Sunday, December 3, 2017

OPEC extends output cuts to end of 2018; US gasoline exports hit a record high

as was widely expected, OPEC oil ministers at their biannual meeting in Vienna on Thursday agreed to extend their reduced oil output quotas at the same level they've been at since the beginning of 2017 until the end of 2018; that was, in effect, a nine month extension of the production cut agreement already in place, since at their meeting at the end of May of this year they had agreed to extend the original 6 month agreement of November 2016 by 9 months, from June 2017 through March 2018...the only noteworthy change from the original pact was that Nigeria and Libya, who were previously exempt from the production limits because their oil output had already been reduced by civil strife, have now agreed to a combined cap of 2.8 million barrels per day, less than 100,000 barrels per day above their average output of the last two months, but quite a bit more than the 2.25 million barrels of oil per day the two countries were producing when the first production curtailment agreement was signed...the non-OPEC participants who were in the original pact, led by Russia, also agreed to hold their production at reduced levels, and, since Russian oil companies were reluctant to commit to production cuts for over a year into the future on concerns that an extension for the entirety of 2018 could prompt a spike in crude production in the US, OPEC also agreed to review this deal at their June meeting, with the possibility that they would adjust the agreement at that time, based on any changes in global market conditions they had not foreseen.... 

since the final disposition of this OPEC meeting was largely discounted by oil traders beforehand, the market reaction to the news from this meeting was fairly muted, and trading volumes were not out of the ordinary...oil prices did end 47 cents lower on the week, however, which as it turns out was the largest weekly price drop in 2 months, since oil prices have been in an extended rally over that entire period, and closed last week at a 2½-year high of $58.95 a barrel...from there, it was not unexpected to see oil prices fall 84 cents to $58.11 a barrel in profit taking on Monday, as doubts about the OPEC pact overcame the prior week's exuberance, and Keystone pipeline imports from Canada jittery oil traders stayed on the sidelines awaiting the OPEC news, U.S. oil prices for January delivery then fell 12 cents on Tuesday and then another 69 cents to $57.30 a barrel on Wednesday, as the EIA reported that both gasoline and distillates supplies showed large increases...oil prices then yo-yoed in advance of the OPEC meeting Thursday morning, first rising, then falling below $57 a barrel before ending 10 cents higher at $57.40 a barrel on the news, with overseas prices seeing a larger 46 cent increase....US oil prices then rocketed to as high as $58.88 on Friday, but then retreated to close with a gain of 96 cents at $58.36 a barrel, as all US markets were rocked when former national security adviser Michael Flynn plead guilty to lying under oath and implicated Donald Trump for meddling in Russia while Obama was still president...

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 24th, showed a big drop in our oil imports (due to the Keystone shutdown) while our refineries were using oil at a record pace for this time of year, and hence we needed to pull quite a bit of oil out of storage to meet their needs...our imports of crude oil fell by an average of 544,000 barrels per day to an average of 7,329,000 barrels per day during the week, while our exports of crude oil fell by an average of 179,000 barrels per day to 1,412,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 5,917,000 barrels of per day during the week, 365,000 barrels per day less than the net imports of the prior the same time, field production of crude oil from US wells rose by 24,000 barrels per day to another record high of 9,682,000 barrels per day, which means that our daily supply of oil coming from net imports and from wells totaled an average of 15,599,000 barrels per day during the reported week... 

during the same week, US oil refineries were using 17,003,000 barrels of crude per day, 165,000 barrels per day more than they used during the prior week, while at the same time 828,000 barrels of oil per day were being withdrawn from 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, from oilfield production, and from storage was 576,000 fewer barrels per day than what refineries reported they used during the account for that disparity, the EIA needed to insert a (+576,000) 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 slipped to an average of 7,619,000 barrels per day, 1.7% less than the 7,748,000 barrels per day average imported over the same four-week period last year....the 828,000 barrel per day decrease in our total crude inventories included a 490,000 barrel per day withdrawal from our commercial stocks of crude oil and a 338,000 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 24,000 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 4,000 barrels per day increase in output from Alaska....the 9,682,000 barrels of crude per day that were produced by US wells during the week ending November 24th was yet another new record high for US output, 10.4% more than the 8,770,000 barrels per day we were producing at the end of 2016, and 11.3% more than the 8,699,000 barrels per day of oil that were being produced during the during the equivalent week a year ago...

US oil refineries were operating at 92.6% of their capacity in using those 17,003,000 barrels of crude per day, up from 91.3% of capacity the prior week, and above normal for this time of year...while the 17,003,000 barrels of oil that were refined this week were still 4.1% less than the 17,725,000 barrels per day that were being refined the week before Hurricane Harvey struck at the end of August, they were at a record level for any week during the autumn months, 4.4% more than the 16,283,000 barrels of crude per day that were being processed during week ending November 25th, 2016, when refineries were operating at 89.8% of capacity, and 11.8% above the 10-year seasonal average for this time of the year... 

even with increase in the amount of oil refined, gasoline output from our refineries was 2.0% lower, decreasing by 210,000 barrels per day to 10,222,000 barrels per day during the week ending November 24th, after increasing by 580,000 barrels per day the prior week...that production was still 2.4% higher than the 9,986,000 barrels of gasoline that were being produced daily during the week ending November 25th last year, and a new high for any comparable November week on addition, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 51,000 barrels per day from last week's November record to 5,284,000 barrels per day, which was still 1.3% more than the 5,216,000 barrels per day of distillates that were being produced during the the same week a year ago....    

with our gasoline production remaining elevated, our gasoline inventories at the end of the week rose by 3,627,000 barrels to 214,102,000 barrels by November 24th, primarily because our domestic consumption of gasoline fell by 871,000 barrels per day to 8,724,000 barrels per day at the same time, even as our exports of gasoline rose by 431,000 barrels per day to a record high 1,213,000 barrels per day, while our imports of gasoline rose by 12,000 barrels per day to 526,000 barrels per day...however, with significant gasoline supply withdrawals in 15 out of the last 24 weeks, our gasoline inventories are still down by 11.7% from their pre-summer high of 242,444,000 barrels, and more than 5.3% below last November 25th's level of 226,123,000 barrels, even as they are still roughly 1.8% above the 10 year average of gasoline supplies for this time of the year...   

since our gasoline exports happened to jump to a record high this week, we'll include a graph below of what those exports look like historically...

November 30 2017 gasoline exports for November 24

the above graph comes from a Zero Hedge post on this week's EIA report, and it shows US gasoline exports in thousands of barrels per day from mid-2010 to the current week, with gasoline exports prior to July 2016 shown monthly, and gasoline exports after that date shown weekly; prior to 2010, our gasoline exports were negligible and were not tracked you can see, there is a seasonal pattern to gasoline exports, in that they rise during the fall and winter months, when domestic use of gasoline is at its lowest, and then fall back in the summer, when US demand is higher...although we've recently expressed concern, bordering on dire, about the elevated level of our distillates exports, this one week of record high gasoline exports is not yet that critical, especially during a week when our own supplies were near normal and rising...

meanwhile, with our distillates production still near record levels, our supplies of distillate fuels rose by 2,747,000 barrels to 127,779,000 barrels over the week ending November 24th, in just the third supply increase in thirteen weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 175,000 barrels per day to 3,882,000 barrels per day, and as our exports of distillates fell by 300,000 barrels per day to 1,130,000 barrels per day, while our imports of distillates fell by 70,000 barrels per day to 120,000 barrels per day...even after this week’s increase, our distillate inventories were still 17.1% lower at the end of the week than the 154,196,000 barrels that we had stored on November 25th, 2016, and 5.2% lower than the 10 year average of distillates stocks at this time of the year

finally, the big drop in our crude oil imports, combined with another increase in domestic refining demand, meant that our commercial crude oil inventories fell for the 27th time in the past 34 weeks, decreasing by 3,429,000 barrels, from 457,142,000 barrels on November 17th to 453,713,000 barrels on November 24th....while our oil inventories as of November 24th were 7.1% below the 488,145,000 barrels of oil we had stored on November 25th of 2016, and fractionally lower than the 457,212,000 barrels of oil that we had in storage on November 27th of 2015, they were still 30.9% greater than the 347,015,000 barrels of oil we had in storage on November 28th  of 2014, at a time when the buildup of our oil glut in the US was just getting started...      

This Week's Rig Count

because of last week's Thanksgiving holiday and resulting early report, this week's Baker Hughes rig count report for the week ending December 1st covers changes in drilling activity for the nine days from November 22nd to December 1st...for that period, they reported that drilling rig activity increased for the 4th week in a row, but for just the 7th time out of the last 18 weeks, as the active rig count rose by 6 rigs, from 923 rigs on November 22nd to 929 rigs on December 1st....that was also 332 more rigs than the 593 rigs that were deployed as of the December 2nd report last year, but still well down from the recent high of 1929 drilling rigs that were in use on November 21st of 2014... 

the number of rigs drilling for oil rose by 2 rigs to 749 rigs this week, which was also up by 272 oil rigs over the past year, while this week's oil rig count remained far from the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the count of drilling rigs targeting natural gas formations rose by 4 rigs to 180 rigs this week, which was still only 61 more gas rigs than the 119 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...

activity on two platforms that had been drilling in the Gulf of Mexico offshore from Louisiana was shut down this week, which reduced the Gulf of Mexico rig count to 20 rigs, which was still down from the 22 rigs active in the Gulf of Mexico a year ago...since there were no other offshore rigs active other than those deployed in the Gulf either this week or a year ago, those Gulf of Mexico rig counts are also the same count as the total US offshore count...

the count of active horizontal drilling rigs increased by 6 rigs to 792 rigs this week, which was up by 307 rigs from the 485 horizontal rigs that were in use in the US on December 2nd of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...meanwhile, both the vertical rig count and the directional rig counts were unchanged at 66 rigs and 71 rigs respectively, with the vertical rig count also unchanged from a year ago, while the directional rig count was up from the 46 directional rigs that were working on December 2nd a year ago..

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 both tables, the first column shows the active rig count as of December 1st, the second column shows the change in the number of working rigs between last week's count (November 22nd) and this week's (December 1st) count, the third column shows last week's November 22nd 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 2nd of December, 2016...           

December 1 2017 rig count summary

as you can see, despite the 4 unit increase in rigs drilling for natural gas, the Marcellus and Utica rig counts remained unchanged, as did the corresponding rig counts for Ohio, Pennsylvania and West Virginia...of the new natural gas rigs, three were in the Haynesville, on the Texas side of the northwestern Lousiana border, and one was in an "other" unnamed basin; the rig that was shut down in the Dallas area Barnett shale was an oil rig, leaving the Barnett with 3 gas rigs and one oil rig remaining...otherwise, the above tables are pretty much indicative what changes in activity occurred this past week...


New Ohio law would allow the sale of drilling brine for use on roads - The Post -- A new Ohio House bill would allow the sale of commercialized brine produced during fracking and oil drilling for use on roadways — something Athens’ city officials plan to oppose.   Ohio House Bill 393, introduced by Ohio State Representatives Anthony Devitis, R, and Michael J. O’Brien, D, would allow the “sale of brine as a commodity for surface applications.” That would mean that brine, a byproduct of oil and gas drilling, could be sold and sprayed on roads as a form of ice control. Athens City Council members expressed concerns about the potential toxicity of the brine.   “This means that ODOT, or the county or the city, could use brine and injection fluid from oil and gas fracking on the streets,” Athens City Councilwoman Chris Fahl, D-4th Ward, said at a council meeting Nov. 13. “This would open up a whole other area and would be so poisonous.”  Fahl said she plans to introduce an ordinance that would ban the city from spraying brine on its roadways. Brine is leftover waste from the drilling process in both fracking and conventional drilling, according to a report by the Connecticut General Assembly. “The process produces high volumes of wastewater that must be treated, recycled or safely disposed,” the report reads. “The wastewater is generally classified in two categories: flowback fluid, which is the fracturing fluid (the mix of water, sand and chemicals) that returns to the surface when production starts, and production brine (also called produced water, formation water or simply ‘brine’) … Waste from fracking operations is exempt from federal hazardous waste regulations, according to the Environmental Protection Agency (EPA).”

Rights groups hope to achieve goals by altering state law - Athens NEWS - A legal organization that has been working with a group of Athens County residents to put an anti-fracking county charter before voters the past three years is launching an initiative petition process for two Ohio constitutional amendments. One seeks to assert the primacy of local self-government, while the other seeks to grant counties and townships the power of initiative and referendum. The Pennsylvania-based Community Environmental Legal Defense Fund (CELDF) assisted the Athens County Bill of Rights Committee (ACBORC) in its legal arguments with proposed charters in 2015, 2016, and 2017. None of those charter proposals ever reached the ballot in Athens County, having been struck down each time eventually by the Ohio Supreme Court. In a press release earlier this month, the CELDF announced that the organization, working through the Ohio Community Rights Network (OHCRN), submitted two proposed state constitutional amendments to the Ohio Attorney General. The office will have to certify the validity of the proposals before the process of collecting petition signatures can begin. The CELDF assisted in the drafting and legal review of both amendments, the press release said. The proposed “Ohio Community Rights Amendment” codifies the right to local community self-government, enabling local governments to protect and expand fundamental rights and prohibit corporate activities that violate those rights, the news release stated. “It also secures the authority of communities to put in place stronger environmental rights and protections than those recognized at the state, federal, or international level,” the release said.

Community rights group's petitions certified by AG - Athens NEWS - The Ohio Attorney General’s Office has certified two petitions for proposed amendments to the Ohio Constitution put forward by a group that has advised Athens County residents on proposed anti-fracking county charter efforts the past three years. The AG’s certification clears the first hurdle for the Pennsylvania-based Community Environmental Legal Defense Fund (CELDF) to begin efforts to collect the more than 305,000 signatures needed to bring the two proposed amendments to Ohio voters. One amendment seeks to assert the primacy of local self-government, while the other seeks to grant counties and townships the power of initiative and referendum.  The CELDF assisted the Athens County Bill of Rights Committee (ACBORC) in its legal arguments with proposed charters in 2015, 2016, and 2017. None of those charter proposals ever reached the ballot in Athens County, having been struck down each time eventually by the Ohio Supreme Court.Once the summary language and initial signatures are certified, the Ohio Ballot Board must determine if the amendments each contain a single issue or multiple issues. The petitioners must then collect signatures for each proposed amendment from registered voters in each of 44 of Ohio’s 88 counties, equal to 5 percent of the total vote cast in the county for the office of governor at the last gubernatorial election in 2014. Total signatures collected statewide must also equal 10 percent of the total vote cast for the office of governor at the last gubernatorial election.In a press release earlier this month, the CELDF announced that the organization, working through the Ohio Community Rights Network (OHCRN), submitted two proposed state constitutional amendments to the Ohio Attorney General.The proposed “Ohio Community Rights Amendment” codifies the right to local community self-government, enabling local governments to protect and expand fundamental rights and prohibit corporate activities that violate those rights, the news release stated. “It also secures the authority of communities to put in place stronger environmental rights and protections than those recognized at the state, federal or international level,” the release said.

Ohio activists push amendments to restore community rights - Youngstown Vindicator -- Activists in Ohio are joining efforts around the country that supporters say are aimed at restoring rights to communities to challenge a growing list of corporate incursions. The campaign to pass an Ohio Community Rights Amendment stems from mounting frustration among environmental groups that have failed for years to push anti-fracking measures onto local ballots. But the latest effort is broader, said spokeswoman Tish O’Dell. State laws are making it increasingly difficult for communities to regulate predatory lending, puppy mills, wireless equipment location, minimum wages, pesticide treatments and a host of other issues, O’Dell said. Two constitutional amendments proposed in Ohio would prevent further setbacks from election officials, courts and the state’s Republican-led state Legislature, O’Dell said. Similar efforts are underway in Oregon and New Hampshire. An earlier attempt failed in Colorado.The first would extend the right of initiative and referendum enjoyed by residents of municipalities to those living outside them, in counties and townships. The second, dubbed the Ohio Community Rights Amendment, would secure localities’ rights to self-government on issues of the health, safety and welfare of humans and the environment.Republican Ohio Attorney General Mike DeWine certified petitions for both amendments Monday, sending them next to the state ballot board.If the proposed amendments make it onto ballots, they will face broad opposition, said Ohio Oil & Gas Association Executive Vice President Shawn Bennett. The group has fought similar local efforts as both illegal and unconstitutional.

Oil and gas industry moving south -- and picking up – in Ohio - WTOV Steubenville - Local leaders say the oil and gas industry is turning a new direction in Ohio. On the heels of Belmont besting Carroll county for most drilling permits in the state of Ohio, leaders say they're gearing up for another productive spike in oil and gas activity."I think the drilling and what I'm hearing, and what people I’m talking to in the industry is going to pick in 2018," said Larry Merry, Belmont County Port Authority director.Unemployment rates are lower as the local population has picked up jobs made available through the economic activity that fracking has created. "Look around,” Merry said. “Look at the restaurants, look at the white pickup trucks. And the one thing I want everybody to remember, those pickup trucks may have out-of-state plates on them, and they may look like companies, but a lot of those trucks are driven by local folks. And so the jobs are here." While many local opportunities for truck drivers, water delivery, and other positions in the service industry have increased locally, more lucrative, permanent jobs could be on the horizon."Could there be better jobs?” Merry asked. “Yes, that's what we're working on every day, trying to get the infrastructure in here for what we hope is a positive announcement with the big project, which will have an impact. "Merry, of course, is referring to the upcoming announcement on PTT’s possible decision to build a $5.7 billion ethane cracker plant in Dilles Bottom.  The Ohio oil and Gas association is comparing the current oil and gas boom to something we can all relate to -- baseball. He says we're only in the second inning and there's a long game ahead of us.

US appeals court orders halt on natural gas pipeline in Ohio (AP)- A city facing long odds of stopping section of a $2 billion natural gas pipeline from being built there was handed a victory this week when a federal appellate court issued an emergency order that temporarily halts the start of construction. The 6th U.S. Circuit Court of Appeals in a 2-1 decision on Wednesday ruled that the city of Green, in northeast Ohio's Summit County, is likely to prevail in a federal petition it filed with the court last month claiming that the state Environmental Protection Agency failed to follow its own rules when it granted NEXUS Gas Transmission a clean water certificate for the project. Green argues that the 8-mile (13-kilometer) pipeline section could damage environmentally sensitive areas, including a bog that contains protected plant and animal species. The EPA has said in court documents that it followed its rules. NEXUS, a partnership between Calgary, Alberta-based Enbridge and Detroit's DTE Energy, has intervened in the petition to defend the EPA. The company has recently begun construction of a 255-mile-long (410 kilometer) pipeline capable of transporting 1.5 billion cubic feet (42.5 million cubic meters) of gas per day from Appalachian shale fields across northern Ohio and into Michigan and Canada. The project has received all its federal approvals but will now have to wait to do any work in Green, a solidly middle class community of 25,000 residents south of Cleveland, until after 6th Circuit decides the merits of the city's claims.

Ohio asks Rover pipeline to stop horizontal drilling (AP) — The Ohio Environmental Protection Agency has told the company building the massive Rover natural gas pipeline project to stop horizontal drilling after another spill of clay-based slurry. The Repository reports EPA Director Craig Butler on Wednesday asked Energy Transfer Partners, the Dallas-based company building the $4.2 billion project, to halt drilling after 200 gallons of slurry spilled into a river in Ashland County on Nov. 16. Butler told the company the EPA will be asking the Federal Energy Regulatory Commission to intervene. The state Attorney General’s Office earlier this month sued Energy Transfer claiming the company had committed numerous environmental violations in more than a dozen counties. The EPA earlier fined the company $2.3 million over previous spills. A spokesman for the project didn’t respond to messages seeking comment.

Fracking chemical clarity is requested - — A policy group has partnered with emergency management agencies across 21 states, including Ohio, to petition the U.S. Environmental Protection Agency to disclose the identities of chemicals used by oil and gas drilling companies in the hydraulic fracturing process.  Dusty Horwitt, J.D., senior counsel for the group, said in a release that the state of Ohio and the federal government often prevent citizens, even first responders, from knowing what chemicals are used in drilling operations because they deem their extracting process as “confidential business information.” In a letter dated Nov. 15 and sent to U.S. EPA Director Scott Pruitt, the group, along with more than 100 first responders, health professionals and scientists from 21 states and the District of Columbia, requested that the EPA disclose the identities of 41 chemicals that EPA regulators reviewed between 2003 and 2014, under a program created by the Toxic Substances Control Act to ensure that new chemicals are safe before they are used commercially.“The regulators identified health concerns about each of the new chemicals ranging from lung irritation to developmental toxicity to neurotoxicity, yet allowed each of them to be used in oil and gas wells. “In at least 30 of the 41 cases, EPA allowed the chemicals to be commercially produced without receiving health testing data from the manufacturers or requesting such data — as EPA has authority to do under the law,” Horwitt stated. The PFPI claims evidence has shown that the 41 chemicals were likely used for hydraulic fracturing, and that chemical manufacturers have declared confidential some or all of the chemicals’ identifying information, as permitted by the TSCA. “President Trump frequently talks about how important first responders are to protecting the public,” said Silverio Caggiano, battalion chief with the Youngstown Fire Department and deputy chief with the Mahoning County Hazardous Materials Response Agency in Mahoning County, Ohio. “Here’s something his EPA can do to protect first responders and citizens: disclose these chemical identities so that we know what kind of risks we’re likely to encounter in the event of a spill or emergency.”

Sunoco proposes construction change for Mariner East 2, but meets fresh resistance - Sunoco’s plan to change the construction of its Mariner East 2 pipeline in Chester County’s West Whiteland Township is stirring opposition from residents and local lawmakers only five months after a botched drilling operation there spilled fluid, punctured an aquifer and turned drinking water cloudy in some private wells.The company wants to abandon its controversial method of horizontal directional drilling (HDD) at two West Whiteland sites where a court temporarily halted the practice last summer as part of a statewide action in response to dozens of spills along the 350-mile route.The Environmental Hearing Board ordered Sunoco to conduct a “re-evaluation” of 63 sites where fluid was spilled, in an effort to determine whether local geology was suitable to the drilling technique even though state permits were issued and construction was underway.At the points where the pipeline route crosses North Pottstown Pike and Swedesford Road, an independent geologist hired by Sunoco concluded, horizontal drilling should either be sharply curtailed or scrapped altogether, because continuing the work would likely result in more spills.At the Pottstown Pike site, the consultant said, the drilling would likely have the same result because of a “fractured” geological formation some 70 feet below the surface.“Based on the further analysis of the underlying geology and hydrogeological factors such as fractured geology, cobble and voids, the original design was determined to pose a moderate to high risk of subsurface and/or surface loss of drilling fluid,” the report by Groundwater & Environmental Services said.At the Swedesford Road site, the drilling technique is unsuited to the limestone geology, and a method should be used that won’t spill drilling fluids, the report said. Sunoco has accepted the geologist’s reports, and is now proposing to build the pipeline in an open trench and through a conventional bore at the West Whiteland sites, according to two “re-evaluation” documents on the Department of Environmental Protection’s web site.

