Sunday, February 25, 2018

net US oil imports fall to lowest on record, OPEC report shows global oil glut growing again..

oil prices were higher for the second week in a row, pushing to an 18 day high on falling US oil inventories, troubles in Libya and Saudi jawboning...after a 4.2% jump to $61.68 a barrel the prior week, oil contracts for March delivery rose another 22 cents on Tuesday, on reports that oil inventories at the US crude pricing depot at Cushing, Oklahoma fell 2.1 million barrels to a 3 year low, with pricing for that contract expiring at $61.90 a barrel, a 2-week the same time, the new front month crude contract for delivery in April rose 24  cents to $61.79 a trading oil for April, oil prices fell 11 cents to $61.68 a barrel on Wednesday on expectations that the EIA report the next day would show rising crude inventories in the US...however, when that report unexpectedly showed the first decrease in US oil supplies in four weeks, oil prices rose $1.09, or about 1.8%, to close Thursday at $62.77 a barrel, with a weakening dollar contributing to the rally...oil prices then rose another 78 cents to end the week at $63.55 a barrel on Friday, on news of the shutdown of a major oilfield in Libya and Saudi comments that the OPEC effort to cut stockpiles had been successful...US oil prices for April thus ended the week with a gain of exactly $2.00, or 3.2%, settling at its highest level since February 5th...

natural gas prices were also higher for the week, largely on forecasts of a return to more seasonable winter weather for much of the US, with prices for March climbing from what was near an 18 month low last week by 5.8 cents on Tuesday and 4.3 cents on Wednesday, before falling back 2.5 cents on Thursday after the release of the weekly storage report, and then losing another nine-tenths of a cent on Friday to close the week with a gain of 6.7 cents, or 2.6%, at $2.625 per mmBTU, still well below the price most US gas producers need to break even...the week's natural gas storage report indicated that our natural gas in storage fell by 124 billion cubic feet to 1,760 billion cubic feet in the week ending Friday, February 16, 2018, which left our gas supplies 609 billion cubic feet, or 25.7% lower than the 2,369 billion cubic feet that was in storage on February 17th of last year, and 433 billion cubic feet, or 19.0% below the five-year average of 2,172 billion cubic feet for the seventh week of the year...the typical natural gas withdrawal for the seventh week of the year has averaged 145 billion cubic feet over the past 5 years, so the withdrawal during the cited week was 21 billion cubic feet below normal..

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, covering the week ending February 16th, showed that due to a large increase in our oil exports, along with a similarly large decrease in our oil imports, we had to pull crude oil out of storage for the first time in four weeks, despite the slowest oil refining since the hurricane related shutdowns...our imports of crude oil fell by an average of 867,000 barrels per day to an average of 7,021,000 barrels per day during the week, while our exports of crude oil rose by an average of 722,000 barrels per day to an average of 2,044,000 barrels per day, which meant that our effective trade in oil worked out to a net import average of 4,977,000 barrels of per day during the week, 1,589,000 barrels per day less than the net imports of the prior week and the lowest net imports since the EIA started keeping such records in the same time, field production of crude oil from US wells fell by 1,000 barrels per day to 10,270,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 15,247,000 barrels per day during the reporting week..

during the same week, US oil refineries were using 15,833,000 barrels of crude per day, 329,000 barrels per day less than they used during the prior week, while at the same time 330,000 barrels of oil per day were being pulled out of 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 256,000 barrels per day less than what refineries reported they used during the account for that disparity, the EIA needed to insert a (+256,000) 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, essentially a fudge factor that is labeled in their footnotes as "unaccounted for crude oil"...(how this weekly oil data is gathered, and the likely reason for that "unaccounted" oil, is explained here)...since there was a 653,000 barrel per day change in that 'unaccounted for oil', from -352,000 barrels per day last week to +256,000 barrels per day this week, the week over week changes here are correspondingly unreliable...

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports fell to an average of 7,808,000 barrels per day, 6.6% less than the 8,360,000 barrel per day average we imported over the same four-week period last year....the 330,000 barrel per day decrease in our total crude inventories came from a 231,000 barrel per day withdrawal from our commercial stocks of crude oil and a 99,000 barrel per day withdrawal of oil from our Strategic Petroleum Reserve, possibly part of the sale of oil reserves included in the recently passed bill to fund the government...this week's 1,000 barrel per day decrease in our crude oil production was due to an 11,000 barrel per day decrease in output from Alaska, which was partially offset by a 10,000 barrel per day increase in output from wells in the lower 48 states...the 10,270,000 barrels of crude per day that were produced by US wells during the week ending February 16th was 14.1% more than the 9,001,000 barrels per day that US wells were producing on February 17th of last year, and 21.9% above the interim low of 8,428,000 barrels per day that our oil production fell to during the last week of June, 2016...

US oil refineries were operating at 88.1% of their capacity in using 15,833,000 barrels of crude per day, down from 89.8% of capacity the prior week, and down from the wintertime record 96.7% of capacity set just seven weeks earlier, as US refineries are now into the pre-spring blend changeover and maintenance season...the 15,833,000 barrels of oil that were refined this week were 10.1% less than the off-season record 17,608,000 barrels per day that were being refined during the last week of December 2017, but were 3.7% more than the 15,271,000 barrels of crude per day that were being processed during the week ending February 17th, 2017, when refineries, undergoing seasonal maintenance, were operating at 84.3% of capacity....

even with the drop in the amount of oil being refined, gasoline production by our refineries was much higher, increasing by 515,000 barrels per day to 10,107,000 barrels per day during the week ending February 16th, after decreasing by 493,000 barrels per day the prior week....that increase meant our gasoline production was 7.2% higher for the week than the 9,429,000 barrels of gasoline that were being produced daily during the week ending February 17th of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 322,000 barrels per day to 4,489,000 barrels per day, after falling by 317,000 barrels per day the prior week...but even after that decrease, the week's distillates production was still fractionally higher than the 4,467,000 barrels of distillates per day than were being produced during the equivalent week of 2017....    

with the big increase in our gasoline production, our supply of gasoline in storage at the end of the week rose by 261,000 barrels to 249,334,000 barrels by February 16th, the fourteenth increase in 15 weeks....that was even as our exports of gasoline rose by 279,000 barrels per day to 918,000 barrels per day, while our imports of gasoline fell by 288,000 barrels per day to 350,000 barrels per day, and while our domestic consumption of gasoline fell by 57,000 barrels per day to 9,002,000 barrels per day...but even after fourteen increases in fifteen weeks, our gasoline inventories are still 2.8% lower than last February 17th's level of 256,435,000 barrels, even as they are now roughly 7.3% above the 10 year average of gasoline supplies for this time of the year...       

meanwhile, with the week's drop in distillates production, our supplies of distillate fuels fell by 2,422,000 barrels to 138,945,000 barrels over the week ending February 16th, the fourth decrease in distillates supplies in the past ten weeks...that was as the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 42,000 barrels per day to 4,224,000 barrels per day, while our exports of distillates fell by 177,000 barrels per day to 854,000 barrels per day and as our imports of distillates rose by 7,000 barrels per day to 243,000 barrels per day...after this week’s inventory decrease, our distillate supplies were 15.9% lower at the end of the week than the 165,133,000 barrels that we had stored on February 17th, 2017, and 2.1% lower than the 10 year average of distillates stocks at this time of the year… 

finally, the big increase in our oil exports combined with a similarly large drop in our oil imports meant that our refineries had to pull oil out of our commercial supplies of crude oil for the 11th time in 14 weeks and for the 36th time in the past 49 weeks, as our commercial crude supplies decreased by 1,616,000 barrels, from 422,095,000 barrels on February 9th to 420,479,000 barrels on February 16th....with that drop occurring at a time of year when oil supplies are usually increasing, our oil inventories as of that date ended the week 18.9% below the 518,683,000 barrels of oil we had stored on February 17th of 2017, and 11.7% lower than the 476,325,000 barrels of oil that we had in storage on February 19th of 2016, even as they were still 5.1% greater than the 399,943,000 barrels of oil we had in storage on February 20th of 2015, at a time when US supplies of oil had just begun to increase...

OPEC's Monthly Oil Market Report

we also want to quickly review OPEC's February Oil Market Report (covering January OPEC & global oil data), which was released the week before last week, and which is available as a free download....the first table from this report that we'll look at is from page 69 of that OPEC pdf, and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to resolve any potential disputes that could arise if each member reported their own figures...    

January 2018 OPEC crude output via secondary sources (2)

as we can see from this table of official oil production data, OPEC oil output slipped by 8,100 barrels per day in January to 32,302,000 barrels per day, from an December production total of 32,310,000 barrels per day, but that was a figure that was originally reported as 32,416,000 barrels per day, so their production for December was effectively a 114,000 barrel per day decrease from previously reported figures (for your reference, here is the table of the official December OPEC output figures as reported a month ago, before this month's revisions) you can tell from the far right column above, the main reasons that OPEC's January output fell by 8,100 barrels per day from revised December figures was the decrease of 47,300 barrels per day in output from Venezuela, which is suffering from the effects of economic sanctions imposed by the US...on the other hand, oil output from Iraq increased by 30,200 barrels per day, which leaves them and Nigeria as the only OPEC members whose production is well in excess what their pact calls for, as can be seen in the table below:  

January 2018 OPEC output vs quota via Platts

the above table is from the "OPEC guide" page at S&P Global Platts: the first column of numbers shows average daily production in millions of barrels of oil per day for each of the OPEC members for January of this year, and the 2nd column shows the allocated daily production in millions of barrels of oil per day for each member, as was agreed to at their November 2016 meeting, and the 3rd column shows how much each country produced over or under their quota for the month...note that Venezuela alone, now 330,000 barrels per day below quota, more than makes up for smaller amounts of over production by other OPEC members...

the next graphic we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from Febraury 2016 to January 2018, and it comes from page 70 of the February OPEC Monthly Oil Market Report....on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale...   

January 2018 OPEC report global oil supply

OPEC's preliminary data indicates that total global oil production rose to 97.66 million barrels per day in January, up by .35 million barrels per day from a December output total of 97.31 million barrels per day, which was revised down by .18 million barrels per day from the 97.49 million barrels per day global oil output for December that was reported a month oil output for January was also 1.49 million barrels per day higher than the 95.82 million barrels of oil per day that was being produced globally in January a year ago (see last February's OPEC report online (pdf) for the year ago data)... OPEC's January  production of 32,302,000 barrels per day thus represented 33.1% of what was produced globally, down from 33.2% in December, as oil output increases by Canada, Mexico, Norway, UK, Bahrain, Brazil and Kazakhstan were partially offset by decreases in output from the US, Malaysia, Oman, Russia and Azerbaijan....OPEC's January 2017 production was at 32,139,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding their new member Equatorial Guinea, are now producing 29,000 more barrels per day of oil than they were producing a year ago, during the first month that their production quotas went into effect, with the increase largely due to recoveries of oil production in Libya and Nigeria... 

the increase in global oil output that we can see in the above purple graph meant there was a surplus in the amount of oil being produced globally, as the next table from the OPEC report will show us..    

January 2018 OPEC report 2018 global oil demand

the table above comes from page 41 of the February OPEC Monthly Oil Market Report, and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line of the second column, we've circled in blue the figure that's relevant for January, which is their revised estimate of global oil demand for the first quarter of 2018...  

OPEC's estimate is that over the 1st quarter of this year, all oil consuming areas of the globe will using 97.23 million barrels of oil per day, which is an upward revision from their prior estimate of 97.17 million barrels of oil per day.....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, even after the OPEC and non-OPEC production cuts, the world's oil producers were producing 97.66 million barrels per day during January, which means that there was a surplus of around 430,000 barrels per day in global oil production vis-a vis demand during the month... 

global oil production estimates for December were also revised lower with this report, by 0.18 million barrels per day to 97.31 million barrels per day, while global demand figures for the 4th quarter were revised 0.09 million barrels per day higher at 98.29 million barrels per day; that now means there was a deficit of 980,000 barrels per day in December global oil output, which we had previously figured to be a global oil deficit of around 760,000 barrels per addition, there was also a revision to oil demand estimates for 3rd quarter, which on a cumulative basis for the year worked out to be a 0.03 million barrels per day upward revision to 2017 oil demand (which we have circled in green) round numbers, that means our previous estimate of a 183 million barrel oil shortfall for 2017 was about 10 million barrels too low, a revision to 2017 that's almost enough to offset the 13.33 million barrels of oil surplus that we saw globally in January...

This Week's Rig Count

US drilling activity increased for just the 13th time in the past 30 weeks during the week ending February 23rd, but the rig count is still up by 20 over that span, as the increases have exceeded the decreases....Baker Hughes reported that the total count of active rotary rigs running in the US was up by 3 rigs to 978 rigs in the week ending on Friday, which was also 224 more rigs than the 754 rigs that were deployed as of the February 24th report of 2017, while it was still down by nearly half 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 1 rig to 799 rigs this week, which was also 197 more oil rigs than were running a year ago, while the week's oil rig count still remained well below the recent high of 1609 rigs that were drilling for oil on October 10, the same time, the number of drilling rigs targeting natural gas formations increased by 2 rigs to 179 rigs this week, which was also 28 more gas rigs than the 151 natural gas rigs that were drilling a year ago, but way down from the recent high of 1,606 natural gas rigs that were deployed on August 29th, 2008...

drilling activity from platforms in the Gulf of Mexico decreased by 1 rig to 17 rigs for the week, which was the same number of rigs that were deployed in the Gulf of Mexico a year ago...the total offshore US rig count last year was also at 17 rigs, same as this week's total...meanwhile, a rig began drilling from a platform on an inland lake in Louisiana this week, bringing the "inland waters" rig count up to 2 rigs, which was still down from 4 rigs on inland waters as of February 24th of last year...

the week's count of active horizontal drilling rigs was up by 3 rigs to 842 horizontal rigs this week, which was also up by 218 rigs from the 624 horizontal rigs that were in use in the US on February 24th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of the same time, the vertical rig count was up by 2 rigs to 67 vertical rigs this week, which up from the 61 vertical rigs that were in use during the same week of last year...on the other hand, the directional rig count was down by 2 rigs to 69 directional rigs this week, which was the same number of directional rigs that were deployed on February 24th of 2017...

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 the 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 February 23rd, the second column shows the change in the number of working rigs between last week's count (February 16th) and this week's (February 23rd) count, the third column shows last week's February 16th 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 24th of February, 2017...  

February 23 2018 rig count summary

most of what's in the table above is pretty straight forward this week, although as usual Texas is problematic, with so many different basins in or extending into the state...the 2 rig increase in the Permian, however, seems to have been in New Mexico, because both Permian districts in Texas saw their rig counts decline...the one rig gain in Louisiana is net of the the inland lake increase, the offshore decrease, and the additional gas rig that started drilling in the Haynesville; another gas directed rig was added in the Utica, while 2 gas rigs were shut down in the Marcellus, one each in Pennsylvania and West Virginia...the net 2 rig increase for rigs targeting natural gas was from incremental additions in basins not tracked separately by Baker Hughes, so absent some digging through the individual logs, we'll have to leave those as unknown...and in addition to the changes in the major oil and gas producing states shown above, Mississippi saw both rigs which had been active in the state shut down last week, which is the first time on record there were no drilling rigs active in the state; on February 24th year ago, Mississippi drillers had three rigs deployed...


Gubernatorial Hopeful Ohio Vows To Ban All Oil & Gas Drilling - Ohio Democratic gubernatorial candidate Dennis Kucinich—a vocal opponent of fracking—vows to ban all oil and gas drilling in the state, if elected, and even take the industry to court in a class-action lawsuit.Kucinich, a former mayor of Cleveland and former Ohio Congressman, is running in the primaries on May 8. In a poll from end-January, in the crowded Democratic Party field, Kucinich had 16 percent support, behind the leading candidate of the Democrats, Richard Cordray, with 23 percent support.“Fresh water and clean water are not negotiable issues,” Kucinich told The Intercept, pointing to water contamination associated with oil and gas drilling. “They’re not negotiable.”While Kucinich is campaigning to ban all oil and gas drilling in Ohio, the other Democratic candidates don’t support either idea for a ban or the class action lawsuit.“Those who have poisoned Ohio’s people and their land will be made to pay,” Kucinich has recently said.“No longer will the industry be able to hide behind the false label of ‘proprietary’ to experiment with toxic chemicals and biocides and use them without traceability and responsibility for the health and environmental impacts on the State of Ohio. No longer will we be lied to and used by these interests,” Kucinich says, and proposes to use the eminent domain to seize control of oil and gas wells in Ohio and shut them down. Kucinich also vows to block all drilling permits and totally ban injection wells. Another proposal of Kucinich’s is to subsidize health screens for people living near fracking sites and use the data to file a class action lawsuit similar to the lawsuit against Big Tobacco in the 1990s.

Dennis Kucinich Vows to End All Oil and Gas Drilling in Ohio If Elected Governor, and Then Take the Industry to Court - The Intercept -- The man who saved Cleveland — and paid the ultimate political price for it — now wants to do the same for Ohio. Dennis Kucinich, the boy mayor of Cleveland who went on to serve nearly two decades in Congress, is running for governor on a platform of radical change to the way the energy industry operates in the state. “Fresh water and clean water are not negotiable issues,” Kucinich told The Intercept, pointing to the water contamination associated with oil and gas drilling. “They’re not negotiable.”In a press conference in late January, the Ohio Democratic gubernatorial candidate unveiled one of the most cutting-edge environmental platforms of any candidate in the country. Kucinich calledfor a total end to oil and gas extraction in the state of Ohio.To accomplish this, he would deploy a battery of radical policies. He would, for instance, utilize eminent domain to seize control of oil and gas wells throughout the state and then shutter them. He would block all new drilling permits and order a total ban on injection wells. Kucinich would also deploy the Ohio State Highway Patrol to stop and turn away vehicles that possess fracking waste. Under a Kucinich administration, Ohio would give subsidized health screens to residents living near fracking sites; that data would then be used to file a class-action lawsuit against fracking companies similar to how states took Big Tobacco to court in the ’90s.   Industry is less than happy about Kucinich’s plan, to say the least.

Protest Challenges New Fracking Leases Threatening Ohio's Only National Forest - Center for Biological Diversity (press release) — Seven conservation groups have filed an administrative protest challenging a Bureau of Land Management plan to auction off 345 acres of Ohio’s Wayne National Forest for oil and gas fracking leases in March. The protest, filed late Tuesday, notes that the leases would lock in dangerous fracking in the Wayne. Despite known threats from hydraulic fracturing, the BLM planned the auction using only a cursory review that avoids site-specific analysis of potential harm from fracking operations. That means the public will have no information about pollution risks to streams, eradication of endangered species habitat and harm to nearby communities, which is required under the National Environmental Policy Act. “The Bureau of Land Management is unlawfully cutting corners in its push to develop the Wayne. Our protest filing is intended to rein in the agency,” said Nathan Johnson, attorney for the Ohio Environmental Council. “The Wayne is one of Ohio's finest natural treasures, plain and simple. It deserves to be protected from heavy industrial development.” The auction comes after the U.S. Forest Service announced plans to revise its 2006 forest plan governing land management in the Wayne. Conservation groups last year sued the Forest Service and the BLM, which oversees drilling and fracking of federal oil and gas. The lawsuit says federal officials relied on the outdated plan and failed to analyze threats to public health, water, endangered species and the climate before opening 40,000 acres of the Wayne to fracking  Clear-cutting for well pads, roads and other infrastructure would reverse decades of forest and watershed recovery in the Wayne and destroy habitat for endangered Indiana bats and threatened northern long-eared bats. The bats are already imperiled by forest fragmentation, white-nose syndrome and climate change. Pollution from fracking operations, explosions and spills would damage water supplies that provide drinking water for millions of people.

Old wells are 'a problem for everyone' - Crain's Cleveland Business - When it comes to oil and gas wells in Northeast Ohio, environmentalists and the drilling industry are on the same page: They want a lot of them to be plugged.That's not because the Ohio Oil and Gas Association (OOGA) has taken up with the Ohio Environmental Council (OEC) to oppose drilling. They are in bed together, but it's not necessarily love. It's because they both say there's a longstanding problem of old, abandoned wells leaking methane, oil and otherwise contaminating the ground and presenting a danger to residents.They have different reasons for wanting them to be addressed, but are both pushing for it. They helped get legislation to address the issue passed in the Ohio House in January (HB 225), and are now hopeful the Senate will follow suit."It's a problem for everyone," said Melanie Houston, director of climate programs at OEC.She wants the wells addressed for reasons other than climate, though many of them do release methane, a greenhouse gas that is far more powerful than carbon dioxide in terms of its ability to trap heat and contribute to global warming. They also can contaminate ground water, sometimes contain old drilling fluids or oil, and are made of metals that should be removed, not to mention they can be a safety issue."These have been found under buildings, houses, streets," Houston said. "There's a story about a school gymnasium in Lorain where there was a methane leak and they couldn't figure out where it was. It turned out to be an old well." There are so far more than 700 so-called orphan oil and gas wells with no known owners identified around the state that need to be plugged, according to information from OOGA. Surprisingly, perhaps to some at least, Northeast Ohio has a disproportionate number of the old wells, with the Cleveland area leading the way. Cuyahoga County has 54 orphan wells; only Washington and Wood counties have more, with 55 and 79, respectively. Also ranking high are Lorain County with 41 wells that need to be addressed, Medina with 33 and Lake County with 16.

