply of oil and the consumption of it balance out, a metric that is labeled in their footnotes as "unaccounted for crude oil"...

further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 7,742,000 barrels per day, still 2.8% less than the 7,969,000 barrels per day average imported over the same four-week period last year....the 164,000 barrel per day increase in our total crude inventories came about on a 265,000 barrel per day addition to our commercial stocks of crude oil, which was partially offset by a 101,000 barrel per day sale of oil from our Strategic Petroleum Reserve, part of an ongoing sale of 5 million barrels annually that was included in a Federal budget deal 25 months ago...this week's 25,000 barrel per day increase in our crude oil production included a 20,000 barrel per day increase in output from wells in the lower 48 states and a 5,000 barrels per day increase in output from Alaska....the 9,645,000 barrels of crude per day that were produced by US wells during the week ending November 10th was another new record high for US output, 10.0% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.1% more than the 8,681,000 barrels per day of oil we produced during the during the equivalent week a year ago...

US oil refineries were operating at 91.0% of their capacity in using those 16,639,000 barrels of crude per day, up from 89.6% of capacity the prior week, about par for this time of year... the 16,639,000 barrels of oil that were refined this week were still 6.1% less than the 17,725,000 barrels per day that were being refined the week before Hurricane Harvey struck at the end of August, even as they were 3.2% more than the 16,126,000 barrels of crude per day that were being processed during week ending November 11th, 2016, when refineries were operating at 89.2% of capacity, and more than 10% above the 10-year seasonal average for this time of year...

even with increase in the amount of oil refined, gasoline output from our refineries was 3.0% lower, decreasing by 315,000 barrels per day to 9,852,000 barrels per day during the week ending November 10th, which was also 3.0% lower than the 10,152,000 barrels of gasoline that were being produced daily during the comparable week a year ago....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 32,000 barrels per day to 5,231,000 barrels per day, which was a record for any week in November, and 5.0% more than the 4,984,000 barrels per day of distillates that were being produced during the week ending November 11th last year....   

our lower gasoline production notwithstanding, our gasoline inventories at the end of the week still rose by 894,000 barrels to 210,431,000 barrels by November 10th, after falling by 12,788,000 barrels over the prior three weeks, as our domestic consumption of gasoline fell by 324,000 barrels per day to 9,172,000 barrels per day, even as our exports of gasoline rose by 212,000 barrels per day to 844,000 barrels per day, while our imports of gasoline fell by 56,000 barrels per day to 349,000 barrels per day...however, with significant gasoline supply withdrawals in 15 out of the last 22 weeks, our gasoline inventories are still down by 13.2% from the pre-summer high of 242,444,000 barrels, and 5.1% below last November 11th's level of 221,709,000 barrels, even as they are still roughly 1% above the 10 year average of gasoline supplies for this time of the year...   

even with the increase in our distillates production, our supplies of distillate fuels fell by 799,000 barrels to 124,763,000 barrels over the week ending November 10th, the tenth decrease in eleven weeks, after falling by 3,359,000 barrels the prior week...the smaller drawdown occurred because the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 457,000 barrels per day to 4,029,000 barrels per day, even as our exports of distillates rose by 198,000 barrels per day to 1,477,000 barrels per day, while our imports of distillates rose by 75,000 barrels per day to 161,000 barrels per day...after this week’s decrease, our distillate inventories ended the week 16.2% lower than the 148,912,000 barrels that we had stored on November 11th, 2016, and 6.7% lower than the 10 year average of distillates stocks at this time of the year…

finally, with a big increase in oil imports coming while our oil production was at a record high, our commercial crude oil inventories rose for the 7th time in the past 32 weeks, increasing by 1,854,000 barrels, from 457,143,000 barrels on November 3rd to 458,997,000 barrels on November 10th....while our oil inventories as of November 10th were 6.4% below the 490,284,000 barrels of oil we had stored on November 11th of 2016, they were still fractionally higher than the 455,074,000 barrels of oil that we had in storage on November 13th of 2015, and 31.6% greater than the 348,758,000 barrels of oil we had in storage on November 6th of 2014, at a time when the buildup of our oil glut was just getting started...    

This Week's Rig Count

US drilling activity increased 5th time in the past 16 weeks during the week ending November 17th, but in contrast to last week, when only oil drilling increased, this week only saw new rigs targeting natural gas...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 8 rigs to 915 rigs in the week ending on Friday, which was also 327 more rigs than the 588 rigs that were deployed as of the November 18th report in 2016, while it was still less than half of the recent high of 1929 drilling rigs that were in use on November 21st of 2014....

the number of rigs drilling for oil was unchanged at 738 rigs this week, which was still up by 267 oil rigs over the past year, while their count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the count of drilling rigs targeting natural gas formations was rose by 8 rigs to 177 rigs this week, which was still only 61 more gas rigs than the 116 natural gas rigs that were drilling a year ago, and way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

drilling began from 3 addition platforms in the Gulf of Mexico offshore from Louisiana this week, which increased the Gulf of Mexico rig count to 21 rigs, which was still down from the 23 rigs active in the Gulf of Mexico a year ago...since there were no other offshore rigs active other than those in the Gulf either this week or a year ago, those Gulf counts are also the same count as the total US offshore count...

the count of active horizontal drilling rigs was unchanged at 764 rigs this week, which left them up by 306 rigs from the 470 horizontal rigs that were in use in the US on November 18th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, the directional rig count was up by 2 rigs to 76 rigs this week, which was also up from the 52 directional rigs that were working during the same week last year....in addition, the vertical rig count was up by 6 rigs to 63 vertical rigs this week, which was still down from the 66 vertical rigs that were deployed on November 18th of 2016...

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 pdf from Baker Hughes that 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 basins...in both tables, the first column shows the active rig count as of November 17th, the second column shows the change in the number of working rigs between last week's count (November 10th) and this week's (November 17th) count, the third column shows last week's November 10th active rig count, the 4th column shows the change between the number of rigs running on Friday and 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 week’s case was for the 18th of November, 2016...           

there's not much on the tables above that can explain how 8 rigs targeting natural gas were added this week, while the horizontal rig count remained unchanged at the same time...we would have thought that the rig that was added in Ohio's Utica, for instance, would have been one of the new natural gas rigs, but that's not the case, since that rig is targeting oil, in only the third week of Utica oil drilling since May of 2016...the Haynesville, of northwest Louisiana and adjacent Texas, which has seen more oil drilling recently, did add two natural gas rigs this week, as all 40 of their rigs are now back to targeting gas...the other 6 natural gas rigs are in Baker Hughes's "other" category, wherein the basins and locations are not named...based on the Texas and Louisiana state counts, however, we would guess that most of the new natural gas rigs are in those two states or the adjacent Gulf, and are most likely conventionally drilled vertical wells...note that other than the major producing states shown above, Mississippi also saw a rig added this week, and now they have two rigs active, same as they had on November 18th a year ago..

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'No is no is no': A tiny township's fight against oil and gas waste disposal - Pittsburgh Post-Gazette -- This community of 740 people in Indiana County normally abides its wells — which have supplied residents royalty payments or free gas — but the prospect of hosting an underground waste reservoir has spurred a revolt.Grant’s citizens have filed appeals, enacted a ban, changed their form of local government and legalized nonviolent civil disobedience to try to stop it.The town is being sued by the state, while the well’s operator, which won a federal lawsuit against the municipality, is seeking monetary sanctions and attorneys’ fees of $561,000 — five times the town’s average account balance.On Oct. 30, U.S. Magistrate Judge Susan Paradise Baxter scheduled a trial for May to determine damages in the federal case.“We just don’t want it,” said Judy Wanchisn, a 75-year-old retired elementary school teacher helping lead opposition to the well. “You can put all the regulations you want in. A teaspoon of poison or two gallons, it’s still poison. Don’t regulate the harm.”Pennsylvania needs between 17 and 34 more disposal wells to meet current demands to get rid of oilfield waste fluids that can’t be readily reused, the consulting and engineering firm Tetra Tech estimated this spring. The alternative is trucking the fluid — at significant cost — to Ohio, which has more than 200 wells for entombing oil and gas waste fluids in deep rocks.

Marcellus shale drilling company pitches fracking to A-K Valley business leaders - TribLIVE: A Monroeville-based Marcellus shale well developer has plans to drill more natural gas wells in the Alle-Kiski Valley next year. Huntley & Huntley Energy Explorations of Monroeville will announce the new wells when approvals are finalized sometime next year, according to Paul Burke, vice president and general counsel for Huntley & Huntley. The company is best known for fracking for natural gas beneath Deer Lakes Park in West Deer and Frazer. Environmentalists and some park supporters opposed it. In the Valley, the company has permits for well pads in Allegheny Township, Upper Burrell and Plum. Elsewhere, it has a well pad under construction in Penn Township, Westmoreland County, and two more in the permitting process. It's also seeking approvals in Elizabeth Township, Allegheny County. Construction is planned at the other locations in the next several months, according to Burke. He declined to disclose them. Huntley & Huntley will hold public meetings with landowners near those sites to provide details on the project and its timeline. Increased Marcellus shale well development and more pipelines exporting the natural gas from the region offer prosperity for landowners and businesses, he said, and create more local jobs. Valentas said Marcellus shale wells provide income from leases with landowners and are “the savior of the family farm.” 

New gas pipeline capacity sharply exceeds consumption, report says - Charges that the U.S. pipeline industry is building far more natural gas pipelines than it needs are being fueled by a new report showing that the capacity of lines approved by federal regulators over the last two decades was more than twice the amount of gas actually consumed daily in 2016. The report by the independent Analysis Group for the Natural Resources Defense Council said the Federal Energy Regulatory Commission has approved more than 180 billion cubic feet a day (bcf/d) of new pipeline capacity since 1999, when it began its current policy on approving interstate pipelines. The new capacity compares with the average daily consumption of only 75.11 bcf/d last year, the report said.  Even during the Polar Vortex of 2013/14 when exceptionally cold temperatures in the Northeast boosted the need for heating fuel, consumption of 137 bcf/d was still significantly lower than the combined capacity additions, the report said, citing data from the federal Energy Information Administration. In January 2017, national consumption was 93.1 bcf/d, even further below the capacity of the additional pipeline network, the report said. The data on additions to pipeline capacity are from FERC.NRDC, in the report issued Nov. 6, said the overcapacity is being driven by the profits that can be earned by pipeline builders; by FERC’s willingness to accept builders’ assurances that there is a need for the additional gas, and by the regulator’s existing application policy that does not recognize big changes in the natural gas market since the policy began. “The report underscores very real concerns that we are overbuilding the natural gas pipeline system,” said Montina Cole, an attorney with NRDC’s ‘Sustainable FERC’ project.Cole told StateImpact that an increasing number of pipeline builders are justifying their projects with so-called affiliate agreements in which buyers of the gas are commercially linked with the carrier. When the buyer is an electric utility, that means ratepayers end up paying the cost of the pipeline, she said.“The pipeline developer is really on both sides of the transaction,” Cole said. “They are both selling the capacity, and the buyers are affiliates, which are increasingly electricity companies that have captive ratepayers.” She argued that FERC, which approves virtually all pipeline applications that come before it, is too ready accept builders’ assurances that there is a need for a pipeline.

Lawsuit seeks to stop work on Appalachian gas pipeline  (AP) — Environmental groups are asking a court to stop construction of a natural gas pipeline that will run across northern Ohio and into Michigan and Canada, the latest in a series of challenges against pipelines being built to transport gas from shale deposits in Appalachia. The lawsuit filed Monday by the Sierra Club and others is requesting a new review of whether the NEXUS pipeline is needed. It also challenges the decision made by the federal commission that oversees gas pipelines that allowed construction to move ahead. Within the past month, surveyors have started staking the route and crews have cleared trees for the 255-mile-long pipeline, one of several being built or in the planning stages to carry gas from West Virginia, Pennsylvania and Ohio. Plans for the pipelines have generated intense opposition from residents worried about property rights, safety and damage to the environment. The mayor of a small city in northeast Ohio has gone to federal court in a bid to move the NEXUS pipeline route to a less populated area while another group of property owners haven't had success in getting the courts to consider their attempt to block the project. The opponents face an uphill battle because there aren't any known instances of a pipeline project being derailed after receiving approval from the commission. The lawsuit seeks an immediate halt to construction on the NEXUS pipeline.  The Sierra Club is asking a federal appeals court in Washington to order a review of the Federal Energy Regulatory Commission's approval allowing construction. The environmental groups say that the federal commission is allowing work to begin before all of the legal challenges are considered.

West Virginia Legislators, Industry Leaders Digesting $83B Shale Deal - Wheeling Intelligencer -- From how petrochemical plants will impact the environment to whether drillers should get access to minerals even if they cannot obtain a lease for them, the $83.7 billion Chinese shale natural gas development deal gives members of the West Virginia Legislature plenty to consider.Also, longtime industry leaders said using Mountain State natural gas for electricity generation and ethane cracking will increase demand for the product, which will ultimately create more jobs and revenue . “Once you get those power plants going, and then even some manufacturing, that is going to drive demand. Drilling is sure to pick up.”“And this is so much bigger than anything we’ve ever seen.” Indeed, the $83.7 billion figure exceeds the total value of all goods and services produced within West Virginia during a typical year. The state’s annual gross domestic product is estimated at about $75 billion.  While in the presence of President Donald Trump and China’s President Xi Jinping in Beijing, West Virginia Secretary of Commerce Woody Thrasher signed the MOU with China Energy, which calls for the company to invest $83.7 billion in West Virginia during a 20-year span. The investment could lead to ethane crackers, storage areas, pipelines, processing plants, electricity plants, and other such facilities. Thrasher later said some of the first projects that are part of the agreement are natural gas-fired power plants in Brooke and Harrison counties, the two of which should cost about $1.3 billion. According to its website, Brooke County Power would generate enough electricity for up to 700,000 homes.“I think this will be great for the mineral owners and the drillers because there will be a consistent market for the gas,” Greene said. “Because of the higher demand, you get higher prices — which means you get more drilling.”  Weld said the key to the deal is that it involves “downstream” projects. In the oil and natural gas industry, this term refers to end-users, such as ethane crackers or power plants. “Upstream” is industry jargon for drilling and fracking, while “midstream” refers to pipelines, processing plants and compressor stations. “This gives us the opportunity to capitalize on our resources with downstream projects,” Weld said. “For years, we’ve mined coal here and exported it. Now, instead of just sending the raw material out of West Virginia, we can add value to it. This creates more jobs and revenue for our state.”

FERC quorum raises likelihood of pipeline approvals tied to LNG facilities - After waiting several months for the Federal Energy Regulatory Commission to gain a quorum, a handful of Louisiana pipeline projects, including three related to proposed natural gas export facilities, are expected to easily win approval. FERC regained enough members for a voting quorum in mid-August. But the commission has a backlog of hundreds of applications. The energy-related projects alone carry an estimated cost of $50 billion. David Dismukes, executive director of the LSU Center for Energy Studies, said the FERC quorum means the LNG pipelines will continue to move forward. "I think right now FERC has a slate of commissioners that have marching orders to move infrastructure development. That's where the bias is," Dismukes said. Dismukes doesn't see any problems with getting the pipelines permitted, adding that he doesn't know of many that FERC rejected. The only question is how hard the commissioners will push the staff to work through the backlog, he added. Colette Breshears, product manager, Infrastructure Intelligence for energy analyst Genscape, said not many Louisiana pipelines were affected by FERC's quorum issue. The majority of the planned pipes that still need FERC attention are slated for construction in late 2018 or early 2019, Breshears said. Those projects are just entering a period where they need their certificates authorized. The pipelines that lie further out, which include many of those intended to serve planned LNG facilities, were not affected by FERC's inability to act, Breshears said. Those pipelines hadn't reached the stage in permitting where the lack of a quorum stalled things.

New Study – “Natural Gas” Has No Climate Benefit, Will Make Things Worse - Gaius Publius - Your methane bridge to nowhere (source) - I’ve seen this report referenced several times, but none of those mentions is getting traction. So time to repeat. The idea that methane, so-called “clean natural gas” or “clean energy,” is a bridge fuel that can make our climate problem better — is a lie. Not only that, it’s an obvious lie. If you want to eliminate dust and grit, say, from blowing through an open window into your home, you don’t half-close the window that lets it in. You close it all the way. If you want to eliminate all carbon emissions from burning fossil fuel, you don’t start burning a different fossil fuel. You stop burning allfossil fuels, including methane. That’s just common sense. It makes even more sense when you consider that the Big Oil barons who own the oil companies also own many of the methane companies. Of the ten top drillers of fracked gasin the U.S., the largest by far is Exxon Mobil.  With the purchase of XTO, Exxon produces nearly 50 percent more gas than its closest competitor. Earlier this year, Exxon began running ads touting natural gas as a safe, clean source of domestic energy. About two-thirds of the company’s domestic reserves are now in natural gas, with the rest in oil.Others on the top ten list include BP, ConocoPhillips and Chevron. So call the promotion of “clean natural gas” a profit protection plan for Big Oil as well. Do we want Big Oil companies to be profitable? Only if they abandon carbon fuel extraction and go into an entirely different, entirely anodyne business, as makers of party balloons perhaps. Otherwise, they need to die and disappear as companies, the sooner the better. (I suspect that most people don’t realize this — that if we don’t kill off the fossil fuel companies, they will kill us off. That’s literally true. Exxon and its like really do have to fail and disappear, or be taken down, before anything resembling our smart-phone civilization can survive.)

Women climb flag poles near Chase Midtown building to protest bank’s climate change ties - Two protesters climbed flag poles outside of a JP Morgan Chase building on Park Ave. Monday, protesting the bank's financial ties to climate change. The women got halfway up the poles at 277 Park Ave. holding a banner that read, "JP Morgan Chase — # 1 on Wall St — Tar sands, Pipelines, and Climate Change" before police took them into custody without incident. Charges were pending. The two climbers were arrested after they climbed down. "We want them to get out of the climate change business, stop trampling indigenous rights, and start to put their money into alternatives," Ruth Breech, 37, of the Rainforest Action Network, said. Tar sands — also known as oil sands — are a dirty and expensive source of oil that has more environmental impacts than liquid oil.

Michigan governor cites 'significant' concerns over pipeline (AP) — Michigan Gov. Rick Snyder says he has "significant" long-term concerns after the company that operates twin oil pipelines in a Great Lakes waterway told state officials it found additional gaps in pipeline coating. The Republican released a statement Monday after Enbridge Inc. issued an update on inspections and repairs along Line 5. The pipelines carry 23 million gallons (87 million liters) of oil and natural gas across northern Wisconsin and Michigan to refineries in Ontario each day. Snyder says the company's overview doesn't indicate imminent danger for the Straits of Mackinac, but says the update is "deeply concerning." He says he's no longer satisfied with Enbridge's operational and public information tactics. Environmentalists want the 64-year-old pipelines closed. They say gaps in coating bolster their contention that the pipes are unsafe. 

Enbridge discloses 'dozens' more gaps on Straits of Mackinac pipeline's protective coating -- The revelations keep expanding about damaged protections on underwater oil pipelines in the Straits of Mackinac. And state officials' ire keeps growing. For the second time in two months, Gov. Rick Snyder called out Canadian oil transport giant Enbridge, this time after state agencies announced Monday that the company had revealed "dozens" of additional gaps in the protective outer coating that the state requires on Line 5 in the Straits of Mackinac. “I am no longer satisfied with the operational activities and public information tactics that have become status quo for Enbridge," Snyder said. "It is vitally important that Enbridge immediately become much more transparent about the condition of Line 5 and their activities to ensure protection of the Great Lakes.” Line 5 is an oil transmission line through the Upper Peninsula that splits into twin, underwater pipelines through the 4½-mile Straits of Mackinac before reconnecting into one line and continuing through the Lower Peninsula. The pipeline transports up to 23 million gallons of crude oil and natural gas liquids through the state to a hub in Sarnia, Ontario. In August, state officials requested Enbridge inspect the underwater pipelines at the site of all anchor supports securing the pipes on the lake bottom, after the company's inspections revealed damage to the outer protective coating on the pipe at one of the anchor support installation locations. Enbridge possessed information about the damage to at least one area of pipeline coating in 2014 and failed to disclose it to state agencies until this summer. Enbridge thus far has completed inspections at 48 of 128 anchor locations, and the majority of those areas have coating gaps, company officials told the state Monday. "A year ago, Enbridge said there were no coating gaps on the Straits pipeline. Now there are dozens," said Valerie Brader, executive director for the Michigan Agency for Energy and cochair of the state Pipeline Safety Advisory Board. "When will we know the full accounting of what Enbridge knows about Line 5?" 