Lawmaker: Natural gas lobby too influential in severance tax debate - A Democratic lawmaker from Delaware County says the current debate over the severance tax is unduly influenced by the natural gas industry, which has spent millions lobbying lawmakers. With more than 200 gas industry lobbyists registered in Harrisburg, State Rep. Greg Vitali says the industry has spent $3.7 million on lobbying the Capitol this year alone. Using campaign finance reports, lobbying disclosure reports, lobbying registration statements and lawmakers’ statements of financial interests, Vitali has regularly tracked industry spending. He says in order to pass a severance tax, House members would have to agree to changes in the way the Department of Environmental Protection regulates the industry. “This is all because of the huge clout of the natural gas industry and the contributions they give to the legislature and the money they spent lobbying the legislature,” he said. The current severance tax deal includes speeding up natural gas permit reviews and curbing the state’s efforts to reduce methane emissions. Vitali says the changes to DEP’s permitting rules would hurt its ability to regulate. “They are so influential in this building that In order to get a severance tax of less than one percent,” he said, “we have to give this to them as a way to make amends.” The industry has also spent $7.7 million on campaign contributions since 2007. Senate President Pro Temp Joe Scarnati has received $483,500, according to Vitali’s calculations. 

Commission releases fracking ban proposal for Delaware River - The Delaware River Basin Commission released a draft of the new proposals late Thursday that would permanently ban fracking, but environmentalists fear that the measures don't go far enough.The proposed rules outline a permanent ban on fracking in the region, which environmentalists have long called for, but would still allow for fracking wastewater to be dumped in the river basin. The proposed rules would also allow for water to be taken out of the river basin and shipped off for fracking use elsewhere. "There's some really big success in the proposed regulations," said Maya van Rossum, the Delaware Riverkeeper. But she added that she had "mixed feelings" about the rest of the proposal."It still puts the watershed at risk," van Rossum said.  "High volume hydraulic fracturing in hydrocarbon bearing rock formations is prohibited within the Delaware River Basin," the proposed rules state.Natural gas producers in the region spoke out against the proposed ban, claiming that it only served to deny citizens the right to develop their own property."[The proposal] flies in the face of settled science and common sense environmental regulation, and would bring self-inflicted economic harm to [Pennsylvania]," David Spigelmeyer, the president of the Marcellus Shale Coalition, said in a statement.If approved, the new rules would make permanent a temporary moratorium on fracking in the region that has been in place since 2010. Environmentalists still worry, however, that allowing for fracking waste to be dumped in the region will undercut a fracking ban."Banning fracking but then allowing the dumping of fracking waste undoes the whole purpose of the ban in the first place, which is to protect our water," said Jeff Tittel, the director of the New Jersey Sierra Club, in a statement Thursday.  “This is a dirty water deal hidden behind a fracking ban," Tittel added.

US FERC approves 223 MMcf/d Millennium Pipeline expansion in New York - Millennium Pipeline has received certificate approval from the US Federal Energy Regulatory Commission for the Eastern System Upgrade project, which would add 223 MMcf/d of capacity on the eastern end of its system in New York.The project will increase capacity along the constrained portion of Millennium's system, specifically from the Corning Compressor station in Steuben County to the interconnect with Algonquin Gas Transmission at Ramapo in Rockland County.By alleviating this constraint, production within the area will have the potential to increase and deliver more gas into Algonquin, according to Platts Analytics' Bentek Energy. The increase in deliveries will in turn place downward pressure on AGT city-gate prices.The project entails a roughly 7.8-mile-long, 30- to 36-inch-diameter loop in Orange County known as the Huguenot Loop, two new 24,000 hp compressor stations in Sullivan and Delaware counties and other modifications to existing Millennium stations.Millennium has precedent agreements with nine shippers, all of which are local distribution companies or municipalities, for about 91% of the capacity and is marketing the remaining 20,500 Dt/d, according to FERC's certificate order (CP16-486), issued late Tuesday.Unlike Millennium's Valley Lateral project, which has been caught up in a legal tangle between FERC and the New York State Department of Environmental Quality over a water quality certificate, the Eastern System Upgrade has already received air and water quality approval from the state agency. Construction of the Valley Lateral, which would serve a new power plant, was held up when the 2nd US Court of Appeals on November 2 granted an administrative stay of the notice to proceed with construction, at the request of the DEC.

Transco natgas expansion approved to start: (Argus) — The US Federal Energy Regulatory Commission (FERC) has given Transcontinental Gas Pipeline permission to begin flows on its Virginia Southside II expansion project in the mid-Atlantic US. The 241mn cf/d (7mn m³/d) expansion was designed to provide additional service to markets in southern Virginia, including deliverability to Dominion Virginia Power's new 1,580MW combined-cycle natural gas-fired power plant in Greensville County, Virginia, when that plant comes on line. The $191mn pipeline project includes the new 4-mile (6km) Greensville Lateral in Virginia, as well as metering and compressor station facilities in Virginia, South Carolina and North Carolina. The project will boost flows from Transco's compressor station 210 pooling point in Mercer County, New Jersey, and from its compressor station 165 pooling point in Pittsylvania County, Virginia, to a proposed delivery point on the Greenville Lateral. The $1.3bn Greensville County power plant will acquire full transportation rights on the Virginia Southside II expansion once the plant begins service, according to filings with FERC. Dominion began construction on the plant in June 2016, and expects it to begin commercial operations in late 2018.

FERC sued over alleged ‘unconstitutional’ granting of pipeline certificates - In another challenge to the expansion of natural-gas pipelines, a conservation group is accusing a federal agency of unlawfully allowing the taking of private land in a complaint filed in the U.S. District Court in Trenton. The lawsuit filed against the Federal Energy Regulatory Commission by the New Jersey Conservation Foundation is the latest legal entanglement involving the 120-mile PennEast pipeline, a project spanning two states and crossing the Delaware River. The $1 billion project, facing strong opposition in New Jersey and Pennsylvania, has been troubled by numerous delays, including the refusal of property owners to allow PennEast Pipeline LLC access to land along the route.The standoff has prevented the company from submitting all the information it needs to obtain crucial permits from the New Jersey Department of Environmental Protection. To obtain access, the company is seeking to gain final approval for the project from FERC, a decision that would give it the power of eminent domain over those properties. In the 20-page filing with the federal court, the complaint advances what its plaintiffs argue is a first-of-its-kind legal challenge, alleging the federal agency is unlawfully allowing companies to seize private property through eminent domain for pipeline construction. The lawsuit, filed by the Eastern Environmental Law Clinic and Columbia Environmental Law Clinic, also argued the agency failed to demonstrate the project is needed, a point repeatedly made by opponents of the pipeline. “The Fifth Amendment says that private property can only be taken for public use, and FERC’s pipeline review process doesn’t pass that test,’’ said Tom Gilbert, campaign director of the New Jersey Conservation Foundation. 

Enviros raise new challenge to FERC eminent domain process - New Jersey environmentalists are the latest pipeline critics to take aim at how natural gas projects are approved and developed.The New Jersey Conservation Foundation last week sued the Federal Energy Regulatory Commission, arguing that the agency's practice of granting eminent domain power to pipeline developers is unconstitutional.The group argues that FERC's process for approving pipelines and then granting developers the power to take private property falls short of constitutional standards that require such property takings to be for a public use. The lawsuit, filed in the U.S. District Court for the District of New Jersey, contends that the agency often approves pipelines that are not really needed."FERC's failure to ensure that the only pipelines built are those that are absolutely required to be built has burdened the parties FERC was meant to protect," the filing says. "While a constitutional public use analysis may be time-consuming or complex, that does not excuse FERC from doing its job."The conservation group claims it is harmed by FERC's process because the proposed PennEast pipeline, under review by the agency, passes through land the group owns in western New Jersey. But the lawsuit does not focus on proceedings for that project; instead, it broadly challenges FERC's pipeline approval processes. Landowners along pipeline routes have shown increasing concern about the use of eminent domain by developers. At least three similar challenges are pending: a lawsuit in Ohio focused on the Nexus pipeline, a lawsuit in Virginia focused on the Mountain Valley pipeline, and a lawsuit in Washington, D.C., focused on both the Mountain Valley and Atlantic Coast pipelines.

Climate activists delay U.S. gas pipeline approvals: regulator (Reuters) - National environmental groups waging legal battles against energy projects are delaying approval of U.S. natural gas pipelines, a top federal energy regulator said on Thursday. The groups have lawyers who “understand how to use all of the levers of federal and state law to frustrate pipeline development,” Neil Chatterjee, the chairman of the Federal Energy Regulatory Commission (FERC), told a meeting of natural gas industry officials. Some recent approvals of natural gas pipelines, such as the Atlantic Coast Pipeline from West Virginia to North Carolina, have taken two years or more. Chatterjee said he hoped a timeline of two-plus years would not become the new industry norm. While industry officials have often complained about climate activists, Chatterjee’s comments, which he said reflected his opinion, are rare for a regulator.  He did not identify any specific green groups, but the Sierra Club and both have campaigns to reject pipelines filled with gas from hydraulic fracturing, or fracking, projects. The groups are fighting development of fossil fuels including oil, coal and fracked natural gas, because they say the production slows the transition to cleaner sources, like wind and solar power, and the conservation and storage of energy.

FERC chairman takes a break from discussing coal plan to slam pipeline protesters -   Federal Energy Regulatory Commission Chairman Neil Chatterjee took a break from discussing a high-profile plan to prop up coal and nuclear plants to criticize environmentalists' efforts to delay pipeline approvals.  Instead, Chatterjee used his remarks before the Natural Gas Roundtable to slam what he called the well-funded and legally savvy campaigns by climate change activist groups to significantly delay the natural gas pipeline approval process at FERC. The independent federal agency is in charge of overseeing the development of interstate oil and natural gas pipelines. Activists have targeted natural gas pipelines because of the perceived link between the drilling process known as fracking and pipeline development. The activists equate stopping FERC with stopping the fracking process since pipelines are the only way to transport shale-produced natural gas to the market."It is not hard to see that opposition to natural gas pipeline projects has become much more ideologically driven than it used to be," Chatterjee said. He said much has changed from when pipeline decisions might have been held up by local interests, such as a landowner or community, which focused on avoiding pipelines being built on their land. But anti-fossil fuel activism has turned pipelines into a much bigger issue that is slowing the agency's work.  "But what's new is this: increasing anxiety about carbon emissions has given rise to a national 'keep it in the ground' movement resisting any natural gas project as a matter of principle," Chatterjee said.  Adding to the national activist groups are the "political branches" of state and federal governments that "these pipeline opponents" now possess, alluding to members of Congress and state attorneys general that look to block fossil fuel development. "Now, what we see are well-funded, sophisticated, national environmental advocacy organizations who understand how to use all of the levers of federal and state law to frustrate pipeline development," Chatterjee said.He particularly noted the "clever" legal strategies employed by activist groups to confound the natural gas pipeline review process at FERC. Even if they do not win lawsuits, they manage to significantly slow the pipeline review while emboldening state opposition to pipeline development, he said.The FERC chairman also said it has become increasingly "evident that these folks are growing more confident in their chances in taking those challenges to the D.C. Circuit, in particular, and other federal appellate courts." Chatterjee said that affects FERC by forcing the agency to become "even more deliberate in its review processes to ensure that they will withstand judicial review."

The East Coast's pipeline wars: A cheat sheet - The expansion of natural gas infrastructure along the East Coast has created a seemingly endless queue of new pipeline battles involving landowners, environmentalists, states and the federal government. Some of the proposed pipelines have similar names. A handful have similar routes. Many have been in the news for years, while others seem to have sprung from nowhere. They're all accompanied by a nonstop stream of procedural and legal drama. Even the most astute pipeline watchers have trouble keeping it all straight. Was it Atlantic Coast or Atlantic Sunrise that just got approved? Wait, how many projects are on hold in New York? And aren't there nuns protesting somewhere? Here's a breakdown of some of the most interesting projects to help you avoid getting your wires — er, pipelines — crossed.

  • Constitution - Length: 126 miles  Route: Northeast Pennsylvania to central New York.  Status: Company wants FERC to waive a state-issued water permit. The fate of this project might not just be a matter of laws and regulations; it may also be a battle of political wills. Democratic Gov. Andrew Cuomo of New York has held up a number of high-profile gas projects, including the Constitution pipeline. For its part, Williams Cos. Inc., the lead sponsor of the project, is banking on favorable treatment by the Federal Energy Regulatory Commission.
  • Northern Access - Length: 99 miles and associated infrastructure. Route: Northwest Pennsylvania to western New York.  Status: Company appealing New York permit denial at 2nd Circuit, at FERC and in state court.  National Fuel Gas Co., the lead sponsor of the Northern Access project, launched a bevy of legal challenges after New York regulators denied its water permit this year. But even the company's president and CEO, Ronald Tanski, has conceded that "it's anyone's guess when we might get an answer."
  • Valley Lateral- Length: 7.8 miles. Route: Connects Millennium Pipeline Co.'s main line to a power plant in Orange County, N.Y.  Status: Construction halted pending arguments at 2nd Circuit. What could have been a routine approval for a $39 million fuel line to a power plant has evolved into a high-stakes case with a federalist twist. The brouhaha began in August, when the New York State Department of Environmental Conservation denied a water permit that Millennium had to get under the Clean Water Act. Millennium protested to FERC, saying New York had taken longer to reach that decision than the statute allowed: a year. FERC agreed, saying New York had waived its authority to do the review and that Millennium could go ahead. Not so fast, the 2nd U.S. Circuit Court of Appeals said.
  • PennEast - Length: 120 miles. Route: Northeast Pennsylvania to central New Jersey. Status: Awaiting final approval at FERC before reapplying to New Jersey. First proposed in 2014, the roughly billion-dollar project would connect gas fields in the Marcellus Shale to New Jersey, a state that gets more power from gas than any other fuel. But the project hit a speed bump in June when state regulators under Republican Gov. Chris Christie blocked the project's application for a water certificate required under federal law.
  • Atlantic Sunrise. Length: 183 miles and multiple expansions and upgrades. Route: Southern Pennsylvania to northern Pennsylvania and upgrades across East Coast network
  • Status: Approved by FERC; under construction. Atlantic Sunrise encompasses new construction in Pennsylvania and an array of upgrades along the existing Transcontinental Gas Pipe Line Co. LLC system that runs down the Eastern Seaboard to the Gulf Coast. The $3 billion project has attracted the most pushback in Pennsylvania, where landowners, environmentalists and a group of Catholic nuns have led opposition. The Adorers of the Blood of Christ sued FERC over its approval of the pipeline, arguing that routing the line across their land violates their religious rights. A district court dismissed their claim, and it's now on appeal.
  • Nexus - Length: 255 miles. Route: Eastern Ohio to southeastern Michigan.  Status: Approved by FERC; under construction.  The $2 billion Nexus pipeline in Ohio has been a hotbed of legal challenges since before it was approved. Landowners filed a novel lawsuit in May, arguing that FERC's practice of granting eminent domain authority to pipeline developers is unconstitutional. That case is still pending in federal court in Ohio.
  • Rover - Length: 713 miles  Route: From processing plants in Pennsylvania, West Virginia and Ohio to delivery points in Ohio and MichiganStatus: Some segments in service, others under construction; completion expected in early 2018.  The $4.2 billion Rover project to move up to 3.25 billion cubic feet of gas from Mid-Atlantic shale plays is being developed by Energy Transfer Partners LP, the company behind the heavily protested Dakota Access oil pipeline.
  • Mountain Valley - Length: 303 miles. Route: Northern West Virginia to southern Virginia. Status: Approved by FERC; state permits pending. The $3.5 billion Mountain Valley project is being developed by Pittsburgh-based EQT Corp. and partners to carry shale gas from West Virginia to markets in Virginia. The project has been controversial in Virginia, with pushback from environmentalists and landowner groups, and is the subject of a legal challenge that says the use of eminent domain for the pipeline violates landowners' constitutional rights and the Natural Gas Act.
  • Atlantic Coast - Length: 600 miles. Route: Northern West Virginia to eastern Virginia and North Carolina. Status: Approved by FERC; state permits pending. Atlantic Coast is a $5.1 billion project developed by four energy companies — Dominion Resources Inc., Duke Energy Corp., Piedmont Natural Gas Co. Inc. and Southern Company Gas — to deliver Mid-Atlantic shale gas to local markets in Virginia and North Carolina. It has faced strong local opposition in both states and was a point of debate in a fierce governor's race in Virginia. Democrat Ralph Northam, who largely dodged taking a position on the project but once supported it, won that race.
  • Sabal Trail. Length: 515 miles. Route: Eastern Alabama to central Florida. Status: Partially in service; FERC is conducting supplemental review. Sabal Trail is most notable for sparking a legal battle that forced FERC to take a closer look at the project's climate change impacts. The $3.2 billion pipeline, part of the broader Southeast Market Pipelines Project, sends gas to power plants in Florida. According to the U.S. Court of Appeals for the District of Columbia Circuit, FERC is required to estimate the greenhouse gas emissions from burning the gas. The August decision was the D.C. Circuit's most forceful decision to date requiring more climate analysis for pipelines.

Atlantic Coast Pipeline faces another delay as NC officials push for more details --  The planned Atlantic Coast Pipeline, already more than a year behind schedule, could face further delays as North Carolina officials once again seek additional information on the project’s potential impacts to the communities the pipeline will traverse. The N.C. Department of Environmental Quality on Wednesday sent the pipeline’s developers a fourth round of questions about the economic benefits and environmental risks of the project. The unusual repeat request gives pipeline officials 30 days to respond and gives the agency 60 days to review their response. The energy consortium building the pipeline includes Charlotte-based Duke Energy and Dominion Energy in Richmond, Va. The proposed 600-mile pipeline would cross West Virginia, Virginia and North Carolina to bring natural gas from northern fracking operations to fuel Duke’s power plants in North Carolina and South Carolina. Duke said the Atlantic Coast Pipeline will submit a responses in less than 30 days. “We’re working on a response to the NC DEQ’s data request and will submit it in short order,” Duke said in a statement. “We don’t expect an impact to the overall project schedule.” Department of Environmental Quality spokeswoman Bridget Munger said the answers could spark further inquiries. “It really will depend on whether they provide the information requested, and once staff has reviewed it, what additional questions they will have,” Munger said of the timeline. 

A map of $1.1 billion in natural gas pipeline leaks -- When a crude oil pipeline is ruptured, it’s bad news, particularly if the oil gets into water, where it’s likely to impact wildlife or drinking water supplies. But when a natural gas pipeline busts, it can be far worse because of the volatility of the fuel, which is made up mostly of methane. Leaked natural gas can’t be recovered, it can build up in enclosed spaces and explode, and it is a potent greenhouse gas, with at least 30 times the warming potential of carbon dioxide over the long term. Between January 2010 and November 2017, the nation’s natural gas transportation network leaked a total of 17.55 billion cubic feet of mostly methane gas. That’s enough to heat 233,000 homes for an entire year, and it’s got the same global warming potential as the carbon dioxide emitted from a large coal-fired power plant over the course of a year. Pipeline incidents took nearly 100 lives, injured close to 500 people and forced the evacuation of thousands during that time, while costing about $1.1 billion. Click the below image to be redirected to the interactive version. Then, hover over the circles on the map for more details. (Note: It does not include the massive Aliso Canyon methane leak of a couple years ago because natural gas storage sites are not under the PHMSA’s jurisdiction.)

TransCanada sees US gas supply, demand growth seen as keys to future - TransCanada's US natural gas pipeline business is expected to provide the company its biggest financial boost by segment through the end of the decade thanks to growing Appalachian production and Gulf Coast demand for LNG exports, the operator said Tuesday. The efforts -- designed to carry more gas to residents, businesses, industrial plants and export terminals -- are bolstered by forecasts that output from the Appalachian Basin, which includes the Marcellus and Utica shale plays, will grow to over 40 Bcf/d in 2027 from 25 Bcf/d this year. The company also estimates that Gulf demand will increase by over 14 Bcf/d during the next 10 years. The outlook highlights TransCanada's increased focus on the US market through billions of dollars in new projects and expansions of existing pipelines. While adding long-term transportation contracts provides stability, the strategy also comes with potential roadblocks, especially on the regulatory front amid aggressive resistance from environmental and community groups. "As a company, we are prepared for those challenges that lie ahead," CEO Russ Girling said during TransCanada's annual investor day presentation webcast from Toronto. "While pipelines aren't perfect, we continue to believe they are by far the safest and most efficient method of moving both natural gas and crude oil to markets that need them." On the oil front, TransCanada has been working on boosting optionality through upgrades and cross-border opportunities. The company filed a "procedural" motion last week with the Nebraska Public Service Commission seeking permission to raise questions regarding the state regulator's decision on the new routing of the proposed Keystone XL crude pipeline, Dean Patry, senior vice president of TransCanada's liquids pipelines unit, said during the presentation. NPSC spokeswoman Deb Collins said in an email that TransCanada's motion for reconsideration is a routine filing with the commission having 60 days to rule on it. The NPSC ruled in a 3-2 vote on November 20 approving the company's "mainline alternative" for its Keystone XL pipeline, rather than the direct route.

Will US Oil Markets be Roiled by a New FERC Order? -- Last Wednesday, November 22, the Federal Energy Regulatory Commission acted on a Petition for Declaratory Order (PDO) by Magellan Midstream Partners in which the midstreamer asked for FERC’s blessing to establish a marketing affiliate to “buy, sell and ship” crude oil on pipelines owned by Magellan as well as pipes owned by other companies. Today Magellan does not have such an affiliate, although many of its competitors do. Most of those competitors use their affiliates to generate incremental throughput on their pipelines, sometimes by doing transactions that result in losses for the marketing affiliate, but that are still profitable for the overall company because the marketing arm pays its affiliated pipeline the published tariff transportation rate. FERC denied Magellan’s request, coming down hard on such transactions as “rebates” specifically prohibited by the law governing interstate oil pipelines. In today’s blog, we take a preliminary look at FERC’s Magellan order and what it could mean for U.S. crude oil markets.  The FERC finding spells out aspects of crude oil pipeline regulation that have been in place for over 100 years, but have been subject to varying degrees of interpretation and enforcement and are very different from the rules that cover natural gas and gas pipelines. As we discussed in Hey Crude – The Costs and Challenges of Building Crude Oil Pipelines, although crude and gas pipelines that cross state lines are both regulated by FERC, the laws and rules governing crude oil pipelines are based on an entirely different statute — the Interstate Commerce Act (ICA) instead of the Natural Gas Act (NGA) — and the evolution of FERC regulation of oil pipelines has a pretty tortured history ever since FERC took over this area of regulation from the Interstate Commerce Commission.  There are two important aspects of these ICA-based regulations relevant to the Magellan PDO. First, the rules for setting crude oil pipeline tariffs are somewhat ambiguous, to say the least. The tariffs aren’t necessarily based on costs, the approach to setting rates can vary over the life of a pipeline, and the rules have pragmatically mutated from time to time, to the extent that they can change without a lot of warning. All this provides both opportunities and risks that don’t exist to the same degree for gas pipelines. Second, the rules governing permissible transactions on crude pipes are quite different than those for gas pipelines, and are even more ambiguous than the crude oil pipeline tariff rules.