Trump wants to kill research into how oil and gas impact health - The White House’s proposed budget deals a whopping blow to environmental programs of all kinds, but the U.S. Geological Survey (USGS) would lose an invaluable asset: research into environmental health impacts.The scientific agency studies natural threats to human life and wildlife, including climate change and extractive industries. The administration is requesting to reduce the USGS’s budget from $1.1 billion to $860 million, a similar request as the White House made last year. If these cuts were made, the environmental health program would lose its $21 million in funding, associate director, and all 119 full-time staff. That money would be reappropriated “to address higher priorities” like mineral and energy resources, which would receive more money under this proposal than they did in 2017. This USGS’s environmental health program is responsible for looking at how things like abandoned uranium mines, oil spills, pesticides, and air pollution are impacting human health. It also oversees a lot of research on hydraulic fracturing, aka fracking. The USGS under the Trump administration, however, is focusing more on finding and developing energy and mineral resources (like coal, oil, gas, and rare metals) than, say, how that very development might get people sick or pollute a stream and devastate its fish population. Research already shows that the people closest to oil and gas development are disproportionately low-income or communities of color.

Landowners brace for eminent domain loss in Penneast pipeline cases -  Albertine Anthony has been living in the same picturesque Carbon County farmhouse since she was born 93 years ago, and she’s not going anywhere even if PennEast builds a natural gas pipeline across her land.Anthony, a tiny figure with a slight stoop and a shock of white hair, was offered $37,000 by the company as compensation for building the pipeline across a corner of her 124-acre farm that was first purchased by her grandfather, and where tenants now grow crops including corn and oats.She might have gotten used to the idea if the company hadn’t changed its plans and redrawn the pipeline route so that it crossed a wetland containing the spring that has supplied her house with water for three generations.The idea that pipeline construction might destroy the spring that provides fresh, clear water by gravity – even to the second floor of her house – has set her firmly against PennEast’s plans and led her to tell them that she’s not accepting their compensation at any price.“You can give me any amount of money but you can’t replace that spring, and you can’t replace the good taste that it has,”  Anthony is among 50 Pennsylvania landowners who are being sued by PennEast to take a portion of their land using eminent domain. Court records show the company filed 28 suits in federal court for the Eastern District of Pennsylvania on Feb. 6, and another 22 cases, including Anthony’s, in federal court for the Middle District of Pennsylvania, also on Feb. 6. The filings were prompted by federal energy regulators issuing a long-awaited Certificate of Public Convenience and Necessity for the pipeline in mid-January, allowing the company to begin its legal effort to obtain the lands from uncooperative owners. The actions came the day after a deadline imposed by PennEast for landowners to accept or decline its offers.

Environmental group: Methane pollution higher than PA thinks - An environmental group says that Pennsylvania’s gas drilling industry is releasing much more methane into the atmosphere than the state is reporting.  Scientists at the Environmental Defense Fund calculated Pennsylvania’s Marcellus shale industry is emitting twice as much methane as companies are reporting to the state’s Department of Environmental Protection. The analysis, posted to the group’s website, is based on 16 peer-reviewed studies funded in part by EDF, including some involving oil and gas companies. Methane is the main component of natural gas, and is a powerful greenhouse gas. Over the course of 20 years, methane is as much as 86 times more potent at trapping heat in the atmosphere than carbon dioxide. The fracking boom in Pennsylvania has made the state the No. 2 gas-producing state in the country, behind Texas. It has also brought attention to how much methane the wells are leaking into the atmosphere. But the state’s older, conventional drilling industry may also be a significant source of methane pollution, according to the EDF.The group’s analysis showed that about half of the industry’s methane emissions are from the state’s 70,000 conventional gas wells. They are mostly vertical wells drilled into shallow formations, not into deep shale formations like the Marcellus. One study cited by EDF found conventional wells were losing about 23 percent of their gas, compared to .3 percent for larger unconventional wells in the Marcellus shale region.David Lyon, EDF’s lead scientist on the report, said the conventional wells probably lose so much gas because of their age.“One of the main reasons is a lack of maintenance, or less attention being paid to these wells, that are more common and produce a lot less oil and gas than some of the newer (unconventional) wells,” Lyon said.  Estimates leave out leaky wells.

Far More Methane Leaking at Oil, Gas Sites in Pennsylvania than Reported - Leaks of methane, a powerful greenhouse gas, from oil and gas sites in Pennsylvania could be five times greater than industry reports to state regulators, according to a new analysis by the Environmental Defense Fund. Drawing from peer-reviewedresearch based on measurements collected downwind of oil and gas sites, along with government data, the EDF analysis estimates that the state's oil and gas wells and infrastructure leak more than 520,000 tons of methane annually, largely due to faulty equipment. "This wasted gas causes the same near-term climate pollution as 11 coal-fired power plants and results in nearly $68 million worth of wasted energy resources," the group said in its report, released Thursday. The underreporting of methane leaks in Pennsylvania is part of a nationwide pattern that peer-reviewed studies have uncovered in recent years as scientists compare federal and state statistics to data they gather on the ground and in aircraft flyovers. The disparity between what researchers find and what industry reports raises important questions about the actual level of greenhouse gas emissions in the United States and the viability of natural gas as an alternative to coal, if limits aren't placed on methane leaks from gas and oil infrastructure. In the new report, EDF analyzed methane leaks from Pennsylvania's conventional oil and gas wells, mostly drilled before 2008, and from unconventional wells, those unlocked since then using hydraulic fracturing. There are far more conventional wells than unconventional ones in the state, and because they are older they leak at a much higher rate. Twenty-three percent of methane at a conventional well leaked into the atmosphere compared to 0.3 percent at a fracked well, EDF estimated. But the newer fracked wells produce considerably more natural gas than the older wells. As a result, even a small leakage rate of 0.3 percent led to a vast amount of methane entering the atmosphere, the analysis estimated. EDF calculated that fracked wells spewed about 253,500 tons of methane in 2015, and conventional wells, 268,900 tons.

Emissions From Fracking 5 Times Higher Than Reported  -- Natural gas is not a “bridge fuel to the future.” It is a death sentence for humanity. Think that is too strong? Think again. A new study by the Environmental Defense Fund finds that methane escaping from fracking operations in Pennsylvania “causes the same near term climate pollution as 11 coal fired power plants” and is “five times higher than what oil and gas companies report” to the state. A previous assessment by EDF last November found methane emissions escaping from oil and gas wells in New Mexico are “equivalent to the climate impact of approximately 12 coal fired power plants.  In its executive summary of the study, the EDF says, “The analysis — based on peer-reviewed research and emissions data collected at Pennsylvania well sites — examines both the total amount of methane and volatile organic compounds emitted from oil and gas sites. These pollutants increase global warming and are hazardous to human health.” Several interactive maps and more information about the data collection procedures and analysis used by EDF are available on its website. Methane is the primary component of what is popularly known as “natural gas.” It is a powerful greenhouse gas which traps 86 times as much heat as carbon dioxide over a 20 year period, according to Think Progress. The amount of methane in the earth’s atmosphere has increased dramatically since 2006. A recent NASA review determined that the majority of that increase is attributable to oil and gas extraction. Fracking has become a matter of national pride for the United States. For the first time, it is now one of the largest producers of oil and gas in the world. OPEC never imagined back in the 1970s that America would one day out-produce its member states. Russia, another major supplier of oil and gas, is also none too pleased about the US selling more fossil fuels than it does. America’s new role as a major supplier could create geo-political tensions with global implications. Fights over access to the Arctic as sea ice melts now seem inevitable. Be careful what you wish for, America. Giving Donald Trump another reason to beat his breast and crow about what a great country America is, or was, or might be is no reason to celebrate if it means poisoning the entire planet. Fracking is nothing less than a loaded gun pointed straight at the head of every man, woman, and child alive

EQT, the biggest US natural gas producer, is spinning off its pipeline business --  EQT, the nation's biggest natural gas producer, will spin off its pipeline business into a new publicly traded company, the Pittsburgh-based driller announced Wednesday. The transaction represents something of a consolation prize to investors who objected to EQT's purchase of Rice Energy last year. Opponents led by activist investor Barry Rosenstein's Jana Partners had contended that splitting EQT's natural gas production and transportation businesses would better reward EQT shareholders. Shares of EQT were up more than 1 percent Wednesday to about $52, after popping about 5 percent in premarket trading. The spinoff will create the third-largest U.S. natural gas gathering company, according to EQT. The company says the deal will allow the two pure-play companies to attract an investor base attuned to their businesses, simplify financial results and more efficiently allocate capital. Before their combination, both EQT and Rice operated midstream businesses — which transport oil and gas from wells to processing, transportation and shipping facilities — through limited partnerships. The deal announced Wednesday will merge Rice Midstream Partners with EQT Midstream Partners, both of which are focused on the Appalachian region, the epicenter of the U.S. shale gas boom. 

Environmental groups puts up legal 'roadblock' against Mountain Valley Pipeline  - A new legal action filed by a coalition of environmental groups in the U.S. Court of Appeals takes issue with the way the Army Corps of Engineers issued a water crossing permit for a natural gas pipeline.The petition is the latest in attempts to stop the building of the Mountain Valley Pipeline, a 300-mile-long pipeline that would run from Wetzel County to Pittsylvania County, Virginia.The Army Corps is tasked with issuing a “dredge and fill” permit under Section 404 of the Clean Water Act, but the petition says it’s wrong to have issued the permit because West Virginia’s Department of Environmental Protectionwaived its right to a water quality analysis last year.Under Section 401 of the Clean Water Act, states have the authority to decide whether a project that needs a federal permit complies with state water quality standards, though they may waive that authority.The legal action was filed in the 4th Circuit in Richmond, Virginia, by Appalachian Mountain Advocates on behalf of the Sierra Club, the West Virginia Rivers Coalition, Indian Creek Watershed Association, Appalachian Voices and Chesapeake Climate Action Network. Officials need to readdress the impact the project might have on the state’s rivers and streams before proceeding with the project, said Angie Rosser, executive director for the West Virginia Rivers Coalition. “The combination of WVDEP’s waived water quality analysis and the Army Corps’ cookie-cutter approach just doesn’t cut it for a project of this scale,” she said. Ideally, the Army Corps or the state of West Virginia will have to do another water quality impact review before the pipeline is built, said a news release from the Sierra Club.

Federal judge grants preliminary injunction to Mountain Valley Pipeline  -- A federal judge in Charleston has sided with two other federal judges, granting a preliminary injunction to developers of the Mountain Valley Pipeline. U.S. District Judge John Copenhaver granted the preliminary injunction Wednesday evening, two weeks after a hearing in the Robert C. Byrd U.S. Courthouse, in Charleston. The hearing followed decisions in the Northern District of West Virginia and Western District of Virginia, where Mountain Valley Pipeline sued landowners over easement through eminent domain rights to build the pipeline, which would run from Wetzel County, West Virginia to Pittsylvania County, Virginia.U.S. District Judge Elizabeth Dillon, from the Western District of Virginia, and U.S. District Judge Irene Keeley, from the Northern District of West Virginia, granted approval for the project.“The court finds it pertinent to note, at the outset of this discussion, that the two other district courts presiding over Mountain Valley’s companion condemnation actions have already granted Mountain Valley’s request for a preliminary injunction under virtually identical circumstances,” Copenhaver wrote in a 39-page decision.The project faces a tight deadline — tree clearing would have to be finished by March 31, the day the U.S. Fish and Wildlife Service marks as the day two species of bats come out of hibernation.

Trump's infrastructure plan would make it harder to challenge pipelines - The Trump administration’s infrastructure plan released earlier this week is designed to stimulate the construction of more oil and natural gas pipelines across the country.To make the building of new pipelines easier, the White House wants to make it harder for the next big anti-pipeline movement  to win in the courtroom. How? By limiting the legal options available to lawyers at environmental groups opposed to new fossil-fuel infrastructure. Such a move could be a significant blow to the slew of protesters who spent years agitating against the Keystone XL pipeline and more recently the Dakota Access one. But environmentalists can probably rest easy despite the broadside: A new network of pipelines built with little legal opposition is probably a pipe dream for Trump and his allies because it involves the arduous task of getting Congress to rewrite long-standing environmental laws.  Among the changes sought by the White House in its infrastructure plan -- a longshot for passage as it requires a lot of new government spending -- is reducing the statute of limitations for challenging permitting decisions under the National Environmental Policy Act (NEPA) from six years to 150 days. Changing NEPA, which requires that federal agencies prepare environmental reviews of major projects, has been a focus of Republicans on the House Natural Resources Committee, which held an oversight hearing on restructuring the 48-year-old law in November. The law has served as a model for environmental-review legislation in other countries, but Congress has amended NEPA only once, in 2015. The smaller window for challenging permits would give environmental groups less time to mount legal challenges, although “the reality is that most of the truly controversial projects would be challenged right out of the gate,” The White House also wants to change the standard under which a pipeline project could be temporarily halted by a judge.

New Jersey officials resist pipeline company’s eminent domain push  - State regulators from Pennsylvania to Virginia have served as cheerleaders for pipeline development, regardless of the potential consequences. New Jersey, however, has started to take a different approach. New Jersey’s new attorney general, Gurbir Grewal (D), recently called on federal regulators to hit pause on the 120-mile PennEast Pipeline. Grewal wants to make sure important environmental issues are addressed before the companies behind the proposed pipeline begin legal efforts to gain access to landowners’ property in his state. So far, PennEast is seeking eminent domain over nearly 147 parcels in New Jersey and has started proceedings to condemn, or gain legal permission to take control of these areas. In his motion filed with the Federal Energy Regulatory Commission (FERC) on behalf of the New Jersey Department of Environmental Protection (DEP), Grewal urged the commission to listen to the department’s concerns. Although the proposed pipeline would cross over 30 streams in New Jersey, the DEP has not been provided with any site-specific information from PennEast detailing how environmental impacts would be avoided or minimized, the attorney general said. “FERC’s misunderstanding that impacts can be mitigated away not only threatens precious environmental resources but also would leave PennEast in the position of having condemned properties which may not qualify for permits under the Clean Water Act,” Grewal wrote. PennEast wants FERC to deny the motion, contending the issues raised by the attorney general on behalf of the DEP aren’t new and have already been considered by the commission.

Refiner goes belly-up after big payouts to Carlyle Group (Reuters) - Throughout 2016 and 2017, a rail terminal built to accept crude oil for the largest East Coast refinery often sat idle, with few trains showing up to unload. Although little oil flowed, plenty of money did. Under a deal Philadelphia Energy Solutions (PES) signed in 2015, the refiner paid minimum quarterly payments of $30 million to terminal owner North Yard Logistics LP - even if little crude arrived. Much of that cash, in turn, flowed to the investors that own both PES and North Yard, led by the Carlyle Group, a global private equity firm with $178 billion in assets. The deal in effect guaranteed lucrative payouts to Carlyle regardless of whether the refinery benefited from the arrangement. When oil market conditions made the rail shipments unprofitable later that year, the refinery took heavy losses while its investors continued to collect large distributions for two more years. The rail contract exemplifies the financial demands Carlyle imposed on PES in the years leading up to the refiner’s bankruptcy in January. The Carlyle-led consortium collected at least $594 million in cash distributions from PES before it collapsed, according to a Reuters review of bankruptcy filings. Carlyle paid $175 million in 2012 for its two-thirds stake in the refiner. More than half the distributions to the Carlyle-led investors were financed by loans against PES assets that the refiner now can’t pay back, the filings show. The rest came from the refiner’s operating budget and payments PES made under the terminal deal to North Yard, a firm with no offices or employees that PES spun off in 2015. 

Trump calls meeting on biofuels policy after refiner bankruptcy  (Reuters) - U.S. President Donald Trump has called a meeting early next week with key senators and Cabinet officials to discuss potential changes to biofuels policy, which is coming under increasing pressure after a Pennsylvania refiner blamed the regulation for its bankruptcy, according to four sources familiar with the matter. The meeting comes as the oil industry and corn lobby – powerful forces in Washington – clash over the future of the Renewable Fuel Standard (RFS), a decade-old regulation that requires refiners to cover the cost of mixing biofuels such as corn-based ethanol into their fuel. Trump’s engagement reflects the high political stakes of protecting jobs in a key electoral state. Oil refiner Philadelphia Energy Solutions (PES), which employs more than a thousand people in Philadelphia, declared bankruptcy last month and blamed the regulation for its demise. The meeting, scheduled for Tuesday, will include Republican Senators Ted Cruz of Texas, Chuck Grassley and Joni Ernst of Iowa, along with Environmental Protection Agency Administrator Scott Pruitt, Agriculture Secretary Sonny Perdue, and potentially Energy Secretary Rick Perry, according to the four sources, who asked not to be named because they were not authorized to speak publicly on the matter. One source said the meeting would focus on short-term solutions to help PES continue operating. PES is asking a bankruptcy judge to shed roughly $350 million of its current RFS compliance costs, owed to the EPA which administers the program, as part of its restructuring package. The other sources said the meeting will consider whether to cap prices for biofuel credits, let higher-ethanol blends be sold all year, and efforts to get speculators out of the market. 

New York Harbor heating oil differential pops after multiyear low -- The differential for high sulfur heating oil barges in New York Harbor rebounded sharply Friday after reaching the lowest level in a number of years on warm weather and overblending. S&P Global Platts assessed benchmark Atlantic Coast HSHO at the NYMEX March ULSD futures contract minus 18 cents/gal, compared with minus 21.75 cents/gal on Thursday, the lowest differential since NYMEX switched its futures contract from heating oil to ULSD in spring 2013. BP offered heating oil barges lower Thursday to NYMEX March ULSD minus 21.50 cents/gal, with no buyers. But it was heard bid at minus 18.25 cents/gal on a quiet Friday of trading in the Northeast, where many people had the same forecast as given on Groundhog Day: a cold February. "I guess somebody should have shot that groundhog. He missed the forecast again," one trader said. He noted another major use is for blending the 2,000 ppm sulfur grade into 500 ppm sulfur, or S500, heating oil. "And the demand for S500 has just fallen off the cliff. That's put added pressure on heating oil on a prompt basis," he said. "I wouldn't say it's warm there, but it's probably warmer than suppliers would want to see. They may have overblended to start with." US imports of Canadian heating oil have tapered off lately, with just one ship from Irving Oil unloading 95,000 barrels of heating oil in Maine this week, according to US Customs Bureau data. But Rolympus brought in 316,000 barrels of gasoil into Connecticut on Wednesday from Russia that was likely heating oil grade. 

LNG Comes To Boston, A Harbinger Of The Future? - The most curious natural gas story of the year so far comes out of Boston and seems to have echoes of a deepening Russia-related scandal in Washington. A liquefied natural gas (LNG) tanker bearing natural gas produced in part in Russia delivered its cargo to the Boston area for insertion into the natural gas pipeline system there. Apparently, the Russian company that supplied some of the gas may fall under U.S. sanctions against the financing and importation of Russian goods.  One of the many ironies of the delivery is that the United States is simultaneously importing LNG in one place even as it exports LNG from another. (I'll explain later why this may become a more frequent occurrence in the years ahead.) The hue and cry from the natural gas partisans blamed Boston's predicament on the lack of pipelines to carry growing gas production from the nearby Marcellus and Utica shale deposits to needy Bostonians whose gas supplies had been depleted by a deep winter freeze.Within the context of this narrow appraisal, the partisans are mostly correct. Attempts to bring more pipeline gas to New England have come to grief, especially in New York state where residents have strongly opposed new natural gas pipelines and storage facilities.In addition, the state banned hydraulic fracturing—the main method for extracting gas from the Marcellus and Utica deposits—in 2014, claiming the process threatened water supplies. That ban, of course, prevented any shale gas development in southern New York under which the deposits lie. And, it brought into disrepute all things related to hydraulic fracturing or "fracking" including natural gas pipelines and storage facilities. What lurks behind the outrage of the partisans is the assumption—widely touted in the media and by the U.S. Energy Information Administration (EIA)—that the country is about to become a large exporter of LNG for the long term as its natural gas production grows ever skyward.

U.S. ethane consumption, exports to increase as new petrochemical plants come online - Over the next two years, EIA’s Short-Term Energy Outlook (STEO) projects growth in U.S. consumption of ethane in the petrochemical industry will exceed increases in consumption of all other petroleum and liquid products—such as motor gasoline, distillate, and jet fuel—combined. EIA also projects that ethane exports will continue increasing, as ethane is exported both by pipeline to Canada and by tankers to more distant destinations. Ethane is separated from raw natural gas at natural gas processing plants along with other hydrocarbon gas liquids (HGL) such as propane, normal butane, isobutane, and natural gasoline. Ethane is mainly used as a petrochemical feedstock for the production of ethylene, which is a building block for plastics, resins, and other industrial products. As U.S. natural gas production has increased, the amount of ethane contained in raw natural gas production streams has exceeded domestic demand or the ability to export it abroad. This situation has led producers to leave some of the ethane in the natural gas stream, up to allowable limits set by natural gas pipelines and distribution systems, and to sell it as natural gas, rather than recover and market ethane as a separate product. Nonetheless, ethane is increasingly being recovered from the natural gas stream, and U.S. ethane consumption is increasing as existing ethylene crackers have expanded and new plants have begun operating. In addition, expanding pipeline networks and two new ethane export terminals have allowed U.S. ethane exports to increase.  In 2017, construction was completed on the first three of a series of new ethylene crackers—two early in the year and a third in late December, all on the Texas Gulf Coast. These crackers expanded the capacity to consume ethane in the United States by 210,000 barrels per day (b/d), and EIA expects ethylene plant capacity to continue to expand: six ethylene crackers, collectively capable of consuming 380,000 b/d of ethane, are planned to be completed by the end of 2019. EIA expects annual U.S. ethane consumption to grow from an estimated 1.2 million b/d in 2017 to 1.4 million b/d in 2018 and 1.6 million b/d in 2019 as these new plants and related infrastructure ramp up operations.

