oil prices were down less than half a percent over the past week, as geopolitical concerns competed with supply fundamentals for oil traders' attention...after increasing more than 10% over the prior 10 sessions and closing at $68.40 a barrel last week, US crude oil contracts for June delivery rebounded from a $1.26 drop on Monday morning to finish 24 cents higher at a new 42 month high of $68.64 a barrel, as oil traders feared renewed U.S. sanctions could curtail Iran's oil output and reduce global supplies...prices then dropped 94 cents to $67.70 a barrel on Tuesday, after speeches by Trump and French President Macron telegraphed an agreement on an Iran nuclear deal...however, geopolitical concerns returned to the markets after Venezuela imprisoned Chevron employees for treason on Wednesday, and oil prices subsequently rose 35 cents to $68.05 a barrel, despite a surprising increase in US crude supplies...oil prices rose another 14 cents to $68.19 a barrel on Thursday, as the risk of renewed sanctions on Iran and plunging Venezuelan output offset the effects of a strong dollar...while international oil prices continued to move higher on Iran concerns on Friday, US prices slipped 9 cents to end the week at $68.10 a barrel, 30 cents lower than their previous weekly close, thus logging their first decrease in three weeks...
natural gas prices, meanwhile, were little changed this week, with the June contract ending Friday at a $2.771 per mmBTU, just four-tenths of a cent higher than it closed the previous week, despite a larger than expected withdrawal of gas from storage...the now expired May natural gas contract, on the other hand, was up every day it traded, ending 8.2 cents higher at $2.821 per mmBTU on Thursday, before the June contract became the front month on Friday and fell 6.8 cents...the natural gas storage report from the EIA released on Thursday indicated that natural gas in storage in the US fell by 18 billion cubic feet to 1,281 billion cubic feet over the week ending April 20th, which left our gas supplies 897 billion cubic feet, or 41.2% lower than the 2,178 billion cubic feet that were in storage on April 20th of last year, and 527 billion cubic feet, or 29.1% below the five-year average of 1,808 billion cubic feet typically in storage after the third week of April....the forecasts had been for a 12 billion cubic foot withdrawal, which still would have been unusual for this time of year; normally, the third week of April sees a 60 billion cubic foot surplus of natural gas, which is then injected into storage; last year, there were 71 billion cubic feet of gas added to storage over the week ending April 20th...since the Midwest has been taking the brunt of the withdrawals lately, we'll include a table from that report showing the differences in regional natural gas supply...
the above table is the initial summary table from the EIA's Weekly Natural Gas Storage Report for the week ending April 20th; the first column shows the quantity of natural gas in storage in billions cubic feet for each US region and nationally the week ending April 20th; the second column shows the natural gas in storage for each US region and nationally the week ending April 13th, and the next column shows the change between the two...on the right, under 'Historical Comparisons', they show the billions cubic feet of natural gas in storage for each US region and nationally as of April 20th of last year, and then the average of natural gas in storage for each US region and nationally for the 3rd week in April over the past 5 years...thus we can see that of this week's 18 billion cubic foot withdrawal, 17 billion cubic feet came out of storage in the Midwest, as we would expect, recalling that week, as well as most of April, has seen cooler than normal weather in this region...that left regional gas supplies at 211 billion cubic feet, or 58.0% lower than the 502 billion cubic feet that were in storage in the Midwest on April 20th of last year, and 42.7% below the five-year average of 368 billion cubic feet typically in Midwest storage after the third week of April...
the issue here is not that we're going to run short of natural gas this year anymore, since it's almost certain that the next week will see a surplus, and hence an increase in gas in storage...the question is whether enough natural gas can be added back to storage over the coming months to get our supplies back up to normal by mid-October, when the next heating season begins...that's what we'll be watching as the natural gas injection season progresses...
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, covering the week ending April 20th, indicated equally large increases in both our oil imports and in our oil exports, but because of a big pullback in the amount of oil used by our refineries, we were able to add oil to our commercial crude supplies for the eighth time in the past thirteen weeks...our imports of crude oil rose by an average of 539,000 barrels per day to an average of 8,469,000 barrels per day during the week, after falling by 720,000 barrels per day the prior week, while our exports of crude oil rose by an average of 552,000 barrels per day to a record high average of 2,331,000 barrels per day during the week, which meant that our effective trade in oil over the week ending the 20th worked out to a net import average of 6,138,000 barrels of per day during the week, 43,000 barrels per day less than our net imports during the prior week...at the same time, field production of crude oil from US wells rose by 46,000 barrels per day to a record high of 10,586,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 16,724,000 barrels per day during the reporting week...
meanwhile, US oil refineries were using 16,621,000 barrels of crude per day during the week ending April 20th, 328,000 barrels per day less than they used during the prior week, while at the same time 205,000 barrels of oil per day were being added to oil storage in the US....consequently, this week's crude oil figures from the EIA seem to indicate that our total working supply of oil from net imports and from oilfield production was 102,000 fewer barrels per day than what refineries reported they used during the week plus what was reportedly added to storage...to account for that disparity, the EIA needed to insert a (+102,000) 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"... (for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this)...
further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,237,000 barrels per day, which was 1.5% more the 8,113,000 barrel per day average we imported over the same four-week period last year...the 205,000 barrel per day addition to our total crude inventories included a 310,000 barrel per day increase in our commercially available stocks of crude oil, partially offset by a 105,000 barrel per day decrease the oil in our Strategic Petroleum Reserve, possibly a sale mandated by this year's federal budget...this week's 46,000 barrel per day increase in our crude oil production included a 33,000 barrel per day increase in output from wells in the lower 48 states and a 13,000 barrel per day increase in output from Alaska...the 10,540,000 barrels of crude per day that were produced by US wells during the week ending April 20th were the highest on record, 14.3% more than the 9,265,000 barrels per day that US wells were producing during the week ending April 21st of last year...
since our crude oil production has been hitting new record highs virtually every week this year, it's worth taking a look at a graph of what those production increases looks like compared to the recent historical trend...
the above graph was copied from a zero hedge review of this week's EIA petroleum status report, and it shows our weekly crude oil production in thousands of barrels per day on the right scale from the beginning of 2015 in blue...it also shows the weekly US rig count on the left scale over that same period in green, with dates for those rig counts shifted forward 3 months from the oil production dates in an attempt to line up weekly production with the number of rigs that were drilling three months prior in any given week...however, the fact is that the number of rigs drilling at any point in time has little to do with future oil production anymore, for a couple of reasons...first, drilling during any week in preparation for fracking does not bring that well into production in any given time-frame...as we saw with the DUC well report last week, there was a 6.4 month backlog of drilled but uncompleted wells in the US in March, a total which has been rising for fairly continuously for two years...completions of those wells, which would bring them into production, has been progressing at an increasing pace, irregardless of the changes in the weekly rig count...another reason that the number of rigs has little to do with the ultimate oil output is that horizontal wells are getting much larger, and are being fracked in an increasing number of stages...just this week, ConocoPhillips set a new record for horizontal drilling with a lateral of 21,478 feet, or more than four miles long...other producers are using up to 2 unit trains (~100 cars each) of sand and fracking in as many as 80 stages...these new fracks in longer laterals are a far cry from from the few stages fracking in 5000 foot laterals common just a few years ago, and hence mean considerably more production from each well when they are completed, without any increase in the number of rigs in use...
so, ignoring the rig count, the above graph clearly shows how our oil production has been spiking over the past several months, exceeding 10 million barrels per day for the first time during the week ending February 2nd, and topping 10.5 million barrels per day just 9 weeks later...at 10,586,000 barrels per day, our oil production is now up by 25.6% from the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June, 2016, with an increase of 804,000 barrels per day year to date, or up 8.2% from the 9,782,000 barrel per day oil production of December 30th...at that rate we'd see an increase of over 2.5 million barrels per day this year alone...putting that into a bit of perspective, the OPEC oil production cuts of 1.2 million barrels per day have been less than half of that...
returning to our EIA data, US oil refineries were operating at 90.8% of their capacity in using those 16,621,000 barrels of crude per day during the week ending April 20th, down from 92.4% of capacity the prior week, and down from the off-season record 96.7% of capacity set during the last week of 2017...the 16,621,000 barrels of oil that were refined this week were the least oil processed since the first week of March, down 5.6% from the off-season record of 17,608,000 barrels per day that were being refined during the last week of December 2017, and 3.8% less than the 17,285,000 barrels of crude per day that were being processed during the week ending April 21st, 2017, when refineries were operating at 94.4% of capacity....
with the decrease in the amount of oil being refined, gasoline output from our refineries was much lower than the prior week, decreasing by 308,000 barrels per day to 9,886,000 barrels per day during the week ending April 20th, after our refineries' gasoline output had increased by 54,000 barrels per day during the week ending April 13th....but even with that large decrease, our gasoline production was still 1.8% greater during the week than the 9,710,000 barrels of gasoline that were being produced daily during the week ending April 21st of last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 117,000 barrels per day to 4,977,000 barrels per day, after falling by 162,000 barrels per day the prior week....hence, that decrease meant the week's distillates production was 1.7% less than the 5,063,000 barrels of distillates per day than were being produced during the week ending April 21st, 2017....
however, even with the drop in our gasoline production, our supply of gasoline in storage at the end of the week rose by 806,000 barrels to 236,807,000 barrels by April 20th, just the second increase in 8 weeks, but the 17th increase in 24 weeks, as gasoline inventories are typically built up over the winter months...our gasoline supplies rose because our domestic consumption of gasoline fell by 744,000 barrels per day from last week's record to a below normal 9,083,000 barrels per day, and because our imports of gasoline rose by 191,000 barrels per day to 896,000 barrels per day, even as our exports of gasoline rose by 144,000 barrels per day to 791,000 barrels per day...but even with this week's increase, our gasoline inventories are still 1.8% lower than last April 21st's level of 241,041,000 barrels, even as they are now roughly 9.2% above the 10 year average of gasoline supplies for this time of the year...
meanwhile, with this week's decrease in distillates production, our supplies of distillate fuels fell by 2,611,000 barrels to 122,729,000 barrels over the week ending April 20th, the 6th decrease in seven weeks, after falling by 3,017,000 barrels the prior week...our distillate inventories fell again because our exports of distillates rose by 439,000 barrels per day to a record high 1,724,000 barrels per day despite that lower production, while our imports of distillates rose by 20,000 barrels per day to 123,000 barrels per day, and while the amount of distillates supplied to US markets, a proxy for our domestic consumption, fell by 607,000 barrels per day to 3,749,000 barrels per day...after this week’s inventory decrease, our distillate supplies ended the week 18.7% lower than the 148,266,000 barrels that we had stored on April 21st, 2017, and roughly 9.6% lower than the 10 year average of distillates stocks at this time of the year…
finally, despite the jump to a record high by our oil exports, we were still able to add to our commercial supplies of crude oil for the 9th time in 2018 and for the 17th time in the past year because of the increase in our imports and the reduced oil consumption by our refineries, as our commercial crude supplies increased by 2,170,000 barrels during the week, rising from 427,567,000 barrels on April 13th to 429,737,000 barrels on April 20th ...however, after falling most of the past year, our oil inventories as of April 13th were still 18.7% below the 528,702,000 barrels of oil we had stored on April 21st of 2017, 15.6% lower than the 509,311,000 barrels of oil that we had in storage on April 22nd of 2016, and 6.2% below the 458,181,000 barrels of oil we had in storage on April 24th of 2015, at a time when the US glut of oil had already begun to surge from the stable levels of prior years...
since our oil exports have hit yet another record this week, we will again include the latest updated chart of their trajectory over the past 20 months..
the above graph came from the weekly package of oil graphs that John Kemp of Reuters emailed out on Wednesday, and it shows weekly US crude oil exports in thousands of barrels per day over the past 20 months, and also highlights the exact amount of our crude exports in thousands of barrels per day over a few select weeks going back to September 1st, when our exports were choked off as Gulf Coast ports were shut down by Hurricane Harvey...as you can see, our oil exports had only topped a million barrels per day a few times prior to that date...however, after the price of US crude fell to a 10% discount to the comparable international grade in the wake of the hurricanes, US crude suppliers began to sell as much oil overseas as they could, and as a result our oil exports have stayed above a million barrels per day since...as of Friday, US WTI (West Texas Intermediate) crude for June was selling at $68.10 a barrel, while June North Sea Brent, the international benchmark crude of an equivalent grade, was selling at $74.64 a barrel, so it's evident that US oil traders will be pulling down large windfall profits to sell US crude into the international markets in the months going forward, even after paying the roughly $2 a barrel transport costs...
with the record for crude exports occurring the same week as a record for distillates exports and an increase in our gasoline exports, it shouldn't be much of a surprise that our total exports of oil and the products made from it were also at a record high, eclipsing the old export record by nearly 10%, and that's what the next graph shows:
this is the graph that accompanies the EIA spreadsheet for "Weekly U.S. Exports of Crude Oil and Petroleum Products" which gives us the weekly totals in thousands of barrels per day of all our exports of oil and all products made from oil, including gasoline, distillates, fuel oil, and petrochemical precursors...we exported 8,332,000 barrels per day of such oil & oil products during the week ending April 20th, obviously a new record, up from 6,725,000 barrels per day the prior week, and 39.4% more than the 5,979,000 barrels per day that were being exported during the same week a year earlier...
This Week's Rig Count
US drilling activity increased for the ninth time in the past ten weeks and for 18th time in the past 25 weeks during the week ending April 27th, a period of higher oil prices that has consequentially seen the rig increases far exceed the few decreases...Baker Hughes reported that the total count of active rotary rigs running in the US rose by 8 rigs to 1021 rigs in the week ending on Friday, which was also 151 more rigs than the 870 rigs that were in use as of the April 28th report of 2017, while it was still down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014...
the number of rigs drilling for oil increased by 5 rigs to 825 rigs this week, which was also 128 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas formations was increased by 3 rigs to 195 rigs this week, which was 24 more gas rigs than the 171 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, there is also a rig drilling currently that is listed as "miscellaneous", unchanged from last week, but down from the 2 "miscellaneous" rigs that were operating a year ago.
drilling activity in the Gulf of Mexico was unchanged at 18 rigs rig this week, while the year ago offshore totals fell, which meant that the total Gulf count and total offshore count is now 1 rig higher than the 17 offshore rigs deployed a year ago...this week also saw a rig set up to drill through an inland lake in Louisiana, where there are now 5 such rigs working, up from the 4 rigs deployed on inland waters during the week ending April 28th of a year ago..
the count of active horizontal drilling rigs increased by 12 rigs to 901 horizontal rigs this week, which was 171 more horizontal rigs than the 730 horizontal rigs that were in use in the US on April 28th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014... on the other hand, the directional rig count was down by 2 rigs to 68 rigs this week, which was still up from the 63 directional rigs that were in use during the same week of last year....at the same time, the vertical rig count also decreased by 2 rigs to 52 vertical rigs this week, which left their count down from the 77 vertical rigs that were deployed on April 28th 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 basins...in both tables, the first column shows the active rig count as of April 27th, the second column shows the change in the number of working rigs between last week's count (April 20th) and this week's (April 27th) count, the third column shows last week's April 20th active rig count, the 4th column shows the change between the number of rigs running on Friday and as of the equivalent weekend report of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was on Thursday the 28th of April, 2017...
it's a bit of a surprise to see this week's increase led by the 9 rig increase in the Cana Woodford of Oklahoma, as drilling in that basin has been stagnant to lower over recent months, after it rose to 74 rigs in the middle of November, while drilling elsewhere had been on the increase...all those were oil rigs, as was the rig addition in the Ardmore Woodford, while the rig added in the Arkoma Woodford was targeting natural gas...meanwhile, the increase of two natural gas rigs in Ohio's Utica shale was offset by natural gas rig shutdowns in Pennsylvania's Marcellus and Arkansas' Fayetteville...other natural gas rig increases came in the Haynesville of northern Louisiana and in an "other" basin not tracked separately by Baker Hughes...note that other than the major producing states shown above, Nevada also saw a rig added this week and now has two; up until 7 weeks ago, Nevada had gone over a year with no drilling at all...
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Across the US, Courts are Keeping Voter Initiatives Off Local Ballots - - Hattie Wilkins, a retired union president at a Youngstown pillow factory, is part of a group of residents who have, since 2013, placed six initiatives on the city’s ballot to protect city water and assert municipal control over frack-waste injection wells. The one in November 2016 failed 10,164 to 12,443 votes. Undaunted, the group, Frackfree Mahoning Valley, gathered enough signatures to get two initiatives on the November 2017 ballot.That year, the group proposed a ban on fracking and underground frack waste injection wells that would have allowed private citizens to take legal action against violators and another to regulate political campaign contributions, restricting the right to donate to city residents.But in 2017, for the first time, the Ohio Supreme Court effectively removed their initiatives from the ballot—no votes were cast.This year, for the May 2018 ballot, Frackfree Mahoning Valley again took to the streets to qualify yet another initiative. The group proposed a “Youngstown Drinking Water Protection Bill of Rights” that would ban oil and gas wells and waste injection, allow the city to prosecute violations, and mandate that surplus water revenue be spent on improving the city’s water and sewer infrastructure. (In March, the city of Youngstown was forced to repay water customers $4 million, $28 each, after it was found the city had illegally spent surplus water funds.) Shortly after Wilkens and her fellow petitioners submitted signatures for the Drinking Water Protection Bill of Rights, the Mahoning Valley Board of Elections refused to place it on the May 2018 ballot.“We had enough ballot signatures and the board of elections decided not to put it on, and that’s not right,” says Wilkens. As it did last year, the board referred to a 2016 law (HB463) that allows it to remove a initiative deemed beyond the city’s “scope of authority.” It argued that proposed language to hold violators liable and a provision to grant ecosystems new legal protections are outside the city’s power. The initiative is also a direct challenge to the Ohio Assembly’s claim of total control over oil and gas.
High court rules fracking ban proposal must be on primary ballot - The Ohio Supreme Court ruled today in a 5-2 decision that the Mahoning County Board of Elections overstepped its authority by rejecting an initiative to ban fracking in Youngstown. The court ruled that the board must place the proposal back on the primary election ballot.
MarkWest Agrees to Pay Millions in Federal Settlement Over 'Pig' Emissions - A natural gas energy processor has agreed to pay a $610,000 civil penalty and install millions of dollars worth of equipment to reduce harmful emissions at hundreds of facilities across western Pennsylvania and eastern Ohio. In a federal settlement filed this week in the U.S. District Court for the Western District of Pennsylvania, Ohio-based MarkWest agreed to pay the civil penalty and install $2.6 million worth of equipment at more than 300 compressor stations, pig launchers and pig receivers.In addition, the company will install and operate ambient air monitoring systems near compressor stations in Ohio and Pennsylvania and participate in other supplemental environmental projects, totaling $2.4 million. The federal settlement is the first to acknowledge that the use of a maintenance technique called “pigging,” is a major source of harmful emissions in wet gas shale plays like the Marcellus and Utica.Devices called “pigs” are used to remove debris and liquids inside pipelines. Often, before the pigs are inserted, pipelines are depressurized, which releases gas into the atmosphere The settlement between the U.S. Department of Justice, Environmental Protection Agency and Pennsylvania Department of Environmental Protection and two MarkWest subsidiaries -- MarkWest Liberty Midstream Resources, LLC and Ohio Gathering Company, LLC -- alleges the company failed to apply for or comply with air pollution permits. As a result, the company unlawfully vented hundreds of tons of natural gas and volatile organic compounds, or VOCs. VOCs include chemicals that cause smog, or ozone pollution, and can cause serious health impacts, including headaches, nausea and damage to internal organs. MarkWest is the largest processor and separator of natural gas in the Appalachian Basin and has operations across the northeast and near the Gulf of Mexico. The company operates two processing facilities in West Virginia, one in Kenova and the Cobb Processing Facility in Clendenin. A spokesman for MarkWest said the settlement will only apply to the operations outlined in the documents. EPA says the technology installed under the settlement will prevent more than 700 tons of VOC emissions from being released annually.
Blue Racer keeps growing in the heart of Utica Shale -- Blue Racer Midstream is not often in the news. The privately held company quietly goes about its business in the Appalachian Basin. The company operates the largest network of gathering pipelines in the Utica Shale with more than 700 miles of pipelines, its so-called “super system,” said spokesman Cory Gerken, at a recent Utica Midstream conference in North Canton, Ohio.That includes 531 miles of rich gas lines, 39 miles of lean gas lines, 101 miles of liquids and 50 miles of condensate lines, he said. Its processing has grown from about 200 million cubic feet per day (MMcf/d) in March 2014, to 400 MMcf/d in March 2015, to 700 MMcf/d today, according to a Kallanish Energy review of company data.It serves 20 customers in the Utica Shale in eastern Ohio and the nearby Marcellus Shale in West Virginia and western Pennsylvania.Blue Racer must remove the heavy hydrocarbons from the wet or rich natural gas to create the most value for its producers, and those natural gas liquid volumes are increasing. The system serves the lean Utica and the rich Utica and nearby rich Marcellus areas. The company’s flagship Natrium processing plant on the Ohio River at Natrium, W. Va., can handle 450 MMcf/d of natural gas processing, and 123,000 barrels per day (BPD) of fractionation, he said. It also features 2,500 BPD of onsite condensate stabilization, he said.
Seneca Nation takes on Pittsburgh startup to defend the Allegheny River - Environmental Health News - Last month more than 100 Seneca Nation tribal members showed up at the monthly meeting of the local municipal authority in the small town of Coudersport, Pennsylvania, carrying protest signs and ceremonial drums. They couldn't all fit inside the sewer plant building, so many stood outside, where they sang and chanted in the Seneca language. Their signs bore messages like, "Water is sacred," and "Keep your fracking in Pennsylvania." They were protesting a proposed fracking wastewater treatment plant adjacent to the Coudersport Area Municipal Authority's sewage treatment facility. If approved, the facility would take up to 42,000 gallons of fracking wastewater per day from Marcellus shale gas drillers to be treated and discharged into the Allegheny River—which flows from Coudersport in north central Pennsylvania's Potter County up into Western New York and through the Seneca Nation's territory. No one consulted tribal members about the plan. They read about it in the news. "Our name for the Allegheny is Ohi'yo, which means 'beautiful water,'" said Seneca Nation president Todd Gates. "We're determined to keep it that way. We can't do anything without water. It's the basis of all life. It's a sacred resource." After flowing from Coudersport into New York and through the Seneca Nation's land, the river turns back into Pennsylvania and meanders down into Pittsburgh, where it converges with the Monongahela River to form the Ohio River. In other words, every community on the Allegheny River between New York and Pittsburgh is downstream of the proposed wastewater treatment plant. "It's not a question of would something go wrong," John Stolz, director of the Center for Environmental Research and Education at Duquesne University in Pittsburgh, said. "The question is if there are still even small amounts of dangerous constituents in the discharge, especially radioactive ones, then there's the possibility of buildup in the river over time."
The Connection Between Russia and 2 Green Groups Fighting Fracking in US - Daily Signal -- New Yorkers who are missing out on the natural gas revolution could be victims of Russian spy operations that fund popular environmental groups, current and former U.S. government officials and experts on Russia worry.Natural gas development of the celebrated Marcellus Shale deposits has spurred jobs and other economic growth in neighboring Pennsylvania. But not in New York, which nearly 10 years ago banned the process of hydraulic fracturing, also known as fracking, to produce natural gas.Two environmental advocacy groups that successfully lobbied against fracking in New York each received more than $10 million in grants from a foundation in California that got financial support from a Bermuda company congressional investigators linked to the Russians, public documents show.The environmental groups Natural Resources Defense Council and the Sierra Club Foundation received millions of dollars in grants from the San Francisco-based Sea Change Foundation.“Follow the money trail, and this [New York] ban on fracking could be viewed as an example of successful Russian espionage,” Ken Stiles, a CIA veteran of 29 years who now teaches at Virginia Tech, told The Daily Signal.To Stiles and other knowledgeable observers, this looks like an actual case of knowing or unknowing collusion with Russia.Both Natural Resources Defense Council and Sierra Club Foundation also accepted tens of millions from the Energy Foundation, the top recipient of grants from Sea Change, according to foundation and tax records.When New York Gov. Andrew Cuomo, a Democrat, renewed his state’s ban on fracking three years ago, the Natural Resources Defense Council issued a statement supporting the ban. So did the Sierra Club, the primary recipient of grants from its sister organization, the Sierra Club Foundation.Environmental activists associated with the groups receiving Sea Change Foundation grants continued to pressure Cuomo and other public officials to maintain and expand New York’s fracking ban.Most recently, the two environmental groups scored another victory when the Delaware River Basin Commission, an interstate regulatory agency that includes the governors of New York, New Jersey, Pennsylvania, and Delaware, proposed a ban on fracking within the Delaware River Basin cutting across all four states. The Sierra Club and the Natural Resource Defense Council have pressed the regional commission to impose the ban, issuing statements (here and here) calling for restrictions that are tighter than what the commission proposed.
Pennsylvania’s natural gas production continues to increase -- Pennsylvania’s marketed natural gas production averaged a record 15 billion cubic feet per day (Bcf/d) in 2017, 3% higher than the 2016 level. This production is largely from shale plays in the Appalachian Basin. Pennsylvania accounted for 19% of total U.S. marketed natural gas production in 2017 and produced more natural gas than any other state except Texas. Pennsylvania has experienced an increase in permitting and drilling activity with the expansion of regional pipeline capacity capable of moving natural gas to market centers outside of production areas. According to the Pennsylvania Department of Environmental Protection, the state issued 1,352 natural gas drilling permits in 2016 and another 2,038 in 2017. The drilling rig count in the state has also increased, averaging 20 rigs in 2016 and 33 in 2017, based on data from Baker Hughes. Recent permitting and drilling activity in Pennsylvania is concentrated in opposite corners of the state. Washington and Greene counties in southwestern Pennsylvania and Susquehanna County in northeastern Pennsylvania have the highest number of permits and rigs. Natural gas produced in Washington and Greene counties has a high natural gas plant liquid (NGPL) content, enhancing the value of gas extracted from these counties and helping drive production. NGPLs have tended to sell at a higher price than the natural gas. By comparison, natural gas production in Susquehanna County is relatively dry, meaning the natural gas has less NGPL content. In Susquehanna County, the estimated ultimate recovery of wells—a measure of gas productivity—has increased over the past five years, spurring further drilling activity. In 2016 and 2017, these three counties combined accounted for slightly more than half of the total permits and two-thirds of the active rigs in Pennsylvania. EIA forecasts natural gas production to continue to increase in the Appalachian basin, which would indicate a need for additional pipeline capacity. Current pipeline projects include the 3.25 Bcf/d Rover Pipeline Project and the 1.5 Bcf/d NEXUS Gas Transmission Project, both slated to begin operations during the next few months.