The Rejuvenation Of Natural Gas Processing Economics, Part 2  --NGL prices have been rising fast since the middle of this year, but the same cannot be said for the price of natural gas. So how does this market scenario play out for gas processors who make their money extracting NGLs from gas? It plays out pretty darn good. In Part 1 of this series, we looked at how the relationship between the price of NGLs versus natural gas can be assessed by the Frac Spread, and concluded that things are definitely looking up for gas processing economics. But we also concluded that the Frac Spread misses the impact of a few key factors, including the BTU value and composition of the inlet gas stream. So today we’ll see what it takes to incorporate those factors into our assessment and, in the process, do a deep dive into the math of gas processing to examine the relationship between volumetric capacity, gallons of NGLs per 1,000 cubic feet of natural gas (GPMs) and moles. Today, we continue our latest expedition into the wilds of gas processing. In Part 1, we reviewed the calculation methodology, the history and the pros and cons of the Frac Spread — the difference between the price of natural gas and the weighted average price of NGLs on a BTU basis. We noted that while the Frac Spread is a good indicator of the relative health of natural gas processing over time, it is not representative of the specific processing margin for a particular stream of input gas. That is because the Frac Spread does not take into account the quality of the gas being processed either in terms of the liquids content or the BTU content, nor does it factor in things like the operating efficiency of the plant or help determine if ethane rejection makes sense. (We’ll get to these issues in later episodes of this blog series.) These factors and others ultimately determine the quantity of NGLs that a given inlet gas stream can produce from a given gas processing plant. To incorporate these factors into gas processing margin calculations, we first have to understand how liquids content and BTU content are measured and then how to convert between gas volumes and liquid volumes, since we transform the input gas stream into both liquid and gas outputs in our processing plant.

A rumbling volcano halfway around the world could hit natural gas prices -- Scientists say a volcano in Bali has the potential to seriously affect natural gas prices if it blows, as research shows tropical eruptions typically bring on mild winters in the U.S. An eruption of Mount Agung, which has been rumbling since September and on Monday sent ash soaring 4.7 miles above sea level, could cool the earth for years, which traders say could usher in freezing temperatures across the U.S. and higher gas prices.  But research shows Northern Hemisphere winters tend to be warmer than usual following large tropical eruptions; an eruption also could trigger a Pacific Ocean El Nino by cooling tropical Africa, which could set the stage for milder conditions across much of the U.S. “If Agung does put a large enough mass of sulfur dioxide into the stratosphere, the global average temperature would be reduced for several years,” says Michael Mills of the National Center for Atmospheric Research, but "the regional and seasonal climate impacts would be more complex."

Traces of petroleum, lead found in water at Rover Pipeline work site - Test results showed "slightly elevated" levels of petroleum in water spilling from a Rover Pipeline construction site into wetlands near Pinckney, about 10 miles northwest of Ann Arbor. Rover Pipeline has taken steps to filter the water and has halted its pumping activities, designed to dry out the construction site near the northern crossing of Dexter-Townhall Road, until the necessary permits are issued. That could happen this week, said Matthew Konieczki, of the Michigan Department for Environmental Quality.The MDEQ issued a violation notice to Rover Pipeline on Oct. 13 after area residents reported water that smelled like gasoline spilling over the sides of a dewatering enclosure into the wetlands. "They have not done any pumping once they stopped, due to the violation notice letter," said Konieczki, who is an environmental quality analyst in the Water Resources Division of the MDEQ's Jackson District. Rover Pipeline stopped its pumping activities after receiving the violation notice and installed a carbon filter to address any contaminants in the water. "Rover is willing to address any contamination, even though not released by Rover's construction project, and has decided to employ a carbon filter system proactively to eliminate the flow of any preexisting contamination at the site," stated a letter dated Oct. 18 from Rover to the DEQ.

Michigan gets deal to keep controversial oil pipeline running | TheHill: Michigan Gov. Rick Snyder (R) and Enbridge Inc. reached a deal Monday for the company to increase safety precautions on its controversial Line 5 petroleum pipeline under the Straits of Mackinac. The agreement means Enbridge can, for the time being, keep operating the line, despite intense scrutiny in recent years from regulators and environmentalists. Line 5 is decades old, and regulators have said it is at risk of leaking due to corrosion, anchors, missing coating and other factors.“Business as usual by Enbridge is not acceptable and we are going to ensure the highest level of environmental safety standards are implemented to protect one of Michigan’s most valuable natural resources,” Snyder said in a statement. “The items required in this agreement are good strides forward. The state is evaluating the entire span of Enbridge’s Line 5 pipeline and its future, but we cannot wait for the analyses to be completed before taking action to defend our waterways.” The binding deal means Enbridge must replace a portion of the line under the St. Clair River, study the feasibility of replacing the line under the Straits of Mackinac, shut down the line during adverse weather and improve monitoring for leaks, among other steps. “We hope the agreement is a step in a positive direction to demonstrate our commitment to doing the right thing to serve Michigan and protect the waters of the Great Lakes. The Great Lakes are a treasure that must be preserved now and for future generations,” Enbridge said in a statement of its own. 

Enbridge oil pipelines in Straits, St. Clair River could go in tunnels under new pact  - Canadian oil transport giant Enbridge's underwater pipeline in the St. Clair River would run under the river inside a tunnel, and its controversial pipeline at the bottom of the Straits of Mackinac would be studied for the same treatment as part of an agreement announced Monday between the company and the state of Michigan. Enbridge also will be required to shut down transmission of oil through Line 5 in the Straits of Mackinac during adverse weather conditions that would limit oil recovery efforts in the event of a spill, according to the agreement.   Under stipulations detailed in the agreement, the state is requiring Enbridge to:

  • Replace the portion of Line 5 that crosses beneath the St. Clair River with a new pipe in a tunnel under the river, a site where similar pipeline construction for Line 6B was successfully accomplished a few years ago. The St. Clair River is an important source of drinking water and an environmentally sensitive location along the pipeline. The underground replacement line will significantly lower the risk that oil could reach the river or the Great Lakes.
  • Undertake a study, in conjunction with the state, on the placement of a new pipeline or the existing dual pipelines in a tunnel beneath the Straits of Mackinac. The state’s alternative analysis identified tunneling as an alternative to the current pipelines. This study will examine several possible techniques and allow a much more detailed examination on the technical feasibility of such a tunnel.
  • Temporarily shut down operation of Line 5 in the Straits during periods of sustained adverse weather conditions, because those conditions do not allow effective response to potential oil spills. “Sustained adverse weather conditions” are defined in an appendix of the agreement.
  • Assess the possible installation of underwater technologies, including cameras, to better monitor the pipeline beneath the Straits of Mackinac.
  • Implement technologies that improve the safety of Line 5 in the straits by allowing faster detection and a more immediate response in the event of a spill.
  • Implement measures to mitigate a potential vessel anchor strike on Line 5 beneath the straits. A vessel anchor strike was identified in the final alternatives analysis as one of the most serious threats to Line 5 safety in the straits.

Environmental Groups Blast Michigan Officials for 'Trust' in Pipeline Operator -- Environmental groups are attacking an agreement between Michigan and Canadian oil transport company Enbridge, Inc. that set a timeline to determine the future of a controversial pipeline running across a channel where Lakes Huron and Michigan come together.  The 645-mile pipeline, Line 5, lies at the bottom of the Straits of Mackinac, a five-mile-long environmentally sensitive stretch of water that serves as a center piece in Michigan's tourist industry. It cuts through the state as it runs from western to eastern Canada, bringing 23 million gallons of oil and liquid natural gas across the straits between Michigan's Upper and Lower peninsulas—an area noted for its choppy waters, unpredictable currents and subzero temperatures. "I can't imagine another place in the Great Lakes where it'd be more devastating to have an oil spill," Dave Schwab, an expert in hydrodynamics from University of Michigan, told a Motherboard correspondent in 2015. Monday's agreement between Gov. Rick Snyder and Enbridge was designed to address immediate concerns about the 64-year-old twin pipeline. Under the agreement, Enbridge is required to halt pipeline operations if waves in the straits reach eight feet or higher for more than an hour.  The deal , which doesn't preclude a permanent shut down of Line 5, requires Enbridge to evaluate three options for routing the pipeline through a tunnel or trench on or beneath the lakebed by June 2018. Enbridge also said it would take steps to prevent pipeline damage from ship anchors, and increase its monitoring by placing cameras and other devices near the pipeline. It would also expedite plans to detect potential ruptures and respond to spills.

Well pump spools up at Boulter / 11-23-17 -- As of last week, an oil pump jack is humming at the Boulter 1-17 site. After secondary drilling, trucks arrived with pump components in mid-November. Large square storage containers occupy the north end of the site, along with a generator and equipment. “Escaping natural gas burns in a release flare near the well head.” State authorities are unable to confirm whether the well's target depth has been reached or if hydrocarbons have been discovered. Under state law, operators are protected from divulging drilling results until 90 days after drilling concludes. The 90-period is expected to end sometime in January 2018. Absent of confirmation, well pump installation suggests the lessor, Interstate Explorations, has found or is close to finding oil and gas deposits. The pump jack, visible from Sisson Road, operates intermittently throughout the day. Boulter 1-17 received a permit to utilize hydraulic fracturing. An estimated 950,000 gallons of fluid were to be used in fracking Boulter 1-17. However, a well expected to utilize fracking may be completed conventionally, said Mark Snow with the Michigan Department of Environmental Quality Oil, Gas, and Minerals Division. Until drill records are made public, it will be impossible to confirm whether Boulter 1-17 was fracked. Smaller completion rigs fracture the injection zone after the main well bore is drilled. At least one smaller rig was used at Boulter 1-17 after the initial drilling rig was dismantled. Boulter 1-17 targeted the Trenton-Black River formation, a large natural gas and oil deposit stretching from New York state into Kentucky, West Virginia, Ohio, Michigan and Quebec. A DEQ permit specifies Boulter 1-17's target depth at 6,500 feet. Trenton-Black River has yet to be tapped in Barry County. If Boulter 1-17 successfully extracts oil and natural gas from Trenton-Black River, it could attract additional companies eager to capitalize undeveloped oil and gas fields. More likely, Interstate Explorations may redeem dozens of leases it holds throughout Barry County, most of which are in Carlton Township.

Everglades oil well application rejected - A proposal for an exploratory oil well in the Everglades of western Broward County was rejected again Monday by state regulators, although this is unlikely to be the final act in a Miami family’s persistent attempts to extract oil from its land. Noah Valenstein, secretary of the Florida Department of Environmental Protection, signed a final order turning down the application of Kanter Real Estate LLC to drill in marshy wilderness about six miles west of Miramar. In issuing this decision, the department rejected the recommendation for approval by a state administrative law judge.“The Florida Department of Environmental Protection is committed to protecting Florida’s one-of-a-kind natural resources, including the environmentally sensitive Everglades, and administering Florida’s environmental laws,” the department said in a written statement accompanying the order. “After careful review and consideration, DEP today executed a final order denying Kanter Real Estate’s application for a drilling permit in the Everglades.” Company president John Kanter said the family was “very disappointed” with the decision, since the judge had recommended approval after hearing all the evidence. He declined to discuss the family’s legal options but made clear that the fight was far from over. “We will be assessing our options and take a suitable course of action to protect our property rights in the face of today's decision by the DEP secretary to ignore the findings and recommendation of impartial and unbiased judge,” he said.

Spilled pipeline oil near Pointe a la Hache to be burned: Coast Guard -  Contractors responding to a pipeline leak in marsh near Pointe a la Hache in lower Plaquemines Parish will use fire to remove the the majority of the oil on Friday (Dec. 1), the U.S. Coast Guard announced late Thursday.The pipeline owned by XTO Energy was reported to be leaking to the Coast Guard at 2:40 p.m. Thursday. The initial report indicated that about 504 gallons of oil were discharged before the pipeline was secured, but by Thursday night, officials said they'd already removed 1,260 gallons of "product" through the use of boom, sorbent pads and skimmer packages.The in-situ burn will begin at 11 a.m. Friday, and will monitored from the air.Personnel from Teichman Group LLC, OMI Environmental Solutions, New Orleans, National Oceanic and Atmospheric Administration, Louisiana Oil Spill Coordinators Office, Louisiana Department of Environmental Quality, and Louisiana Wildlife and Fisheries are responding to the incident. Coast Guard officials said there were no reported injuries and no waterway restrictions resulting from the spill. The cause of the pipeline leak is under investigation.

The United States continues trend toward exporting more gasoline than it imports – EIA - Despite record high gasoline consumption, the United States is on pace to export more gasoline than it imports for the second year in a row. Changes in regional markets, increased demand for exports, and high refinery runs are once again leading to the United States to be a net exporter in 2017. In 2016, the United States became a net exporter of gasoline for the first time on an annual basis with net gasoline exports of 56,000 barrels per day (b/d). Through September 2017 (the most recently available monthly data), the United States averaged net gasoline exports of 55,000 b/d. The shift toward net exports of gasoline on an annual basis has been a long-running trend.U.S. gasoline imports and exports are highly seasonal. The United States has typically been a net importer of gasoline in spring and summer months, whn domestic consumption increases, and a net exporter in winter months, when demand is lower. However, for every month between April and August 2017, the United States set either record low net imports or record high net exports (Figure 1). Almost year-round net gasoline exports is a major change for U.S. gasoline markets, which is the result of one long-term trend and two more recent trends.  Changes in trends of gasoline production and consumption in the Midwest United States, in part, have driven this trend. Historically, the U.S. Gulf Coast (Petroleum Administration for Defense District (PADD) 3) supplied refined products to other regions of the United States where demand exceeded supply, such as the Midwest (PADD 2) and the U.S. East Coast (PADD 1). While the East Coast still relies on supplies from the Gulf Coast and still remains a large net importer of gasoline—619,000 b/d in 2016, the Midwest has reduced its need to draw supplies from the Gulf Coast in recent years. Midwest refineries now are running at higher rates and increased capacity, resulting in more Midwest gasoline demand being met from in-region production. Between 2006 and 2016, Midwest receipts of gasoline from the Gulf Coast declined by 278,000 b/d to 273,000 b/d.

Second wave of US LNG to be based on 'free' gas: NextDecade Corp - The 'second wave' of US LNG production is coming in the early 2020s and will be based on essentially free gas, according to project developers NextDecade Corp. Speaking at the CWC LNG Summit in Lisbon Thursday, NextDecade CEO Kathleen Eisbrenner said her company had "the lowest cost, reliable LNG project in the world," and that it would be "the leader of the second wave of US LNG." That US LNG can be the world's lowest cost is a big claim, especially when set against the riches of Qatar's North Field and Iran's geologically connected South Pars. This giant gas accumulation produces large quantities of natural gas liquids (NGLs), which effectively underpins the production of LNG with large economies of scale. However, similar claims are being made by NextDecade about US LNG, as well as by another US second wave development company Tellurian. The basic argument is that gas output from the Permian basin, the US shale oil industry's hottest hot spot, is going to rise hugely, not because it is necessarily wanted, but because it will be produced as associated gas alongside the oil. According to Eisbrenner, drilling and completion spending in the Permian basin will double year-on-year in 2018 to make up 44% of all US D&C spending, up from just 20% in 2014. The gas produced cannot be reinjected, and it cannot be flared for more than very short periods. It must, therefore, be evacuated. Producers will pay for it to be taken away. Eisbrenner said that gas production in the Permian Midland would have a breakeven cost of negative $6.31/MMBtu. She estimated breakeven for gas production in the Permian Delaware at negative $2.69/MMBtu. Whether or not these calculations really stand up to scrutiny, the prospect of big increases in Permian basin gas production has prompted a plethora of new pipeline proposals to take that gas to a market or a point where markets can be accessed. Four projects, with total capacity of 6.4 Bcf/d, have been proposed between Waha and Agua Dulce on the Gulf Coast, but the gas will still need to be used and, most likely, liquefied for export.

UTA research finds dangerous bacteria in groundwater near Texas gas drilling sites - “Oil and gas companies are committed to protecting groundwater,” Todd Staples, president of the Texas Oil & Gas Association, said.   About the bacteria that researchers found, Staples said the connection to gas drilling is “based on proximity and nothing more."The research, UTA's Schug said, does point to chemically-altered water sources as a friendly environment for some nasty organisms.One of the study authors, Paula Stigler-Granados, assistant professor at the UTHealth School of Public Health in San Antonio, said these bacteria could cause gastrointestinal illnesses along with rashes and eye and ear infections. The microbes are particularly worrisome for the very young, the elderly and those with compromised immune systems."There's a lot of views that groundwater is clean and that it doesn't need to be filtered,” she said. “There are people who have lived there all their lives thinking, 'I've drank this water forever and I'm fine.’ It might not be the same [water]." "The potential contribution of these microbes to these health effects is probably understudied, underappreciated, unknown," Schug said. Staff and students at the CLEAR Lab have conducted extensive research about water quality in Texas, mostly focused on chemicals. It was only recently that they expanded the scope to include microorganisms. Some bacteria are known to thrive in more hostile environments. In 2016, Ohio State University researchers found a new genus of bacteria — which they named Frackibacter — in an oil well and gas wells. "As we've been involved more in conversations with oil and gas operators and even other industries looking to recycle waste water, you hear more and more concern about how microbes are interacting with those systems," Schug said.

Oil and gas industry is causing Texas earthquakes, a 'landmark' study suggests - An unnatural number of earthquakes hit Texas in the past decade, and the region's seismic activity is increasing. In 2008, two earthquakes stronger than magnitude 3 struck the state. Eight years later, 12 did. But for any given earthquake, it is virtually impossible to tell whether humans or nature triggered the quake. There are no known characteristics of a quake, not in magnitude nor in the shape of its seismic waves, that provide hints to its origins. A cluster of earthquakes around a drilling project can, at best, suggest a relationship. “The main approach has been to correlate the location to where there has been human activity,” said Michael Blanpied, a USGS geophysicist and co-author of the new study.The study authors took a different approach in the new work — they hunted for deformed faults below Texas. “This technique is called high-resolution seismic reflection imaging,” Magnani said. Seismic reflection is the same tool that allows extractors to find oil and gas deposits in underground structures. To collect seismic reflection data, an artificially generated wave ripples through the ground and reflects back to the surface, like light off a mirror. The result is “a little bit like an ultrasound,” Magnani said, revealing not baby toes but twisted rock.The scientists compared the Texas earth with Mississippi, another seismically active region that, like Texas, is not close to a turbulent edge of a tectonic plate. Unlike Texas, though, north Mississippi has a much longer history of recorded earthquakes, going back to the early 1800s.An underground ultrasound revealed that, beneath Texas, the most recent signs of active faults were in a geologic layer 300 million years old — 70 million years before the first dinosaur took its first step. All the younger layers above it were stable.“All the displacement was stopping at a layer that is 300 million years old,” Magnani said. “The fault did not move after that layer was deposited.” In the Mississippi region, in contrast, the rock told a story of continuous fault activity, unbroken for the last 65 million years.

Drilling Reawakens Sleeping Faults in Texas, Leads to Earthquakes - Since 2008, Texas, Oklahoma, Kansas and a handful of other states have experienced unprecedented surges of earthquakes. Oklahoma’s rate increased from one or two per year to more than 800. Texas has seen a sixfold spike. Most have been small, but Oklahoma has seen several damaging quakes stronger than magnitude 5. While most scientists agree that the surge has been triggered by the injection of wastewater from oil and gas production into deep wells, some have suggested these quakes are natural, arising from faults in the crust that move on their own every so often.  Now researchers have traced 450 million years of fault history in the Dallas-Fort Worth area and learned these faults almost never move.  “There hasn’t been activity along these faults for 300 million years,” says Beatrice Magnani, a seismologist at Southern Methodist University in Dallas and lead author of a paper describing the research, published today in Science Advances. “Geologically, we usually define these faults as dead.”  Magnani and her colleagues argue that these faults would not have produced the recent earthquakes if not for wastewater injection. Pressure from these injections propagates underground and can disturb weak faults. The work is another piece of evidence implicating drilling in the quakes, yet the Texas government has not officially accepted the link to one of its most lucrative industries. Magnani and her colleagues studied the Texas faults using images of the subsurface similar to ultrasound scans. Known as seismic reflection data, the images are created by equipment that generates sound waves and records the speeds at which the waves bounce off faults and different rock layers deep within the ground. Faults that have produced earthquakes look like vertical cracks in a brick wall, where one side of the wall has sunk down a few inches so the rows of bricks no longer line up. Scientists know the age of each rock layer—each row of bricks--based on previous studies that have used a variety of dating techniques. The seismologists compared images of faults in north Texas with images of other faults that have been active throughout geologic history. When Magnani and her colleagues examined the New Madrid faults, they saw evidence of earthquakes—the horizontal rows of bricks were offset at the fault line--from the distant past into the present. But images of the north Texas faults showed zero disturbances in the last 300 million years.

Okla. company cuts well volume after seismic shakes - A spate of small earthquakes thought to be caused by fracking forced an Oklahoma oil and gas company to curb volume and pressure at an oil well near the city of Yukon on Monday, the Oklahoma Corporation Commission said. Citizen Energy halved the pressure and volume of the well when a series of quakes that had begun last week continued after the weekend. The biggest earthquake in the series came in at magnitude 2.9, according to the Oklahoma Geological Survey. They were likely caused by fracking operations in the area, said commission spokesman Matt Skinner. Oklahoma has weathered an unusual number of earthquakes over the past few years, most of which have been attributed to saltwater disposal operations that pump oil and gas waste through the Arbuckle rock layer. "There are no Arbuckle disposal wells in that area," Skinner said. "The quakes are all located around the location of a well completion operation"

Transcanada asks Nebraska to reconsider order on Keystone route (Reuters) - TransCanada Corp has asked the Nebraska Public Service Commission to reconsider its order approving an alternate route for the Canada-U.S. Keystone XL pipeline, according to a filing posted on the commission’s website on Monday.  The Canadian pipeline company is seeking a “clarification” on the PSC’s Nov. 20 decision, a TransCanada spokesman said. The approved line was not TransCanada’s preferred route for the Keystone XL pipeline, but for a more costly alternative that would add 5 miles (8 km) of pipeline. “Keystone requests the Commission reconsider its order dated November 20, 2017, in accordance with this motion,” said the order, which was submitted on Friday. The PSC voted 3-2 to approve a route for TransCanada Keystone XL pipeline through Nebraska, removing a big regulatory obstacle for the long-delayed project backed by President Donald Trump, but leaving its future shrouded in legal and market uncertainty. In addition to the alternate route for the pipeline, the commission’s approval covered an additional pumping station and related transmission lines. State and federal officials said it was unclear if the route required any permits in addition to those already secured for the preferred route. TransCanada Chief Executive Officer Russ Girling said in a statement last week that the company would review the commission’s decision to assess the impact on the project’s cost and schedule.

Lawsuit over Keystone XL pipeline can go ahead - A federal judge has ruled that a lawsuit brought by environmentalists over the Trump administration's approval of the Keystone XL pipeline can proceed. The decision comes just two days after Nebraska regulators lifted the final regulatory obstacle to the project. It creates a potential roadblock for pipeline operator TransCanada's long-stalled project to transport heavy Canadian crude to U.S. refining hubs.On Wednesday, U.S. District Judge Brian Morris rejected efforts by the Trump administration and TransCanada to have the lawsuit dismissed. The administration argued that no further environmental reviews were necessary when President Donald Trump approved construction of Keystone XL.The environmentalists said the State Department and other agencies relied on outdated environmental reviews for the Keystone XL pipeline and did not consider relevant information when Trump issued his executive action in January. "Once again, the courts are serving as a critical backstop against this administration's attempts to flout the law for the benefit of corporate polluters," said Doug Hayes, senior attorney at Sierra Club, in a statement.

Judge allows lawsuit over Keystone XL pipeline to move forward | TheHill: A federal judge on Wednesday allowed a lawsuit over a key permit for the Keystone XL oil pipeline to move forward. U.S. District Judge Brian Morris rejected a request from the Trump administration and developers of the Keystone XL pipeline to throw out the lawsuit. The Indigenous Environmental Network, North Coast River Alliance and others challenged the presidential permit issued by the Trump administration in March allowing the pipeline to cross the U.S.-Canada border. The permit was issued using older environmental assessments that opponents say need to be updated before a cross-border permit can be issued. The Trump administration and developer TransCanada argued the lawsuit should be dismissed due to jurisdictional concerns. Morris, an appointee of former President Barack Obama, rejected that request on Wednesday. Opponents of Keystone XL celebrated the decision Wednesday. Their lawsuit against the federal permit is one of the key roadblocks still facing the Keystone pipeline. A Nebraska regulatory commission this week issued a permit allowing the construction of the pipeline in the state. That decision is subject to legal challenges, and TransCanada is analyzing the economics of building the proposed $8 billion pipeline before moving forward.