US Plans Largest Ever Oil & Gas Lease Sale In Gulf Of Mexico -  The largest oil and gas lease sale for waters in the Gulf of Mexico in U.S. history will occur on March 21st, according to an announcement by the Trump administration on Friday.Less than a year ago, a similar auction in the same body of water generated little interest from energy companies.The Interior Department, which oversees all onshore and offshore licensing activities, says the auction will include 77.3 million acres of offshore waters in the Gulf for energy development.The round had been previously announced in October, but an exact date had not been assigned. It is part of President Donald Trump’s America First Offshore Energy Strategy, which promises to expand fossil fuel activity to lower imports and create jobs.Oil prices have been low for three years, so expensive offshore drilling projects are not a top priority for energy companies.   Last month, analysts said the oil and gas industry’s response to the Trump administration plan to open almost all of the U.S. continental shelf for drilling leases is due to be slow. The draft program, which would replace President Barack Obama’s leasing plan through 2022, which restricted drilling in the Arctic and other federal waters, fulfills the White House’s promise to encourage the American fossil fuel sector, even as the international community opts for renewable and alternative energies in the fight against climate change. If the proposal is adopted, 47 potential lease sales could open up 25 of 26 planning areas, with the exception being Alaska’s North Aleutian Basin, which was deemed off limits by President George W. Bush, according to a report by Oil and Gas Investor. Nineteen sales would still proceed in offshore Alaska, seven in the Pacific, twelve in the Gulf of Mexico and nine in the Atlantic.

Interior to hold largest oil and gas lease sale in US history | TheHill: The Interior Department is planning to hold the largest sale of oil and gas leases in the country's history. The plans, announced Friday, would auction off 77.3 million acres of offshore waters to drilling, covering coastal waters in Texas, Louisiana, Mississippi, Alabama and Florida. The auction will take place March 21. Areas protected under a 2006 congressional moratorium, which bans drilling within 125 miles of the Florida coast until 2022, will be excluded from the lease.Interior largely credited strong offshore lease sales from 2017 for raising U.S. revenues by $1 billion dollars compared to 2016.“Responsibly developing our offshore energy resources is a major pillar of President Trump’s  American Energy Dominance strategy,” Deputy Secretary David Bernhardt said in a statement. “​A strong offshore energy program supports tens of thousands good paying jobs and provides the affordable and reliable energy we need to heat homes, fuel our cars, and power our economy."On a call with reporters to discuss the Interior Department's annual budget proposal Monday, Secretary Ryan Zinke teased the sale saying, "Without a strong and steady stream of revenue we cannot afford to do everything we need to do."Plans Zinke announced in early January to vastly expand offshore drilling on federally owned waters, were met with heavy criticism, including from Republican governors of coastal states.At a congressional hearing in January, an Interior department official said that each state was still being individually reviewed before any final determination on drilling. “Until such time as all those analyses are complete and we have all those comments to put in the record and consider, we will not have any indication of where the secretary wants to go," Walter Cruickshank, the acting director of the Interior Department’s Bureau of Ocean Energy Management, told the Senate committee.

Federal oil drilling lease sale off Florida coast sparks environmental opposition (Politico)  — An Interior Department plan announced Friday to open a huge swath of the Gulf of Mexico to oil drilling, including a smaller area off Florida's Gulf Coast for oil and gas drilling, left environmentalists adamantly opposed.But an oil industry representative and the federal Bureau of Ocean Energy Management pointed out that the area off Florida, which covers 944,640 acres and at its closest is 125 miles from the Panhandle coast, has never been off limits to drilling. Interior Secretary Ryan Zinke's proposal in January to open federal waters off Florida to drilling appears to be fueling controversy for the lease sale — even though the sale area lies outside an area closed to drilling until 2022 under federal law. "There is a pattern here — Zinke is saying, 'Drill everywhere and drill anywhere regardless of what the environmental impacts are going to be,'" said Sierra Club Florida chapter director Frank Jackalone. "Zinke and [President Donald] Trump just don't care about the damage they do to our fisheries, our marine life and our coast." "This massive lease sale is more supporting evidence for why Florida needs to be permanently protected from offshore oil and gas exploration," Holly Parker, Florida regional manager for the Surfrider Foundation, said in an email.

U.S. Oil Exports Go Up a Gear as Supertanker Sets Sail for China -- The flood of U.S. oil exports stepped up a gear on Monday after the first fully laden supertanker sailed from an American port, alleviating a bottleneck that’s limited overseas shipments. The Louisiana Offshore Oil Port, or LOOP, the only deep water port in the U.S. able to handle the industry’s biggest tankers, said in a statement it had successfully completed the first loading of a very large crude carrier. Shipping data compiled by Bloomberg show the tanker is the Saudi Arabian-owned Shaden, now heading to the Chinese port of Rizhao. "There could not be a better time to offer this service as domestic production surpasses 10 million barrels per day in the ever-dynamic global crude oil market," said LOOP LLC President Tom Shaw. LOOP has been a vital piece of U.S. energy infrastructure for more than 30 years, handling oil imports from across the world as well as gathering crude pumped from deepwater deposits in the Gulf of Mexico. Since it started receiving oil in 1981, it has offloaded 10,200 tankers. The Shaden, which is owned by the National Shipping Co. of Saudi Arabia and carries the flag of the kingdom, was the first VLCC to load oil at the port rather than discharge it. Pipelines and ports have become the biggest bottleneck in U.S. oil exports, with traders at times engineering logistically complex chains combining railways, trucks, pipelines, barges, and ship-to-ship transfers to get crude out of the country. . While U.S. crude has already been exported using supertankers, other ports are too shallow to allow full loadings, meaning smaller ships must shuttle multiple cargoes to the giant vessels as they wait to load offshore. LOOP, because it stands in deeper water about 18 miles off of the Louisiana coast, allows the industry’s largest tankers to load in one go. The new export capacity at LOOP will allow the supertankers to deliver foreign crude into the U.S. and depart laden, known as back-hauling in the industry’s jargon, rather than returning empty. 

US flexes crude export muscle with first VLCC LOOP load -- The first VLCC to directly load a crude oil cargo from the Louisiana Offshore Oil Port in the US Gulf Coast has been completed, terminal operator LOOP LLC said in a statement Sunday, in a further sign that US crude exports will play a more significant role in the global oil markets. The appeal for US crude oil is poised to broaden as the freight costs for VLCCs are much lower than smaller tankers and this could spur more global demand for US crude, making it viable for more arbitrage opportunities. This loading signals a big shift in crude exports out of the US which normally load in smaller tankers like Suezmaxes and Aframaxes. LOOP LLC confirmed that it "successfully completed the first VLCC crude oil loading operation at its Deepwater Port, 18 miles offshore of Port Fourchon in Louisiana. Sources identified the vessel as the Shaden; it left the terminal on Sunday, according to S&P Global Platts trade flow software cFlow. LOOP said the vessel was chartered by Shell. Shell was unavailable for comment. Shaden is a Saudi Arabian-flagged VLCC owned by Bahri (the top VLCC owner globally) that entered service at the end of 2017. A spokesman at Bahri was unavailable for comment. Sources also told S&P Global Platts that the tanker is bound for Asia, with some options to discharge in China. Shipping sources had said that tanker was booked by China's Unipec and the supplier of the crude was Shell. Representatives at Unipec were also unavailable for comment. China has emerged as the main destination for US crudes since the then US President Barrack Obama lifted the ban of US crude exports in December 2015. 

Recent legislation mandates additional sales of U.S. Strategic Petroleum Reserve crude oil -- Recent legislation has directed the sale of more than 100 million barrels of oil from the U.S. Strategic Petroleum Reserve (SPR) in U.S. government fiscal years (FY) 2022 through 2027. Based on legislated sales established in multiple acts of Congress, the SPR could decline by about 40% in the coming decade while still meeting requirements for petroleum import coverage. Assuming no other legislation over this period, the SPR could decline from 695 million barrels at the start of 2017 to about 410 million barrels at the start of 2028.  The largest stockpile of government-owned emergency crude oil in the world, the SPR was established to help alleviate the effects of unexpected oil supply reductions. Located in four storage sites along the Gulf of Mexico, the SPR held more than 695 million barrels of crude oil at the beginning of 2017, or about 97% of its 713.5 million barrel design capacity. Prior to FY 2017 sales, the SPR inventory level had remained nearly constant for several years. A previous Today in Energy article described the three bills enacted in 2015 and 2016 that collectively call for the sale of 149 million barrels in FY 2017 through FY 2025. Most of these sales set volumetric requirements, and revenues from those sales go to the U.S. Department of Treasury. A section of one of those bills—Section 404 of the Bipartisan Budget Act of 2015—included authorization for funding an SPR modernization program by selling up to $2 billion worth of SPR crude oil in FY 2017 through FY 2020. In that act, the sales are based on revenue targets that must be authorized by Congress. Two recent congressional acts collectively call for the sale of 107 million barrels of crude oil in FY 2022 through FY 2027:

  • The Bipartisan Budget Act of 2018, enacted in February 2018, calls for the sale of 30 million barrels over the four-year period of FY 2022 through FY 2025, 35 million barrels in FY 2026, and 35 million barrels in FY 2027. 
  • The Tax Cuts and Jobs Act of 2017, enacted in December 2017, calls for the sale of 7 million barrels over the two-year period of FY 2026 through FY 2027.

One of the SPR's core missions is to hold enough oil stocks to carry out U.S. obligations under the International Energy Program (IEP), the 1974 treaty that established the International Energy Agency (IEA). Under the IEP, the United States must be able to contribute to an IEA collective action based on its share of IEA oil consumption. Based on the most recent shares, the United States must be prepared to contribute about 43% of the barrels released in an IEA coordinated response. As a member of the IEA, the United States is obligated to maintain stocks of crude oil and petroleum products, both public and private, to provide at least 90 days of U.S. net import protection. As net imports of crude oil and petroleum products into the United States continue to decline, this requirement can be met with lower SPR inventory levels.

U.S. refiners turn to export markets as gasoline growth slows at home (Reuters) - U.S. gasoline consumption has leveled off as the stimulus provided by low and falling oil prices between 2014 and 2016 has faded, so refiners are increasingly turning to diesel and customers in emerging markets. U.S. gasoline consumption is forecast to rise by just 40,000 barrels per day (bpd) in 2018, after remaining essentially unchanged last year, according to the U.S. Energy Information Administration. Slower consumption growth stands in contrast to the earlier surge when usage rose by almost 260,000 bpd in 2015 and another 140,000 bpd in 2016 ("Short-Term Energy Outlook", EIA, February 2018).Traffic volumes are also growing more slowly, after rising sharply during most of 2015 and 2016, according to separate estimates from the Federal Highway Administration.Traffic on U.S. roads was up by less than 1 percent in the three months to November compared with the same period a year earlier ("Traffic volume trends", FHWA, January 2018).Traffic growth has slowed from a peak of well over 3 percent per year in the early part of 2016, shortly after oil prices hit their lowest point in the current cycle.Oil prices have been trending higher for more than two years and are now within $10 per barrel of their average real level over the entire of the last cycle ( while the cost of fuel is not expensive, it is no longer especially cheap, and the steady increase in prices has started to moderate consumption growth.The nationwide weighted-average retail price of gasoline was $2.67 per gallon in January, an increase of more than 60 cents per gallon compared with two years previously. If oil prices continue to climb through the remainder of 2018 and into 2019 as the price cycle matures, U.S. gasoline consumption growth will likely slow even further.

Exxon Could Make Beaumont The Largest Refinery In The US - ExxonMobil is close to issuing a final approval of a major expansion of its Beaumont refinery complex in Texas that could make it the largest crude oil processing plant in the U.S., Reuters reported on Thursday, quoting three sources familiar with Exxon’s plans.The Beaumont Refinery currently has the capacity to process 365,000 bpd and produces 2.8 billion gallons of gasoline annually. The Beaumont complex also includes a chemicals plant, a polyethylene plant, and a lube plant.Exxon has estimated the total post-expansion capacity for the Beaumont refinery to be between 700,000 bpd and 850,000 bpd, according to Reuters. This capacity would be higher than the current largest refinery in the U.S., Motiva’s Port Arthur refinery in Texas, which has a crude processing capacity of more than 600,000 bpd and is North America’s biggest refinery.Exxon has been considering the addition of a third crude distillation unit (CDU) at the Beaumont refinery, but according to one of Reuters’ sources, the U.S. supermajor is still “crunching the numbers” on the capacity of that third unit.The company is looking to increase its light crude refining operations in North America, but has not made any specific decisions yet, spokeswoman Sarah Nordin told Reuters. “The Beaumont refinery is being considered as part of that evaluation,” Nordin noted.If approved, the major expansion of the Beaumont refinery would signal that Exxon wants to increasingly take advantage of the second boom in the U.S. shale production. Last month, the company said that it planned to triple its total daily production in the Permian Basin to more than 600,000 oil-equivalent barrels by 2025. Exxon also plans to invest more than US$2 billion on transportation infrastructure to support its Permian operations.

How is Trump administration crafting sanctions so as not to adversely impact US refiners? - Capitol Crude podcast - The Trump administration is considering sanctions on Venezuelan oil exports, but is worried they could bankrupt a refinery along the US Gulf Coast, a top energy adviser to President Donald Trump tells Platts Capitol Crude. On this week’s podcast, George David Banks, who stepped down as White House Special Assistant at the National Economic Council and National Security Council last week, talks about Venezuela oil sector sanctions, President Trump’s decision to leave the Paris climate change agreement, the future of the Iran nuclear deal, and the Trump administration’s evolving relationship with Saudi Arabia and OPEC. Banks left his White House position last week after he was denied a permanent security clearance due to past marijuana use. This is the first in a two-part podcast. 

Permian's Mammoth Cubes Herald Supersized Future for Shale -- In the scrublands of West Texas there’s an oil-drilling operation like few that have come before. Encana Corp.’s RAB Davidson well pad is so mammoth, the explorer speaks of it in military terms, describing its efforts here as an occupation. More than 1 million pounds of drilling rigs, bulldozers, tanker trucks and other equipment spread out over a dusty 16-acre expanse. As of November, the 19 wells here collectively pumped almost 20,000 barrels of crude per day, according to company reports. Encana calls this “cube development," and it may be the supersized future of U.S. fracking. The technique is designed to tap the multiple layers of petroleum-soaked rock here in Texas’ Permian shale basin all at once, rather than the one-or-two-well, one-layer-at-a-time approach of the past.   “Now it’s all about entering manufacturing mode."  With the new technique, Encana and other companies are pushing beyond the drilling patterns that dominated during the early, exploratory phases of the shale revolution. Now, operators are assembling projects with a dozen or more well bores that touch multiple underground layers of the Permian and other shale plays simultaneously, tapping the entire 3-D “cube" beneath a producer’s acreage.  The shift has been controversial, with some of the biggest names in oil shying away from the approach as too aggressive and expensive. But if proponents are right, the cube could accelerate a drilling boom that’s already helped push U.S. production past an historic 10 million barrels a day, rewriting the rules of global energy markets along the way.Along with the Davidson pad, Calgary-based Encana has 12- and 14-well operations in Texas as well as a 28-well behemoth in the Montney shale play in Alberta and British Columbia. Devon Energy Corp. said on Wednesday that it has more than 10 multi-zone projects scheduled for 2018, including the 11-well Boomslang pad in the Permian and the 24-well Showboat project in Oklahoma. Concho Resources Inc., another early champion, debuted its Brass Monkey operation in the Permian last year, with 10 wells that dive underground and then burrow about two miles horizontally. “We have just started to get into the manufacturing and harvest mode of the shale revolution,"

Frac Sand Shortage Threatens Shale Boom –-- Higher drilling costs could threaten the recent surge in United States shale production. Halliburton said last week that its earnings could be negatively impacted because of bottlenecks related to the supply of frac sand used in shale drilling.  Halliburton’s CFO Chris Weber told an audience at the Credit Suisse Energy Summit that the company’s first quarter earnings could take a hit by a whopping 10 cents per share. The reason, he said, was because of delays by Canadian rail companies that would slow the delivery of frac sand. Halliburton saw its shares drop by more than 2 percent on a day that saw broader gains to the S&P 500. Frac sand is integral to growing shale production, increasingly so these days with more and more sand pumped down into a well. Shale drillers have credited the heavy doses of sand with squeezing out more oil and gas from the average well. Demand for frac sand surged from 34 million tons in 2012 to 61.5 million tons in 2014. Consumption fell in the ensuing years as drilling dried up when oil prices collapsed, but frac sand consumption surpassed previous highs in 2017 as drilling resoundingly came back. In 2018, frac sand demand is expected to top 100 million tons, according to Rystad Energy.   Much of the frac sand has come from places like Wisconsin, which produces “northern white sand” that is hard and round, helping to create porous fractures in shale wells. It is high quality, but expensive, particularly because it has to be shipped by rail to Texas shale fields. The FT reported that frac sand could cost $120 per short ton on at the Texas well head in 2017, essentially triple what it costs at the mine in the northern U.S. That led to new investment in frac sand mining in Texas, where “brown sand” could be produced. The quality was not as good, with finer grains, but Texas brown sand could cost a third less than its northern cousin, and it is located much closer to drilling operations. But as the mines in Texas are still in the process of coming online, the U.S. shale industry’s dependence on far away suppliers continues. And because drilling is ramping up, and the average shale driller is using more proppant than ever before, sand supplies are feeling the strain.

Fracking billionaires pump millions into Texas races, pushing state GOP even further to the right -- A civil war is raging among Texas Republicans. Nowhere are the big-money moves and political schisms more apparent than in a little-publicized state Senate race on the east side of Dallas.  From East Dallas’ blue precincts to moderate Republican turf in Garland and Mesquite, to ruby-red Rowlett and a huge swath of heavily GOP-leaning territory in East Texas, the sprawling Senate District 2 offers a glimpse at how a few West Texas billionaires are trying to tip the Legislature in a very different and much more hard-right direction.  Tea party-aligned state Sen. Bob Hall, a first-term Republican from Edgewood, is trying to fend off a challenge from pro-business conservative Sunnyvale GOP state Rep. Cindy Burkett.  The Wilks brothers of Cisco, southeast of Abilene, and political action committees they dominate have given nearly $540,000 to Hall’s re-election campaign — 55 percent of its total fundraising haul.  Farris and Dan Wilks, fixtures in the Assembly of Yahweh 7th Day Church their father helped found, whose adherents follow Jesus but also dietary laws described in the Old Testament, became billionaires in a mid-2000s “fracking” boom in oil and gas drilling.  Farris, his wife, JoAnn, and Dan and his wife, Staci, have invested millions in staunchly conservative political causes and news media sites. In state races, the two couples have zoomed to the top of the list of GOP mega donors.

Minnesota regulators turn down tribal request that could delay Enbridge pipeline project - Minnesota utility regulators Thursday rejected a request by the state's Ojibwe bands to require a comprehensive tribal cultural analysis for Enbridge's proposed pipeline across northern Minnesota.The tribes have asked the Minnesota Public Utilities Commission (PUC) to include a full state study of tribal historic sites as part of the state's Environmental Impact Statement for Enbridge's proposed new Line 3. The controversial pipeline would ferry Canadian oil to Enbridge's terminal in Superior, Wis.The PUC declined to include such a survey in the environmental review, essentially saying that it isn't the state's responsibility but that of the U.S. Army Corps of Engineers. A Corps-led cultural survey began last fall but is unlikely to be completed before the PUC makes a final decision on Line 3, which is expected in June.The PUC has acknowledged that the timing is a problem. It decided in December that if it approves Line 3, construction can't start until the federal tribal cultural survey is completed. "We understand there's another point of view that that's not enough," PUC member Dan Lipschultz said at Thursday's meeting.Two Minnesota House members expressed that viewpoint at the meeting."It defies logic to approve something before we have the results and the full implications of the [tribal cultural] survey," said Rep. Jamie Becker-Finn, DFL-Roseville, who grew up on the Leech Lake Reservation. "How can you approve something if you don't have all of the information?" added Rep. Peggy Flanagan, DFL-St. Louis Park, who is member of the White Earth Nation.