Group urges Gov. Wolf to take action against Mariner East 2 pipeline - About 30 speakers pleaded with Gov. Tom Wolf to change his ways and put a stop to the Sunoco Mariner East 2 pipeline, during a Del-Chesco United for Pipeline Safety citizen’s public hearing, at the township building on Thursday. The venue was changed to accommodate what was a standing-room only audience of more than 150 concerned citizens from all over the state. The event highlighted what many said was Wolf’s lack of respect for the health, safety and welfare of Pennsylvania residents during pipeline construction, and when and if, highly volatile fuels are pumped through the pipeline stretching 350 miles from Ohio, West Virginia and western Pennsylvania to the former Marcus Hook Refinery in Delaware County. Speakers presented testimony as part of an “investigation” concerning whether or not Wolf has violated his oath of office by pushing through Sunoco Pipeline’s “dangerous” pipeline project. A panel of representatives from several counties listened intently and will make a decision at a future date. Rebecca Britton lives in Uwchlan and said she thought she was living the American Dream. “Put people over partisan politics and the big money,” Britton said. “Gov. Wolf, look deep within yourself.” Susan Britton-Seyler said that the governor, the Department of Environmental Protection and the Public Utilities Commission are violating the state Constitution. “They’ve decided that a blast zone in Exton, Pennsylvania is acceptable,” she said. She then asked public officials to embrace clean, renewable energy. “Fracking and pipelines are a threat to the health, safety, air and soil,” Britton- Seyler said. “Empty promises are not acceptable.” Ann Pinca, of North Lebanon Township, said, “our government has failed us.”
Gov. Justice order to expedite permit process could benefit business, oil gas industries — Gov. Jim Justice signed an executive order Monday intended to streamline the permitting process for business and industry seeking to set up shop in the Mountain State. “West Virginia has consistently been ranked at or near the bottom amongst all states for our regulatory environment by publications such as Forbes and CNBC,” Justice said in a press release. “This is an area where we need to improve. “Like our President, Donald J. Trump, I have been very focused on regulatory reform and will aggressively continue those efforts in our state,” Justice said in the release. According to the governor’s staff, the executive order would require expedited permitting for all projects, as well as prioritization of permits for projects of critical economic concern. The order also would require executive state agencies to file written reports to the permit applicant, executive director of the state Development Office and governor that explain inaction on completed permit applications for projects of critical economic concern. And the order would establish an annual reporting requirement from the Development Office to the governor and Legislature explaining whether the program is operating successfully. “The purpose of this action is to provide an expedited permitting process for business and industry to secure all necessary permits,” the order reads. “Executive state agencies shall immediately review all completed grant applications upon receipt,” the order says. “Executive state agencies shall grant or reject all permits in an expeditious manner without compromising the integrity of a thorough analysis or statutory requirements.”
West Virginia executive order expected to smooth permitting for downstream projects -An executive order issued by West Virginia Governor Jim Justice to expedite the permitting of "projects of critical economic concern" is expected to speed permitting of intrastate pipelines and other large energy projects, an official representing independent oil and gas producers said Tuesday. The order, which Justice signed on Monday, calls for faster permitting of all projects but prioritizes those that have "the ability to stimulate economic development and job creation in West Virginia."The biggest effects from the executive order are likely to be felt "downstream from the drilling," Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, said in an interview Tuesday.Burd cited proposed intrastate pipeline projects as the most likely beneficiaries of the order, as well as any industrial and chemical manufacturing plants built as an outgrowth of the expansion of the shale gas industry. In addition, he pointed to any projects that might be launched as a result of the $83.7 billion that China Energy Investment, the world's largest power company, had committed to invest in shale gas, power and chemical projects in West Virginia last November; as well as the much-discussed proposed creation of a petrochemical storage and trading hub in the southwest Appalachian region.However, the order is less likely to shorten the time it takes to secure a permit to drill an oil or gas well, a process that is already fairly streamlined, Burd said. He estimated the average time to secure a drilling permit at 75 days."Those permits are routinely done in a relatively efficient manner if all the components of the permits are included at the time of the initial submittal," he said. "Permits sometimes get held up if there's a portion of the permit mistakenly not included."
Study: Songbird that needs clean streams threatened by fracking -- Mack Frantz is a Ph.D. candidate at West Virginia University and part of the USGS Cooperative Fish & Wildlife Research Unit. He recently published a journal article about the measurable effect of shale gas development on the bird.“The Louisiana waterthrush is the proverbial canary in the coal mine,” Frantz says. Frantz and his colleagues studied habitat in West Virginia where there has been increasing activity from the gas industry. It’s a heavily forested area but there’s also forest fragmentation. “It’s not really so much the placement of a well pad, but all of the infrastructure it takes in order to access that well pad and to transfer the gas — access road, pipelines, compressor stations,” Frantz explains. “So in areas where you used to have contiguous forested habitat, which is important to have for certain kinds of wildlife, that might be broken up.” Frantz and the research team looked at aerial and satellite images of gas development, and spent hours in the field from 2009 to 2011 when unconventional drilling began and was peaking, and then again from 2013 to 2015. They also monitored waterthrush nests and territories. They found that nest survival decreased. “So the probability that a nest is going to be successful over its 29 day nesting period, that was lower due to shale gas development,” Frantz says. “We also saw that shale gas-disturbed areas were producing less fledglings.”Frantz says the riparian habitat quality also declined in areas where there was gas development. That means water quality in the streams, but also erosion of stream banks, and a loss of native plants. The study also suggests that Louisiana waterthrush have had to increase their range. “If you start to remove some of that forest cover, that’s going to affect their food resources. And so I think in part that’s what we’re seeing here: that the waterthrush are having to have larger territory to support their foraging needs, not only for themselves but for their nestlings.”
Perched on a platform high in a tree, a 61-year-old woman fights a gas pipeline — When the trees started coming down, Theresa “Red” Terry went up.Now, the 61-year-old mother of three is perched on a platform 32 feet in the air between two oak trees, trying to stop a natural gas pipeline from coming through land granted to her husband’s family by the king of England in Colonial times.For three weeks, she has endured rain, snow, hail, nighttime temperatures in the 20s and high winds. Her body is stiff and sore. When she huddles under a tarp to stay warm, it’s usually too dark to read. She’s bored.Ten days ago, police said family and friends could no longer bring her food and water. Officers are waiting at the base of the trees, around the clock, to arrest her when she finally comes down. Her 30-year-old daughter is in another tree, too far through the family’s woods to see, also defying police.They’re trespassing on their own property.As the stalemate drags on, “I stand with Red” has become a rallying cry for opponents of the Mountain Valley Pipeline, a 300-mile, $3.5 billion project being built by a coalition of companies led by EQT Midstream Partners. It’s the further along of two gas pipelines planned in Virginia. An even bigger project, the Atlantic Coast Pipeline, is being built through the central part of the state by a coalition led by Dominion Energy, the state’s largest utility. The two pipelines have thrown together environmentalists; although property rights advocates have tried to block them, the projects have won political and regulatory support at every turn. With tree-clearing finally underway, an air of desperation is gripping opponents. A handful of other tree-sitters have blocked part of the Mountain Valley Pipeline’s route in the Jefferson National Forest in West Virginia since February. A few more sitters went up trees in Virginia’s Franklin County last week.Last Wednesday, a group of Democratic state lawmakers from Northern Virginia and Richmond joined with others from the southwestern part of the state to call on Gov. Ralph Northam (D) to slow both projects, a sign that the issue is expanding beyond a regional concern. Though Northam’s office said there is nothing the governor can do, because the project has won federal approval, the State Water Control Board has approved a new 30-day comment period for the public to weigh in on whether waterway protections are adequate.
With Treetop Protest, 61-Year-Old Red Terry Leads Fight Against Mountain Valley Pipeline - (video) In Virginia and West Virginia, residents and activists are battling natural gas companies over a natural gas pipeline currently being constructed. The Mountain Valley Pipeline will extend 303 miles from northwestern West Virginia to southern Virginia, with a recently proposed 70 mile extension into North Carolina. The project is being funded and operated by Mountain Valley Pipeline LLC, owned by EQT Midstream Partners, LP; NextEra US Gas Assets, LLC; Con Edison Transmission, Inc.; WGL Midstream; and RGC Midstream, LLC. The pipeline will transport up to 2 billion cubic feet of fracked natural gas daily from the Marcellus and Utica shale basins , "to supply the growing need for natural gas in the mid-Atlantic and southeastern regions of the United States," according to a EQT Midstream Partners spokesperson. The Federal Energy Reserve Commission approved the pipeline in October 2017 with a 2-1 vote, with two seats on the commission vacant. The only dissenting vote was cast by Cheryl LaFleur, who cited environmental concerns and skepticism over the pipeline's necessity as influential factors on her vote against its approval. In February, a federal court denied a request to delay the pipeline's construction filed by Appalachian Voices and five other conservation organizations. Mountain Valley Pipeline LLC is currently clearing forest along the Appalachian Trail and in Jefferson National Forest for the pipeline construction. According to FERC , Mountain Valley Pipeline has until May 31 to complete tree cutting. Pipeline opponents claim the pipeline's construction will negatively impact the scenery and pose various environmental risks in the Appalachian region. "We are concerned about the Appalachian Trail and the devastation that's going to occur to the views from Peters Mountain and all along this region," said Maury Johnson, a resident and property owner in West Virginia opposing the pipeline, in an interview. Johnson noted that pipeline surveyors visited the property on his family farm, and he has dealt with them since surveying began in early 2015. He claimed the surveyors rushed the job, often missing details that he had to frequently point out for them to record. "Some of the work that has been done has been very flawed," he said. On his Facebook account, Johnson has posted several photos of sediment barriers set up by Mountain Valley Pipeline being breached to prevent erosion, just one of the several risks to water quality in the area posed by the pipeline.
Tree-sit protests of the Mountain Valley Pipeline pose a new challenge for police - Since tree-cutting began for the Mountain Valley Pipeline, local police have been faced with a new question: What to do when a protester climbs up a tree destined for a chainsaw and refuses to come down?There seems to be no established protocol for such a situation in Southwest Virginia, where the closest thing has been the occasional call for a cat up a tree.But according to law enforcement officials involved in similar standoffs elsewhere, the best response is the one being used here: avoid the use of force and wait the tree-sitters out. In the Kalmath National Forest of Northern California in the late 1990s, several people opposed to logging and timber sales on public land camped out in tree stands for weeks in an effort to block tree-cutting. Jay Power, a now-retired Forest Service law enforcement officer who was involved in the standoff, said authorities cut off the supply of food and water the tree-sitters were receiving from supporters on the ground. Then they shone bright lights at them all night long while cranking up country music on loudspeakers. “We did everything we could to make them uncomfortable and make them want to come down out of the trees,” Power said.In such cases, when determined but peaceful activists are high above the ground in tight quarters, trying to remove them forcefully can carry more risks than police are willing to take.“I think we were meeting non-violent tactics with non-violent police work, with no intention of hurting anybody,” Power said.Deb Strickland, a retired Forest Service officer in Montana, said similar tactics paid off when dealing with tree-sitters in the Bitterroot National Forest. “Sooner or later, each one of them crawled down on their own,” Strickland said. “But it was a waiting game.”
Roanoke County police deliver pizza, sandwiches to pipeline protesters in tree stands - After provisions ran low in two tree stands occupied by pipeline protesters, Roanoke County police used plastic buckets on a rope to send up pizza and bologna sandwiches to the two women. The police officers, who have been keeping a close watch on the mother-and-daughter team of tree-sitters, were told for the first time Sunday that they needed food. “Their requests were accommodated immediately,” county spokeswoman Amy Whittaker said. As the anti-Mountain Valley Pipeline stands of Theresa “Red” Terry and her daughter, Theresa Minor Terry, drew national attention, some observers accused police of treating the women inhumanely by denying them food and water. In fact, Whittaker said, intelligence gathered by police officers camped out below the tree stands indicated that the Terrys only recently depleted a stockpile of necessities during their three weeks aloft. “As has been repeatedly stated, Roanoke County will provide protesters with what is needed to ensure their physical needs are met,” Whittaker said in a news release Monday. While Minor Terry ate pizza, her mother dined on bologna sandwiches that were hoisted up to her wooden tree stand in the woods off Poor Mountain Road. The Terrys say they plan to sit tight for as long as it takes to block Mountain Valley from cutting trees for a natural gas pipeline slated to pass through land that has been in their family for seven generations.
Appalachians Against Pipelines: “One of the Two Tree Sits…Has Been Taken Down by [MVP] Security” - Up on the mountain ridge — on the West Virginia side of Peters Mountain, at the original tree sit site — the past couple days have brought some changes.First, one of the two tree sits here has been taken down by Mountain Valley Pipeline security. No one was harmed or arrested in its removal.Just a couple hundred feet away, the second sit is occupied & holding strong! The sitter in that tree writes, “I feel together with everyone working to resist this pipeline. While the other tree sit here on Hellbender is no more, I’m continually inspired by its courageous stand for over 50 days. I am not intimidated by the now 24-hour surveillance of both MVP’s security and the Forest Service, whose tents you can see on the ridge above me. I remain. Stay strong.”A few miles down the mountain, the record-breaking monopod also remains standing. Today is Day 28. In addition to this (and perhaps in response), MVP filed for a variance request that would allow them to cut trees in the Jefferson National Forest after their March 31st deadline — specifically, they asked for permission to cut the trees protected by the Peters Mountain Stand. FERC granted that request almost immediately. We don’t know if or when they plan to come cut the trees left standing on the easement, protected now by one remaining tree sit. But we’ll be here. Come join us. In spite of these recent developments, we are continually inspired and encouraged by the support we’ve received from near and far. Local supporter Nancy Hadden sent us this beautiful note yesterday: “The tree sitters are doing more than just climbing onto a high platform in protest of corporate greed, stolen property rights, and environmental injustice. They are helping all of us to find our own strength, our own voice. Because of them, I check myself each day; I ask how much I am willing to sacrifice for what I know to be true and just. For every day they are there, I become more involved, more courageous. They are helping the people find their power.”
Mountain Valley Pipeline gets OK to cut trees in small area past deadline — The Federal Energy Regulatory Commission has granted permission for Mountain Valley Pipeline to cut trees in a small but contentious area of the Jefferson National Forest, beyond what had been a March 31 deadline. The area of the national forest — along the West Virginia/Virginia line — has been the location of protests by those who oppose construction of the 303-mile pipeline.Protesters have spent months on treetop platforms in the national forest, blocking the tree cutting.The deadline to cut trees was March 31 for areas considered sensitive as bat and migratory bird habitats.The variance granted Monday by FERC was also approved by the Bureau of Land Management, the U.S. Department of Agriculture Forest Service and the Fish and Wildlife Service.Protesters started blocking the tree cutting in late February by sitting on platforms in an area along the Appalachian Scenic Trail on Peters Mountain in Monroe County.The protest continued on past the March 31 deadline.The treetop protests still continue now, although one of two platforms in Monroe County was disassembled a few days ago after a protester left it. Mountain Valley Pipeline would extend 42-inch diameter natural gas pipeline over 303 miles to transport West Virginia natural gas into southern Virginia.
Attorneys warn that Giles pipeline protester could die if denied sustenance - A protester could die if authorities continue to deny her food and water as she nears one month atop a pole blocking construction of a natural gas pipeline, two attorneys say in a letter to the U.S. Forest Service. Since March 28, the woman has been living on a small platform suspended from a 50-foot pole. The barricade was erected in the middle of an access road needed to build a segment of the Mountain Valley Pipeline through the Jefferson National Forest in Giles County. Forest Service law enforcement officers have cordoned off the so-called monopod sitter and are preventing supporters in a nearby camp from supplying her with food and water, according to court documents. “The Forest Service’s actions in continuing to starve her out are tantamount to torture and contrary to human rights and international law,” Floyd County attorneys Alan Graf and Tammy Belinsky wrote in a letter faxed Wednesday to Roanoke-based Forest Supervisor Joby Timm. “Mr. Timm, you have a duty to protect the health and welfare of a United States citizen,” the letter stated. “The death or significant injury to the pod-sitter will be on your shoulders should that transpire.” In an April 6 email through a spokeswoman, Timm said the woman was not being denied food or water and is free to leave her monopod, which sits in a portion of the national forest that has been closed for pipeline construction..“Quite a while,” the woman said when asked how long she might last. “She has held her ground through snow, sleet, hail, heavy winds, driving rain, freezing nights, and (a few) scorching afternoons,” Appalachians Against Pipelines, a group that has been documenting the protests, said on its Facebook page Thursday.
Climate change looms large as FERC reviews pipeline policy -- The Federal Energy Regulatory Commission's comprehensive review of natural gas policy will likely open a new chapter in a long debate over how the agency weighs the environmental impacts of pipeline projects.FERC officially kicked off its first review of guidelines for pipeline applications since 1999 last week with a notice requesting feedback on four broad categories (Energywire, April 20). One of them: How should FERC consider environmental impacts?Another question raised is whether FERC should calculate potential greenhouse gas emissions from upstream activities, like the drilling of natural gas wells, and downstream gas consumption. The review also asks if FERC should use the "social cost of carbon" tool in its consideration of environmental impacts.Those are familiar questions to anyone who has followed FERC's shifting policies and legal strategies. FERC's review is also expected to delve into issues that have dogged the agency in recent court fights — notably battles over FERC's 2016 approvals of the Sabal Trail pipeline and the broader Southeast Market Pipelines Project without analyzing the planet-warming emissions anticipated from Florida power plants that would burn gas transported by the pipeline.Last August, the U.S. Court of Appeals for the District of Columbia Circuit rebuffed the agency and ordered it to conduct additional analysis of the project's downstream climate impacts (Energywire, Aug. 23, 2017). That decision triggered a high-stakes supplemental review process and an urgent — and successful — effort by FERC and developers to keep Sabal Trail from being shut down. Amid the legal drama, environmental lawyers and outside experts set to work making recommendations for how FERC should conduct its climate analysis. In the end, many advocates were dissatisfied with the commission's approach. They're likely to raise the issues again during the pipeline policy review.
Anti-fracking documentary wins top prize at EarthxFilm - This weekend, the EarthxFilm festival awarded its top prize to Unfractured about a New York-based biologist turned fractivist. The film, directed by Chanda Chevannes, screened three times at the Dallas-based environmental film festival. “This remarkable documentary does more than help us comprehend the fracking industry and its immediate impact on our environment. Unfractured is also a deeply moving and revealing portrait of the human cost of uncompromised activism and the anatomy of personal sacrifice. Ultimately, Unfractured carries with it a hopeful message about how advocacy, protest, and demonstration can—and must—truly change the world.” The award comes with a $5,000 prize. Inspired by the growing opposition she has witnessed, including recently in Texas, filmmaker Chanda Chevannes said she will use the funds to bolster the grassroots movement, by offering the rights to screen Unfractured free of charge to 50 grassroots organizations. Chevannes intends to work closely with those on the frontlines of the battle against the fossil fuel industry, in the hopes of inspiring more women and men to join the fight. A triumphant documentary about fighting with your whole heart, Unfractured follows biologist and mother Sandra Steingraber as she reinvents herself as an outspoken activist and throws herself into the fight against fracking in New York State.
Why increasing pipeline capacity will reduce eastern gas price volatility - This past winter’s gas price spikes shined a bright light on the changing dynamics driving Eastern U.S. natural gas markets, especially the growth in gas-fired generation that is contributing to more frequent — and more severe — spikes in gas prices in the region on very cold days. There are other changes too. For one, gas is increasingly flowing from the Northeast to the Southeast as prodigious Marcellus/Utica production growth is pulled into higher-priced, higher-demand growth markets. In today’s blog, we conclude our series on ever-morphing gas markets on the U.S.’s “Right Coast” by examining how gas pipeline flows back East have changed on days besides the winter peaks, how much demand could be unlocked by forthcoming pipeline projects, and what that new demand will mean for flow and price patterns. In Part 1 of this series, we considered what was behind the sky-high Eastern natural gas prices we saw from time to time during the winter of 2017-18. We found that regional gas demand for power generation has been strengthening, although volatile weather and gas prices can sometimes obscure this trend. And we noted that while the Marcellus and Utica production areas are proximate to the biggest East Coast demand markets, limited pipeline capacity exists between these supply and demand locations. In Part 2, we disentangled competing forces in Eastern power generation and determined that, after you strip out the impact of fuel switching and gas-price volatility, (1) gas demand in the Eastern Transco Corridor has increased structurally by about 400 MMcf/d since the 2013-14 Polar Vortex winter and (2) about 120 MMcf/d of that delta is due to coal-plant retirements. Now, in the final part of this blog series, we explore how growth in Northeast supply and Southeast generation has changed flow and price patterns on Transco, and how new pipeline projects now under construction will increase gas demand and change flows and prices next winter.
Supersized Natural-Gas Power Plant Would Supply Energy to New York - Does New Jersey need a huge new natural-gas power plant? Probably not, but New York certainly does.That kind of explains why developers of a new 1,200-megawatt natural-gas power plant held a press conference yesterday in an industrial part of North Bergen to tout the benefits of locating a $1.8 billion generating unit a few miles away from Manhattan. The (1,200MW) project would sit on a 15-acre site in a heavy industrial section of the township at 94th Street near existing energy and utility infrastructure. The North Bergen Liberty Generating plant would use natural gas and the latest combustion turbine technology to produce enough electricity to power approximately 1.2 million homes in New York City. “Our facility would be among the cleanest, most efficient power plants in the region,’’ said David Deutsch, vice president of development for North Bergen Liberty Generating. Critics may offer a different view. The project also seems to be out of step with policies being proposed by New Jersey Gov. Phil Murphy and New York Gov. Andrew Cuomo, both of whom have endorsed having 50 percent of their state’s electricity produced by renewable sources by 2030.
New Jersey Passes Nation's Toughest Ban on Offshore Oil Drilling - New Jersey has passed a law prohibiting offshore oil and gas exploration, development and production in state waters—the nation's toughest response yet to the Trump administration's plans to vastly expand offshore drilling in nearly all U.S. coastal waters.Gov. Phil Murphy signed into law on Friday the bipartisan bill called the "Shore Tourism and Ocean Protection from Offshore Oil and Gas Act" or "STOP Offshore Oil and Gas Act." The Democratic governor noted that signing occurred on the anniversary of the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. The state's 130-mile coastline is home to beaches, fisheries and marine life. It also supports a $44 billion tourism industry that attracts millions of visitors each year. Even though New Jersey has no control over drilling in federal waters, they do have jurisdiction over three nautical miles extending off the coast. By banning drilling in those waters, the state has effectively blocked the construction of any infrastructure such as pipelines or docks that could transfer the oil. While companies can get offshore oil without this equipment—they can instead use floating oil rigs and transfer the oil onto ships—that method is much more difficult and expensive. According to the governor's office, the bill also prohibits the Department of Environmental Protection (DEP) from issuing any permits and approvals for the development of any facility or infrastructure related to offshore drilling within or outside of New Jersey waters. Additionally, the DEP must review any proposed oil or natural gas development in the Atlantic region of the U.S. exclusive economic zone to determine if the proposal can reasonably be expected to affect New Jersey waters.
Anchor’s Away: Marcellus Shale Leaves Cove Point, Future Arrives - Finally!!! The very first cargo of Marcellus Shale gas has been liquefied, loaded and as of Sunday night, set sail from Dominion’s Cove Point LNG plant, heading for we’re not sure where yet. We’ve waited YEARS for this day! Let’s pop the cork on a bottle of the bubbly and celebrate. Last week MDN told you that a ship called the Patris was due to dock at Cove Point and load the first shipment of Marcellus molecules. It appears that information was incorrect. It was correct at the time! Either the Patris was redirected somewhere else, or we’re not sure what happened. But, news has just broken that late Sunday night, close to midnight, a ship by the name of Adam departed Cove Point loaded with the very first Marcellus shipment. Several more ships are said to be headed for Cove Point now. International shipping isn’t our specialty, so we won’t quote chapter and verse for which ships and when. This first shipment that left Sunday belongs to Japan, but there’s no indication it will actually go to Japan. As we’ve noticed and have been reporting, both Japan and India (which will take all of the LNG Cove Point can produce) are in the game of swapping cargoes they own, sending Cove Point cargoes to customers closer to the point of origin in return for receiving cargoes that originate closer to their own shores. When we hear where the first Marcellus cargo lands, we’ll let you know. In the meantime, here’s the information we can find about the very first load of Marcellus Shale gas to get exported from Cove Point. From Reuters:The first contractual liquefied natural gas (LNG) cargo from Dominion Energy Inc’s newly constructed Cove Point LNG export plant in Maryland in the United States left the facility on Monday, Thomson Reuters Eikon ship tracking data showed.The cargo is expected to act as a drag on spot LNG prices as it coincides with the resumption of exports of the fuel from the Papua New Guinea LNG plant, which had been shut following a powerful earthquake.The 160,000-cubic meter LNG tanker Adam LNG left Cove Point on Monday with a draft of 91 percent, suggesting it was full, according to the data. Its destination was not immediately clear.The facility has exported two commissioning or test cargoes already, which were sold to Royal Dutch Shell. The first cargo from the facility left the terminal in early March heading for Britain’s Dragon LNG terminal.