The link between fracking and health issues - The Environmental Protection Agency has allowed a series of chemicals with known health concerns to be used in oil and gas drilling known as fracking, according to documents obtained by Marketplace. While no medical diagnoses have been revealed to be caused directly by these oil and gas drilling chemicals, cause and effect can be difficult to prove. Chemical identities are largely unknown, and disease and causality can take years to show up in the data. Several studies do show a link between living by a well near a fracking site and high rates of cancer, asthma, high-risk pregnancies and heart defects. Here are a series of studies looking at the potential links that exist.

• 1) Air pollution caused by fracking may lead to health problems for those who live near natural gas drilling sites, due to the exposure of potentially toxic petroleum hydrocarbons, including benzene, ethylbenzene, toluene and xylene.
• 2) Another study out of Colorado looked at the connection between certain birth defects and the proximity of mothers to natural gas developments. The researchers found an association between those who lived within a 10-mile radius of these areas and congenital heart defects and possibly neural tube defects.
• 3) The Environmental Protection Agency conducted a five-year scientific study of fracking’s effect on U.S. drinking water. The report documented 457 spills related to fracking between 2006 and 2012, and in 324 of those cases, spills reached soil, surface water or groundwater.
• 4) A study of drinking-water wells near fracking sites in Pennsylvania found elevated levels of methane, ethane and propane gases. About 82 percent of drinking water samples contained methane, with concentrations six times higher for homes within 1 km of natural gas wells than homes farther away.
• 5) Researchers examined the data on more than 10,000 births in north and central Pennsylvania from 2009 to 2013. It found that mothers living in the most active fracking areas were 40 percent more likely to give birth prematurely, and 30 percent more likely to have their pregnancy labeled high-risk.
• 6) Another study on fracking for gas and oil in Pennsylvania found that those who live near such activity have a higher likelihood of being hospitalized for cardiac, neurological, urological, cancer-related and skin-related problems.
• 7) A group of mothers who lived closest to a high density of fracking wells in Pennsylvania were 34 percent more likely to give birth to infants who were small for their gestational age, according to researchers, even after accounting for factors like prenatal care, race, and the mother’s smoking habits.
• 8) Eight volatile chemicals were found near wells and fracking sites in Arkansas, Colorado, Ohio, Pennsylvania and Wyoming. Benzene, a carcinogen, and formaldehyde were among the most common.
• 9) A survey from the University of Washington and Yale found that Pennsylvania residents who lived near gas facilities were more likely to report skin issues, headaches and nosebleeds. Residents within a kilometer of a gas well had twice the number of health problems as those living at least 2 kilometers away.
• 10) Research published by the American Medical Association found a connection between worsening asthma symptoms and one’s proximity to natural gas fracking operations.
• 11) Sixteen cattle died after drinking a “mysterious fluid” adjacent to a natural gas drilling rig. Someone working nearby claimed it was used for fracking, although the company that owns the gas drilling rig, Chesapeake Energy, had not identified the exact chemicals in the fluid.
• 12) Fracking could be having a negative impact on the dairy industry. One study looked at dairy farms in various Pennsylvania counties, and compared those in areas with the most wells drilled and those with the least. Those in the most heavily drilled areas saw a 30 percent loss of milk cows.
• 13) Researchers have also looked at the potential influence of fracking chemicals on the reproductive health of men. Compared to a control group of male offspring not exposed to these chemicals, they ended up having “a lower sperm count, higher testosterone levels in the blood and larger testicles in adulthood."

African-Americans taking brunt of oil industry pollution: report (Reuters) - African-Americans face a disproportionate risk of health problems from pollution caused by the oil and gas industry, and the situation could worsen as President Donald Trump dismantles environmental regulations, according to a report issued on Tuesday by a pair of advocacy groups.  The report, issued by the National Association for the Advancement of Colored People civil rights group and the Clean Air Task Force, said more than a million African-Americans live within half a mile (0.8 km) of an oil and gas operation, and more than 6.7 million live in a county that is home to a refinery. “African-Americans are exposed to 38 percent more polluted air than Caucasian Americans, and they are 75 percent more likely to live in fence-line communities than the average American,” the report said, referring to neighborhoods adjacent to industrial facilities. “In the current regulatory environment, the disproportionate burden of pollution will only increase for low-income communities and communities of color,” the report added. A White House official declined to comment on the NAACP-CATF report. But Trump has said his pro-energy industry policies are good for blacks and other minorities because they will create jobs.

'This Is an Emergency': 1 Million African Americans Live Near Oil, Gas Facilities -  A new analysis concludes what many in African-American communities have long experienced: Low-income, black Americans are disproportionately exposed to toxic air pollution from the fossil fuel industry.More than 1 million African Americans live within a half-mile of oil and natural gas wells, processing, transmission and storage facilities (not including oil refineries), and 6.7 million live in counties with refineries, potentially exposing them to an elevated risk of cancer due to toxic air emissions, according to the study.In three states—Oklahoma, Ohio and West Virginia—it found that about one in five African-American residents lives within a half-mile of an oil and gas facility, while comprising just 4 to 14 percent of the total population in each state."We have a real problem with air," said Doris Browne, president of the National Medical Association, a national organization of black physicians and sponsor of the study. "We think it's just a little smog and fog, but we need to worry about the pollutants in the air we're breathing."The study, Fumes Across the Fence-Line: The Health Impacts of Air Pollution from Oil and Gas Facilities on African American Communities, was published Tuesday by the Clean Air Task Force and the National Association for the Advancement of Colored People. Its findings are based on data from the U.S. EPA's National Emissions Inventory and the National Air Toxics Assessment, which look at emissions and health risks on a county-by-county level. The authors applied additional analysis to focus solely on emissions and health impacts attributable to pollution from oil and gas facilities, and then used demographic data to estimate health impacts on African-American communities.

"The public has a right to know": Fracking companies don't have to disclose chemicals linked to health concerns -  With drilling and fracking, the ingredients that make up the chemicals used to obtain oil and gas are legally allowed to be kept confidential. According to newly released documents from the Environmental Protection Agency, that secrecy starts as soon as chemical manufacturers apply for government approval of their products.Hundreds of agency papers were released under the Freedom of Information Act to the environment group Partnership for Policy Integrity. They show that from 2003 to 2014 chemical makers routinely withheld all kinds of information in their applications, including the molecular structure of chemicals, product names, commercial uses of chemicals, even the manufacturers' names.EPA scientists are privy to this chemical information, but cannot make it public, said Dusty Horwitt, an attorney with the Partnership for Policy Integrity.The new documents show that the EPA listed varying health risks about most of the chemicals it approved, including the risk of poisoning to the brain, lungs and liver.“If EPA's own regulators are finding that there are health concerns about these chemicals, and then they allow them to be used in oil and gas drilling, the public has a right to know,” Horwitt said.He and more than 100 toxicologists and advocates are sending a letter to the EPA, asking it to release the details on more than 40 drilling and fracking chemicals — ones the agency described as risky to human health. The EPA did not respond to a request for comment. Click on the dots in the map below to see information about individual wells that used chemicals that the EPA knew posed potential health risks.

Second Virginia county bans hydraulic fracturing | The Herald: A second Virginia county has banned hydraulic fracturing, the process of injecting water and chemicals deep into the ground to loosen trapped gas and oil. The Free Lance-Star reports the Richmond County Board of Supervisors voted unanimously last Thursday to not allow any type of oil and gas drilling. The board's chairman, F. Lee Sanders, said the county's water supply was the primary impetus for the ban. The county is bordered by the Rappahannock River, which advocacy group American Rivers ranked as the fifth-most endangered American river, citing fracking's threat to clean drinking water. A small portion of Richmond County is in the Taylorsville basin, where more than 84,000 acres (34,000 hectares) have been leased for possible drilling. Augusta County became the first Virginia locality to ban fracking, in February.

Where Did Our Distillate Go? Stocks Low As Heating Oil Season Arrives --U.S. inventories of distillate — especially ultra-low-sulfur diesel (ULSD) and heating oil — are at their lowest pre-winter level in three years after falling during the summer months for the first time since inventory records started being measured in 1982. Rising diesel exports are one culprit; another is the shutdown of a number of Gulf Coast refineries during and immediately after Hurricane Harvey. The good news is that distillate prices have been increasing, as have the margins for refining crude oil into distillate — both encouraging refineries to ramp up their diesel/heating oil production. Today, we look at recent developments in the distillate market and what they may mean for diesel and heating oil prices this winter. For most of 2017 — with the month after Hurricane Harvey hit the western Gulf Coast being a notable exception — U.S. distillate production has been at or near record levels; according to the Energy Information Administration (EIA), through the last week of October, production of ULSD and other distillate has averaged 4.94 million barrels/day (MMb/d) this year, up 3.6% from the same 10-month period last year. But despite the fact that U.S. distillate production is up — and finally back to pre-Harvey levels of more than 5 MMb/d as of the week ending October 27 — distillate inventories, which had been riding high through 2016, have been tumbling for several months in 2017 (yellow line in Figure 1), and are nearing their lowest levels of the past five years. (The gray-shaded area in Figure 1 represents the range of distillate stocks in 2012-16.)  Most startling of all is that in 2017 distillate stocks fell during the summer months for the first time since EIA started tracking distillate inventories in 1982. Normally, summer is the time to bebuilding distillate inventories in anticipation of the coming winter heating season, not whittling them down. During the summer of 2016, distillate stocks increased by more than 8%, from just under 151 MMbbl to just over 163 MMbbl, and the summer before that (2015), they were up almost 12%. But in the summer of 2017, distillate stockpiles fell by more than 9%, from 152 MMbbl to 138 MMbbl, and by the last week of October they were down another 9 MMbbl to only 129 MMbbl — their lowest pre-winter level in three years.

Distillate fuel oil market set to tighten in 2018: Kemp -  (Reuters) - U.S. refineries are struggling to meet booming demand for distillate fuel oil at home and in export markets which will leave the distillate market very tight in 2018.Even if the northern hemisphere winter is only averagely cold, the distillate market looks set to enter 2018 with lower than average stocks and fast-growing demand, which should keep prices and refining margins firm.The gross refining margin for turning Brent into U.S. heating oil has climbed to almost $19 per barrel from a recent low of less than $11 in May, despite record U.S. refinery production of distillate.Refiners therefore have a strong commercial incentive to maximise distillate output, which should ensure crude intake remains high, and spread tightness into the crude market (http://tmsnrt.rs/2zJ8KEC).U.S. refiners processed a seasonal record 16.6 million barrels per day (bpd) of crude last week, which was 600,000 bpd higher than at the same point in 2016 and 1.8 million bpd above the 10-year average.And they produced a seasonal record 5.2 million bpd of distillate fuel oil, which was 300,000 bpd above 2016 and 600,000 bpd above the decade average.But it was not enough to prevent distillate stocks falling by another 800,000 barrels to less than 125 million barrels, according to the U.S. Energy Information Administration.Distillate stocks have shrunk by 38 million barrels since the start of the year compared with a seasonal decline of less than 10 million in 2016 and a ten-year average of just 5 million.Stocks are now 24 million barrels below the prior-year level, and 9 million barrels below the decade average, at levels that have not been seen since 2012-2014. The distillate market was heavily oversupplied at the start of 2017 but has become progressively undersupplied in the course of the year.Domestic consumption has been running well above prior-year levels and the long-term average in most weeks since March.But it is the phenomenal strength of exports that is causing stocks to continue drawing down even as refineries maximise output.Exports over the last four weeks were running at a record 1.5 million bpd, an increase of more than 400,000 bpd or almost 40 percent compared with the same period in 2016.Distillate stocks look severely depleted even before the main winter heating season begins in North America and Western Europe. The last two winters have been relatively mild in the United States but if this one reverts to the mean stocks could start to feel tight.

US Gulf Coast distillates flows to Europe around 1.2 million mt for November - Distillates flows to Northwest Europe and the Mediterranean from the US Gulf Coast for November arrival total around 1.2 million mt, according to data Monday from cFlow, S&P Global Platts trade flow software. It was the first time the flow has exceeded 1 million mt since the advent of Hurricane Harvey in late August. Sources had been expecting the US to ramp up and return to full production, putting a bit of pressure on European prices. While the arbitrage has seen sporadic moments of workability, the flow coming over was heard to be mostly system barrels, or volume that was pretty much committed. Nevertheless, the headline figure has been dented by some volume diverting to Latin America. Five vessels carrying distillates left over the past seven days to head to Europe, four Medium Range tankers carrying roughly 40,000 mt each and one Long Range 1 tanker carrying in the region of 60,000 mt. Of the cargoes on water, the STI Fontvieille diverted from Lavera, France, to Contantza, Romania, in what was a relatively unusual move given the Black Sea is a regular exporter of ultra low sulfur diesel, the main product exported from the US Gulf Coast. However, there has been a degree of tightness in the East Mediterranean, where Turkey has been tendering to buy on a regular basis, which has mopped up any excess barrels leading to nothing being currently offered on the spot market, according to one source. Generally, freight costs mean US vessels rarely venture past the Adriatic Sea.

Exportin' From The Free World - Crude Export Growth And Gulf Coast Infrastructure Needs - Since the ban on exports of U.S. crude oil was lifted in December 2015, export volumes have soared, and for the week ending October 27, 2017, they surpassed 2 million barrels/day (MMb/d) for the first time ever, according to Energy Information Administration (EIA) statistics. And while exports slowed last week, it is clear that there’s more to come. But the pace of export growth depends on many things, including the ability of Gulf Coast infrastructure to receive and store increasing volumes of West Texas Intermediate (WTI), SCOOP/STACK, Bakken and other crudes and load it onto ships — the bigger the ship the better. Fortunately, coastal Texas and Louisiana already had extensive crude-related infrastructure in place when the export ban ended just under two years ago, and elements of that have been repurposed to handle exports. Will it be enough? Today, we begin a new blog series on existing and planned storage facilities and marine terminals targeted to support rising U.S. crude oil exports.  Crude exports already had been minimal (only a few thousand barrels/day, on average) when the ban was put in place — in fact, exports actually rose in the late 1970s as Alaska North Slope (ANS) production kicked in (exports peaked, for the time, at 287 Mb/d in 1980). By the early 2000s, though, ANS was on the decline and crude exports amounted to a drop in the bucket, averaging less than 30 Mb/d. With the Shale Revolution, U.S. production of crude oil (including condensate — the ultra-light crude produced in a number of tight-oil plays) started rising, and by 2014, U.S. producers provided most of U.S. refiners’ need for lighter grades of oil, reducing the need for imported light crude in the process.  As U.S. production continued to rise, stockpiles of lighter crudes built up and the spread between West Texas Intermediate (WTI; the key benchmark for U.S. light crudes) and international benchmark Brent widened. Some relief for U.S. producers came in June 2014, when the U.S. Commerce Department broadened its definition of refined products (whose export was never banned) to include condensate that was minimally processed (run through a stabilizer or other unit so it could be called “processed condensate”). Exports of processed condensate took off, peaking in December 2015 (the month the crude export ban was lifted) at more than 150 Mb/d. But processed condensate couldn’t be counted as crude exports — after all, it was processed.

Cheniere eyes sanctioning new Texas LNG train next year: (Argus) — Cheniere Energy said it plans to make a positive investment decision next year on a planned third liquefaction train at the Corpus Christi LNG export terminal in Texas. "I have a whiteboard in my office with a to-do list on it, and the only thing on that to-do list is to FID Corpus Christi train 3," Cheniere chief executive Jack Fusco said today on an earnings call. An FID refers to a final investment decision. Cheniere is building two trains and associated facilities at Corpus Christi for $11bn. Each unit would have peak capacity of 5mn t/yr, equivalent to 694mn cf/d of gas, and baseload capacity of 4.5mn t/yr. The two-train project is 72pc complete and scheduled to start operating in 2019. The Houston-based company has said it can build a similar-sized third train at a unit cost of $500-$600 per tonne of annual production, or about $2.25bn-$2.7bn for the baseload output. The third train would be cheaper by using existing infrastructure. Cheniere signed some 20-year offtake deals for train 3 before oil prices dropped in mid-2014, but not enough to finance the unit. The company is negotiating with some large Asian utilities to sell more output from train 3, including potentially finalizing a preliminary agreement reached last week with China's state-owned CNPC. Fusco said he is "guardedly optimistic" the CNPC agreement can be finalized early next year, but that deal is not necessary for Corpus Christi train 3 to move forward. Cheniere will soon ask the US Federal Energy Regulatory Commission for authorization to do some preliminary work for train 3 in anticipation of the investment decision, he added. Six LNG export terminals are being built in the US that would have combined peak capacity of 73.5mn t/yr, including Cheniere's 25mn t/yr Sabine Pass LNG terminal in Louisiana. But it has been difficult for new US projects to sign customers since oil prices plummeted in mid-2014. The economics of US LNG exports are based on a wide differential between domestic gas prices and global oil prices, as most long-term Asian LNG contracts are linked to oil prices. Cheniere is confident that it can secure more customers for Corpus Christi train 3 primarily because oil prices have started to climb, recently reaching the mid-$50s/barrel. Spot LNG prices and Asian demand have been higher than most analysts expected, but the spot market is not liquid enough to finance long-term deals, Fusco said.

US Gulf Coast seen as natural gas export hub for years to come - The US Gulf Coast is expected to be a crude oil, natural gas and LNG export hub for years to come even as supply, demand and geopolitical swings shift market dynamics, industry consultants said Monday. At the heart of the forecast is the fact that US supplies are abundant and cheap, and billions of dollars of new infrastructure is being added to link those resources to overseas destinations, particularly in Asia, Europe, the Middle East and South America. Mexico, too, has been heavily reliant on US LNG and pipeline gas from the Gulf Coast. During the USAEE/IAEE North American Ride the Energy Cycles Conference, government officials, analysts and investment bankers joined industry consultants to explore how shale technology is boosting the US role in global energy markets, and how the Gulf is a key focal point for those efforts. While Saudi Arabia, Russia, Qatar and China are vying for market position, none looks likely to have the same market clout in terms of excess supply, the experts said.

New US gas pipelines fall short of 'last mile' to LNG demand – podcast - A slew of LNG export projects, largely in Texas and Louisiana, are under construction or in the planning phase but new Northeast pipeline capacity appears to fall short of supplying the demand centers. Luke Jackson looks at how the 'last mile' problem takes Northeast gas to the Midwest and other areas and paints a bullish story for Henry Hub prices.

Regulatory hurdles hamper US natural gas exports - Reaching consensus about energy policy is rare in Washington these days.  But one extremely important issue on the table should be a no-brainer even for the anti-free-trade Trump administration: given China’s growing interest in switching from coal to cleaner natural gas for its domestic energy needs, a golden opportunity exists to take advantage of America’s huge shale-gas supply. China’s demand for natural gas is expected to reach 330 billion cubic meters in 2020, up from 206 billion last year, and the United States is well-positioned to capture a significant share of that rising demand. With little fanfare, U.S. shale-gas production has been booming. It recently rose 12 percent in one month alone, from 53 billion cubic feet in August to 59.4 billion cubic feet in September. Thanks to the shale revolution, the United States is now the world’s top producer of natural gas. U.S. capacity for processing liquefied natural gas (LNG), or natural gas cooled to liquid form, also is expanding: it is set to grow nearly seven-fold by 2019, but that is not fast enough. Domestic gas production is outpacing domestic demand, producing a glut of unsold gas in storage, but only one U.S. LNG export facility is now operating — Cheniere Energy’s Sabine Pass terminal in Louisiana. Another terminal is scheduled to open soon on Maryland’s Chesapeake Bay, and at least three other terminals are expected to be online by 2019. Despite this rapid capacity expansion, regulatory roadblocks are hampering the construction of even more terminals. The permit process for LNG facilities is outdated. Getting a permit takes several years and requires approvals from multiple federal and state agencies. Unless and until Congress passes legislation to expedite the process, the United States will find itself at a competitive disadvantage with other LNG exporters, such as Australia, Malaysia, Qatar, and Russia.