Bill banning sabotage of pipelines, 'critical infrastructure' passes Iowa Senate - Criminal convictions for sabotage of Iowa pipelines, telecommunications facilities, water treatment plants and other critical infrastructure could result in a long prison sentence and a hefty fine under a bill approved Wednesday night by the Iowa Senate Senate File 2235, proposed by the Iowa Department of Homeland Security and Emergency Management, is being pursued in the wake of millions of dollars in damage inflicted by protesters on Iowa sections of the Dakota Access Pipeline, prior to the crude oil pipeline becoming operational last year across Iowa and three other states.The bill passed on a 33-16 vote after a heated debate, sending it to the House, where a companion bill is being considered.The legislation would create the crime of critical infrastructure sabotage as a Class B felony. It would be punishable by up to 25 years in prison and a fine of between $85,000 and $100,000.The bill defines critical infrastructure sabotage as any unauthorized  act intended to cause substantial interruption or impairment of service rendered to the public relating to critical infrastructure property.  Sen. Robert Hogg, D-Cedar Rapids, argued against the bill, saying it represented "extraordinary overbreadth." He said could result in nonviolent protesters being prosecuted for circumstances that simply represented trespassing and a "bare intention." Hogg unsuccessfully offered amendments to soften the bill, including an amendment that would have exempted from the Class B felony requirements situations which did not result in physical injury or property damage. Another amendment that failed would have exempted a person protesting eminent domain while on their own property.

Earthquakes in southern Kansas linked to oil, gas production (UPI) -- Seismographs have documented a significant increase in earthquakes in southern Kansas over the last five years, and the latest research suggests the oil and gas industry's activity tied to hydraulic fracturing is to blame. Prior to 2012, no documented magnitude 4 or greater earthquake had shaken southern Kansas. Between 2012 and 2016, as oil and gas activity increased, seismographs registered six such earthquakes. To better understand the link between seismic activity and hydraulic fracturing, researchers with the U.S. Geological Survey analyzed 6,845 earthquakes that shook Harper and Sumner counties, home to the newest wave of oil and gas exploration. While researchers say the earthquakes are not linked specifically to hydraulic fracturing, wastewater injection -- an activity that follows fracturing -- may be linked to them. When scientists compared the timeline of seismic activity with the schedule of wastewater injection, they found a strong correlation between the two. Their data showed an increased in wastewater injection and seismic activity was followed by a decrease in both in 2015. A drop in oil and gas prices, combined with new regulations designed to limit wastewater injections, likely precipitated a downturn in hydraulic fracturing activity, explaining the drop-off in the occurrence of earthquakes. Though wastewater injections have slowed, scientists say it's possible earthquakes could continue in areas where the injection of fluids have altered the natural pressure in the underlying bedrock. 

Interior plan to use drilling funds for new projects met with skepticism | TheHill: A new Interior Department plan to build roads in national parks, fix visitors centers and complete other infrastructure projects using money raised by drilling on public lands is facing skepticism from members of Congress and a former senior department official. The plan, part of the budget the White House proposed this week, would forgo traditional funding and instead opt to finance up to $18 billion in “backlogged” infrastructure projects solely through the sale of mineral and fossil fuel extraction on public lands and waters. But the proposal heralded by Interior Secretary Ryan Zinke faces several key hurdles, leaving even Republican members of Congress questioning its feasibility and raising a number of concerns, including whether the drilling money is already spoken for by other agencies. “Keep in mind that if we are funding this through oil revenues from offshore, what else is it being spent for?” said Sen. Lisa Murkowski (R-Alaska), chair of the Senate appropriations subcommittee on the Interior. “You have a lot of uses or sources, a lot of calls on that same money. So how many times has it been spent over? We have to find that out," she added. The annual budget already takes into consideration the billions of dollars in revenue generated from oil and gas extraction on public lands when it makes its appropriations to each department. Zinke’s plan suggests creating a Public Lands Infrastructure Fund to pool new lease sale revenues for use exclusively by Interior. The fund concept is novel, said a former Interior senior official, but the idea of trying to make a claim on a source of funding solely for one department is not. 

Project Gasbuggy Brought Nuclear Fracking to New Mexico | KSFR (radio podcast) The old Atomic Energy Commission hatched Operation Plowshare in the nineteen sixties as a way to use nuclear materials for good.  Some ideas were preposterous, like blowing a hole in the Alaska coast to create a harbor, others were pushed by oil and gas production companies as a way to release natural gas from underground rock. KSFR's Ellen Lockyer brings us this story about the little-known Project Gasbuggy.

Court Orders Trump Administration to Enforce Obama-Era Methane Rule - A federal judge reinstated a widely supported methane waste rule that President Trump's administration has repeatedly tried to stop . Judge William Orrick of the U.S. District Court for Northern California ruled Thursday that Bureau of Land Management's ( BLM ) decision to suspend core provisions of the 2016 Methane and Waste Prevention Rule was "untethered to evidence." Orrick ruled that the plaintiffs—California, New Mexico and environmental groups —have shown "irreparable injury caused by the waste of publicly owned natural gas , increased air pollution and associated health impacts, and exacerbated climate impacts." California Attorney General Xavier Becerra celebrated the news in a tweet:  Judge Orrick, an Obama-appointee, also blasted the BLM's decision to postpone the methane waste rule in that it failed to point to any factual support underlying its concerns, and also rebuked Interior Sec. Ryan Zinke's refusal to consider public comments related to the rule. The Obama-era regulation was finalized in November 2016 and went into effect in January 2017. The rule limits methane pollution from oil and gas operations on public lands . Not only is methane is a potent greenhouse gas that's 86 times more powerful than carbon dioxide, accidental leaks and intentional venting and flaring costs more than $330 million each year.

Fracking Has Its Costs And Benefits -- The Trick Is Balancing Them – Forbes - Hydraulic fracturing, or fracking, is perhaps the most important energy discovery in the last half century. As a result of fracking, U.S. production of oil and natural gas has increased dramatically. This increase has abruptly lowered energy prices, strengthened energy security and even lowered air pollution and carbon dioxide emissions by displacing coal in electricity generation. The lower energy prices have meant more money in the pockets of American families and businesses. And the lower emissions are certainly good news for our health with large reductions in air pollution dispersed across the country and, at least for the near term, our climate.  Whether or not we as a society continue to gain from the broad benefits of fracking rests on the shoulders of the local communities where drilling takes place, or could take place. These communities must determine if the local benefits exceed the local costs, a calculation that requires a lot of information to be done well. Over the past year, we have been part of two research efforts that have shed light on what’s at stake in the choices communities are making. On the benefits side, fracking increases economic activity, employment, income and housing prices. But, it also brings more truck traffic, increases in crime and potential health impacts possibly due to air and/or water pollution. In some recent work, we’ve added it all up. We discovered that for the average household living in a community where fracking takes place the benefits exceed the costs—indeed, it is worth about $2,000 per year to them. That calculation of $2,000 per year is based on people’s current understanding of the health impacts at the time of our study. If people’s understanding of the health impacts were to change, it is likely that this would alter the net benefits of allowing fracking.

Stolen fracking profits and murder in North Dakota on Pandora's Box: Unleashing Evil -  Doug Carlisle was a Spokane businessman who knew his life could be in danger, warning his son just days before he was killed if I’m ever murdered let everyone know James Henrickson did it.Soon after the warning was attacked by a gunman in his home, his wife managed to hide upstairs but Carlisle was shot dead at point blank range. He owned an oil trucking company and his dealings with Henrickson related to shares in an oil field that they both planned to develop.The investigation did turn up DNA from burglar Timothy Suckow and he was charged with the murder, but the detectives were not happy that this was the end of the tale and further work showed up Henrickson’s link to Suckow and to another murder case in the shape of KC Clarke, a man Henrickson owed over half a million dollars to.In May 2016 Henrickson was found guilty of hiring Timothy Suckow to murder Dougl carlisle and hiring Robert Delao to kill Clarke. He was also found guilty of numerous other charges of solicitating to commit murder for hire. He was sentenced to life in prison and another 30 years on top for related crimes.

Zinke meets with California governor on offshore drilling | TheHill: Interior Secretary Ryan Zinke met with California Gov. Jerry Brown (D) on Tuesday to hear the governor’s objections to oil and natural gas drilling off the state’s coast. Brown’s press secretary said the two met privately in his Sacramento office. “This meeting was an opportunity to continue last month’s conversation ... regarding the state’s strong opposition to the federal government’s decision to expand oil and gas drilling off of California’s coast,” spokesman Evan Westrup said in a statement.“Secretary Zinke made it clear that California’s views will be taken into account.” Brown has been a vocal opponent of Zinke’s plan, announced last month, to consider offshore drilling along the entirety of the Pacific coast, along with the Atlantic and Gulf coasts and all around Alaska. Zinke said the offshore plan is a key piece of the Trump administration’s “energy dominance” agenda, in which officials want the United States to dramatically increase its production of fossil fuels and other energy. Brown and other California leaders made their objections known immediately. But after Zinke quickly took Florida’s waters off the table for drilling during a meeting with Florida Gov. Rick Scott (R), California and other states have demanded similar exclusions. Zinke has not yet granted any. Zinke is obligated by law to work with governors, congressional delegations, coastal communities and other key stakeholders in considering where to allow drilling. 

Groups want details on Trump's approval of Keystone pipeline -  Opponents of the proposed Keystone XL oil pipeline from Canada are asking a judge to force the U.S. government to turn over emails and other documents related to President Donald Trump's approval of the project. Environmentalists who sued to stop the 1,179-mile (1,800-kilometer) pipeline said the documents could bolster their case that Trump's decision was arbitrary and should be overturned by the courts. But U.S. Justice Department attorneys argued in court filings that the disputed documents include internal deliberations that don't have to be made public. They said the request amounts to a "fishing expedition" and should be rejected. Formal arguments were scheduled for Wednesday before U.S. District Judge Brian Morris in Great Falls. If the environmentalists prevail, the U.S. State Department would have to review an estimated 5 million pages of documents at a cost of more than $6 million, according to a declaration filed by Jerry Drake, an agency division chief who oversees its information technology team. That's on top of more than 4.5 million documents that were turned over in the case in December, according to the Justice Department.The pipeline is sponsored by Alberta-based company TransCanada Corp., which is siding with the U.S. government in the document dispute. An attorney for the Northern Plains Resource Council, one of the plaintiffs in the case, said the goal of the conservation group's sweeping document request was to uncover the basis of Trump's decision and see if it aligns with years of analysis on the project during the Obama years. "You can't make one decision based upon the record, then change your mind based upon the same record," council attorney Timothy Bechtold said. "That is the definition of arbitrary and capricious."  

Keystone XL pipeline ruling: Trump administration must release documents -  A federal judge in Montana has ordered the Trump administration to release documents it relied on to approve construction of the Keystone XL pipeline last year, a development that pipeline opponents believe could stymie the controversial project. Last March, the State Department approved construction of the nearly 1,200-mile pipeline, which would carry crude oil from the tar sands region of Alberta, Canada, to Nebraska and ultimately to refineries on the Gulf Coast. The approval reversed a 2015 decision by the Obama administration, which had blocked the project by refusing to issue a permit for the pipeline to cross the Canadian border.  Environmental groups sued the Trump administration, saying its reversal broke three laws and that it failed to conduct additional, updated environmental reviews before granting approval. As the lawsuit progressed, the government released only some documents, prompting environmentalists to push for a more complete record—or an explanation of why other  documents were being withheld. In January, the plaintiffs told the court that the government "wrongly omitted an unknown number of emails and other internal communications.""The government provided a cherry-picked record," said Jackie Prange, an attorney for the Natural Resources Defense Council, one of the plaintiffs in the case. "We were asking the government to produce all the documents, or if it wasn't going to, say which ones and why. Our concern is that there's a black box here, and the public deserves to know what evidence the Trump administration relied on to approve the pipeline."Under the law, the government can withhold certain documents that are deemed "deliberative," but it has to provide a "privilege log" that explains why they were withheld from the record.The Trump administration now has until March 21 to release the documents or the privilege log.

Inside the Trump Admin's Fight to Keep the Keystone XL Approval Process Secret By Steve Horn -- At a Feb. 21 hearing , a U.S. District Court judge ruled that the Trump administration must either fork over documents showing how the U.S. Department of State reversed an earlier decision and ultimately came to approve the Keystone XL pipeline , or else provide a substantial legal reason for continuing to withhold them. The federal government has an order to deliver the goods , one way or the other, by March 21.  DeSmog has reviewed the court evidence from the environmental groups bringing the case, records which help illuminate their argument that the government is, in fact, withholding such documents. The judge will decide if those documents, legally, should be made public.The case, which began in March 2017 , pits the Indigenous Environmental Network and the North Coast River Alliance against the State Department, U.S. Fish and Wildlife Service, the U.S. Department of interior and TransCanada , the owner of Keystone XL. During his first week in office, Donald Trump signed amemorandum calling for the State Department to perform an expedited 60-day permit review of the pipeline. Two months later, the State Department gave Keystone XL the permit it needed to cross the U.S.-Canada border. At the center of this case is a dispute over the administrative records of federal agencies, which in other lawsuits are routinely made public as part of the pre-trial process.Generally, releasing such documents gives a snapshot of the full deliberative process behind federal agencies' decisions.  In the TransCanada case, the State Department has argued for keeping these pre-trial records sealed while the plaintiffs, the environmental groups, have argued they should be made public. These documents, which might include emails and memos, would offer the plaintiffs and the general public an idea of how the Trump administration decided to approve the Keystone XL. The plaintiffs say that not all of those records have been turned over.

A downside for many midstreamers in new tax law. -- While the recently enacted federal tax cuts have been widely viewed as a boon to corporate America, including businesses in the energy sector, a new report by our friends at East Daley Capital finds a major drawback in the law for midstream companies. By slashing the corporate tax rate from 35% to 21% — and by allowing partnerships and “pass-through” entities to take a 20% deduction on their income pre-tax — the new law will increase the return on equity that midstreamers earn on their crude oil, NGL and natural gas pipelines. That may well lead the Federal Energy Regulatory Commission (FERC) to re-set its formula rates for at least some gas pipelines, and also is likely to heighten regulatory scrutiny of the rates charged by the owners of oil and NGL pipelines. Today, we continue our review of East Daley’s new “Dirty Little Secrets” report with a look at the tax law, the higher pipeline ROEs resulting from the tax cuts, and the midstream companies that may be affected. The 2018 edition of “Dirty Little Secrets” shines a bright light on the assets and prospects of 28 U.S. midstream companies. As we said in Part 1 of our blog series on the report’s highlights, accurately assessing the relative value of specific midstream energy companies requires a deep, detailed analysis — not all midstreamers are winners, even in a period of rebounding crude oil prices. We also noted some of the key takeaways from the new report, including:

  • $7.2 billion (15%) in cash-flow growth from midstream companies in 2018 will be transformational for an industry beaten down in 2017.
  • 17 of the 28 companies covered in this report are expected to outperform market consensus, highlighting a positive outlook for midstream growth.
  • Coverage and leverage are key metrics but they can mask insight into future company performance that is only exposed through detailed asset-level analysis — Boardwalk Pipeline Partners and Energy Transfer Partners being two prime examples.
  • Gas and oil production is expected to surge across the country, bolstering earnings across the sector.
  • Supply growth has been underappreciated in basins like the Bakken, the Powder River and the Marcellus.

EDITORIAL: Fracking data lacking -- It shouldn’t be surprising that hydraulic fracturing is a hot topic in Nova Scotia again. The McNeil government placed a ban on high-volume fracking in 2014. And so a new debate on this method of “stimulating” the flow of oil and gas trapped in shale formations has itself been stimulated by the recent release of the Energy Department’s Nova Scotia Onshore Petroleum Atlas.Assembling the best available data and modelling, the atlas focuses on two geological formations with hydrocarbon potential, the Cumberland Sub-basin in Northern Nova Scotia and the Windsor Sub-basin south of the Minas Basin and Cobequid Bay.It estimates some 6.5 trillion cubic feet (tcf) of recoverable natural gas lies in the two formations, of which 4.3 tcf would be shale gas requiring fracking to crack the rock and make it flow. The remainder is conventional gas and coal-bed methane. The atlas estimates a market value of $20-$60 billion for these reserves.Given the potential of this resource to lift economic growth and public revenues, in a province that could use a lot more of both, it’s reasonable that voices are calling on government to at least permit enough exploration to clarify the extent and value of shale reserves, so their public owners can make informed decisions on development. But it’s not surprising, either, that people who wanted a ban still believe fracking can’t be safely regulated and presents threats to groundwater that can’t be mitigated. No one in government, after all, is doing work on how fracking might be well regulated or what the best practices and highest standards would look like in terms of Nova Scotia’s geology and hydrology

Canada's Oil Crisis Continues To Worsen -- Canadian oil producers can’t get a break. First it was the pipelines - there are not enough of them to carry the crude from Alberta’s oil sands to export markets. This pipeline capacity problem has been forcing producers to pay higher rates for railway transportation, which has naturally hurt their margins in no small way. Now, there is a shortage of rail cars as well.  The situation is going from bad to worse for Canadian producers who can’t seem to catch a break. Canadian railway operators are fighting harsh winter weather and finding it hard to supply enough cars to move both crude oil from Alberta and grain from the Prairies.The harsh weather is just the latest factor, however. Before that, there was the 45-percent surge in demand for rail cars from the oil industry, Bloomberg reports, citing Canadian National Railway. The surge happened in the third quarter of last year, and Canadian National’s chief executive Ghislain Houle says that it took the company “a little bit by surprise.” This surprise has led to “pinch points” on the railway operator’s network, further aggravating an already bad situation.As a result, crude oil remains in Alberta and prices fall further because Alberta is where the local crude is priced, Bloomberg’s Jen Skerritt and Robert Tuttle note. In fact, Canadian crude is currently trading at the biggest discount to West Texas Intermediate in four years, at $30.60 per barrel. The blow is particularly severe as it comes amid improving oil prices elsewhere driven by the stock market recovery. The light at the end of the tunnel is barely a glimmer. Despite federal government support for the Trans Mountain pipeline expansion project, it is still facing obstacles that may result in it never seeing the light of day. The project that would boost the current pipeline’s capacity from 300,000 bpd to 890,000 bpd, accommodating much of the increased Alberta bitumen production, is being challenged in court and Kinder Morgan has yet to collect even half of the necessary permits to proceed with it. There are no other major pipeline projects in Canada that have been approved. Meanwhile, the news from the research front is not good, either. Back in September, media outlets reported on an accidental discovery that could make transporting bitumen by rail much safer by turning the crude into pellets. This would minimize the danger of a spill but, some said at the time, would increase transportation costs.

New Technology Could Turn Tar Sands Oil Into 'Pucks' for Less Hazardous Transport -- A new technology has the potential to transform the transportation of tars sands oil . Right now, the already thick and slow-flowing oil, known as bitumen, has to be diluted with a super-light petroleum product, usually natural gas condensate, in order for it to flow through a pipeline or into a rail tank car.However, scientists at the University of Calgary's Schulich School of Engineering inadvertently found a way to make tar sands oil even more viscous, turning it into "self-sealing pellets" that could potentially simplify its transport."We've taken heavy oil, or bitumen, either one, and we've discovered a process to convert them rapidly and reproducibly into pellets," Ian Gates, the professor leading the research, told CBC News in September.Based on the initial description of this product, it appears that it could alleviate many of the risks involved with moving tar sands oil by rail. The research teams says this product floats in water, does not pose a fire and explosion risk like the diluted bitumen currently moved in rail tank cars, and would eliminate air quality issues related to the volatile components of diluted bitumen.If true, this technology would appear to reduce potential risks to people and the environment, in comparison with moving diluted bitumen by rail or in pipelines.  Gates also suggests that the solidified bitumen can be moved in the type of open rail cars used for coal . That would be welcome news to railroads, which have been losing business transporting coal as demand has dwindled.

Refined-Product Delivery And Storage Infrastructure In Mexico, Part 4 --Mexico continues to open up its refined-products sector to competition, and refinery troubles at government-owned Pemex are providing U.S. refiners and motor-fuel marketers with a golden opportunity to export increasing volumes of gasoline and diesel south of the border. But transporting all those refined products to Mexican population centers and distributing them to thousands of service stations requires port and rail terminals, pipelines and storage, and Pemex has been slow in relinquishing control of its infrastructure. Today, we continue our series on efforts to facilitate the transportation of motor fuels from U.S. refineries to ­­— and within — Mexico, this time looking at more port and rail-related projects and at existing and planned pipelines. The final numbers for 2017 Pemex motor-fuel production are in, and the news isn’t good — unless, that is, you’re a U.S. refiner exporting gasoline and diesel. Gasoline output at Pemex’s six refineries averaged only 257 Mb/d last year, down 21% from 2016 (and 33% from 2015), and in the fourth quarter of 2017, Pemex’s output averaged a dismal 185 Mb/d. The situation is even worse for diesel: 2017 Pemex production averaged 154 Mb/d, down 29% from the previous year (and 44% from 2015), and in the last three months of 2017, Pemex diesel output fell to 103 Mb/d. U.S. exports have flooded into this void, averaging 377 Mb/d for gasoline and 232 Mb/d for diesel in the first 10 months of 2017, according to the Energy Information Administration (EIA), then spiking in November to all-time records of 655 Mb/d for gasoline and 310 Mb/d for diesel.