New Louisiana Gas Pipeline Capacity Needed From North To Feed Gulf Coast LNG Exports - Over the next two years, increasing natural gas demand for Gulf Coast LNG exports will reverse flow patterns across the Southeast/Gulf region, resulting in supply/demand imbalances, pipeline capacity constraints and regional price aberrations. The most significant of these developments will occur in the backyard of Henry Hub, Louisiana, where growing supplies in the north of the state will compete for pipeline capacity to get down to coastal export facilities. More Louisiana north-to-south pipeline capacity is needed. The only questions are where the capacity is needed most, and who will build it? Today, we continue our review of Louisiana gas supply, demand and transportation capacity. This is Part 6 of a blog series that we started about six weeks ago, in which we’ve been analyzing the effects of the major changes taking place in the Louisiana gas market — the decline in offshore gas production, the emerging demand from LNG exports, the influx of gas supply from the Marcellus/Utica and the rebound in local gas supply from the Haynesville and other regional gas supplies. These market developments will drive the overall U.S. gas supply-demand balance over the next several years, which makes understanding the Louisiana gas market a critical piece of the puzzle. Yet that is no small undertaking given that the Bayou State has the most dense, tangled network of natural gas pipes in the U.S.
Gas pipelines facing $18.5-billion threat from Trump tax revamp - Pipeline owners led by Enbridge Inc. and Williams Cos. could be forced to refund as much as $18.5 billion to drillers, utilities and even United Airlines Inc. for upfront payments they charged customers before new U.S. tax rules cut the corporate rate. Natural gas conduits include the cost of future tax payments in customer fees. Because the Trump administration lowered the tax rate 21% from 35% earlier this year, pipelines have effectively been overcharging customers, according to East Daley Capital Management Inc. The sides now await a U.S. ruling on whether refunds must be made, and how quickly. The outcome could be particularly damaging to master limited partnerships aligned with pipeline companies. In March, MLPs -- whose shares are down 21% from a year ago --lost the ability to collect any taxes, after regulators issued a ruling following a federal court decision involving United Airlines. Now, they face the prospect of paying back funds charged in the past.
Fracking boom drives Taiwan company's plan for $9 billion petrochemical plant in Louisiana - A company based in Taiwan plans to build a $9.4 billion chemical manufacturing complex on a 2,400-acre site in Louisiana, officials announced Monday.Gov. John Bel Edwards and Formosa Petrochemical Corp . Executive Vice President Keh-Yen Lin announced plans for the plant in St. James Parish, between Baton Rouge and New Orleans.The project is expected to provide 1,200 permanent jobs with average salaries of $84,500 and up to 8,000 construction jobs, according to a state news release.The plant will be the parish's largest industry, Parish President Timmy Roussel said.It will add about $28 million a year in property taxes once the exemption offered as an industrial incentive expires, Roussel told The Advocate. The parish now gets about $60 million a year in various taxes, he said.Part of Louisiana's standard incentive package is, with local approval, a full property tax exemption for five years, followed by an 80-percent exemption for three years. That alone would add up to about $207 million in tax breaks over eight years. Gary Perilloux, spokesman for Louisiana Economic Development, said he was working to get dollar figures for the exemptions. Construction is expected to take 10 years, possibly beginning as soon as 2019 if all permits are approved. The work would be in two phases, with the first permanent jobs expected to be filled in 2021. That hiring would trigger the first of four $3 million installments of a performance-based grant to offset infrastructure costs. The complex downriver from Donaldsonville would take natural gas and make ethylene, propylene, ethylene glycol and associated polymers used in many plastic products. It's the latest big petrochemical expansion in Louisiana motivated by cheap natural gas produced by the American fracking boom.
Gas Dominates, Again, in FERC State of the Markets Report - By now, it sounds like a broken record.As they have in the past four years, the trends in natural gas dominated the discussion of FERC’s annual State of the Markets report at the commission’s open meeting on Thursday. The report found that average U.S. natural gas spot prices rose 21% in 2017 from 2016, while average day-ahead on-peak LMPs increased 3 to 13% at pricing nodes in RTO/ISO markets. While the previous two years were marked by cheap prices driven by warm winters, last year saw cold weather at both its beginning and end, with an especially severe cold snap at the end of December and into January 2018 leading to a sharp spike in prices, especially in ISO-NE. (See FERC, RTOs: Grid Performed Better in Jan. Cold Snap vs. 2014.)Last year also marked the first since 1958 that the U.S. was a net exporter in gas, propelled by increased LNG export capacity. “The largest increase in demand for natural gas came from LNG exports, which rose from 0.63 Bcfd to 2.19 Bcfd, a 248% increase,” according to the report. Total exports to Mexico, the U.S.’ biggest LNG customer, increased by 0.5 Bcfd to an average 4.2 Bcfd for the year, aided by several new cross-border pipelines. Gas producers also found new markets within the U.S. About 12 billion Bcfd and 773 miles of new pipeline capacity went into service last year, most of it in the Marcellus and Utica shales. “New pipeline capacity out of the Marcellus and Utica shale plays allowed producers to meet demand in previously inaccessible markets,” the report says. “These shale plays demonstrated the largest U.S. natural gas production growth in 2017, with a 10.3% year-over-year increase for a total production of 22.1 Bcfd by the end of 2017.” Total U.S. gas production rose 1.0%, averaging 73.6 Bcfd. One of the only metrics to fall significantly was storage inventory. 2017 saw the third lowest weekly storage injection rate since 2010, while the end-of-year cold snap led to the largest withdrawal in history, 359 Bcf. The large winter withdrawals also led to the lowest end-of-winter storage level since 2014: 1.35 Tcf on April 5, 2018.
NYMEX May gas little changed at $2.736/MMBtu as stocks offset weather - NYMEX May natural gas futures were little changed in overnight US trading as the bullish influence of depleted inventories offset the prospect of a fall on weather-related demand. At 6:40 am EDT (1040 GMT) the contract was 0.3 cents lower at $2.736/MMBtu. Natural gas inventories fell in the week ended April 13, for which the US Energy Information Administration reported a 36 Bcf withdrawal compared with the 47 Bcf injection a year earlier and the 38 Bcf five-year average build. Working gas stocks were 1.299 Tcf, or 808 Bcf lower on the year and 449 Bcf below the five-year average. Lingering cold weather in major heat-consuming regions kept demand supported in the storage review week, but recent and forecast mild to warm weather indicates diminished demand for heating likely to encourage the changeover from weekly storage withdrawals to injections.
May NYMEX gas ticks up marginally to $2.747/MMBtu with warming weather - NYMEX May gas futures tiptoed higher overnight in the US ahead of Tuesday's open, with changing fundamentals and ahead of options expiry at the close of Thursday's trade and the contract's roll off the board Friday. At 6:50 am ET (1050 GMT) the contract was 0.7 cent higher at $2.747/MMBtu, trading between $2.728/MMBtu and $2.754/MMBtu. Revised weather forecasts show above-average temperatures over the Northeast, much of the mid-Atlantic, nearly all the Midwest, the upper tier of the Gulf Coast and parts of the Rockies in the 6-10 day period. This shifts south and expands west to cover most of the country's eastern two-thirds, the Southwest and fringes of the Northwest in the 8-14 day period. Lingering below-average temperatures shrink in scope to Montana, parts of the west-north-central US and a bit of Florida. Longer-range projections call for warmer-than-normal weather over a large part of the US from April through June, encouraging the switch from the extended withdrawal season to the already-delayed injection season that typically runs from April 1 through October 31.
NYMEX May natural gas futures down to $2.771/MMBtu ahead of options expiry - After rising 4.1 cents to $2.781/MMBtu Tuesday, NYMEX May natural gas futures fell on fundamental pressure overnight ahead of Wednesday's opening and options expiration at the close of business. At 7:10 am ET (1110 GMT) the contract was 1.0 cent lower at $2.771/MMBtu. Despite a prolonged withdrawal season, natural gas inventories are expected to end the injection season that typically runs from April 1 to Oct 31 with the second largest volume of refill season net injections on record at 2,416 Bcf, or 11.3 Bcf/d, according to preliminary EIA estimates. The agency anticipates an end-of-October inventory of 3,767 Bcf. Total working gas stocks are currently 1,299 Bcf, or 808 Bcf below the year-ago level and 449 Bcf below the five-year average of 1,748 Bcf, after the EIA outlined a large and atypical 36 Bcf withdrawal for the week to April 13. Estimates for the forthcoming storage report due Thursday that will cover the week ended April 20, call for a draw from stocks in the low to mid-teens. Moderate to warmer weather in store for the bulk of the country that should dampen heating demand ahead of the onset of substantial cooling load will combine with robust production implied by a rising rig count to encourage the onset of the injection season and promote a healthy pace of storage rebuilding going forward.
US heating season looks to continue its record-long stretch -- The natural gas withdrawal season is poised to stretch two weeks longer than ever reported as stocks must currently replace 2.549 Tcf of gas to reach the five-year average by the start of the next heating season. The US Energy Information Administration on Thursday is expected to report a 12 Bcf withdrawal for the week that ended April 20, according to a survey of analysts by S&P Global Platts. Responses to the survey were tight and ranged from a withdrawal of 7 Bcf to 17 Bcf. The EIA plans to release its weekly storage report at 10:30 am EDT on Thursday. A 12 Bcf draw would be very bullish compared to the corresponding week last year, which featured a 71 Bcf injection, and the five-year average build of 60 Bcf. It would also be the latest net withdrawal on record for the heating season. A withdrawal within analysts' expectations of 12 Bcf would deplete stocks to 1.287 Tcf. The deficit versus the five-year average would grow to 521 Bcf and the deficit versus the corresponding week last year would expand to 891 Bcf. The EIA reported a 36 Bcf net withdrawal for the week ended April 13. It dropped inventories to 1.299 Tcf, which was 38.3% less than the year-ago inventory of 2.107 Tcf, and 25.7% less than the five-year average of 1.748 Tcf. During the injection season, stocks currently need to replace 2.549 Tcf to reach the five-year average of 3.848 Tcf for the start of the next heating season. Last year, storage added 1.737 Tcf during injection season. Over the past five injection seasons stocks have increased by an average of 2.147 Tcf. Over the past decade, stocks only registered lower once to start the injection season. In March 2014, the injection season began with 824 Bcf in storage following the polar vortex. By November, producers had added 2.787 Tcf to reach 3.611 by the start of the 2014-15 heating season. S&P Global Platts Analytics has October ending inventories on pace to finish at 3.4 Tcf despite 7.5 Bcf/d of production growth summer over summer, of which 3.5 Bcf/d is forecast to come from the Northeast. Population-weighted temperatures across the US increased 1.5 degrees week over week. Although the East, Midwest and South Central storage regions experienced slight warming, temperatures there remained 6 or 7 degrees below normal, pushing withdrawal season for the US two weeks further than has historically occurred.
Weekly Natural Gas Storage Report - One More Bullish Report In The Making Followed By 3 Bears -- The EIA reported a -18 Bcf change in storage for the week ended April 20. This brought storage to 1.281 Tcf. This compares to the +74 Bcf change last year and +60 Bcf change for the five-year average. Going into this storage report, a Reuters survey of traders and analysts pegged the average at -12 Bcf with a range of +9 Bcf to -22 Bcf. We expected -17 Bcf and were 5 Bcf above the consensus. We were off by 1 Bcf on this storage report.This week's report was clearly bullish from the standpoint that a -18 Bcf storage draw was 92 Bcf lower than last year and 78 Bcf lower than the 5-year average.And following this bullish storage report, we estimate next week's storage report will also be a relatively bullish one. We currently have an estimate of +45 Bcf versus last year's +67 Bcf and +69 Bcf 5-year average. But it's not good news for the natural gas bulls following next week's report. Our estimates for 5/4, 5/11, and 5/18 week all show higher than average injections. On a relative basis, the first three weeks of May will show storage injections to be:
- Higher than 5-year average by 29 Bcf.
- Higher than last year by 92 Bcf.
Throughout the injection season and at least for May, injections should continue to be higher than the 5-year average. This is the result of fundamental balances now shifting negative despite storage being materially lower y-o-y. Yes, we do realize that storage is now almost 900 Bcf below last year's, but keep in mind that the natural gas market is forward-looking and with supplies showing a max capacity limit of ~81.5 Bcf/d today, this could bode bearishly for fundamentals during cooling demand season.
June NYMEX gas slips to $2.797/MMBtu on healthy outlook for storage rebuilding - NYMEX June natural gas futures had a weak showing in the US overnight ahead of Friday's open, as the market looked beyond significantly depleted inventories toward what is expected to be a healthy pace of storage rebuilding going forward. At 6:29 am ET (1029 GMT) in its first day as the new lead month, the June contract was 4.2 cents lower at $2.797/MMBtu. Natural gas inventories continued to draw lower three weeks beyond the typical start of injection season, with the latest storage data from the US Energy Information Administration outlining an 18 Bcf withdrawal for the week ended April 20. That bested the full range of estimates coming into the day, and defied both the 71 Bcf prior-year injection and the 60 Bcf five-year average build. Total working gas stocks were left at 1,281 Bcf, or 897 Bcf below the year-ago level and 527 Bcf below the five-year average of 1,808 Bcf. Increased heating demand relative to historical averages is seen to have allowed for the continued storage erosion in the recent inventory report week, but milder to warmer weather of late and in store associated with subdued demand suggests the possibility of the changeover from weekly stock draws to injections. Deflated demand combined with elevated production should allow for natural gas to flow more freely into underground storage facilities. Growing production implied by a rising rig count is expected to help natural gas inventories build by what is expected by the EIA to be the second largest volume of refill season net stock additions on record totaling about 2,416 Bcf, or 11.3 Bcf/d, by the traditional end of the injection season October 31. The agency anticipates an end-of-October storage of 3,767 Bcf.
Natural Gas Storage Forecast For Next Week - The EIA reported a -18 Bcf change yesterday. This was 1 Bcf higher than our forecast of -17 Bcf. Be sure to read our week of April 20 storage report here. For the week of April 27, we expect a storage build of 45 Bcf. On a fundamental supply and demand basis, below is how each fundamental factor fared vs. the prior week: On the supply side, Lower 48 production averaged at the all-time high of ~80.1 Bcf/d this week. Canadian gas net imports also rose w-o-w. Canada's gas storage situation has also shifted into a deficit to the 5-year average. Total gas supplies, as a result, were higher this week. On the demand side, big demand decrease from heating demand resulted in a drop of 5.6 Bcf/d w-o-w. Power burn and industrial demand also pulled back this week due to seasonal demand decrease. But on a relative basis, demand variables were higher versus norm given the bullish total degree day backdrop. As we wrote in our NGD on Tuesday, natural gas fundamentals are starting to turn bearish. Storage injections for the first 3 weeks of May are expected to be higher than the seasonal average. In our last week's market balance, we had -4.4 Bcf/d for 2018. This week? It's -3.47 Bcf/d. But for the time being, end of storage is expected to still come in below the 5-year average with our latest estimate pegged at 3.561 Tcf. May is expected to show bearish storage builds, and the latest long-range weather outlook didn't help the bulls' cause either. For now, our trading position is that we are still long DGAZ as we told readers yesterday.
First exported VLCC from LOOP arrives in China: In the LOOP -- The first VLCC to directly load a cargo at the Louisiana Offshore Oil Port arrived at the port of Huizhou, China, on Sunday. The Shaden departed LOOP on February 18 after a loading time of about five days. The Saudi Arabian-flagged VLCC is owned by Bahri and took approximately two months to reach its final destination on the east coast of China, according to Platts vessel-tracking software cFlow. Prior to arriving at Huizhou, the Shaden had previously stopped at Rizhao, China, on April 17. Shell loaded Mars onto the Shaden, with Unipec reportedly taking the crude to ports in China. As the only US Gulf Coast export facility that does not require Aframax or Suezmax vessels for reverse lightering on to a VLCC, LOOP is poised to become a major export hub in coming years. Month on month, the Dubai/WTI swap spread has widened 97 cents, putting second-month Dubai at a $1.43/b premium over front-month WTI. As the spread widens, WTI-based sour grades produced in the US Gulf become more competitive with Dubai-based Middle Eastern sour grades in export markets, including those in Asia. The assessed value of Mars reached a 10-month low February 6, when it was assessed at WTI cash minus $1.65/b. Since then, the grade has increased $1.55 its current assessed value of WTI cash minus 10 cents/b. Strong export demand from Asia has helped boost the price of Mars in recent weeks, with that demand expected to continue, according to market sources.
U.S., Cheniere rewrite safety order after LNG leak - Cheniere Energy Inc. has finalized an agreement with U.S. regulators that eliminates some deadlines for the company to complete an investigation into the causes of a ruptured storage tank at its Sabine Pass liquefied natural gas export facility in Louisiana.In a "consent agreement and order" dated Friday and published yesterday, Cheniere and the Pipeline and Hazardous Materials Safety Administration (PHMSA) agreed that the company would continue to investigate the cause of an LNG release from a storage tank at Sabine Pass, which in 2016 was the first of a handful of LNG plants to begin shipping U.S. gas overseas.The leak on Jan. 22 was not publicly reported until Feb. 9, when PHMSA issued a corrective action order requiring Cheniere to shut down two of the five LNG storage tanks in use at the facility (Energywire, Feb. 12).Natural gas is highly flammable and, under certain conditions, explosive. LNG is natural gas that is cooled to a liquid at minus 260 degrees Fahrenheit. Its volume is then reduced six-hundredfold. When supercooled LNG encounters ambient air temperatures, it quickly expands and turns back into a gas. Each of Cheniere's tanks can store up to 3.4 billion cubic feet of natural gas.At a hearing last month in Houston, Cheniere said PHMSA had overstated the danger posed to the public by the leak and described the agency's order as "not warranted." PHMSA responded that the safety order was necessary to protect the safety of the hundreds of workers at the Sabine Pass site, as well as the public (Energywire, March 22). The hearing was initially scheduled as closed to the public but was made open under legal pressure by E&E News with the help of lawyers for the Reporters Committee for Freedom of the Press.
Oil/gas drilling activity, interest growing in area -- ConocoPhillips is making a play in Louisiana’s portion of the Austin Chalk formation, raising the prospect of a resurgence of onshore drilling activity in the state. Some reports claim the the Houston-based oil company’s effort could be focused in the Simmesport area. In the Bunkie area, people are watching an oil well being drilled in nearby south Rapides Parish, where the BlackBrush oil company has started “fracking” in a well it has drilled there. If the production from the well is good, it could open the Bunkie area up for more drilling. In addition to ConocoPhillips’ interest in what lies beneath Avoyelles’ fertile soil, EOG Resources has drilled a test well in the formation. A handful of other companies have established positions in Louisiana going from the Texas line eastward through Avoyelles, the Felicianas and beyond Baton Rouge. The Austin Chalk formation stretches from Texas through the middle of Louisiana, including Avoyelles Parish. “The excitement surrounding it is definitely there and measurable,” Louisiana Oil & Gas Association President Gifford Briggs said. He said the “jury is still out” as to whether the activity will turn into a full-blown resurgence of drilling in this area. There are several variables, including difficulty to drill, costs and production potential, that will be determined with exploratory wells. EOG Resources, which has leased about 130,000 acres, has drilled a test well in Avoyelles Parish in the Goudeau area. The firm will not comment on exploration work unless it moves into active development.
Permian Basin Is Growing Into the Largest Oil Patch in the World - The Permian shale play is all about setting records. Now, the region may even become the world’s largest oil patch over the next decade. Output in the basin is forecast to reach 3.18 million barrels a day in May, according to the Energy Information Administration. That’s the highest since the agency began compiling records in 2007. By 2023, the basin may produce 4 million barrels a day, according to the International Energy Agency. The Ghawar field in Saudi Arabia is currently the world’s biggest oil field, with capacity of 5.8 million barrels a day, according to a 2017 EIA report.This is all thanks to the size of the oil deposits, coupled with increased technology and efficiencies. “The technology is the biggest driver,” said Rob Thummel, managing director at Tortoise, which handles $16 billion in energy-related assets. “The basin in and of itself could end up being the largest oil field in the world, even bigger than Ghawar in Saudi Arabia." By contrast, top-producing members of OPEC such as Iran and Iraq pump less than 5 million barrels a day. Iran produced about 3.81 million barrels day in March, according to data compiled by Bloomberg.“If the Permian was part of OPEC, it would be the fourth-largest OPEC member, right behind Saudi Arabia, Iran and Iraq,” Thummel said. “By the end of the year, the Permian probably overtakes Iran.”The rampant production growth has already strained available pipeline capacity to transport the oil to market, pressuring prices. West Texas Intermediate oil in Midland, Texas, the heart of the Permian, sank Tuesday to $8 a barrel below U.S. benchmark prices in Cushing, Oklahoma, the biggest discount in more than three years, according to data compiled by Bloomberg. Companies are planning more lines to ease the bottleneck. Phillips 66 Partners LP and Andeavor announced Tuesday a joint venture to build a pipeline from the Permian to Corpus Christi and the Sweeny-Freeport area that may carry as much as 700,000 barrels a day when it starts at the end of 2019.
Permian crude differential hits lowest since Aug 2014 as output tops expectations - Permian Basin light sweet crude WTI Midland fell to its lowest level in more than three and a half years Tuesday, with rising production and limited takeaway capacity pushing down the grade's differential. On Tuesday, S&P Global Platts assessed WTI Midland at WTI cash minus $8.35/b on trade data heard, down $2.25/b compared with Monday's assessment. Tuesday's differential is the lowest assessment for WTI Midland since August 26, 2014, when the differential dropped to minus $9/b. Earlier in the day, the grade had traded as low as minus $11/b before slightly recovering by the early afternoon to its assessed value. Permian sour grade WTS Midland also fell to a multi-year low, dropping $2.80/b day on day to be Tuesday assessed at WTI cash minus $9/b, its lowest differential since January 25, 2013's minus $17.50/b. Permian Basin oil production is forecast to increase 1.2 million b/d in 2018, compared with last year, or 100,000 b/d each month, and is expected to reach 3.9 million b/d by December, according to data from S&P Global Platts Analytics. May output is expected to average 3.18 million b/d, according to data from the US Energy Information Administration, although the production estimate is slightly lower than total Permian pipeline takeaway capacity of 3.3 million b/d. This surge in regional crude production, facilitated by generally higher global oil prices, has tightened takeaway capacity from the Permian. With 3.3 million b/d of Permian takeaway capacity, April 15 pipeline allocations reduced the remaining spot capacity available for the month,
Costly logistical headaches for Permian crude E&Ps, part 4 - Large-scale and well-funded producers in the Permian have built dedicated gathering systems and signed up for pipeline-takeaway options to keep their barrels moving to markets at the Gulf Coast and Cushing. For the most part, smaller producers don’t have the same options, for a variety of reasons. More and more, barrels from outside the core areas of the Permian are competing for the last bits of pipeline space and producers are being forced to rely more heavily on Permian trucking companies to help keep their crude flowing. Truckers are being asked to make less desirable, less economical and longer hauls, and are passing those costs back to the producer. With pipeline takeaway capacity maxed out, trucking capacity is being pushed to the limit too, with several potential upstream impacts. Today, we look at trucking options for smaller producers in second-tier production areas, the impact of boom-bust cycles on trucking companies and what tight trucking capacity means for the basin as a whole. In Part 1 of this series, we discussed the recent blowout in differentials between crude oil at Midland and crude in Cushing and the Gulf Coast — widening spreads that were a result of massive and sustained production growth in the Permian and a lack of significant new takeaway capacity until 2019. In Part 2, we looked at smaller exploration and production companies (E&Ps), which are taking a more active approach in developing — and thereby proving the value of — more economically challenging “Tier 2” acreage. These new Tier 2 production trends are adding incremental production to the glut of crude in the basin and forcing producers to compete even harder for any and all available takeaway capacity. In Part 3, we discussed the challenges these smaller producers face without dedicated gathering systems or firm space on takeaway pipes. Today, we’ll get even closer to ground level and explore the potential impacts of Permian producers relying heavily on trucking operations to move their crude.
Refinery explosions rock Texas and Wisconsin - On Thursday, a tank containing asphalt exploded at the Husky Energy oil refinery in Superior, Wisconsin, a city of about 27,000 that borders Minnesota and the westernmost tip of Lake Superior. According to authorities, 11 people were injured by the blast but only one sustained serious injuries. The fire sent huge, toxic plumes of smoke into the air, posing a serious health risk to those living downwind. The noxious fumes prompted an evacuation order covering a three-mile radius around the refinery as well as a 10-mile corridor south of the blast where the smoke was heading. It is unclear how many people were evacuated. The refinery is in an industrial area, but there is a residential neighborhood a mile to the northeast. After the fire was put out, residents were told they could return to their homes. But authorities later announced the evacuation order would remain and be re-evaluated throughout the night. The Wisconsin explosion and fire followed an April 19 blast and fire at a Valero refinery in Texas City, Texas. According to authorities, the fire was quickly contained and no injuries were reported.The Texas City explosion was heard five miles from the source. It shook buildings within a mile of the refinery. Workers at the Texas City Valero and Marathon refineries, which are adjacent to one another, were given orders to shelter-in-placeSmoke from the explosion forced vessels in the industrial canal to leave, and the Coast Guard asked that no ships sail out of the port. No residents were asked to evacuate, but emergency responders escorted bystanders away from the area.Smoke from the explosion was visible miles away. According to ABC 13, Valero estimated its Texas City refinery emitted more than 5,000 pounds of alkylates, 13,700 pounds of carbon monoxide, 970 pounds of hydrogen fluoride and 12,000 pounds of particulate matter. The refinery also released oxides of nitrogen and sulfur dioxide at rates exceeding amounts considered safe. The Texas Commission on Environmental Quality is investigating the fire and its potential impact. Both the Valero refinery in Texas and the Husky Energy refinery in Wisconsin have a history of safety violations.