TransCanada contacting landowners as fate of rerouted Keystone XL pipeline uncertain -  TransCanada has begun contacting Nebraska landowners along the newly approved path for its Keystone XL pipeline as the company ponders whether or not to build. "We're not standing still," said Dean Patry, TransCanada's senior vice president for liquids pipelines, speaking Tuesday to attendees of the Calgary-based company's annual investor day in Toronto. Patry was asked, but gave no timeline for when TransCanada executives will make a final investment decision on the pipeline. The soonest the company hopes to begin construction is next year, a decade after the 36-inch, $8 billion pipeline was first proposed. It would run 1,184 miles from Hardisty, Alberta, to Steele City, Nebraska, connecting there with the existing Keystone pipeline to carry Canadian oil sands to the U.S. Gulf Coast. The Keystone XL's fate has never been certain, but Nebraska regulators added to that uncertainty last week by rejecting TransCanada’s preferred route for the pipeline in favor of another route through this state. TransCanada has asked the Nebraska Public Service Commission for clarity on its decision, but says it isn't trying to contest the approved route. The Public Service Commission determined TransCanada's preferred route wasn’t in the public interest because it did not take advantage of an existing utility corridor. Instead, the commission approved a route that more closely follows the original Keystone pipeline, which was completed in 2010. That approved route — the “mainline alternative” — would carry the pipeline through Keya Paha, Boyd, Holt, Antelope, Madison and Stanton counties before meeting up with the existing pipeline and continuing through Colfax, Butler, Seward, Saline and Jefferson counties. The change means TransCanada would need to deal with new landowners, plan and build more pumping stations, cut through more regulatory red tape and face the probability of fresh legal challenges from pipeline opponents, who argue the commission's decision was in error. That process could add months, even years, to the project timeline.

TransCanada recovers 44,400 gallons of oil from Keystone pipeline spill site (Reuters) - TransCanada Corp said on Friday it has recovered 44,400 gallons, or 1,057 barrels, of oil from the Keystone pipeline spill site at Amherst, South Dakota. An aerial view shows the darkened ground of an oil spill which shut down the Keystone pipeline between Canada and the United States, located in an agricultural area near Amherst, South Dakota. The company had shut down its 590,000 barrel-per-day Keystone pipeline, which links Alberta’s oil sands to U.S. refineries, on Nov. 16 after a 5,000-barrel spill. It has not yet set an expected restart date for the pipeline, which is one of Canada’s main crude export pipelines. Additional excavation will be conducted beyond Sunday for soil remediation purposes, the Calgary-based company said, adding, it has about 170 personnel round-the-clock on the site engaged in clean-up activities. Preliminary inspections of the damaged section will be completed on site by both TransCanada and U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) staff, then sent to Washington, D.C., for an investigation by the National Transportation Safety Board’s Metallurgical Laboratory, the company said. “As a safety precaution, TransCanada sampled one residential water well yesterday at a location about 1.5 miles from the site to alleviate any concerns — all test results were normal,” TransCanada added. 

Regulators suspect construction damage caused Keystone spill - Mechanical damage to the Keystone pipeline that occurred when it was built may be responsible for the leak of 5,000 barrels of crude oil into a rural part of South Dakota earlier this month, federal officials say.A "corrective action order" issued by the Pipeline and Hazardous Materials Safety Administration on Tuesday says the pipeline failure that led to the spill was a rupture that "has characteristics of mechanical damage from original construction" in 2008.PHMSA's preliminary analysis suggests that the failure may have been caused by damage to the pipe and a protective coating that covers the metal, associated with a weight sometimes placed on pipes to hold them down "in areas where water could potentially result in buoyancy concerns."The broken portion of the pipeline will undergo testing to inform the agency's ongoing investigation into what caused the rupture. PHMSA said the pipeline section that failed was manufactured by Berg Steel Pipe Corp.Cleaning and leak detection tools were in use on the pipeline at the time of the rupture and had already passed the failure site without detecting any problems and are not believed  to have contributed to the leak, according to PHMSA. TransCanada Corp.'s Keystone pipeline runs from Hardisty, Alberta, to Patoka, Ill., and on to the U.S. Gulf Coast. Following the leak on Nov. 16, the pipeline was shut down from Alberta to Illinois. TransCanada got the go-ahead to restart operations at reduced pressure Tuesday after excavating and replacing the ruptured pipeline segment.

3 Major Spills in 7 Years: Keystone Has Leaked Far More Than TransCanada Estimated -- TransCanada's existing Keystone pipeline has already leaked a significant amount of oil three times in less than seven years . That's a much higher rate than the company predicted in its risk assessments provided to regulators, Reutersreported. Since the 2,147-mile pipeline began operating in 2010, it has gushed 5,000-barrels just this month in Marshall County, South Dakota, and about 400 barrels each in Hutchinson County, South Dakota in 2016 and in Sargent County, North Dakota in 2011.  However, TransCanada's spill risk assessment estimated that the chance of a leak of more than 50 barrels to be “not more than once every seven to 11 years over the entire length of the pipeline in the United States,"  And in South Dakota, where the line has leaked twice, the estimate was for a “spill no more than once every 41 years."  The spill risk analysis was conducted by international risk management company DNV GL, which did not respond to Reuters' request for comment.  TransCanada could lose its permit to operate the Keystone in South Dakota if an investigation into this month's massive leak determines that the pipeline operator violated its license. Conditions include construction standards and environmental requirements.  “They testified that this is going to be a state-of-the-art pipeline," South Dakota Public Utilities Commission member Gary Hanson told Reuters. “We want to know the pipeline is going to operate in a fashion that is safe and reliable. So far it's not going well."

With US leak repaired, Keystone pipeline is set to reopen - France 24: - The Keystone pipeline will resume oil deliveries on Tuesday after being shut down because of a leak in South Dakota, its operator TransCanada announced Monday. The company's "repair and restart plans have been reviewed by the Pipeline and Hazardous Materials Safety Administration (PHMSA) with no objections, permitting a safe and controlled return to service," TransCanada said in a statement. The PHMSA falls under the US Transportation Department. The pipeline, TransCanada added, will initially be operated at "a reduced pressure," before ramping up "to ensure a safe and gradual increase in the volume of crude oil moving through the system." A spill of about 5,000 barrels of oil earlier this month in a remote part of South Dakota forced the company to shut down the 4,324-kilometer (2,700-mile) conduit, which runs from the Canadian province of Alberta to oil terminals in Cushing, Oklahoma and Patoka, Illinois. In the spring, US President Donald Trump gave the green light for construction of the larger Keystone XL pipeline, which his predecessor Barack Obama had rejected amid environmentalists' warnings about the potential for serious leaks and ecological damage. With Keystone XL, TransCanada aims to more than double the current capacity of the line and have a direct hookup with oil refineries on the US Gulf Coast.

DAKOTA ACCESS:  Greenpeace urges court to scrap pipeline developer's lawsuit - Environmentalists are pushing a federal court to toss a lawsuit from Energy Transfer Partners LP that accuses several groups of defaming the company and inciting violence around the construction of the Dakota Access oil pipeline.In filings to the U.S. District Court for the District of North Dakota this week, Greenpeace International argued that ETP's recent legal challenge is a meritless attempt to punish advocacy work.ETP filed the challenge in August, accusing Greenpeace, BankTrack, Earth First! and others of racketeering and campaigning for "malicious interference" with pipeline construction. The company claims it incurred $300 million in damage from construction interruptions (E&E News PM, Aug. 22).Pipeline construction near the Standing Rock Indian Reservation in North Dakota attracted thousands of demonstrators, some of whom engaged in "direct action" protests to obstruct the construction route. The oil project is now complete and in service.Greenpeace says ETP's lawsuit wrongly alleges criminal activity from a few organizations participating in widespread opposition to the pipeline."However, despite gallons of ink spilled in the 228-page, 442-paragraph Complaint, on careful review it becomes obvious that all Energy Transfer is really complaining about is garden-variety environmental advocacy, not a criminal conspiracy," the group told the court Tuesday.Greenpeace argues that Washington's anti-SLAPP (strategic lawsuit against public participation) law should apply to the case, as two of the five defendants live there, and many of the allegedly defamatory or inciting statements were made from within the district. Under that statute, litigants are barred from using the courts to attempt to silence critics. "If Energy Transfer Partners succeeds, it will embolden other corporate giants to abuse the legal system with SLAPPs to silence any criticism," Tom Wetterer, Greenpeace USA general counsel, said in a statement. "Anyone who values free speech and public advocacy — including journalists, nonprofit organizations, and community protectors — should be following these cases closely, and defending our collective right to speak out against corporate power."

Bakken gas flaring rebounds, and more challenges loom - Producers in the Bakken region made substantial progress in 2014-15 in reducing the volume and percentage of gas that was flared or burned off, but those gains stalled in 2016, and flaring has actually been on the rise through much of 2017. Due to an unfortunate confluence of events (gas processing plant and pipeline issues among them), 16% of the gas produced in the Bakken in September was flared, marking the first time producers failed to meet the state’s ratcheting-down target for gas burn-offs. The October and November flaring numbers are expected to improve, but there are worries that without more processing capacity, Bakken producers will have trouble achieving the North Dakota flaring target when it drops to 12% (from the current 15%) in November 2018. Today, we discuss recent developments in Bakken gas production, gas flaring and gas-related infrastructure. One of the most enduring images of the Shale Era is a photograph of North America from a NASA satellite that showed western North Dakota shining as brightly in the nighttime sky as major metropolitan areas like New York City, Los Angeles and Houston. But it wasn’t streetlights and stadiums that lit up the Bakken region; it was the flaring of vast volumes of associated gas that was being produced at crude oil-focused wells. The burn-off of more than one-third of Bakken gas production wasn’t just wasteful, it hurt producers’ bottom line and it gave the Shale Revolution (and the Bakken in particular) a public-relations black eye — a real shiner. As we said a while back in We Did Start the Fire and (Fewer) Candles In The Wind, getting a handle on flaring proved to be especially challenging in the Bakken, given its remote location and the fast pace of oil and gas production growth there earlier in this decade. In September 2011, with oil (and associated gas) production in the Bakken on a tear and gas gatherers and processors struggling to keep up, the percentage of produced gas that was flared peaked at 36%. Something had to be done, and it was. Since June 2014, the North Dakota Industrial Commission (NDIC) has required exploration and production companies (E&Ps) to file a “gas capture plan” (GCP) with their drilling permits. Flaring now is limited to one year after first production from the well; after that, the well has to be either connected to a gas gathering pipeline or capped.

California's largest solar power plant to extract oil - Yesterday, Aera Energy and GlassPoint Solar announced plans to build California’s largest solar energy project. Located at the Belridge oilfield west of Bakersfield, the project will be used to generate steam to inject into the ground to help extract oil.The site will produce 12 million barrels of steam per year, replacing 4.8B ft3 of natural gas that would have been burnt to generate the steam. The oil-producing solar project is projected to save more than 376,000 metric tons of carbon emissions, which is equivalent to the emissions of 80,000 cars per year.Belridge Solar will consist of two power plants, a solar thermal plant and solar electric plant. The solar thermal facility will output 850 MW of thermal energy, producing 12 million barrels of steam per year via reflecting sunlight from large mirros on a centrally located tube. The solar electric plant will produce 26.5 MW of electricity.Aera and GlassPoint plan to break ground on the Belridge Solar plant in the first half of 2019 and expect to be producing steam and electricity as early as 2020.An explanation for the purpose GlassPoint’s solar thermal project was provided:  Heavy oil is produced by injecting steam into the reservoir to heat the oil so it can be pumped to the surface. This process, known as thermal Enhanced Oil Recovery (EOR), typically generates steam using natural gas. By harnessing the sun’s thermal energy to replace the combustion of natural gas, GlassPoint is enabling Aera to reduce its energy consumption and carbon footprint at Belridge. A patent was given for ‘solar augmented geothermal energy‘ that looks very similar to this oil extraction method and was actually referenced by GlassPoint in its own patent filings. The image below gives a rough description of the flow of steam in the power plant:

Natural gas production in Bakken region increases at a faster rate than oil production - In North Dakota’s Bakken region, the ratio of natural gas production relative to crude oil, known as the gas-oil ratio, has been gradually increasing since 2008 and has increased at a faster rate since 2014. More than 90% of North Dakota’s crude oil and natural gas production comes from the Bakken region, which includes the Bakken and Three Forks formations.  Total North Dakota crude oil production peaked at more than 1.2 million barrels per day (b/d) in December 2014, but production has since dropped to 1.07 million b/d (as of August 2017), based on data in EIA’s Monthly Crude Oil and Natural Gas Production Report. The record crude oil production in late 2014 was the result of increasing crude oil production from the Bakken and Three Forks formations. Despite production declines in 2016, North Dakota remained the second-largest oil-producing state, accounting for 11% of total U.S. crude oil production.   While oil production has slowed in North Dakota, natural gas production has continued to grow, reaching a record high of 1.94 billion cubic feet per day (Bcf/d) in August 2017, or the energy equivalent of about 334,000 b/d of crude oil. Despite the increasing gas-oil ratio, North Dakota still produces more than three times as much energy from crude oil as from natural gas.  In tight oil formations like the Bakken and Three Forks—which have low permeability—the gas-oil ratio tends to increase only gradually over an extended period of time before reaching a certain point at which it then increases significantly. As producers extract hydrocarbons from a rock formation, the pressure in the formation eventually falls below the point at which natural gas naturally separates from the gas-saturated crude oil—a threshold known as the bubble point. More oil relative to natural gas tends to be produced during the initial phases of production, after which natural gas production can increase once pressure in the formation reaches the bubble point.

Anti-fracking activists and anarchists are blocking rail tracks in Olympia, Wash. They don't plan on leaving. -- The encampment went up on Nov. 17, a guerrilla whirlwind of tents, tarps, wooden pallets and two-by-four studs. In just a few hours, the intersection at Jefferson Street SE and Seventh Avenue in downtown Olympia, Wash., was transformed from a drab piece of asphalt into a hulking structure, somewhere between a refugee camp and a carnival tent. As impressive as the camp was, however, most of the 100 people who collected behind its barricades the first day did not expect it to last. This was contested turf. Two sets of train tracks snaked north from the intersection to where the Port of Olympia sits on a piece of land jutting into the Budd Inlet like a fat thumb pointing from a fist. The encampment covered both rails, planting the makeshift site — and the people inside — directly in the path of any engines heading in or out of the port. That was the point. In a peaceful protest spearheaded by members of local indigenous tribes, activists planned to disrupt rail shipments related to the hydraulic fracturing business in North Dakota. A similar effort a year before ended in arrests and flash bangs and burning recycling bins. This year, the activists were sure authorities would react similarly. “We assumed another raid would be coming instantly,” one participant, who declined to give her name, told The Washington Post this week. “We thought it had to come down. We were feeling nervous. People stayed up all night.” But when the sun climbed up the next morning, the camp was still there. This week, 12 days into the blockade, the protesters remain. The structure has only grown. “This year it’s much larger,” Kyle Taylor Lucas, an indigenous rights activist involved in the protest, told The Post. “Last year we only covered one of the tracks.” Lucas said the attitude in the camp is hopeful. “What we are trying to do is resist the forced complicity in this brutal practice to devastate the earth,” she said. “The various affinity groups here bring their own specific messages and commitments and specific reasons for being here. But we came together for the common demands.” The blockade has successfully created controversy among Olympia’s political leaders, port commissioners and the rail company. But the stand is also a window into protest in the age of President Trump, a time when longtime activists find themselves fortifying the barricades with a younger breed galvanized into action by Trump’s election and other high-profile protests. “We have more anarchists,” Lucas told The Post. “And I suppose last year we did have more mainstream activists there, folks who are doing climate change work but on a more mainstream level.”

Trump administration approves Arctic Ocean oil exploration | TheHill: The Trump administration has approved an oil company’s request to explore for oil in the Arctic Ocean. The Bureau of Safety and Environmental Enforcement (BSEE) on Tuesday granted a permit for Italian oil giant Eni SpA to drill an exploratory well in the Beaufort Sea as a way to test production conditions there. The permit means the company could begin work on its exploratory well as early as next month. The decision is the first time the federal government has allowed a company to explore for oil in the American portion of Arctic waters in two years. Obama administration regulators put tight conditions on drilling activities in the Arctic and eventually decided to prohibit the sale of new drilling leases there. Eni already owns leases for the area it hopes to explore. The Trump administration, meanwhile, has looked to encourage drilling activities both on and offshore. The Interior Department approved Eni's drilling plan in July, and officials are considering a rewrite of Obama's offshore drilling plan, potentially opening up more areas of the Arctic for development in the future. “Responsible resource development in the Arctic is a critical component to achieving American energy dominance,” BSEE Director Scott Angelle said in a statement. 

Oil Exploration in Arctic Ocean Approved by Trump Administration as ANWR Drilling Bill Moves Forward -- The fight against new Arctic drilling took a major setback on Tuesday. On the same day that the Senate Budget Committee passed a bill allowing oil and natural gas drilling in Alaska's pristine Arctic National Wildlife Refuge , the Trump administration granted oil company Eni's request to explore for oil in nearby Alaska waters. The Department of Interior 's Bureau of Safety and Environmental Enforcement (BSEE) issued the permit to Eni yesterday, allowing the oil giant to drill exploratory wells in the Beaufort Sea as early as next month. “Achieving American energy dominance moved one step closer today with the approval of Arctic exploration operations on the Outer Continental Shelf for the first time in more than two years," the department boasted . In April, President Donald Trump signed an executive order that initiated the process of rolling back former President Obama's 2016 ban on any new off shore oil and gas leasing in the Arctic Ocean. Exploratory drilling will take place on Spy Island, a man-made artificial island approximately three miles offshore of Oliktok Point. Eni, which has sat on its leases in the Beaufort Sea for more than a decade, says the new development could lead to the creation of 100-150 jobs in the region and new production of 20,000 barrels of oil per day.

Green group poll: Arctic refuge drilling unpopular in key GOP districts | TheHill: A proposal to allow drilling in a section of the Arctic National Wildlife Refuge (ANWR) is unpopular in several key House districts Republicans are looking to defend next year, according to a poll released Wednesday. The survey, from the League of Conservation Voters, found 61 percent of voters in eight GOP-held House districts oppose drilling in the Arctic refuge, while only 29 percent support it. A majority of respondents in seven of the eight districts told pollsters their opinion of their House member would decline if the member votes to allow drilling in ANWR. The drilling proposal is less popular than the GOP tax plan, which 34 percent of respondents support and 48 percent oppose. The two proposals are expected to be linked together as Congress debates the tax bill next month. The League of Conservation Voters opposes drilling in ANWR. Its poll comes a week after the Senate Energy Committee approved a bill from Sen. Lisa Murkowski (R-Alaska) calling for drilling lease sales in a small portion of the refuge. Republicans say drilling can be done safely, would create jobs in Alaska and raise revenue for the federal and state governments. Opponents of the proposal contend ANWR is too environmentally sensitive to allow drilling there.

Democrats worry Arctic National Wildlife Refuge being lost amid tax debate – Politico -  Democrats’ fight to keep oil and gas rigs out of the Arctic National Wildlife Refuge is losing ground as the Republican tax plan advances — and it's almost as if no one has noticed. The prospect of drilling in the untouched Alaskan tundra is as close to reality as it's been in more than a decade, with none of the political drama that in past decades turned the refuge's fate into a top-tier rallying cry for liberals. Legislation to allow drilling in ANWR is quietly hitching a ride on the tax code overhaul that Senate Republicans hope to complete by the end of the week, overshadowed by larger debates on whether the bill is a giveaway to rich people and corporations at the expense of the poor and working class. “It’s really not gotten the attention that it should,” Sen. Tammy Duckworth (D-Ill.), a member of the Energy and Natural Resources Committee, told POLITICO about the ANWR provision. “It’s not just the budget discussion. It’s about everything else that’s going on, the flurry of all sorts of other news.” Angus King (I-Maine) said Republicans were trying to shield ANWR from opposition by adding it to the larger bill rather than bringing it to the floor separately under rules, which would require it to win support from 60 senators to overcome a filibuster. “Well, clearly the strategy is to try to get it through as part of this tax reform effort and thereby avoid a direct up-or-down vote,” King said in an interview earlier this month. The nonstop news cycle and preponderance of other concerns with the tax bill are making it difficult to focus on an issue that normally fires up Democratic voters. 

ANWR Drilling Effort Hits Snag: 'This Is What Happens When You Sneak Drilling Into a Terrible Tax Bill'  -- The backdoor Arctic refuge drilling provision snuck in the Senate Republican's tax reform plan could be held up thanks to a little-known procedural rule. The Republican-led effort to open the pristine Arctic National Wildlife Refuge (ANWR) to oil and natural gas drilling could violate the Byrd Rule, which outlines what can be included in the Senate's budgetary legislation. According to the Associated Press : "Senate Democrats objected to the provision opening a portion of the remote refuge to oil drilling, saying measures to fast-track environmental approvals violate a rule designed to limit budget legislation to provisions that are mainly fiscal in nature. Congressional aides say the Senate parliamentarian has signaled agreement with Democrats, which could force Republicans to secure 60 votes for drilling, instead of 50 needed for the tax bill."The fate of the bill is now unclear but environmental groups cheered the news.  Tiernan Sittenfeld of the League of Conservation Voters told the AP that the procedural hiccup "is what happens when you cut corners and try to sneak drilling into an already terrible tax bill."  The drilling provision was introduced by Sen. Lisa Murkowski (R-Alaska), who chairs the Senate Energy and Natural Resources Committee and has worked for most of her career to allow drilling in the refuge. Conservatives have sought for decades to open up parts of the refuge to create jobs and boost the energy sector. They have targeted the so-called 1002 area on the Prudhoe Bay in Northern Alaska, which has an estimated 12 billion barrels of recoverable crude. Murkowski called the 1002 a "non wilderness area" since the government set it aside for petroleum exploration decades ago. However , the targeted area hosts migratory bird species and endangered wildlife and is considered to be sacred to the indigenous Gwich'in people, who sustain themselves from the caribou that migrate there.

US shale producers renew challenge to OPEC: Kemp (Reuters) - U.S. shale producers have started adding more drilling rigs in response to rising oil prices and improving confidence about the outlook for 2018. Experience shows changes in the number of rigs drilling for oil in the United States tends to follow changes in WTI prices with a lag of about 16 to 20 weeks. The active rig count peaked in mid-August and then declined through September and October, in response to the earlier peak and fall in prices between February and mid-June. But WTI prices hit a recent low around June 21 and have been on an upward trend for 22 weeks so it was expected the rig count would start to rise. Right on time, the rig count has climbed from a low of 729 on Nov. 3 to 747 on Nov. 22, according to oilfield services company Baker Hughes ( ). Shale firms are adding rigs in response to a big increase in spot prices, which is improving their short-term cash flow, and a brightening outlook, which should make production more profitable over the next year. Front-month WTI futures prices have climbed by more than $16 per barrel or almost 40 percent since their trough in late June. Front-month prices are now above their previous peak in February and at the highest level in almost 31 months. The WTI calendar strip for 2018, the benchmark against which shale producers execute hedges for next year, has climbed by more than $11 per barrel to the highest level since the start of 2017. The strip is now trading above $56 per barrel, high enough for most shale firms to ensure basic profitability in 2018. The renewed rise in the U.S. rig count underscores the delicate balance Saudi Arabia, Russia and other OPEC and non-OPEC oil exporters must strike this week at their meeting in Vienna. 