Atlantic LNG's production, plant reliability impacted by gas shortages - Trinidad-based gas liquefaction complex Atlantic LNG continues to struggle with massive gas shortages that are negatively impacting production and plant reliability, Atlantic CEO Nigel Darlow said said in an address to an AMCHAM T&T conference this week in Port of Spain. The company provided a copy of the address on Wednesday. Gas shortages have brought the facility's utilization rates down to 70%, he said."This has had a significant impact on the business--not only the considerable lost revenue opportunity, but the operational challenges of having to continually adjust to gas supply fluctuations," Darlow said.The plant is not on steady operation, making things more complicated and putting additional strain on the plant and equipment and the people operating and maintaining it. Consequently, this has had an adverse impact on our plant reliability, which is lower than normal." Darlow expected the gas supply picture to improve "in the short to medium term, when supply from Juniper (gas development) increases its flows into the system and other sources come online," he said.In August, BPTT announced first gas at Juniper and said the $2 billion offshore project will eventually boost BPTT's gas production capacity by an estimated 590,000 Mcf/d.  Darlow said Atlantic has also seen a drop in its safety performance. Since August, the company has experienced two incidents, including a gas release that shut Train 3 for 11 days and a fire that damaged one of its power generation units.The incidents shook the company, he said, adding they were "quite difficult for us to come to terms with." Atlantic has been reviewing how it operates and maintains the plant and whether it needs to make any changes, he said.

IEA Sees U.S. Shale Surge as Biggest Oil and Gas Boom in History -- The U.S. will be a dominant force in global oil and gas markets for many years to come as the shale boom becomes the biggest supply surge in history, the International Energy Agency predicted. By 2025, the growth in American oil production will equal that achieved by Saudi Arabia at the height of its expansion, and increases in natural gas will surpass those of the former Soviet Union, the agency said in its annual World Energy Outlook. The boom will turn the U.S., still among the biggest oil importers, into a net exporter of fossil fuels. “The United States will be the undisputed leader of global oil and gas markets for decades to come,” IEA Executive Director Fatih Birol said Tuesday in an interview with Bloomberg television. “There’s big growth coming from shale oil, and as such there’ll be a big difference between the U.S. and other producers.” The agency raised estimates for the amount of shale oil that can be technically recovered by about 30 percent to 105 billion barrels. Forecasts for shale-oil output in 2025 were bolstered by 34 percent to 9 million barrels a day. The U.S. industry “has emerged from its trial-by-fire as a leaner and hungrier version of its former self, remarkably resilient and reacting to any sign of higher prices caused by OPEC’s return to active market management,” the IEA said. While oil prices have recovered to a two-year high above $60 a barrel, they’re still about half the level traded earlier this decade, as the global market struggles to absorb the scale of the U.S. bonanza. It’s taken the Organization of Petroleum Exporting Countries and Russia almost 11 months of production cuts to clear up some of the oversupply. 

US shale drillers are reacting faster and faster to rising oil prices – Platts Capitol Crude podcast - We know US oil drillers can react quicker these days to rising prices and put new production online. But for the first time, a study has quantified US shale drillers' price responsiveness.  Richard Newell, the study's lead author and former chief of the Energy Information Administration, spoke with us about what this new speed means for price volatility, if it sets up the US to become a swing producer someday and whether we still need strategic oil reserves. Newell is president of Resources for the Future. We also spoke with Lynn Helms, North Dakota's top oil regulator, about how drillers are accelerating projects in the Bakken.

U.S. SHALE OIL PRODUCTION UPDATE: Financial Carnage Continues To Gut Industry -- As the Mainstream media reports about the next phase of the glorious U.S. Shale Oil Revolution, the financial carnage continues to gut the industry deep down inside the entrails of its horizontal laterals.  The stench of fracking fluid must be driving shale oil advocates utterly insane as they are no longer able to see the financial wreckage taking place in these companies quarterly reports. This weekend, one of my readers sent me the following Bloomberg 45 minute TV special titled, The Next Shale Revolution.  If you are in need of a good laugh, I highly recommend watching part of the video.  At the beginning of the video, it starts off with President Trump stating that the U.S. has become an energy exporter for the first time ever.  Trump goes on to say, "that powered by new innovation and technology, we are now on the cusp of a new energy revolution."  While I have to applaud Trump's efforts for putting out some positive and reassuring news, I wonder who is providing him with terribly inaccurate energy information. I would kindly like to remind the reader; the United States is still a NET IMPORTER of oil.  We still import nearly six million barrels of oil per day, but we export some finished products and a percentage of our shale oil production.  Thus, we still import a net of approximately three million barrels per day of oil.A few minutes into the Bloomberg video, both Pioneer Resources Chairman, Scott Sheffield, and Continental Resources CEO, Harold Hamm, explain how advanced technology will revolutionize the shale oil industry and bring down costs.  I find that statement quite hilarious as Continental Resources and Pioneer continue to spend more money drilling for oil and gas then they make from their operations.  As I stated in a previous article, Continental Resources long-term debt ballooned from $165 million in 2007 to $6.5 billion currently.  So, how did advanced technology lower costs when Continental now has accumulated debt up to its eyeballs? Of course... it didn't.  Debt increased on Continental Resources balance sheet because shale oil production wasn't profitable... even at $100 a barrel.  So, now the investor who purchased Continental bonds and debt are the Bag Holders.

Is Peak Permian Only 3 Years Away? -- The world’s hottest shale basin, the Permian, is leading the second U.S. wave of tight oil production growth and will continue to do so for years to come, all analysts say. However, signs have started to emerge that the relentless intensification of drilling leads to diminishing returns, Simon Flowers, Chairman and Chief Analyst at Wood Mackenzie, said in an article this week. Pumping twice as much sand as usual into Permian wells and drilling longer laterals doesn’t deliver commensurate volumes of oil, Flowers notes.“Drilling costs rise exponentially with depth, and there’s a suspicion that longer wells are hitting a cost efficiency ceiling,” WoodMac’s chief analyst writes.Moreover, after the early production-exuberance stage, drillers are now much more focused on delivering profits and higher profit margins. They now favor quality over quantity, and value over volumes. “Might the Permian be reaching the limits of well size and design? Maybe - as Star Trek’s Scotty might observe of an underwhelming high intensity completion ‘you cannae change the laws of physics, Jim’,” Flowers says. But WoodMac suggests that drillers could ‘change the laws of physics’ and that these signs of setbacks may actually be growing pains. The energy consultancy’s Director of L48 Research, Rob Clarke, argues that there are two basic and very sound reasons that the fading lateral drilling and proppant metrics might be just growing pains. One is much more advanced proppant placement, and the other is the oil majors’ move into the Permian, set to change things. “Now, pinpoint frac technology can place the proppant exactly where it’s wanted. Science is also being applied to identify the most effective proppant grain size and shape as well as drill bit design and fluid chemistry, all with the aim of boosting EUR,” according to WoodMac. In addition, ExxonMobil significantly boosted its Permian position earlier this year, and Exxon has “global expertise in extra-long laterals—including a 39,000 footer in Russia,” WoodMac says.ExxonMobil has already drilled a 12,500-foot well in the Permian and “will no doubt ramp up longer still to test the diminishing returns theory,” Clarke noted.   Now the next challenge will be to deliver an effective completion of such a long well.

Buying Texas Oil at New Mexico Prices: Majors Go West for Shale | Rigzone: Oil producers discouraged by the rising cost of accessing the vast deposits of the Permian Basin in Texas are sneaking into a geological back door, through neighboring New Mexico.The state, which covers a smaller part of the oil-soaked shale formation, is the fourth-largest U.S. producer and luring industry giants including Exxon Mobil Corp., Chevron Corp., EOG Resources Inc. and Occidental Petroleum Corp. Their investments -- while small compared with Texas -- are increasing as activity in the rest of the Permian starts to slow down.In just the past five months, drilling on the New Mexico side of the Permian expanded 25 percent to 75 rigs, while Texas contracted by 2 percent to 490, according to data compiled by Drilling Info Inc., an Austin-Texas based industry consultant. At the same time, the pipeline network is being expanded, which could mean more sustained growth in development and production.New Mexico “may well be the next wave,” “If Exxon’s looking at it, that’s probably a good sign.” Earlier this year, Irving, Texas-based Exxon, the world’s largest energy company by market value, jumped into New Mexico with a $5.6 billion acquisition of assets from the Bass family. Exxon said the quarter-million acres it bought will provide 20 years of drilling prospects. Oil and gas companies have invested about $13 billion in New Mexico over the past couple of years through mergers and acquisitions, according to Steve Vierck, who runs economic development efforts in Lea County, one of the places seeing the biggest increase in drilling activity. The state produced a near-record 462,000 barrels a day in August, twice what it was pumping six years earlier, Energy Information Administration data show. 

Four Trends to Watch in Artificial Lift - Rigzone: Unconventional oil and gas producers are gaining a variety of new artificial lift technologies to deploy at their onshore well sites, according to a Houston-based artificial lift specialist. “Artificial lift is a range of production engineering methods used to lift hydrocarbons and water from a producing reservoir,” explained Stuart Scott, director of technology with Petroleum(etc) and a Fellow of the American Society of Mechanical Engineers (ASME). “Most often, lifting liquids from the well allows the gas to flow using its own energy, but today some methods can also aid in lifting the gas.”Scott noted that artificial lift approaches fall into two broad categories: energy-added methods and reservoir energy methods. Examples of energy-added methods, which “use external energy to lift fluids to the surface,” include electrical submersible pumps (ESPs), gas-lift, jet-pumps and rod/beam-pumps, said Scott. Relying “on the pressure in the reservoir to lift fluids to the surface,” reservoir energy methods include intermitters, plunger-lift, foam-lift and velocity strings, he added. “Energy-added methods are more expensive in terms of capital and operating expenditures but have a dramatic impact on both ultimate recovery and flow rate,” pointed out Scott. He added that selecting the right artificial lift method helps a producer achieve desired goals in areas such as lease operating expense (LOE), recovery factor and return on investment. “Often 50 percent of the resource is left to be extracted after the high-rate initial flow period,” Scott said. “Companies that win in unconventionals are the companies that get artificial lift right. I like to use the term ‘artificial lift first.’ This goes to the idea that artificial lift needs to be considered upfront for any development and not as an after-thought.” What follows is a breakdown of four specific areas of artificial lift innovation to watch. 

Former OU researcher, state seismologist felt pressured to suppress fracking research - A former OU researcher and state seismologist testified under oath he was pressured by members of the OU administration to suppress research on the connection between wastewater injection and recent earthquakes in Oklahoma. Austin Holland, who published research implicating wastewater injection wells in recent earthquakes throughout the state of Oklahoma, testified under oath during an Oct. 11 deposition that OU President David Boren and Larry Grillot, former dean of Mewbourne College of Earth and Energy, among others, pressured him to suppress scientific research. Holland, who left the Oklahoma Geographical Survey in 2015, testified that he was called into a meeting with Boren and Harold Hamm, chairman and CEO of Continental Resources, a top oil-producing company, in which both advised him to be aware of the needs of the oil and gas industry. While Boren previously sat on the board of Continental Resources, OU Press Secretary Matt Epting said Boren left that position "earlier this year." A report from Bloomberg Business news revealed Hamm emailed Grillot telling him he wanted faculty researching the connection between wastewater and earthquakes "dismissed from the university." “The president of the university expressed to me that it had complete academic freedom, but that as part of being an employee of the state survey, I also have a need to listen to, you know, the people within the oil and gas industry,” Holland said during the deposition. “Harold Hamm expressed to me that I had to be careful of the way in which I say things, that hydraulic fracturing is critical to the state's economy in Oklahoma, and that me publicly stating that earthquakes can be caused by hydraulic fracturing was, you know, could be misleading.” 

Nebraska Regulators Prepare A Verdict On Keystone’s Fate -- Energy infrastructure regulators in Nebraska could decide the future of the Keystone XL Pipeline as activists continue opposing the multi-billion dollar oil project.  The Nebraska Public Service Commission will vote Nov. 20 on the project, the agency announced Monday, without tipping its hand on which direction it might take.President Donald Trump approved the pipeline earlier this year, but state regulators must approve the deal as environmentalists continue lodging lawsuits against Keystone. TransCanada, the project’s developer, also has yet to determine the long-term economic success of building a pipeline during an oil glut.Oil prices are lower today than they were a decade ago when the pipeline was first proposed. Prices hovered around $130 per barrel during the mid-2000s, which meant that demand from oil producers and refineries was high.A barrel of oil today sells for about $56, largely due to the emergence of hydraulic fracturing, or fracking. The natural gas boom took the steam out of traditional crude oil.TransCanada initially applied for a permit in 2008 and the State Department determined that the project would have no significant impact on the environment. But former President Barack Obama eventually rejected it on the grounds it would diminish the U.S.’s credibility in the fight against global warming. Benzene byproducts found in pregnant women near fracking sites

Nebraska to decide on Keystone XL pipeline next week | TheHill: Regulators in Nebraska will announce their decision on the Keystone XL pipeline project next week. The five members of the Nebraska Public Service Commission will vote on a proposed order for the Keystone XL pipeline on Nov. 20, the agency announced on Monday, though it didn’t detail what that decision might be. Approval from the Nebraska commission is one of several tasks facing Keystone XL developer TransCanada, which hopes to build the pipeline and deliver oil from Alberta, Canada, to the Gulf of Mexico.President Trump granted a presidential permit for the controversial $8 billion pipeline in March. But state regulators still need to approve it, and green groups have sued over Trump’s decision, raising a legal barrier against the pipeline as well.Keystone’s developers also have to decide if the pipeline is economically viable: TransCanada officials told investors this summer that it might not build the project, though the company said earlier this month that it likely has enough demand from potential customers to make the project worthwhile.TransCanada reapplied for its Nebraska permit in February, putting the decision in the hands of the Public Service Commission. It applied to follow the same route bisecting Nebraska that the state’s governor approved in 2013, before President Obama rejected federal permits for the pipeline. President Trump routinely cites his approval of Keystone XL — and the Dakota Access pipeline — as one of the biggest accomplishments of his first year in office.

An estimated 210,000 gallons of oil spilled from the Keystone pipeline in South Dakota -- Clean-up crews are busy in South Dakota today, cleaning up a large oil leak in the Keystone Pipeline. A Native American protester pauses over the land where the Keystone Pipeline is being built From KSFY:Crews are working to clean up a pipeline leak that has spilled at least 210,000 gallons of oil in South Dakota.Brian Walsh with the Department of Environment and Natural Resources tells KSFY News they were alerted to the leak at 10:30 a.m. Thursday morning by TransCanada.The leak was in the Keystone Pipeline located in an agricultural area in Marshall County. There have been no reports of the oil entering any waterways or water systems at this time.Walsh said 5,000 barrels of oil have leaked, and at 42 gallons a barrel, that totals 210,000 gallons of oil.The pipeline has been shut off and the leak has been covered. An emergency response plan has been activated to get more staff and contractors to the site for clean up. The pipeline is temporarily shut down.

Keystone pipeline spills 210,000 gallons of oil on eve of permitting decision for TransCanada - The Keystone pipeline running from Canada across the Great Plains leaked Thursday morning, spilling about 5,000 barrels of oil — or 210,000 gallons — southeast of the small town of Amherst in northeast South Dakota.The spill comes just days before a crucial decision next Monday by the Public Service Commission in Nebraska over whether to grant a permit for a new, long-delayed sister pipeline called Keystone XL, which has been mired in controversy for several years. Both are owned by Calgary-based TransCanada.  The spill on the first Keystone pipeline is the latest in a series of leaks that critics of the new pipeline say shows that TransCanada should not receive another permit.“TransCanada cannot be trusted,” said Jane Kleeb, head of the Nebraska Democratic Party and a longtime activist opposed to Keystone XL. “I have full confidence that the Nebraska Public Service Commission is going to side with Nebraskans, not a foreign oil company.”TransCanada, which has a vast network of oil and natural gas pipelines, said that the latest leak occurred about 35 miles south of the Ludden pump station, which is in southeast North Dakota, and that it was “completely isolated” within 15 minutes. The company said it obtained permission from the landowner to assess the spill and plan cleanup.Brian Walsh, an environmental scientist manager at the South Dakota Department of Environment and Natural Resources, said that the leaking pipe was in “either a grass or an agricultural field” and that TransCanada had people at the site. Walsh said the leak was detected about 5:30 a.m.“Based on what we know now, the spill has not impacted a surface water body,” Walsh said. “It has not done that. So that’s good news.”The first Keystone pipeline, which runs 1,136 miles from Hardisty in Alberta, carries about 500,000 barrels a day of thick bitumen from the oil sands area to pipeline, refining and storage networks in Steele City, Neb., and Patoka, Ill. The pipeline has had smaller spills — 400 barrels each — in the same region in 2011 and 2016

Massive Pipeline Leak Shows Why Nebraska Should Reject Keystone XL - About 210,000 gallons (5,000 barrels) of oil leaked Thursday from TransCanada's Keystone oil pipeline near Amherst, South Dakota, drawing fierce outcry from pipeline opponents. The leak, the largest spill to date in South Dakota, comes just days before Nebraska regulators decide on whether its controversial sister project—the Keystone XL (KXL) Pipeline—will go forward. "Enough is enough. Pipelines leak—it's not a question of 'if', but 'when.' The pending permit for TransCanada's Keystone XL pipeline should be flatly rejected by Nebraska's Public Service Commission (PSC), but know that no matter what the outcome, the fight's not over yet," said Scott Parkin, Rainforest Action Netrwork 's Organizing Director. "We need to stop all expansion of extreme fossil fuels such as tar sands oil—and we need the finance community to stop funding these preventable climate disasters—disasters for the climate, the environment and Indigenous rights." CNN reported that the spill occurred in the same county as part of the Lake Traverse Reservation.  "We are concerned that the oil spill is close to our treaty land, but we are trying to stay positive that they are getting the spill contained and that they will share any environmental assessments with the tribal agency," said Dave Flute, tribal chairman of the Sisseton Wahpeton Oyate.

Tribes across the Midwest are gearing up for a big new pipeline battle -  The sun was still hiding Wednesday morning, November 8, when about 15 individuals woke up to leave Camp Makwa on the Fond du Lac Indian Reservation in northern Minnesota. The time was 3 a.m., and this time of year, temperatures can drop real low, like 20 degrees Fahrenheit. That didn’t stop this group, though. They were on a mission to temporarily halt construction on the Enbridge Line 3 Pipeline Replacement Program, a new effort to boost the capacity of a pipeline carrying oil over a thousand miles from Alberta to Wisconsin. And, well, they succeeded, even if construction was just halted momentarily. Line 3 is supposed to replace an older pipeline of the same name, and to almost double the amount of crude oil it carries, from 390,000 barrels a day to 760,000. Pipeline developer Enbridge plans to leave the old pipe abandoned in the ground to avoid any environmental risks that might result from disturbing other nearby active pipelines. Enbridge also wants to alter the new Line 3 route. “At this point, it really does boil down to civil disobedience.” Environmentalists and indigenous activists are worried about what will result from both abandoning the old Line 3 and from shipping oil through the new Line 3. Leaving the pipe in the ground—even if it’s properly cleaned and follows all regulations in place to avoid environmental risk—can lead to soil and water contamination as it ages and leaks any residual oil. That’s one of Minnesota’s concerns about this plan, laid out in its Environmental Impact Statement, even if these impacts are expected to be “minimal.” Activists are also worried about wild rice, which grows better in Minnesota than in any other state. It’s a traditional food for the Anishinaabeg people, the collective name for the group of related U.S. and Canadian tribes in the Great Lakes region. They consider it sacred.

Massive Fracking on Nevada Public Lands Sought by Trump Administration, Conservation Groups Launch Legal Protest - Three conservation groups filed an administrative protest Monday against an enormous Bureau of Land Management oil and gas lease auction, scheduled for Dec. 12, that would allow fracking on more than 600 square miles of Nevada public lands . The 388,000 acres in eastern Nevada includes important regional springs and groundwater and critical habitat for imperiled species. The protest—filed by the Center for Biological Diversity , WildLands Defense and Basin and Range Watch —says the BLM has violated the National Environmental Policy Act and the Endangered Species Act by failing to analyze the risks of drilling for oil and fracking with dangerous chemicals on such a massive scale. Development of these parcels, one of the largest fracking plans in the country, could contaminate ground and surface water, threaten endangered species and cause irreparable harm to the global climate.   "The Trump administration is putting some of Nevada's most critical water supplies at risk of fracking pollution by auctioning off this public land to oil companies," said Patrick Donnelly, the Center for Biological Diversity's Nevada state director. "This plan reeks of callous disregard for our state's water and wildlife . Trump's BLM is flagrantly violating our nation's environmental laws to line the pockets of the fossil-fuel industry. "

U.S. Justice pledges to prosecute activists who damage pipelines (Reuters) - The U.S. Department of Justice on Friday pledged to prosecute protesters who damage oil pipelines and other energy infrastructure, a move that could escalate tensions between climate activists and the administration of President Donald Trump. The DOJ said it was committed to vigorously prosecuting those who damage “critical energy infrastructure in violation of federal law.” Attempts to “damage or shut down” pipelines deprive communities of services and can put lives at risk, cost taxpayers millions of dollars, and threaten the environment, a department official said in a statement sent to Reuters. The statement was in response to a letter sent last month to Attorney General Jeff Sessions by 84 U.S. representatives asking whether domestic terrorism law covers activists who shut oil pipelines in October 2016. The DOJ said it was reviewing the letter. The DOJ did not say whether it would investigate or prosecute the protesters who broke fences in four states last year and twisted shut valves on several pipelines importing crude oil from Canada that carry the equivalent of as much as 15 percent of U.S. daily oil consumption. The group Climate Direct Action said at the time the action was in support of the Standing Rock Sioux Tribe, which has protested Energy Transfer Partners LP’s Dakota Access Pipeline.