Oklahoma -- processing plants, pipelines planned to keep pace with gas growth, part 2 -- Increasing production of NGL-packed associated gas in the adjoining SCOOP, STACK and Merge plays in central Oklahoma and rising interest in the Arkoma Woodford play in the southeastern part of the state are spurring a bevy of natural gas-related infrastructure projects. New gas-gathering systems are being developed, new gas processing capacity has come online, and at least another 1.1 Bcf/d of processing capacity is under construction or will be soon. To help bring all the resulting gas and NGLs to market, new takeaway pipeline capacity out of Oklahoma is being planned too. Today, we continue our review of ongoing efforts to add gas-processing and takeaway capacity in the hottest parts of the Sooner State. As we said in Part 1, crude oil and natural gas production in Oklahoma have fully rebounded from the declines that followed the 2014-15 collapse in oil prices and stand at 21st-century highs. The center of most drilling activity in the state has been in the Cana-Woodford region, which includes SCOOP, STACK and Merge plays. SCOOP/STACK/Merge primarily targets crude oil, natural gas liquids (NGLs) and condensates in the Woodford and Meramec formations of the Anadarko Basin, but with them come significant volumes of associated natural gas. Since the start of 2017, crude production in the Cana-Woodford has increased 27% and gas production is up 24% — to 280 Mb/d and 3.7 Bcf/d, respectively, in March 2018, according to our friends at PointLogic. More recently, a few producers (many of them backed by private equity) have been talking up the gas-focused Arkoma Woodford — sometimes referred to as Arkoma STACK. Arkoma Woodford gas production in the first three months of 2018 averaged 1.5 Bcf/d — up 250 MMcf/d from the same period in 2017 and the highest output for the play in more than five years.
GOP Tax Law Bails Out Fracking Companies Buried in Debt -- EOG Resources is one of the top companies in the fracking industry, and thanks to the new tax bill passed by Republicans and President Donald Trump at the end of last year, EOG had an exceptionally strong year compared to 2016.In 2017, the company reported a net income of $2.6 billion. The previous year? A loss of $1.1 billion. That financial turnaround seems very impressive until you realize that $2.2 billion, or about 85 percent, of its 2017 income was the result of the new tax law. Without that gift from the GOP and Trump, EOG would have lost approximately $700 million between those two years. Instead they are $1.5 billion ahead of the game. With numbers like these, it is easy to see how the Tax Cuts and Jobs Act of 2017 was a much-needed lifeline for the money-losing fracking industry. EOG is routinely touted as one of the best shale oil and gas companies. Yet the company still lost $700 million in the past two years. Or at least it would have if not for the tax bill.This is the same company that an analyst at the investment advice website Seeking Alpha says is “generally considered one of the best unconventional upstream oil and gas players in the business, and its financials back it up.” If those are the best financials in your industry, your industry has a big problem. An interesting side note is that EOG stands for Enron Oil and Gas, which was spun off as its own company from Enron — the company notorious for one of the great energy Ponzi schemes of the 20th century.
US shale groups reach self-financing milestone as oil price rises - The US shale oil revolution has reached a landmark moment, with the sector’s top companies for the first time earning enough cash to cover the cost of new wells.Since the shale oil boom began a decade ago, exploration and production companies have needed a steady inflow of capital to pay for drilling and completing new wells but thanks to the rise in crude prices, many can now finance themselves.The leading producers, which were just about covering their capital spending from their operating cash flows in the final quarter of last year, are now generating significant free cash, according to Wood Mackenzie, the research company.“It’s quite a windfall for a lot of these companies,” said Andrew McConn, of Wood Mackenzie, who noted that the larger US shale oil companies needed a crude price of about $53 a barrel to generate free cash. Benchmark US crude was $68 a barrel on Friday.The shift to self-sustainability is removing one of the key concerns for investors. As crude prices have climbed since June last year, US exploration and companies’ shares, which typically follow the commodity, have lagged behind. This month, however, they have started to rise. Since the start of April, shares in EOG Resources and Continental Resources are up 11 per cent, and for Pioneer Natural Resources they are up 17 per cent. From the time the first shale oil test wells were drilled in the US in 2008-09, the industry’s capital expenditure has exceeded its cash from operations, with producers only able to stay in business by attracting hundreds of billions of dollars in financing from bond and share sales and bank loans. From 2008 to 2017, US exploration and production companies raised $293bn from bond sales, according to Dealogic.
Will U.S. Shale Offset Soaring Global Oil Demand? - Oil has rallied sharply in recent days to see West Texas Intermediate (WTI) trading at just under $70 per barrel and Brent breaking through the $70 per barrel mark, with crude trading at its highest price since 2014. The surge in oil can be directly attributed to a wide variety of geopolitical risks which are sparking considerable fears that global oil supplies could be sharply constrained in coming months. This has triggered considerable speculation that $100 per barrel is on its way.According to some pundits, the bearish factors which have weighed on oil prices for some time have been priced in by the market.Nonetheless, the perception of geopolitical risk and how it is driving oil higher appears to be overbaked and there are a range of threats to the $100 per barrel oil narrative. Key is that U.S. oil production is expanding at a rapid clip. The U.S. EIA recently estimated that domestic production had hit 10,500 barrels daily, its highest level since starting to provide this data in the early 80s. The International Energy Agency (IEA) believes that the U.S. will overtake Russia to become the world’s largest oil producer by 2019.The big question is whether this along with a marked expansion in the volume of U.S. drilled but uncompleted wells (DUCs) and rig count, which in early April 2018 reached its highest point in three years, is enough to suppress prices. The answer could surprise investors because fundamentals indicate that higher oil is here to stay, for as long as Saudi Arabia and Russia don’t aggressively unwind the production caps established in November 2016. This is contrary to the thoughts of some analysts including those at Barclays who believe that oil will weaken once again to $51 per barrel during the second-half of 2018. What many analysts who are betting on lower oil are discounting is the effect of stronger global economic growth on the demand for energy. World gross domestic product (GDP) has been forecast by the International Monetary Fund (IMF) for 2018 to expand at 3.9 percent which is 10 basis points higher than the 3.8 percent projected for 2017. Already, the IEA has revised its 2018 estimates many times. At its last revision in mid-March 2018, the IEA estimated that demand growth would top 1.5 million barrels daily for the year, which is 200,000 barrels higher than its earlier forecast. There is every sign that the global economic upswing which is underway will boost demand even higher.
TransCanada acquiring land in Nebraska for Keystone XL oil pipeline: spokesman TransCanada is now acquiring land in Nebraska for its planned Keystone XL oil pipeline, aimed at shipping incremental volumes of Western Canadian barrels to the US Gulf Coast for local refining and also providing options for exports, spokesman Terry Cunha said Wednesday. "The process [of land acquisition] just started last week," Cunha said in an email, adding that it's still early stages but "overall those discussions with landowners are going well." The need to acquire new "easements" -- handing over long-term access to land without transfer of ownership -- came after the Nebraska Public Service Commission decision, which approved an alternate route, he said. In November, the NPSC upheld its decision to allow TransCanada to build the 830,000 b/d Keystone XL pipeline system on an alternate route. The Nebraska regulators approved the 'mainline alternative,' which heads east sooner towards the existing Keystone pipeline and parallels it for 96 miles. A final investment decision is widely due for the Keystone XL system that will ship crude from Hardisty, Alberta, to Steele City, Nebraska, and link up with the Keystone pipeline that runs through Cushing, Oklahoma, to the USGC.
Wisconsin DNR gives OK for Jackson County frac facility - State environmental officials have given a Colorado logistics company the green light to build a Jackson County frac sand rail terminal that neighbors have sued to block.The Wisconsin Department of Natural Resources issued a permit Monday allowing OmniTRAX Logistics Services to fill just over 4 acres of wetlands in order to install nearly 10 miles of track in a loop along the banks of Halls Creek, a Class II trout stream that feeds into the Black River.OmniTRAX says it will use the terminal to fill more than 80 rail cars per day with sand from a nearby mine. Sand will be processed near the mine and brought to the rail terminal by a nearly 2-mile-long conveyor that will pass under two public roads. The company says it intends to ship about 3 million tons of sand each year to Montana and Texas, where it will be used to extract oil in a process known as hydraulic fracturing. According to the permit, the wetlands are “generally high quality with few invasive species and historic human influence” and are “exceptional” wildlife habitat. The project will have a high impact on the wetland’s functional value and will result in habitat fragmentation, although the overall environmental impact will be “neutral” considering the company’s plans for mitigation and tunnels to allow wildlife to cross under the rails.
Explosion at Wisconsin oil refinery injures at least 11, forces evacuation - Authorities said a fire at a northwestern Wisconsin refinery where an explosion injured at least 11 people was out and people were being allowed back in their homes Thursday night after most of the city of Superior was forced to evacuate. Douglas County officials posted an update saying the fire was extinguished but asking residents in the evacuation area to stay away from their homes for at least another two hours. The fire had poured thick clouds of noxious black smoke into the air after the explosion rocked the refinery. Schools and a hospital also were evacuated. Authorities said a tank of crude oil or asphalt exploded about 10 a.m. at the Husky Energy oil refinery in Superior, a city of about 27,000 that shares a Lake Superior shipping port with nearby Duluth, Minnesota. That prompted them to order the evacuation of a three-mile (five-kilometer) radius around the refinery, as well as a 10-mile (16 kilometer) corridor south of it where the smoke was heading. It was unclear how many people were being evacuated, but Mayor Jim Paine said most of the city was being evacuated. The refinery is in an industrial area, but there's a residential neighborhood within a mile to the northeast. The corridor downwind to the south of the refinery is sparsely populated. Schools in Superior and nearby Maple, Wisconsin, canceled classes Friday as a precaution. Hospital officials said only one of the injured was seriously hurt, with what was described as a blast injury. No deaths were reported, and officials said all workers had been accounted for. Thick, black smoke poured from the refinery hours after the explosion. Refinery manager Kollin Schade said the smoke was from burning asphalt that was so hot that firefighters were unable to attack the fire to try to put it out. Emergency officials later said another tank had caught fire, too, though they didn't specify what was in it.
Wisconsin Oil Refinery Explosion Injures at Least 15 People -- A powerful explosion at Husky Energy 's oil refinery in Superior, Wisconsin sparked a massive fire and injured multiple people on Thursday.The blast sent thick, dark smoke across the city and prompted the evacuation of thousands of residents 10 miles downwind of the refinery, 2 miles to the north, and 3 miles east and west. All Superior schools closed Friday due to the fire.Roughly 15 people were injured, Reuters reported.Husky Energy, a Canadian company based in Alberta, said all the refinery's workers have been accounted for and no fatalities have been reported. Several people have been hospitalized and are reported to be in stable condition, the company said. MPR reported that the refinery gets heavy crude from Alberta's tar sands and lighter crude from North Dakota's Bakken region. It processes around 50,000 barrels per day and has a storage capacity of 3.6 million barrels. It produces asphalt, gasoline, diesel and heavy fuel oils. According to the Associated Press , a tank of crude oil or asphalt exploded about 10 a.m. Thursday at the refinery. The fire was put out about 11:20 a.m., but it reignited. Firefighters successfully extinguished the fires around 6:45 p.m., after burning for about eight hours.
US judge gives conditional approval for Enbridge crude oil pipeline expansion - Enbridge's plans to proceed with its Line 3 replacement project delivering an additional 380,000 b/d of Canadian crude to refineries in the US Midwest, was boosted Monday when an administrative law judge in Minnesota gave a conditional approval for the planned expansion. Judge Ann O'Reilly has recommended to the Minnesota Public Utilities Commission that an approval be granted for the project as long as the pipeline expansion is carried out along the current corridor rather than an alternate route for which Enbridge is seeking regulatory approval. Adhering to the existing pipeline route would isolate the risk of a spill in an environmentally sensitive part of the state and also prevent the abandonment of nearly 300 miles of steel pipeline, the judge said. "We will be taking time to review in more detail the recommendation that we use the existing right-of-way, and will have additional comments to follow," Enbridge said, adding Monday's recommendation on the Line 3 replacement project is an important step in the regulatory process. Line 3 currently ships 390,000 b/d of Western Canadian crude from Hardisty, Alberta to Superior, Wisconsin, with the pipeline passing through Minnesota. Enbridge is planning to replace the existing pipeline that was built in the 1960s with 1,031 miles of new pipeline and related facilities on either side of the Canada-US international border, besides nearly doubling its total capacity to 760,000 b/d. The Minnesota Public Utilities Commission is due to issue a final judgment in June, according to information on its website. Enbridge has already received Canadian government approval for the project in 2016 and is now targeting to complete the facility in 2019, the company said in its last earnings call in February, noting work is already underway on the Canadian side to replace the pipeline.
Environmental Groups Oppose Enbridge Ruling - Environmental and tribal groups are criticizing an administrative law judge's recommendation that Minnesota regulators should approve Enbridge Energy's proposal for replacing its aging Line 3 crude oil pipeline if it follows the existing route rather than the company's preferred route.They oppose Enbridge building the project, regardless of what route it takes.The director of the Sierra Club's Minnesota chapter, Margaret Levin, says the Public Utilities Commission should listen to thousands of Minnesota residents who have marched, submitted comments and testified against Line 3, and reject it once and for all.Tara Houska, national campaigns director of Honor the Earth, says tribes have made it "crystal clear" that a new line is not acceptable.Greenpeace USA campaigner Rachel Rye Butler says tar sands pipelines carry too much environmental and economic risk. Administrative Law Judge Ann O'Reilly recommended Monday that the Public Utilities Commission choose the existing route, which avoids sensitive areas in the Mississippi River headwaters region where American Indians harvest wild rice and hold treaty rights. The proposal has drawn opposition because the line would carry Canadian tar sands crude.The commission is expected to make its final decision in June. Line 3 was built in the 1960s. Alberta-based Enbridge says a replacement is needed to ensure reliable deliveries of crude to Midwestern refineries. It has said proposed route alternatives are unworkable.
Leech Lake Band criticizes judge's recommendations on Enbridge's proposed pipeline - The Leech Lake Band of Ojibwe on Tuesday slammed a judge's recommendation that Enbridge's proposed new Line 3 oil pipeline should follow the current Line 3's route, which crosses the band's reservation. Administrative Law Judge Ann O'Reilly issued a report Monday saying that Enbridge should be allowed to build the controversial new Line 3, but not on the company's proposed new route. Rather, O'Reilly recommended that the new Line 3 be built along the same corridor that hosts six Enbridge pipelines running across northern Minnesota. She also recommended that Enbridge remove the aging and corroding old Line 3 and essentially drop a new pipeline in its place. The Leech Lake band has been adamantly against a new Line 3 on its land. "The judge has made this horrific recommendation without even holding a single hearing on the Leech Lake Reservation and gave a recommendation on a route that has not had the same environmental review [as Enbridge's preferred route]," the band said in a statement. O'Reilly's recommendation, the band added, "further drives the message that it is OK to put pipelines on reservations and that risk is acceptable." The Public Utilities Commission (PUC) is scheduled in late June to decide the fate of the $2.6 billion new Line 3 project, as well as its route. However, pipeline right-of-way issues on Indian reservations are governed by federal law, so it's unlikely the PUC could force an on-reservation solution. Calgary, Alberta-based Enbridge has declined to comment on O'Reilly's routing recommendation, but it's likely not happy, either. First, the company has rejected the notion of extracting the old Line 3, an expensive proposition. And second, Enbridge chose its new route partly because it doesn't cross any Indian reservations.
Minn. court sides with climate change activists in pipeline case - The Minnesota Court of Appeals ruled on the side of climate change activists Monday in a case over an oil pipeline protest. The four activists — one from New York and three from Washington — admit they broke into Enbridge Energy property in northwestern Minnesota in an effort to stop oil from flowing through a pipeline. The activists' case is headed to trial in Clearwater County later this year. They've asked the court if they can use what's known as a "necessity defense" to argue they needed to shut off the flow of oil in order to address climate change. The judge on their case granted the request. But state prosecutors challenged the decision and the Minnesota Court of Appeals heard oral arguments in Feburary. The Minnesota Chamber of Commerce, which represents business interests in the state, filed a friend-of-the-court brief supporting the prosecutors' argument. But the state appeals court dismissed the challenge in their ruling Monday, making way for the activists to call experts on global warming to testify during their trial. The activists argue they have exhausted other methods to get their elected officials to adequately address the problem. "We are left with no other recourse at this point," Annette Klapstein, one of the activists charged, said in an interview Monday after she heard about the ruling. "I hope it does mean more civil disobedience, because that's the only thing we have left as ordinary citizens when our political system will not respond to a crisis that is actually threatening the very existence of our grandchildren," she said.
Activists May Argue Pipeline Shutdown Was Necessary Due to Climate Change, Court Rules - The Minnesota Court of Appeals ruled Monday that four climate activists facing criminal charges may use an unusual "necessity defense" over their efforts to shut down a pair of tar sands pipelines owned by Enbridge Energy . "Valve turners" Emily Johnston and Annette Klapstein were charged after shutting off the emergency valves on the two pipelines in October 2016. Johnston and Klapstein, and the two defendants who filmed them, argue their actions to stop the flow of the polluting bitumen were justified due to the threat of climate change. The action was part of Climate Direct Action 's plan to shut down five pipelines across the U.S. that deliver tar sands oil from Alberta, Canada. The pipelines targeted were Enbridge line 4 and 67 in Leonard, Minnesota; TransCanada's Keystone pipeline in Walhalla, North Dakota; Spectra Energy's Express pipeline at Coal Banks Landing, Montana; and Kinder Morgan's Trans-Mountain pipeline in Anacortes, Washington. The case now heads to trial in Clearwater County later this year. This court's decision allows the defense to call on climate scientists and other experts to explain the threat of climate change during the trial. "The Minnesota Court of Appeals has upheld our right to present the facts on the ongoing climate catastrophe, caused largely by the fossil fuel industry, to a Minnesota jury," Klapstein told the Associated Press in a statement. "As a retired attorney, I am encouraged to see that courts across the country seem increasingly willing to allow the necessity defense in climate cases." The activists face felony charges of criminal damage to property and other counts.
Russia’s ‘keep it in the ground’ ploy to stifle American oil | TheHill: Just 1 percent — that’s the share of all-electric vehicles to total new U.S. car sales today. You don’t have to be an auto retailer to know that electric vehicles are not pushing gasoline-powered cars and light trucks off the showroom floor. Virtually all of the 17 million vehicles sold in the U.S. last year were gas burners.More to the point, even allowing for a hypothetical spike in EV sales, the global gasoline demand for light vehicles is expected to roughly triple by the mid-2030s. Meanwhile, levying special taxes on electic vehicles — or switching from motor fuel taxes to a tax per mile driven — will be required so that EV owners help pay for building and maintaining roads and bridges. But a threat is hanging over oil. What is most ominous is the spread of the destructive idea that, because of climate change, all fossil fuels, including oil, must be kept in the ground. Russia bears some of the blame for that underhanded campaign, using social media to twist American public opinion against oil production to achieve its own devious goal: push up world oil prices. With Russia’s help, the keep-it-in-the-ground movement threatens to impede the production of oil offshore and stifle hydraulic fracturing in shale formations. At the same time, Russia is spearheading opposition to the construction of new oil and natural gas pipelines. Because of the Depression-era Jones Act, which requires shipments between U.S. ports to be carried on American-flagged and -crewed vessels, additional pipeline capacity is essential for delivering heating oil to markets in the Northeast where it’s needed the most.If the keep-it-in-the-ground crowd is successful, domestic oil supplies will drop and prices will rise, harming oil-using industries and consumers. Every $10 per barrel hike in crude prices is like a $70 billion tax increase on Americans. The recent spurt in gasoline prices was a taste of what will happen if the keep-it-in-the-ground movement takes hold.. Given that Russia’s involvement in U.S. domestic affairs is likely to be a major political issue over the next few years, groups engaged in the keep-it-in-the-ground movement ought to rethink the economic and geopolitical consequences of their actions.
Fracking in Colorado: Lawsuit Targets Federal Shell Game Hiding Harm to Communities and Wildlife - Conservation groups on Thursday sued Interior Secretary Ryan Zinke and the Bureau of Land Management for approving new leases to allow fracking on more than 45,000 acres in western Colorado, including within communities and within a half-mile of a K-12 public school , without analyzing or disclosing environmental and public health threats as required by federal law."Fracking is a filthy, dangerous business, and dodging environmental analysis puts people and public lands at risk," said Diana Dascalu-Joffe, a senior attorney at the Center for Biological Diversity. "The Trumpadministration is trying to ignore science , public health and climate change threats to enrich corporate polluters, but it can't shrug off the law."The lawsuit, filed in U.S. District Court in Denver, challenges leases in and around the towns of De Beque, Molina and Mesa on the western slope of the Rocky Mountains. Fracking would be allowed near three state parks—James M. Robb-Colorado River, Vega and Highline, a migratory bird hot spot and the site of the "18 Hours of Fruita" mountain bike race. Leases also have been offered within a half-mile of a K-12 public school in De Beque and beneath Vega Reservoir, important for wildlife , recreation, irrigation and hydroelectric power."Not only did the Bureau of Land Management move forward with these lease sales without looking at the climate effects of fracking, the agency also failed to examine its likely public health risks," said Kyle Tisdel with the Western Environmental Law Center . "In addition, the agency failed to analyze or acknowledge the enormous water depletion drilling will impose on the Colorado River, already in low-flow conditions. BLM is simply drilling in the dark on these lease sales."
US delays oil, gas sales in Montana after climate ruling (AP) — U.S. officials delayed lease sales on federal oil and gas reserves beneath more than 160 square miles (414 square kilometers) of public and private lands in eastern Montana in response to a recent court ruling on climate change, a U.S. Bureau of Land Management spokesman said Wednesday. The 223 lease parcels had been slated for sale on June 12, but instead will undergo additional environmental analysis, Jon Raby said, the bureau's acting state director for Montana, in a letter announcing the delay. Agency officials could not provide a timeline for the new analysis or say when the parcels would be available for sale. U.S. District Judge Brian Morris in March ruled that government officials failed to fully consider the climate impacts of burning coal, oil and gas extracted from the Powder River Basin of Montana and Wyoming. The basin has the largest coal reserves in the U.S. and lesser quantities of oil and gas. Morris said any new or pending lease sales in the area must be subjected to a detailed environmental review. That ruling came in a lawsuit from environmental groups including the Western Organization of Resource Councils and Sierra Club. The groups argued that when federal officials drew up land management plans for the Powder River Basin they failed to acknowledge the large volumes of greenhouse gases that would be generated from burning the region's fossil fuels. "One thing the court was clear about is the BLM cannot continue to ignore the real and significant impacts of fossil fuel development in the Powder River Basin,"
Trump just took the first step of an aggressive effort to drill in the Arctic - The Trump administration took the first step Thursday toward an aggressive effort to drill for oil in the Arctic National Wildlife Refuge, one of the country’s most pristine and environmentally sensitive areas. The Bureau of Land Management, a division of the Interior Department, issued a notice of intent to begin an environmental impact analysis of how oil exploration and the heavy infrastructure required to support it would alter a landscape where plants and animals thrive. The BLM said an official notice of the analysis, known as scoping, will be published Friday in the Federal Register, kicking off a 60-day comment period set to end in mid-June. In addition to allowing comments to be submitted online, five locations have been selected to engage Alaskans directly in Anchorage, Arctic Village, Fairbanks, Kaktovik and Utqiagvik. The administration wants to issue leases to the oil and gas industry as soon as next year. It is the first time an administration has initiated an oil and gas leasing program in the refuge since 1980, when Congress identified the region’s Coastal Plain section as an important area for energy resources. “Developing our resources on the Coastal Plain is an important facet for meeting our nation’s energy demands and achieving energy dominance,” said Joe Balash, assistant secretary for Land and Minerals Management at Interior, echoing part of President Trump’s campaign message. “This scoping process begins the first step in developing a responsible path forward. I look forward to personally visiting the communities most affected by this process and hearing their concerns.”
The New Alaskan Oil Rush - ConocoPhillips is coming off of an incredible exploration season, reportedly the best they’ve had in over a decade, and they have Alaskan oil to thank for it. The company stuck big in the National Petroleum Reserve-Alaska (NPR-A) this winter, successfully finding oil at all six of their test wells (three exploration and three appraisal), which means chances are good that the trans-Alaska pipeline system could soon be seeing a lot more (much-needed) action. The Houston-based supermajor has estimated that there are at least 300 million barrels of recoverable oil in its "Willow Discovery" along Alaska's Western North Slope, and these appraisal wells seem to strongly support that projection. More importantly, this discovery could represent just a fraction of the available reserves along the North Slope, and ConocoPhillips plans to keep exploring the area over another busy exploration season next year, starting with a recent $400 million deal to buy all of Anadarko Petroleum Corp.’s North Slope assets.Over the next five years, it is projected that ConocoPhillips will be adding 100,000 barrels a day to the trans-Alaska pipeline for a total 650,000 barrels a day, an 18 percent increase. This is great news after years of dwindling volumes--to put today’s 550,000 barrels per day in perspective, when the pipeline peaked in 1988 it was funneling 2.1 million barrels of oil per day through Alaska, an economy that relies heavily on oil revenues but has been seeing volatile returns in the past years. ConocoPhillips’ “Willow Discovery” is also a glimmer of hope for Alaska’s long-suffering North Slope. Once the powerhouse of the country, many of its once-abundant fields have been sucked dry. Onetime major fields like Prudhoe Bay, the Kuparuk River and the Alpine are now nearly tapped. Now companies like ConocoPhillips are breathing new life into the region, picking up speed since several major oil fields were discovered there over the past few years. Now, the Trump administration is pushing ahead with legislation that will allow drilling in the vast Arctic National Wildlife Refuge, with a 60-day review to sell oil and gas leases in the pristine 19.6-million acre region. A divisive issue to say the least, the fate of the region has been bounced back and forth between political platforms since the Clinton administration, and critics point out the delicacy of the region and the threat drilling would pose to its population of migratory birds and the caribou on which the indigenous Gwich’in people depend.