Million-Barrel Oil Hedging Surge Signals Shale Boom Here to Stay - Oil explorers took advantage of a market rally to lock in prices for almost 1 million barrels a day’s worth of future output, signaling the shale boom’s staying power as OPEC ponders the extension of its supply curbs. New hedging contracts in the third quarter covered 897,000 barrels a day of annualized production, a 147 percent increase over the second quarter, according to an analysis of 33 companies released Tuesday by industry researcher Wood MacKenzie Ltd. It was the biggest jump in crude hedging volumes since Wood Mackenzie began tracking such activity two years ago. OPEC and its allies are scheduled to meet in Vienna this week to discuss whether to extend supply cuts intended in large part to counter the historic surge in U.S. production. The hedging contracts, which allow drillers to lock in future payments of at least $50 a barrel, could make it easier for the cartel’s American rivals to keep pumping more, no matter which way prices go. “Producers that are able to lock in prices above previous expectations may feel more comfortable with increasing activity,"  . “Others may leave budgets unchanged and promote higher cash-flow guidance to an investment community anxious about profits." Most of the hedges guarantee payments of $50 to $60 a barrel for 2018, the analysis found. New York-based Hess Corp. and Cenovus Energy Inc., one of Canada’s biggest producers, were the most active, accounting for 35 percent of volume added in the quarter. Fourteen companies each added at least 25,000 barrels a day, said Wood Mackenzie. Natural-gas hedging slowed, with drillers adding almost a third fewer contracts than in the prior quarter. That’s likely because gas prices have been less volatile this year, McConn said. Most contracts were added at prices between $3 and $3.40 per million cubic feet, with Fort Worth, Texas-based Range Resources Corp. accounting for 27 percent of volumes added. 

Oil Majors Are Leading The Recovery Race - In a sign that the oil majors have survived the three-and-a-half-year oil bust and are back on solid ground, Royal Dutch Shell announced that it will restore its full cash dividend.Shell hasn’t paid the full cash dividend in over two years, instead offering investors shares in lieu of payment. But with debt falling significantly over the past year, cash flow improving, and an improved oil market outlook, the company chose to dish out some of the rewards to its shareholders. Shell also said that it would buy back $25 billion worth of shares by 2020, roughly the equivalent to the amount of shares that it issued instead of paying the cash dividend.Shell follows BP and Statoil, which both made similar announcements in recent weeks. BP said it will begin buying back shares and Statoil said it will end its scrip dividend and return to cash payments. But Shell’s decision to pay the full cash dividend is notable because it had become one of the most indebted oil companies in the world after its $50 billion purchase of BG Group.Taken together, the moves to step up payments to shareholders is a sign that the oil majors are feeling much more confident than they were in recent quarters. Shell increased its guidance for free cash flow from a prior range of $20 to $25 billion through 2020, up to a new range of $25 to $30 billion—a level that assumes oil prices trade at an average of $60 per barrel. The “strategy update shows an encouraging increase in future cash flows,” said Simon Gergel, chief investment officer of equities at Allianz Global Investors, according to Bloomberg. The restoration of the cash dividend “reflects their improving cash-generation profile,” he said. The sharp improvement for Shell is the result of several years of cost-cutting, asset disposals and efficiencies that have helped drive down the cost of production. Also, some high-profile projects have reached completion, easing the spending burden while also adding new sources of revenue. The acquisition of BG Group transformed Shell into the largest LNG exporter in the world, but it also raised eyebrows because of the stratospheric debt that it required. Now, with the Anglo-Dutch company paying down debt, improving its cash position, and restoring its cash dividend, the acquisition of BG Group looks much better.

MIT Study Suggests US Vastly Overstates Oil Output Forecasts - Turns out, America’s decade-long shale boom might just end up being a little too good to be true. Researchers at MIT have uncovered one potentially game-changing detail: a flaw in the Energy Department’s official forecast, which may vastly overstate oil and gas production in the years to come. The culprit, they say, lies in the Energy Information Administration’s premise that better technology has been behind nearly all the recent output gains, and will continue to boost production for the foreseeable future. That’s not quite right. Instead, the research suggests increases have been largely due to something more mundane: low energy prices, which led drillers to focus on sweet spots where oil and gas are easiest to extract. “The EIA is assuming that productivity of individual wells will continue to rise as a result of improvements in technology,” said Justin B. Montgomery, a researcher at the Massachusetts Institute of Technology and one of the study’s authors. “This compounds year after year, like interest, so the further out in the future the wells are drilled, the more that they are being overestimated.” Extrapolating from field studies Montgomery and his colleague Francis O’Sullivan conducted in North Dakota’s Bakken shale deposit, the research suggests that total U.S. oil and natural-gas production from new wells could undershoot the EIA estimate by more than 10 percent in 2020. Things would get progressively worse each year after that as wells in various sweet spots are exhausted and technology fails to close the gap.

Oil Major: 70% Of Crude Can Be Left In The Ground - Canada’s oil sands are too dirty to be produced, and should probably stay in the ground.That has long been the sentiment of environmental groups, but it is also gaining acceptance even among some of the largest oil companies in the world. “A lot of fossil fuels will have to stay in the ground, coal obviously … but you will also see oil and gas being left in the ground, that is natural,” Statoil’s CEO Eldar Saetre told Reuters in an interview. “At Statoil we are not pursuing certain types of resources, we are not exploring for heavy oil or investing in oilsands. It is really about accessing the most carbon-efficient barrels.” Meanwhile, Statoil is under pressure at home on another front: its Arctic wells in the Barents Sea have come up dry, capping off a highly disappointing drilling season. If heavy oil and oil sands are to be left unproduced, then a lot of oil will need to stay in the ground. According to the USGS, about 70 percent of the world’s discovered oil reserves are in the form of heavy oil and bitumen. Much of that comes from Venezuela – one of the last places in the world that an oil company wants to do business in these days – and Canada.  Last year, Statoil abandoned Canada’s oil sands, selling off its assets to Athabasca Oil Corp. But Statoil is hardly alone in the exodus. ConocoPhillips unloaded a whopping $13.3 billion of oil sands assets to Cenovus Energy earlier this year. Shell sold off $4.1 billion in oil sands assets to Canadian Natural Resources. Meanwhile, ExxonMobil wrote off 3.5 billion barrels of oil sands from its book in February, admitting that they were unviable in today’s market. French oil giant Total SA decided earlier this year to halt funding for the Fort Hills oil sands project, led by its partner Suncor Energy. To be sure, the overarching motivation for many of these asset sales is one of economics.  ConocoPhillips’ CEO said that it would no longer invest in any oil project that needs a breakeven price of $50 or higher, according to the FT. Conoco’s CEO Ryan Lance said that much of the company’s new investment will be directed into U.S. shale. “You don’t even get through the door unless you are below $50 cost of supply, and you don’t really get to the table in the capital allocation fight unless you are $40 a barrel or below,” he said.

Exxon, oil giants team up to reduce methane emissions | TheHill: ExxonMobil Corp. and seven other energy firms have teamed up to tackle natural gas sector greenhouse gas emissions, the companies announced on Wednesday. Exxon was the only American-owned company to sign an agreement to crack down on emissions of methane, a powerful greenhouse gas that producers tend to emit along the natural gas production line. The companies agreed to take steps to reduce methane emissions, work with institutions and governments to write new methane regulations, improve emissions reporting data and increase transparency. The oil industry has increasingly touted natural gas as an effective way to cut down on electricity sector greenhouse gas emissions, because it burns cleaner than other fossil fuel alternatives like coal. But methane emissions pack about 25 times the warming potential of carbon dioxide, a fact that has caused regulators to turn their eye to pollution controls on natural gas producers. In the United States, the Trump administration is working to roll back methane pollution rules from the Interior Department and the Environmental Protection Agency.The oil industry has opposed the regulations, arguing they are costly and duplicative of state pollution standards, and noting they have cut emissions on their own. Environmentalists say the warming potential of methane make the regulations necessary.

Ban fracking, London mayor tells councils - The Mayor of London wants to effectively ban fracking in the capital, urging local councils to refuse applications for exploration or extraction. Sadiq Khan called the method of extracting shale gas "harmful" and a risk to public health, and will this week set out guidance on the matter in a new draft plan for London. "There is absolutely no place for fracking in London and I remain firm in my belief that any such application must be refused," he said. “The harmful, negative impact of the use of fossil fuels on the environment and on the air we breathe is well known. We must instead focus our resources on developing technologies for the efficient extraction of clean, renewable forms of energy, rather than coming up with more ever innovative ways to keeping burning fossil fuels. The move was welcomed by campaigners at Greenpeace and Friends of the Earth. It's understood that application for fracking has been made to any councils, but London Local Energy has signalled that it wants to explore a site in Brentford. Fracking was effectively banned in Scotland last month, following in the footsteps of Wales and Ireland. France, the Netherlands, Germany and Bulgaria are also among the countries to have banned the controversial practice. 

Denmark's New Law Could Block Nord Stream 2  -- A new law passed by the Danish government could authorize regulators to block the passage of the Russian Nord Stream 2 gas pipeline on security or foreign policy grounds, according to a new report by Reuters.  Under previous laws, the two reasons above would not have constituted valid grounds to reject the construction of a pipeline. Nord Stream 2 will bypass land routes through Ukraine, Poland, and Belarus to supply gas to Germany and surrounding nations. The line’s route cuts through Danish waters in its current form, but Gazprom researchers are investigating a new route that cuts through international waters instead, preventing a showdown in the Danish parliament regarding the project.The Danish Energy Agency is assessing a submitted application for the Nord Stream 2 line, but the new law applies to all applications being processed, including this controversial one. Supporters of the project argue that Germany and neighboring countries will get cheap, reliable gas from Russia that will complement - not replace - gas from existing supply routes.  Opponents of the project argue that Russia’s Gazprom will increase its share of the European gas market, which would boost its already dominant position in Central and Eastern Europe, and therefore undermine the efforts of some European countries to diversify their gas supplies away from Russia. Opponents also see Nord Stream 2 as Moscow gaining political leverage over the EU.  Nord Stream 2 - currently planned for completion by the end of 2019 - faces stiff opposition from Poland, the Baltic countries, and several other EU countries. Germany, on the other hand, which will be the main beneficiary of the new gas supplies, says that the project is just business, and should not be made political.

Venezuela's military is reportedly taking over the country's state oil giant - The general appointed to run Venezuela's energy sector will bring more military officials into the senior ranks of state oil company PDVSA during a major shakeup intended to root out corruption, two company sources told Reuters on Monday. Industry analysts and sources said the surprise appointment of Manuel Quevedo, a former housing minister with no known energy experience, was a bad omen for the country's already deteriorated oil industry. Quevedo takes over from two industry veterans to become one of the most powerful players in the country, which is home to the worlds largest crude reserves. He will have to tackle corruption scandals and an attempted debt restructuring, within the context of a deep recession and debilitating U.S. sanctions. The time for a new oil revolution has come, leftist Maduro said in his televised Sunday address, urging Quevedo to purge PDVSA of corruption. Last week, six executives from U.S.-based Citgo, a Venezuelan-owned refiner and marketer of oil and petrochemical products, were arrested in Caracas on graft allegations. About 50 officials at state oil company PDVSA have been arrested since August in what the state prosecutor says is a crusade against corruption. Sources within PDVSA and the oil industry said Maduros administration was using corruption allegations to sideline rivals and deepen its control of the industry, which accounts for over 90 percent of export revenue. Quevedo, whom two sources close to the military identified as a Maduro ally, will take over his new roles on Monday before he is officially sworn in on Tuesday. He vowed on Sunday to bring PDVSA closer to the ideals of late leftist leader Hugo Chavez. It was unclear how Quevedo planned to increase oil production, or what position he would have in Venezuelas complex attempt to restructure its debt, although his appointment is likely to worry bondholders. 

Report: Shell Complicit in Human Rights Abuses -- Amnesty International is calling for an international investigation into Royal Dutch Shell 's practices, alleging in a new report released Tuesday that the oil giant was involved in human rights violations committed by the Nigerian government in the early 1990s. The report, created following a review of thousands of internal company documents and testimony statements, charges Shell with aiding Nigerian security forces in silencing protests in the country's oil-producing Ogoniland region. "The evidence we have reviewed shows that Shell repeatedly encouraged the Nigerian military to deal with community protests, even when it knew the horrors this would lead to—unlawful killings, rape, torture, the burning of villages," Amnesty Director of Global Issues Audrey Gaughran told Bloomberg.   Shell is the oldest oil company established in Nigeria, Africa's largest oil producer and the sixth largest oil-producing country in the world, and currently operates a joint venture with the Nigerian government that produces more than one-third of the nation's crude oil.  As reported by The Guardian : "Mark Dummett, a researcher for Amnesty, said: 'The fact Shell was running a shady undercover unit and then passing on information to the Nigerian security agency is incredibly disturbing. 'This was a time when Nigeria was cracking down on peaceful protesters, and there must have been a risk that information gathered by Shell's secret spy unit contributed to grave human rights violations.'  He added: 'The revelations show how close and insidious the relationship was between the oil company and the Nigerian state, and Shell has serious questions to answer.'"

US exporting dirty fuel to already pollution-choked India   (AP) — U.S. oil refineries that are unable to sell a dirty fuel waste product at home are exporting vast quantities of it to India instead. Petroleum coke, the leftover from refining Canadian tar sands and other heavy crude, is cheaper and burns hotter than coal. But it also contains more planet-warming carbon and far more heart- and lung-damaging sulfur — a key reason few American companies use it. Refineries are sending it around the world instead, especially to energy-hungry India, which last year got almost a fourth of the fuel grade "petcoke" the U.S. ships, an Associated Press investigation found. In 2016, the U.S. sent more than 8 million metric tons of petcoke to India — about 20 times more than in 2010, and enough to fill the Empire State Building eight times. The petcoke burned in countless factories and plants is contributing to dangerously filthy air in India. "My life is finished....My lungs are finished," said Satye Bir, 63, wheezing and reaching for an inhaler. "This is how I survive. Otherwise, I can't breathe." Tests on imported petcoke used near the capital found 17 times more sulfur than the limit for coal, according to India's Environmental Pollution Control Authority. India's own petcoke, produced domestically, adds to the pollution. Industry officials say petcoke has been an important fuel for decades, and its use recycles a waste product. Health and environmental advocates say the U.S. is exporting an environmental problem. The U.S. is the biggest producer and exporter of petcoke in the world. 

Strong China demand, oil drive spot Asia LNG prices to highest since Jan 2015 - Asia LNG spot prices surged to a near three-year high Monday as surging Chinese demand and robust oil prices coincided with persistent supply anxieties. The Platts JKM for January was assessed at $9.85/MMBtu Monday, the highest price since January 9, 2015, and up about 8% since the start of the month. China imported 28 million mt of LNG in January-October 2017, up 47% from 19 million mt in the same period last year, closing the gap to the world's second-largest importing nation, South Korea. The country's policy directives encouraging coal-to-gas switching to combat air pollution mean that LNG imports were increasingly needed to feed the country's enormous energy appetite. The replacement of coal-fired heating with gas-fired boilers at millions of Chinese households this year also boosted winter LNG purchases. This additional demand was satisfied through spot procurement largely through majors CNOOC and PetroChina. Both companies were active in spot dealmaking, either via bilateral transactions or participating in sell-tenders, sources said. In particular, CNOOC awarded a rare tender for up to seven December deliveries in late-September, sources said. Other importers like Guanghui Energy opted to do short-term strip deals, while others like Sinopec and Jovo relied on long-term contracted volumes. "China's activity on the spot market this year really took out a lot of excess supply, especially for leaner cargoes," an international trader said. 

As gas heating demand soars, China's Hebei warns of shortages (Reuters) - China’s Hebei province has told cities across the region to force shops and factories to cut their natural gas use due to shortages, the strongest sign yet that Beijing’s shift to clean fuel is hurting businesses across the industrial heartland. Demand for gas in the world’s second-largest economy has surged after the government ordered millions of households across northern China to convert to gas heating from coal this year and companies to replace their coal-fired industrial boilers with gas or electricity as part of its war on pollution. The government has been battling toxic smog, produced from the emissions from coal-fired power plants, that blankets the north during the winter when people turn up their home heating. Hebei’s Development & Reform Commission (DRC) issued an orange alert, the second-highest level in its four-tier scale, and urged city authorities to force commercial and industrial users to cut gas consumption, according to the notice reviewed by Reuters. “Due to gasification projects and overall efforts to remove coal, gas consumption rose rapidly in Hebei. Upstream producers also cut supplies leading to a bigger tightness,” the notice said. A Hebei official confirmed the document’s authenticity, which was issued on Nov. 27 and came into force on Nov. 28. It is not known how long the measures will be in force. The Hebei DRC declined to comment on the situation. An orange alert means Hebei, the country’s largest steelmaking province, faces a gas supply shortfall of 10 percent to 20 percent of its current needs. Hebei’s warning comes just two weeks since the newly installed radiators were switched on for the winter on Nov. 15. The government has said residential users will have supply priority over industrial users. 

Gas exporters group hits out at economic sanctions against members - The Gas Exporting Countries' Forum (GECF) has slammed the imposition of sanctions against its members in a final communique from its fourth heads of state summit held in Bolivia last week. The GECF -- made up of the world's biggest gas exporters including the big hitters Russia, Qatar and Iran -- holds around 60% of the world's proven gas reserves and although it is more of an advisory forum than one that takes action, the comments on sanctions stand out. In the declaration, the GECF said it expressed its "deep concern" about the extra-territorial application of laws and regulations, and its objection to unilateral economic sanctions in the gas sector, particularly against its member countries. The US in August passed a new sanctions law that gave President Donald Trump the power to impose measures against companies investing in Russian energy export infrastructure. Heads of state and members of government from the member countries convened the week-long summit in Santa Cruz de la Sierra. There has been speculation over the past decade that the GECF could morph into a "Gas OPEC" with the power to manage markets through supply intervention, but the group has insisted its role is to promote gas and encourage cooperation. 

OPEC’s Clash With U.S. Oil Is Nearing Its Day of Reckoning - The clash between OPEC and America’s oil industry is reaching a day of reckoning.  The U.S. shale revolution is on course to be the greatest oil and gas boom in history, turning a nation once at the mercy of foreign imports into a global player. That seismic shift shattered the dominance of Saudi Arabia and the OPEC cartel, forcing them into an alliance with long-time rival Russia to keep a grip on world markets. So far, it’s worked -- global oil stockpiles are draining and prices are near two-year highs. But as the Organization of Petroleum Exporting Countries and Russia prepare to meet in Vienna this week to extend production cuts, ministers have little idea how U.S. shale production will respond in 2018. “The production cuts are effective -- it was absolutely the right decision, and the fact of striking a deal with Russia was crucial,” said Paolo Scaroni, vice-chairman of NM Rothschild & Sons and former chief executive officer of Italian oil giant Eni SpA. Nonetheless, “OPEC has not the same power. The U.S. becoming the biggest producer of oil in the world is a dramatic change.”  For OPEC members, the stakes couldn’t be higher. Saudi Arabia’s Crown Prince Mohammed Bin Salman is embarking on a radical economic transformation of the kingdom, including a partial sale of its state oil company that could be the largest public offering in history. Venezuela, reeling from years of recession and a crushing debt burden, is on the brink of political implosion. The producers’ efforts to clear the oil surplus are starting to pay off. They’ve drained excess inventories in developed nations this year by 183 million barrels, or more than half of the glut, which now stands at about 140 million barrels, according to OPEC data. That has revived London-traded crude futures, which sank below $45 a barrel this summer, to a two-year high of $64.65 on Nov. 7. That success goes some way to countering accusations that OPEC had lapsed from the dominant market force of the 1970s and 1980s into irrelevance. Although its 14 members still pump 40 percent of the world’s oil, their share has dwindled from the days when OPEC held the global economy in thrall.

Shale Is Confounding Everybody, But Never Mind -- If anyone doubted that the U.S. shale industry has completely upended the oil market, just look at how it's complicating OPEC's next meeting.As the group prepares to decide on Nov. 30 whether to extend output cuts to the end of 2018, it has no idea how much competition to expect from shale. Nor does anybody else, for that matter. Forecasting output growth used to be a relatively simple undertaking. Developing oil fields had a lead time of several years and the flow of new oil coming from them was reasonably visible over a 12-month horizon.Now, lead times are measured in weeks rather than years for new shale projects, and the large number of companies operating in the sector have made forecasting oil output growth almost impossible. The uncertainty makes it very difficult for OPEC and its friends to assess how they should respond. This raises a risk that they hesitate on extending the production reductions.Analysts briefing the group last week said forecasts of growth in shale oil output next year ranged from 500,000 barrels a day to 1.7 million. That margin of uncertainty is as big as the entire output cut the group agreed to a year ago. The group doesn't just have a problem with looking ahead. Understanding of the current year is little better. The U.S. Energy Information Administration is underestimating this year’s growth in shale oil output by about 300,000 barrels a day, according to veteran crude trader Andy Hall, who was part of the briefing. But Continental Resources Chief Executive Officer Harold Hamm said during an EIA webinar earlier this month that the department's 2017 exit rate of production is 220,000 barrels a day too high, implying it is also overstating annual average output.  Adding to the complexity, OPEC and the International Energy Agency have very different global projections for next year. If output cuts are extended to the end of 2018, the producer group sees oil inventories reducing quickly in the second half of the year. With an estimated 154 million barrels of excess inventory in Organization for Economic Cooperation and Development countries alone, those steep reductions are still needed to bring stockpiles down to the five-year average level that OPEC seeks.

China's splurge on U.S., Russian crude shows OPEC's dilemma (Reuters) - The shifting dynamics of China’s crude oil imports show the scale of the challenges facing the Organization of the Petroleum Exporting Countries (OPEC) and its allies ahead of a decision on whether to continue with production cuts. The detailed Chinese customs data for October illustrates trends that should give pause for thought to the leaders of OPEC and its allies, particularly major exporter Russia, ahead of the meeting in Vienna on Nov. 30. Market share is the big issue for shippers to China, the world’s largest crude importer, and there are two strands to the problem. The first is that the import data shows how China has been able to develop new relationships with oil exporters fairly rapidly, reducing reliance on some traditional suppliers from OPEC. The second is that it appears that the burden of reducing exports, at least as far as China is concerned, isn’t being shared remotely equally by members of OPEC and their partners in output cuts. This imbalance raises the chance that an extension to the overall output cuts first agreed a year ago will prove ineffective as some parties to the deal are tempted to export more in a bid to retain, or expand, market share. China’s imports from the United States neatly encapsulate the dilemma that OPEC and its allies have in dealing with the challenge of rising U.S. exports on the back of the boom in shale oil. China imported about 206,900 barrels per day (bpd) from the United States in October, the second-highest monthly amount on record since this trade flow started late last year.