Dakota Access Pipeline Company Paid Mercenaries to Build Conspiracy Lawsuit Against Environmentalists - The private security firm TigerSwan, hired by Energy Transfer Partners to protect the controversial Dakota Access pipeline, was paid to gather information for what would become a sprawling conspiracy lawsuit accusing environmentalist groups of inciting the anti-pipeline protests in an effort to increase donations, three former TigerSwan contractors told The Intercept. For months, a conference room wall at TigerSwan’s Apex, North Carolina, headquarters was covered with a web-like map of funding nodes the firm believed it had uncovered — linking billionaire backers to nonprofit organizations to pipeline opponents protesting at Standing Rock. It was a “showpiece” for board members and ETP executives, according to a former TigerSwan contractor — part of a project that had little to do with the pipeline’s physical security. In August, the law firm founded by Marc Kasowitz, Donald Trump’s personal attorney for more than a decade, filed a 187-page racketeering complaint against Greenpeace, Earth First, and the divestment group BankTrack in the U.S. District Court of North Dakota, seeking $300 million in damages on behalf of Energy Transfer Partners. The NoDAPL movement, the suit claims, was driven by “a network of putative not-for-profits and rogue eco-terrorist groups who employ patterns of criminal activity and campaigns of misinformation to target legitimate companies and industries with fabricated environmental claims.” “It was as if the entire campaign came in a box. And of course it did,” the suit alleges. “Its objective was not to protect the environment or Native Americans but to produce as sensational and public a dispute as possible, and to use that publicity and emotion to drive fundraising.” Among the nonprofit network’s alleged crimes: “perpetrating acts of terrorism under the U.S. Patriot Act, including destruction of an energy facility, destruction of hazardous liquid pipeline facility, arson and bombing of government property risking or causing injury or death.” The case was filed under the Racketeer Influenced and Corrupt Organizations Act, passed in 1970 to prosecute organized crime — primarily the mob. Greenpeace says it amounts to a strategic lawsuit against public participation, or SLAPP, designed to curtail free speech through expensive, time-consuming litigation.

#NoDAPL Activists Face Continued Tactics to 'Silence Future Protests' -- Dakota Access Pipeline owner Energy Transfer Partners (ETP) paid a private security firm to build a massive racketeering suit against green groups opposing the pipeline , three former employees confirmed to the Intercept this week. Documents leaked to The Intercept in May reveal that ETP hired TigerSwan, which was originally founded as a State Department contractor working to "execute the war on terror," to conduct counterterrorism measures on activists, including aerial surveillance on protesters, infiltrating activist groups and developing "counter-information" campaigns. ETP employed a law firm headed by Donald Trump 's personal attorney to file a blanket lawsuit in August alleging "eco-terrorism" against Greenpeace , Earth First , and the divestment group BankTrack . The lawsuit used information specifically gathered by TigerSwan, the Intercept confirmed in its latest report. As reported by The Intercept : "The case was filed under the Racketeer Influenced and Corrupt Organizations Act, passed in 1970 to prosecute organized crime—primarily the mob. Greenpeace says it amounts to a strategic lawsuit against public participation, or SLAPP, designed to curtail free speech through expensive, time-consuming litigation. 'It grossly distorts the law and facts at Standing Rock,' said Greenpeace general counsel Tom Wetterer. 'We'll win the lawsuit, but it's not really what this is about for ETP. What they're really trying to do is silence future protests and advocacy work against the company and other corporations.'" The federal government is also continuing to chase down #NoDAPL protesters: the AP reported that a woman seriously injured at the protests last year is still under investigation by the FBI, who applied for a warrant to search her Facebook account.

Woman injured in pipeline protest still being investigated - (AP) — A New York City woman who suffered a serious arm injury while protesting the Dakota Access pipeline last year is preparing for her fifth surgery, even as she faces assertions by the government that she or her fellow protesters are at fault for an explosion they blame on police. Recently unsealed court documents indicate the government last spring sought evidence that might implicate Sophia Wilansky of federal crimes dealing with homemade explosives by searching her Facebook account. Wilansky was injured during a violent clash between protesters and police in November 2016 that's become the emblematic skirmish of the months-long protest in North Dakota against the recently finished pipeline that's carrying oil to Illinois. Police said protesters threw objects including rocks, asphalt and water bottles at officers. Wilansky suffered a left arm injury in an explosion. Protesters allege the blast was caused by a concussion grenade thrown by officers, while police maintain it was caused by a propane canister that protesters rigged to explode. "There is probable cause to believe that violations (of explosives laws) have been committed by Sophia Wilansky," FBI Special Agent Brian VanOosbree said in an affidavit accompanying the March 28 application for a search warrant for her Facebook account.  The FBI sought information that took 1 ½ pages to detail, from photos and videos to lists of friends. "It did seem like one of the motivations of going after her Facebook account was to see her associates, to see her friends," said Wilansky's attorney Lauren Regan, who heads the Civil Liberties Defense Center. Wayne Wilansky said he and his daughter weren't aware of the search but aren't surprised or worried by it. "There's nothing on her Facebook page that would concern me," he said. The family is planning to sue the FBI to obtain shrapnel that authorities took as evidence, hoping it will bolster an eventual lawsuit they plan to file against law enforcement seeking monetary damages. 

Continental to export second Bakken cargo : (Argus) — Continental Resources said it has sold its second cargo of crude oil from the Bakken field in North Dakota for export. The company, a key Bakken producer, plans to sell 430,000 bl for January delivery to overseas markets. The transaction will take place at the Cushing, Oklahoma, storage hub, the company said. It did not share details on the buyer or where the cargo was headed. "We expect steady US production and increasing international sales will drive down US inventories and help correct the recent disparity between Brent and WTI prices," chief executive Harold Hamm said. The Brent-WTI spread has widened to over $6/bl in recent weeks from about $2/bl earlier in the summer. Continental last month said it sold its first shipment of Bakken, or 1mn bl for November delivery, to Total, which plans to export the oil to China. Daily sales of 33,500 b/d will take place in Cushing, it said.

EIA says US West Coast jet fuel imports reach 10-year high - Jet fuel imports to the US West Coast reached their highest level in more than 10 years in the week ended November 10, Energy Information Administration data showed Wednesday. West Coast imports soared to 275,000 b/d during the week , up 140,000 b/d week on week. This was the highest level since the week of March 9, 2007, when it was reported at 286,000 b/d. Two shipping vessels from Asia recently unloaded a total of more than 600,000 barrels of jet fuel at the Port of Los Angeles, according to US Customs data and Platts cFlow trade-flow software. STI Ruby arrived at the port from South Korea with more than 300,000 barrels of jet fuel on November 4 for LAXFuel. More recently, Silver Carla delivered more than 300,000 barrels of the product on Friday from China, with North American Fuel as the consignee. Benchmark Los Angeles jet dropped to its lowest differential in nearly 10 months Tuesday, assessed at NYMEX December ULSD minus 8.25 cents/gal, amid increased regional supply and low seasonal demand. Jet fuel inventories on the West Coast rose 389,000 barrels week on week to 9.672 million barrels, a four-week high, EIA data showed. Refiner and blender net jet production in the region also rose, climbing 54,000 b/d to 437,000 b/d. On the East Coast, stocks dropped to an 11-week low of 8.442 million barrels, down 1.635 million barrels. Production fell 14,000 b/d to a six-week low of 85,000 b/d, while imports also dropped to 34,000 b/d, down 44,000 b/d on the week. Gulf Coast jet inventories, meanwhile, climbed 1.314 million barrels to 14.264 million barrels, as production fell 49,000 b/d to 804,000 b/d. In the Midwest, stocks rose 339,000 barrels to 7.264 million barrels. In contrast, production fell 10,000 b/d to 251,000 b/d, EIA data showed.

Oil Tycoon Hamm Slams EIA's Overoptimistic Shale Forecasts -- As a powerful oil market mover, the EIA needs to have “more sophisticated” forecasts about U.S. shale production, because overly optimistic expectations depress oil prices and disadvantages the U.S. market, shale billionaire and Continental Resources chief executive Harold Hamm said in an interview with Bloomberg published on Thursday.  The EIA is “a very powerful market mover, and so it’s necessary they understand all of these things,” said Hamm who is scheduled to take part in an EIA webinar on crude oil production forecasts later on Thursday.“EIA is on that world stage with us, as the swing producer in the world, and so it’s going to require better, more sophisticated methods of forecasting -- more so than ever before,” Hamm told Bloomberg. According to the billionaire oil executive, the EIA needs to hear “meaningful feedback” from the shale producers and oilfield service providers about their production challenges.“It’s pretty easy to get enamored” by technology, and “some people tend to go too far with it,” Hamm told Bloomberg.  Over the past few months, Hamm has been one of the most vocal critics of EIA’s overly optimistic forecasts for U.S. oil production.

The Undisputed Leader Of Tomorrow's Oil & Gas Markets -- The United States will become the undisputed leader of global oil and gas production in the longer term, Fatih Birol, the Executive Director of the International Energy Agency (IEA), said at a press conference on the sidelines of a UN Climate Change conference in Germany on Thursday. The oil market will balance next year, but looking beyond the next few quarters, in the next ten years, more than 80 percent of the global oil production growth will come from the U.S., Birol said.Not only will the U.S. lead in new oil supply, but American natural gas production “will be 30 percent higher than Russia” in ten years, the IEA’s head said.The U.S. becoming the undisputed leader of global oil and gas production will have implications on oil markets, prices, trade flows, investment trends, and geopolitics of energy, Birol said in Bonn today.Earlier this week, the IEA said in its WEO that the 8 million bpd increase in tight oil production between 2010 and 2025 “would match the highest sustained period of oil output growth by a single country in the history of the oil markets.”The IEA also noted that the era of oil is not over yet, and said:“With the United States accounting for 80 percent of the increase in global oil supply to 2025 and maintaining near-term downward pressure on prices, the world’s consumers are not yet ready to say goodbye to the era of oil.” It’s not only the IEA that expects U.S. oil production to continue to increase over the next decade. None other than OPEC—the rival producer bloc that tried to drive U.S. shale out of profitability by flooding the market with oil and contributing to the plunge in oil prices—admitted last week that American oil production will rise much faster than previously expected.

Jane Goodall urges U.S. Senate to halt quest for Arctic refuge oil (Reuters) - British primatologist Jane Goodall sent a letter to every U.S. senator on Tuesday urging them to oppose a push in the U.S. Congress to allow oil drilling in Alaska’s Arctic National Wildlife Refuge, a region environmentalists say is one of the world’s last paradises.The Republican-led Senate is trying to open up the 1002 region on the coastal plain of the ANWR, a region inhabited by Gwich‘in natives, caribou herds, polar bears and millions of birds that migrate to six of the world’s seven continents. “If we violate the Arctic Refuge by extracting the oil beneath the land, this will have devastating impact for the Gwich‘in people for they depend on the caribou herds to sustain their traditional way of life,” Goodall said in the letter, a copy of which was seen by Reuters. The ANWR’s “very wildness speaks to our deeply rooted spiritual connection to nature, a necessary element of human psyche,” wrote Goodall, best known for her study of chimpanzees in Tanzania. Last week, a group of 37 U.S.-based scientists whose research focuses on Arctic wildlife asked senators to not open the ANWR, saying that drilling would be “incompatible with the purposes for which the refuge was established.” The Senate energy committee on Wednesday will consider a bill spurred by Senator Lisa Murkowski, a Republican from Alaska and the head of the panel, to hold at least two lease sales in the ANWR over the next 10 years. 

Bankrupt oil companies dump $100 million in clean up costs on Orphan Well Association in under two years – The Alberta government has been keeping a tab of the clean-up costs bankrupt oil companies have handed over to the Orphan Well Association since a controversial court decision last year made it easier for companies to dump liabilities. That tab has now passed $100 million. The Financial Post has obtained a copy of the Alberta Energy Regulator’s list of assets that have been transferred to the OWA, which cleans up oil and gas sites whose owners have gone bankrupt, since a controversial May 2016 Court of Queen’s Bench decision that the Supreme Court of Canada has now said it would review. The lower-court decision allowed the trustee for Redwater Energy to send the company’s uneconomic oil and gas wells to the OWA but keep control of better-performing wells, which could be sold to repay the company’s debt. The decision prioritized the rights of debt holders over environmental remediation in insolvency processes.Alberta appealed the decision all the way to the Supreme Court out of concern it would lead to more companies stripping off bad assets and handing the bill to the OWA and, potentially, onto taxpayers. The Supreme Court announced Thursday it would hear the appeal.The list obtained by the Post shows how many assets have been disclaimed since the lower court decision: 12 defunct oil and gas companies have disclaimed responsibility for 1,628 licensed oil and gas sites. The deemed liabilities for those sites exceed $100 million. University of Calgary economist Blake Shaffer said that extra $100 million in clean up costs would add to OWA’s  burden.

Study: Benzene byproducts found in pregnant women near fracking sites - A Montreal study of exposure to high levels of benzene during pregnancy raises concerns about the risks for childhood leukemia. A team of Université de Montréal researchers looking at a small sample of 29 women living near major natural-gas well sites found high levels of toxins in their urine. Researchers found they had 3.5 times more benzene byproducts in their urine than the average person in Canada. But in nearly half the participants, 14 of them Indigenous women, the levels were six times higher. Benzene is identified as a cancer-causing volatile solvent, and its health impacts have been well-documented. Exposure to benzene may increase the risk of developing leukemia and other blood disorders. Contaminants, including volatile organic compounds, are released during hydraulic fracturing or fracking, and pregnancy is a vulnerable window of exposure for the mother and fetus, especially in the first months of pregnancy, said Élyse Caron-Beaudoin, a post-doctoral researcher at the Université de Montréal Public Health Research Institute and lead author. Results of the pilot study, led by toxicology risk-assessment expert Marc-André Verner of U de M, were published this week in Environment International. “The blood brain barrier is not completely developed in the fetus and if exposed, those toxins may pass that barrier,” Caron-Beaudoin said. “High exposure to benzene during pregnancy is associated with low birth weight, an increased risk of childhood leukemia and birth defects.”

Exposure to benzene during pregnancy—a pilot study raises concerns - Peace River Valley, in northeastern British Columbia, has become known in recent years as a place of hydraulic fracturing for natural gas - "fracking," as it's commonly called. What are the health impacts related to living near fracking sites where contaminants, including volatile organic compounds, are released? To try to answer that question, Élyse Caron-Beaudoin, a postdoctoral researcher at the Université de Montréal Public Health Research Institute, studied a group of pregnant women who live in the area. Her results were published this week in Environment International. High concentrations of muconic acid - a degradation product of benzene (a volatile, toxic and carcinogenic compound) - were detected in the urine of 29 pregnant women who participated in the pilot study. Their median concentration of muconic acid was approximately 3.5 times higher in these women than in the general Canadian population. In five of the 29 participants, the concentration of muconic acid surpassed the biological exposure index (BEI), a measure developed by the American Conference of Governmental Industrial Hygienists (ACGIH) to protect the health of people in the workplace. Caron-Beraudoin informed the five women of the results and communicated with their attending physicians. Guidelines of acceptable amounts of muconic acid in urine exist only for the workplace; there are none for the general population. "Although the levels of muconic acid found in the participants' urine cannot prove beyond a reasonable doubt that they were exposed to high levels of benzene, these results do clearly demonstrate the importance of exploring human exposure to environmental contaminants in natural-gas (fracking) regions," said Marc-André Verner, the lead researcher on the study. The health impacts of benzene are well-documented. "High exposure to benzene during pregnancy is associated with low birth weight, an increased risk of childhood leukemia and a greater incidence of birth defects such as spina bifida," said Caron-Beaudoin. "We were therefore very concerned when we discovered high levels of muconic acid in the urine of pregnant women."

Canada Builds $300 Million Highway To Nowhere, But Is There A Hidden Agenda? -- A new $300-million first of its kind ‘permanent’ highway will officially open in the Northwest Territories of Canada on Wednesday.This will be the first time in Canada’s history that the national highway system will be linked to all coasts. The completion of the four-year project is said to connect the tiny Arctic coastal town of Tuktoyaktuk with the rest of the communities to provide better transportation for residents.We think there could be another reason why Canada would build a highway to nowhere.As explained by one citizen in the video below, the new route is called ‘road to resources’, it’s where major reserves of oil and gas reside, and at one time inaccessible due to poor infrastructure. The all-season 137-kilometer highway is the first of its kind that connects Inuvik to Hamlet of Tuktoyaktuk. The traditional route to Tuktoyaktuk involved ice roads in the winter, but as the seasons changed those roads were inaccessible. In the summer, the only way to travel north was by plane, which made it difficult to transport goods. The new road will be a game changer and its size indicates heavy machinery can be transported north, such as oil and gas platforms. Darrel Nasogaluak, mayor of the Northwest Territories hamlet of Tuktoyaktuk, saidthe permanent road is “something that’s been on the community’s want list for 40 years.” Nasogaluak might want to take back that statement in a few years, as what we expect the Canadian government could flood the region with oil and gas exploration teams.

Local communities can decide how to spend cash from fracking through the Shale Wealth Fund - including paying themselves | City A.M.- Communities near fracking sites will be given the power to decide how to spend the money they will gain through a new Shale Wealth Fund, even if they choose to hand the cash directly to local residents, the government confirmed today. The fund will provide up to £10m for each community close to an approved site and will initially consist of up to 10 per cent of tax revenues arising from shale gas production. The Treasury has said the cash could go towards local projects such as sports facilities and libraries, improvements to transport links and the restoration of heritage sites. But, in a statement today, it added the funds could be "paid directly to local residents in host areas".  The Treasury's exchequer secretary Andrew Jones said: Shale production could play an important part in the UK’s future energy security, creating jobs and boosting our economy.The economic benefits must be shared with those living alongside these sites and this funding will ensure local people reap the rewards too.The government has granted local autonomy in response to a consultation that ran from August to October last year. It first said it was intending to consult on the Shale Wealth Fund in the 2016 Budget. Those living in the north and the Midlands, where there are significant shale gas reserves, are set to benefit first. It's been estimated the exploration of shale could create around 65,000 jobs, attract up to £33bn in investment and also generate greater energy security. Environmental campaigners have been critical of the fund, which they view as a pay-off to attract communities that might otherwise oppose fracking.

Paradise Papers Reveal U.S. Selling Russian LNG In Europe - The new massive data leak that has been making headlines for several days now has revealed that a company with U.S. ownership has been buying Russian gas and selling it in Europe at higher prices.  According to a report in Belgian daily Le Soir, taken up by other media outlets, such as The Guardian and Eurasia Review, Wilbur Ross holds a 35-percent interest in Navigator Holdings, a shipping company registered in the Marshall Islands.According to the leaked documents, four cargo carriers owned by Navigator Holdings were used to load Russian natural gas at the port of Ust Luga before heading to the Anwerp LNG terminal in Belgium.The documents suggest that a company with U.S. ownership is buying Russian gas from petrochemical giant Sibur, and then selling it—at a profit, of course—to the European Union, which is in a rush to build as many LNG terminals as it can in a bid to reduce its dependence on Russian gas.If the reports are true, the situation is an ironic one for Europe: while trying to reduce its dependence on Russian gas it is inadvertently increasing it and is even paying more for it than it would if it bought the extra loads directly from Gazprom. One might wonder how a U.S. company is able to do business with a Russian one. It’s simple: Wilbur Ross himself said earlier this week that Sibur is not a subject to sanctions, so for Navigator Holdings and the petrochemical giant, everything is business as usual.