ConocoPhillips claims North American record for horizontal drilling - ConocoPhillips Alaska has announced a North American drilling landmark as North Slope producers push efforts to tap oil as efficiently as possible after years of low oil prices. The company set the continent's land-based record with a four-mile "horizontal lateral," an extension branching off a vertical well, the ConocoPhillips said in a statement. The record, at 21,478 feet, beat a 19,500-foot horizontal lateral in Ohio announced in 2017 by Eclipse Resources, said Amy Burnett, a spokeswoman with the company.The record came at a well at the company's CD5 field, the first commercially producing field within the National Petroleum Reserve-Alaska.Oil companies today are able to drill "extraordinary kickout lengths," opening huge areas of a reservoir with a small footprint, said Mark Wiggin, deputy commissioner for the Alaska Department of Natural Resources.That saves money on the tons of gravel needed for well-pad foundations and roads, and reduces environmental impact, said Wiggin, a former engineer with Arco Alaska, a ConocoPhillips Alaska predecessor. Advances in drilling systems helped boost the distances, said Chip Alvord, Alaska drilling manager for ConocoPhillips.
Russia Bets Big On Arctic Oil - Gazprom Neft, Russia’s fourth largest oil producer, has big plans for its Arctic oil operations, and it seems that neither sanctions nor production cuts can force it to quit its presence there. In fact, the oil division of Gazprom will try to turn itself into what its head of strategy and innovations called “a benchmark,” but not in terms of production. Gazprom Neft wants to become a benchmark in areas such as safety and efficiency, and most notably technology.Arctic drilling was one of the top targets of U.S. sanctions that banned U.S. oil companies—and their European peers—from sharing technological know-how with Russian producers. This may have slowed down the progress of Gazprom Neft and others in the Arctic, but it did not put an end to it. Not that it could: Russia’s energy industry has been working on Arctic exploration for much longer than the four years since the annexation of Crimea, which became the grounds for the sanctions.Gazprom Neft launched its first Arctic field, Prirazlomnoye, at the end of 2013, and first oil, and the new blend, ARCO, from Arctic Oil, reached markets the following year. Since then, more than 10 million barrels have been shipped from the field. Recoverable reserves at Prirazlomnoye are estimated at 540 million barrels of crude, and the peak of production is set to be reached in 2020, at 110,000 barrels per day. The Arctic as a whole is top priority for Gazprom Neft: in 2016, two new projects got the go-ahead there. Messoyakha, which is the northernmost onshore oil field in Russia to date, is estimated to hold 470 million tons of oil and condensate. Novoportovskoye, or Novy Port, field holds an estimated 250 million tons of oil and condensate.
First Nations court challenges continue to hang over $7.4-billion Trans Mountain pipeline expansion- First Nations court challenges that allege inadequate consultation and seek to overturn federal and B.C. approval of the $7.4-billion Trans Mountain oil pipeline expansion have been overshadowed by recent debate on federal and provincial powers to regulate oil transport. But legal experts say the First Nations cases have real implications that should not be overlooked or forgotten. When the Federal Court of Appeal in 2016 overturned approval of Enbridge’s $7.9-billion Northern Gateway oil pipeline, finding Ottawa had failed to properly consult First Nations, it all but signalled the end for the project. “A lot of the focus in the last week and a half has come to be about the federal/provincial issue and that’s obviously a major issue. But the Indigenous rights issue is a major legal issue as well,” said University of Saskatchewan law professor Dwight Newman. University of B.C. law professor Margot Young said the Indigenous rights’ question — and the ruling from the courts — is a critical question that has yet to be answered. There is little chance that question is going to be resolved by a Kinder Morgan-imposed May 31 deadline for the federal government to assure them the project will go ahead. “Unlike this battle over jurisdiction … Indigenous rights stop both levels of government,” said Young. Jack Woodward, a B.C. lawyer who is the author of Native Law, said the constitutionally protected rights and title of First Nations is a completely separate hurdle for the project to overcome. “These cases are potential show stoppers,” he said.
Justin Trudeau is under scrutiny over allegations that the Kinder Morgan pipeline approval was ‘rigged' - An investigation by the Canadian media outlet National Observer found that a high-ranking federal official directed staff across five different departments to “give cabinet a legally-sound basis to say ‘yes’” to the Trans Mountain pipeline expansion.Blowback was swift. On Wednesday, Trudeau faced blunt criticism in the House of Commons. “The whole fiasco of an approval process is looking more rigged than a Russian election,” said Nathan Cullen, member of Parliament from British Columbia — where opposition in the courts and in demonstrations have led to Kinder Morgan halting all non-essential spending on the flailing project.Canada’s constitution stipulates that the government consult with First Nations on projects like Trans Mountain that would impact their land and water. If the allegations are true, the government may have merely paid lip service.Trudeau is keeping his game face on, denying allegations of any wrongdoing in the pipeline process. “We actually added additional steps to make the process more rigorous,” he said in response.New Democratic Party leaders Jagmeet Singh and Guy Caron issued a letter to Trudeau on Wednesday calling for the prime minister to release all documents connected to its review of the pipeline expansion. “These revelations throw into question the legitimacy of the government’s entire review,” Singh and Caron assert. In an apparent attempt to make peace, Federal Environment Minister Catherine McKenna today proposed a joint scientific expert advisory panel and partnership with the B.C. government and indigenous peoples to address the risk of pipeline spills.
Alberta moves toward limiting energy to British Columbia -- The government of Alberta is moving toward restriction of energy movement to British Columbia in an escalating interprovincial conflict over expansion of the Trans Mountain pipeline system. The expansion would nearly triple the system’s capacity to carry oil to Burnaby, BC, to 890,000 b/d and relieve a transport bottleneck costly to Alberta. Although the expansion has approval of the federal government, BC Premier John Horgan, the New Democrat leader governing in coalition with the Green Party, has pledged to block it. Alberta Premier Rachel Notley, also a New Democrat, has intensified her opposition to Horgan’s position and appealed to the federal government to intervene.“The powers in this legislation are not powers that Alberta wants to use, but we will do so if it means long-term benefit for the industry, for Alberta, and for Canada,” said Alberta Energy Minister Marg McCuaig-Boyd, according to press reports.
The growing and possibly enduring role of LNG imports in Mexico's gas market - Imported liquefied natural gas from the U.S. is helping Mexico address major challenges facing its gas sector. For one, LNG shipments from the Sabine Pass export terminal in Louisiana to Mexico’s three LNG import facilities have been filling a gas-supply gap created by delays in the country’s build-out of new pipelines to receive gas from the Permian, the Eagle Ford and other U.S. sources. Imported LNG also is playing — and will continue to play — a key role in balancing daily gas needs within Mexico, which has virtually no gas storage capacity but is planning to develop some. Today, we consider recent developments in gas pipeline capacity, gas supply, LNG imports and gas storage south of the border. For a few years now, we have been writing regularly about Mexico’s efforts to shift from oil-fired power generation to natural gas (and renewables), as well as the country’s development of vast networks of gas pipelines to help deliver U.S.-sourced gas from Texas and other U.S. border states to new gas-fired combined-cycle plants and industrial and other users in northern, central and even southern Mexico. In our With a Little Help from My Friends Drill Down Report, we explained that Mexico has been opening up its energy markets to competition and — with its own production on the decline — has been becoming increasingly dependent on imports of natural gas, liquefied petroleum gasses (LPG) and refined products from the U.S. Most important to our discussion today is that Mexico’s state-owned Comisión Federal de Electricidad (CFE) has been investing heavily in expanding and modernizing its power generation fleet with thousands of megawatts of new, natural gas-fired power plants, and the country has been developing new, high-capacity pipelines to supply growing gas-fired generation demand (see our It Takes Two blog series). As Figure 1 shows, the power-plant/pipeline build-out resulted in a sharp rise in U.S. gas exports to Mexico via pipeline (blue shaded area) in 2015, when pipeline gas exports increased 44%, and 2016, when they rose 23%, according to the U.S. Energy Information Administration.
UK needs 6,000 shale gas wells to fill 50% of imports, study says - More than 6,000 shale gas wells would be needed to replace half the UK’s gas imports over a 15-year period, according to a new report.The nascent UK fracking industry has argued that growing reliance on gas from Norway and Qatar necessitates developing home-produced supplies in addition to North Sea output.Recent arrivals of Russian gas by ship have prompted shale advocates to repeat the argument.However, analysis for Friends of the Earth by the Cardiff Business School found that at least one well would need to be drilled and fracked daily between 2021 and 2035 to replace 50% of gas imports.Rose Dickinson, at Friends of the Earth, said: “This would mean an industrialisation of our countryside at a rate that nobody has yet fully appreciated and would put many more communities in the firing line of this dirty and unwanted industry.”Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDeskThe FoE research found 6,100 wells on 1,000 well pads would take up around 3,560 hectares of land (around 13 square miles), based on analysis of government figures, National Grid forecasts and other data.But no one expects there to be that many wells. The most bullish estimate came in a 2013 report by the Institute of Directors, forecasting 4,000 wells by 2032. The government admits its most recent estimate of 155 wells by 2025, produced last year, is already out of date.
Report warns countryside could be 'littered' with fracking wells -- The countryside would have to be “littered” with fracking wells before the technology could significantly reduce Britain’s reliance on gas imports, a new report warns today. Research for Friends of the Earth suggests that one well would have to be drilled and fracked every day for 15 years to produce enough gas to replace just half of future imports. Drilling on such a scale would have “potentially terrible consequences” for the rural landscape, the report warns. Seven gas firms have licences to explore whether fracking is feasible across vast swathes of Yorkshire, with the Prime Minister saying in February that the process of extracting shale gas from rocks deep underground could reduce the nation’s reliance on imported energy. But last month the Government refused to publish a confidential Cabinet Office report on the subject, arguing that doing so “could call into question the industry’s viability”. Today’s research, conducted by Prof Calvin Jones of Cardiff Business School, finds that at least 6,100 wells would be required to replace just half of the UK’s estimated gas imports. If the new wells produced gas at the lower end of expectations, the figure could rise to 16,500, Prof Jones said. Rose Dickinson, of Friends of the Earth, said a widespread roll-out of fracking would mean “an industrialisation of our countryside at a rate that nobody has yet fully appreciated”. Ms Dickinson said: “One well would have to be drilled and fracked every day for 15 years to replace just half of our gas imports. “This would and would put many more communities in the firing line of this dirty and unwanted industry.
Fracking can cause social stress in nearby areas according to research - The question of opening the Northern Territory and South Australia to fracking has re-ignited concerns about environmental and health impacts. Receiving less attention are the social and economic changes affecting nearby rural communities from this natural gas development and the social stress that can result. From 2012, I led a team analysing trends in key social and economic indicators over the past 15 years in Queensland's largely agricultural Darling Downs, where over A$20 billion has been invested in coal seam gas (CSG) development since 2011. We also interviewed and talked with over 200 residents and business owners. Social stress emerged as the most visible health impact of this coal seam gas development. Staff in both government and the gas industry agree that stress is an important impact. Our findings are reinforced by studies in the Darling Downs by numerous researchers and research students as well as extensive work in North America on resource boomtowns. Residents in community meetings expressed concern about potential effects of coal seam gas development on the amount and quality of groundwater and about possible health impacts. Their concerns were compounded by low levels of trust in the oil and gas industry and a mix of distrust and trust in the government regulator's ability to manage the industry. This lack of confidence can contribute to psycho-social stress.
Trump's revenge: US oil floods Europe, hurting OPEC and Russia -- As OPEC’s efforts to balance the oil market bear fruit, U.S. producers are reaping the benefits – and flooding Europe with a record amount of crude. Russia paired with the Organization of the Petroleum Exporting Countries last year in cutting oil output jointly by 1.8 million barrels per day (bpd), a deal they say has largely rebalanced the market and one that has helped elevate benchmark Brent prices LCOc1 close to four-year highs. Now, the relatively high prices brought about by that pact, coupled with surging U.S. output, are making it harder to sell Russian, Nigerian and other oil grades in Europe, traders said. “U.S. oil is on offer everywhere,” said a trader with a Mediterranean refiner, who regularly buys Russian and Caspian Sea crude and has recently started purchasing U.S. oil. “It puts local grades under a lot of pressure.” U.S. oil output is expected to hit 10.7 million bpd this year, rivaling that of top producers Russia and Saudi Arabia. In April, U.S. supplies to Europe are set to reach an all-time high of roughly 550,000 bpd (around 2.2 million tonnes), according to the Thomson Reuters Eikon trade flows monitor. In January-April, U.S. supplies jumped four-fold year-on-year to 6.8 million tonnes, or 68 large Aframax tankers, according to the same data. Trade sources said U.S. flows to Europe would keep rising, with U.S. barrels increasingly finding homes in foreign refineries, often at the expense of oil from OPEC or Russia. In 2017, Europe took roughly 7 percent of U.S. crude exports, Reuters data showed, but the proportion has already risen to roughly 12 percent this year. Top destinations include Britain, Italy and the Netherlands, with traders pointing to large imports by BP, Exxon Mobil and Valero.
Gazprom pumping gas to Europe like it’s already winter -- After the coldest winter since 2012, storage sites from Austria to the Netherlands are depleted and levels on the continent are at their lowest in at least a decade. That has Russia’s Gazprom PJSC smelling an opportunity. The Moscow-based company is shipping as much as 580 MMcmd — volumes comparable with winter supplies when heating demand soars, its Deputy CEO Alexander Medvedev said in an interview in Berlin. Increased gas-fired generation and economic growth in Europe also support a strong appetite for Russian gas, he said. “Minimal historical gas storage levels will mean that summer demand will match winter demand of the not so distant past, given the need to refill the stores,” Medvedev said. “In addition, our gas remains the most cost-competitive.”
Falcon expects serious drilling in 12 months as Australia fracking ban lifted -- Falcon Oil & Gas expects serious drilling activity to begin in 12 months' time at its major prospect, where a government ban on fracking has been lifted, enabling the project to proceed. The prospect, in Australia's Northern Territory, had been put into abeyance after the moratorium was established. The ban was lifted last week, but Falcon boss Philip O'Quigley said a new permitting process put in place will take three to six months to complete. In addition, monsoon-like weather will also delay the process, pushing a planned five-well programme back into 2019. The programme will be carried out in conjunction with Falcon's partner in the project, Australian business Origin. Well tests carried out prior to the moratorium indicated what Falcon called "a very promising material gas resource". The company is now free to seek to exploit the gas on a commercial basis. Northern Territory Chief Minister Michael Gunner, who lifted the fracking ban, admitted he could face a backlash from voters. Fracking is controversial because opponents say there is a risk of groundwater contamination. It works by drilling into the ground and shooting rocks with a high-pressure mixture of water, sand and chemicals to release the resources inside. A report commissioned by the Australian authorities found that "the challenges and risks associated with any onshore shale gas industry in the NT (Northern Territory) are manageable". "The panel is of the opinion that with enactment of robust and rigorously enforced safeguards, the waters shall continue to flow "clear and cold out of the hills'."
South Korea's Most Damaging Earthquake Linked to Geothermal Fracking -- One of South Korea's largest earthquakes was likely triggered by hydraulic fracturingassociated withgeothermal energy production, according to two studies published Thursday in the journal Science. The 5.5-magnitude temblor that struck the city of Pohang on Nov. 15, 2017 was the second most powerful on record and its most damaging, leaving the infrastructure in ruins, injuring dozens of people and leaving about 1,500 homeless. Hydraulic fracturing, aka fracking, works by injecting high-pressure fluid underground to fracture rock in order to achieve increased rates of flow. Fracking is often associated with unlocking oil and natural gas deposits,but in this case , the intention was to enable circulation to produce geothermal energy. Using geological and geophysical data, South Korean researchers from one of the studies suggested that the Pohang earthquake was induced by fluid from an enhanced geothermal system site that was injected directly into a near-critically-stressed subsurface fault zone. Kwanghee Kim, a seismologist at Pusan National University and lead author of the study, explained that the well's high-pressure water lubricated an unknown fault in the rock, causing it to slip and trigger the quake. In the second study , researchers from the University of Glasgow, ETH-Zurich in Switzerland, and GFZ-Potsdam in Germany found that the mainshock and its largest aftershocks occurred within 2 kilometers or less of the geothermal site, where many thousands of cubic meters of water were injected under pressure into boreholes.
Arrested Chevron workers could face treason charge in Venezuela (Reuters) - Two Chevron Corp. employees detained in Venezuela last week could be charged with treason for refusing to sign a parts contract for a joint venture with state-owned oil company PDVSA, according to two sources familiar with draft charges against the U.S. firm’s executives. The arrests, by national intelligence agents, marked the first at a Western oil firm in Venezuela and represent a dramatic escalation of growing tensions between PDVSA and foreign companies over control of supply contracts, the sources told Reuters. The widening dispute could worsen operational chaos that has caused the OPEC nation’s oil output to plunge by 23 percent, or 450,000 barrels per day, since October. “These detentions are going to accelerate the operational crisis,” another source with knowledge of Chevron’s operations told Reuters. “Procurement could end up in paralysis if nobody wants to take the risk of signing or authorizing anything.” The draft treason charges - seen by Chevron lawyers last week, the two sources said - raised concern that the oil major could get caught in the crossfire between Washington and Venezuelan President Nicolas Maduro, who accuses the U.S. government of sabotaging the economy to topple his administration. The United States has imposed sanctions on senior members of Maduro’s government and PDVSA. The two Chevron employees were jailed when they refused to sign a supply contract written by PDVSA executives under an emergency decree - which skips the competitive bidding process, according to a half dozen sources close to the case. Such decrees have been cited by Venezuela prosecutors as a means of extracting bribes in some recent PDVSA corruption cases. The Chevron employees balked when the parts were listed at more than double their market price in a contract worth several million dollars, one of the sources told Reuters.
Chevron evacuates Venezuela executives following staff arrests (Reuters) - U.S. oil major Chevron Corp has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state-owned oil company PDVSA, according to four sources familiar with the matter. Chevron asked other employees to avoid the facilities of its joint venture with the OPEC nation’s oil firm, the sources said. The arrests, in a raid by national intelligence officers, were the first at a foreign oil firm since Venezuela’s government launched a purge last fall that has resulted in detentions of more than 80 executives at PDVSA and business partners accused of corruption. The Chevron workers may face charges of treason for refusing to sign a supply contract for furnace parts drawn up by PDVSA executives, Reuters reported earlier this week. The workers balked at the high costs of the parts and a lack of competitive bids. Venezuela’s foreign minister, Jorge Arreaza, linked the Chevron arrests to the government anti-corruption probe for the first time on Wednesday. “The decisions of the prosecutor’s office are based on serious investigations to fight corruption ... These two people involved have the right to defense and due process.” Chevron spokeswoman Isabel Ordonez responded to the minister’s comments with a written statement that the firm “abides by a code of business ethics, under which we comply with all applicable U.S. and Venezuelan laws.” Chevron’s move to evacuate its expatriate workforce underscores the how arduous it has become for foreign oil firms and their workers to sustain operations through Venezuela’s accelerating political and economic meltdown. The affected staff numbers about 30 people in the coastal city of Puerto la Cruz. Chevron’s Ordonez said the company had an executive team overseeing operations in Venezuela but declined to provide details on the leadership there or the number and type of workers the company had withdrawn. Chevron has no plans to exit the country, according to a person familiar with the thinking of its board of directors. The oil company has not pulled out of other tough environments in the past, the person said - citing the jailing of employees in Indonesia in 2013 - and the firm believes Venezuela will eventually stabilize.
Halliburton Writes Off Remaining $312 Million Invested in Venezuela — Halliburton, the global oil service company, announced on Monday that it had written off its remaining investment of $312 million in Venezuela, as oil production in the politically polarized and virtually bankrupt country continues to plummet.The move had long been expected because the state-owned oil company, Petróleos de Venezuela, known as Pdvsa, had for years been falling behind on paying its bills from companies that maintain and operate its oil and gas wells.“This is one step further into the collapse of the Venezuelan oil industry,” said Francisco J. Monaldi, a Venezuelan energy expert at Rice University, “because it means oil service contractors, which are absolutely essential to operations, are slowly giving up on the country.’’Daily oil production in Venezuela, the country with the world’s largest reserves, has plummeted by 200,000 barrels since late last year, to its lowest level in 30 years. That drop has helped raise global oil prices in recent weeks to more than $70 a barrel, and has pushed gasoline prices in the United States to their highest level for this time of the year in three years. Pdvsa has been purged of more than 80 executives in recent months, and its operations have been put under the command of a major general in Venezuela’s National Guard with no experience in the oil business. Tensions between the national company and foreign companies that operate in the country have increased as military officers have taken over more oil supervisory positions.
China Sets Its Sights On First South American Refinery - China could be on the brink entering the refining industry in the Americas if it inks a deal with Brazil’s Petrobras that will see it invest in the Comperj refinery in exchange for local crude oil, two sources close to the negotiations told Reuters. The Comperj refinery needs an injection of around US$3 billion, other sources said, in order to reach its initial processing capacity of 165,000 barrels per day and Petrobras has not made a commitment to fund the facility. China’s CNPC, however, could do that, the sources said, and in exchange receive stakes in some of the fields the Brazilian major operates in the Campos Basin as well as the right to use the Comperj refinery. China has been investing heavily in South America with the energy sector a priority. Brazil in particular has been in the focus of Chinese investment attention but if completed, the current deal between CNPC and Petrobras would be the first in which the Brazilian company offers oil in exchange for investments. The two, however, are already partners in the Libra field, in another prolific basin, Santos. Last year, Chinese investment in Brazil hit the highest since 2010, at US$20.9 billion, with oil and gas, logistics, and agriculture the top three destinations for Chinese money. Construction of the Comperj refinery started a decade ago but has run into problems as it got caught up in the political corruption scandal that cost ex-president Dilma Rousseff her office and saw almost 100 business executives end up with jail sentences. Petrobras, which poured US$13.5 billion into the refinery, had to take write-downs of almost US$2 billion on the project because of overpriced services related to its construction and equipment, Reuters said. Still, Petrobras wants to finish the construction as the country needs more locally produced fuels to reduce its dependence on imports.
Schlumberger warns of oil supply gaps unless E&P raise capex -- Oil services giant Schlumberger on Friday warned of an increasing likelihood the world will face growing oil supply challenges as cautious upstream producers show capital budget restraint even at current robust oil prices, while the impacts from spending cut during the recent industry downturn accelerate. Notable year-over-year declines in Mexico, Angola, China, Malaysia, and Indonesia, coupled with Venezuela's production "freefall" and potential new sanctions against Iran have left Saudi Arabia, the UAE, and US shale oil as the only major feasible sources of short-term supply growth to remedy global production declines, Schlumberger CEO Paal Kibsgaard said during the company's first quarter earnings conference call. The company, which provides equipment and services to the upstream industry, is typically the first to hold its quarterly call and provides an early glimpse at the rest of the year's likely outlook for the sector. Despite "clear signs of a tightening oil market," no upward revision to 2018 upstream budgets has taken place so far, with North America and the rest of the world still expected to spend just 20% and 5% higher, respectively, over last year's levels, Kibsgaard said. "Based on these investment levels...it's increasingly likely industry will face growing supply challenges in the coming years and that a significant increase in global E&P [capex] will be required to minimize an impending production deficit," Kibsgaard said. Unless triggered by a clear crisis or other event, oil companies typically review their capital spending plans at mid-year and announce changes in their second-quarter financial reports. As for the US, where oil production recently surpassed 10 million b/d and is projected to exceed 11 million b/d by year-end, questions have arisen over whether that bullish outlook is achievable given growing midstream infrastructure constraints, well interferences from more infill drilling, and lower per-well outputs as the most productive acreage wanes and operators are left with less prolific areas, Kibsgaard added.
Footing Bill for Environmental Damage from Pertamina Oil Spill - Greenomics Indonesia, a social institution which focuses on environmental economics, had put a number on the amount of losses which resulted from the crude oil spill from a Pertamina pipeline which passes along the bottom of Balikpapan Bay, East Kalimantan, on Saturday three weeks ago.A Director-General of Law Enforcement of the Environment and Forestry Ministry Royas Rasio Ridho Sani is known was angry because Greenomics had come up with the figure prematurely. He was concerned that this would make things more difficult for the Environment Ministry, which was in the process of calculating the damage to the environment which had resulted from the Pertamina oil spill. "If our demands are lower than the figure from Greenomics, there will be an uproar," said Roy in his office at the Environment Ministry in Jakarta. On the other hand, if the figure reached by the Ministry is higher, Roy is concerned that the difference could be exploited to reduce the credibility of their calculation. In their release on Wednesday last week, Greenomics stated that the Pertamina oil spill in the waters of Balikpapan Bay was equivalent to an area 20,000 times larger than Gelora Bung Karno Stadium in Jakarta. The minimum amount of ecological damage was said to be US$8.27 billion, or about Rp110.428 trillion at a US dollar exchange rate of Rp13,700. Their calculation used a benefit transfer approach which referred to the monetary value of several of the main components of the maritime and mangrove ecosystem. "This calculation used an international standard of methodology to quickly provide an initial estimate," said Vanda Mutia Dewi, Executive Director of Greenomics Indonesia. How much will Pertamina have to pay due to this disaster? Pertamina Company Secretary Adiatma Sardjito said that the company is still focusing on cleaning up the oil spill. Pertamina, according to him, has not yet calculated the potential losses resulting from the oil spill and other burdens. "We are still focusing on social and environmental recovery," said Adiatma, on Friday last week.