OPEC sees market rebalancing after June as it mulls oil cut extension (Reuters) - Oil markets will rebalance after June 2018 at the earliest, an OPEC working panel concluded last week, OPEC sources said on Monday, signaling the need to extend existing production cuts well into next year. The conclusion from OPEC’s national representatives and the group’s secretariat came after a meeting on Thursday and Friday, according to four sources at the Organization of the Petroleum Exporting Countries. It also came as non-OPEC Russia said it would support extending cuts in tandem with OPEC but gave conflicting signals on the duration of the extension after oil price rallied about $60 per barrel, raising fears that the market could over-tighten and spur another spike in U.S. shale output. OPEC’s leader Saudi Arabia has signaled it wanted oil to trade at about $60 per barrel as the kingdom is preparing to list its national oil champion Aramco and is still fighting a large fiscal deficit. Russia also needs high oil prices ahead of the presidential election in March 2018. But officials in Moscow have said they were also worried about an overly strong rouble which would undermine the competitiveness of its economy. “The best scenario would suggest third quarter for the rebalancing of the market,” one of the OPEC sources said. OPEC, Russia and nine other producers are cutting oil output by about 1.8 million barrels per day until March 2018, and will discuss extending the deal at a Nov. 30 meeting in Vienna. OPEC delegates have said a nine-month extension was the most likely outcome although some delegates and Russia have said a six-month extension was an option. Oil prices have risen to almost $65 a barrel, the highest since 2015, supported by lower inventories. However, excess supply persists, making some in OPEC wary of renewed price weakness. The supply pact is aimed at reducing oil stocks in industrialized countries to their five-year average, and the latest figures suggest OPEC is more than halfway there. “OPEC needs an extension until the end of 2018 to send the market a message that we are committed,” a second OPEC source said. “OPEC will meet in June again and if the market is tight by then, they can always adjust supply.” Russian officials told OPEC they thought the market needed to be monitored very closely so the agreement could be reviewed if signs of a deficit began to emerge, according to sources familiar with the discussions. 

OPEC, Russia Said To Announce Oil Pact Extension On Nov 30 - Saudi Arabia and Russia have agreed that OPEC and non-OPEC allies should announce an extension of the cuts at the highly-anticipated meeting in Vienna on November 30, Bloomberg reported on Friday, quoting people involved in the talks. Recent OPEC/non-OPEC oil pact chatter had it that Saudi Arabia was pushing for an announcement of the cuts extension next week in Vienna, while Russia was more hesitant about telling the market on November 30 how the participants in the deal would act. Russia appeared to be stalling and playing for an announcement to be issued closer to the current expiration deadline of the deal, March 2018. According to Bloomberg’s sources, now Russia and Saudi Arabia have agreed on the need to announce some sort of a deal next week, but Russia has insisted on additional phrasing in the extension deal that would link the size of the cuts to the state of the oil market.  While OPEC and Russia have agreed on a general framework, discussions are ongoing as to how OPEC could meet Russia’s demands, including how to include a link between the size of the cuts and the state of the rebalancing of the oil market. There are also discussions about including an option to review the pact again in early 2018, including calling a new meeting, according to Bloomberg’s sources. As of last week, not all Russian oil companies were on board with extending the cuts, and they were said to have discussed a six-month extension with Energy Minister Alexander Novak.Novak, for his part, said on Friday in a television interview posted on the energy ministry’s website that some 50 percent of the global oil oversupply had been erased and Brent prices had risen to an “acceptable enough” level of more than $60 a barrel. Nevertheless, the oil market is not yet balanced and the pact needs to be extended,Novak said, adding that Russia supports an extension, and various options are being discussed.

U.S. oil falls on Keystone restart, doubts about Russia’s resolve (Reuters) - U.S. oil prices fell more than 1 percent on Monday, easing from two-year highs on prospects of higher supply from a planned restart of the Keystone crude pipeline and uncertainty about Russia’s resolve to join in extending output cuts ahead of this week’s OPEC meeting. TransCanada Corp said it will restart its Keystone crude oil pipeline at reduced pressure on Tuesday after getting approval from U.S. regulators. Calgary-based TransCanada shut down the 590,000 barrel-per-day pipeline, one of Canada’s main crude export routes to the United States, on Nov. 16 after 5,000 barrels of oil leaked in South Dakota. Keystone carries crude from Alberta’s oil sands to U.S. refineries. Brent futures LCOc1 ended down just 2 cents at $63.84 a barrel while U.S. crude CLc1 settled 84 cents, or 1.4 percent, lower at $58.11 a barrel. On Friday, U.S. crude touched $59.05 a barrel, its strongest since mid-2015, following the spill. In post-settlement trading the front month spread for U.S. crude spread hit a session low of negative 10 cents a barrel, after Transcanada’s restart announcement. Oil prices have surged in recent months due to output cuts by the Organization of the Petroleum Exporting Countries, Russia and other producers. However, higher prices have encouraged greater output among U.S. producers. OPEC and its allies cut production by 1.8 million bpd in January and have agreed to hold down output until March. OPEC meets on Thursday to discuss policy and most analysts expect a deal to extend the cuts. On Friday, Russia said it was ready to support extending an output cut deal. Still, Russia has not given a timeline, and on Monday there were signs Russia may find it hard to comply. Oil output from Russia’s Sakhalin-1 project is set to rise by about a quarter to 250,000-260,000 barrels per day (bpd) from January, sources with knowledge of the plan said. 

U.S. oil prices mark first decline in 4 sessions - U.S. oil prices settled lower for the first time in four sessions Monday, as some traders expressed doubt over an extension to a production-cut deal at the OPEC meeting later this week. Still, prices for the U.S. benchmark crude finished off the session's worst levels, finding some support after a report that oil workers in Brazil are set to strike later this week. Oil labor union workers approved a strike starting Wednesday, Phil Flynn, senior market analyst at Price Futures Group said, citing a report from Bloomberg. The strike "may not even happen," but the news still helped oil trade off the day's "correction low," said Flynn. January West Texas Intermediate crude fell by 84 cents, or 1.4%, to settle at $58.11 a barrel on the New York Mercantile Exchange after tapping a low of $57.55. On Friday, the U.S. benchmark shot up 1.6% to $58.95, settling at a level not seen since June 30, 2015. January Brent oil , meanwhile, settled little changed, down 2 cents at $63.84 a barrel on the ICE Futures Europe exchange. WTI crude prices have been driven higher in recent sessions as U.S. inventory data showed crude stockpiles falling and on disruption to the Keystone pipeline in the U.S. after an oil spill in South Dakota. But the recent rise in prices, with WTI touching two-year highs, could provide incentive for U.S. producers, in particular, to further boost output. For now, investors are looking ahead to Thursday's meeting in Vienna of members of the Organization of the Petroleum Exporting Countries and nonmember oil producers, including Russia. Some expect the gathering will produce an extension to the output-cut deal announced in January. But "OPEC and Russia may not reach a conclusion on whether to extend supply cuts beyond March's deadline until February," said Adrienne Murphy, chief market analyst at AvaTrade. "The cartel aims to collect as much data possible, as well as appease reluctant Russia, before it commits to more cuts." 

OPEC heading for oil cut extension with a caveat (Reuters) - OPEC and Russia are heading towards prolonging their oil supply cuts for the whole of 2018 but with an option to review the deal in June, OPEC sources said on Tuesday after Moscow expressed concerns the market could overheat. The recommendation was made by a joint committee of OPEC and non-OPEC delegates including Russia but has yet to be approved by the ministers from the committee on Wednesday and then by a full OPEC meeting on Thursday, two OPEC sources said. Oil prices deepened their two-day decline on the news, which the market could perceive as an extension of production cuts by just three months until June 2018 rather than a full year. The Organization of the Petroleum Exporting Countries, Russia and nine other producers are cutting crude output by about 1.8 million barrels per day until March 2018, and on Thursday their oil ministers will discuss extending the deal. “It will not be an easy meeting and we always look at various scenarios,” United Arab Emirates Energy Minister Suhail bin Mohammed al-Mazroui said on Tuesday in Dubai. Upon arrival in Vienna, he said cutting output through the whole of 2018 was still the main scenario but not the only one. The market had largely expected OPEC to prolong the cuts until the end of 2018 to prop up prices and clear an excess of global stocks, but doubts have emerged in the last few days. OPEC’s leader, Saudi Arabia, has signalled that it wants oil to trade at about $60 a barrel as the kingdom prepares to list shares in national oil champion Aramco and fights a large fiscal deficit. The Russian government also wants high oil prices ahead of a presidential election in March 2018. But officials in Moscow have voiced worries about pricier oil boosting the rouble, which could undermine the competitiveness of Russia’s economy.

Oil prices slip on OPEC deal extension jitters (Reuters) - Oil prices eased on Tuesday, weighed down by uncertainty over the outcome of an OPEC meeting this week at which an extension to its price-supporting oil output cuts will be discussed. Prices also briefly came under pressure after a fire broke out at Exxon Mobil Corp’s (XOM.N) 362,300 barrel-per-day (bpd) Beaumont, Texas, refinery. Firefighters have since put out the blaze but the small crude unit is shut, sources said. Brent crude oil LCOc1 ended the session down 23 cents, or 0.4 percent, at $63.61 a barrel. U.S. crude CLc1 settled 12 cents, or 0.2 percent lower at $57.99, after falling 1.4 percent in the previous session. Prices extended losses after data from industry group the American Petroleum Institute showed crude inventories rose by 1.8 million barrels in the week to Nov. 24 to 457.3 million, compared with analysts’ expectations for a decrease of 2.3 million barrels. The Organization of the Petroleum Exporting Countries is heading for tougher-than-expected policy talks on Thursday. Its leader Saudi Arabia is pushing to extend output cuts by nine months while non-member Russia is hesitating due to worries that the market could overheat. Oil output from Russia’s Far Eastern Sakhalin-1 project is set to rise by about a quarter from January, sources with knowledge of the plan told Reuters, signaling Moscow may find it hard to comply with output cuts in tandem with OPEC for the whole of next year. A joint OPEC and non-OPEC technical committee recommended extending the deal until the end of next year, with an option to review it in June, two sources with knowledge of the matter said.

All Eyes On OPEC As Meeting Nears - Oil prices dipped slightly in early trading on Tuesday over a slight uptick in uncertainty regarding the OPEC meeting. Meanwhile, TransCanada is set to return its Keystone pipeline to operation, which dragged down WTI. “This bearish development adds to the underlying unease surrounding the outcome of Thursday’s OPEC meeting,” PVM Oil Associates analysts said in a report.An OPEC working panel concluded that the oil market would balance after June 2018, according to Reuters. “The best scenario would suggest third quarter for the rebalancing of the market,” an OPEC source told Reuters. The conclusion bolsters the case for extending the current agreement, which expires in March. While Russia is concerned about sparking a revival of U.S. shale if the production cuts are extended, some of the top oil traders caution OPEC and Russia not to back down now. The top oil traders insist that the current plan works. “What they need to do is quite simple — they need to stick to what they’re doing,” Marco Dunand, CEO of Mercuria, told the FT. “If they keep their discipline we should see inventories fall to a level that is adequate to support prices above $60 a barrel. If prices rise too high they can always revisit it, but the start of next year doesn’t look overly bullish.” Vitol, another major oil trader, warned that lower prices would be in store if the cuts are not extended. “Balances already look weaker than 2017 even with flat Opec production,” Vitol’s global head of research, Giovanni Serio, said to the FT. “The question going forward is do they want oil to stay above $60?” In a research note, Goldman Sachs said that Russia’s hesitation over extending the OPEC cuts has injected a degree of uncertainty into the talks. And because prices are already relatively high, hedge funds have taken out bullish bets, and timespreads indicate bullishness in the market, the downside risk is quite high, Goldman argued. “With the rhetoric not matching the logic for the first time in years, we believe that the outcome of this meeting is much more uncertain than usual,” Goldman analyst Damien Courvalin wrote. “We believe that oil prices have overshot fundamentals and that price risks are skewed to the downside into Thursday’s meeting.” Ahead of the OPEC meeting, hedge funds and other money managers slightly cut back on their bullish bets on oil futures, growing wary of their overextending position. Recognizing that much of the impact of the OPEC cuts are already priced into the market, speculators pulled back a bit over fears of an unexpected surprise.

Hedge funds lighten bullish positions in oil: Kemp (Reuters) - Hedge funds started to reduce their record bullish position in crude and refined products in the week to Nov. 21 amid growing concerns about the possibility of a sharp price reversal.The net long position held by hedge funds and other money managers in the five main petroleum futures and options contracts covering crude and fuels were cut to 1,092 million barrels from a record 1,120 million on Nov. 14.For Brent, WTI, U.S. gasoline and U.S. heating oil, the net long declined by 28 million barrels after rising by 237 million barrels over the previous four weeks, data from regulators and exchanges shows.Most of the adjustments came from the long side of the market, where portfolio managers reduced the number of long positions in Brent, WTI and gasoline in a sign of profit-taking after a strong price rally.In total, fund managers cut petroleum long positions by 26 million barrels while raising short positions by only 2 million barrels ( the profit-taking, bullish positioning in all contracts remained close to record levels, which continued to leave the market vulnerable to a further correction.From a fundamentals perspective, the positioning appears reasonable, given strong growth in consumption and the likelihood that OPEC will extend production cuts for a further nine months to the end of 2018 when ministers meet in Vienna this week.But prices have already risen a long way in a  short time and the hedge fund community has amassed a record number of positions that could make it hard to sustain buying momentum.

WTI Sinks After Surprise Crude Build -- Despite UAE oil minister jawboning, WTI/RBOB was sold today heading into the API data and extended losses after crude showed a surprise build (+1.82mm vs -2.95mm exp). Cushing saw a massive destocking and RBOB was steady after gasoline showed a surprise draw. API:

  • Crude +1.82mm (-2.95mm exp)
  • Cushing -3.178mm - most since Sept 2009
  • Gasoline -1.529mm (+1.2mm exp)
  • Distillates +2.696mm (+200k exp) - biggest since July

Following last week's small crude draw and gasoline build, hope was high but API showed a surprise crude build (and surprise gasopline draw)... The kneejerk reaction to the API was WTI lower and RBOB higher

OPEC's Impossible Task  - OPEC is on the verge of extending its production cuts for an additional nine months, pushing the deal through the end of 2018.  But the determination to keep the cuts in place comes at the same time that U.S. shale seems to be accelerating in response to higher oil prices.  It’s an impossible tension that OPEC has to deal with. Hesitate on cuts and risk another slide in oil prices, or keep the cuts in place and offer more room to U.S. shale? OPEC has tried to send a signal to the oil market that the group is operating with a consensus, and it telegraphed its intentions ahead of time to inspire confidence in the group’s cohesion. By demonstrating such resolve, the logic seems to be, the oil market would continue to tighten and prices would remain stable. But the downside of such a strategy is that it isn’t just oil traders who are confident in a more balanced oil market – U.S. shale has kicked drilling into a higher gear recently, and appears poised to continue to ratchet up production. The rig count has climbed for several consecutive weeks, and U.S. oil production is on the brink of hitting an all-time record high. The difficulty for OPEC, as Bloomberg Gadfly notes, is that the estimates for how much supply the U.S. will add next year differ by a wide margin. The IEA predicts non-OPEC supply growth by about 1.4 million barrels per day (mb/d) in 2018, a massive sum that would overwhelm demand. In this view, the OPEC cuts are badly needed to avoid another price collapse. OPEC is more hopeful that the shale industry will struggle; the cartel only predicts non-OPEC supply growth of less than 900,000 bpd next year.  There are plenty of signs to suggest that the shale industry is indeed facing unexpected troubles. But the problem for OPEC is that it simply can’t forecast with any accuracy what to expect from shale drillers over the next year. Nevertheless, the objective of the OPEC production limits is to drain global crude inventories back down to average levels, a goal that will take more time to reach. But while there are some warning OPEC about a shale comeback, there are also voices that are warning OPEC that it could be doing too much. Brent is already safely in $60-per-barrel territory, and extending the cuts through next year could push prices up even more.

OPEC, Russia head for oil cut extension but wary of overheating market (Reuters) - OPEC and Russia look set to prolong oil supply cuts until the end of 2018 this week while signaling that they may review the deal when they meet again in June if the market overheats. With oil prices rallying above $60 per barrel, Russia has questioned the wisdom of extending existing cuts of 1.8 million barrels per day (bpd) until the end of next year as such a move could prompt a spike in U.S. production. Russia needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude. Six ministers from OPEC and non-OPEC oil producers including Saudi Arabia and Russia met in Vienna on Wednesday - one day ahead of a full OPEC gathering - and recommended extending the cuts to the end of 2018. At present, the cuts expire in March. “That’s one of the recommendations,” Kuwait’s Oil Minister Essam al-Marzouq told reporters when asked whether the committee had agreed on a nine-month extension, among other matters. Russian Energy Minister Alexander Novak was, however, less certain about the duration. “The market has not been fully balanced yet. Joint efforts are needed after April 1. Everybody has recommended that the agreement could be extended and tomorrow such concrete details will be discussed,” Novak said. Several sources familiar with the talks have said Russia had suggested an option of reviewing the deal at the next OPEC meeting in June in case the oil market overheats. “In reality it would be only a three-month true extension with the review in June,” said Olivier Jakob from Petromatrix consultancy. Benchmark Brent and U.S. crude prices fell for a third consecutive session on Wednesday but Brent still traded above $63 per barrel. [O/R] Saudi Energy Minister Khalid al-Falih told the monitoring meeting on Wednesday that cuts needed to be extended as the rebalancing of oil markets was not yet complete. Iranian oil minister Bijan Zanganeh, who fought Falih on many previous occasions, said he would agree with extending cuts by either six or nine months to help the market rebalance. 

Oil Trims Losses as U.S. Crude Stocks Drop 3.4M Barrels Last Week -- Oil prices pared losses on Wednesday, after data showed U.S. crude stockpiles dropped more than forecast last week.U.S. West Texas Intermediate (WTI) crude futures were at $57.87 a barrel, down 12 cents, or about 0.2%, by 10:35AM ET (1535GMT). Prices were at around $57.78 prior to the release of the inventory data.Meanwhile, Brent crude futures, the benchmark for oil prices outside the U.S., dipped 10 cents, or around 0.2%, to $63.14 a barrel.The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 3.4 million barrels in the week ended Nov. 24. That compared with analysts' expectations for a decline of 2.3 million barrels, while the American Petroleum Institute late Tuesday reported a supply-gain of 1.8 million barrels.Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, decreased by 2.9 million barrels last week, the EIA said.Total U.S. crude oil inventories stood at 453.7 million barrels as of last week, which the EIA considered to be at the upper half of the average range for this time of year.U.S. crude oil imports averaged 7.3 million barrels per day last week, down by 544,000 barrels per day from the previous week.The report also showed that gasoline inventories increased by 3.6 million barrels, compared to expectations for a gain of 1.2 million barrels. For distillate inventories including diesel, the EIA reported a gain of 2.7 million barrels.Oil prices extended their decline into a second session on Tuesday as doubts over an extension to a production-cut deal at Thursday's OPEC meeting weighed.Oil ministers from the Organization of Petroleum Exporting Countries and other major producing countries will meet in Vienna on Thursday to decide whether to extend their current production agreement beyond a March 2018 deadline. Most market analysts expect the oil cartel to extend output cuts for a further nine months until the end of next year, but the terms were so far unclear, as Russia has sent mixed signals about whether it will back the move.

EIA: US commercial crude oil inventories decreased by 3.4 mln barrels --Below are the key highlights from the EIA's report's summary of weekly petroleum data for the week ending November 24, 2017.

  • U.S. crude oil refinery inputs averaged 17.0 million barrels per day during the week ending November 24, 2017, 165,000 barrels per day more than the previous week’s average.
  • U.S. crude oil imports averaged over 7.3 million barrels per day last week, down by 544,000 barrels per day from the previous week.
  • U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 3.4 million barrels from the previous week.
  • Total products supplied over the last four-week period averaged 20.0 million barrels per day, up by 0.9% from the same period last year.

RBOB Fades On Surprise Product Build, New Record High Production -- Last night's API-reported surprise crude build sparked selling that not even Russia/Saudi jawboning could rescue, but DOE data showed the exact opposite with a big crude draw and even bigger gasoline draw. Added to a new record high in US crude production and RBOB is fading and WTI is not rallying. DOE:

  • Crude -3.43mm (-2.95mm exp)
  • Cushing -2.914mm - biggest draw since Sept 2009
  • Gasoline +3.63mm (+1.2mm exp) - biggest build since July
  • Distillates  +2.747mm (+200k exp) - biggest build since Jan

DOE data showed the exact reverse of API with big surprise draw in crude and build in gasoline... Additionally Cushing saw the biggest destocking since Sept 2009 last week... US crude production rose 24k b/d - to a new record high...  Gasoline exports hit a record high... WTI was lower and RBOB higher heading into the DOE data but the trend reversed after on the surprise bearish product builds...

U.S. oil production surged in September as Texas rebounded from Harvey -  The nation's oil production climbed nearly 300,000 barrels a day in September, reaching the highest level since its most recent peak in April 2015, the Energy Department said Thursday. Energy companies pumped 9.48 million barrels of oil a day in September, up 3.2 percent compared to the 9.19 million barrels a day produced in August. Drillers in Texas, rebounding from the crippling effects of Hurricane Harvey, boosted output in September to 3.57 million barrels a day, up 5.7 percent from 3.38 million barrels a day the month before. U.S. output crested at 9.62 million barrels a day in April 2015, its highest level in four decades, after American drillers tapped into once-inaccessible shale rocks containing vast amounts of oil and natural gas. After oil prices crashed, production fell as low as 8.55 million barrels a day in September 2016.

Oil prices higher with Brent up sharply amid optimism over OPEC meeting  - Oil prices settled modestly higher on Thursday after OPEC members and other major oil producers agreed to extend their production-cut pact to the end of 2018. In a press conference Thursday, Saudi Energy Minister Khalid al-Falih said ( the Organization of the Petroleum Exporting Countries and its oil-producing allies reached a "unanimous decision" to extend their oil output-cut deal to the end of December 2018. He also said Libya and Nigeria have agreed to cap their production at 2017 levels next year. "In agreeing to extend current production quotas OPEC and non-OPEC nations are managing a fine balance, which is likely to maintain prices at current levels in the near term," said Chris Midgley, head of analytics at S&P Global Platts said. Russian Oil Minister Alexander Novak also said the country, which isn't an OPEC member, fully agreed to extend the cuts. Clashes between Russia and Saudi Arabia in the run-up to the summit had raised concerns about the likelihood of the deal's extension.  January West Texas Intermediate crude added a dime, or less than 0.2%, to settle at $57.40 a barrel on the New York Mercantile Exchange. Prices for the contract climbed about 5.1% for the month. Based on the front-month December contract at the end of October, prices rose 5.6%. That was the third-consecutive monthly rise in a row.January Brent , the front-month contract which expired at the session's settlement, rose 46 cents, or 0.7%, to $63.57 a barrel on ICE Futures Europe. For the month, front-month prices ended around 3.6% higher, according to data from Dow Jones. February Brent , which is now the front-month contract, added 10 cents, or nearly 0.2%, to $62.63 a barrel. 

OPEC Agrees To Extend Oil Supply Cuts Until End Of 2018 - With OPEC delegates sequestered in a Vienna conference room, as they negotiate the proposed 6-9 month production cut extension, at least one appears to be leaking the decision process to media outlets, because moments ago Bloomberg reported that OPEC ministers have agreed to extend their production cuts until the end of 2018 - agreeing with the Saudi-proposed 9 month extension - and discussions have now moved on to the mechanism that will be used to review the agreement in the middle of the year. While oil prices had traded near session highs ahead of the leaked announcement, they have failed to spike on the news and in fact Brent is back under $64, suggesting that, as Goldman predicted, a favorable outcome had been priced in, and now the details of the agreement will determine which way oil moves next.