Arctic Oil Drilling Under Attack as Norway Dragged to Court | Rigzone: -- A group of activists is trying to put a stop to Norway’s Arctic oil exploration and forcing the country to defend itself in the first court case of its kind.Greenpeace and a Norwegian group, Nature and Youth, say Norway’s decision to award 10 Barents Sea exploration licenses in 2016 to Statoil ASA, Lundin Petroleum AB, Chevron Corp. and others, breaches the country’s constitution. Drilling in these areas, which include new acreage bordering Russian waters, is incompatible with Norway’s commitment to fight climate change under the 2015 Paris Agreement and poses a threat to the environment, the plaintiffs say.Norway’s government says the plaintiffs are misreading the law -- or at least its intention. Representatives from the two sides meet in court in Oslo on Tuesday.The lawsuit is the first of its kind in Norway. But it marks part of a growing global trend of legal challenges brought against governments and companies for falling short on climate change. While experts doubt this particular suit will be successful, it could pave the way for more legal fights.The battle will also force Norway to confront its split status as a nation trying to promote green policies while relying on fossil fuels for economic growth. Norway is trying to wean itself off oil and gas reliance, but it remains western Europe’s biggest producer.“We will see more of this, in Norway and other countries,” Catherine Banet, an associate professor at the University of Oslo, said in a phone interview. “It’s definitely interesting -- it addresses an issue that affects many and goes straight to the dilemma of Norway’s petroleum and energy policy.”

Norway's $1 Trillion Wealth Fund Suddenly Considers Dumping $35 Billion Of Oil And Gas Stocks - One of the world's largest sovereign wealth funds, and one which ironically amassed the overwhelming majority of their wealth via rich oil reserves, is now looking to sell off some $35 billion worth of energy stocks.  According to central bank Deputy Governor Egil Matsen, the move is intended simply to "spread the risks for the state's wealth," but one has to wonder whether the owner of 1.5% of the world's stocks has decided that oil has now moved into a period of secular decline.  Per Bloomberg: Norway’s $1 trillion sovereign wealth fund proposed dumping about $35 billion in oil and gas stocks, including Royal Dutch Shell Plc andExxon Mobil Corp., to protect the economy of western Europe’s biggest petroleum producer. The nation will be “less vulnerable” to a drop in oil by not being invested in stocks of companies in the industry, the Oslo-based fund said Thursday. The Finance Ministry said it would study the plan and decide at the earliest in “autumn 2018.” “Our perspective here is to spread the risks for the state’s wealth,” Egil Matsen, the deputy governor at the central bank in charge of overseeing the fund, said in an interview in Oslo Thursday. “We can do that better by not adding oil price risk through the fund.” While the fund says the plan isn’t based on any view on the future of oil prices or the industry, it will likely add pressure on oil producers, already struggling in a world where renewable energy is gaining sway. In light of this news, here is a list of Norway's 10 largest energy holdings that you should probably look to lighten up on at some point before they do.

Ukrgazvydobuvannia plans to get 1.5 bcm of gas in five years due to 50 hydraulic fracturing operations conducted by Romanian Tacrom: Ukrgazvydobuvannia plans to get 1.5 bcm of gas in five years due to 50 hydraulic fracturing operations conducted by Romanian Tacrom Romanian Tacrom has conducted 50 hydraulic fracturing operations on the wells of Ukrgazvydobuvannia, which will allow to additionally receive about 1.5 billion cubic meters (bcm) of gas in five years. According to the company, since January 2017 the company has already received an additional 276 million cubic meters of gas due to Tacrom hydraulic fracturing operations performed on 29 wells. Ukrgazvydobuvannia estimates additional profit that could be received in five years at $92 million, while the total estimate for the first company's project to intensify production on the operating wells was $6.9 million. As reported, in 2016 Belorusneft and Romanian Tacrom won the tender of Ukrgazvydobuvannia for implementation of hydraulic fracturing operations. With the help of these contractors it is planned to implement 100 hydraulic fracturing operations during 2016-2017 on the deposits of Shebelynka and Poltava areas at a depth of 2,800-5,000 meters.

Rosneft Announces Completion Of World’s Longest Horizontal Well - Rosneft announced the successful completion of the world’s longest well in the Sea of Okhotsk today, according to a new report from World Oil.The Orlan platform finished the 15,000 -horizontal completion, creating a world record for the measurement. Since the Sakhalin-1 project began, the project has drilled nine of the world’s ten longest wells.Sakhalin-1 is operated by ExxonMobil.While output at oil sites operated by foreign oil majors under production-sharing agreements dropped by 39 percent in September over August, Russian companies boosted their domestic oil production. Output at the biggest oil firm Rosneft increased 1.2 percent to 3.82 million bpd, and production at no.2 Lukoil inched up 0.7 percent to 1.64 million bpd, according to Energy Ministry data, cited by Reuters.Russia’s pledge in the OPEC/non-OPEC deal is to shave off 300,000 bpd from the October 2016 level, which was the highest in almost 30 years.Russia’s Energy Minister Alexander Novak said on September 21 that Russia would exceed its share of the output cuts for September, due to maintenance works. “We are well below, due to maintenance works at some of our enterprises, including Sakhalin-1,” TASS news agency quoted Novak as telling reporters a few weeks ago.

Venezuela crude output hits 28-year low: OPEC (Reuters) - Oil-dependent Venezuela’s crude output dipped last month below 2 million barrels per day, its lowest level in nearly three decades, global producer group OPEC said on Monday. The output fall could not come at a worse time, with the economy in crisis and the socialist government struggling to pay its foreign debt. The government opens talks on Monday with creditors to renegotiate its debt and avert a default that would plunge its economy into deeper trouble. Compounding the situation, another eight managers and employees of state oil company PDVSA in eastern Venezuela were arrested in recent days for fiddling production figures, chief prosecutor Tarek Saab told reporters. In a major corruption sweep engulfing the oil sector, about two dozen high-level executives have already been arrested in recent weeks, ridding PDVSA of much of its top brass. The Organization of the Petroleum Exporting Countries’ latest monthly data showed Venezuela reporting production of 1.955 million bpd in October, versus 2.085 million in September. The figure was even lower based on secondary sources rather than what the government reports, at 1.863 million bpd in October, according to OPEC. Venezuela depends on oil for more than 95 percent of hard currency export revenues, fuelling both social welfare programs and payment on some $60 billion of outstanding bonds.PDVSA is the financial motor for President Nicolas Maduro’s government, but has been suffering from the oil price drop, crippling operational problems, and internal corruption.  

Oil Spills in Nigeria Could Kill 16,000 Babies a Year -- Nigeria, one of the world’s most oil-rich countries, has a history of catastrophic oil spills that have wreaked havoc on the environment and local communities.But a new study says that oil spills may have also claimed the lives of thousands of babies born to mothers who live in areas contaminated by such incidents.The study, published as a working paper by the CESifo group, found that if an oil spill occurred within 10 kilometers (6.2 miles) of the residence of a mother before she fell pregnant, the mother’s baby would be twice as likely to die. Oil spills that occurred while the mother was actually pregnant did not have an impact on child or neonatal mortality, according to the study. Researchers found that even if the oil spill occurred five years before the mother conceived, it still resulted in the neonatal mortality rate doubling from 38 deaths per year to 76 deaths per year for every 1,000 live births. Given that there were almost 5.3 million live births in Nigeria in 2012 and that around 8.05 percent of these births took place within 10 kilometers of an oil spill, the authors estimated that oil spills could have killed around 16,000 infants within their first month of life in 2012.Roland Hodler, the study’s lead author, told the Guardian that the results constituted a “tragedy.” Oil spills are a fairly common occurrence in the Niger Delta region, a huge area of swamplands in southern Nigeria. The Nigerian Oil Spill Monitor has recorded more than 11,500 since 2006—when a government agency was set up to detect and investigate oil spills—though a few hundred of these were mistaken reports.The spills have led to accusations from Nigerians that international oil companies are exploiting the country’s natural resources. Royal Dutch Shell paid out £55 million ($83.5 million) to some 15,600 farmers and fishermen from the Bodo community in 2015 after two massives oil spills in 2008. Spills have also been a factor in periods of militancy in the region, most recently led by the Niger Delta Avengers.

Indian state oil firms betting on natural gas as next big thing  (Reuters) - India’s state oil refiners are planning an aggressive push into natural gas in coming years to meet Prime Minister Narendra Modi’s goal of making the fuel a bigger part of the country’s energy mix. State-owned oil companies - Indian Oil, Bharat Petroleum and Hindustan Petroleum - are planning to raise gas contributions to between 5 and 15 percent of their incomes over the next few years, up from nearly none now, company executives said. This in line with a government target to raise the natural gas portion of India’s primary energy mix to 15 percent by 2030, up from 6.5 percent now, to help meet climate targets and rein in rampant pollution. The increase would come mostly at the expense of coal, which is dirtier than gas and is India’s most-used energy source. Liquefied natural gas (LNG) imports will cover the greater part of the growth, although the government also hopes to recover untapped domestic reserves off its east coast. With China, Pakistan and Bangladesh also increasing gas use, the surge in Asian demand is expected to help eat up a global glut of LNG supplies by 2021-2022. BPCL, another leading Indian refiner, sees natural gas pulling in 5 to 10 percent of its overall revenue in less than a decade, from barely any now, its director of refineries, R. Ramachandran, told Reuters. The state oil companies’ plans involve building LNG import terminals and domestic pipelines, and bidding to set up urban gas networks across potential major demand centres, particularly in the eastern part of the country. India’s natural gas consumption is expected to rise to 70 billion cubic metres (bcm) by 2022 and 100 bcm by 2030, according to a government think tank and the Oxford Institute of Energy Studies, up from 50 bcm now. India burns just 7 percent of what top user the United States consumes in a year with about a quarter of India’s population. 

US, Japan break into Vietnam's LNG market - Vietnam's LNG ambitions moved closer to reality last week, following several preliminary agreements signed with US-based and Japanese entities, aimed at securing LNG supplies, building regasification infrastructure and developing downstream markets in the southeast Asian country. The expectation that the LNG industry will remain oversupplied into the 2020s is creating an incentive for Vietnam and other emerging Asian markets to develop import infrastructure and accelerate energy reforms to support gas penetration in the energy mix. Meanwhile, international investment is pouring in across the region, as global LNG market participants seek to create new demand outlets, amid rising global supplies from the US and Australia, and stagnant demand growth in the legacy markets of Japan and South Korea. For the US, this emerging demand presents an opportunity to secure buyers for the multi-billion dollar LNG export projects being built along the US Gulf Coast, and reduce trade deficit in goods with its Asian trading partners. For Japan, opening new demand centers in the region is a key priority, as the world's largest LNG consumer is faced with a combination of contractual over-commitment, slowing domestic demand growth and downstream market deregulation. The deals were signed as Vietnam held the 2017 Asia Pacific Economic Cooperation Summit (APEC) in the central city of Da Nang. 

China's crude oil stocks fall for first time in a year - China's crude oil stocks fell for the first time in 12 months in October -- by 27.41 million barrels from the month before -- as crude imports hit a one-year low amid strong throughput at domestic refineries, S&P Global Platts calculations based on latest official data showed Thursday. The last time China saw a draw in monthly crude stocks was October 2016, of 18.32 million barrels. Stocks subsequently rose each month until a 20.16 million-barrel build was calculated for September. Analysts said the country was unlikely to see a significant crude stock build in November amid expectations refinery throughput will remain high in the month. China does not release official data on stocks. Platts calculates China's net crude stocks build or draw by subtracting the official refinery throughput data from the country's crude supply data. The latter takes into account net crude imports and domestic crude production. Latest data from the National Bureau of Statistics showed that refinery throughput in October jumped 7.4% year on year to 11.94 million b/d, despite edging down 0.9% from the historical high of 12.06 million b/d in September. "The October run was slightly lower than that in September only because of the 19th China's Communist Party Congress, which required industrial plants to lower runs to cap pollution," said a Beijing-based analyst. Meanwhile, China's crude imports in October hit a 12-month low at 7.34 million b/d, resulting in country's crude supplies in the month falling 13.1% from September to 11.06 million b/d, despite posting a 4.5% rise on a year-on-year basis.

China's oil demand to reach 15.5 million b/d in 2040: IEA - Oil demand from China's transportation sector will peak in 2030, and flatten thereafter, mainly due to falling gasoline demand for passenger vehicles that become more efficient and increasingly electricity-driven, the International Energy Agency said in its latest World Energy Outlook report Tuesday. The flattening of China's oil demand growth reflects its fundamental change from an industry-driven economy to one based on services and consumption. It also has major implications for Beijing's reliance on oil imports, energy security and the overall energy mix. "China's energy future will not be a continuation of previous trends," the IEA said, adding that the country's energy choices will have profound implications for global markets, trade and investment flows. Oil will still remain the backbone of China's transport fuel demand till 2030, growing by 3.3% per year on average, but its share will fall to just above three-quarters, from nearly 90% today, the IEA said. The remaining 25% of transport fuels will be biofuels, natural gas and electricity. The IEA said that China would become the world's largest oil consumer by the early 2030s, overtaking the US, and touch 15.5 million b/d in 2040. But the slowdown means that India will become the largest source of global oil demand growth from around 2025.

OPEC Reports 151Kbpd Drop In October Crude Output; Raises Demand Forecast For 2018 -- True to its perpetually optimistic form, OPEC, which only last week for the first time conceded the threat posed by rising US shale production...... sharply raised its demand forecast for cartel oil in 2018, ahead of a key meeting of the group’s ministers later this month. According to OPEC's monthly market report, the oil exporters said the forecast demand for its oil next year had been increased by around 400,000 barrels a day from the previous month to 33.4mmbpd, about 0.46mmbpd higher than in 2017. Overall, the cartel now expects global demand growth to rise by 1.53 million barrels a day in 2017 - an upward revision of 74kbps from the October report citing better than expected performance from China - and 1.51 million barrels a day in 2018.The increase comes on the back of the recent global economic strength, which has exceeded many analysts’ expectations, helping to draw down inventories that built up during the crude glut since late 2014. Furthermore, the rise in demand has combined with the 1.8mmbpd in production cuts by OPEC and non-OPEC nations since January of this year to help tighten the market, pushing the price of Brent back above $60 a barrel for the first time in two years.As the FT adds, cartel analysts said demand for Opec crude is expected to reach 34m b/d in the second half of next year, roughly 1.4mmbpd above what they pumped last month, according to secondary sources. As usual, oil demand is contingent not only on overall confidence (i.e. the stock market), but also whether the global economy is expanding or contracting, which all boils down to whether China is creating lots of new debt each month. In the monthly report, OPEC also said Monday that crude oil production fell last month by 151,000 barrels a day. Crude output by members of the Organization of the Petroleum Exporting Countries dropped by 0.46%, to 32.59 million barrels a day in October, compared with the month prior. That decline was aided by reduced production in Iraq, Nigeria, Venezuela, Algeria and Iran. Production in Saudi Arabia rose by 17kpbd to 10 million barrels daily. As the WSJ notes, the report "highlights the cartel’s increasingly successful efforts to rebalance the oil market by withholding production to reduce the global supply glut and boost prices." To be sure, none of the numbers below incorporate last week's striking FT report, according to which Saudi Arabia may be hiding 70mm barrels in above ground storage to give the impression of higher demand.

OPEC Boosts 2018 Demand Forecast, Signaling Faster Rebalancing - OPEC boosted forecasts of demand for its crude in 2018, signaling that the rebalancing of the global market could gather pace.The Organization of Petroleum Exporting Countries raised estimates for the amount it will need to pump to meet demand next year by 400,000 barrels a day to 33.4 million a day, according to a monthly report from the group. As that’s about 670,000 a day more than OPEC produced in the third quarter, global inventories would diminish further in 2018 if the group and its allies continue to keep supplies restrained.OPEC and Russia have been leading a worldwide coalition of oil producers this year in production cuts aimed at ending a glut that has weighed on prices and battered their economies since 2014. They’ll meet on Nov. 30 in Vienna, where they may decide to prolong the measures beyond their scheduled end in March.Output cuts are the “only viable option” for completing the rebalancing of the market, OPEC Secretary-General Mohammad Barkindo said in Abu Dhabi on Monday. Last week he said that no producers opposed continuing the accord and the only question was the duration of the extension.Production from OPEC’s 14 members shrank by 150,900 barrels a day last month to 32.59 million a day as a result of lower output from Iraq, according to the report. The country’s exports have been curtailed because of a dispute between the central government and the semi-autonomous Kurdish region. Iraqi production fell by 131,000 barrels a day to 4.38 million a day.The report showed that supply curbs by OPEC, Russia and their partners are paying off. Oil inventories in developed nations dropped again in September, bringing the total decline this year versus their five-year average to 183 million barrels. OPEC has said its main objective is to return stockpiles to the five-year mean; they remain 154 million barrels above this level. OPEC increased estimates for global demand in 2018 by 300,000 barrels a day to 98.45 million a day. Demand will expand next year by 1.5 million a day, or 1.6 percent.

OPEC points to larger 2018 oil supply deficit as market tightens (Reuters) - OPEC raised its forecast on Monday for demand for its oil in 2018 and said its deal with other producers to cut output was reducing excess oil in storage, potentially pushing the global market into a larger deficit next year. The Organization of the Petroleum Exporting Countries also said in a monthly report it had cut its estimate of 2018 supply from non-OPEC producers and said oil use would grow faster than previously thought due to a stronger-than-expected world economy. “The global economic growth dynamic has continued its broad-based and relatively strong momentum,” OPEC said. “The ongoing momentum could still provide some slight upside potential.” OPEC said the world would need 33.42 million barrels per day (bpd) of OPEC crude next year, up 360,000 bpd from its previous forecast and marking the fourth consecutive monthly increase in the projection from its first estimate made in July. The report is OPEC’s last before a Nov. 30 meeting in which the group and its allies are expected to extend their supply-cutting deal further into next year. The projections pointing to a growing 2018 supply deficit could influence debate on how long to maintain the curbs. Oil prices, which are close to their highest since 2015, rose further towards $64 a barrel after the report was issued. Crude is still about half its level of mid-2014, when a build-up of excess supply led to a price collapse. The 14-country producer group said its oil output in October, as assessed by secondary sources, was below the 2018 demand forecast at 32.59 million bpd, a drop of about 150,000 bpd from September. The report’s OPEC production figures mean compliance with the supply cut by the 11 members with output targets has risen above 100 percent from 98 percent initially reported in September, according to a Reuters calculation. 

Warmer weather, rising non-OPEC output threaten oil market balance (Reuters) - Global oil demand growth looks likely to increase more slowly over the coming months, as warmer temperatures cut consumption, which may tilt the market back into surplus in the first half of next year, the International Energy Agency said on Tuesday. In its monthly oil market report, the Paris-based IEA cut its oil demand forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018. Geopolitical tension in the Middle East and intermittent supply outages in the likes of Nigeria and Iraq have pushed oil above $60 a barrel for the first time since 2015, while global inventories have fallen, prompting many market watchers to raise their price forecasts. “Does it mean the market has found a ‘new normal’ where the accepted floor might have moved from $50/bbl to $60/bbl? This might be a tempting view, assuming supply disturbances will continue and tensions in the Middle East will not ease,” the IEA said. “However, if these problems do prove to be temporary, a fresh look at the fundamentals confirms the view we expressed last month that the market balance in 2018 does not look as tight as some would like, and there is not in fact a ‘new normal’.” The IEA noted that output by the Organization of the Petroleum Exporting Countries was down by 830,000 bpd year-on-year in October, although demand for the group’s crude is expected to fall to 32.6 million bpd in the fourth quarter of this year and to 32.0 million bpd in the first quarter of 2018. Compliance by the group with its joint 1.8-million-bpd output cut with 10 partners was 96 percent in October, the highest since the supply-reduction deal took effect in January. The biggest threat to market balances, aside from a tempering in demand, is the growth in supply from non-OPEC nations. “Even after some modest reductions to growth, non-OPEC production will follow this year’s 700,000-bpd growth with 1.4 million bpd of additional production in 2018 and next year’s demand growth will struggle to match this,” the IEA said. 