Caspian games: Central Asian ‘stans’ vie for connectivity market Asia Times - Pepe Escobar - Azerbaijan held a presidential election this month. Predictably, incumbent leader Ilham Aliyev won his fourth consecutive term with a Kim dynasty-esque 86% of the votes. International monitors for the Organization for Security and Cooperation in Europe (OSCE) Office for Democratic Institutions and Human Rights (ODIHR) stressed “widespread disregard for mandatory procedures, numerous instances of serious irregularities and lack of transparency”; the Azeri electoral commission replied that such observations were “unfounded”. Then the whole issue simply vanished. Why? Because, from a Western strategic perspective, Azerbaijan’s post-Soviet petro-autocracy is simply untouchable. Much has to do with the Baku-Tblisi-Ceyhan (BTC) pipeline, facilitated by the late Zbigniew “Grand Chessboard” Brzezinski during the first Bill Clinton administration to bypass Iran. The BTC de facto unleashed the energy chapter of the New Great Game that I have called Pipelineistan.Now, Baku is harboring great hopes for its new port at the desert wasteland of Alat (“Your hub in Eurasia!”), simultaneously connected to the West (Turkey and the European Union), the South (Iran and India) and the North (Russia). Alat is also designed as a top logistics/manufacturing/connectivity hub of the New Silk Roads, aka Belt and Road Initiative. Its top strategic location straddles the BRI’s central connectivity corridor; links to the newly opened Baku-Tblisi-Kars railway, connecting the Caucasus with Central Asia; and also links with the International North-South Transport Corridor that connects Russia to India via Iran. Transportation corridors are all the rage. For Azerbaijan, oil and gas may only last up to 2050. So the priority from now on is to engineer the transition toward becoming a logistics hub; actually, the premier Caspian Sea hub.
Can China Combat Its Natural Gas Crisis? -- Last December, LNG imports into China hit a record high amid natural gas shortages due to the government moving too fast with its shift from coal to gas as well as gas transport infrastructure construction falling behind. But this year things will be different, according to the head of Sinopec’s trading division, Unipec. Last year, China became the world’s second-largest LNG importer, taking in some 38 million tons of the fuel, a 46-percent increase on 2016. Even so, some parts of the country suffered shortages because the gas could not reach them fast enough. As a result, China is now actively working on expanding its LNG storage capacity and pipeline network.Earlier this month Sinopec said it had plans to boost its LNG import capacity to 26 million tons annually over the next six years from the current 9 million tons. China’s total of LNG import capacity is 17 million tons. State energy companies have also begun turning depleted gas fields into gas storage facilities to avoid a repeat of this winter’s supply crunch.Plans are to have all 25 underground gas storage sites before winter, and to increase LNG imports: according to Wood Mac, China’s LNG imports are set for a 25-percent increase this year, to 48-49 million tons. Fresh customs figures for March, meanwhile, revealed a 64.2-percent increase in LNG shipments to 3.25 million tons, Xinhua reported. Over the first quarter of the year, China imported 12.38 million tons of LNG, up 59.1 percent on Q1 2017. Chances are that imports will continue to increase: the available storage capacity is only enough to cover 5 percent of the country’s gas consumption. That’s twice as low as the international average, which stands at 10-12 percent, but Beijing has launched a storage-building strategy that will see the current capacity doubled over the next five to eight years.
One of the world’s longest gas pipelines from Russia to China almost complete --The construction of the 3,000km Power of Siberia gas pipeline or the eastern route, which is aimed to deliver Russian gas to China, will be completed by the end of the year. The announcement was made by Deputy Chairman of Gazprom Management Committee Vitaly Markelov, who said: “By 2019, we plan to eliminate technical gaps after testing.”The Power of Siberia pipeline is one of the biggest projects between Russia and China. Analysts say it could help Russia become one of China’s main providers of natural gas as demand in the country increases. At 3,000km, the pipeline is one of the longest in the world, longer than the distance between Moscow and London. The deal on the eastern route took more than a decade to negotiate. Last July, Gazprom and the China National Petroleum Corporation (CNPC) inked an agreement to start gas deliveries via the route.
Sinopec plans to extend cuts in Saudi crude oil imports to June, July: officials (Reuters) - China’s Sinopec, Asia’s largest refiner, plans to continue to cut their Saudi Arabian crude oil purchases for June and July loadings, after slashing May shipments by 40 percent, two senior executives from the company’s trading arm Unipec said on Tuesday. The Unipec executives, who declined to be identified as they are not authorized to speak to the media, said the reductions in May followed state oil company Saudi Aramco’s decision to raise its official selling prices (OSP) for Arab Light crude which made the grade uncompetitive against other crudes. The unexpected price increase prompted some Asian refiners to trim imports and seek substitutes in the spot market. “Arab Light’s economics are not as good as oil from other Middle East producers. So our refineries have reduced their consumption and we will continue to cut,” one of the Unipec executives said. “We have cut imports in May and we plan to reduce (Saudi oil supply) in June and July,” he said, without indicating how much supplies will be cut. “There’s no reason to use the oil if the (Saudi) OSPs are high and economics do not improve.” Saudi Aramco did not respond to an e-mail from Reuters seeking comment on Sinopec’s cuts. Sinopec’s request for a 40 percent cut in their May Saudi crude imports also coincides with scheduled maintenance at its largest refinery. Still, the big supply cut raised eyebrows as Saudi Arabia only sells its oil through long-term contracts where the permitted change in the monthly contract volume is plus or minus 10 percent. This clause, known as operational tolerance, is to allow both parties to adjust volumes based on shipping conditions.
China's top refiners plan Q2 maintenance, cast doubts on global oil optimism (Reuters) - Some of China’s top refineries will shut in May and June for maintenance, cutting nationwide throughput by some 10 percent and dampening oil demand in the world’s largest crude importer after record run levels in March, according to a Reuters survey. At least six state-owned and private refiners are planning a full annual maintenance shutdown in the second quarter for 30 days or more, including China’s largest refiner Sinopec’s Zhenhai unit, a Reuters survey of 11 plants showed. A slowdown in China’s refining activity could result in lower Chinese imports of crude oil, which in turn could undercut a two-month price rally that has lifted crude to more than $75 a barrel for the first time in over three years. Analysts and traders say imports may also be disrupted by a shutdown of major oil import hub Huangdao, part of Qingdao port in northern Shandong province, further crimping consumption. “If Shandong prepares to shut down the Huangdao port, crude arrivals could start dropping starting in late May,” said Emma Li, senior analyst at Thomson Reuters Oil Research. Port authorities declined to comment on what measures they might take ahead the Shanghai Cooperation Organization Summit in Qingdao in June. Qingdao is a major commodities port, and Beijing usually adopts tighter pollution controls and curbs shipping traffic for big events to ensure blue skies. In total, the six plants to be fully shutdown process around 1.09 million barrels per day (bpd), accounting for 10 percent of China’s average monthly crude runs, Reuters calculations based on refinery rates from China’s statistics bureau showed. The pace of outages due to maintenance is down from 1.26 million bpd in the same period last year, Reuters calculations also showed. But the actual volume of outages could grow as a flurry of independent refineries are considering undertaking maintenance in June and early July to avoid the potential pollution curbs.
Analysis: Asian oil importers ready to sail through Iran sanctions storm -- Asian oil importers were well placed to weather the storm of a possible US re-imposition of sanctions on Tehran,and any subsequent blockage to the country's crude exports, due to their supply diversification efforts that had led to a drop in their Iranian purchases. Various sources with East Asian refiners said they were waiting for clarity on Washington's intention to bring back the sanctions. Major oil consumers in Asia had, however, already factored this in and the companies were well-positioned to seek alternatives in the event that they faced difficulties accessing Iranian crude, industry sources and analysts said. "Iranian crude oil imports have already been declining so it would not create a headache [for us] even without it," a northeast Asian refiner source said. "We [still] hope to have clarity [on the sanctions] because it could be troublesome for shipping arrangements." South Korea's crude and condensate imports from Iran dropped 37.4% year on year to 374,097b/d in March, marking the fifth consecutive year on year decline since November 2017, Korea National Oil Corp's latest data showed. Japan's 2017 imports from Iran fell 24.2% to 172,216 b/d, from 227,142 b/d in 2016, S&P Global Platts calculations based on the Ministry of Economy, Trade and Industry data showed. In the first two months of 2018, imports had fallen 12.3% year on year to 192,289 b/d.
Kuwait Plans Massive Oil Tanker Expansion - Despite the ongoing oil production cuts across OPEC, Kuwait has announced plans to expand its oil and oil product tanker fleet twofold over the next 20 years to 60 vessels, the chief executive of Kuwait Petroleum Corp, Nizar al-Adsani said as quoted by S&P Platts today.The move is the latest indication that in spite of hints, the production cuts may not be in the long-term plans of all members. Several OPEC producers have production expansion plans on their agendas, most notably Iraq, OPEC’s number-two, and now Kuwait.Currently, Kuwait has 28 tankers at its disposal, of which 12 are for crude oil, 10 are for oil products, and four are LPG carriers. The remaining four are bunkering tankers. Yet, "To service KPC's international marketing trade requirements, we will expand our fleet, especially for product carriers," al-Adsani said at the Middle East Petroleum and Gas event in Abu Dhabi.KPC will buy two more oil tankers in the next three years and another four by 2040, the CEO said, along with 11 more oil product vessels and one more LPG carrier. By the same year, Kuwait plans to expand its oil production capacity to 4.75 million bpd from the current 3.2 million bpd, which will take some US$400 billion in new investment. Before that, however, by 2020, Kuwait plans to ramp up its production capacity to 4 million bpd. Refining capacity will also grow, from 936,000 bpd at the moment to 2 million bpd by 2035. At the same time, the Kuwaiti energy minister earlier this month signaled an extension of the production cuts might be what the future holds, which could interfere with the country’s expansion plans unless it is counting on troubled Venezuela’s fast-falling output.
Down In Saudi Arabia, They're Partying Like It's 2008 – Is this really 2018? It started to sound a lot like 2008 in Saudi Arabia on Friday, as the kingdom's oil minister argued that the world could tolerate a higher crude price. "I haven't seen any impact on demand with current prices," Khalid Al-Falih told reporters at the meeting of OPEC and non-OPEC producers in Jeddah. Arguing that the energy intensity of global economic growth hadn't declined, he offered the view that "there is the capacity for higher prices." President Trump certainly didn't appreciate the sentiment, firing off a tweet that accused OPEC of promoting "artificially high prices" which "will not be accepted."Yet setting aside Trump's unique approach to geopolitics, the Saudi comments are indeed troubling. They are an eerie echo of comments made almost exactly a decade earlier by a former OPEC grandee: Libya's Shukri Ghanem. The world economy "has not reached the tipping point where it can't accept higher prices," Ghanem said back in April 2008. Little did he realize just how close that tipping point was. West Texas Intermediate crude, which had touched a record $116.97 a barrel the previous day, continued to climb for another 3 months as OPEC insisted it didn't need to raise production. But then the collapse came, and it was quite a crash. After trading above $145 a barrel in the first half of July, WTI was below $40 by the end of the year.Of course, oil prices are nowhere near as high as a decade ago. But it's startling how quickly the lessons of 2008, or indeed the last price crash of 2014, are being ignored -- even if they're unlikely to have been forgotten.
Kemp: Mission Accomplished for OPEC as Oil Moves from Slump to Boom (Reuters) - The slump that characterised the oil market between the middle of 2014 and the middle of 2016 has been replaced by what looks like the beginning of a boom. Benchmark Brent prices have already risen by more than $45 per barrel or 170 percent from their cyclical trough in early 2016. Front-month futures prices, at almost $75 per barrel, are now trading close to the inflation-adjusted average for the last price cycle, which started in 1998 and finished in 2016. So far this year, futures prices have averaged nearly $68 per barrel, which is well above the post-1973 real average price of $50-$55. Futures prices have shifted from a big contango during the slump into an increasingly wide backwardation since the middle of 2017, which is consistent with a shift from over-supply to under-supply (https://tmsnrt.rs/2JkTIpK ). Global oil consumption is predicted to increase by more than 1.5 million barrels per day (bpd) in 2018, the fourth consecutive year of very strong growth. Non-OPEC oil production is forecast to increase by 2.0 million bpd or more this year, mostly as a result of a large increase in U.S. shale plus other output increases from Canada, Brazil and Norway. But with steep declines in output from OPEC member Venezuela as a result of unrest and mismanagement, and continued curbs on production by other OPEC and non-OPEC members, global production is failing to keep pace with consumption. OECD inventories have dropped sharply and are now in line with the five-year average, eliminating the surplus of over 300 million barrels inherited from the slump. If inventories are adjusted for the rise in consumption, which gives a more accurate picture of the market balance, stocks are now well below the five-year average and continue to tighten. So on every indicator, from spot prices and spreads to consumption, production and inventories, the oil market is now well into the boom phase of the cycle. But booms are always followed by slumps. If OPEC allows the oil market to tighten too much in 2018/19, it will create the conditions for the next downturn a few years later.
Opec’s grand bargain on output is at risk of becoming a victim of its own success - There are three problems with the Opec/non-Opec coalition’s current approach. Compliance is too high, and is not adjusted for some members’ inability to maintain production. The group’s metrics for assessing their deal, and hence their future guidance on policy, have become blurred. And current prices threaten demand growth, and hence risk a renewed slump. The committee reported that Opec and its non-Opec partners had achieved record compliance to their planned cuts of 149 per cent – ie, cutting 50 per cent more than they had planned. But this is not a sign of success. The group should be aiming to hit, not exceed, its target. The over-tightening is mainly due to the continuing collapse in Venezuela, whose output is down from 1.9 million barrels per day in 2017 to less than 1.5 million bpd in March. Angola has lost another 150,000 bpd over its target because of ageing fields. Meanwhile Saudi Arabia is also producing less than its target – when it should be slightly over-producing to compensate for others’ losses. Having declared that they have pretty much achieved their goal of bringing down Organisation for Economic Co-operation and Development oil stocks to the five-year average level, Opec has now begun casting around for a different metric to justify continuing cuts. This is not price: the Saudi Arabia and UAE energy ministers, Khalid Al Falih and Suhail Al Mazrouei, have resolutely refused to talk in terms of a specific price. Conversely, Iranian oil minister Bijan Zanganeh and Russia’s Alexander Novak, respectively, named $60 and $64 per barrel as “acceptable”. Instead, Mr Al Falih has echoed the oil consumers’ organisation, the International Energy Agency (IEA), in pointing to the danger of a lack of investment. But this is not a guide to Opec policy: what is the right level of investment? And with investments taking several years to come to fruition, this would not be helpful for making month-by-month production decisions.
Saudi Arabia’s $100 Oil Dilemma - Saudi Arabia is rumored to want oil prices at $100 per barrel, but if prices rise that high, it could sow the seeds of the next downturn. Saudi officials want more revenues for their budget and a higher oil price to bolster the valuation of the Aramco IPO. But that short-term thinking could spell trouble not just for them, but also for oil prices, and ultimately for longevity of oil demand.As Liam Denning of Bloomberg Gadfly points out, in the past decade, while oil prices have surpassed $100 per barrel for periods of time, they didn’t stay there for very long. In 2008, when oil nearly hit $150 per barrel, it was quickly followed by the financial crisis and a deep U.S. recession. Then, the period between 2011 and 2014, when oil was north of $100 per barrel, U.S. shale crashed the market with a wave of fresh supply.If Saudi Arabia aims to drive up prices to triple-digit territory once again – and to be sure, that is only a rumor at this point – there are plenty of ways that could merely create the conditions for another bust. First, oil prices are rising, in part, because demand is so strong, not just because OPEC is keeping barrels off the market. Oil at $100 would essentially amount to a doubling of the price from the past few years, which would quickly put an end to high demand growth rates. A corollary to this is that $100 oil would likely impact economic growth. The economic recovery from the financial crisis in 2008 is almost a decade old at this point, much longer than the average upswing. History suggests that we are due for a recession at some point in the not-so-distant future. A spike in fuel prices around the world could help bring that on. Taking too much oil off to the market for too long could send prices “artificially” high he said. "That is a big concern…Because oil prices don't generate crises; the abrupt and unexpected rise of oil prices creates crises," Second, $100 oil would set off yet another round of frenzied drilling, likely resulting in an even stronger wave of new shale supply. Several years of triple-digit oil prices led to a near doubling of shale production in the U.S., a volume that helped crash the market in 2014. A spike in oil prices could result in history repeating itself.
Saudi Aramco to Lift Oil-Trading Volume to 6 Million Barrels/Day -- Saudi Aramco, the world's biggest oil exporter, plans to trade as much as 6 million barrels a day, a jump in volume that would put it in the top tier of companies that buy and sell crude and refined products.The trading arm of the state-run giant known officially as Saudi Arabian Oil Co. currently handles between 3.3 million and 3.6 million barrels a day, Ibrahim Al-Buainain, the unit's chief executive officer, said in an interview in Abu Dhabi. Aramco Trading, as the business is known, targets 5.5 million to 6 million barrels a day by 2020 as its parent opens new refineries in Malaysia and Saudi Arabia, he said.Saudi Arabia is counting on Aramco to anchor an economic transformation that the kingdom's Crown Prince is promoting to create industries and jobs. The government plans to sell shares in Saudi Aramco as early as this year in what could be the largest initial public offering. While Aramco is extremely profitable, the government has yet to choose an international exchange on which to sell the shares and could push the IPO into 2019.If it reaches its target, Aramco Trading would rival Vitol Group, the world's largest independent trader, which trades about 7 million barrels a day of crude and products. Royal Dutch Shell Plc buys and sells about 12 million barrels a day, and BP Plc deals in about 8 million. Shell and BP, like Aramco, are integrated oil companies engaged in production, refining and trading. Middle Eastern oil producers are adding refining capacity through joint ventures and will need to find new buyers for their larger product volumes, according to Chris Bake, Vitol's head of origination. Bake and Al-Buainain both spoke on Monday at the Middle East Petroleum and Gas Conference in Abu Dhabi.
Hedge fund oil bulls on the rampage as bears vanish: Kemp (Reuters) - Hedge fund managers have never seemed so convinced that oil prices are set to rise rather than fall in the near term, according to the latest positioning data published by regulators and exchanges. Fund managers remain super-bullish even though benchmark Brent prices have almost tripled over the last two years and are now trading at the highest level since November 2014. Hedge funds and other money managers raised their net bullish position in the six most important futures and options contracts linked to the price of crude and fuels by 45 million barrels in the week to April 20. The net bullish position was equivalent to 1.411 billion barrels of crude and fuels - enough to satisfy global oil consumption for more than two weeks. The net long position was still below the record 1.484 billion barrels set back on Jan. 23 (https://tmsnrt.rs/2Jfts03 ). But hedge fund managers have never been so overwhelmingly convinced prices are set to rise further rather than fall back. Across the six major contracts, portfolio managers hold almost 14 long positions for every short one, compared with a ratio of less than 12:1 back on Jan. 23. In total, funds hold 1.520 billion barrels of long positions across Brent, NYMEX and ICE WTI, U.S. gasoline, U.S. heating oil and European gasoil. The number of short positions has fallen to just 109 million barrels, down from 141 million in January, and the lowest number for at least five years. There are plenty of reasons to be bullish about oil, including rapid growth in global oil consumption, continued supply restraint by OPEC, falling output in Venezuela and the possible re-imposition of sanctions on Iran. OECD oil inventories have fallen back in line with the five-year average and are now below the average if adjusted for increased consumption. Senior OPEC leaders have indicated they see room for prices to rise further and have no intention of boosting output before the end of 2018. Nonetheless, the hedge fund community's positioning has become exceptionally lopsided, which could herald a sharp correction in prices if and when fund managers try to close some of their open positions.
Oil pivots higher, settles with a gain as tensions in the Middle East heat up again - Oil prices gave up earlier declines Monday to settle higher, as reports that a Saudi-led air strike killed the head of the Houthi rebels in Yemen raised the potential for disruptions to the flow of crude in the Middle East. “The fear of geopolitical risk, and the reality that supply will tighten again this week, brought the market back,” said Phil Flynn, senior market analyst at Price Futures Group. Saleh al-Sammad, political leader of the Houthi rebels in Yemen, was killed in Saudi-led air strikes, Al Jazeera reported, citing the Houthi-run Al-Masirah TV network. U.S. benchmark oil prices had turned higher around the last hour of trading on the New York Mercantile Exchange. Earlier losses were fed by strength in the U.S. dollar and news of a higher U.S. rig count late last week, which pointed to further growth in domestic crude production. June West Texas Intermediate crude ose 24 cents, or nearly 0.4%, to settle at $68.64 a barrel on Nymex, after trading as low as $67.14. The expired May contract logged a 1.5% gain last week. June Brent crude on Monday tacked on 65 cents, or 0.9%, to $74.71 a barrel on ICE Futures Europe, reversing course after touching a low of $73.13.
Deutsche: Another $5 Rise In Oil Would Unleash Market Turmoil - Recall, it is the ongoing move higher in crude prices that has sent 10Y breakevens surging to 4 year highs, while expectations of rising inflation have in turn boosted nominal yields as well as sent odds for 4 rate hikes to cycle highs... ... translating into a relentless dollar bid, which is creating a feedback loop forcing the record number of dollar shorts to aggressively cover their positions. So how much higher can oil prices rise, before there the adverse feedback loops and unintended consequences swamp out the risk-on sentiment? According to Deutsche Bank's chief Macro Strategist, another $5/barrel increase in oil would be enough for US 10y yields to threaten 3%, which also suggests that "oil is now at the cusp of levels where higher prices will spark greater FX and broader asset market volatility." As Ruskin notes, "oil is working its wonders on inflation expectations. Figure 1 shows 10y breakevens again slavishly following oil around" and calculates that according to market beta regressions, "a $5/b increase in oil is worth at least 10bps on 10y breakevens. Assuming that real yields and breakevens if anything remain positively correlated (see figure 2) a WTI near $75/b could precipitate US 10y pushing through 3%." As shown in the next chart, breakevens have been following real yields higher. Real yields, meanwhile, have been benefiting from some impact from fiscal policy; positive productivity/ growth expectations; and, most recently, a better risk environment as it relates to a range of political issues, inclusive of trade protectionism, N.Korea and perhaps Syria. Further, as discussed previously, the Syria story with its associated Russian sanctions angle, has awakened dormant commodity price pressures, with the CRB now finally threatening levels last seen in 2015, although some of these have eased in the past 24 hours following suggestions from the US Treasury the Trump admin may be willing to ease back some of its Russian sanctions, unlocking Rusal aluminum supply-chains. Meanwhile, higher commodity prices are falling on a market that should be receptive to some broader increase in inflation in the US.
Oil Prices Tumble After Brent Breaks $75 - Brent prices hit $75 per barrel in early morning trading on Tuesday, the highest price in more than three years. While prices quickly fell back again, bullish sentiment remains strong. The reasons are familiar – geopolitical events are flaring up at a time when the oil market is tightening. The Trump administration is less than three weeks away from a key decision on whether or not to withdraw from the Iran nuclear deal. “Let’s assume he will withdraw from the deal on May 12, we don’t know how much volume will be lost, we might see the $80 level for Brent,” Halliburton reported a 34 percent increase in first quarter revenue largely due to higher drilling activity in North America. The oilfield services giant did take a revenue hit in the first quarter due to winter weather, but that was offset by the uptick in demand for its services from the shale industry. Halliburton’s CEO said that margins of 20 percent should return later this year as the fracking market tightens. “We believe the pressure pumping market is undersupplied and will remain tight,” CEO Jeff Miller said. Halliburton took impairment charges on its entire operation in Venezuela, citing lack of reimbursement from PDVSA, currency turmoil, U.S. sanctions and political uncertainty. PDVSA only produces about half of Venezuela’s oil production on its own, and joint ventures with private companies represent the other half. Even as oil prices hit multi-year highs, demand in Asia is set to rise to a record high in April. That is helping drive oil prices higher. Reuters estimates that China’s oil imports will hit 9 million barrels per day in April, a monthly record high. China’s overall oil demand is expected to jump some 370,000 bpd in 2018.As Bloomberg notes, cash flow for the oil majors is set to be the highest in 12 years, yet they have fallen out of favor with investors. Fears of abundant supply in the next few years, combined with fears that demand will peak in the long run has pushed down the stock prices of the majors.
Oil prices finish lower after tapping highest levels in more than 3 years - Oil settled lower on Tuesday, finding little support from uncertainty surrounding Iran’s nuclear deal, as a diminished appetite for risk weighed on the U.S. stock market.Colin Cieszynski, chief market strategist at SIA Wealth Management Inc., cited a “general lack of enthusiasm toward risk markets” for oil’s retreat, with the U.S. stock market taking an even bigger hit Tuesday than oil.“Swirling geopolitical tensions around Iran may come and go in terms of importance in the coming days,” he said, noting that comments from U.S. President Donald Trump appear to be mixed Tuesday in relation to Iran. “U.S. [updates on crude] inventories and other indications of energy demand, like U.S. GDP on Friday, may also have a significant impact on energy prices.”June West Texas Intermediate crude lost 94 cents, or 1.4%, to settle at $67.70 a barrel on the New York Mercantile Exchange, the lowest finish since April 17. It fell from an intraday high of $69.38, which would have marked its highest settlement since November 2014. Global benchmark June Brent settled at $73.86 a barrel on ICE Futures Europe, down 85 cents, or 1.1%. It had touched a high of $75.47, the highest level since November 2014.The two contracts settled higher Monday, after reports that a Saudi-led airstrike killedthe leader of Houthi rebels in Yemen. That was seen as raising the potential for disruptions to crude supply in the Middle East, which is a major oil-producing region. Separately, the possibility that the U.S. will reimpose sanctions on Iran has been a key concern.. Reinstating the sanctions would likely lead to tighter global oil supplies.