Crude Oil Prices Dip as OPEC Fails to Corral Russia: Update - - The Organization of the Petroleum Exporting Countries (OPEC) has agreed in principle to maintain until December 2018 production cuts scheduled to end in March. The Wall Street Journal reported the agreement citing sources familiar with the matter. That is not, however, what markets wanted to hear. Crude oil has been trading higher for the past several weeks on the expectation that Russia and other non-OPEC partners in the production cuts would agree to extend the lower production level until the end of next year. Russia has apparently balked, sending benchmark West Texas Intermediate (WTI) crude from an intra-day high of nearly $58 to just a few pennies above $57. Brent futures also dropped about $1 per barrel to trade at around $62.40. The Russians do not want to commit to an extension through December 2018. The world’s leading producer would prefer to extend the agreement only through June and then return to the status quo ante if market conditions are favorable. The current production cuts have removed about 2% of global supply. Russia is concerned that continuing the cuts for another nine months will work too well, driving prices to a level that will unleash another wave of investment and drilling in U.S. shale plays, running production higher and, once again, lowering prices. The Saudis are not worried about U.S. shale production because they believe the global market can absorb any increase from the shale producers. The Saudis are probably right. The United States is on track to reach a production level of 10 million barrels a day this year and to fill the 2% hole in global supply would need to add nearly 2 million more barrels daily next year. That is not going to happen.

OPEC, allies set to agree oil cut extension to end of 2018 (Reuters) - OPEC and non-OPEC producers led by Russia agreed on Thursday to extend oil output cuts until the end of 2018 as they try to finish clearing a global glut of crude while signaling a possible early exit from the deal if the market overheats. Russia, which this year reduced production significantly with OPEC for the first time, has been pushing for a clear message on how to exit the cuts so the market doesn’t flip into a deficit too soon, prices don’t rally too fast and rival U.S. shale firms don’t boost output further. Russia needs much lower oil prices to balance its budget than OPEC’s leader Saudi Arabia, which is preparing a stock market listing for national energy champion Aramco next year and would hence benefit from pricier crude. The producers’ current deal, under which they are cutting supply by about 1.8 million barrels per day (bpd) in an effort to boost oil prices, expires in March. Saudi Energy Minister Khalid al-Falih told reporters the Organization of the Petroleum Exporting Countries and non-OPEC allies had agreed to extend the cuts by nine months until the end of 2018, as largely anticipated by the market. OPEC also decided to cap the combined output of Nigeria and Libya at 2017 levels below 2.8 million bpd. Both countries have been exempt from cuts due to unrest and lower-than-normal production. Falih said it was premature to talk about exiting the cuts at least for a couple of quarters as the world was entering a season of low winter demand. He added that OPEC would examine progress at its next regular meeting in June. “When we get to an exit, we are going to do it very gradually ... to make sure we don’t shock the market,” he said. OPEC and Russia together produce over 40 percent of global oil. Moscow’s first real cooperation with OPEC, put together with the help of President Vladimir Putin, has been crucial in roughly halving an excess of global oil stocks since January. With oil prices rising above $60, Russia has expressed concerns that an extension for the whole of 2018 could prompt a spike in crude production in the United States, which is not participating in the deal. A joint OPEC and non-OPEC communique said the next meeting in June 2018 would present an opportunity to adjust the agreement based on market conditions. 

OPEC Meeting Concludes: This Is What Was Agreed -- As previewed earlier this morning, when the flurry of leaks began, today OPEC reached a deal with non-OPEC partners to extend the oil production cuts until end of 2018 (recall these were supposed to be "temporary" when originally unveiled one year ago) at their meeting in Vienna, as part of producers' strategy to reduce global inventory levels.  Below is a summary, via Bloomberg, of the key items agreed on:

  • Analysts had previously predicted an extension; a survey showed 9 months as the most likely duration, measured from end of March 2018
  • Thursday’s Vienna agreement will have an effective start date of Jan. 1 and run through end-December 2018, superseding previous deal
  • Total volume of supply cutbacks from participating nations was left unchanged at ~1.8m b/d, ministers say
  • In addition, Nigeria and Libya agreed to a collective cap of 2.8m b/d; they had previously been exempt from supply curbs
  • Discussions in Vienna progressed as expected, with Joint Ministerial Monitoring Committee proposing on Wednesday an extension of 6 to 9 months, with a preference for 9
  • Thursday’s meeting has concluded; deal will be reviewed at June meeting
  • Joint Ministerial Monitoring Committee to meet every 3 months, chaired by Saudi Arabia and Russia

A key part of today's agreement was the provision that a "further adjustment" would be considered in June.

WTI Slumps Despite OPEC 'Deal' As Russia Questions Remain -- Both WTI and RBOB prices are tumbling this morning after OPEC member agree to limit oil output through the end of 2018. While this is bullishly longer-than-expected (6-9mo was expected), OPEC members now rely on Russia to agree to these terms, and it appears the market is questioning that. Furthermore, despite US shale output at record highs, Saudi officials are shrugging off any impact.As The Wall Street Journal reports, OPEC members agreed in principle Thursday to keep limiting their output through the end of 2018, according to people familiar with the matter, providing assurance for an oil industry still struggling through a fragile recovery.The accord signals that the world’s biggest oil-producing countries believe that a global oversupply of oil is still weighing down oil prices, even a year after they struck their first agreement to cut crude production. Oil in storage—a proxy for the global glut—remains well above historical averages, national oil ministers said.Any agreement OPEC strikes will be contingent on support from a group of producers outside the cartel led by Russia, which pumps more crude than any country in the world. The Russia-led delegations are meeting with OPEC to hash out a final agreement. It appears the market is questioning Russia's acquiescence...

OPEC : Declaration of Cooperation -- OPEC and the aforementioned non-OPEC producing countries have reached the following commitment:

  1. OPEC maintains its decisions made on 30th November 2017;
  2. The Declaration of Cooperation is hereby amended to take effect for the whole year of 2018 from January to December 2018, while pledging full and timely conformity of OPEC and participating non-OPEC countries in accordance with voluntary agreed production adjustments.
  3. In view of the uncertainties associated mainly with supply and, to some extent, demand growth it is intended that in June 2018, the opportunity of further adjustment actions will be considered based on prevailing market conditions and the progress achieved towards re-balancing of the oil market at that time.
  4. Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, Republic of South Sudan maintain to continue to adjust their respective oil production, voluntarily or through managed decline.
  5. Pledge to fulfil their full commitment under this Declaration of Cooperation, individually and collectively;
  6. To strengthen their cooperation through a dynamic and transparent framework, including regular monitoring, joint analyses and outlooks for a sustainable market stability in the medium- to long-term, for the benefit of producers and consumers;
  7. To support the extension of the mandate of the Joint Ministerial Monitoring Committee (JMMC) composed of Algeria, Kuwait, Venezuela, Saudi Arabia and two participating non-OPEC countries of the Russian Federation and Oman, chaired by Saudi Arabia, co-chaired by the Russian Federation, and assisted by the Joint Technical Committee at the OPEC Secretariat, to closely review the status of and conformity with the Declaration of Cooperation and report to the OPEC – non OPEC Conference;
  8. To ensure continuity and proactive cooperation through established regular meetings at technical and ministerial levels.

Saudi Arabia and Russia reach compromise on oil pact: Kemp (Reuters) - Ministers from OPEC and their allies have agreed to extend their production pact all the way to the end of 2018 but with a review in June that will take into account market conditions and progress towards rebalancing.The outcome represents a successful compromise between de facto OPEC leader Saudi Arabia (which wanted to announce an extension throughout 2018) and non-OPEC heavyweight Russia (which wanted to avoid giving such a long commitment).The decision was in line with traders’ expectations and there has been little change in either outright crude prices or calendar spreads since the decision was announced on Thursday.As a practical matter, it makes little difference whether the decision is described as a nine-month extension from the end of March, when the current cuts were scheduled to expire; or a three-month extension from March to June with the option of extending them until December 2018.The compromise allows ministers to signal a resolve to do whatever it takes to rebalance the market (a Saudi priority) while preserving flexibility to adapt to changing market conditions (a Russian one).Critically, it recognises the oil market has already made significant progress towards rebalancing but also that there is uncertainty about how quickly the process will be completed ( Arabia’s oil minister Khalid Al-Falih said on Thursday the excess of OECD oil stocks over the five-year average had already shrunk from 280 million barrels in May to just 140 million in October.Crude oil in floating storage has fallen by 50 million barrels since June, and products stocks are already down to their five-year average (“Opening address to the 173rd meeting of the OPEC conference”, Falih, Nov. 30). Both Brent and WTI have flipped from contango into backwardation for the first time since 2014, Falih noted, indicating the market’s move towards a more balanced condition.

OPEC deal calls on Libya, Nigeria to produce below 2.8 mil b/d combined: Iran's Zanganehr - OPEC ministers on Thursday agreed to a nine-month extension of their production cut agreement through the end of 2018, and will call on Libya and Nigeria not to exceed a combined output of 2.8 million b/d, Iranian oil minister Bijan Zanganeh told reporters. "We decided to roll over the past decision to the end of 2018, and Nigeria and Libya accepted not to produce more than their production in 2017 for all of 2018," Zanganeh said. "We didn't set a figure [for Libya and Nigeria], but both are less than 2.8 [million b/d]." Russian energy minister Alexander Novak, who has remained noncommittal on the nine-month extension, has yet to sign off on the deal and is currently meeting with OPEC ministers. The current deal calls on OPEC and its 10 non-OPEC partners, led by Russia, to cut 1.8 million b/d in supplies from October 2016 levels to hasten the market's rebalancing. It is scheduled to expire in March. OPEC granted Libya and Nigeria their exemptions when the production cut agreement with 10 non-OPEC countries was negotiated late last year, as the two African nations dealt with internal strife and civil unrest that had targeted their oil infrastructure. But both countries have seen sharp rises in production this year, partially undoing the impact of the OPEC/non-OPEC coalition's collective 1.8 million b/d in supply reductions. Libyan output rebounded to 980,000 b/d in October, a rise of 70,000 b/d from the previous month as production from key fields like Sharara ramped up. The normally talkative Mustafa Sanalla, the chairman of Libya's state-owned National Oil Corporation, attended the Vienna meeting, but refused to speak with journalists. He has outlined ambitious plans to raise Libyan production from current levels of around 1 million b/d to 1.25 million b/d by the end of 2017.

As OPEC extends output cuts, Asia turns to North America for more oil (Reuters) - Asian refiners are losing no time reacting to a decision by OPEC and Russia to extend their agreed production cuts to all of 2018, ordering more oil from the Caribbean and Gulf of Mexico in a move that will result in lost OPEC and Russian market share. r Output cuts aimed at tightening the market to prop up prices have been in place since January and were to expire in March 2018, but the Organization of the Petroleum Exporting Countries (OPEC), together with non-OPEC producers including Russia, extended those cuts on Thursday, to cover all of 2018. Despite this, oil supplies remain ample. Even before the official announcement on Thursday to extend the cuts, refiners in Asia, the world’s biggest consumer region, had already put in enquiries for oil shipments from the Gulf of Mexico and the wider Caribbean, particularly from the United States, Mexico, Venezuela and Colombia, tanker operators said. “There have been many enquiries from Asia for oil tanker shipments from the Gulf of Mexico and Caribbean. Now that we know OPEC’s cuts will be extended, these enquiries are being turned into orders,” OPEC’s and Russia’s biggest problem with cutting output has been that it has led to higher U.S. production and market share. “U.S. crude oil exports to China could easily double next year as U.S. production and export capacity expands ... (and) OPEC countries will see their market shares in Asia decline further.” Shipping data in Thomson Reuters Eikon shows oil shipments from the Gulf of Mexico and the Caribbean to Asia’s consumer hubs of China, Japan, South Korea, Taiwan and Singapore have already soared from around half a million barrels per day (bpd) in January, when the OPEC-led cuts were implemented, to over 1.2 million bpd in November and December. 

OilPrice Intelligence Report: OPEC Extension Sends Oil Prices Soaring - OPEC followed through on its promise, extending the production cuts through the end of 2018, bringing relief to an oil market that had grown jittery in recent days. Oil prices traded in a relatively narrow range after the meeting and appeared muted. But once concerns over a selloff calmed, oil prices rallied once again on Friday morning.  The deal will run from January through to December, and the exact volumes of the production cuts will be the same as this year. The OPEC/non-OPEC coalition said that they would monitor market conditions and would remain “agile,” ready to respond if the fundamentals deviate significantly from expectations. They will revisit the agreement at the next official meeting in June 2018, but they assume the cuts will last through the end of the year. Russian officials pressed for details on an exit strategy heading into the meeting, but the group offered no information – Saudi oil minister Khalid al-Falih said it would be “premature” to do so. One notable change is that Libya and Nigeria agreed to cap their production levels at their 2017 average, which doesn’t necessarily curtail supply but will prevent any “surprise,” as witnessed this year. The Russian and Saudi oil ministers played up their unity and boasted about their strong relationship.  While OPEC was meeting behind closed doors, the EIA published data for September, showing a dramatic jump in output. The U.S. produced 9.48 million barrels per day in September, an increase of 290,000 bpd from a month earlier. Aside from the size of the increase, the data was significant because it seemed to put to rest the notion that the agency was overestimating supply. For several months, the weekly data diverged from the monthly data, raising questions about how accurate the EIA’s estimates were. Yesterday’s data suggests that U.S. shale production is indeed growing robustly.

Oil Rig Count Rises After OPEC Deal Extension - A day after OPEC extended the already-extended production cut deal to end-2018, oil and gas rigs in the US climbed by 6. The boost to the number of oil and gas rigs in the US is likely just a taste of what’s to come if oil prices continue to climb as a result of OPEC’s prolonging of the deal that is designed to ease the glut. And at current prices of WTI, US drillers are bound to find sufficient funds to add rigs, pressuring the prices that OPEC is attempting to hold fast. This week, the number of active oil rigs increased by 2, with gas rigs climbing by 4. The WTI and Brent benchmarks slipped shortly after the agreement was signed on Thursday, but rebounded on Friday, with WTI up $1.23 (+2.14%) to $58.63 and Brent up $1.36 (+2.17%) to $63.99 around 11:00am EST. The total oil and gas rig count in the United States now stands at 929 rigs, up 332 rigs from a year ago. The number of oil rigs stand at 749 versus 477 a year ago. The number of gas rigs in the US now stands at 180, up from 119 a year ago. The Permian Basin added 4 rigs for the week, bringing the total count in the fastest growing shale patch to 397 compared to just 235 a year ago. Haynesville basin was also up this week, adding 3 rigs for a total of 43 actives. Rigs in the Eagle Ford basin stayed the same, with Barnett, Cana Woodford, and DJ-Niobrara each losing one rig.Canada also added rigs this week—4 oil rigs and 3 gas rigs, for a total of 7. Along with an increase to the number of active oil rigs, US crude oil production was up for the week ending November 24 at 9.682 million barrels per day—another new high for 2017 as new highs are achieved each week.

U.S. drillers add oil rigs for second week in a row: Baker Hughes (Reuters) - U.S. energy companies this week added oil rigs for a second week in a row as crude prices traded near their highest levels since the summer of 2015 as major oil producing countries extended a global deal to limit supply. Drillers added two oil rigs in the week to Dec. 1, bringing the total count up to 749, the highest since September, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday. U.S. producers applauded Thursday’s decision by the Organization of the Petroleum Exporting Countries and non-OPEC producers led by Russia to extend oil output cuts of about 1.8 million barrels per day beyond March until the end of 2018 as they try to finish clearing a global glut of crude. Rising U.S. production, however, has been a thorn in OPEC’s side, undermining the impact of its output curbs. U.S. production rose to 9.5 million bpd in September, its highest monthly output since reaching 9.6 million bpd in April 2015, according to federal energy data going back to 2005. On an annual basis, U.S. output peaked at 9.6 million bpd in 1970. The U.S. rig count, an early indicator of future output, is still much higher than a year ago when only 477 rigs were active after energy companies boosted spending plans for 2017 as crude started recovering from a two-year price crash around the same time OPEC agreed to production cuts a year ago. The increase in U.S. drilling lasted 14 months before stalling in August, September and October as some producers started trimming their 2017 spending plans after prices turned softer over the summer. Energy firms started adding rigs again in November as crude prices rose. U.S. crude futures rose 5.5 percent in November amid talk of extending the OPEC-led deal to cut global supply, and so far in 2017 since the agreement kicked in, have averaged over $50 a barrel, easily topping last year’s $43.47 average. This week, futures climbed over $58 a barrel, near their highest since June 2015. Looking ahead, futures were trading near $57 for calendar 2018 and $54 for calendar 2019. In anticipation of higher prices than in 2016, exploration and production (E&P) companies increased their spending on U.S. drilling and completions in 2017 by about 53 percent over 2016, according to U.S. financial services firm Cowen & Co. In addition, Cowen said 14 of the 64 E&Ps they track have already provided capital expenditure guidance for 2018 indicating a 9 percent increase in planned spending over 2017. 

U.S. oil prices end higher, but suffer largest weekly loss in 2 months - Oil futures climbed Friday, lifting U.S. benchmark prices to their highest finish in a week, after major oil producers hammered out an agreement that was widely expected, to extend ongoing production curbs through 2018. However, concerns about growing output from producers who aren't part of the deal, particularly the U.S., helped pull West Texas Intermediate prices down for the week. January WTI crude climbed 96 cents, or 1.7%, to settle at $58.36 a barrel on the New York Mercantile Exchange. That was the highest settlement since last Friday, but it was still down about 1% for the week, FactSet data show. The weekly percentage loss was the largest since the first week of October. February Brent crude put on $1.10, or 1.8%, to $63.73 a barrel, with the new front-month contract up 0.4% for the week. Oil prices settled modestly higher Thursday after Organization of the Petroleum Exporting Countries reached a "unanimous decision" with other major oil producers to extend their production-cut pact to the end of 2018. Soothing some concerns about a clash with Saudi Arabia in the run-up to the meeting, Russian Oil Minister Alexander Novak also said his country, not an OPEC member, fully agreed to extend the cuts.  Adherence to the 2017 quota levels beyond [the first quarter of 2018] for OPEC and Russia will create a fundamentally tighter balance by around [400,000 barrels a day] (all else equal) and therefore presents upside risk to our price forecast for [the second half of 2018]," wrote Michael Cohen and Warren Russell, of the Barclays commodities research team, in a note. An agreement between OPEC and several non-OPEC countries, including Russia, to cut production by roughly 1.8 million barrels a day from October 2016 levels was implemented in January, in a effort to rebalance market supply and demand. The cuts were previously set to end in March of 2018. Still, the oil-producer meeting "ended up being a bit of a wash for the market and futures appropriately ended almost perfectly flat". WTI and Brent each tacked on a dime Thursday.

The MbS-Blackwater Marriage Of Convenience -- In my previous related articles and herein, I have mentioned and reiterate that MBS is increasingly gaining popularity within the ranks of young and educated Saudi men and women of all ages and in general amongst the grass-roots of the population. Hence, in this venture, he is scoring two birds with a single stone. In rounding up more popular support, he is confiscating and freezing badly-needed cash under the pretext of corruption. The estimates of the number of incarcerated Saudi princes and businessmen are not any less subject to a game of guess work than the funds involved in this kerfuffle. Ignoring how many men have been put under detention, the tally of funds confiscated and frozen is estimated at a minimum of USD 150 bn to a maximum of USD 800 bn. Given that the total official Saudi savings reserve is in the tune of “only” USD 700 bn after decades of high financial times, even the low estimate of USD 150 bn is a huge sum by proportion and by any proportion of course. It is little surprise that MBS is trying to replenish into the coffers of the state such sums, and if he manages to do it, it would be to his credit. With MBS’s purge on the royals, no traditional royal supporter with known wealth is left feeling safe. How can they feel safe if they hear reports of news of princes like Al-Walid bin Talal not only being in custody, but also getting tortured and his assets frozen and sieged by the state. In my previous article, The Second Saudi Dynasty: MBS’s Reset Button, I wondered how can MBS count on any local supporters. Apparently, he is not. Recent inside information that was later on published in various media, reports that MBS has been using Blackwater to do his dirty work. If those reports are true, MBS has hired Blackwater to arrest, with orders to kill whoever resists arrest, Saudi princes and high-ranking businessmen, and to answer to no one but him.

Tolerance And Terrorism In Saudi Arabia - On the one hand this past week, Thomas Friedman at the New York Times has written a praising column about Crown Prince Muhammed bin Salman (MbS). He is going to bring a new “wave of tolerance” into Saudi Arabia, along with more generally modernizing it. This claim is not totally without substance given his setting up for women to drive starting next June as well as letting them go to sports events with men and also curbing some of the excesses of the Mutaween, the religious police. It is not clear what further liberalizations are in order, but Friedman assures they are coming. A newly tolerant Saudi Arabia is on our doorstep, whoopee! OTOH, it has since been announced that MbS is overseeing a rewriting of the criminal code of the Kingdom of Saudi Arabia (KSA). A major part of this rewriting is to help the government combat terrorism, with the death penalty available for helping to aid in this. Just as we all oppose corruption, which MbS fought by arresting 201 people, many of whom also seem to have been potential political rivals or critics, we all oppose terrorism. But just as with corruption, terrorism can be stretched to mean many things. And indeed, it turns out that one of the items appearing in the new criminal code is that criticizing the king is an act of terrorism, punishable by death. This is how one has tolerance while fighting terrorism at the same time in the new Saudi Arabia, whoopee!

Detained Saudi Prince Buys His Freedom For $1 Billion -- One day you were the billionaire head of the National Guard in one of the world’s most brutal dictatorships. Although that carries some risk, you were probably reassured by your position as a senior prince in the ruling family, never mind your strong ties to the US military... oh and of course the many zeros in your bank account. The next day, in a turn of events akin to Shakespearian drama, you were imprisoned (kind of) with ten of your fellow princes and a bunch of ministers and former ministers in a 5 star hotel on charges of money laundering, bribery and general corruption. Despite being a cousin of the Kingdom’s uber-autocratic crown prince, Mohammed bin Salman (MBS), Prince Miteb bin Abdullah was a son of former King Abdullah and got caught up in a clan war in the ruling family. Former Riyadh governor and another of King Abdullah’s sons, Turki bin Abdullah, was also arrested in the crackdown. Miteb was accused of conducting normal business practices in Saudi Arabia, such as embezzlement, hiring “ghost” employees and awarding his own companies a $10 billion contract for walkie-talkies and bullet proof protection. However, after what must have been the worst three and a half weeks of his life in the Ritz Carlton “prison”, Miteb has purchased his freedom for a cool $1 billion. According to Bloomberg, "Prince Miteb bin Abdullah, one of the most senior Saudi royals detained in the kingdom’s corruption crackdown, has been released after reaching a settlement deal believed to exceed the equivalent of $1 billion, an official involved in the anti-graft campaign said."