NYMEX March gas continues slide as shoulder season approaches The NYMEX March natural gas futures contract Friday continued the month's downward trend, settling 2.2 cents lower at $2.558/MMBtu, as outlooks for warmer weather, rising production and decreasing demand again weighed on prices. It has been a stormy past few weeks for the front-month contract, which has now fallen to its second-lowest point since February 21, 2017, despite a higher-than-expected storage withdrawal from national stocks. Friday's move brings the total decline to 63.7 cents since March took over as the front-month contract on January 30, a 20% drop. Phil Flynn, senior market analyst at Price Futures Group, said that given milder weather, the market likely would have a hard time "holding on to rallies." He noted that after the larger-than-expected draw from storage prompted no rise in price, market watchers were left to "wonder what it will take to maintain a rally." Flynn added that the "closer we get to spring with no rally" in price, "the harder it will be to prevent further price drops" as winter ends and the shoulder season approaches. The most recent eight- to 14-day weather outlook from the National Weather Service called for a likelihood of warmer-than-average weather in the Northeast, Southeast, Midwest, Midcontinent and in Texas. Accordingly, US demand is expected to fall to an estimated 79.9 Bcf/d in the next eight to 14 days, a 6.8 Bcf/d drop from the 86.7 Bcf/d averaged in the previous seven days, according to S&P Global Platts Analytics.

NYMEX March gas up 8.7 cents at at $2.645/MMBtu in US morning trading -  The NYMEX March natural gas futures contract jumped in morning trading Tuesday, bucking the downward trend experienced since the beginning of February. As of 11 am EST (1600 GMT), the March contract was trading at $2.645/MMBtu, up 8.7 cents from Friday's close. So far on Tuesday the March contract has traded in a range of $2.562-$2.662/MMBtu. Tuesday's increase in price comes after the NYMEX front-month contract declined sharply over the past few weeks, with total losses at 98.6 cents since February expired as the front-month contract January 29, a 27% drop. The market has appeared to be unfazed by bullish storage data. According to the US Energy Information Administration, total national gas stocks are currently at an estimated 1.884 Tcf, an 18.7% deficit to the five-year average. The rebound in price Tuesday may not continue, as falling US demand and strong dry production may begin to eat away at the storage deficit. Over the next seven days, US demand is forecast to average 79.1 Bcf/d, a 10.4 Bcf/d drop from the 90.6 Bcf/d average experienced so far over the current month, according to S&P Global Platts Analytics.Weather forecasts are sending more of a mixed signal, as the most recent six-to-10-day weather outlook from the National Weather Service calls for colder-than-average temperatures along the West Coast and Rockies, while warmer-than-average temperatures along the East Coast and demand centers in the Midwest, Midcon and Texas are expected. 

NYMEX March natural gas continues upward trend for second consecutive day - The NYMEX March natural gas futures contract was up for the second straight day in morning trading Wednesday, as the market continued to rally from the heavily bearish trend experienced so far in the month of February.As of 11:15 am EST (1615 GMT), the March contract was trading at $2.671/MMBtu, up 5.5 cents from Tuesdays close. So far on Wednesday, the March contract has traded in a range of $2.565-$2.680/MMBtu.The NYMEX front-month contract's recent upward momentum has helped it recover from the rapid decline felt thus far in the month of February as total losses since February 1 are now 18.5 cents, a 6.5% drop.Kyle Cooper, analyst and principal at IAF Advisors, said "the rebound from low levels" occurring over the past two days is coming "off the back of less bearish weather." When temperatures are colder than average, "demand is there" and with large storage draws and a high national stock deficit, there is "no need to buy any more demand," he added.This upward movement in price could be partly attributed to a forecast of colder weather in the coming weeks, as the most recent eight- to 14-day outlook from the National Weather Service calls for colder-than-average temperatures along the West Coast and Rockies, with average temperatures expected along the East Coast, Midwest, Midcon and Texas. Riding on the back of an outlook for colder-than-average weather during the closing of the winter season is an expectation of an uptick in demand. According to S&P Global Platts Analytics, US Demand is estimated to average 85.3 Bcf/d over the next eight-14 days, a 4 Bcf/d increase from the 81.3 Bcf/d averaged over the month of February last year.

NYMEX March natural gas inches lower as demand forecast trumps EIA data -- The NYMEX March natural gas futures contract ticked slightly lower Thursday despite the US Energy Information Administration announcing a higher-than-expected storage withdrawal. As of 11:31 am EST (1631 GMT), the March contract was trading at $2.644/MMBtu, down 1.5 cents compared with Wednesday's close. So far on Thursday, the March contract has traded in a range of $2.624/MMBtu to $2.670/MMBtu. The EIA announced an estimated 124 Bcf draw from storage for the week that ended February 16, compared with the 119 Bcf draw expected by a consensus of analysts surveyed by S&P Global Platts, although it is 14.5% below the 145 Bcf withdrawal averaged over the past five years. The withdrawal puts the deficit to the five-year average at an estimated 19%, according to EIA data. The market has appeared to be unconcerned with storage changes of late, as the winter season is quickly coming to an end and players expect robust production to continue in the shoulder and summer months. According to S&P Global Platts Analytics, US dry production has averaged 77.3 Bcf/d so far in February, an increase of 6.3 Bcf/d compared with the same period in February 2017. Looking ahead, the most recent eight- to 14-day weather outlook from the National Weather Service calls for colder-than-average temperatures along the West Coast and in the Rockies and Southwest, but average temperatures are expected along the East Coast and in the Midwest, Midcontinent and Texas. However, the forecast for colder temperatures is unlikely to boost consumption, as US demand is expected to average 82.7 Bcf/d over the next eight to 14 days, 200 MMcf/d below the 82.9 Bcf/d average for the previous seven days, according to S&P Global Platts Analytics.

NYMEX March natural gas returns to February downward trend -- The NYMEX March natural gas futures contract was down during morning trading Friday, as steady demand and strong production could be overshadowing the outlook of cold weather in the waning winter season. As of 10:50 am EST (1550 GMT), the March contract was trading at $2.583/MMBtu, down 5.1 cents from Thursday's close. So far on Friday, the March contract has traded in a range of $2.555-$2.620/MMBtu. The NYMEX front-month contract appears to have returned to the downward trend it has experienced so far over the month of February, after a brief uptick in prices during the beginning of the week. The front-month contract has fallen below the $2.60/MMBtu level for the seventh time during the month of February, well below the $3.60/MMBtu level seen last month, despite two consecutive weeks of higher than expected storage withdrawals from national stocks. Friday's decline brings the total losses for the front-month contract to $1.048 since February expired as the front-month contract on January 29, a 29% drop. Yesterday's higher-than-expected draw from storage of 124 Bcf, brings the national storage stocks to 1.760 Tcf and a 19% deficit to the five year average, according to the US Energy Information Administration. With little time remaining in the winter season, some cold weather could be on the horizon, as the most recent eight- to 14-day weather outlook from the National Weather Service calls for a likelihood of colder-than-average temperatures in the Northwest, Southwest, Rockies, Midcon and parts of the East Coast. Despite the forecast for colder weather, demand is expected to stay relatively unchanged, as US demand is estimated to average 83.1 Bcf/d over the next eight- to 14-days, a small dip of 570 MMcf/d from the 83.67 Bcf/d averaged over the previous seven days, according to S&P Global Platts Analytics. 

The End Of The LNG Glut - Many reputable forecasters, who've anticipated an LNG supply glut for years, now expect a brief period of surplus at most, and gradual market tightening after 2020. But global demand, which has surprised market watchers to the upside and kept physical markets tight during the past four years, could cut this looming mini-glut short. Numerous factors are at play but a few key indicators will shed light on likely supply and demand conditions through the mid-2020s. Looking near term, the International Energy Agency (IEA) expects that available LNG export capacity will greatly exceed demand through 2022. The IEA’s recent medium term gas market outlook titled Gas 2017 says the surplus will reach its highest level in the year 2020, then gradually dissipate as tighter market conditions reappear in the early 2020s. “It is relatively easy to see what’s coming on the supply side, given the long lead times for liquefaction projects,” says researcher Akos Losz of Columbia University’s Center on Global Energy Policy, “but predicting demand is much more difficult.” “There is no question about the availability of supply,” Losz says, “there is plenty of gas in the world ready to be tapped.” Barring project delays, Losz believes that supply capacity is pretty much baked in for the next 2-3 years. The IEA report says that LNG export capacity will continue to grow rapidly, from 450 bcm (in 2016) to 650 bcm worldwide in 2022, with the most remarkable additions coming from the US and Australia. The latter will have the world’s largest LNG export capacity in 2022, estimated at 120 bcm per year, followed closely by the US and Qatar at about 105 bcm each per year. As for demand, the IEA report foresees worldwide demand rising from 353 bcm (in 2016) to 460 bcm in 2022. It anticipates import volumes shrinking in Japan, Korea and Europe, but rising in China and India. More demand is also expected from a group of new, smaller importing countries which together will be greater than China in scale, accounting for about 20 percent of the global LNG trade in 2022.

Interest in LNG fires up again, but the market's different now: Russell (Reuters) - If you were looking for signs that the liquefied natural gas (LNG) merry-go-round is starting to spin a little faster, the announcement of a planned massive expansion in Papua New Guinea is ample evidence. Global majors Exxon Mobil and Total are considering plans to double LNG exports from Papua New Guinea to about 16 million tonnes per annum, their partner Oil Search said on Feb. 20. If approved, three new trains would be added to the existing Exxon-operated PNG LNG facility, with natural gas from Total’s fields supplying two of the units and the third using existing fields and a new Exxon development. While a final investment decision on the $13 billion expansion is still more than a year away, it’s a clear sign that LNG producers believe the market is headed for a deficit and that large-scale projects are once again viable. The LNG industry’s recent development has been characterised by periods of massive investment and capacity expansions followed by lulls amid fears of low prices caused by oversupply. The past decade has witnessed a rapid expansion of LNG capacity, with eight large-scale projects being built in Australia and six in the United States, as well as some others such as the Yamal venture in Russia. Most of these developments have started, or are due to start, within a fairly narrow time frame between 2016 and 2020, a bunching together of new capacity that led to widespread market concern of oversupply and weak prices. While it’s still likely that there may be some oversupply this year, and perhaps until the early 2020s, the market reality is that new LNG buyers in Asia and a surge in Chinese demand has eaten away most of the expected surplus.

Natural gas, LNG restrictions seen likely to worsen Australia's market imbalance -  Moratoria and bans on both unconventional and conventional gas by Australian states and territory governments are exacerbating the fundamental imbalance of Australia's east coast market, according to industry sources, analysts and policy advisers. Australia needs to act quickly to ensure it is both adequately supplied with gas and able to meet its LNG export commitments, the International Energy Agency said in its 2018 review of Australia Thursday. "Increasing LNG exports have created a tight supply in Australia's eastern market, which is characterized by weak regulation, poor transparency and low liquidity," the IEA said. "Market inefficiencies need to be addressed swiftly and transparency improved rapidly for domestic consumption and LNG exports to successfully coexist." The Australian Petroleum Production and Exploration Association welcomed the remarks, highlighting the "urgent need" to remove the bans and restrictions. "The message to policymakers from the IEA's Executive Director, Dr Fatih Birol, could not have been clearer," APPEA chief executive Malcolm Roberts said. "Dr Birol identified the number one step Australia can take to deliver secure and affordable energy -- removing bans on unconventional gas projects," he said. A mining and energy analyst with the Commonwealth Bank of Australia, Vivek Dhar, said moratoria effectively stifles exploration and delays potential upstream investment. 

Venezuela cryptocurrency to draw investment from Turkey, Qatar-official (Reuters) - Venezuela’s new “petro” cryptocurrency will attract investments from Turkey, Qatar, the United States and Europe, the country’s cryptocurrency regulator said on Friday. The government of President Nicolas Maduro, which says the petro will help skirt financial sanctions by Washington, has scheduled the first petros sale for Tuesday. Skeptics say that concerns about Venezuela’s financial solvency will likely limit investor interest, while the U.S. Treasury Department has warned the petro may violate sanctions against the OPEC nation. “On Tuesday, there will be quite a few announcements about the start of the process,” Venezuelan Cryptocurrency Superintendent Carlos Vargas said on the sidelines of a political meeting in Caracas. “And there will surely be a lot of investors from Qatar, Turkey, and other parts of the Middle East, though Europeans and Americans will also participate.” He did not elaborate. The Venezuelan government has not provided full details about the petro. But advisers working for the government recommended that 38.4 percent of the petros should be sold in a private auction at a discount of 60 percent. Venezuela is suffering quadruple-digit inflation and chronic shortages of food and medicine, which have spurred increased incidents of malnutrition and preventable diseases. Maduro says his government is the victim of an “economic war” led by opposition politicians with the help of the government of U.S. President Donald Trump. Sanctions levied last year by Washington block U.S. banks and investors from acquiring newly issued Venezuelan debt, effectively preventing the struggling nation from borrowing abroad to bring in new hard currency or refinance existing debt. 

Why Commodity Coins Are Gaining Popularity - Cryptocurrencies have become the most loved-and-hated topic in the financial world. Corporate coins, joke coins, government coins, and even commodity-backed coins are flooding the markets, and potential investors are scrambling to sift through the madness. No other coin, however, has drawn as much controversy as “El Petro.” In December, Venezuelan President Nicolas Maduro announced a plan to create an oil-backed cryptocurrency, El Petro. A plan which received harsh criticism from nearly every corner of the globe, even its own parliament declared the proposed coin illegal.   From the beginning, El Petro was promoted under dubious circumstances. Maduro himself, in his original announcement, suggested that the coin was to be used to “overcome financial blockades” put in place by the west as a response to the Venezuelan government’s ongoing political turmoil.  El Petro has been the focus of numerous warnings to investors from countries around the world. Even Venezuelan lawmaker Jorge Millan had strong words against the coin: “This is not a cryptocurrency, this is a forward sale of Venezuelan oil,” adding “It is tailor-made for corruption,”   But that didn’t stop Maduro from pushing forward.  In January, Maduro announced that over 800,000 young Venezuelans had already been recruited to mine the cryptocurrency. “We are going to call them a special cryptocurrency team…They will] set up cryptocurrency mining farms in all states and municipalities of the country,” Maduro said. And in preparation for the official pre-sale set to launch on February 20, Maduro took his campaign to the next level, approaching the Organization of Petroleum Exporting Countries (OPEC) with his idea. “I have explained to Mohammed Barkindo the goodness of the petro. The cryptocurrency is the world of the future. I am very excited as well as the people of Venezuela,” said Maduro.

Iraq exporting 100,000 b/d of fuel oil: sources - Iraq is exporting around 100,000 b/d of fuel oil from its southern terminals on the Persian Gulf, with much of the product shipped to Asia, sources close to the oil ministry said. Some 500,000 cu m of fuel oil is being shipped monthly from jetties at the Khor al-Zubair terminal, near the Umm Qasr port at the northern tip of the Persian Gulf, the sources said this week. The fuel oil is sold on an FOB basis, the sources said. Of the total, around 420,000 cu m was transported by pipeline from storage tanks at the Basra refinery, and another 80,000 cu m moved by trucks from Iraq's smaller refineries in the central and southern provinces. The oil ministry said February 13 it was also transporting fuel oil and other products by rail tanker from the 140,000 b/d Daura refinery near Baghdad, following the rehabilitation of the country's rail network. The new loading and unloading platforms at Daura and the rail link to the south will eventually allow Iraq to transport another 1,000 cu m/d of fuel oil and 4,000 cu m/d of other products from the refinery. 

Iran's oil revenue plummets as US oil exports grow - Iran missed its oil and gas revenue targets by nearly 30 percent last year, while failing to grab enough money in taxes to make up the shortfall, according to its official news service.President Hassan Rouhani's administration "only managed to earn $19.44 billion from taxes and $13.06 billion by exporting oil and its byproducts, showing deficits of $7.34 billion and $5.3 billion, respectively," according to the Islamic Republic News Agency.The government had projected $18.36 billion from selling oil this year, according to the news service.In fiscal 2017, revenue from oil reached more than $24 billion in the wake of relaxed U.S. sanctions, 45 percent more than in fiscal 2018. Iran also had the benefit of not signing onto a Saudi-led pact to cut oil production among members and non-members of OPEC to drive crude oil prices higher.An oversupplied oil market cut many OPEC nations' budgets in half, forcing them to consider austerity measures, such as in Venezuela, or, like Saudi Arabia, create a long-term plan to move its economy away from oil. Iran's oil ministry had projected that oil revenue would surge to more than $40 billion in fiscal 2018. But the boom times appear to be over for the Islamic Republic, at least for now, based on the new report from the Central Bank of Iran. Increased pressure on Iran's oil revenue is expected to come from the U.S. The latest projections from the International Energy Agency show oil and natural gas production increasing from fracking in the U.S., which has remained profitable in the low oil-price environment.

Iran deepens freight discount to boost oil sales to India: sources (Reuters) - Iran has offered to raise the freight discount on oil sales to India in return for New Delhi agreeing to boost imports, as the OPEC member is keen to eat into the market share of other producers including top rivals Saudi Arabia and Iraq. Iran is pushing to retain customers for its oil in Asia, hoping concessions will boost the appeal of its crude compared with other Middle Eastern suppliers, even as the threat looms of potential further U.S. sanctions on the country. Since the lifting of sanctions on Iran in 2016 it has been offering India a freight discount linked to a formula translating into 105 percent of the Platts assessment. For 2017/18 Tehran had reduced the discount to 62 percent of the formula from 80 percent, but Iran has offered to change this if Indian refineries step up purchases, three sources familiar with the matter said on Saturday. “Now they are offering 100 percent discount, meaning a sum equivalent to 105 percent of the Platts freight assessment,” said one of the sources. Iran said it expected Indian orders to grow. “State-owned Indian companies are going to increase their level of Iranian oil purchase,” Iran’s oil minister Bijan Zanganeh told reporters after a meeting with Indian oil minister Dharmendra Pradhan in New Delhi. Indian refiners - state-owned and private - will buy about 500,000 bpd of Iranian oil in 2018/19, said Zanganeh, in India as part of a delegation led by Iranian President Hassan Rouhani. 

Japan Confirms Oil From the Sanchi Is Washing Up On Its Beaches - The Japanese Coast Guard has confirmed that the oil that is being washed up on islands in the south of the country is "highly likely" to have come from the stricken Iranian tanker, the Sanchi .Samples of clumpy oil that washed up earlier this month on the shores of the Okinoerabu and Yoron islands chain "were found to be linked to the Sanchi's sinking" according to the Japanese Coast Guard. The islands are famous for their pristine beaches and seafood.Thursday, a Coast Guard spokesperson told the Reuters news agency that "Oily matter that arrived at the shores of the two islands is extremely likely to be linked to the Sanchi tanker incident, considering the similarity of the oil and the fact that there has not been any marine disaster involving oil spill in the nearby sea area." Earlier Friday, a coastguard spokesman Takuya Matsumoto said essentially the same thing to another news agency, AFP : "We are not aware of any other maritime accident in the region that resulted in oil leaks. So we have concluded that it is highly likely that the oil that reached (the two islands) is connected with Sanchi." The Sanchi sank on Jan. 14 in the East China Sea, carrying 136,000 tons of light crude oil called condensate. It also had nearly 1,900 tons of bunker fuel oil on board. Two weeks after the Sanchi sank, black clumps of oily matter started washing up on the shores of Takarajima island. It is likely this oil is the heavy fuel oil that was powering the ship, not the condensate.Since then oil debris has been found on 21 other islands that are part of a chain of islands that includes Amami-Oshima and Okinawa. Some 90 tonnes of oil debris has been collected so far. The oil washing up on the beaches is a significant setback for the authorities who originally said last month that there was little chance the spill would reach the county's shores.

One year on, OPEC gets closer to original target of oil cut pact (Reuters) - OPEC is closing in on its goal of reducing oil inventories held by industrialized nations to their five-year average, the original target of a supply-cutting pact with Russia and others, figures from the group’s head of research showed on Tuesday. Oil stocks in developed OECD economies, which were 340 million barrels above the five-year average in January 2017, were just 74 million barrels above that level last month, Ayed Al Qahtani, OPEC’s head of research, told a conference. The Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million barrels per day as part of its deal with Russia and other non-OPEC producers. The pact began in January 2017 and will run until the end of 2018. A strong level of adherence by producers to their pledged cuts helped to erode the surplus. OPEC said their compliance in January was 133 percent, meaning they were cutting more than pledged and a figure which Al Qahtani said was a record high. “This conformity level has been very successful in withdrawing the overhang,” Al Qahtani told the Energy Institute’s IP Week, an annual conference of the oil trading industry in London. The stated goal of the supply-cutting deal was to reduce oil inventories to the five-year average. The surplus of 74 million barrels is the smallest yet reported since the cuts began. But OPEC officials are increasingly talking of looking at different metrics. The level of the latest five-year average may be higher than it was a year ago, even though the size of the surplus against that average is coming down, an OPEC source said. That means the figures give a more mixed picture for OPEC. Saudi Arabia’s Energy Minister Khalid al-Falih said last week that OPEC and its allies would need to consider how to adjust targets and should take into account non-OECD inventories, floating storage and oil in transit. United Arab Emirates Energy Minister Suhail al-Mazroui, the current OPEC president, also mentioned the possibility of looking at other metrics at a news conference in London earlier on Tuesday. 