Oil Tumbles After Macron Proposes New Iran Deal - With crude oil surging in recent weeks as a result of geopolitical tensions, including Trump's tariffs on Russia but mostly due to concerns the US president will terminate the Iran nuclear deal in two and a half weeks, eliminating roughly 1 million barrels in Iranian output from the market, it was to be expected that the mere suggestion that the Iranian deal could be salvaged - as virtually all of Europe has insisted and pleaded with Trump - would send oil tumbling. That's precisely what happened moments ago, when during his press conference with Donald Trump, French President Emmanuel Macron proposed a new Iran deal, noting that a "new deal" would block nuclear activity to 2025. Here's a breakdown of Macron's "Plan B" for the Iran, per CBS."I always said there is the JCPOA but we needed to add three pillars post 2025. I don't know what President Trump will decide on the JCPOA and it is his responsibility," said Macron when asked again on the Iran deal."I'm not saying we're moving from one deal to another, I'm saying its one aspect of the problem," Macron said. He added, "I've never been critical [of the JCPOA] because I think we can usefully add to it."Macron again urged adding limitations on Iran's ballistic missile program and limiting Iran's regional influence to a potential new deal."It's about respecting the sovereignty of the states in the region," added Macron. "It's not about tearing apart an agreement but building something new that will cover all of our concerns." In a kneejerk response, oil tumbled by nearly one dollar, sliding below the $69 level it reached earlier today for the first time since 2014, and dropping briefly below $68, in the process slamming Inflation breakevens, and the broader market, as suddenly inflation is not looking all that certain.
WTI/RBOB Extend Losses After Surprise Crude Build - WTI/RBOB sank on the day as Macron suggested a new Iran Deal that may work for President Trump, but after API reported a surprise crude build (+1.099mm vs -2.25mm exp), energy prices kneejerked lower.Macron “has quickly switched to ‘let’s negotiate a new deal.’ It was a bit of a surprise,” said Bob Yawger, director of futures at Mizuho Securities USA Inc. in New York.“It would be a deal that would get everyone involved and try to avoid a confrontational situation. It does seem to be a situation that would hopefully not involve taking barrels off the market.”API;
- Crude +1.099mm (-2.25mm exp)
- Cushing -930k (-150k exp)
- Gasoline -2.724mm
- Distillates -1.911mm
Investor expected a follow up to last week's surprise crude draw but were surprised by a crude build. Cushing along with products all saw inventory draws again...
WTI/RBOB Slide After Surprise Crude, Gasoline Builds; Record Production - WTI/RBOB prices have gone nowhere since API reported a surprise crude build, but after last week's across the board inventory draws, DOE reported surprise builds in crude and gasoline inventories and production hit a new record high, sending prices lower. Bloomberg Intelligence's Senior Energy Analyst Vince Piazza noted before the data hit that, propelled by WTI discounts to Brent of greater than $6 a barrel, domestic refinery throughout is expected to push higher. Strength in crude exports, relative to last year, should persist. DOE:
- Crude +2.17mm (-2.25mm exp)
- Cushing +459k (-150k exp)
- Gasoline +840k
- Distillates -2.611mm
After last week's across the board inventory draws, Crude and Gasoline saw notable surprise builds this week... Inventories are just 3% below the five-year norm. Crude exports hit a new record high... Production rose 46k b/d to 10.586mm b/d - a new record high... In the Permian basin, output is forecast to reach 3.18 million barrels a day in May, the highest since the Energy Information Administration began compiling records in 2007. Amid all the chaos in stocks, WTI/RBOB went nowhere since the API data with no follow-through from Trump or Macron regarding Iran.
Oil prices rise on geopolitical worries, shrugs off U.S. build (Reuters) - Oil prices rose on Wednesday despite data showing rising U.S. inventories, holding within sight of three-year highs reached the previous day on geopolitical tensions including the prospect of fresh sanctions on Iran. Trump will decide by May 12 whether to restore U.S. sanctions on Tehran, which could be a first step to ending the deal. The market was also supported by concerns around oil output from Venezuela. U.S. oil major Chevron Corp has evacuated executives from Venezuela after two of its workers were imprisoned over a contract dispute with state-owned oil company PDVSA, according to four sources familiar with the matter. “The geopolitical risk in the market has a pretty high premium,” . “Even with this week’s Department of Energy numbers it hasn’t shaken any of the confidence that the global supply and demand balance continue to tighten.” Brent crude LCOc1 settled 14 cents higher at $74.00 a barrel, below the November 2014 intraday high of $75.47 reached on Tuesday. U.S. crude futures CLc1 ended up 35 cents at $68.05 a barrel. The market rebounded quickly from a dip after bearish U.S. inventory data because the build was not as large as it could have been, given the jump in exports, McGillian said. Crude inventories USOILC=ECI rose 2.2 million barrels last week, compared with expectations for a 2 million-barrel draw. Crude stocks at the Cushing, Oklahoma, delivery hub USOICC=ECI rose 459,000 barrels, EIA said. A rise in U.S. government borrowing costs to their highest since 2013 this week has tempered some investor appetite for risk, but analysts said Brent crude futures, the global benchmark, may yet rise toward new 2018 peaks above $75 a barrel. Supplier cutbacks, steady demand growth, geopolitical tensions and a favorable structure in the futures market have attracted record investment in oil this year.
Oil prices rise on Iran sanctions worries, falling Venezuelan output - Oil prices rose on Thursday,supported by expectations the United States will re-impose sanctions against Iran, a decline in output in Venezuela and ongoing strong demand. Brent crude oil futures were at 74.27 per barrel at0643 GMT, up 27 cents, or 0.4 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were up 14cents, or 0.2 percent, at $68.19 per barrel. Traders said markets climbed on expectations that the UnitedStates will in May re-impose sanctions against Iran, a major oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC). French President Emmanuel Macron said on Wednesday that he expected U.S. President Donald Trump to pull out of a deal withIran reached in 2015, in which Iran suspended its nuclear programme in return for western powers lifting crippling sanctions. Trump will decide by May 12 whether to restore U.S.sanctions on Tehran, which would likely result in a reduction ofits oil exports. Further pushing oil prices has been declining output in Venezuela, OPEC's biggest producer in Latin America. Venezuela's crude production has fallen from almost 2.5 million barrels per day (bpd) in early 2016 to around1.5 million bpd due to political and economic turmoil. U.S. oil major Chevron CorpCVX.N has evacuated executives from Venezuela after two of its workers were imprisoned over contract dispute with state-owned oil company PDVSA. u= However, not all market indicators point towards tighter supplies. U.S. crude oil inventories rose by 2.2 million barrels in the week to April 20, to 429.74 million barrels.That's almost 10 million barrels above the five-year average. U.S. crude production climbed by 46,000barrels per day (bpd) on the previous week, to 10.59 bpd. That'san increase of more than a quarter since mid-2016. American crude oil output has overtaken that of top exporter Saudi Arabia. Only Russia currently produces more, at around 11million bpd.
Expect Much Tighter Oil Markets - As oil prices hover close to multi-year highs, Saudi's Oil Minister has hit the wires saying that OPEC 'shouldn't be complacent and listen to some of the noise such as mission accomplished' . Just as we learned earlier in this economic cycle via 'don't fight the Fed', we too should take heed: 'Don't fight the Falih'.Year-to-date, U.S. crude inventories have risen by 3 million barrels, compared to 53 million barrels for the same period last year. Our seasonal Q1 build has been distinctly errant.While a number of factors can be assigned for such a lack of upward trajectory (higher exports, stronger refinery runs, lower waterborne imports), the slashing of crude flows to the U.S. from Saudi Arabia has also played a part. Saudi crude deliveries were down over 50 million barrels year-on-year in Q1, a third consecutive quarter of considerably lower year-on-year imports.The aforementioned combo of higher exports, stronger refinery runs and lower waterborne imports have colluded to leave Q1 U.S. crude inventories 110 million barrels lower than end-March last year. (Granted, this is from a high-water mark indeed - the absolute record of U.S. crude inventories at 535.54 million barrels, but hey). In 2017, Saudi crude deliveries to the U.S. dropped by 160,000 bpd versus the prior year. Meanwhile, total OPEC deliveries to U.S. shores in both 2016 and 2017 averaged ~3.2 million barrels per day, with imports last year really strong in the first half of the year, before taking a dive in the second half (hark, below). In Q1 of this year, OPEC deliveries averaged close to 2.7 million bpd, down nearly 20 percent on year-ago levels and the lowest quarter since Q3 2015. This is both a combination of OPEC reining in supplies, and a lesser need from U.S. refiners for OPEC barrels, as they lean as heavy as they can on soaking up rising domestic production.
Oil's big backwardation spells trouble ahead: Kemp (Reuters) - The oil market is becoming extremely tight as consumption outstrips production, and traders expect it to tighten even further over the next six months. The balance between production, consumption and inventories is intimately connected with the shape of the oil futures curve (https://tmsnrt.rs/2Kkn74M ). If consumption is expected to exceed production, and inventories are already low and falling, spot prices tend to trade at a premium to forward prices. The premium for spot prices over forward prices, known as backwardation, acts as a signal to conserve remaining stocks as much as possible. The premium for spot prices is intended to boost supply in the short term while encouraging consumers to defer purchases. Backwardation is the most important and reliable signal of a tight and tightening oil market. Front-month Brent futures have recently been trading in a backwardation of more than $3.40 per barrel over the seventh-month contract. The current backwardation in Brent is among the most extreme in the last quarter of a century and in the 91st percentile of all trading days since 1992. If the backwardation was confined mostly to one or two months, it could be dismissed as an aberration or a sign of market manipulation. But big backwardations are evident for all months through 2018 and 2019. The increasing backwardation is consistent with statistics from the physical market showing oil inventories are becoming increasingly tight. Stocks of crude oil and refined products in the OECD industrialised countries have fallen to just 43 million barrels above the five-year average, from a surplus of 340 million barrels at the start of 2017. If OECD stocks are adjusted for the rise in consumption, current inventories are now below the five-year average. The oil market is currently on an unsustainable trajectory, with global demand growth systematically outrunning supply. Logically, there are five ways in which the oil market can be moved off its currently unsustainable course and brought back towards balance:
- (1) Slower consumption growth (in response to higher prices, an economic slowdown, or a combination of both)
- (2) OPEC and its allies lift their output
- (3) Supply disruptions (existing and threatened) ease
- (4) U.S. shale output increases even faster than expected
- (5) Non-OPEC non-shale output increases faster than predicted.
Trump, Merkel Confirm That Iran Deal Talks Continue; Oil Drops - German Chancellor Angela Merkel and Trump had what was by all accounts a productive meeting on Friday. And if the press conference that followed their three-hour summit had a key takeaway, it would be that, despite Trump's aggressive rhetoric, the Iran deal remains alive - for now, at least. This realization sent the price of WTI sinking in afternoon trade as oil bulls worried about Iranian supply, though WTI climbed 4.5% in April. Trump addressed the Iran deal in general terms, saying that the West must "ensure that this murderous regime does not even get close to a nuclear weapon." Reiterating remarks from earlier this week, Trump said Iran would not be restarting its nuclear program, "you can bank on it." Merkel said that while the deal "isn't perfect", she said it's "part of a bigger Middle Eastern picture" and added that the signatories would continue to be involved in "very close talks" to try and preserve the deal. Merkel said the JCPOA was discussed, and that the two sides were working on forging a deal that would assuage US concerns. Turning to the subject of North Korea, Trump reiterated remarks from a press conference earlier in the day, saying that while he's looking forward to talks with North Korea, the US would not let the North "play" the Trump administration like the Kims have played previous administrations. "I will be meeting with Kim Jong Un in the coming weeks, we look forward to that," he said, thanking Merkel for her help in the "maximum pressure" campaign on North Korea. Trump also touched on the need for NATO nations to pay their fair share for national security costs born by the bloc, and also commented on Germany's trade surplus with the US. Crucially, Merkel didn't give a direct answer about whether the US would extend an exemption for aluminum and steel tariffs for the European Union, which is set to expire early next month.
Geopolitical Breakthroughs Calm The Oil Market - The diplomatic breakthrough on the Korean Peninsula is taking away one source of geopolitical risk, at least for now, with oil prices dipping in early trading on Friday. After a brief outage, Libya’s Es Sider export terminal resumed shipments. A pipeline suffered damage from an explosion last Saturday, leading to a temporary outage of 80,000 bpd, but the pipeline has since been repaired. Separately, Libya’s eastern military leader, Khalifa Haftar, returned to the country after a hiatus in France for medical treatment. His absence fueled speculation about a return to instability, which threatened new oil supply disruptions. At least six state-owned and private oil refineries will shut down in May and June for maintenance. The pause could result in a 10 percent decline in refinery runs, or about 1.09 million barrels per day, which could temporarily hit China’s demand for crude oil imports. First quarter earnings began coming out this week from the oil majors, most of whom are posting the largest profits in years. . All are making more money with oil at $65 to $70 today than they were in the pre-2014 environment in which oil topped $100 per barrel. Royal Dutch Shell announced the final investment decision for the Vito project, a deep-water offshore development in the Gulf of Mexico. The Anglo-Dutch oil major said the project has a breakeven price of about $35 per barrel and will produce 100,000 bpd at its peak. The project is expected to begin producing in 2021. The Trump administration has repeatedly found itself caught in the fight between the oil refining and the corn ethanol industries, industries that are battling over the renewable fuels standard (RFS) and how much ethanol refiners are required to blend into their fuel mixes. Refiners are demanding changes to the rule that requires 10 percent ethanol, asking for a rollback. The ethanol industry is digging in its heels. The EPA has granted exemptions to a growing number of refiners, which is giving more urgency to the debate because it is undermining the ethanol market. Trump is caught between the two sides and has tried to avoid making a decision over fears of alienating one of these constituencies.
Oil inches down but Brent ends week firmer on Iran concerns (Reuters) - Oil prices edged lower on Friday, although Brent still gained for a third straight week amid supply concerns should the United States reimpose sanctions on Iran. Brent crude futures fell 10 cents, or 0.1 percent, to settle at $74.64 a barrel. This month, the global benchmark hit highs above $75, a level last seen in late 2014. U.S. West Texas Intermediate (WTI) crude futures fell 9 cents to settle at $68.10 a barrel, also a 0.1 percent loss. Brent gained about 0.5 percent this week - its third consecutive weekly gain - while WTI posted a weekly loss of about 0.5 percent. Hedge funds and other money managers cut their combined futures and options position in U.S. crude in New York and London by 17,021 contracts to 455,885 during the week to April 24, the U.S. Commodity Futures Trading Commission (CFTC). U.S. President Donald Trump will decide by May 12 whether to reimpose sanctions on Iran that were lifted as part of an agreement with six other world powers over Tehran’s nuclear program. The renewed sanctions would likely dampen Iranian oil exports, disrupting global oil supply. “That’s the biggest factor right now that’s driving the market. And that’s why you’re seeing low volatility today and for the most part during the week,” Rob Thummel, portfolio manager at energy investment manager Tortoise Capital in Leawood, Kansas. “The market is just kind of waiting on that.” Brent has risen by around 6 percent so far this month, while WTI was on track for a gain of nearly 5 percent. The gains came despite a higher dollar .DXY, which hit its strongest since Jan. 11 against a basket of currencies. A stronger dollar makes greenback-denominated commodities more expensive for holders of other currencies. Concerns about market tightness have also been fueled by the deteriorating political and economic situation in Venezuela that has led to a 40 percent decline in crude output in the past two years.
Baker Hughes reports U.S. rig count up 8 to 1,021 rigs BHGE - Baker Hughes reports that the U.S. rig count is up 8 rigs from last week to 1,021, with oil rigs up 5 to 825, gas rigs up 3 to 195, and miscellaneous rigs unchanged at 1. The U.S. Rig Count is up 151 rigs from last year's count of 870, with oil rigs up 128, gas rigs up 24, and miscellaneous rigs down 1 to 1. The U.S. Offshore Rig Count is unchanged at 18 and up 1 rig from last year's count of 17. The Canada Rig Count is down 8 rigs from last week to 85, with oil rigs down 5 to 33 and gas rigs down 3 to 52. The Canada Rig Count is unchanged from last year's count of 85, with oil rigs up 9 and gas rigs down 9.
Tehran Threatens To Leave Nuclear Nonproliferation Treaty If Trump Kills Iran Deal - While the UN, EU, International Atomic Energy Agency and a host of others implored President Trump late Monday to preserve the landmark Iran nuclear deal - even if the US couldn't achieve concessions on Iran's ballistic missiles program that it has been aggressively pushing - Iranian officials have been cranking their rhetoric up to "11", with Ali Shamkhani, the Secretary of Iran's Supreme National Security Council, acknowledging during a news broadcast on state television that the Iranian leadership had discussed leaving the Nuclear Nonproliferation Treaty as "one of three options that we are considering" in response to the US potentially scrapping the deal. While this isn't the first time Iran has threatened to leave the NPT - the cornerstone of the international nonproliferation order - it's the first time the leadership has threatened to leave as a tit-for-tat response to the US leaving the Iran deal. While Iran committed to not pursuing a nuclear weapon when it joined the NPT in 1970, the Iran deal imposed tighter restrictions on the regime, per Reuters. Of course, by leaving both agreements, Iran would only fuel its enemies' claims that the Islamic Republic is explicitly seeking to build a nuclear weapon. Per the Jerusalem Post, Shamkhani, who spoke with reporters shortly before departing for Russia, said the Atomic Energy Organization of Iran was ready for some "surprising actions" if the nuclear deal is scrapped. Meanwhile, over the weekend (and again on Monday), Iranian Foreign Minister Javad Zarif warned that Tehran would reactivate its centrifuges should the US drop out of the deal and reimpose economic sanctions. On Tuesday, the war of words ratcheted higher when Iranian President Hassan Rouhani warned that Trump should keep the deal in its current format or face "severe consequences.""I am telling those in the White House that if they do not live up to their commitments...the Iranian government will firmly react," Rouhani said in a speech."If anyone betrays the deal, they should know that they would face severe consequences," Rouhani told a cheering crowd of thousands gathered in the city of Tabriz. "Iran is prepared for all possible situations," he added.
A Saudi-Iranian Dialogue on Regional Security - With tensions between regional rivals Iran and Saudi Arabia at the brink, a rare dialogue recently took place between two former senior Saudi and Iranian officials. Hosted by the Center for Strategic Studies at the Joint Special Operations University in Tampa, Florida, former Saudi Ambassador to the United States and Director General of Saudi Arabia’s intelligence agency Prince Turki al Faisal debated Ambassador Hossein Mousavian, a former spokesman for Iran’s nuclear negotiators and chairman of the foreign policy committee of Iran’s National Security Council. The lively discussion touched on each country’s view of its security environment and the broader issues affecting the Iran-Saudi relationship. LobeLog has obtained the full transcript of the conversation, and the following is an abbreviated excerpt covering the key points.
Saudi airstrike kills 33 at wedding in northern Yemen - An airstrike by Saudi-led coalition jet fighters on a wedding in northern Yemen killed at least 33 people and wounded 55 others Sunday night.The bombs, supplied by the United States, rained down on a tent in the northwestern province of Hajjah where women and children had gathered, killing dozens, including the bride. Most of those injured in the attack were children, many of whom were sent to hospital with grievous shrapnel wounds and severed limbs.Abdel-Hakim al-Kahlan, a Health Ministry spokesman, reported that ambulances were delayed from reaching the injured and dying out of fear of a repeated attack as Saudi jets continued to fly overhead following the attack. Such so-called “double tap” strikes have been used repeatedly in Yemen by the Saudi coalition.Video from the scene depict scattered limbs and a young boy clinging to a man’s corpse as he is removed from the rubble.The bloody attack was one of three Saudi airstrikes over the weekend which claimed mass civilian casualties in Yemen. A separate airstrike Sunday night on a home in Hajjam killed five members of a single family. The previous day 20 civilians were killed outside the city of Taiz when Saudi planes bombed a commuter bus. Saudi Arabia has been waging an unrelenting war against Yemen for more than three years, with the full support of the United States and its allies. Utilizing American-made jet fighters armed with US-supplied bombs and refueled by the US Air Force, the Saudis have pushed the poorest country in the Arab world to the brink of famine and sparked the worst cholera outbreak in modern history. The US Navy has provided ships to enforce a blockade of the country, which has cut off critical supplies of food and medicine. Saudi coalition jets have attacked residential neighborhoods, schools, markets, factories and hospitals, as well as water and electrical systems. No civilian target is apparently off limits for Saudi bombs. Earlier in April Saudi warplanes struck a housing complex for displaced people in port city of Hodeida. Once the attack ended at least 14 had been killed and nine wounded, the victims were predominantly women and children. More than 13,000 civilians have been killed in the course of the three-year war, with Saudi Arabia responsible for the majority of all casualties.
Saudi Media Claims Houthis Are Holding 19 Oil Tankers Hostage Off Yemeni Coast - The Yemeni Houthis have captured 19 oil tankers and are keeping them from entering the Hodeidah port, according to reports from Saudi media quoting the Kingdom’s ambassador in Yemen. The ambassador suggested three possible reasons for the detention, including an attempt to extract money from the owners of the vessels, “the continued starvation of the Yemeni people”, and a plan to destroy the tankers, causing major environmental damage to the Red Sea.However, the only media sources reporting the tanker seizure are Saudi sources and there has been no confirmation from an external source that the Houthis have indeed seized any tankers yet. No details have been disclosed as to the origin of the vessels, either. According to Saudi Arabia, the Houthis - a Shiite militia backed by Iran - are holding the port of Hodeidah as “a tool of war”. The port is one of the largest in the war-torn country, and it is the destination for many oil tankers and humanitarian aid. It is also controlled by the Houthis unlike other large ports, which the Saudi-led coalition closed earlier, worsening the plight of starving Yemenis.At the end of last year, the Houthis threatened that they would start attacking oil tankers and warships sailing under enemy flags if the Gulf coalition fighting it in the country does not reopen its ports. Since then, there have been multiple reports of Houthis strikes against Saudi targets, including civilian targets, but no real damage has been done.Even so, following the latest missile strike report, Human Rights Watch said that “Houthi forces in Yemen violated the laws of war by launching ballistic missiles indiscriminately at populated areas in Saudi Arabia on March 25, 2018.” “But just as unlawful coalition airstrikes don’t justify the Houthi’s indiscriminate attacks, the Saudis can’t use Houthi rockets to justify impeding life-saving goods for Yemen’s civilian population,” Sarah Leah Whitson, Middle East director at Human Rights Watch, said.Yemen lies along one of the main global oil chokepoints in the Red Sea. Millions of barrels of crude oil pass Yemeni shores from the Suez Canal en route to Europe every day.
Saudis say 19 oil ships are held hostage off Yemen. Not true, say maritime experts. -- A Saudi Arabian diplomat said last weekend that 19 oil tankers were seized by rebel forces off the coast of Yemen. Then, the Saudi Embassy in Washington, DC, repeated the story. But based on interviews and research conducted by PRI, there is no hostage situation at all. The first report appeared Saturday, April 21 in a tweet from a Saudi Arabian diplomat, Mohammad Al-Jabir, which showed a list of ships which the ambassador said were being detained outside Yemen's deepwater port of Hodeidah. "A list of detained ships by the Iranian-backed Houthi militia in the anchoring zone, which they control," the tweet reads. "These ships have been detained for more than 26 days." The Saudi Embassy in Washington, DC, amplified Jabir's claims two days later in a press release.A hostage crisis. Hijackings at sea. Commercial ships to be destroyed. An environmental disaster to follow. The Saudi press release indicated a crisis was surely brewing. But shipping companies and industry analysts tell a different story. TankerTrackers.com, a maritime transparency project based in Sweden, spotted the tankers listed by the Saudis within hours of the ambassador's tweet. Through satellite imagery and data transmissions, the group identified the vessels anchored off Hodeidah and began watching their movements. On Tuesday, a spokesperson for a Greek shipping company whose tankers are on the Saudi list expressed surprise about the Saudi accusations. "Up to now there is not any issue reported by vessels," wrote Capt. Minas Papadakis of the Athens-based company, Eurotank, which manages four of the ships. "There is congestion at port, but waiting time is normal for Hodeidah." Papadakis said the Delia I had successfully offloaded its cargo of fuel at Hodeidah and that Eurotank's other ships were in line to do the same."Ariana, Selene and Liana are at [Hodeidah] anchorage waiting orders by port control for discharging their cargo," he said. "We confirm that all are in order." "Given everything that we've seen from satellite imagery, we have not seen any vessels that were surrounded or physically blocked from entering port," he said. "They've been sitting idle in anchorage. And now we see a lot of traffic: vessels that move from anchorage into port to deliver the cargo, and then they leave the port." In short, it's been business as usual at Hodeidah.
Yemenis resort to burning firewood and rubbish to cook food - Since November, millions of Yemenis have been affected by a chronic shortage of fuel after Saudi Arabia tightened its blockade on Houthi-controlled ports and airports.Attempting to force the Houthis, a group of Shia rebels who control large parts of the north, into relinquishing their grip on power, a major gas firm in Marib, a gas-rich region controlled by the Saudi-backed Yemeni government, slashed deliveries to rebel-held areas. The blockade, which has only been partially lifted, had a devastating impact on the civilian population, with only a sliver of goods entering the capital of 4 million people.The shortage of fuel forced factories to lay off their staff, taxi prices to increase astronomically and hospitals, which rely on diesel to power their generators, to start closing wards. Fuel imports in March were less than one-third, 30 percent, of the national requirement, according to the UN's Office for the Coordination of Humanitarian Affairs (OCHA). Power shortages have caused a burgeoning rise in demand for diesel and gasoline on the black market, and young men and boys have begun lining major thoroughfares, selling plastic water bottles filled with bright red or deep yellow fuel - at up to five times the normal price.