Saudi Prince Who Wooed West Finds Few Friends in Tough Times -- For more than a quarter-century, Saudi Arabia’s Prince Alwaleed bin Talal has been making investments and building relationships in the West.  He bailed out Citigroup Inc., helped refinance the ill-fated Euro Disney and backed Rupert Murdoch during the U.K. phone-hacking scandal. Now, as Alwaleed passes a fourth week at a Riyadh hotel, one of hundreds of detainees in an anti-corruption crackdown, almost no one has rallied to his cause. Bill Gates, the Microsoft Inc. co-founder and philanthropist, said in a statement Monday that Alwaleed, 62, has been an “important partner” in their charitable work together. Earlier this month, Citigroup CEO Michael Corbat called him a “consistent, loyal supporter.” They don’t have much company. For Alwaleed, the relative silence is a skimpy return on the billions he’s invested over the years in everything from Twitter Inc. to Europe’s biggest hotel operator, Accor SA. Yet his situation reflects a harsh reality: As much as his friends and business associates may want to support him publicly, they’re wary of being perceived as critics of the crackdown and the man behind it, Saudi Arabia’s Crown Prince Mohammed bin Salman. The son of King Salman, Prince Mohammed is trying to modernize the Saudi economy in part by weaning the country off its decades-long dependency on oil revenue. His anti-corruption drive threatens to end a patronage system that allowed royals and Saudi businesspeople to grow wealthy off government contracts and lucrative deals with multinational corporations. “There is a recognition that attempting to interfere in the process in Saudi Arabia is unlikely to yield a lot of results, given that this has been driven by Mohammed bin Salman himself,” Ayham Kamel, head of Middle East & North Africa at Eurasia Group, said in a phone interview. “Any public defense of Prince Alwaleed or others would not necessarily be conducive to their interests in Saudi Arabia, or those of the individuals implicated.” 

A Prince’s Uncertain Fate Deepens Mystery in Saudi Arabia - It has been more than three weeks since Prince Alwaleed bin Talal, the most prominent investor in Saudi Arabia, was arrested on a Saturday night as part of the sweeping detention of several dozen elites. He hasn’t been heard from, nor have any charges against him been made public. Because he was the longtime public face of finance for Saudi Arabia, Prince Alwaleed’s arrest — and the lack of transparency around what has happened to him — is causing increasing consternation among his various business partners and in much of the Western business community.His arrest has also created a sense of uncertainty among investors about whether to do business with Saudi Arabia and, by extension, could affect some of its partners, like Masayoshi Son’s $100 billion SoftBank fund, in which the kingdom holds a 45 percent stake. It could also affect the highly anticipated public offering of the state-owned oil company, Aramco, planned for next year.“I’m surprised that he got swept up in this, because he had always been such a positive figure both in reality and symbolically for Saudi progressivism — for participating in the modern world, in modern finance,” said Richard Parsons, a former chief executive of Time Warner and former chairman of Citigroup, in which the prince had also been a large investor. Many of the prince’s longtime partners have sought information about him, but have not been able to learn about his well-being or the charges against him. The Murdoch family, which has long had a relationship with the prince — he has been a large investor in 21st Century Fox, which in turn has a nearly 20 percent stake in Rotana, the media company he controls — has tried to find out more about his situation but has been stymied. Known as the Warren Buffett of the Middle East, the prince has worked with Bill Gates on various projects, including their ownership of the Four Seasons resorts and several philanthropic endeavors. “I’m only aware of what I’ve read in the press, and I can’t speculate,” Mr. Gates, Microsoft’s co-founder, said by email. “Prince Alwaleed has been an important partner in my foundation’s work to ensure that kids around the world receive lifesaving vaccinations. We’ve worked together to help stop the spread of polio, measles and other preventable diseases. His commitment to philanthropy is inspiring.”  The Saudi Arabian government has officially described the arrest of Prince Alwaleed and dozens of other princes and businessmen as part of a long-planned “anticorruption” effort. But outside the country, questions remain. The arrests have been called everything from a power grab by the crown prince, to a shakedown, to a Saudi version of “the Saturday Night Massacre.”

With Saudi Blockade Threatening Famine in Yemen, U.S. Points Finger at Iran - The White House is pressing to declassify intelligence allegedly linking Iran to short-range ballistic missile attacks by Yemeni insurgents against Saudi Arabia, part of a public relations blitz aimed at persuading America’s U.N. counterparts that Tehran is helping to fuel the country’s conflict. The effort to cast blame on Iran comes at a time when the U.S.-backed Saudi military coalition in Yemen is facing mounting international condemnation for enforcing a blockade on vital ports that threatens to plunge the country into a massive famine. The declassification push is part of a broader U.S. bid to isolate Tehran in the U.N. Security Council, and potentially to provide a justification for enforcing sanctions or imposing new penalties against Tehran. It marks a surprising recognition by President Donald Trump — who dismissed the United Nations as a feckless talk shop during his presidential campaign — that the world body is critical for rallying international support. The U.S. campaign to highlight Tehran’s violation of U.N. sanctions suffered a setback earlier this month,when a U.N. panel of experts disclosed it has received no proof that Iran furnished Yemen’s Shiite Houthi insurgents with the missile it fired on Nov. 4 at an airport near the Saudi capital of Riyadh. The attack was cited earlier this month by Saudi Arabia as a justification for imposing a blockade on Houthi-controlled ports and the airport in Yemen’s capital, Sanaa, a move condemned by aid agencies as paving the way to a humanitarian catastrophe. Saudi Arabia announced Wednesday that it would reopen the port in Hodeida and the airport in Sanaa to humanitarian aid deliveries. But the move was criticized by the International Rescue Committee as a half measure which will continue to block the import of vital commercial goods and fuel.

Saudi Coalition Crumbles In Yemen: Sudanese Mercenaries On Front Lines, Foreign Officers, Proxies In Revolt -- Most Americans might be forgiven for having no clue what the war in Yemen actually looks like, especially as Western media has spent at least the first two years of the conflict completely ignoring the mass atrocities taking place while white-washing the Saudi coalition's crimes. Unlike wars in Iraq, Libya, and Syria, which received near daily coverage as they were at their most intense, and in which many Americans could at least visualize the battlefield and the actors involved through endless photographs and video from on the ground, Yemen's war has largely been a faceless and nameless conflict as far as major media is concerned.Aside from mainstream media endlessly demonstrating its collective ignorance of  Middle East dynamics, it is also no secret that the oil and gas monarchies allied to the West are rarely subject to media scrutiny or criticism, something lately demonstrated on an obscene and frighteningly absurd level with Thomas Friedman's fawning and hagiographic interview with Saudi crown prince MBS published in the New York Times. But any level of meticulous review of how the Saudi coalition (which heavily involves US assistance) is executing the war in Yemen would reveal a military and strategic disaster in the making. As Middle East Eye editor-in-chief David Hearst puts it, "All in all, the first military venture to be launched by the 32-year-old Saudi prince as defense minister is a tactical and strategic shambles."    And if current battlefield trends continue, the likely outcome will be a protracted and humiliating Saudi coalition withdrawal with the spoils divided among Houthi and Saudi allied warlords, as well as others vying for power in Yemen's tenuous political future. But what unsurprisingly unites most Yemenis at this point is shared hatred for the Saudi coalition bombs which rain down on civilian centers below. For this reason, Hearst concludes further of MBS' war: "The prince, praised in Western circles as a young reformer who will spearhead the push back against Iran, has succeeded in uniting Yemenis against him, a rare feat in a polarized world. He has indeed shot himself, repeatedly, in the foot."

‘The Saudis are Going to Fight Tehran to the Last Dead American’ - naked capitalism - Lambert here: NC readers, this Real News Network segment on our friends, the Saudis, concludes with grounds for optimism, in this exchange between TRNN’s Paul Jay and Larry Wilkerson:

  • JAY: [The administration] can’t execute much of anything right now.
  • WILKERSON: You’ve got a point. I’ve often said, and from time to time Colin Powell and I would joke about that the best thing going for us was incompetence.

So, “gridlock is our friend” in foreign policy, as well. (By contrast, we were extremely competent at overthrowing Qaddafi and getting his country bombed, and look where that got us.) (video and transcript)

Long Divided, Iran Unites Against Trump and Saudis in a Nationalist Fervor - After years of cynicism, sneering or simply tuning out all things political, Iran’s urban middle classes have been swept up in a wave of nationalist fervor. The changing attitude, while some years in the making, can be attributed to two related factors: the election of President Trump and the growing competition with Saudi Arabia, Iran’s sectarian rival, for regional dominance.  Iranians listened during the 2016 campaign as Mr. Trump denounced the Iran nuclear treaty as “the worst deal ever negotiated” and promised to tear it up. They watched in horror when, as president, he sold more than $100 billion worth of weapons to the kingdom of Saudi Arabia and participated in a traditional war dance in Riyadh. And they are alarmed at the foreign policy moves of the young Saudi crown prince, Mohammed bin Salman, whom they see as hotheaded and inexperienced. At the same time, they now believe they have something to be proud of, with Iranian-led militias playing a central role in defeating the Islamic State militant group in Syria and Iraq, increasing Iran’s regional influence in the process.The two most popular stars in Iran today — a country with thriving film, theater and music industries — are not actors or singers but two establishment figures: Gen. Qassim Suleimani, the leader of Iran’s regional military effort, which is widely seen as a smashing success; and the foreign minister, Mohammad Javad Zarif, the symbol of a reasonable and measured Iran.  In short, it appears that Mr. Trump and the Saudis have helped the government achieve what years of repression could never accomplish: widespread public support for the hard-line view that the United States and Riyadh cannot be trusted and that Iran is now a strong and capable state capable of staring down its enemies.

China pumps billions into Iranian economy as Western firms hold off | South China Morning Post: China is financing billions of dollars worth of projects in Iran, making deep inroads into the economy while European competitors struggle to find banks willing to fund their ambitions, Iranian government and industry officials said on Friday. Freed from crippling nuclear sanctions two years ago, Iran is drawing unprecedented Chinese funding for everything from railways to hospitals, they said. State-owned investment arm CITIC Group recently established a US$10 billion credit line and China Development Bank is considering lending US$15 billion more. “They [Western firms] had better come quickly to Iran otherwise China will take over,” said Ferial Mostofi, head of the Iran Chamber of Commerce’s investment commission, speaking on the sidelines of an Iran-Italy investment meeting in Rome. The Chinese funding, by far the largest statement of investment intent of any country in Iran, is in stark contrast with the drought facing Western investors since US President Donald Trump disavowed the 2015 pact agreed by major powers, raising the threat sanctions could be reimposed. Iranian officials say the deals are part of Beijing’s US$124 billion Belt and Road Initiative, which aims to build new infrastructure – from motorways and railways to ports and power plants – and link China with Europe and Africa to pave the way for an expansion of trade. A source in China familiar with the CITIC credit line, which was agreed in September, called it “an agreement of strategic intent”. The source declined to give details on projects to be financed, but Iranian media reports have said they would include water management, energy, environment and transport projects. An Iranian central bank source said loans under the credit line would be primarily extended in euros and yuan. The China Development Bank signed a memorandum of understanding for US$15 billion, Iranian state news agency IRNA said on September 15. 

New round of Syria talks opens in Geneva -- Syria's government and opposition will start a new round of UN-brokered talks in Geneva on Tuesday, but there is little optimism for progress towards ending the seven-year conflict.After months of stalemate, the talks are expected to focus primarily on a new constitution and elections, two of the four so-called "baskets" of reforms laid out by the United Nations for a political settlement to the Syria crisis.The UN's special envoy for Syria, Staffan de Mistura, said he hoped the warring factions would start a fresh round of negotiations "without preconditions" and within the framework of the UN Security Council's resolutions."We are all moving, I hope, in the direction of implementing Resolution 2254 and a political solution long overdue in Syria," said De Mistura from Moscow on Friday, at the end of a frantic week spent between the Saudi and Russian capitals in a bid to ensure that both the government and the opposition would come to Geneva ready to lay the groundwork for a political solution. De Mistura announced earlier that he would press hard for "particular up-front attention on a new constitution and UN-supervised elections", two of the four baskets, which also include a non-sectarian transitional government and "counterterrorism" measures.

Putin Is Mediating A Secret Deal Between Assad And Netanyahu, Bombshell Report Reveals -- A bombshell report that Israeli Prime Minister Benjamin Netanyahu has threatened to attack all Iranian facilities and assets within 40 kilometers (25 miles) of Israel's Golan Heights is circulating in Israeli media. The story, first picked up by The Jerusalem Post based on Israeli and Arab sources, also indicates that intense and potentially breakthrough back channel diplomacy between Assad and Netanyahu is currently being mediated via Vladimir Putin.Though unconfirmed, what appears to be an ultimatum by Netanyahu could be the catalyst that finally pushes the Levant either toward broader war, o r in the direction de-escalation and regional stability after months of intensifying and provocative Israeli airstrikes on Syria and a corresponding war of words. The report also follows on the heels of a rare and unexpected visit of Assad to Sochi, Russia where he met with Putin just prior to trilateral talks between Russia, Iran, and Turkey over the future of Syria. Netanyahu himself recently met with Putin in a reportedly contentious summit in August where the Israeli prime minister declared, "We cannot forget for a single minute that Iran threatens every day to annihilate Israel. Israel opposes Iran's continued entrenchment in Syria. We will be sure to defend ourselves with all means against this and any threat."

Damascus throws 'transition' up in air by skipping Geneva talks | Asia Times: Any hopes pinned on the eighth round of UN-mandated talks in Geneva yielding a firm peace settlement in Syria were dealt a blow on Tuesday as Damascus skipped the opening date in a move that threatens to derail the entire process. The Syrian government delegation is expected to make a brief stop-over in Switzerland on Wednesday (November 29), during which it will explain its non-appearance to the UN Special Envoy, Staffan De Mistura. Whatever hopes he had that this time of direct, face-to-face talks between the warring Syrian factions are dead in the water.Also on Tuesday, it was announced that a Kremlin-sponsored “national dialogue conference” due to be held at the Russian Black Sea resort of Sochi has been postponed. The brainchild of President Vladimir Putin, it was due to convene on 2 December 2017, and would have brought 1,300 Syrians to the negotiating table. The tentative new date for Sochi is 15 January. This is the second postponement after two initial dates were penciled in and then scrapped in November. A ninth round of talks in Switzerland, tentatively set for December 8, was also due to happen before Christmas but that too has now been put off. This wasn’t supposed to happen. Hadn’t Presidents Donald Trump and Vladimir Putin agreed to work together on Syria during their last meeting in Vietnam in mid-November? Their joint statement was well-received in both Moscow and Damascus, and Trump commented that “I think people are going to be extremely happy with it and also very impressed by it.” The statement stressed that there was no military solution for Syria, only a political one, and spoke both of constitutional reforms and elections, while acknowledging President Bashar al-Assad’s “commitment” to the political process. As far as the Russians were concerned, this was a de facto statement by the US of surrender to Putin’s long-held stance on Syria – namely that the regime should not be toppled, that Assad should be part of the country’s transition and that he should be allowed to run for a new term when his current tenure expires in 2021. 

The Challenge of Saudi-Israeli Intelligence-Sharing – Saudi-Israeli relations, especially between their intelligence services, started several years back under the direction of Bandar bin Sultan, a former Saudi ambassador to Washington and a former director of the Saudi national security council.These relations, however, accelerated significantly during the P5+1 negotiations over the Iran nuclear deal, and especially since Muhammad bin Salman (MbS) became the de facto ruler of Saudi Arabia.Saudi Arabia and Israel joined forces in a vigorous lobbying campaign in Washington to thwart the nuclear deal, to no avail. Despite failing to derail it, they have since collaborated closely to undermine the agreement and demonise Iran. Their claims that Iran has violated the conditions imposed on it under the deal have not been recognised by international observers or the International Atomic Energy Agency (IAEA).With MbS’ dramatic rise to power, bellicose attitude towards Iran and more recently Hezbollah, along with the failing war in Yemen, and his unabashed power grab in the kingdom under the guise of fighting corruption, he once again has joined forces with the Israelis to halt the spread of a “Shia Crescent” in the Middle East.MbS naively thinks that an alternative “Sunni Crescent” could constrain Iran’s regional stature and influence, or would be more palatable to western audiences and policymakers, including Israel’s right-wing government.The Saudi crown prince’s anti-Iran campaign has been welcomed by Israel, especially since MbS expanded his rabid anti-Shia front to include Hezbollah and Lebanon. By accusing tiny Lebanon of declaring war on Saudi Arabia – a patently ludicrous claim – MbS hopes to cement his relations with the Israelis, as they consider Lebanon their backyard and Hezbollah their mortal enemy. Saudi intelligence contacts with Israel’s external intelligence service – the Mossad – are part of the expanding relations between Israeli intelligence and the other GCC countries, especially Bahrain and the UAE.

China To Deploy Elite Troops To Syria To Fight Alongside Assad's Army - According to multiple reports in Middle East regional sources, China plans to send elite military units to Syria to advise and assist the Syrian Army in an attempt to root out the country's terrorist insurgency, especially Chinese Islamist foreign fighters who have shown up in increasing numbers in Syria's north since the start of the conflict. If confirmed this won't be the first time China - one of the five veto-wielding powers of the UN Security Council - has sent assistance to the Assad government: according to previous reporting by Middle East Eye, China began quietly sending soldiers in an advisory capacity into Syria earlier this year to assist government forces in weapons systems, intelligence collection, logistics, and medicine. But this certainly marks a dramatic and more public escalation in terms of Chinese operations in the region as Beijing will reportedly send special forces to work closely with government troops, and likely in coordination with the Russians as well. Sources told the Saudi Arabia based newspaper New Khaleej that the Chinese Ministry of Defense intends to send two units known as the “Tigers of Siberia” and the “Night Tigers” - both elite special operations units - to assist the Syrian government's fight against the jihadist insurgency. The news follows a high level meeting last week in China between Syrian Presidential Advisor Bouthaina Shaaban and Chinese Chinese Foreign Minister Wang Yi, who praised Damascus' efforts in fighting foreign militants from the East Turkistan Islamic Movement (ETIM, also commonly called the Turkestan Islamic Party, or TIP). The Muslim separatist group was founded by ethnic Uighurs and is based in the Xinjiang province of northwest China.

Militants Who Killed Over 300 At Egypt Mosque Brandished ISIS Flags -- Yesterday, Egypt suffered its worst mass killing since at least 2013 – a massacre that was ironically carried out by the country’s security forces – when five armed gunmen stormed a mosque in northern Sinai and killed more than 300 people, including at least two dozen children.And while no group has stepped up to take responsibility for the murderous rampage,Reuters reported that the attackers brandished an Islamic State flag, according to witness accounts. Prosecutors are already investigating the group.Egyptian forces are battling a stubborn Islamic State affiliate in the region, one of the surviving branches of the militant group after it suffered defeats by US-backed forces in Iraq and Syria.The assault on the mosque has stunned Egyptians, prompting President Abdel Fattah al-Sisi’s government to tighten security at places of worship and key buildings, and call three days of mourning for the bloodiest attack in Egypt’s modern history. The official death toll rose to 305 Saturday, including 27 children, and 128 people were injured.Egypt’s public prosecutor’s office, citing interviews with wounded survivors as part of its investigation, linked Islamic State militants, also known as Daesh, to the attack on the Al Rawdah mosque in Bir al-Abed, west of El-Arish city.“The worshippers were taken by surprise by these elements,” the prosecutor said in a statement. “They numbered between 25 and 30, carrying the Daesh flag and took up positions in front of the mosque door and its 12 windows with automatic rifles."Witnesses described a scene of unparalleled brutality, amplified by the notion that the attackers escaped before authorities could respond.The gunmen, some wearing masks and military-style uniforms, had arrived in jeeps, surrounded the mosque and opened fire inside, sending panicked worshippers scrambling over each other to escape the carnage. Witnesses had said gunmen set off a bomb at the end of Friday prayers and then opened fire as people tried to flee, shooting at ambulances and setting fire to cars to block roads. Images on state media showed bloodied victims and bodies covered in blankets inside the mosque.

Strong Evidence that U.S. Special Operations Forces Massacred Civilians in Somalia —It was around five in the morning when Abdullahi Elmi heard the gunfire. Sitting in his small home in Bariire, in southern Somalia, the farm administrator had been recording the names of the laborers who had worked the day before. Stacks of accounting books sprawled on the floor around him. Across the room, his wife sat with their 3-year-old son who dozed as his mother rocked him back and forth in her arms. When the sound of gunshots began, Abdullahi thought they were too far away to be heading toward his farm. But within seconds they seemed to grow louder, and closer, sending Abdullahi and his wife, carrying their young son, sprinting through the nearby forest of banana trees in search of safety. “They told my wife to go back in our home and then they went inside to search. I was pleading with them not to take anything.” When the soldiers finished their search, they ordered the men to move with them toward the scene of the shooting. There Abdullahi and Goomey saw their fellow farmers’ bodies sprawled across the ground. The small pot that one of them had been using to make tea still stood upright near the corpses. And they also saw what they later estimated to be around 20 American soldiers standing around the bodies. A Somali National Army soldier who was at the scene estimated 10 to 12 Americans were there. Abdullahi felt his chest tighten as he heard his friend, Ali-waay, calling for help, blood from a gunshot wound pouring into the earth around him. One of the Somali soldiers ordered Abdullahi to put his head on the ground. The bottom of a boot belonging to an American soldier kept it there. THE U.S.-LED OPERATION on Aug. 25 would result in the death of 10 civilians, including at least one child, and become the largest stain on U.S. ground operations in the country since the infamous Black Hawk Down incident in 1993. In the operation’s aftermath, hundreds of people in the nearby town Afgoye flooded the city’s streets demanding justice for those killed, and survivors on the farm refused to bury their dead until the Somali government recanted its allegations that they were members Al Shabaab, and offered an apology.

B-52s Are Dropping Hundreds of Dumb Bombs in Afghanistan to Literally Shape the Terrain --The bombers, along with F-16s and drones, are blasting mountains and other cover to force the Taliban into the open.    According to the public affairs official, the very first of these missions in support of the U.S. military’s Operation Freedom’s Sentinel occurred in June 2016 and involved F-16C Viper multi-role fighter jets. Since then, F-16s, B-52s, and even MQ-9 Reaper drones, have flown terrain denial sorties. Though the unguided Mk 82 remains the weapon of choice for this task, aircraft have dropped a variety of laser- and GPS-guided munitions, as well. These include 500-pound class GBU-12/B Paveways, GBU-38/B Joint Direct Attack Munitions (JDAM), and GBU-54/B Laser JDAMs, and 2,000 pound class GBU-31/B JDAMs. The B-52s with their cavernous bomb bays definitely have an outsized capability in this regard. Since July 2016, B-52s have flown more than 225 strikes over Afghanistan and dropped approximately 1,050 munitions of all types, including standard Mk 82s, during area denial missions specifically, according to AFCENT. Until November 2017, the lumbering bombers at Al Udeid were not even able to carry precision guided weapons internally, limited instead to lugging a maximum of 18 of those munitions on external pylons. The revelation about area denial strikes thus helps explain earlier, conflicting reports about the BUFFs flying with as many as 30 bombs on individual sorties. This is, of course, hardly the first time the United States has employed these tactics. From World War II through Desert Storm, the U.S. military employed carpet bombing, in which aircraft, especially heavy bombers, dropped strings of unguided bombs across wide areas. During the Vietnam War, the American aircraft famously did this repeatedly over the Ho Chi Minh Trail that snaked from North Vietnam south through Laos. The United States also saturated the area with small landmines, irritating chemicals, and even a powder that was supposed to create permanent, made-made “mud” to slow down enemy personnel and vehicles. More infamously, the U.S. military sprayed copious amounts of toxic herbicides, including a mixture called Agent Orange, to deny cover to insurgent forces. Early in the U.S. military’s campaign against the Taliban and Al Qaeda in Afghanistan, B-52s famously flew similar missions to bombard enemy positions in a mountainous part of the country near the Pakistani border known as Tora Bora. That campaign ultimately failed to keep key leaders, such as Osama Bin Laden, from escaping into Pakistan.

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