As Oil Stocks Drain, OPEC Searches for Its Next Fig Leaf -- There is no doubt that the output cuts made by OPEC and its friends, aided by a collapse in production from group member and historic quota cheat Venezuela, have drained a lot of excess oil out of the supply chain. Tankers floating full of crude off the coasts of Iran and South Africa have disappeared and total U.S. stockpiles are close to their lowest in almost three years.  But now their goal is within sight, or it may already have been passed. And that creates problems for the producer group.  If inventories are back where they say they want them, but prices haven’t recovered as much as they would like, they need to find a way to justify prolonging the cuts to boost their revenues.  Since November 2016, OPEC has been able to get away with the idea of trying to return oil inventories to a five-year average level. That seems a very clear and precise target, but, as I wrote last month, it isn’t. And at this point, it's no longer possible to maintain the charade. The Joint Ministerial Monitoring Committee set up to oversee the OPEC+ output deal will discuss the inventory target when it meets in Saudi Arabia in April. My Bloomberg News colleague Grant Smith has written a very clear explanation of how they might shift the inventory goalposts. The trouble is, that some of the tweaks they might look at could end up indicating they have already overshot their target.   Inventories can be measured in many different ways: the simple volume of oil in storage, the number of days of demand that volume could meet, or, like the International Energy Agency’s emergency stock-holding obligations, the number of days of imports they could cover. The choice of the period over which to average "normal" inventory levels will also have a big impact on determining when the target has been reached.

OPEC Considers Moving the Goalposts - Here's Where They Might Go - After a year of production cuts, OPEC and Russia are finally near their goal of shrinking the world’s swollen oil inventories. So why are they planning to change their target? The answer lies somewhere between the murky and incomplete nature of oil data and the competing interests within the producers’ group.The 24-country alliance wants to reduce oil stockpiles to their five-year average, a goal that is almost at hand according to figures from the International Energy Agency. Yet Saudi Arabia and Russia now say that metric is flawed -- distorted by years of excessively high supplies and patchy data outside developed economies.Choosing a different measure of success could further reinforce the need for supply curbs to continue for the whole of 2018 -- something Saudi Arabia is keen to ensure as it prepares the historic initial public offering of its state oil company. Other methods might indicate the rebalancing of the market is already complete, potentially allowing some producers to end their self-imposed restraint.Saudi Arabia Energy Minister Khalid al-Falih has said that, rather than just comparing inventory levels to their average, OPEC should consider how quickly they’re likely to be consumed. This gauge, known as forward demand cover, measures inventories in terms of the number of days they will last. There are good reasons for considering that measure -- it better reflects how consumption has grown over the past few years -- but wouldn’t necessarily back Al-Falih’s insistence that producers stick with the cuts all year. Inventories in developed economies equated to about 60.6 days worth of demand in December, according to IEA data, which is already back in line with the five-year average. OPEC hasn’t said it’s exclusively targeting inventories in the developed world, but in reality there’s little reliable data for anywhere outside the 34 countries that make up the Organization for Economic Cooperation and Development. Those stockpiles were 52 million barrels above the five-year average in December, according to the IEA. It’s harder, but possible, to compile a global picture. Could data from major consumers like China and India tell a different story?

OPEC Pops The Question - Will Russia Say "I Do"? -- OPEC is drafting an agreement to tie Russia into a so-called “super group” of oil producers.Details on the proposal are vague and the Kremlin’s willingness to consider such a betrothal is uncertain, despite some positive vibes between Russia and OPEC kingpin Saudi Arabia at the moment.In trying to formalize a permanent marriage to a powerful but unpredictable partner like Vladimir Putin, OPEC Secretary General Mohammed Barkindo is no doubt aware of the stakes of a divorce.Any end to the production cut pact is likely to be messy with several countries having touted in recent weeks their plans to boost their production capacity in short order.And for Saudi Arabia, it is counting on keeping Russia on side as its highly anticipated public listing of state oil company Aramco looks to be delayed.Talk of the super group “pushes away the conversation that [OPEC] wants to be avoided: what is the exit strategy?” noted veteran OPEC watcher Jamie Webster, senior director at Boston Consulting Group’s Center for Energy Impact. As the oil market has tightened, OPEC and its allies have remained coy on outlining how they plan to exit their output cut deal, save some vague pledges not to open the taps all at once. Rather, they have obfuscated on the matter – first by declaring that their target of drawing down inventories to the five-year average may be changed, and now by announcing that the draft agreement with Russia and the other non-OPEC partners is in the works. Perhaps it’s not a huge surprise, given that OPEC has never defined any exit strategy from previous production cut accords but has merely looked the other way on cheating until talk of the cuts simply faded away. Barkindo has made no secret of his desire to “institutionalize… a permanent framework” of cooperation with non-OPEC, as he said in London last October. The output cut deal, which is scheduled to run through the end of 2018, commits the 24-country OPEC/non-OPEC coalition led by Saudi Arabia and Russia to cutting 1.8 million b/d to help rebalance the market.

OPEC pact likely to evolve rather than terminate: Kemp - (Reuters) - "The lexicon of exit is not found in our vocabulary", OPEC Secretary-General Mohammad Barkindo told reporters on the sidelines of a conference in Cairo on Monday. Ministers from the Organization of the Petroleum Exporting Countries have been anxious to counter speculation about an early end to production curbs. Barkindo was reinforcing the message that the current curbs will be maintained until at least the end of this year and could be continued into 2019 ("Barkindo stresses ongoing cooperation, not exit", Argus, Feb. 12).OPEC will review progress towards its goal of eliminating excess global inventories at its next regular meeting in June, but ministers have downplayed suggestions the review could lead to an early exit from the accord.The Declaration of Cooperation signed in December 2016 between OPEC, led by Saudi Arabia, and selected non-OPEC producers, led by Russia, has become fundamental to OPEC's strategy for managing the oil market.Both sides appear satisfied with the results achieved so far and keen to extend their cooperation in the medium term.Global oil inventories have been cut to just over 100 million barrels above the five-year average, down from 340 million at the start of 2017. Benchmark Brent prices have risen by around $20 per barrel, or almost 50 percent, since the production cuts were announced, and futures prices have swung from contango into backwardation.Saudi Arabian Energy Minister Khalid al-Falih and his Russian counterpart Alexander Novak are "apostles to the value of cooperation", Barkindo told a separate conference in Riyadh on Wednesday. "They have proven to be the key strong pillars on which the historic OPEC and non-OPEC cooperation has been built" ("Introductory remarks by secretary-general", OPEC, Feb. 14).The agreement between 24 OPEC and non-OPEC oil producers is therefore likely to be extended and evolve rather than terminated.

Saudi Arabia Is Taking a Harder Line on Oil Prices - For decades, Saudi Arabia was the voice of moderation within OPEC, pushing back against the urging of members like Venezuela and Iran for higher oil prices. That role seems to be shifting. Thanks to OPEC-led production cuts, crude prices are double their level two years ago and bloated oil stockpiles are almost back to normal. Yet Saudi Energy Minister Khalid Al-Falih wants to go further. Producers should keep cutting for the whole year, even if it causes a small supply shortage, Al-Falih said. “If we have to overbalance the market a little bit, then so be it,” he told reporters in Riyadh last week.Saudi Arabia faces unprecedented pressures as Crown Prince Mohammed Bin Salman embarks on a program of sweeping economic reforms known as “Vision 2030” and includes the potentially record-breaking initial public offering of its state oil company. “They are definitely not a price dove anymore,” said Mike Wittner, head of oil market research at Societe Generale SA. “They have to think about their social costs, about Vision 2030, about the Saudi Aramco partial IPO or private placement. Al-Falih’s statement last week could not have been much clearer.” Previously content with oil at $60 a barrel, Al-Falih is now seeing $70 as the level where crude prices should trade, according to a person familiar with the matter, who asked not to be identified because the information was private. “If you’re Mohammed Bin Salman, and trying to radically reinvent your country” then “you need a certain price to make it work,” 

How soon will electric vehicles make a significant dent in oil demand? -Khalid Al-Falih may be right when he claims the oil industry has nothing to fear from electric vehicles (EVs). Saudi Arabia’s oil minister unsurprisingly is a robust defender of the internal combustion engine (ICE). Contrary to the views of Tesla Inc.’s headline grabbing founder Elon Musk, the kingdom’s top energy official expects the conventional gasoline powered roa-d vehicle to remain the bedrock of passenger road transport for generations to come. “Today 6.5 billion people live in the developing world,” said Khalid Al-Falih, in his opening speech at the International Energy Forum in Riyadh last week. “This will rise to 8.5 billion by 2020. The reality is the dream for many of these individuals is to buy a motorbike, then a car. Given the issues of competitive products, these are unlikely to be electric vehicles.” Of course, Al-Falih has a vested interest dispelling concerns over peak oil demand despite global climate change concerns. The kingdom draws a large share of its wealth from the Ghawar field—the world’s largest single onshore deposit of crude. Although, critics will argue Al-Falih has his head in the sand he also makes a fair point. EVs are not the only solution to the world’s future mobility needs, or necessarily the best form of low-carbon transport. Neither is Al-Falih alone in this view. OPEC’s Secretary General Mohammed Barkindo has given an equally strong defense of oil’s role in powering future transport in the S&P Global Platts Changing Lanes mobility report published on February 19 at the London Oil & Energy Forum. “It is important to emphasize that oil is expected to remain the most important fuel in the global energy mix for decades to come,” said Barkindo in the report. “In the World Oil Outlook 2017, published last November, there is no peak oil demand in the forecast period to 2040. 

Why The Next Oil Boom Will Be Fueled By Blockchain - Big Oil is due for a disruption.The world’s most important industry has been carrying on without any significant changes in its day to day routine for far too long.But now, the new tech on the block has its sights set on the multi-trillion-dollar oil and gas sector.It’s official: Blockchain technology has infiltrated Big Oil.The hype behind blockchain has reached a full-blown frenzy. And for good reason.The technology, which creates secure ledgers for digital transactions and rapidly accelerates the pace at which transactions can be made, has the potential to disrupt every major industry: real estate, shipping, banking and healthcare.Blockchain is truly revolutionary, and Big Oil is finally catching on.In an industry that has used technology to reduce breakeven costs to all-time lows, create gigantic drilling rigs run by robots, and even tap reserves located 10 miles below the sea, the oil and gas sector has been slow to jump on the blockchain bandwagon…until now.According to a report from the World Economic Forum from 2017, a digital transformation has already swept across the energy industry.Now, blockchain is taking it one step further.Majors like BP and Shell are making headlines with plans to utilize blockchain tech to completely transform how energy is bought and sold.Smaller players with big ambitions like Canada’s Petroteq are preparing to revolutionize the day to day operations of potentially every oil operation on the planet. Petroteq could utilize new technologies to tap massive new reserves of energy, such as the Utah oil sands, while radically reducing environmental risk.With U.S. President Donald Trump planning a trillion dollar infrastructure program, the possibilities for upgrading American oil and gas systems throughout the country are immense. Integrating blockchain into supply-line management and logistics could dramatically cut costs.

Hedge funds lighten bullish positions in oil: Kemp  (Reuters) - Petroleum markets were hit by a heavy bout of profit-taking in the second week of February as hedge funds liquidated some of the record long positions they accumulated over the previous seven months.Hedge funds and other money managers cut their combined net long position in the six most important petroleum futures and options contracts by the equivalent of 152 million barrels in the week to Feb. 13.Fund managers have now cut the combined net long position in Brent, NYMEX and ICE, U.S. gasoline, U.S. heating oil and European gasoil by a total of 215 million barrels over the three most recent weeks.Even so, the combined net long position is still 959 million barrels higher than at the end of June 2017, when fund managers began to turn bullish ( most recent week saw large reductions in net long positions in Brent (-32 million barrels) and WTI (-31 million barrels).But in proportionate terms, there were even larger reductions in European gasoil (-38 million barrels), U.S. heating oil (-32 million barrels) and U.S. gasoline (-20 million barrels).Refined fuels accounted for 25 percent of hedge fund managers' net long position in the petroleum complex but almost 60 percent of the liquidation in the week to Feb. 13.The reduction in net long positions across the complex was the largest pull for nine months, according to position records published by exchanges and regulators.In every contract, the liquidation of long positions far outstripped the creation of new short ones, indicating fund managers were realising some profits after the strong rally in oil prices, rather than turning outright bearish.Portfolio managers' positioning remains very lopsided across the complex, with longs outnumbering shorts by a ratio of more than 10:1, down from almost 12:1 at the end of January, but still exceptionally high.The near-record imbalance remains a significant source of downside risk and could lead to a further sharp drop in oil prices if anything triggers further profit-taking. Fund managers still hold more than 1,400 million barrels of long positions in petroleum futures and options, a scale that was unprecedented until two months ago.

Oil prices hit highest level in nearly 2 weeks on Asian equity recovery - Livemint: Oil prices extended gains to hit their highest level in nearly two weeks on Monday, buoyed as Asian shares joined a global recovery in equity markets and as worries grew over tensions in the Middle East. Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East foes closer to direct confrontation. US West Texas Intermediate (WTI) crude for March delivery was up 73 cents, or 1.2%, at $62.41 a barrel by 11.30am, after earlier touching its highest since 7 February. London Brent crude was up 52 cents, or 0.8%, at $65.36, after rising more than 3% last week. “The upside momentum since WTI hit last week’s low of $58 has been continuing,” said Tetsu Emori, CEO of Emori Capital Management in Tokyo. “Oil got mild support from gains in Asian equity markets, but has been getting pressure from the rise in U.S. rig count and a slight recovery in the dollar.” Trading is expected to be slower than usual due market holidays in the United States as well as Greater China. The US oil rig count, an indicator of future production, rose by seven to 798, its highest since April 2015, according to a weekly report from General Electric’s Baker Hughes unit. That marked the first time since June that drillers added rigs for four consecutive weeks, and the figure was well up on the 597 rigs that were active a year earlier as energy companies have boosted spending since mid-2016 when crude prices began recovering from a two-year crash.

Oil Prices Diverge On Mixed Data - WTI received a boost at the start of the week as Cushing inventories have dwindled amid greater pipeline connections and reduced flows from Canada. Exports are also up. Meanwhile, Brent dipped as European refiners enter maintenance season.  Hedge funds and other money managers reduced their bullish bets on crude oil in the second week of February, which coincided with a dip in oil prices. After building up a near record bullish position, investors “cut their combined net long position in the six most important petroleum futures and options contracts by the equivalent of 152 million barrels in the week to Feb. 13.,” according to Reuters. It was the largest reduction in nine months. With the retreat in prices and the liquidation of some of the long bets, there is now a more balanced positioning from hedge funds and other money managers, reducing the risk of a further price correction.  WTI is receiving a boost relative to other benchmarks because of a spike in U.S. exports over the past year. New pipelines have better connected oil from Texas shale fields to the Gulf Coast, allowing more cargo to be shipped overseas. That, in turn, has helped drain stockpiles in Cushing, OK, helping to push up WTI. The American benchmark recently traded at a premium to the Dubai benchmark for the first time in over a year. Exports are likely to pick up after the start of operations at the LOOP export facility in Louisiana, which can handle very large crude carriers (VLCCs). The U.S. will hold its largest ever lease sale for offshore oil acreage in March. The Interior Department announced plans last Friday to auction off 77.3 million acres of offshore waters on March 21, spanning much of the Gulf of Mexico. 

U.S. oil prices rise on Cushing draw, hopes of producer cooperation (Reuters) - U.S. crude hit a near two-week high in a choppy session on Tuesday amid inventory declines at a key storage hub and on expectations that top producers could extend cooperation beyond 2018, while Brent fell under pressure from a stronger dollar. The Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil producers, including Russia, will discuss extending their cooperation for many more years when they meet in June as they seek to avoid major market shocks, United Arab Emirates’ energy minister and OPEC President Suhail al-Mazroui told Reuters. Data from market intelligence firm Genscape showed that inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell 2.1 million barrels in the week to Feb. 16, according to traders who saw the data. The combination of a new pipeline running from the hub to Memphis, along with reduced flows from TransCanada’s Keystone pipeline, have sent stockpiles in Cushing to the lowest in about three years. Flows on Keystone pipeline were decreased after a leak in November. A strengthening dollar, which hit a six-day high, however, weighed on oil prices. [USD/] A more robust dollar makes oil and other dollar-denominated commodities more expensive for holders of other currencies. Brent crude futures ended the session 42 cents, or 0.6 percent, lower at $65.25 a barrel after trading between $65.81 and $64.78 a barrel. U.S. West Texas Intermediate (WTI) crude futures settled up 22 cents, or 0.4 percent, at $61.90 a barrel, as the March contract expired. Prices rallied to a high of $62.74 a barrel early in the session, the highest since Feb. 7. The most active U.S. crude futures contract for delivery in April settled up 24 cents at $61.79 a barrel. Front month U.S. crude’s discount to the second month flipped to a discount ahead of the March contract’s expiration, falling to a low of a discount of 10 cents per barrel, the widest since Dec. 11. Monday’s U.S. holiday for Presidents Day supported WTI’s performance compared with Brent as the U.S. markets caught up with Monday’s gains,   Premiums for local North Sea grades are at multi-month lows.

Oil Prices Down In Asia Morning Due To Stronger U.S. Dollar -- Oil prices are down again Wednesday morning in Asia, driven by a recovery in the dollar which pulled down fuel demand. Crude Oil WTI Futures futures for April delivery were trading at $61.33 a barrel mid-morning in Asia, down 0.74%. Brent crude futures for April delivery, traded in London, were down 0.31% at $64.84 per barrel in mid-morning. Traders said the declines were due to U.S. dollar-denominated oil imports being more expensive for other countries. The dollar rebounded from three-year lows set last week as traders cut back on some of the bearish bets against the U.S. dollar. A continued dollar recovery will work against oil prices, but oil markets remain well supported due to a healthy demand-growth in Asia, particularly China, combined with a supply restraint by the Organization of the Petroleum Exporting Countries (OPEC). Saudi Arabia’s effort to clean up the global oversupply of oil is also helping to stabilize oil price volatility. The Kingdom has vowed to reduce its exports to below 7 million barrels per day (bpd) next month and to cut oil production by 100,000 bpd in March compared to the February level. Further supporting prices are rising tensions in the Middle East, especially along the border of Syria and Israel. While neither Syria nor Israel is a major player in the oil business, threat to oil anywhere in the Middle East tends to put upward pressure on oil prices. These mixed signals have caused oil prices to zigzag up and down over the past weeks, mostly between small rises and dips. That said, current prices have moved quite far from the highs of the beginning of February. WTI started February at $65.80 and Brent started at $69.65. The U.S., now the second-largest producer of oil in the world, continues to increase its oil production, further dragging prices down. The U.S. has increased its production by more than 20% since mid-2016 to more than 10 million bpd. 

Oil largely steady amid forecast of U.S. crude build, stronger dollar (Reuters) - Oil prices were little changed on Wednesday ahead of data expected to show rising crude inventories in the United States and as the dollar strengthened from last week’s three-year lows. Brent crude futures settled 17 cents, or 0.3 percent, higher at $65.42 a barrel, after trading between $64.40 and $65.53. West Texas Intermediate crude (WTI) futures fell 11 cents, or 0.2 percent, to end at $61.68 a barrel, after trading between $61.86 and $60.92. U.S. crude inventories were forecast to have risen for the fourth consecutive week, increasing 1.8 million barrels last week, an extended Reuters poll showed. [EIA/S] Data on U.S. inventories from the American Petroleum Institute will be released at 4:30 p.m. EST (2130 GMT) and government figures are due on Thursday at 11 a.m.. Both reports were delayed a day due to a U.S. holiday on Monday. Rising U.S. shale output should lead to a modest inventory build, said Stewart Glickman, an energy analyst at CFRA Research in New York “U.S. shale continues to rise to the occasion,” he said. Higher oil prices and rising output should feed increased investment in drilling and production, in turn boosting shale output more, he said. U.S. crude oil production surpassed 10 million barrels per day (bpd) in November for the first time since 1970. Rising U.S. shale output has hindered efforts by the Organization of the Petroleum Exporting Countries (OPEC) and other producers, led by Russia, to reduce bloated global inventories and prop up oil prices by cutting output. The dollar index hit a one-week high after the release of minutes from the U.S. Federal Reserve’s January policy meeting. A stronger dollar makes oil and other dollar-denominated commodities more expensive for holders of other currencies.

WTI/RBOB Rebound After Surprise Crude Draw - Dollar strength today did not help the energy complex as WTI/RBOB slipped lower into tonight's API data, but a surprise crude draw sparked a rebound in oil prices after hours. API

  • Crude -907k (+2.9mm exp)
  • Cushing -2.644mm
  • Gasoline +1.644mm
  • Distillates -3.563mm

After 3 weeks of builds, API reports a crude draw this week and notable draw in Distillates inventories also... OPEC has “taken a lot of production off the table, but it’s just being replaced by U.S. production to a large degree,” Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York told Bloomberg. Cartel members recently sought to reassure investors about their resolve but “the market’s not buying it.” But prices kneejerked higher after tonight's API data showed a surprise (small) crude draw...