Oil prices hit by profit-taking after funds build record bullish position: Kemp (Reuters) - Crude oil prices and calendar spreads have started to soften in recent trading sessions, in what is likely to be profit-taking after hedge funds amassed a record bullish position in the petroleum complex. Hedge funds and other money managers had accumulated a record net long position in the five largest futures and options contracts linked to crude and fuels by Nov. 7, according to regulatory and exchange data. Fund managers held a net long position equivalent to 1,085 million barrels of crude, gasoline and heating oil, up from 305 million at the end of June, and beating the previous peak of 1,025 million set in February. Long positions in crude and fuels have been boosted to a record 1,295 million barrels while shorts have been cut to just 211 million, the lowest since April (http://tmsnrt.rs/2zBrPbN). Hedge funds hold record or near-record bullish positions in Brent, U.S. gasoline, U.S. heating oil and European gasoil, only in WTI is their positioning is still well below previous highs. There may be fundamental reasons to believe prices will head higher, but the lopsided hedge-fund positioning and concentration of long positions has increased the risk of a price reversal in the short term. Brent futures prices for delivery in January 2018 hit a high on Nov. 6 but have since stalled and started to drift lower. Brent calendar spreads for the first half of 2018 also peaked on Nov. 6 and have since eased sharply. Brent prices, which have rallied faster than WTI since the middle of August, have been hit harder in recent trading sessions, which is consistent with profit-taking. Hedge funds held a record net long position of 543 million barrels in Brent on Nov. 7. By contrast, the net long position in WTI was just 382 million barrels, well below the record of 444 million barrels set in February. Fund managers held almost 11 long positions in Brent for every short position, but just 4.5 long positions for every short in WTI, a sign that Brent had become far more stretched than its U.S. counterpart. Positioning in U.S. gasoline and heating oil was also at or close to multi-year highs. The net long position in heating oil hit a record 70 million barrels on Nov. 7. Gasoline stood at a near-record 90 million barrels. With so many long positions already established by last week, and few short ones left to cover, the rise in petroleum prices was at risk of running out of momentum and falling prey to a correction, which is what seems to have happened.

Oil prices remain steady on Monday — Oil was largely steady on Monday, trapped between a bullish push from tension in the Middle East and downward pressure from evidence of rising US production, although record fund bets on a rally kept the price in sight of two-year highs. Brent crude futures were down 17 US cents at $63.35 a barrel by 10.02am GMT, having gained 14% so far in November. US West Texas Intermediate (WTI) crude eased 6c to $56.68. Traders said crude prices were generally well supported as output cuts led by oil cartel Opec and Russia have contributed to a significant reduction in excess supplies that have dogged markets since 2014. The excess of industrialised countries’ oil stockpiles over their five-year average "has fallen by more than 50% in 2017, with inventories currently at around 160-million barrels", consultancy Timera Energy said. "If current trends continue, inventories are likely to return to the five-year average at some stage in 2018," it said, adding that strong demand had also helped reduce the glut. Hedge funds increased their holdings of Brent crude futures and options in the latest week, pushing their bet on a sustained rally in the oil price to the highest on record. Money managers now hold a net long position in Brent futures and options equivalent to nearly 544-million barrels of oil. On the supply side, tension in the Middle East raised the prospect of disruptions, traders said, adding it was unclear whether a strong earthquake that hit Iran and Iraq on Sunday had affected the region’s oil production. 

Don’t Back U.S. Shale To Keep Oil Prices Down - WTI is back in the upper-$50s per barrel, and OPEC is on the verge of extending its production limits well into next year. The fear for OPEC, and other oil bulls, is that this risks sparking another wave of U.S. shale supply, sending oil prices right back down to where they came from. But what if U.S. shale fails to keep up with soaring demand?That’s the conclusion from Morgan Stanley—a prediction that flies in the face of conventional wisdom. When OPEC signed its deal a year ago to limit production, oil prices moved up into the $50s per barrel, and over the next 12 months, the U.S. brought about 1 million barrels per day (mb/d) back online. With crude prices back at similar heights, shouldn’t another dose of shale production be a sure thing?Morgan Stanley says that while U.S. shale drillers could add new production, they won’t be able to keep up with market demand. The investment bank says that the shale sector will have to grow production from about 5.9 mb/d this year to over 7 mb/d in 2018 in order to ensure that the market doesn’t plunge into a deficit, a level that the industry is unlikely to achieve. Shale drillers have proven that they can add that amount of supply in a short period of time in the past, but further gains will be much harder to achieve. "Right when the world's reliance on shale is growing, its limits are starting to become apparent, and there seem to be two aspects to this: ability and willingness," Morgan Stanley analysts wrote last week.The shale sector has run into a range of obstacles in recent months. Higher drilling costs and a shortage of fracking crews have led to bottlenecks. Oilfield services companies are demanding higher prices from producers. Also, there have been operational problems—some shale wells are producing more gas than expected, a bad sign for wells assumed to produce heavier volumes of oil.A range of other metrics point to sudden struggles for shale drillers. Improvements in drilling times have also stagnated over the past year, indicating a limit to the “efficiency gains” that can be achieved by drillers. Rig productivity, as measured in initial output from new wells per rig, have been falling since 2016. Meanwhile, perhaps the most important metric of all—profits—continues to disappoint. The latest roadblock for the shale industry comes from their restive shareholders, who are demanding a strategy overhaul after years of broken promises and red ink. Investors are pushing for spending cuts, changes to executive compensation and more cash returned in the form of share buybacks. The aim is to focus on profits, not production growth.

Oil markets cautious as rising U.S. output undermines OPEC supply cuts : (Reuters) - Oil prices fell on Tuesday as the prospect of further rises in U.S. output undermined ongoing OPEC-led production cuts aimed at tightening the market. Brent crude futures were at $62.94 per barrel at 0415 GMT, down 22 cents, or 0.35 percent, from their last close. U.S. West Texas Intermediate (WTI) crude CLc1 was at $56.62 per barrel, down 14 cents, or 0.25 percent. The falls came after both crude benchmarks early last week hit highs last seen in 2015, but traders said the market had lost some momentum since then. Traders said they were cautious on betting on further price rises. “Prices...are starting to look like a pause or pullback is needed,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader. This sentiment comes in part on the back of rising U.S. oil output, which has grown by more than 14 percent since mid-2016 to a record 9.62 million barrels per day (bpd). The U.S. government said on Monday U.S. shale production for December would rise for a 12th consecutive month, increasing by 80,000 bpd.Fitch Ratings said in its 2018 oil outlook that it assumed 2018 “average oil prices will be broadly unchanged year-on-year and that the recent price recovery with Brent exceeding $60 per barrel may not be sustained”.

IEA Pours Cold Water On OPEC Optimism, Warns Global Oil Demand Shrinking -- Pouring cold water on yesterday's optimistic demand forecast projected by OPEC, which projected global crude demand growth to rise by 1.5mm b/d in 2018, this morning the International Energy Agency warned that the crude oil price rally could be short-lived because, contrary to OPEC's expectations, global oil demand will be weaker than expected this year and next. In its closely watched monthly oil report, the IEA cut its crude demand growth outlook by 100,000 barrels a day for 2017 and 2018, as the WSJ reported. The agency now expects demand to grow by 1.5 million barrels a day this year and 1.3 million barrels a day next year.The IEA predicted that balances will likely show the crude market is oversupplied in Q4 2017 and the first half of 2018, with oil demand in 2017 at 97.7mmb/d, rising to 98.9 million in 2018. Meanwhile, non-OPEC Oil Supply is expected To rise by 700,000b/d In 2017 To 58.1mmb/d, and another 1.4 mmb/d in 2018 to 59.5mm b/d, led by shale output.The IEA also noted that global oil inventories fell 63mm barrels In Q3, only second quarterly draw since 2014, with the call on OPEC crude seen at 32.6mmb/d in Q4, declining to 32.0mmb/d in Q1 2018.However, "the highlight of the report was that they lowered their demand forecast," said Jens Pedersen, senior analyst at Danske Bank. The report also cautioned that "if the geopolitical concerns calm down, then prices could fall down again, so on the margin it’s a tad bearish."The IEA noted that oil prices have risen roughly 20% since early September with Brent crude sustaining gains above $60 a barrel in recent weeks, on the back of supply disruptions and geopolitical tensions in the Middle East. But if those problems prove temporary, a “fresh look at the fundamentals” would likely show the “market balance in 2018 does not look as tight as some would like and there is not in fact a ‘new normal.’”

The Dangers Of A Bullish Oil Market - Oil prices fell on Tuesday in early trading, a sign that investors could be pocketing profits after building up huge net-long bets on crude futures. As those traders back out of bullish positions, they could be forcing oil prices to trade down a bit.  In the IEA’s latest report, the agency says that the U.S. shale boom is far from over, and in fact, by 2025, the increase in supply will equal what Saudi Arabia achieved at the height of its oil boom. Similarly, the expansion of U.S. natural gas supply will exceed what the Soviet Union achieved. “The United States will be the undisputed leader of global oil and gas markets for decades to come,” IEA Executive Director Fatih Birol said in an interview with Bloomberg television. “There’s big growth coming from shale oil, and as such there’ll be a big difference between the U.S. and other producers.” The IEA cast doubt on global demand in its report, lowering its projected demand growth figure for 2017 by 100,000 bpd to just 1.5 mb/d. It also slashed its 2018 forecast by 100,000 bpd, lowering its estimate to just 1.3 mb/d. Lower than expected demand could deflate oil prices.   OPEC continued to report “high conformity levels” in October, with output dipping by 151,000 bpd from a month earlier. The data provides a strong bit of momentum heading into the cartel’s official meeting on November 30, a summit that most analysts believe will produce an extension of the current production cuts for as long as another year. In OPEC’s monthly report, the group cited falling global inventories as a sign that the production cuts have been a success. OPEC’s Secretary-General Mohammad Barkindo said that extending the production cuts is the “only viable option” to restore the group’s credibility. There are few signs of an outcome other than an extension at this point. Last week, OPEC raised its forecast for demand for OPEC crude in 2018 by 400,000 bpd, which would imply a sharper drawdown in stocks. “We are seeing clear indications that the market is re-balancing at an accelerating pace and stability is steadily returning,” Barkindo said. “I am certain that if we had not mobilized ourselves when we did, building consensus and jointly taking action in responding to the crisis, the industry would be in worse condition than it is today.”

Oil prices sink on concern about demand and rising US output --Oil prices fell about 2 percent on Tuesday on forecasts for rising U.S. crude output and a gloomier outlook for global demand growth in a report from the International Energy Agency.Analysts also noted that oil prices were being pressured by a global commodities selloff, led by base metals like nickel and copper, due to weaker-than-expected economic data from China. U.S. West Texas Intermediate (WTI) crude ended Tuesday's session down $1.06, or 1.9 percent, to $55.70, posting its worst daily performance since Oct. 6. The contract plunged to $55.18 at the session low. Brent crude futures fell $1.04, or 1.7 percent, to $62.12 per barrel by 2:26 p.m. ET (1826 GMT), after falling as low as $61.36 earlier in the session.    Market watchers said the declines caused some short-term traders to get nervous and sell out of their positions. Traders noted that Brent slid more after the contract fell below its 14-day moving average for the first time in three weeks.Just last week, prices for both benchmarks hit their highest levels since 2015.The IEA delivered a surprisingly downbeat outlook for oil demand in its monthly market report, showing an expected slowdown in consumption that was at odds with a more bullish view from the producer group OPEC on Monday.The Paris-based IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for this year and next, to an estimated 1.5 million bpd in 2017 and 1.3 million bpd in 2018.The IEA said warmer temperatures could reduce consumption, while sharply rising output from some producer countries might bring back the global crude glut in the first half of 2018."The IEA slashing its oil demand growth forecast for this year and the next has dampened some of the bullish sentiment prevailing in the market,"

WTI/RBOB Extend Losses After Huge Crude Build --  WTI/RBOB prices tumbled today on demand outlook cuts (and late comments from Brazil and Russia with regard OPEC cuts) ahead of tonight's API report which is expected to show crude and gasoline draws. However, WTI/RBOB prices extended their losses as Crude  (biggest in 9 months) and Gasoline saw significant builds.  API:

• Crude+6.513mm  (-2.4mm exp) - biggest build in 9 months
• Cushing -1.803mm - biggets draw in 4 months
• Gasoline +2.399mm (-1.5mm exp) - biggest build in 3 months
• Distillates -2.527

Last week's surprise Crude build appear to be a trend... Following OPEC's forecast of huge oil demand, IEA poured cold water all over that and cut its demand outlook, then Brazil and Russia seem to back away from extending OPEC production cuts...

A lightning fast rally in oil prices is reversing. Here's why-A downbeat outlook for oil demand from a top energy watchdog and fears of rising U.S. output sparked a sell-off in crude futures this week, but analysts say the market was already poised for a pullback. International benchmark Brent and U.S. West Texas Intermediate crude have both shed about $3 a barrel, or nearly 5 percent, from more than two-year highs struck last week. Brent was trading at $61.63 on Wednesday, while WTI was at $55.15, both down about 1 percent after posting their worst daily performance in about a month on Tuesday. It is a pullback from a recent spike fueled by signs of improving oil demand and a month of escalating tensions in the Middle East that threatened output from top OPEC producers. But on Tuesday, the International Energy Agency lowered its outlook for demand growth in both 2017 and 2018, in part because of warmer than expected winter weather. The energy policy adviser to developed nations knocked down its growth forecast by 100,000 barrels a day for each year, projecting that oil markets will remain oversupplied in the first half of 2018. Global demand will struggle to sop up rising output by producers outside the 14-member OPEC cartel, particularly from the United States, IEA said in its monthly oil report. Recent weekly figures show U.S. drillers are pumping near all-time high levels. "This is why, absent any geopolitical premium, we may not have seen a 'new normal' for oil prices," IEA concluded. That view contradicted OPEC's projection, which had been released one day earlier. The producer group raised its forecast for demand growth by 130,000 barrels a day in 2018. Adding to the commotion, oil futures got caught in a general commodities sell-off following weaker-than-expected economic data from China, which drives global commodity consumption

WTI/RBOB Slide On Surprise Build As US Crude Production Hits New Record High -- WTI/RBOB extended yesterday's IEA-driven losses after a big crude build reported overnight by API, and DOE did nothing to assuage that with a 1.85mm crude build (admittedly smaller than API's projected 6.5mm, but notably different from the 2.4mm draw expected),Gasoline also surprised with a build and WTI/RBOB extended losses. Additionally US Crude production rose to a new record high.Bloomberg Intelligence energy analyst Fernando Valle notes:Weaker demand drove a negative print for crude and product stocks.Strong refinery runs and rising crude exports were not enough to offset rising U.S. crude production. This latest increase, combined with reduced demand for refined products should put a damper on the oil-price recovery.  DOE:

• Crude +1.854mm (-2.4mm exp)
• Cushing -1.504mm
• Gasoline +894k (-1.5mm exp)
• Distillates -799k

DOE data confirmed API's reported builds in crude and gasoline (and a big drawdown in Cushing stocks). US Crude production reached a new record high the previous week - not what OPEC hoped for - and last week's big surge in the rig count suggests this is not about to slowdown as iot rose 25k b/d to a new record high... WTI was hovering right at $55 heading into the DOE data and broiefly broke below on the print. RBOB is notably weaker...

Oil prices fall for fourth day after U.S. crude stocks rise -- Oil prices fell for a fourth session on Wednesday after the U.S. government reported an unexpected increase in crude and gasoline stockpiles, but an increase in refining runs and a drawdown in distillates helped prices bounce off session lows. Prices also remained under pressure from this week’s International Energy Agency (IEA) outlook for slower growth in global crude demand. While the crude build of 1.9 million barrels reported by the Energy Information Administration was more than forecast, it was not as big as the increase of 6.5 million barrels reported on Tuesday by industry group the American Petroleum Institute. The EIA data encouraged buying at session lows. “Overall, the report is somewhat supportive because it was not as bearish as the previous API report last night – that is why we are slowly digging our way out of the downside seen earlier this morning,” s The data also showed distillate stocks in the U.S. Gulf fell to a one-year low, while overall refining rates rose in the latest week, led by a jump in East Coast refining, which is operating at a record 99.8 percent of capacity. Increased refining rates could eventually reduce crude inventories. U.S. West Texas Intermediate (WTI) crude CLc1 was trading at $55.42 per barrel, down 32 cents, as of 1:19 p.m. EST (1819 GMT). Brent crude futures LCOc1 were down 19 cents at $62.02 a barrel, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. On Tuesday, the IEA cut its oil demand growth forecast by 100,000 barrels per day (bpd) for both 2017 and 2018. That could mean world oil consumption may not breach 100 million bpd next year as many had expected. Also, supplies are likely to exceed that level, particularly as U.S. production continues to rise.

Oil extends losing streak on U.S. oversupply worries (Reuters) - Oil prices ended lower again on Thursday on increased concerns about growth in U.S. production and inventories, despite expectations that major world producers will extend a supply-cut deal later this month. Brent crude futures LCOc1 settled 51 cents, or 0.8 percent, lower at $61.36 per barrel, running its streak of losses to five straight days. U.S. light crude CLc1 fell for a fourth consecutive session, ending down 19 cents, or 0.3 percent, at $55.14 a barrel. Oil prices have slipped from the two-year highs hit last week by both crude benchmarks on signs that U.S. supply is rising and could potentially undermine OPEC’s efforts to tighten the market. The market has been bolstered of late by funds extending long positions on a bullish outlook for the commodity due to tightening supply worldwide. Expectations that the Organization of the Petroleum Exporting Countries will agree to extend their supply-cut pact with other major world producers in Vienna on Nov. 30 has offset some of the recent pressure on prices. Now, some analysts believe there won’t be clarity on the market’s direction until after OPEC meets on November 30. “Certainly U.S. oil production is not slowing down. If crude imports remain elevated and exports don’t rebound, then the bullish underlying tone begins to fade, 

OilPrice Intelligence Report: Is This Oil Rally Coming To An End?: Crude benchmarks posted steep losses this week in the wake of the incredibly bearish assessment from the IEA. The losses continued on Wednesday and Thursday after the EIA reported a surprise uptick in crude inventories. However, oil regained some ground in early trading on Friday on hopes that OPEC would extend its production cuts.Saudi Arabia’s energy minister tried to assuage oil market concerns about OPEC’s actions. “We need to recognize that at the end of March we’re not going to be at the level we wanted to be, which is at the five-year average,” Khalid al-Falih said in a Bloomberg television interview Thursday. “That means an extension of some sort is needed. My preference is to give clarity to the market, and announce on Nov. 30 what we are going to do.” But the problem is that the oil market has already baked in the cuts into current assumptions. “Anything apart from an extension to the end of 2018 is likely to send the oil price into an immediate tailspin,” analysts at Commerzbank said. “In our view, the key factor in the supply-demand equation is the U.S. shale sector—something OPEC is keen to play down through its constant comments on the agreement to cut production.”  TransCanada’s Keystone pipeline spilled about 5,000 barrels of oil, or 210,000 gallons, in South Dakota on Thursday, just a few days ahead of a crucial decision by the Nebraska Public Service Commission on the fate of the company’s proposed Keystone XL pipeline. The older Keystone pipeline, which runs from Alberta to the Gulf Coast, was shut down after the leak. Critics of the Keystone XL project seized on the news, citing the leak as exactly the type of threat that comes with the proposed pipeline.

NYMEX Dec gas dips even as storage withdrawal exceeds expectations -- The NYMEX December natural gas futures contract dipped 2.7 cents Thursday to settle at $3.053/MMBtu, even as the US Energy Information Administration announced a higher-than-expected storage withdrawal. The EIA estimated an 18 Bcf withdrawal for the week that ended November 10, 4 Bcf larger than the 14 Bcf withdrawal estimated by analysts surveyed by S&P Global Platts. It was the first withdrawal of the season. Over the past five years, the first storage pull on average came in the week that ended November 17. The week that ended November 10 has averaged a 12 Bcf storage build over the past five years. The larger-than-expected pull came as temperatures in high-demand areas across the US have been cooler-than-average, increasing heating demand. Total demand in the US has averaged 77 Bcf/d so far in November, according to Platts Analytics' Bentek Energy data, compared with 67.1 Bcf/d in the year-ago period. Total gas stocks now sit at an estimated 3.772 Tcf, a 2.6% deficit to the five-year average, according to EIA data. Looking ahead, the most recent six- to 10-day weather outlook from the National Weather Service calls for cooler-than-average temperatures in the US Northeast and Southeast, with the West expected to see warmer-than-average temperatures. Also, US dry production is expected to dip to a projected 75.4 Bcf/d over the next 14 days, compared with the 76.1 Bcf/d average for the six days prior, according to Platts Analytics.