A US Ally Is Literally Beheading People Over Nonviolent Drug Charges - Saudi Arabia, the United States’ main ally in the Middle East, has executed 48 people so far this year, half of them over nonviolent drug charges, Human Rights Watch reported this week.“Many more people convicted of drug crimes remain on death row following convictions by Saudi Arabia’s notoriously unfair criminal justice system,” the advocacy organization said in a release.Though Human Rights Watch did not specify the method of execution, the Guardian classified the 48 killings as beheadings, and the Saudi government has a reputation for this type of sentence.“Saudi Arabia has carried out nearly 600 executions since the beginning of 2014, over 200 of them in drug cases. The vast majority of the remainder were for murder, but other offenses included rape, incest, terrorism, and ‘sorcery,’” HRW noted.As far back as 2004, CBS reported that “[t]he Saudi government beheaded 52 men and one woman last year for crimes including murder, homosexuality, armed robbery and drug trafficking,” adding that the Kingdom argues the practice is acceptable under Islamic law, which governs the country. At the same time, they condemned beheadings by militant groups. CBS noted that while Islam allows for the death penalty “few mainstream Muslim scholars and observers believe beheadings are sanctioned by Sharia, or Islamic law.”Nevertheless, the Saudi government has continued the practice, beheading 157 people in 2015, the highest since 1995, when 192 were executed. Nonviolent drug offenders were among those killed that year, as well. “Human Rights Watch (HRW) found that of the first 100 prisoners executed in 2015, 56 had been based on judicial discretion and not for crimes for which Islamic law mandates a specific death penalty punishment,” the Guardian noted at the time. The Kingdom also criminalizes protest and received widespread condemnation in 2017 for its efforts to execute 14 Shia minority demonstrators who protested during the Arab Spring. One of those protesters was a Saudi student who was arrested on his way to study abroad in the United States, and an advocacy groups’ appeals to President Trump to intervene on his behalf, the White House offered no indication it intended to help him.
UK refuses to back UN inquiry into Saudi 'war crimes' amid fears it will damage trade - Britain vowed not to back a proposed UN investigation into possible war crimes by Saudi Arabia in Yemen after the Kingdom threatened to review its trade with nations who backed the move. A Saudi-led coalition has been waging war in northern Yemen for more than two years against Houthi rebel forces who are opposed to the country’s leader, President Abdrabbuh Mansour. More than 10,000 have been killed – many of whom are said to be civilians – and some 50,000 injured, figures show, after mostly air strike attacks by fighter jets dispatched by Riyadh.It comes after figures from charity War Child UK claimed that British arms companies have earned more than £6bn from trade with Saudi Arabia since the conflict erupted.UN members Holland and Canada have called for an inquiry into alleged war crimes by the Saudis in its campaigns against the Houthi forces over its border with Yemen. But the Kingdom said it “will not accept” any outside investigation into the allegations and warned countries that supported the move could see their trade with the Saudis suffer. A letter distributed by the kingdom read: "Adopting The Netherlands/Canadian draft resolution in the Human Rights Council may negatively affect the bilateral political economic relations with Saudi Arabia”, according to the news agency.
Iran Officially Switches From Dollar To Euro - Middle East Monitor reports that Iran’s feud with the US is set to get worse after Tehran announced this week that it will start reporting foreign currency amounts in euros rather than US dollars, as part of the country’s effort to reduce its reliance on the American currency due to political tension with Washington. Central bank governor Valiollah Seif said last week that Supreme Leader Ayatollah Ali Khamenei had welcomed his suggestion of replacing the dollar with the euro in foreign trade, as the “dollar has no place in our transactions today”.Iran does hardly any trade with the US due to decades of economic sanctions. It’s most important trading partner is the UAE, which accounts for around 24 per cent of all Iranian imports and exports. China is not far behind with 22 per cent, followed by Turkey, India and the EU, all of which account for around six per cent of Iran’s trade.Iran’s leaders have been threatening for some time to ditch the dollar for a different currency. The shift towards euro took on added urgency after the appointment of Donald Trump and his decision to include Iran on a list of mainly Muslim majority countries banned from entering the US. Trump has also threatened to exit a 2015 nuclear deal Iran made with world powers. The next major test for the deal is 12 May when Trump will be required to re-endorse the deal, which he has derided as “the worst deal ever”. The move is seen by Iranian officials as a logical and necessary step. The threat of further US sanctions has destabilised Iran’s foreign exchange market in recent months. Bank transactions involving the dollar are already difficult for Iran; sanctions have made US banks unwilling to do business with Tehran; foreign firms can be exposed to sanctions if they do Iranian deals in dollars, even if the operations involve non-US branches.
The growing threat of an Israeli war against Iran --With the world media focused on the discussions in Washington between US President Donald Trump and his French counterpart Emmanuel Macron concerning the Iranian nuclear agreement, the Israeli government has adopted an increasingly provocative posture toward Iran while carrying out a buildup on its northern border in preparation for a military confrontation. Macron bowed to Trump’s demand for an aggressive policy toward Iran aimed at further curtailing not only the country’s nuclear program, but also its conventional weapons, and rolling back its influence throughout the Middle East. Nevertheless, the reaction in Tel Aviv to the Franco-American summit was largely negative. The Israeli perception is that Macron might succeed in brokering a deal that would deter the American president from the outright repudiation of the JCPOA (Joint Comprehensive Plan of Action), the nuclear deal reached between Iran and six major powers—the US, Russia, China, Britain, France and Germany—in 2015. Trump faces a May 12 deadline for deciding whether to scrap the agreement and reimpose unilateral US sanctions against Iran. This would place Washington on a direct trajectory toward war with Iran, the preferred outcome of the Israeli government. Israeli Intelligence Minister Israel Katz said in a radio interview Wednesday that the Iranian nuclear deal had to be “fundamentally amended, and if not, cancelled.” He warned that Macron and other European leaders had to understand that “putting pressure on Iran today can prevent violence and perhaps war tomorrow.” The warning of a potential war made by the Israeli minister was by no means hypothetical. Israel has sharply escalated the danger of an all-out military confrontation with Iran. The April 8 strike, a direct violation of international law and a violation of the sovereignty of two countries, was launched by US-supplied F-15 fighter jets flying over Lebanon against Syria’s T4 Air Base in the central province of Homs. The victims of the Israeli missiles included over a dozen military personnel, including seven Iranian military advisers, apparently the intended targets.
Palestinian-Israeli conflict: UN envoy warns 'Gaza about to explode' -- “Gaza is about to explode” as the Palestinian-Israeli conflict is continuing with no prospects for a political resolution, Nikolay Mladenov, UN Special Coordinator for the Middle East Peace Process has warned. Mladenov told the Security Council during an open debate on the crises affecting the region, urging both sides to avoid further clashes along the enclave’s border. “Old wounds continue to bleed and deepen as we speak, risking the outbreak of another war,”, the UN special envoy warned. While his briefing covered the situations in Syria, Yemen and Lebanon, it was largely focused on the unfolding crisis along the Gaza fence, which is at the tiny enclave’s border with Israel. For the last four weeks, tens of thousands of Palestinians in Gaza have converged on the fence to protest the long-standing blockade of the enclave. The so-called ‘Great March of Return’ demonstrations were expected to continue and culminate around May 15, and could spread to the West Bank and beyond, Mladenov said. Since March 30, during these demonstrations, 35 Palestinians have been killed and large numbers have been injured by Israeli security forces but no Israeli casualties have been reported, he added. Israel had accused Hamas, Islamic Jihad and other militants of using the protests, women, children and the elderly, as a cover to infiltrate Israel and commit terrorist attacks. The UN envoy urged Israel to calibrate its use of force and minimise the use of live fire. He also called on Hamas – a Palestinian faction governing the enclave – and the leaders of the demonstrations to keep protestors away from the Gaza fence. Mladenov said the combination of the security, development and humanitarian deterioration, coupled with the political impasse, was making Gaza “a powder keg"
Germany's Largest Public TV News Broadcaster: Syria Chemical Attack "Most Likely Staged" - A senior correspondent for German state media broadcast ZDF heute stunned his European audience during a report from on the ground in Syria when he gave a straightforward and honest account of his findings while investigating what happened in Douma. The veteran reporter, Uli Gack, interviewed multiple eyewitnesses of the April 7 alleged chemical attack and concluded of the testimonials, "the Douma chemical attack is most likely staged, a great many people here seem very convinced." It appears that all local Syrians encountered by the German public broadcast reporter were immediately dismissive of the widespread allegation that the Syrian government gassed civilians, which the US, UK, France, and Israel used a pretext for launching missile strikes on Damascus. ZDF heute: The world continues to puzzle over whether the banned chemical weapons were used in Douma. ZDF correspondent Uli Gack is in Syria for us: "you were in a large refugee camp today and talked to a lot of people - what did you hear about the attack there?" Gack responded, "the Douma chemical attack is most likely staged, a great many people here seem very convinced." The German ZDF report is consistent with veteran British journalist Robert Fisk's investigation upon being the first Western journalist to gain access to the site in Douma. Fisk reported early this week, "There are the many people I talked to amid the ruins of the town who said they had 'never believed in' gas stories–which were usually put about, they claimed, by the armed Islamist groups.
Beware Of White Helmets Bearing News - The celebrated White Helmets of Oscar fame appeared to have made their own feature film in Duma on the night of the alleged chemical attack... At the center of the controversy over an alleged chemical attack in the Damascus suburb of Duma on April 7 are the White Helmets, a self-described rescue operation about whom an Oscar-winning documentary was made. Reporter and author Max Blumenthal has tracked the role of the White Helmets in the Syrian conflict. He reported that the White Helmets were created in Turkey by James Le Mesurier, a former British MI5 agent. The group has received at least $55 million from the British Foreign Office and $23 million from the U.S. Agency for International Development as well as millions from the Kingdom of Qatar, which has backed a variety of extremist groups in Syria including Al Qaeda. Blumenthal writes, “When Defense Secretary James Mattis cited ‘social media’ in place of scientific evidence of a chemical attack in Duma, he was referring to video shot by members of the White Helmets. Similarly, when State Department spokesperson Heather Nauert sought to explain why the US bombed Syria before inspectors from the OPCW could produce a report from the ground, she claimed, ‘We have our own intelligence.’ With little else to offer, she was likely referring to social media material published by members of the White Helmets.” The reference to social media as evidence in the most serious decision a leader can make—to engage in an act of war—is part of a disturbing trend. Then Secretary of State John Kerry pointed to “social media” as evidence of the Syrian government’s guilt in a 2013 chemical attack in the same Damascus suburb. But as Robert Parry, the late founder and editor of this site, pointed out in numerous reports, Syrian government guilt was far from a sure thing. Rather than wait for the arrival of a team of experts from the Organization for the Prohibition of Chemical Weapons to assess whether chemicals had even used in this latest incident, Trump gave the order to bomb.
OPCW Investigators Reportedly Found "No Evidence" Of Chemical Weapons At Syrian Facilities Bombed By US - While it will likely take the Organization for the Prohibition of Chemical Weapons weeks or even months to issue their final report on the alleged gas attack in Douma (an attack for which journalists and other independent parties have failed to find any evidence), the organization's investigators have apparently spoken with Russian military officials after visiting the site of the Barzeh research center in Damascus - one of the three facilities targeted by the strikes. The Barzah Research and Development Center in Damascus, Syria, before it was struck by coalition forces on Saturday. This satellite image, taken Monday morning, shows the Barzah Research and Development Center in Damascus after it was struck by coalition forces. At the time we noted Paul Craig Roberts' 'awkward question' to Washington's warmongers:If this were true, would not a lethal cloud have been released that would have taken the lives of far more people than claimed in the alleged Syrian chemical attack on Douma?Would not the US missile attack be identical to a chemical weapons attack and thus place the US and its vassals in the same category as Washington is attempting to place Assad and Putin?And now, according to Sputnik, the investigators, who spoke with Russian General Staff Col. Gen. Sergey Rudskoy, revealed that they had found no evidence of chemical weapons in the remains of research facilities that were supposedly integral to the Syrian Army's chemical weapons program. Of course, this shouldn't come as a surprise: After all, if the US, France and the UK really did bomb a building filled with chemical weapons, there would've been thousands - possibly tens of thousands - of bodies to show for it. "Immediately after the attacks, many people who worked at these destroyed facilities and just bystanders without any protective equipment visited them. None of them got poisoned with toxic agents," Rudskoy said.
Did You Really Drop Bombs On A Chemical Weapons Facility Mrs May? On April 14th, shortly after the United Kingdom, United States and France bombed the sovereign country of Syria, on the basis of unproven allegations of the use of chemical weapons in Douma on 7th April, the British Prime Minister, Theresa May made the following comment in her official statement: “Together we have hit a specific and limited set of targets. They were a chemical weapons storage and production facility, a key chemical weapons research centre and a military bunker involved in chemical weapons attacks. Hitting these targets with the force that we have deployed will significantly degrade the Syrian Regime’s ability to research, develop and deploy chemical weapons” [my emphasis].It seemed to me when I heard these words – and the passage of time has not altered this impression – that Mrs May was admitting to one of two actions, either of which ought to see her removed from office. If we take her statement at face value, then it appears that she authorized a cruise missile strike on a number of depots that she believed contained chemical weapons, thus risking the dispersion of toxic chemicals into the atmosphere. It hardly needs to be spelled out what this could have led to, especially as some of these sites were close to residential areas. On the other hand, if she authorised the bombing of these facilities knowing full well that they did not contain chemical weapons, then her public statement made after the bombing was false. There really are no other options. Either she believed that these facilities contained chemical weapons, in which case her authorisation of the bombing of them was a deeply reckless and irresponsible act, which could have had horrendous consequences for the people near those locations. Or she knew that they did not in fact contain chemical weapons, in which case her statement was deliberately misleading.
Russia Claims It Captured Trump's "Nice And New And Smart" Missiles After Syrian Strike - Two of President Trump’s “nice and new and smart” cruise missiles were recovered non-detonated by the Syrian Armed Forces on April 14, one day after the US, the UK and France fired more than 100 rockets into Syria according to the Russian TASS new agency. The U.S.-led missile strike targeted what they assumed were Syrian chemical weapon facilities in response to the April 07 gas attack in the Syrian city of Douma. And now the reverse engineering of America's "new and smart" technology can begin: an unnamed source within the Syrian military confirmed to TASS that the cruise missiles were sent to Russia on April 18.“Two cruise missiles that were not exploded during the US missile strike in Syria on the night of April 14 were discovered by the Syrian military, both missiles in good enough condition the day before yesterday [April 17] were transferred to the Russian military,” the source said.As the source adds “these missiles were sent yesterday [April 18] by plane to Russia” for further examination.Alleged images of American and French cruise missiles shot down by Syria forces have recently surfaced on Twitter:“Syrian soldier stands beside downed US Tomahawk missile,” said Partisangirl.#Syrian soldier stands beside downed #US tomahawk missile. #Syria #SyriaStrike pic.twitter.com/8yijrnASmd — Partisangirl (@Partisangirl) April 14, 2018
We will deliver S300 to Syria. Russian Army answers to threats by Lieberman - Russia plans to deliver new air defense systems to Syria in the near future, RIA news agency cited Russia’s Defense Ministry as saying on Wednesday.The ministry added it plans to study a U.S. Tomahawk cruise missile captured by Syrian forces in a recent attack, in order to improve Russia’s own missiles, RIA reported.The announcement comes a day after Defense Minister Avigdor Lieberman said that Israel may strike the Russian-made S-300 anti-aircraft defense systems in Syria if they are used against Israel. “One thing should be clear – if someone fires on our planes, we will destroy them,” Lieberman said in an interview with the Israeli website Ynet. “What’s important to us is that the weapons defense systems that the Russians transfer to Syria are not used against us. If they are used against us, we will act against them.”
Russia presents alleged Syrian witnesses in The Hague to disprove chemical attack claims - Russia has presented more than a dozen alleged witnesses from Ghouta in Syria at The Hague to support its claim that the chemical attack this month was "staged". Britain dismissed the move as a theatrical "stunt", and said allied powers including France and the United States had boycotted the closed-door briefing."The OPCW [Organisation for the Prohibition for Chemical Weapons] is not a theatre," Britain's envoy to the agency, Peter Wilson, said in a statement."Russia's decision to misuse it is yet another Russian attempt to undermine the OPCW's work, and in particular the work of its fact-finding mission investigating chemical weapons use in Syria." The OPCW is investigating the deaths of dozens of people in Douma, an enclave in Ghouta, on April 7 which the United States and its allies said was caused by chemical weapons, possibly a nerve agent, used by forces of the Russian-backed Government of President Bashar al-Assad.The suspected attacks led to air strikes by the United States, France and Britain against sites in Syria.Both Syria and Russia have denied the accusation and said rebel forces staged the attacks. Russia and Syria brought 15 Syrians to a news conference in The Hague on Thursday (local time), and they said they had not seen any evidence of chemical weapons being used in Ghouta.
"No Attacks, No Victims": Syria Chemical Attack Video Participants Speak At OPCW Briefing - Russian officials brought fifteen people to The Hague from the city of Douma, Syria, said to have been present during the alleged April 7 chemical attack - including 11-year-old Hassan Diab, who was seen in a widely-distributed video taken by the controversian NGO organization known as the "White Helmets," who filmed themselves giving Diab "emergency treatment" after the alleged incident. “We were at the basement and we heard people shouting that we needed to go to a hospital. We went through a tunnel. At the hospital they started pouring cold water on me,” said Diab, who was featured in the video which Russia's ambassador to the Netherlands says was staged.The boy and his family have spoken to various media outlets, who say there was no attack. Others present during the filming of Diab's hospital "cleanup" by the White Helmets include hospital administrator Ahmad Kashoi, who runs the emergency ward. “There were people unknown to us who were filming the emergency care, they were filming the chaos taking place inside, and were filming people being doused with water. The instruments they used to douse them with water were originally used to clean the floors actually,” Ahmad Kashoi, an administrator of the emergency ward, recalled. “That happened for about an hour, we provided help to them and sent them home. No one has died. No one suffered from chemical exposure.” –RT Also speaking at The Hague was Halil al-Jaish, an emergency worker who treated people at the Douma hospital the day of the attack - who said that while some patients did come in for respiratory problems, they were attributed to heavy dust, present in the air after recent airstrikes, but that nobody showed signs of chemical warfare poisoning.The hospital received people who suffered from smoke and dust asphyxiation on the day of the alleged attack, Muwaffak Nasrim, a paramedic who was working in emergency care, said. The panic seen in footage provided by the White Helmets was caused mainly by people shouting about the alleged use of chemical weapons, Nasrim, who witnessed the chaotic scenes, added. No patients, however, displayed symptoms of chemical weapons exposure, he said. –RT Emergency paramedic Ahmad Saur who is with the Syrian Red Crescent, said that his hospital ward did not receive any patients exposed to chemical weapons the day of the alleged incident, and that all the patients either needed general medical care or help with injuries.
Thousands of Syrians buried in the rubble six months after US destruction of Raqqa -- Six months after what the Pentagon proclaimed as its “liberation” of the Syrian city of Raqqa from ISIS militants, reports are emerging about the devastation caused by the relentless US siege of airstrikes and artillery bombardments against the city.The population of approximately 100,000 people, roughly a quarter the number living in the city prior to the US attack, is still without running water and electricity. Between 70 and 80 percent of the city was reduced to rubble by the US assault, with 11,000 buildings either damaged or destroyed. Six months on, an unknown number of thousands of civilians, men, women and children, remain buried beneath the rubble, filling the city’s neighborhoods with the stench of decomposing corpses. An April 19 on-the-spot report by Tamer El-Ghobashy for the Washington Post —a supporter of US military intervention in Syria—detailed the efforts by 37 emergency services personnel to recover the remains of those killed. Since October, they have recovered more than 300 bodies. There are another 6,000 reports of human remains throughout the city that are yet to be responded to. Many of those discovered are so badly decomposed that they are unidentifiable, or can only be identified by family members based on pieces of clothing. “People want to settle back into their neighborhoods and begin to rebuild. But everywhere we go, people are reporting more and more bodies.” This has given rise to a new threat to the city’s population: the spread of leishmaniasis, a parasitic skin disease spread by sand flies attracted to rotting corpses. Khanis noted that “The danger alarms are beginning to sound in this area, diseases and epidemics are starting to spread.” Omar Khalf, a member of the US-backed forces, told Syria Direct that the emergency teams are seeking to “extract the bodies before summer comes” to limit the spread of disease. The Post article quotes a 66-year-old Raqqa resident who lost seven family members to the airstrikes. “We suffered under [the Islamic State], but we’re suffering more from this American liberation.”
The United States Used Depleted Uranium in Syria - Officials have confirmed that the U.S. military, despite vowing not to use depleted uranium weapons on the battlefield in Iraq and Syria, fired thousands of rounds of the munitions during two high-profile raids on oil trucks in Islamic State-controlled Syria in late 2015. The air assaults mark the first confirmed use of this armament since the 2003 Iraq invasion, when it was used hundreds of thousands of times, setting off outrage among local communities, which alleged that its toxic material caused cancer and birth defects.U.S. Central Command (Centcom) spokesman Maj. Josh Jacques told Airwars and Foreign Policy that 5,265 armor-piercing 30 mm rounds containing depleted uranium (DU) were shot from Air Force A-10 fixed-wing aircraft on Nov. 16 and Nov. 22, 2015, destroying about 350 vehicles* in the country’s eastern desert.Earlier in the campaign, both coalition and U.S. officials said the ammunition had not and would not be used in anti-Islamic State operations. In March 2015, coalition spokesman John Moore said, “U.S. and coalition aircraft have not been and will not be using depleted uranium munitions in Iraq or Syria during Operation Inherent Resolve.” Later that month, a Pentagon representative told War is Boring that A-10s deployed in the region would not have access to armor-piercing ammunition containing DU because the Islamic State didn’t possess the tanks it is designed to penetrate. It remains unclear if the November 2015 strikes occurred near populated areas. In 2003, hundreds of thousands of rounds were shot in densely settled areas during the American invasion, leading to deep resentment and fear among Iraqi civilians and anger at the highest levels of government in Baghdad. In 2014, in a U.N. report on DU, the Iraqi government expressed “its deep concern over the harmful effects” of the material. DU weapons, it said, “constitute a danger to human beings and the environment” and urged the United Nations to conduct in-depth studies on their effects. Such studies of DU have not yet been completed, and scientists and doctors say as a result there is still very limited credible “direct epidemiological evidence” connecting DU to negative health effects.
How the US Occupied the 30% of Syria Containing Most of its Oil, Water and Gas – After the U.S. launched “limited” airstrikes on Friday against Syria, U.S. Ambassador to the United Nations Nikki Haley announced that the U.S. will maintain its illegal presence in Syria until U.S. goals in the area are fulfilled, opening the door for the U.S. occupation to continue indefinitely. While the U.S. military presence in Syria has been ongoing since 2015 – justified as a means of countering Daesh (ISIS) — U.S. troops have since turned into an occupying force with their failure to pull out following Daesh’s defeat in northeastern Syria. Currently, the U.S. occupies nearly a third of Syrian territory — around 30 percent — including much of the area east of the Euphrates River, encompassing large swaths of the Deir Ezzor, Al-Hasakah and Raqqa regions. As is often the case in U.S. occupations, both historical and present, it is an effort born out of two goals: resource acquisition for U.S. corporations and the destabilization of a government targeted for U.S.-backed regime change. Northeastern Syria is an important region owing to its rich natural resources, particularly fossil fuels in the form of natural gas and oil. Indeed, this area contains 95 percent of all Syrian oil and gas potential — including al-Omar, the country’s largest oil field. Prior to the war, these resources produced some 387,000 barrels of oil per day and 7.8 billion cubic meters of natural gas annually, and were of great economic importance to the Syrian government. However, more significantly, nearly all the existing Syrian oil reserves – estimated at around 2.5 billion barrels – are located in the area currently occupied by the U.S. government.
Turkish President Erdogan Blasts The US For "Sending 5,000 Trucks Loaded With Weapons To Northern Syria" - On Saturday, Turkish President Recep Tayyip Erdoğan sharply criticized the United States Armed Forces and its N.A.T.O. (North Atlantic Treaty Organization) allies for supplying weapons to Kurdish militias in Syria for free, while refusing to sell defense hardware to Turkey. “We cannot buy weapons from the US with our money, but unfortunately, the US and coalition forces give these weapons, this ammunition, to terrorist organizations for free,” Erdoğan stated in an interview on Turkish NTV news channel.“So where does the threat come from? It comes primarily from strategic partners,” he said, warning that Washington continues to pump in truckloads of weapons into northern Syria. During the interview, the Turkish president unloaded a bombshell that most Americans are entirely oblivious to — Washington and the Trump administration are deploying thousands of trucks jammed packed with guns and ammunition to Syrian terrorist.The United States has recently “sent 5,000 trucks loaded with weapons to northern Syria,” he said.Meanwhile, Trump took to Twitter on April 14 with a triumphant message in less than 280 characters after the US-led precision strikes in Syria hit alleged chemical weapons manufacturing sites earlier this month. “A perfectly executed strike,” he bragged, ending the tweet with a foolish phrase: “Mission accomplished!”The tweet eerily echoed that famous phrase of a former p resident, George W. Bush, who announced “mission accomplished” in 2003 to mark the start of the Iraq War, also called Second Persian Gulf War, that would continue for another 8-years until 2011. Even though Trump could have been using the phrase in a different context — the recent delivery of 5,000 trucks packed with military weapons and ammunition via Washington to terrorist organizations in Syria, indicates that fight in Syria is far from over.
Qatar govt. must send troops to Syria or lose US support and be toppled – Saudi FM - Riyadh appears to be trying to bully regional rival and fellow US ally Qatar into going to war in Syria, with the Saudi foreign minister citing the US leader's call for "wealthy" nations to stump up and send boots to the ground. In his interpretation of US President Donald Trump's appeal to the affluent states in the region, Saudi Foreign Minister Adel Jubeir issued a thinly veiled threat to Doha, arguing the Qatari government will not last a week after the US cuts off its military support.Qatar must "send its military forces (to Syria), before the US president cancels US protection of Qatar, which consists of the presence of a US military base on its territory," Jubeir said on Wednesday, as cited by the ministry's media center.Should the US withdraw some 10,000 servicemen currently stationed at Al-Udeid air base near Doha, the government "would fall there in less than a week," Jubeir argued. The Saudi top diplomat was referring to the remark Trump made during a joint press conference with French President Emmanuel Macron on Tuesday.Reiterating his pledge to pull US forces out of Syria "as soon as possible," Trump pointed to "countries that are in the area, some of which are immensely wealthy" that should pick up the baton in Syria after the US withdraws. "They wouldn't last a week. We're protecting them," the US leader said, urging for those who enjoy America's goodwill to "step up and pay for what's happening."
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