Supply glut fears nearly assuaged, OPEC now frets shrinking spare capacity - Having helped wrestle the oil market from its latest bust, OPEC is now setting its sights at avoiding the next one. While insisting that its work to drain oil inventories through output cuts remains far from done, the organization has in recent weeks shifted its rhetoric from that of a swing producer managing a supply glut to one trying to prevent a market squeeze. Ministers have begun to increasingly stress to the market the need to invest in additional production capacity to meet robust growing demand in the years ahead -- some $10 trillion needed through 2040 just to offset natural field declines, according to the UAE's Suhail al-Mazrouei -- with a tacit nod to the market's significant geopolitical risk exposure, particularly in Venezuela. OPEC's current spare capacity is shrinking, as it maintains its production cuts and global consumption has risen, raising the risk of a price spike that it would like to avoid for fear of demand destruction. "Building and holding ample spare capacity is needed to assure traders and investors that [the OPEC/non-OPEC coalition] has a buffer to offset unexpected tightness and geopolitical interruptions," said Bob McNally, a veteran OPEC watcher with consultancy Rapidan Energy. OPEC spare capacity stands at 3.24 million b/d, about 10% of the bloc's December production, according to the International Energy Agency, which defines it as production that can be reached within 90 days and sustained "for an extended period." The US Energy Information Administration estimates the bloc's spare capacity far lower at 2.04 million b/d, defining it more narrowly as production that can be brought online within 30 days and sustained for 90 days. The vast majority of that surplus capacity is in Saudi Arabia and its Gulf allies. This may very well explain OPEC's desire to make a permanent pact with Russia, the world's largest crude producer, and other allies, beyond their 1.8 million b/d output cut agreement, which expires at the end of 2018. 

WTI/RBOB Jump After DOE Confirms Surprise Crude Draw, Production Slows - Following last night's surprise crude draw (from API), and USD weakness, WTI/RBOB rallied overnight, but faded into the DOE data. However, as DOE confirmed API's reported surprise crude draw (-1.616mm) and production slipped very modestly, prices jumped.  DOE:

  • Crude -1.616mm (+2.35mm exp)
  • Cushing -2.664mm
  • Gasoline +261k (+742k exp)
  • Distillates -2.422mm (-1.1mm exp)

In quite a shocking moment - it seems API was right for once - DOE reports a 1.6mm crude draw - and RBOB prices are up as Gasoline saw a smaller than expected build. As Bloomberg notes, Cushing is being emptied at a very, very, very fast pace. It's the 9th consecutive week of crude draws, bringing the total to its lowest since December 2014.

Oil prices climb after unexpected drawdown in US crude stocks - Oil prices rose to two-week highs on Thursday, boosted by data showing a surprise draw in U.S. crude inventories and also by a drop in the dollar. West Texas Intermediate (WTI) crude CLc1 futures rose $1.09, or about 1.8 percent, to settle at $62.77 a barrel. U.S. crude traded between $60.75 and $63.09, its highest since Feb. 7. Brent crude LCOc1 futures rose 97 cents to settle up about 1.5 percent at $66.39 a barrel. It hit a two-week peak at $66.56. U.S. crude inventories USOILC=ECI unexpectedly fell 1.6 million barrels last week as net imports dropped to a record low and exports surged, while inventories declined further at the key storage hub in Cushing, Oklahoma, according to data from the Energy Information Administration (EIA). Crude inventories had been forecast to rise 1.8 million barrels, as stocks seasonally increase when refineries cut intake to conduct maintenance. “Weekly EIA data was particularly supportive to WTI considering U.S. and Cushing draws, a boost in crude exports above 2 million bpd and flat crude production,” . Crude stocks at the Cushing, Oklahoma, delivery hub for U.S. futures fell 2.7 million barrels last week, the ninth straight week of drawdowns, the EIA said. “The reason that the inventories continue to drop at Cushing is because the market remains backwardated and therefore it’s uneconomical to be storing crude,” . In a market structure called backwardation, prompt crude prices are higher than forward prices, discouraging storage. “It makes more sense to liquidate your on-hand inventories,” . U.S. net crude imports fell 1.6 million barrels per day to just below 5 million bpd last week, the lowest level since the EIA started recording the data in 2001. Exports of U.S. crude jumped to just above 2 million bpd, close to a record 2.1 million hit in October. That helped push net imports to the lowest level on record.

Oil Prices Rise As Bullish Sentiment Returns -- It was a bumpy week for crude benchmarks, although WTI and Brent jumped sharply on Thursday after the EIA reported a surprise drawdown in crude oil stocks. U.S. oil production also remained flat, halting, however briefly, the surge in oil production. “For a little bit of a bullish boost, you’ve got all the planets lined up here after this report,” Bob Yawger, director of the futures division at Mizuho Securities U.S.A., told the WSJ.  Shale drillers are still having trouble posting profits and despite promises of focusing on shareholder returns this year, there is a divergence of strategies among the top shale companies. Reuters reports that an analysis of the top 15 largest independent shale companies finds that only five have started paying or raising quarterly dividends. Six of them have never offered a dividend or have not restored the cuts made since 2014, and the remainder have kept their payouts steady. Those that have boosted dividends recently have seen their share prices jump, while those that deferred have seen their valuations decline. The IEA says that non-OPEC supply growth – coming mainly from the U.S., Canada and Brazil – will be able to meet the increase in global demand for the next two years, putting OPEC in the difficult position of needing to keep the supply curbs in place longer than intended. Beyond 2020, however, the IEA says the oil market will face more challenges as mature fields suffer from decline and new sources of supply fail to keep up with strong demand.  Bloomberg reports that some shale drillers in the Permian are supersizing their operations, with large wellpads drilling into multiple layers of the Permian all at once, rather than at a one-layer-at-a-time approach. They drill multiple wells that touch multiple layers in a single go, accessing the entire 3D “cube” of oil underneath the ground. One wellpad owned by Encana  Bloomberg reports, was producing 20,000 bpd late last year. Still, the practice is controversial because it is expensive.

US oil rig count rises for fifth straight week -Baker Hughes - (Reuters) - U.S. energy companies added one oil rig this week, the fifth weekly increase in a row, as oil prices hovered at two-week highs. Drillers added one oil rig in the week to Feb. 23, bringing the total count up to 799, the highest level since April 2015, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Friday.That was the first time since June that drillers added rigs for five consecutive weeks. The U.S. rig count, an early indicator of future output, is much higher than a year ago when 602 rigs were active as energy companies have continued to boost spending since mid-2016 when crude prices began recovering from a two-year crash. U.S. crude futures traded near $63 a barrel on Friday, moving close to the peaks from late January when prices rose to their highest since December 2014. That compares with averages of $50.85 in 2017 and $43.47 in 2016. Looking ahead, futures were trading at near $62 for the balance of 2018 and $57 for calendar 2019. In anticipation of higher prices in 2018 than 2017, U.S. financial services firm Cowen & Co said 53 of the roughly 65 exploration and production (E&P) companies they track, including Apache Corp, have already provided capital expenditure guidance indicating a 9 percent increase in planned spending over 2017. Cowen said the E&Ps it tracks planned to spend about $66.1 billion on drilling and completions in the lower 48 U.S. states in 2017, about 53 percent over what they planned to spend in 2016.  There were 978 oil and natural gas rigs active on Feb. 23. On average, there were 876 rigs available for service in 2017, 509 in 2016 and 978 in 2015.

Rig Count Inches Higher As Oil Prices Stabilize - Baker Hughes reported a 3-rig increase to the number of oil and gas rigs this week. The total number of oil and gas rigs now stands at 978, which is an addition of 224 rigs year over year. The number of oil rigs in the United States increased by a single rig this week, and now stands at 799, or 197 over this time last year. The number of gas rigs, which rose by 2 this week, now stands at 179, or 28 rigs above this week last year. Canada lost 12 rigs this week; 9 for oil and 3 for gas. At 12:36 pm EST, the price of a WTI barrel was trading up $0.78 (+1.24%) to $63.55. The Brent barrel trading up $0.74 (+1.12%) to $66.85—both benchmarks up from last week. Oil prices dipped a couple of weeks ago after several weeks of EIA reporting higher crude oil inventories, and an updated IEA forecast that warned that a new glut may be coming on the back of robust US crude oil production. US crude oil production fell in the week ending February 16, to 10.270 million bpd—just a hair below last week’s figures—but still the second highest production figure for the US ever. Meanwhile, OPEC continues to sing the praises of its production cut efforts and is quick to point out at every turn that the market is indeed rebalancing. By basin, Cana Woodford and the Permian each added two rigs, while DJ-Niobrara, Haynesville, Utica, and Williston each gained one rig. The Marcellus basin lost two rigs. The Permian basin now has 129 more active rigs than it did a year ago—representing more than 50% of the total annual increase in rigs. At 1:07pm EST, WTI was trading at $63.63 (+$0.86) with Brent trading at $66.92 (+$0.81).

Oil Futures Lifted by Equities Rally - -- New York Mercantile Exchange spot-month oil futures rallied to better than two-week highs this afternoon on the back of higher equities, with investors less concerned that a Jerome Powell-led Federal Reserve would rush to raise interest rates as the U.S. economy strengthens. "A rebound in the stock market and reports of a Libyan oil supply outage sent oil higher," said analyst Phil Flynn at Prices Futures Group in Chicago. The Dow Jones Industrial Average was 347 points higher, the S&P 500 index traded up more than 40 points, and the dollar consolidated near Thursday's 10-day high. The stock market and oil futures have a correlative trading relationship, with equities seen as a barometer for investor sentiment. The stock market has been volatile this week on inflation concerns. On fundamentals, Libya's 70,000 bpd Elephant oilfield halted production on Thursday after armed guards who work for the facility decided to occupy it to protest their unpaid wages, Bloomberg reported, raising concern about Libyan exports to Europe and boosting Brent crude futures on the Intercontinental Exchange.  Domestically, a report by Houston-based oil services firm Baker Hughes issued this afternoon showed the number of active oil rigs in the United States rose by only one this week to a 799 near three-year high.  "The rig-count increase was modest, which is a sign that [oil] production is leveling off," said Flynn.

Oil rises further above $66 as Libyan outage, Saudi comments support - Oil prices rose on Friday to their highest in more than two weeks, supported by the shutdown of the El Feel oilfield in Libya and upbeat comments from Saudi Arabia that an OPEC-led effort to cut stockpiles is working. El Feel produces 70,000 barrels per day of crude. Production in OPEC member Libya has been running at about 1 million bpd, although it remains volatile due to unrest. "Libya is another outage," said John Kilduff, partner at investment manager Again Capital in New York. "This market has benefited from a series of them over the past several months now, whether it's the Keystone, the North Sea (Forties), and now this." Brent crude futures rose 92 cents to settle at $67.31 a barrel, a 1.4 per cent gain. The global benchmark's session high of $67.37 was its highest since Feb. 7. West Texas Intermediate (WTI) crude futures rose 78 cents to settle at $63.55 a barrel, trading between $62.33 and $63.73. Both benchmarks notched their second straight week of gains. Brent was up about 3.7 per cent, its largest weekly increase since the end of October. U.S. benchmark WTI posted a weekly rise of about 3 per cent. Prices were buoyed by comments from Saudi Arabia's energy minister Khalid al-Falih, who said he expected oil market inventories to continue declining. The Organization of the Petroleum Exporting Countries and other producers including Russia have cut output to support prices. They hope to reduce crude inventories held by industrialized nations to their five-year average.

Relax and invest, Saudi prince tells investors after corruption crackdown (Reuters) - Three months after Saudi Arabia detained scores of people in a crackdown on corruption, its rulers are trying to reassure investors that the kingdom remains open for business. Foreign and local investors have long complained about corruption, and confronting it is an important part of reforms unveiled by Crown Prince Mohammed bin Salman to transform the country and reduce the economy’s reliance on oil exports. Yet some business leaders were unsettled by the swoop on top princes, businessmen and government officials in November because of the secrecy around the crackdown and their suspicions that it was at least partly politically motivated. “This is not a recommendation for why you should invest in Saudi Arabia,” said a Western businessman with extensive contacts in the kingdom. “This whole thing has become one big ball of contradictions.” Saudi authorities are loathe to say they mishandled the anti-corruption campaign. But top officials, including Prince Mohammed, met senior local businessmen last month to reassure them that the crackdown was mostly over and that it was safe to do business, according to five Saudi and Western sources who spoke with people who attended the meetings. Most detainees have now been released. In front of global political and business leaders at the World Economic Forum in the Swiss town of Davos last month, Saudi officials highlighted the positives of the detentions, dismissing worries about the way the crackdown was conducted but conceding that it might have been sold slightly differently. “It’s true we could make mistakes here and mistakes there. Saudi Arabia is not a perfect country. Saudi Arabia is like any other country. But the ... road to success is always under construction and the whole momentum of Saudi Arabia is going toward that end,” Minister of Commerce and Investment Majid bin Abdullah al-Qasabi told a Davos session. 

Munich Security Conference: Saudi Arabia sees nuclear energy as a way to save oil -- Saudi Arabia's foreign minister called on the U.S. to give it the same rights as other nuclear nations in its push to process its own nuclear fuel, revealing that it's currently in talks with 10 other countries should America refuse. Saudi Arabia plans to construct 16 nuclear power reactors over the next 20 to 25 years at a cost of more than $80 billion. It has invited U.S. firms to take part in the program but acceptance from Washington requires a country to sign a peaceful nuclear cooperation pact. Known as a 123 agreement, it separates civil and military nuclear facilities and aims to block the steps from nuclear fuel production to potential bomb-making applications. Countries like India have already signed up to such agreements with the U.S. Riyadh has previously stated that wants to tap its own uranium resources for "self-sufficiency in producing nuclear fuel," according to Reuters, and is not interested in diverting nuclear technology to military use. Its regional rival Iran is already one step ahead and is allowed to enrich uranium. show chapters Iran try to cyberattack us almost on a weekly basis: Saudi foreign minister 10:53 AM ET Sun, 18 Feb 2018 | 00:41 Speaking to CNBC at the Munich Security Conference, Adel Al-Jubeir told CNBC that Saudi Arabia was looking at a number of countries that have nuclear technology for peaceful purposes. "We are looking at the issue of the viability of building nuclear reactors in order to produce energy so that we can save the oil and export it in order to generate revenue," the foreign minister said. "The countries that we are talking to are probably roughly 10 countries or so around the world and we have not made a decision yet with regards to which path we will take and which country we will be focusing on more." When pressed on what Saudi Arabia would do if the U.S. failed to back its nuclear energy program, he said: "This is really something that's up to our nuclear energy professionals to deal with, but our objective is we want to have the same rights as other countries." 

As Saudis Go Nuclear, U.S. Seeks an Edge Over Great-Power Rivals -- At a meeting of the International Atomic Energy Agency in Vienna last September, word spread that Saudi Arabia had identified a handful of countries that could build two nuclear reactors in the kingdom. The U.S. wasn’t among them -- until Energy Secretary Rick Perry buttonholed the Saudi delegates and told them America wanted in. Within weeks, a mostly U.S. consortium headed by Westinghouse Electric Co. had joined the race. Its executives have visited the kingdom. So has Perry, whose intervention was described by two people who attended the meeting. In the next few months, the Saudis are expected to narrow the field to two or three bidders.A glance at the current list of contenders shows the geopolitical perils that accompany this business opportunity. American allies South Korea and France are on it -- and so are China and Russia, recently designated by the Pentagon as the main U.S. threats. Reactor-building could become another arena of superpower rivalry. For the Saudis, seeking the technical expertise to move beyond oil and compete with arch-rival Iran, the U.S. is undoubtedly the main strategic partner. But unlike Washington, the kingdom also has cordial ties with the other two giants -- and reasons to keep them sweet. China is its best customer, and Russia is increasingly its partner in policing world oil output. Meanwhile President Donald Trump’s administration sees a chance to revive a moribund U.S. nuclear industry. Some analysts question whether that’s worth the risks that will come with the expansion of nuclear technology through the world’s most volatile region.“You’ve got Israel with nuclear weapons,” says Victor Gilinsky, a former commissioner of the Nuclear Regulatory Commission. “Turkey isn’t far behind. Iran has a nuclear program. Now they’re going to unleash Saudi Arabia? What are we creating here?”

US May Open Path For Saudi Arabia To Acquire Nuclear Weapons - Saudi Arabia is moving swiftly to become the next country in the Middle East with nuclear power. The Kingdom is on the verge of striking a deal with the US for the purchase of nuclear reactors despite concerns over its refusal to accept stringent restrictions against the proliferation of nuclear weapons. Crown Prince Mohamed Bin Salman, who is the de facto ruler of the country, has ambitious plans to diversify the country’s energy source and is in the market to purchase nuclear power reactors. The potential for lucrative deals is too good to be missed and the Trump administration is thought to be mulling over loosening US law to win Saudi contracts, worth billions. The Kingdom has refused to be bound by stringent US regulations that restrict reprocessing and enriching uranium for the production of nuclear weapons. With competitors like Russia and China waiting in the wings, Trump is keen to strike a deal with the Saudi’s and breathe new life into the American nuclear industry. Finalists to build nuclear power stations along the Kingdom’s desolate Arabian Gulf strip will be announced in the coming months, but it’s not certain if the US will be the one to strike the deal. Israel, despite having its own nuclear arsenal, is strongly opposed to any other country in the Middle East acquiring nuclear weapons and with alliances constantly shifting in the region it may try to derail any deal.US policy also seeks to limit nuclear weapons proliferation especially in the Middle East but Trump may have no option other than to lower restrictions with Saudi Arabia. Although the Saudi’s have insisted that their programme will be peaceful, they have also refused to rule out the right to enrich uranium to weapons grade. A senior Saudi official was quoted by the Wall Street Journal admitting as much.

The Post-Islamic State Marshall Plan That Never Was - Iraq needs billions of dollars to rebuild after the military defeat of the Islamic State, but the nations expected to step up and shoulder the financial burden of reconstruction have sent a mixed message of support, leaving the final outcome in doubt. In the weeks leading up to the conference, the threshold for making a public announcement at the conclusion of the event was also rolled back. The original goal of $20 billion dropped to $10 billion, and finally to $5 billion. Even then, it was unclear which speech would be given, according to a source familiar with the preparations. The World Bank estimates that Iraq needs nearly $88 billion to reconstitute damaged infrastructure, housing, and vital services — much of which is supposed to come from Iraqi government oil revenue. In the end, additional support pledged at the conference in Kuwait raised roughly $30 billion in a complex combination of loans, investment guarantees, and direct investment — short of the goal, but better than expected. That result was reflected in Secretary General António Guterres’ speech. “The response to this conference and to this appeal is an extraordinary proof of confidence in the government and in the people of Iraq,” he told the audience.  An Iraqi official confirmed the $30 billion estimate but noted that the government had still not received official documentation of the pledges. Though this final number is considerably higher than originally anticipated, questions remain over whether cash-strapped Gulf states will make good on their promises, and whether private sector companies will begin to ramp up investments necessary to jump-start the country’s economy after years of war. Iraqi national elections are also scheduled for May, and the government must still shoulder much of the reconstruction burden itself.

Turkish Warships Threaten To Sink Italian Drillship In Cypriot Waters - Amid escalating tensions between Cyprus and Turkey in the Mediterranean Sea, the two countries appear headed towards an inevitable resource war. Just two weeks since we first reported on Turkey's aggression in Cypriot waters, reports that a serious incident took place at 10 a.m. on Friday morning, when five Turkish warships threatened to sink the drillship  SAIPEM 12000 commissioned by the Italian energy company ENI. The drillship had set out to reach block 3 of Cyprus’ Exclusive Economic Zone (EEZ) in a new effort to reach Soupia target. SAIPEM could not reach its target due to Turkish threats. According to Cypriot and Turkish media, the captain of one of the Turkish warships contacted the SAIPEM and threatened to sink the drill ship if it should not change its route. The drill ship changed the route and making maneuvers through the Turkish warships turned to the West and left the area.screenshots from via newsit.cyprus Deputy Government Spokesman Victoras Papadopoulos told the Cyprus News Agency, that after consultations between Italian company ENI and SAIPEM 12000, the captain of the drillship tried once again to drive the ship towards the Soupia  (Cuttlefish) target to conduct its drilling operations.

Turkish Forces Hit Kurds With Toxic Gas After Crossing Into Syria: Report - Turkish forces which entered Syria in late January have reportedly conducted a gas attack against Kurdish militias in the village of Aranda, sending at least six civilians to the hospital according to Syrian Kurdish forces and local media."Six civillians suffering from suffocation as a result of Turkish forces firing missiles containing poison gas," reports Dr. Joan Mohammed, director of nearby Afrin Hospital (via SANA)Another Doctor, Khalil Sabri, told local news "all of them suffer the same symptoms of suffocation, malaise, itching skin and burning in the eyes." At least two of the victims are listed in critical condition, while four are stable. Ruha, a child who was playing and singing, didn't know that Turkey& Jihadists will shell her house. Ruha got injured alongside her father yesterday when Afrin city center was shelled by the invaders.#Afrin#UNspeakUpForAfrin Can Êzîdxelo /Jan/ (@ezidxelo) February 15, 2018A spokesman for the Kurdish YPG militia in Afrin, Birusk Hasaka, confirmed to Reuters that Turkish forces hit a village in the northwest of the region, near the Turkish border. Meanwhile, "the Syrian Observatory for Human Rights told Reuters that Turkish forces and their Syrian insurgent allies hit the village on Friday with shells. The Britain-based monitor said medical sources in Afrin reported that six people in the attack suffered breathing difficulties and dilated pupils, indicating a suspected gas attack."