As Oil Heads For Down-Week, Crude Stakes Are Huge -- After five straight weeks higher - read by many as confirmation of how awesome the global coordinated recovery must be - WTI and Brent dropped this week as inventories rose, demand outlooks dimmed, and OPEC hope faded. As Alhambra Investment Partners' Jeffrey Snider notes, there is a titanic struggle going on right now in the oil market.On the one side of the futures market are the usual pace setters, the money managers. Last week, the latest COT data available, they went the most net long since March. If it continues, it will close in on the most positive futures position since the record long they established back in February.Normally that would be insanely bullish for oil prices. But just as in February/March another part of the futures market has intervened on the other side. Back then it was the oil producers who rising inventory forced into a larger and larger offsetting net short (hedge).This time, however, it is the swap dealers who are short for reasons that aren’t really clear. The weekly COT report for the last week in October showed a record net short for dealers, just beating their most extreme position from the middle of 2013 at -424k contracts. In the first week and November, they blew away that record at -470k. It clearly matters because in 2017 the oil market has changed. It may be the inventory story, or it may be the exit of producers from hedging that inventory and other products. Whatever the case, money managers just aren’t setting the price like they used to. And it could be that managers have changed their market activities, too, where other parts of the futures market are now cueing off (shorting) this possible difference. I honestly don’t know what it is, but I can safely point out where it is.  Now with swap dealers apparently showing very, very strong conviction on the short side, oil prices can’t gain any traction beyond the $57 established by in all likelihood geopolitical risk.

Oil Short-Sellers Return as Doubts Loom on OPEC’s Horizon - Short-selling is rearing its head in the oil market again. After bullish bets on Brent crude hit a record and futures surged to two-year highs, hedge funds are pulling back with a sense that the rally reached its limit for now. Wagers on lower prices rose by the most since June as Middle East tensions took a backseat, while uncertainty looms over Saudi Arabia’s push to extend OPEC’s output curbs this month. "We’re at levels where the market appears to have crested," "Continuing to see supply draw-downs is probably what the next leg of the rally will be predicated on." Doubts over Russia’s willingness to go along with the Saudis, record production from America’s prolific shale fields and a worse outlook for demand from the International Energy Agency helped snap oil’s longest streak of weekly gains in a year. At the same time, concern over heightened geopolitical risks in the Middle East seems to have subsided, at least for now, "We haven’t seen more conflict," he said. "For prices to get a lot higher, you have to see a meaningful increase in disruptions -- and we haven’t." Hedge funds lowered their Brent net-long position -- the difference between bets on a price increase and wagers on a drop -- by 1 percent to 537,557 contracts in the week ended Nov. 14, according to data from ICE Futures Europe. Shorts surged 8.7 percent, while longs fell 0.1 percent. Meanwhile, the net-bullish position on West Texas Intermediate, the U.S. benchmark, rose 10 percent to 349,712 contracts over the same period, according to the Commodity Futures Trading Commission. The net-long position on benchmark U.S. gasoline rose 11 percent, and diesel net-longs rose 3.3 percent. But that optimism may be fading, too. WTI also fell from its recent highs, with American crude stockpiles rising by more than 4 million barrels in two weeks. Plus, there are real risks that OPEC may not be able to effectively extend cuts and will add to the overhang spurred by the U.S. shale surge, 

Baker Hughes: US rig count jumps another 8 units to 915 -The US rig count climbed again this week with an 8-unit jump to 915 rigs working during the week ended Nov. 17, data from Baker Hughes indicate. Rigs targeting natural gas in the US gained 8 units to reach 177 while those drilling for oil remained unchanged at 738 units. Land rigs reached 893, up 5 units from a week ago. Rigs drilling offshore were up 3 units to 21, all of which were in the Gulf of Mexico. Among the major producing states, Texas gained 7 units to reach 449 rigs. Louisiana was up 4 units to 62. Ohio and Utah, at 30 and 12 units, respectively, were up 1 unit each. Four states were unchanged this week: Pennsylvania, 31; California, 14; West Virginia, 12; and Arkansas, 0. Six states were down 1 unit, namely Oklahoma, 122; New Mexico, 68; North Dakota, 46; Colorado, 36; Wyoming, 21; and Alaska, 5. Canada gained 5 units to 208. Oil-directed rigs climbed 1 unit to 109 and those rigs drilling for gas rose 4 units to 99. 

Markets Shrug On Flat Oil Rig Count | OilPrice.com -- The number of oil and gas rigs in the United States rose again this week, this time by 8, according to Baker Hughes, ending a short-lived downward trend in weeks prior.  The number of oil rigs stayed flat this week, while the number of gas rigs gained eight.The WTI and Brent benchmarks fell earlier in the week on a surprise increase in crude oil inventory reported by API and EIA, and probably the biggest catalyst this week, IEA’s downward revision for crude oil demand growth. Still, crude oil managed to rally on Friday before the data release.  The total oil and gas rig count in the United States now stands at 915 rigs, up 327 rigs from the year prior, with the number of oil rigs standing at 738 versus 471 a year ago. The number of gas rigs in the US now stands at 177, up from 116 a year ago.Canada, too, saw an increase to oil and gas rigs of 5, with oil rigs climbing by 1 and gas rigs climbing by 4.  By state, Texas was the big winner, adding 7 rigs. Louisiana was the runner up, adding 4 rigs. WTI was trading up on Friday 1.93 percent at $56.42 at 11:26am EST. Brent crude was trading up 1.45 percent at $62.25 at that time—both benchmarks up slightly from last week. The benchmarks climbed even higher closer to data release. Along with an increase to the number of active oil rigs, US crude oil production was up for the week ending November 10 at 9.645 million barrels per day—another new high for 2017 after reaching a high the week prior. At 7 minutes after the hour, both benchmarks had slipped on the data release, with WTI trading at $56.62, with Brent crude trading at $62.67.

Saudi energy minister: market to remain oversupplied by March 2018 (Reuters) - The world will still have a surplus of oil by end-March next year, Saudi Arabia’s energy minister said on Thursday, signaling a willingness to extend output cuts when OPEC meets at the end of November on whether to extend caps well into 2018. Khalid al-Falih also said he did not want oil prices to rise too fast and too soon to shock consumers, adding that the exit from production cuts would be gradual to make sure market reaction is smooth. “We need to recognize that by the end of March we’re not going to be at the level we want to be which is the five-year average, that means an extension of some sort,” he said, referring to inventory levels in the developed world. “We have gone over 50 percent in reducing excess inventories but that means we still have some excessive inventories that we need to drain,” he told journalists on the sidelines of the UN climate conference in Bonn, Germany. “We don’t want any spikes in price that shock the market. We don’t want any price movements that are unhealthy for demand. We don’t think we’ve seen any of that yet but that’s a potential especially if God forbid we have disruptions in any major country. We’re hopeful none of this will happen.” Asked about the most recent spike in oil prices to a two-year high this month he said, “I am not distracted by short-term gyrations in prices and I certainly don’t spend time looking at hedge funds and the flows into financial investment instruments.” Falih said it was too early to make an assessment on a possible extension to OPEC’s global oil output cuts now, but said Saudi Arabia favors making an extension decision at the next OPEC meeting at the end of the month. 

Russian oil unsettled by talk of longer production cuts -- If Russia’s energy minister had hoped for a united front from the country’s oil executives on what to do about a potential extension to an agreement with Opec to cut global production, a high-profile meeting on Wednesday will have disappointed him. Representatives from Russia’s huge hydrocarbons industry walked out of the Ministry of Energy building in Moscow after a meeting with Alexander Novak, with no discernible resolution on whether Moscow should back an extension to the 11-month agreement, and obvious discontent among executives at talk of another potential year with their pumps at less than full throttle. “We need to continue discussing and monitoring, and have agreed to meet again in a week,” said Alexander Dyukov, head of Gazprom Neft.  The original deal with Opec’s de facto leader Saudi Arabia, brokered by Mr Novak and Russian president Vladimir Putin, reduced oil production from participating countries by 1.8m barrels a day and helped push the price of benchmark Brent Crude above $60 a barrel this week for the first time in more than two years. In May, the agreement was then extended until March 2018.

Iraq Oil Revenue Not Enough For Sustainable Development - Oil revenues still are not high enough to allow the Iraqi government to fund the reconstruction of the country, according to Iraqi Prime Minister Haider Al-Abadi.“Oil prices are not at the required level to be used for sustainable development,” state TV quoted al-Abadi as saying during a press conference. Iraq proclaimed itself victorious earlier this year after a three-year, hard-fought war against the terrorist Islamic State.The victory freed up some money - but not enough - for reconstructing the nation after almost 15 years after the demise of dictator Saddam Hussain and the fall of his regime. The oil price crash of 2014 has made it difficult for fossil-fuel dependent countries to provide key government services to its citizens, and Iraq was not immune.In Iraq, years of financial mismanagement and domestic conflict exacerbated existing civil governance issues.Just over a month has passed since the Kurdish referendum, which resulted in a near-unanimous vote for the Kurdistan Regional Government to secede from Iraq.Baghdad has not accepted the results of the vote, moving instead to deploy its military to secure control of the Kirkuk oilfields, which, though located in northern Iraq, do not lie in areas legally allotted to the KRG.The political consequences of the referendum have played out in a recent deal with Iran. With the Kurdistan autonomous region heavily dependent on oil revenues, chances are the government will seek to come to a mutually beneficial agreement with the central government in Baghdad. Yesterday, the region’s Prime Minister, Nechirvan Barzani acknowledged the adverse effect that the Iraqi offensive has had on the region’s oil income, saying it had fallen to less than 50 percent of what it used to be before October 16, when the offensive was launched.

What are the Saudis really up to with Lebanese 'hostage' Hariri? -  The talk of the town in Beirut is that former Prime Minister Saad al-Hariri is being “held against his will” by Saudi authorities and prevented from returning home to Lebanon. The bizarre story has gone viral on social media networks and around the cafes of Beirut, having first surfaced last week on the front page of the pro-Hezbollah daily al-Akhbar, which described him as a “hostage.” This was shortly after Hariri had announced his resignation as prime minister – in Riyadh, rather than Beirut – on the very same day that the Crown Prince of Saudi Arabia, Mohammad Bin Salman, arrested 11 powerful princes in a massive crackdown against opponents, critics, and doubters, all under the pretext of “fighting corruption.”The relationship between the Crown Prince – commonly referred to as MBS – and Hariri was lukewarm, to say the least. For one thing, Mohammad Bin Salman considered the Lebanese leader too soft on Hezbollah. That doesn’t merit restricting his movement, though, let alone placing him under arrest for two nights, as The Washington Post has claimed. Some are speculating that MBS wants Hariri replaced by his low-profile 51-year old brother Bahaa, a successful businessman with close ties to the kingdom which he inherited from their father Rafik al-Hariri, a tycoon-turned-politician who was assassinated back in February 2005. According to Beiruti bazaar gossip, the Saudis want to install Bahaa as head of Lebanon’s Future Movement, which Saad still leads, and then as prime minister. That story is difficult to believe, however, for a variety of reasons. One is simply that Bahaa al-Hariri was, and remains, completely uninterested in politics. Although he was the eldest son of the slain Rafik, he willingly relinquished the family’s political legacy to his younger brother, seeing the job as too costly, dangerous and dull.

It looks like Saudi Arabia removed Lebanon's prime minister — and it may be the first move in starting a war - Saudi Arabia's alleged push to remove Lebanese Prime Minister Saad al-Hariri may spark a war in the Middle East.  "The Saudis appear to have decided that the best way to confront Iran is to start in Lebanon," a European diplomat recently told Reuters.  Hariri resigned as Lebanon's prime minister during a trip to Saudi Arabia last weekend and multiple reports, as well as public statements from leading Lebanese politicians, indicate that he is being held in the kingdom against his will.  The prime minister is politically supported by Saudi Arabia and is part of a joint government that includes Hezbollah, the Iran-backed militant group. He has not been seen back in his home country since his resignation.  Experts believe that by forcing Hariri's resignation, Saudi Arabia could effectively rebrand Lebanon as an "Iranian outpost" dominated by Hezbollah. This may be the first move in a series of actions ending with armed conflict between Israel and Hezbollah — and could curb Iran's influence in the region.   "The removal of Hariri is, in effect, a kind of trap for Hizballah, daring it to fully reveal its power and dominance in Lebanon and take complete responsibility for the Lebanese state which, from a Saudi perspective, it effectively controls anyway," Hussein Ibish, a senior resident scholar at the Arab Gulf States Institute in Washington, wrote in a recent column on the Saudi-Iranian rivalry in Lebanon.  "The next step would be for Hizballah and Lebanon itself to suffer the consequences of being completely identified with what is widely considered to be an international terrorist organization," Ibish writes.

French foreign minister to meet Hariri as Lebanon crisis escalates - Lebanon's president accused Saudi Arabia on Wednesday of detaining the Lebanese ex-prime minister, in an escalation of the crisis that followed Saad Hariri's surprise resignation from the kingdom almost two weeks ago. In comments published on the official Twitter account of the president, Michel Aoun said nothing justifies that Hariri has not returned home so far. "We consider him detained, arrested" in violation of international laws, Aoun said. It was the first time Aoun describes Hariri as a detainee. He had previously only questioned the "mysterious" circumstances under which Hariri resigned. The rhetoric further deepens the crisis with Saudi Arabia, which is a backer of Hariri, a dual Saudi-Lebanese national. Hariri resigned as Lebanon’s prime minister 11 days ago in a video broadcast from Saudi Arabia and has yet to return home. Saudi Arabia denies holding Hariri against his will. France's Foreign Minister Jean-Yves Le Drian is arriving in Saudi Arabia on Wednesday to meet with Hariri and Saudi officials, a diplomatic source said. Le Drian will meet with powerful Crown Prince Mohammed bin Salman in the capital Riyadh before holding talks with Hariri on Thursday, the aide told a foreign ministry briefing.

If The Saudi Arabia Situation Doesn't Worry You, You're Not Paying Attention - While turbulent during the best of times, gigantic waves of change are now sweeping across the Middle East. The magnitude is such that the impact on the global price of oil, as well as world markets, is likely to be enormous.A dramatic geo-political realignment by Saudi Arabia is in full swing this month. It’s upending many decades of established strategic relationships among the world's superpowers and, in particular, is throwing the Middle East into turmoil.So much is currently in flux, especially in Saudi Arabia, that nearly anything can happen next. Which is precisely why this volatile situation should command our focused attention at this time.The main elements currently in play are these:

• A sudden and intense purging of powerful Saudi insiders (arrests, deaths, & asset seizures)
• Huge changes in domestic policy and strategy 
• A shift away from the US in all respects (politically, financially and militarily)
• Deepening ties to China
• A surprising turn towards Russia (economically and militarily)
• Increasing cooperation and alignment with Israel (the enemy of my enemy is my friend?)

Taken together, this is tectonic change happening at blazing speed.That it's receiving too little attention in the US press given the implications, is a tip off as to just how big a deal this is -- as we're all familiar by now with how the greater the actual relevance and importance of a development, the less press coverage it receives. This is not a direct conspiracy; it's just what happens when your press becomes an organ of the state and other powerful interests. Like a dog trained with daily rewards and punishments, after a while the press needs no further instruction on the house rules.

EXCLUSIVE: Senior Saudi figures tortured and beaten in purge - Some senior figures detained in last Saturday's purge in Saudi Arabia were beaten and tortured so badly during their arrest or subsequent interrogations that they required hospital treatment, Middle East Eye can reveal.People inside the royal court also told MEE that the scale of the crackdown, which has brought new arrests each day, is much bigger than Saudi authorities have admitted, with more than 500 people detained and double that number questioned.Members of the royal family, government ministers and business tycoons were caught up in the sudden wave of arrests orchestrated by Crown Prince Mohammed bin Salman, known as MBS, under the banner of an anti-corruption drive. Some, but not all, of the top figures arrested were singled out for the most brutal treatment, suffering wounds to the body sustained by classic torture methods. There are no wounds to their faces, so they will show no physical signs of their ordeal when they next appear in public. Some detainees were tortured to reveal details of their bank accounts. MEE is unable to report specific details about the abuse they suffered in order to protect the anonymity of its sources. The purge, which follows an earlier roundup of Muslim clerics, writers, economists and public figures, is creating panic in Riyadh, the Saudi capital, particularly among those associated with the old regime of King Abdullah, who died in 2015, with power then passing to his half-brother, King Salman. Many fear the primary purpose of the crackdown is a move by MBS to knock out all rivals both inside and outside the House of Saud before he replaces his 81-year-old father. On Wednesday night, seven princes were released from the Ritz-Carlton Hotel in Riyadh, where they had been held since Saturday. The top royals have been moved to the king’s palace, sources told MEE. The crown prince’s cousin, Mohammed bin Nayef, who continues be under house arrest, has had his assets frozen, the Reuters news agency reported. Sons of Sultan bin Abdulaziz have also been arrested and had their assets frozen. One of the most famous is Prince Bandar bin Sultan, a former Saudi ambassador to Washington and confidant of former US president George W Bush. Saudi authorities said that one of the corruption cases they are looking at is the al-Yamamah arms deal, in which Bandar was involved. But Bandar himself is not under arrest and living in Jeddah, a source told MEE.

Saudi Prince's Revolution Is the Real Arab Spring - When Crown Prince Mohammed bin Salman of Saudi Arabia rounded up 500-head of royals and billionaires last weekend and tossed them into luxury confinement, it was more than just a power grab by a young man in a hurry. It was a revolution. But of what kind? Faisal J. Abbas, the editor of the Arab News, the English-language daily that normally speaks for the government, provided an answer of sorts from the Saudi perspective. “With all due respect to the pundits out there, 'experts' analyzing Saudi Arabia in previous decades had it too easy," he wrote on Tuesday. "We need to understand that the days when things took too long to happen -- if they happened at all -- are forever gone. The exciting part is that thanks to the ambitious reforms being implemented … we are finally living in a country where anything can happen.” Muhammed, known as MBS, is 32 years old. He looks like a storybook Arabian prince and he talks like a progressive. He says he plans to liberalize and modernize his sclerotic society, expand the civil rights of women, reduce the economic power of the Saudi fossil fuel industry, and loosen the grip of the 5,000-member royal cousins club that has bled the country dry for generations.Not only that: The prince also promises to transform Saudi Islam into a more tolerant brand of religion that does not fund extremist mosques in the West or underwrite jihadists in the Middle East.  Isn’t this the Arab leader we have been waiting for?Yet so far, there doesn’t seem to be much enthusiasm in world capitals. With the exception of U.S. President Donald Trump, who has tweeted his support, events in Riyadh have elicited mostly silence.This is understandable. Sometimes bright young Arab revolutionaries turn out to be Anwar Sadat, whose radical vision brought peace between Egypt and Israel. More often, they are tyrannical like Gamal Abdul Nasser or murderous like Osama Bin Laden or hapless like the Egyptian yuppies in Cairo’s Tahrir Square in 2010. L et's hope the dismal outcomes of that so-called Arab Spring have taught gullible Westerners not to engage in wishful thinking.  

The Saudi purge isn't just a power grab -- It makes sense to be cynical about Crown Prince Mohammed bin Salman’s ostensible crackdown on corruption in Saudi Arabia. Among the 11 princes, 4 ministers, and dozens of well-known businessmen arrested were some of the 32-year-old’s last potential rivals to the Saudi throne. The move also smacks of an asset snatch. Police nabbed 3 of the Arab world’s 10 richest men, including investor Prince Alwaleed bin Talal, the billionaire best known for rescuing Citicorp in 1991 and making big bets on Apple Inc. and 21st Century Fox Inc. But was it only a Machiavellian power play? Or is this the start of a dramatic, go-for-broke attempt to transform a country that’s resisted change for decades? Prince Mohammed seems to be playing the equally ruthless roles of autocrat and reformer. The millennial has been outspoken about his  bold plans to modernize Saudi society and wean the kingdom from fossil fuel. Now, Prince Mohammed has locked up globe-trotting tycoons and other dynastic rivals, sending shock waves across the desert and around the world. Since Saudi Arabia’s founding in 1932 by his grandfather, Abdulaziz Al Saud, successive kings have sought consensus among the family’s thousands of princes, balancing religious, princely, and tribal factions to maintain stability in the world’s largest oil supplier. Decisions were made at a glacial pace, often capped with generous payouts for anyone left unhappy. Prince Mohammed has smashed that conservative status quo in an act, he no doubt believes, of creative destruction. This is a man of dead-certain belief in himself, who told this magazine in a long, autobiographical interview in April 2016 that his childhood experiences among princes and potentates were more valuable and formative than Steve Jobs’s, Mark Zuckerberg’s, and Bill Gates’s. So, he wondered aloud, “if I work according to their methods, what will I create?” Now we know his disruptive potential. The prince’s unprecedented arrest of a who’s who of Saudi society is a first stab at fulfilling his vow to hold the corrupt accountable. “I confirm to you, no one will survive in a corruption case—whoever he is, even if he’s a prince or a minister,” Prince Mohammed said in a televised interview in May. The vow has now become a Twitter sensation among Saudis under the age of 30, who make up 70 percent of the population, the demographic bulge the prince has made his base. They’re still plenty skeptical of Prince Mohammed and his father the king, who recently visited Moscow with 1,500 retainers, his own carpets, and a golden escalator for his Boeing 747.