    White House Dismisses Reports Of Turkish Gas Attack In Syria As "Extremely Unlikely" - According a new Associated Press report a White House official says the US thinks it is "extremely unlikely" Turkey used chemical weapons against Kurds. The comments came late on Saturday following widespread reports which emerged earlier in the day that Turkish forces launched a chemical gas attack on Kurdish militias in the northern Syria village of Aranda on Friday, sending at least six civilians to the hospital.In response, counter-terrorism expert Max Abrams appropriately quipped concerning the White House's hasty excusal of US ally Turkey as a culprit: sounds scientific, right?  Investigative criteria is as follows: Turkey’s a NATO ally— Max Blumenthal (@MaxBlumenthal) February 18, 2018 Clearly, if a long-time US partner in Syria and NATO ally is to blame for a heinous chemical attack it couldn't possibly be true according to the White House version of events. Yet, imagine if this were Assad or Russia being blamed...

    Public reports ‘clearly show’ Assad’s use of chemical weapons: McMaster- U.S. National Security Adviser H.R. McMaster said on Saturday that, despite denials, public reports showed that Syrian President Bashar al-Assad was using chemical weapons, and added that it was time for the international community to hold the Syrian government to account. “Public accounts and photos clearly show that Assad’s chemical weapons use is continuing,” McMaster said at a major international security conference taking place in Munich. “It is time for all nations to hold the Syrian regime and its sponsors accountable for their actions and support the efforts of the Organization for the Prohibition of Chemical Weapons,” he said. McMaster did not specify which public accounts or pictures he was referring to. Earlier this month, U.S. Defense Secretary Jim Mattis said the Syrian government had repeatedly used chlorine gas, but stressed that the U.S. did not have evidence of sarin gas use. French President Emmanuel Macron has said that “France will strike” if chemical weapons are used against civilians in the Syrian conflict in violation of international treaties, but that he had not yet seen proof this is the case. The Syrian government has repeatedly denied using chemical weapons and said it targets only armed rebels and militants. In recent weeks, rescue workers, aid groups and the United States have accused Syria of repeatedly using chlorine gas as a weapon against civilians in Ghouta and Idlib. Earlier this month, Syrian government forces, who are backed by Russia and Iran, bombarded the areas, two of the last major rebel-held parts of Syria. Diplomatic efforts have made scant progress towards ending a war now approaching its eighth year, which has killed hundreds of thousands of people and forced half the pre-war Syrian population of 23 million from their homes. 

    Tillerson throws Erdogan a bone in Syria | Asia Times: Until the outbreak of Syria’s civil war in 2011, Manbij was a forgotten and neglected city, famed more for its ancient past rather than any modern achievements. For the past six years, though, Manbij has risen to international fame as militarily and politically contested by the Turks, Iran, Russia, the United States, Islamic State of Iraq and Syria (ISIS) and, of course, Damascus. Located 30 kilometers west of the Euphrates River, it is northeast of the Aleppo Governorate, presently controlled by US and Kurdish forces. US Secretary of State Rex Tillerson agreed during a two-day visit to Turkey beginning on Thursday to finally allow Turkish-backed Free Syrian Army troops into Manbij, where they will be deployed side-by-side with American forces. The anti-ISIS Kurdish militias that have run Manbij since 2016, including the Syrian Kurdish YPG, a group Turkey considers a terror organization with links to the insurgent Kurdistan Worker’s Party (PKK), will be asked to leave and dispatch east of the Euphrates River. This is music to the ears of Turkish President Recep Tayyip Erdogan, who is known to have sought a military presence in Manbij for the past two years. 

    Russia Warns U.S. Not to ‘Play With Fire’ in Syria -- Russian Foreign Minister Sergei Lavrov warned the Trump administration not to “play with fire” as he lashed out at the U.S. over what he described as its “provocative” support for autonomy-seeking Kurds in Syria. “The U.S. should stop playing very dangerous games which could lead to the dismemberment of the Syrian state,” Lavrov said at a Middle East conference in Moscow on Monday, alongside his Iranian counterpart Mohammad Javad Zarif and a top adviser of Syrian President Bashar al-Assad. “We are seeing attempts to exploit the Kurds’ aspirations.” An armed clash earlier this month in which U.S. strikes may have killed more than 200 Russian mercenaries attacking American-backed forces inflamed a standoff between Moscow and Washington in Syria. Russia’s Foreign Ministry said it knows of five Russian deaths and the incident is still being investigated. While the U.S. accepted Russian assurances that it had nothing to do with the failed attack, the clash was the deadliest between citizens of the former foes since the Cold War. After seven years of war, Assad has managed to reassert control over a large part of his country. But the conflict is entering a dangerous new phase as outside powers confront each other, with tensions sparked by Iran’s growing influence and Turkey’s bid to crush Kurdish forces it says are linked to separatists inside its borders. The U.S. is setting up a 30,000-strong Kurdish-led border protection force in the northeast of Syria, which Assad’s backers Russia and Iran have condemned as an attempt to carve out an American zone of influence. Lavrov dismissed Western criticism of Iran’s role and demands for a pullout of Iranian troops and military advisers, saying they’ve been invited by the government in Damascus. Zarif for his part said Iran is concerned about a “new wave” of foreign intervention in Syria led by the U.S. after the defeat of Islamic State. He accused the U.S. of trying to capture Syrian territory by making use of proxies.

    Foreign Powers Competing for a Slice of Syria - SPIEGEL - What do a counterfeiter from Syria, an Iraqi-Afghan militia fighter under Iranian leadership and a Russian Cossack have in common? More than you might think. They all took part in a strange offensive involving around 300 men on Feb. 7 -- an attack force that was bombed by the U.S. as it crossed a pontoon bridge over the Euphrates River in an effort to capture one of largest natural gas fields in eastern Syria for the Assad regime. Located near the city of Deir ez-Zor, the so-called Conoco field had been wrested from Islamic State (IS) last September by Kurdish-led troops -- with the help of U.S. Special Forces who have been stationed in the area since then. It's a confusing story, but it says a lot about the increasingly bewildering and dangerous state of affairs in the Syrian war. The advance on the Conoco field, during which around 100 of the attackers are thought to have lost their lives in the American airstrikes, is just one of several clashes between military forces in the country. Indeed, Syria has become a battleground for global and regional powers -- including the United States, Russia, Turkey, Iran and Israel -- who are using the country as a venue for the pursuit of their own interests. The danger of an unintended clash has become extreme. And the conflict has become even more difficult for outsiders to understand.The various international parties to this war have all, almost simultaneously, launched massive attacks in the past few weeks. For much of the last 28 days, the Turkish army has been attacking the Kurdish militia YPG in the northern Syrian city of Afrin. And the Israeli air force launched a wave of airstrikes, which, it says, destroyed half of all Syrian anti-aircraft capability, after one of its warplanes had been shot down during a response to an Iranian drone incursion on Israeli airspace. Then there was this mysterious clash near the natural gas field, which some reports have depicted as the deadliest encounter between Russian and American troops since the end of the Cold War. Russian mercenaries were reportedly found among the dead, with some sources claiming that up to 200 Russians lost their lives. Local sources from the main military hospital in Deir ez-Zor indicate the death toll was likely between 10 and 20.

    Iran, Deeply Embedded in Syria, Expands ‘Axis of Resistance’ - NYT — (maps) When an Iranian drone flew into Israeli airspace this month, it set off a rapid series of strikes and counterstrikes that deepened fears over whether a new, catastrophic war was brewing in the Middle East.That flare-up ended quickly, if violently, with the drone destroyed and an Israeli jet downed after bombing sites in Syria. But the day of fighting drew new attention to how deeply Iran has embedded itself in Syria, redrawing the strategic map of the region.Tactical advisers from Iran’s Islamic Revolutionary Guards Corps are deployed at military bases across Syria. Its commanders regularly show up at the front lines to lead battles. Iran has built and continues to back powerful militias with thousands of fighters it has trained in Syria. And it has brought in new technologies, like drones, to spy on enemies and perhaps to attack them from the sky.Both Israeli officials and Israel’s enemies say that any new conflict between Israel and Iran, or any of its allies, could mobilize Iran’s expanding network of militant proxies in multiple countries, what Iran refers to as “the axis of resistance.” “If there is a war, it will be regional,” said Kamel Wazne, the founder of the Center for American Strategic Studies, in Beirut, who studies the policies of the United States and Iran in the Middle East. “Any confrontation will be with the whole resistance front against Israel and its backers.”

    Kurdish Fighters Strike Deal With Syrian Army To Drive Turks Out - Confirming that the "enemy of my enemy is my friend", YPG Kurdish fighters in north-western Syria - who as a reminder are backed by the US, the country which for 7 years has waged a proxy war to overthrow president Bashar al Assad - have struck a deal with the Russia-backed Assad regime for Syrian forces to enter the Afrin region and repel a Turkish offensive which began last month.Badran Jia Kurd, an advisor to the Kurdish-led administration in northern Syria told Reuters that Syrian troops will deploy along several border positions and could enter the region within the next two days: "we can cooperate with any side that lends us a helping hand in light of the barbaric crimes and the international silence," Jia Kurd said. Meanwhile, a conflicting report from a senior Kurdish official comes from YPG representative Brusk Hasake in Afrin, who told Sputnik News "We have repeatedly said that Syrian Army has not entered [and] will not enter Afrin. If there is an agreement we will make a statement [on it]." As we reported at the time, Turkish ground forces crossed the Syrian border and pushed into northern Syria’s Afrin province on January 20, after Ankara launched artillery and air strikes on a U.S.-backed Kurdish militia it aims to sweep from its border as part of "Operation Olive Branch."  Senior Kurdish official Badran Jia Kurd told Reuters that Syrian government forces could enter the Afrin region within days to repel the Turks, while Syrian state TV reports that Regime forces will enter "within hours."

    Syria’s Assad to deploy troops to help Kurdish fighters battling Turkish forces in Afrin -- The conflict in Syria may escalate significantly after the Assad regime declared that it will send troops to help Kurdish fighters defending the town of Afrin against Turkish forces. The deployment, which may also include Iranian-controlled militiamen, will take place, said Damascus, after an agreement was reached with the People’s Protection Units (YPG) group, which has set up a Kurdish enclave across the Turkish border. “Popular forces will arrive in Afrin within a few hours to support its people’s stand against the Turkish regime’s attack on the area and its people,” announced Sana, the Syrian state news agency. The forces, continued Sana, will position themselves at the frontier – a move that opens up the possibility of direct clashes with the Turks and allied Syrian Arab militias. The reference to “popular forces” indicate that the initial units may not be regular Syrian army but paramilitaries composed of, among others, Shia Afghans recruited in Iran, and the Shabiha – the militia of Syria’s ruling Alawite community. Turkish foreign minister Mevlut Cavusoglu said in response to the Syrian action: “If they [the Syrians] are entering Afrin to protect YPG/PKK, nobody can stop the Turkish army.” However, he added that “there will be no problem” if the regime forces were being sent to control the Kurds. “We have always expressed our support for Syria’s territorial integrity. We are one of the countries with the utmost support for it,” he insisted. Nuri Mahmoud, a spokesman for the YPG, also spoke of “preserving the unity of Syria”. He said: “We are calling on the Syrian army to protect Afrin because we would love to preserve a unified Syria. Syrian soldiers have not arrived yet, but they will.”

    Syrian conflict further escalates as pro-Syrian forces enter Afrin --With the entry of a convoy of militias backing the government of President Bashar al-Assad into the Syrian canton of Afrin on Tuesday and Turkish troops responding with heavy artillery bombardment, the danger of a direct military confrontation between Turkish and Syrian troops has increased.It opens the door to a further escalation in the civil war in Syria, where Turkish and Syrian armies, Iran-linked militias backing the Damascus government, Russian and US troops, and several proxy forces, including Kurdish nationalists and several Islamic groups, are present.According to Reuters, the pro-government forces were welcomed by the Kurdish People Protection Units (YPG), which have set up three autonomous cantons in northern Syria, including Afrin, since the onset of the Syrian conflict in 2011. Ankara regards this as a threat because of the links of the YPG to the Kurdistan Workers Party (PKK), which has been engaged in a guerilla war inside Turkey for three decades.On January 20, Turkey launched its Operation Olive Branch to clear YPG militants from Afrin. According to Turkish officials, this operation has cost the lives of 1,651 Kurdish fighters and 32 Turkish troops, while 7 Turkish civilians were killed and 125 wounded in cross-border attacks launched by the YPG. With its operation Euphrates Shield, the Turkish army began direct intervention in northern Syria in August 2016 to stop the YPG linking Afrin along the Turkish-Syrian border to other largely Kurdish-populated territories in northeastern Syria.Speaking to the parliamentary group of his ruling Justice and Development Party (AKP) earlier on Tuesday, Turkish President Recep Tayyip Erdogan said that Ankara had worked with Russia to prevent any deployment by pro-Syrian government forces. “Preparations in the field take some time. In the coming days we will lay siege to Afrin city. It’s very important that every place we go remains secure,” he said. “Thanks to the siege, the YPG will have no room to bargain with the Syrian regime.” In an attempt to belittle the growing danger of escalation, Erdogan stated later in the day that the issue of the entrance of the pro-Damascus militia in Afrin was “closed for now.” At a press conference with his Macedonian counterpart Gjorge Ivanov, he said: “Yesterday, we agreed on these issues in talks with Putin and Rouhani. Unfortunately, you know, these kinds of terrorist organisations have taken the wrong step with the decision.” On Monday, Erdogan had discussed the issue with Russian President Vladimir Putin and Iranian President Hassan Rouhani in separate telephone conversations.

    It's not a war. It's a massacre': scores killed in Syrian Enclave -- Almost 200 civilians have been killed in dozens of airstrikes and shelling by forces loyal to Syria’s Bashar al-Assad in eastern Ghouta over two days of “hysterical violence”, which has led to warnings of a humanitarian catastrophe that could eclipse past atrocities in the seven-year war. The surge in the killing in the besieged region came amid reports of an impending regime incursion into the area outside Damascus, which is home to 400,000 civilians. More than 700 people have been killed in three months, according to local counts, not including the deaths in the last week. Amnesty International said “flagrant war crimes” were being committed in eastern Ghouta on an “epic scale.” Diana Semaan, the charity’s Syria researcher, said: “People have not only been suffering a cruel siege for the past six years, they are now trapped in a daily barrage of attacks that are deliberately killing and maiming them, and that constitute flagrant war crimes.” Seven hospitals have also been bombed since Monday morning in eastern Ghouta, which was once the breadbasket of Damascus but has been under siege for years by the Assad government and subjected to devastating chemical attacks. Two hospitals suspended operations and one has been put out of service. “We are standing before the massacre of the 21st century,” said a doctor in eastern Ghouta. “If the massacre of the 1990s was Srebrenica, and the massacres of the 1980s were Halabja and Sabra and Shatila, then eastern Ghouta is the massacre of this century right now.” 

    Syrian government offensive prompts calls for intensified US military intervention --Syrian government forces have launched an assault on the enclave of eastern Ghouta over recent days with the aim of recapturing it from Islamist rebels. US media outlets have seized on the escalation of violence to legitimize and call for the expansion of Washington’s illegal military intervention, which is aimed at toppling Syrian President Bashar al-Assad and installing a US puppet regime in Damascus.Syrian aircraft, backed by Russian planes, have conducted repeated air strikes on the area over recent days. According to a report by the British-based Syrian Observatory for Human Rights, upwards of 270 civilians, including more than 60 children, have allegedly been killed. The strikes, which have included the dropping of barrel bombs, have damaged hospitals and other critical infrastructure. Doctors Without Borders said that 13 of its facilities have been hit.Eastern Ghouta has been used as a military base by Islamist groups throughout the conflict. They regularly shell government-controlled districts in Damascus and have continued to do so during the latest offensive, killing at least 12 and injuring dozens more on Tuesday alone. Human rights groups such as Amnesty International issued statements condemning the civilian deaths and appealing for a ceasefire. United Nations officials described living conditions in Ghouta, where only one aid truck has arrived over the past three months, as “hellish.” With its trademark moral double standards and outright hypocrisy, the corporate-controlled media in the US has provided saturation coverage of the government offensive. The transparent aim is to whip up public support for a catastrophic escalation of the Syrian war that could put the lives of millions of people at risk.

    Hezbollah Leader Threatens "We Will Open Fire" On Disputed Israeli Offshore Oil & Gas Operations - During a televised address in Beirut on Friday Hezbollah Secretary General Sayyed Hassan Nasrallah once again warned Israel to back off its claims over disputed oil and gas field just off the southern Lebanese coast, threatening that Hezbollah could "disable [Israel’s offshore oil installations] within hours." "If you prevent us, we prevent you; if you open fire at us, we will open fire," Nasrallah threatened.  The dispute over the eastern Mediterranean gas field goes back to January 2017, but blew up starting in late January of this year as it has been put up for tender by Lebanon and is expected to be developed by an international consortium of energy companies. However, as we reported at the time Israel has aggressively pushed for major sectors of the field to be internationally recognized as lying within its rightful territorial waters, going so far as to warn "respectable" companies from participating in the tender, which would be a "major mistake". Israeli Defense Minister Avigdor Lieberman said in late January, "They [Lebanon] are announcing a tender on the gas field, including Block 9, which is ours by any definition," and Lebanese actions "very, very challenging and provocative conduct here." Though Israel and Lebanon have remained technically at war after the last major Israeli invasion in 2006, Lebanon has moved forward with the exploration without hesitation, and held a signing ceremony with three oil companies attended by President Aoun over a week ago. The companies are Italy’s Eni, France’s Total and Russia’s Novatek, according to the AP. Lebanon’s Energy Minister Cesar Abi Khalil told reporters at the signing ceremony that there is no reason "that they should not speed the process and they should start right away." Meanwhile Nasrallah's Friday speech made the gas dispute the central theme, and even warned Israel's American backers to not intervene. Appealing directly to Israeli leadership, the Hezbollah leader said, "If you prevent us, we prevent you; if you open fire at us, we will open fire."

    Netanyahu says Israel could act against Iran's 'empire' (Reuters) - Prime Minister Benjamin Netanyahu said on Sunday that Israel could act against Iran itself, not just its allies in the Middle East, after border incidents in Syria brought the Middle East foes closer to direct confrontation. Iran mocked Netanyahu’s tough words, saying Israel’s reputation for “invincibility” had crumbled after one of its jets was shot down following a bombing run in Syria. In his first address to the annual Munich Security Conference, which draws security and defense officials and diplomats from across Europe and the United States, Netanyahu held up a piece of what he said was an Iranian drone that flew into Israeli airspace this month. “Israel will not allow the regime to put a noose of terror around our neck,” he said. “We will act if necessary not just against Iran’s proxies but against Iran itself.” For his part, Iran’s Foreign Minister, Mohammad Javad Zarif, called Netanyahu’s presentation “a cartoonish circus, which does not even deserve a response”. “What has happened in the past several days is the so-called invincibility (of Israel) has crumbled,” Zarif, who addressed the conference hours after Netanyahu, said, referring to the downing of the Israeli F-16, which crashed in northern Israel after a strike on Syrian air defenses. “Once the Syrians have the guts to down one of its planes it’s as if a disaster has happened,” Zarif said, accusing Israel of using “aggression as a policy against its neighbors” by regularly carrying out incursions into Syria and Lebanon. Israel has accused Tehran of seeking a permanent military foothold in Syria, where Iranian-backed forces support Syrian President Bashar al-Assad in civil war entering its eighth year. Netanyahu said that as the Islamic State militant group has lost ground, Iran and its allies were surging into territory, “trying to establish this continuous empire surrounding the Middle East from the south in Yemen but also trying to create a land bridge from Iran to Iraq, Syria, Lebanon and Gaza.”

    China Steps Into The Middle East Maelstrom - The Middle East has a knack for sucking external powers into its conflicts. China’s ventures into the region have shown how difficult it is to maintain its principle of non-interference in the internal affairs of other states. China’s abandonment of non-interference is manifested by its (largely ineffective) efforts to mediate conflicts in South Sudan, Syria and Afghanistan as well as between Israel and Palestine and even between Saudi Arabia and Iran. It is even more evident in China’s trashing of its vow not to establish foreign military bases, which became apparent when it established a naval base in Djibouti and when reports surfaced that it intends to use Pakistan’s deep sea port of Gwadar as a military facility.This contradiction between China’s policy on the ground and its long-standing non-interventionist foreign policy principles means that Beijing often struggles to meet the expectations of Middle Eastern states. It also means that China risks tying itself up in political knots in countries such as Pakistan, which is home to the crown jewel of its Belt and Road Initiative — the China–Pakistan Economic Corridor (CPEC).Middle Eastern autocrats have tried to embrace the Chinese model of economic liberalism coupled with tight political control. They see China’s declared principle of non-interference in the affairs of others for what it is: support for authoritarian rule. The principle of this policy is in effect the same as the decades-old US policy of opting for stability over democracy in the Middle East.It is now a risky policy for the United States and China to engage in given the region’s post-Arab Spring history with brutal and often violent transitions. If anything, instead of having been ‘stabilised’ by US and Chinese policies, the region is still at the beginning of a transition process that could take up to a quarter of a century to resolve.There is no guarantee that autocrats will emerge as the winners. China currently appears to have the upper hand against the United States for influence across the greater Middle East, but Chinese policies threaten to make that advantage short-term at best.

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