How deep ties with Pakistan’s military helped Saudi purge - Pakistan has traditionally maintained that its bilateral relationship with the Kingdom of Saudi Arabia is its “most important diplomatic relationship.” Developments in Saudi Arabia last week appear to have hinged to a significant degree on the close relationship that the Kingdom shares with the Pakistani military. Besides both being members of the Organization of Islamic Cooperation (OIC), the two have long maintained a strong military relationship. Pakistani military personnel frequently serve in Saudi Arabia and its last army chief, General Raheel Sharif, now heads a 41-nation Islamic army coalition based out of Riyadh. Sharif’s accession was seen as Islamabad picking sides with Saudi Arabia against Iran. On October 26, the Pakistani Army concluded Al-Saman 6, a three-week military exercise with the Saudi Royal Land Forces.  Pakistan has also been keen to sell arms to Saudi Arabia and has enjoyed Saudi support while developing its nuclear weapons program. On October 16, Pakistan Army Chief Gen Qamar Javed Bajwa met with Saudi Crown Prince Mohammed bin Salman, the man behind the purge against senior Saudi members of the royal family, on the sidelines of an ‘anti-terror’ conference organized by the Saudi Defense Ministry in Riyadh. General Bajwa also visited Tehran on November 6, and, according to reliable diplomatic sources, discussed cooperation on missile technology and the visit of Iranian scientists to SUPARCO, Pakistan’s official space agency.  The meeting with Crown Prince Salman came a little over two months after General Bajwa hosted Saudi Deputy Defense Minister Mohammad Bin Abdullah Al-Aysh in Rawalpindi, where Saudi domestic security was discussed in detail. “Of course, there was no hunch of the arrests and the political upheaval that we’ve seen over the past week or so back then, but in recent months there has been a clear urgency in Riyadh with regards to Pakistan’s involvement in its security,” a senior military official told Asia Times on condition of strict anonymity.

What the Saudi Arrests Mean for the Kingdom's Oil Policy | Rigzone: - Gadfly: We may never fully know what lies behind Crown Prince Mohammed bin Salman's decision to arrest more than 200 Saudi citizens, including 11 princes and four government ministers, on corruption charges, just as tensions with Iran are escalating.What we do know is that his move simultaneously boosted the oil price and undermined the attractiveness of Aramco to potential foreign investors. But it would be a mistake to conclude that this political decision also heralds a shift in Saudi oil policy, or permanently damages the prospects of the state oil company's IPO. Crude prices always rise in response to unrest in the Middle East, even when the countries involved produce little or no oil. That it has done so now, in the wake of the arrests in the region's biggest producer and the threats against Lebanon and Iran in response to a missile launched from Yemen, should come as no surprise.The jump, which took oil prices to their highest level in more than two years immediately after the arrests, might be expected to boost support for a pause before OPEC and its friends decide whether to extend their current deal on production cuts until the end of 2018. There are some, including Russian President Vladimir Putin, who have said that it is too early to decide what should be done beyond the deal's current expiry in March. But dissenting voices are likely to fade into the background when the groups meet in Vienna on Nov. 30. The output cuts do not target a specific oil price -- as Saudi oil minister Khalid Al-Falih said in June, the aim is to reduce excess inventories. That problem has not yet been resolved. 

Saudi crackdown will not hit investments: energy minister Falih (Reuters) - Saudi Arabia’s corruption investigations are linked to a just few individuals and will not hinder investments in the kingdom, its energy minister said on Thursday. Khalid al Falih said the crackdown was way overdue and would also not have any impact on plans to float shares in oil giant Saudi Aramco. “Everybody understands that this is a limited, domestic affair that the government is simply cleaning house,” he said on the sidelines of the U.N. climate conference in Bonn, Germany. Saudi Arabia’s future king has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including billionaire Alwaleed bin Talal who is one of the kingdom’s most prominent businessmen. The move by Prince Mohammed bin Salman against Saudi’s political and business elite also targeted the head of the National Guard, Prince Miteb bin Abdullah, who was detained and replaced as minister of the powerful National Guard by Prince Khaled bin Ayyaf. The energy minister said many foreign investors who had been have been doing business in Saudi Arabia for decades “will tell you that they have not seen corruption in their interactions with the Saudi government or with the Saudi entities”. “It (the crackdown) has no impact on foreign direct investment. It has no impact whatsoever on the kingdom’s openness, capital flows and our wide open investment environment,” he added. Saudi Arabia’s plan to float around 5 percent of Aramco in an initial public offering (IPO) is a centerpiece of Vision 2030, a wide-ranging reform plan to diversify the Saudi economy beyond oil. Falih said a decision is yet to be made on where the listing would be made. 

Saudi Arabia Offers Arrested Royals A Deal: Your Freedom For Lots Of Cash -- As we noted shortly after the Crown Prince’s purge of potential rivals within Saudi Arabia’s sprawling ruling family, while the dozens of arrests were made under the pretext of an "anti-corruption crackdown", Mohammed bin Salman’s ulterior motive was something else entirely: Replenishing the Kingdom’s depleted foreign reserves, which have been hammered for the past three years by low oil prices, with some estimating that the current purge could potentially bring in up to $800 billion in proceeds.  Furthermore, the geopolitical turmoil unleashed by the unprecedented crackdown helped push oil prices higher, creating an ancillary benefit for both the kingdom’s rulers and the upcoming IPO of Aramco.  And, in the latest confirmation that the crackdown was all about cash, the Financial Times reports today that the Saudi government has offered the new occupants of the Riyadh Ritz-Carlton a way out.... and it’s going to cost them: In some cases, as much as 70% of their net worth.Saudi authorities are negotiating settlements with princes and businessmen held over allegations of corruption, offering deals for the detainees to pay for their freedom, people briefed on the discussions say.In some cases the government is seeking to appropriate as much as 70 per cent of suspects’ wealth, two of the people said, in a bid to channel hundreds of billions of dollars into depleted state coffers.The arrangements, which have already seen some assets and funds handed over to the state, provide an insight into the strategy behind Crown Prince Mohammed bin Salman’s dramatic corruption purge.  The crackdown has led to the detention of hundreds of royals, ministers, officals and the country’s richest oligarchs including Prince Alwaleed bin Talal, the billionaire, Waleed al-Ibrahim, the founder of Middle East Broadcasting Center, which owns Al Arabiya, the Saudi satellite television channel, and Bakr bin Laden, chairman of the Saudi Binladin construction group and brother of Osama bin Laden.

Saudi 'Corruption' Probe Widens: Dozens Of Military Officials Arrested --After jailing dozens of members of the royal family, and extorting numerous prominent businessmen, 32-year-old Saudi prince Mohammed bin Salman has widened his so-called 'corruption' probe further still. The Wall Street Journal reports that at least two dozen military officers, including multiple commanders, recently have been rounded up in connection to the Saudi government’s sweeping corruption investigation, according to two senior advisers to the Saudi government.Additionally, several prominent businessmen also were taken in by Saudi authorities in recent days.A number of businessmen including Loai Nasser, Mansour al-Balawi, Zuhair Fayez and Abdulrahman Fakieh also were rounded up in recent days, the people said.Attempts to reach the businessmen or their associates were unsuccessful.It isn’t clear if those people are all accused of wrongdoing, or whether some of them have been called in as witnesses. But their detainment signals an intensifying high-stakes campaign spearheaded by Saudi Arabia’s 32-year-old crown prince, Mohammed bin Salman.There appear to be three scenarios behind MbS' decision to go after the military:

• 1) They are corrupt and the entire process is all above board and he is doing the right thing by cleaning house;
• 2) They are wealthy and thus capable of being extorted (a cost of being free) to add to the nation's coffers; or
• 3) There is a looming military coup and by cutting off the head, he hopes to quell the uprising.

UN: Yemen facing massive famine if blockade not lifted - Al Jazeera: Millions of people will die in Yemen, in what will be the world's worst famine crisis in decades, unless a Saudi-led military coalition ends a devastating blockade and allows aid into the country, the United Nations has warned. The Saudi-led alliance fighting Houthi rebels in Yemen tightened its air, land and sea blockade of the country after a ballistic missile was fired on Saturday towards the Saudi capital, Riyadh. Since then, the country's already inflated food and fuel prices have skyrocketed, while flights delivering much-needed humanitarian aid have been prevented from landing. After briefing the UN Security Council on Wednesday, Mark Lowcock, the UN's humanitarian chief, said the move will worsen a "catastrophic" humanitarian crisis that has pushed millions to the brink of famine and has caused a mass cholera epidemic. "I have told the Council that unless those measures are lifted ... there will be a famine in Yemen," Lowcock, who visited Yemen late in October, told reporters on Wednesday. WATCH: 'Situation is catastrophic' as Saudi tightens blockade on Yemen (1:59) "It will not be like the famine that we saw in South Sudan earlier in the year, where tens of thousands of people were affected. It will not be like the famine which cost 250,000 people their lives in Somalia in 2011," he added. "It will be the largest famine the world has seen in many decades, with millions of victims." 

Houthi Rebels Threaten To Sink Saudi Battleships And Oil Tankers -- Houthi rebels in civil-war torn Yemen have threatened to start attacking oil tankers and warships sailing under Saudi coalition flag, unless Riyadh lifts its naval blockade of Yemen which threatens the lives of millions in the war-torn country. The threat of a military response to the ongoing blockade was made after Houthi leader Maj. Gen. Yousef al-Madani met leaders of the naval, coastal defense and coast guard forces Saturday. On that day, Houthi leader Abdel-Malek al-Houthi posted a message on Facebook assuring that “international navigation will remain safe as it was before,” making clear that “only those who attack our country” will be targeted.   A military spokesman for the Houthi rebels, Gen. Sharaf Ghalib Luqman, said that “systematic crimes of aggression” and the “closure of ports” compels the Houthi forces “to target all sources of funding” of the aggressor. He added the country is ready to “respond to the escalation of the Saudi-US aggression promptly.” The Saudi-led military coalition announced last week that it was temporarily shutting all of Yemen’s land border crossings as well as its air and sea ports in response to a ballistic missile that targeted Riyadh on November 4. The kingdom accused Houthis of launching an Iran-supplied ballistic missile at the Saudi capital last weekend, and responded with bombing raids on the Yemeni capital, Sana’a. Iran has denied allegations that it supplies weapons to the Houthis, but concedes it backs the rebels’ cause. The Houthis, which are loyal to Yemen’s former president, are currently in control of most of Yemen, despite the two-year war with the Saudi Arabian-led coalition that began in defense of the exiled incumbent, Abd-Rabbu Mansour Hadi.

Saudi Propaganda and the Starvation of Yemen - Samuel Oakford reports that a U.N. panel finds no evidence to support the Saudi-led coalition’s claims about missile transfers to the Houthis and questions the justification for tightening the blockade: A U.N. panel of experts found Saudi Arabia is purposefully obstructing the delivery of humanitarian aid into Yemen and called into question its public rationale for a blockade that could push millions into famine. In the assessment, made in a confidential brief and sent to diplomats on November 10, members of the Security-Council appointed panel said they had seen no evidence to support Saudi Arabia’s claims that short-range ballistic missiles have been transferred to Yemeni rebels in violation of Security Council resolutions. The coalition would have no right to inflict collective punishment on the civilian population even if their claim about the missile fired at Riyadh were true. Starving the population in retribution would be a criminal and disproportionate response to a missile launch in any case, but it is all the more outrageous when the pretext for doing so is so shaky. According to this panel, there is also no evidence to support the coalition’s missile claim. Since the Saudis and their allies have been exaggerating the extent of Iran’s involvement in Yemen from the start, the claim that the missile was of Iranian origin was always very questionable. It is a measure of how reflexively the U.S. supports the coalition that our government endorsed their story without question.

Saudi Arabia’s Incompetence Would Be Comical If It Weren’t Killing So Many People - Saudi Arabia should be a very powerful country. Endowed with one-fifth of the world’s proven oil reserves, close ties with powerful Western states, access to endless amounts of U.S. weaponry, the support of global corporate interests, and the religio-cultural cachet afforded by stewardship of Muslim holy sites, the kingdom should by all accounts be an undisputed regional powerhouse. Suffice to say, this is not the case, as a quick glance at the Middle East today reveals. Saudi foreign policy is floundering in a way that would be comical if it didn’t involve so much human devastation. Under the newly minted leadership of Mohammed bin Salman, the Saudi government is stuck losing every proxy war that it is involved in. It has failed to bring their diminutive Gulf rival Qatar to heel and most recently humiliated its own ally, the Lebanese Prime Minister Saad Hariri, in what appears to be a tragicomic attempt to destabilize the Lebanese government. Saudi Arabia is often criticized for being the seedbed for radical Islam, but this might be just a symptom of a deeper problem: the radical incompetence of its leadership. Since the 1975 assassination of King Faisal bin Abdulaziz — the last ruler widely seen to have promoted a positive image of the country — Saudi Arabia’s foreign policy has been catastrophically adrift. Despite spending exorbitant sums of money to spread its influence, the kingdom’s leaders appear more and more besieged — at war not just with Iran and its allies, but with Qatar, the Muslim Brotherhood, and internal rivals.

Arab League To Hold Urgent Meeting On Iran As Saudis Mobilize F-15 Fighter Jets - The Arab League is set to hold an emergency meeting on Iran at Saudi Arabia's request, thisaccording to Reuters and various regional sources, at a moment when Saudi fighter jets may be mobilizing for war in an attempted show of force. Egypt-based Ahram Online also reports further that the meeting will discuss "Iranian interference" in the region at League headquarters in Cairo, and other early unconfirmed reports indicate the meeting could come as early as next Sunday.News of the Arab League extraordinary session comes as tensions are at breaking point as regional powers - especially Saudi Arabia and Israel - talk war against perceived Iranian expansion and domination in the Middle East. Meanwhile, The Daily Star, citing the Baghdad Post, claims that Saudi Arabia has scrambled its air force for strikes in Lebanon: "Reports now state the Royal Saudi Air Force has placed its warplanes on alert to launch strikes as the region sits on a knife edge." The report accompanies undated footage of Saudi F-15's in aerial maneuvers over what is presumably a Saudi airfield.The Daily Star adds the following accompanying the video:The kingdom has mobilized its F-15 fighter jet fleet to launch a military operation against the Iranian-backed terrorist militia of Hezbollah in Lebanon, regional news website The Baghdad Post reports.Saudi Arabia previously accused both Lebanon and Iran of committing an act of wars against it after rebels fired a missile at the King Khalid International Airport in the kingdo m's capital of Riyadh.

Revealed – Saudis Plan To Give Up Palestine – For War On Iran - The tyrants of Saudi Arabia developed a plan that sells away Palestine. They see this as necessary to get U.S. support for their fanatic campaign against their perceived enemy Iran. An internal Saudi memorandum, leaked to the Lebanese paper Al-Akhbar, reveals its major elements. (Note: The genuineness of the memo has not been confirmed. In theory it could be a "plant" by some other party. But Al-Akhbar has so far an excellent record of publishing genuine leaks and I trust its editors' judgement.) According to the memo the Saudis are ready to give up on the Palestinian right of return. They forfeit Palestinian sovereignty over Jerusalem and no longer insist of the status of a full state for the Palestinians. In return they ask for a U.S.-Saudi-Israeli (military) alliance against their perceived enemy on the eastern side of the Persian Gulf. Negotiations on the issue were held between the Saudis and the Zionist under the aegis of the United States. Netanyahu and Trump’s "shared personal assistant, wunderkind Jared Kushner", is the point men in these negotiations. He made at least three trips to Saudi Arabia this year, the last one very recently. The Saudi operations over the last month, against the internal opposition to the Salman clan as well as against Hizbullah in Lebanon, have to be seen in the context and as preparation of the larger plan.

War between Iran and Saudi Arabia could radically transform the world’s oil markets - A fire erupted at an oil pipeline connecting Bahrain and Saudi Arabia, and the two Arab allies are pointing the finger at Tehran. The oil pipeline resumed operations in a matter of hours, but the war of words is heating up. Bahrain’s Foreign Minister Khalid Al-Khalifa said on Twitter that the “attempt to bomb the Saudi-Bahraini oil pipeline is a dangerous Iranian escalation that aims to scare citizens and hurt the global oil industry.” A spokesperson for Iran fired back, saying that the Bahrainis “need to know that the era for lies and childish finger-pointing is over.” The incident comes only days after a missile was fired from Yemen into Saudi Arabia, which the Saudis pinned on Iran. Meanwhile, a web of intrigue has enveloped Lebanon, the small country in which all the regional powers hope to exert their influence. Earlier this month, Lebanese Prime Minister Saad al-Hariri resigned and decamped to Saudi Arabia, blaming Iran and Hezbollah for putting his life and his family’s safety at risk. The incident comes only days after a missile was fired from Yemen into Saudi Arabia, which the Saudis pinned on Iran. The bizarre events, many believe, are part of a broader proxy battle between Iran and Saudi Arabia—a conflict that only seems to be heating up. Crown Prince Mohammad bin Salman’s internal purge of rival members of the Saudi royal family has also raised tensions. Middle East conflicts tend to send oil prices in one direction: up. In recent weeks and months, we’ve seen a return of Middle East geopolitical tension, such as the Kurdish independence referendum and subsequent seizure of Kirkuk oil fields by the Iraqi government. To date, these events have added some upward pressure on oil prices, but the markets have largely shrugged off those flashpoints. A Saudi-Iranian struggle is another matter.

Xi Jinping Pledges To "Strengthen Relationship" Between Saudi Arabia And China -- In what can only be described as a masterful play to entice Saudi Arabia to list shares of Aramco in Hong Kong (assuming the kingdom follows through with the listing, which is reportedly in jeopardy) Chinese state media reported Friday that Chinese President Xi Jinping pledged to strengthen the relationship between China and Saudi Arabia as the latter tries to reform its economy. According to the South China Morning Post, Xi vowed to strengthen cooperation between the two states at a time when the Middle Eastern kingdom is facing a political shake-up at home, and heightened tensions with Lebanon and Iran. Xi’s vow of friendship came with the crucial qualifier that the relationship between the two countries wouldn’t be affected by shifting international circumstances. No matter how the international and regional situation changed, China’s determination to deepen strategic cooperation with Saudi Arabia would not change, President Xi Jinping told Saudi King Salman in a telephone conversation, according to a report by China’s state broadcaster CCTV. “China supports Saudi in its efforts to safeguard its sovereignty and achieve greater development,” Xi was quoted as saying. Of course, that’s an implicit threat that China might come to KSA’s aide if the simmering hostilities between the kingdom and Iran explode out into a military conflict between the two regional rivals. However, the SCMP also stresses that China has a strong relationship with Iran as well. Hong Kong is reportedly still in consideration to host the Aramco IPO.

How Long can Putin Dance with both Riyadh and Tehran? -  Unlike US President Donald Trump, who openly shares Saudi Arabia’s hostility towards Iran, Russian President Vladimir Putin has sought to avoid taking sides in the growing Saudi-Iranian dispute.  Indeed, the recent meeting between Putin and Saudi King Salman bin Abdulaziz Al Saud in Moscow was quickly followed by Putin’s visit to Tehran, where he met with Iranian Supreme Leader Ayatollah Ali Khamenei and President Hassan Rohani.   Russia clearly is seeking good relations with both countries despite their antagonism towards each other.   What is Putin’s objective? The most basic answer is that Russia values and needs cooperation with both Tehran and Riyadh. In Syria, Russia and Iran are very much co-dependent on each other in their effort to prop up the Assad regime and defeat its opponents. Moscow needs Iran and its Shia militia allies to supply the ground forces that Russia does not want to deploy to Syria just as much as Tehran needs Russia’s capable combat air support.   At the same time, Saudi-Russian cooperation in restraining oil production is crucial for meeting Putin’s need to prop up oil prices to support Russia’s stagnant economy. Putin is heavily dependent on petroleum exports for funding his ambitious arms build-up plans and for helping him maintain internal stability. Putin hopes to increase Russian exports to and investment from Saudi Arabia to alleviate the economic pressure Moscow faces because of Western economic sanctions related to his policies towards Ukraine.   In other words, Putin is seeking good relations with both Tehran and Riyadh at the same time because Russia needs them. Saudi-Iranian mutual hostility provides certain opportunities for Moscow. While neither Riyadh nor Tehran appreciates Moscow’s cooperating with the other, Putin understands that their mutual antagonism is so great that neither can afford not to cooperate with Moscow. If anything, Saudi-Iranian hostility motivates both Riyadh and Tehran to increase cooperation with Moscow to project the image that Russia really is on their side — a competition that Putin is most willing to exploit.