US oil prices fell for the first time in 3 weeks this week, mostly on news of a surprise increase in US oil inventories, while international prices fell even more, mostly on news of higher global oil output...after rising 8% to $74.15 a barrel last week on US Iran policy and an interruption of Canadian supplies, US crude for August delivery fell 21 cents to $73.94 a barrel on Monday, on news of higher oil output from Saudi Arabia and Russia and concern over the global trade war launched by the US...for those same reasons, the international benchmark Brent crude ended $1.93 lower to $77.30 a barrel, as its late May $11 price premium over US crude has eroded over the past month on higher than expected output from OPEC....US crude prices then rocketed to as high as $75.27 a barrel at the open on Tuesday as oil output from Libya was cut off, but rolled over and fell sharply in mid-morning trading to a low of $72.73 a barrel, before steadying in the afternoon and ending with gain of 20 cents a $74.14 a barrel on the day, while Brent closed 46 cents higher at $77.76 at the same time...after the holiday, US oil prices were rising again on Thursday morning, reaching $74.96 a barrel, before falling steadily in the afternoon to end the day $1.20 lower at $72.94 a barrel, after the delayed EIA oil data unexpectedly revealed the first increase in US crude supplies in a month...US benchmark prices rallied on Friday, however, rising 86 cents to $73.80 a barrel, when data showed that oil inventories at Cushing OK, the delivery point for pricing U.S. crude, fell to their lowest in 3-1/2 years, largely due to an outage at the Syncrude facility in Canada that's expected to last for a month...at the same time, Brent crude, the international benchmark slipped 28 cents on rising OPEC production to close the week at $77.11 a barrel, thus ending the week only $4.31 a barrel above the US price...
natural gas prices also ended the week lower, initially dropping 6.2 cents to $2.862 per mmBTU on Monday, on data showing record natural gas production, and on expectations for more seasonal weather later in the month, and then ending the week fractionally lower at $2.858 per mmBTU, after the EIA storage report showed a supply increase on the higher side of average estimates....the natural gas storage report for week ending June 29th from the EIA indicated that natural gas in storage in the US rose by 78 billion cubic feet to 2,152 billion cubic feet over the week, which left our gas supplies 717 billion cubic feet, or 25.0% below the 2,869 billion cubic feet that were in storage on June 30th of last year, and 493 billion cubic feet, or 18.6% below the five-year average of 2,645 billion cubic feet of natural gas that are typically in storage after the last week of June...the consensus forecast was for an addition of 75 billion cubic feet to gas in underground storage, so this 78 billion cubic feet increase was fairly close to the consensus, but somewhat higher than the 70 billion cubic foot of weekly surplus natural gas that is typically added to storage at this time of year...however, since natural gas supplies as of end of June were still 1,638 billion cubic feet below the 3,790 billion cubic feet we had stored after the first week of November last year, this week's 78 billion cubic foot addition to supplies was still short of the 91 billion cubic feet per week we need to see weekly over the next 18 weeks to get our gas supplies back to a normal level before the next heating season's withdrawals begin...
a few graphics from two different reports on natural gas that were out this week will help put us our natural gas supply situation into perspective...
this first graph is from the EIA's natural gas weekly for this week, and was part of this week's feature on natural gas supply and consumption for the first half of 2018, in which they cite data from PointLogic Energy, a natural gas analytical unit of IHS...the blue bar graph shows the change, in billions of cubic feet per day, in US consumption of natural gas between the first half of 2017 and the first half of 2018, while the green bar graph shows the change, in billions of cubic feet per day, in US supply of natural gas between the first half of 2017 and the first half of 2018...according to the accompanying data, total natural gas consumption averaged 87.4 billion cubic feet per day (Bcf/d) in the continental US during the first half of 2018, which was 8.4 Bcf/d (11%) greater than during the first half of 2017....that 8.4 billion cubic feet per day additional demand this year is what's graphed in blue, and we can see that most of the new gas consumption has been increased residential and commercial use, for electric generation, and for LNG exports...at the same time, US supplies of natural gas averaged 84.8 billion cubic feet per day during the first half of 2018, a 7.8 Bcf/d (10%) year-on-year increase....that 7.8 billion cubic feet per day of new supply is what's graphed in green, and as you can see, most of it is increased dry gas output from wells, with a small increase of imports from Canada...
what we should take away from that graphic is that US demand for natural gas at 87.4 billion cubic feet per day was greater than our supply at 84.8 billion cubic feet per day, (hence leading to the 25% year over year drop of natural gas in underground storage) and that demand for natural gas has been growing faster than new production is..
at the same time the EIA was publishing that analysis of natural gas supply and demand, S&P Global Platts was issuing a new special report titled Insurgent shale: prospects and perils for US LNG exports (pdf)...suffice it to say that their new report did not consider where new supplies of natural gas would come from, but was largely concerned with the potential for a bottleneck at the Panama Canal if we tried to push all of our proposed natural gas exports through the isthmus at once...while we're not worried about the potential for a gas tanker traffic jam at the Panama Canal, there were some graphics in that report that should raise our concern...the first is a map and table showing US LNG export plants that have been approved, some of which are under construction or already shipping LNG overseas..
the above map and legend are from page 6 of that Platts report, and show the US LNG facilities that are operating, that are under construction, and those that are approved for construction, but have not yet seen ground broken, and the expected gas processing capacity for each...at the top of the list are the two LNG liquefaction plants that are currently operating and exporting LNG: Sabine Pass on the LA-Texas border, with a listed output of 1.40 billion cubic feet per day, and Cove Point Maryland, with a listed output of .82 billion cubic feet per day...note that since Cove Point just began exporting a few months ago, most of its output doesn't even show up in the blue bar for increased LNG exports on the EIA bar graph above...according to Platts, we're currently exporting 2.22 billion cubic feet per day of natural gas in the form of LNG (and more gas exports are also piped to Mexico)
meanwhile, the second grouping on the above list shows the LNG production facilities currently under construction, including another 0.7 billion cubic feet per day at Sabine Pass, 2.10 billion cubic feet per day at Hackberry, Louisiana, 2.14 billion cubic feet per day of liquefaction capacity at Freeport, Texas, 2.14 of capacity at Corpus Christi, and .35 billion cubic feet per day at Elba Island Georgia...together, those plants under construction will represent another 7.43 billion cubic feet per day of natural gas export capacity, some of which will be coming online within a year, and all of which will be completed within two years...that means that by mid-2020, we will be exporting 9.65 billion cubic feet per day of natural gas in the form of LNG, more than quadruple what we are now exporting...recall that during the first half of 2018, our supplies of natural gas from wells and Canadian imports were running at 84.8 billion cubic feet per day, so that means our expected LNG exports will amount to more than 11% of current production by mid-2020...most of these exports are under long term contracts, so they will be supplied first; US consumers who happen to need natural gas for heating on a cold day in the middle of winter will wait in line for whatever gas remains...
in addition, as you can see at the bottom of the table, there are 4 more additional LNG plants that have been approved but are not yet under construction; two at Lake Charles, Louisiana, with a combined draw of 3.28 billion cubic feet per day from our natural gas supplies, another at Hackberry, Louisiana, with a capacity of 1.41 billion cubic feet per day of gas, and another 2.10 billion cubic feet per day at Sabine Pass, on the Texas side of the border...
and that's just the beginning of what this industry thinks they can do, because there are an additional 16 applications still pending or in pre-filing for LNG export plants, with a combined liquefaction capacity of 28.17 billion cubic feet of natural gas per day, as the map and table below from that Platts report shows:
should all of these plants be approved and constructed, the total export capacity of all 27 plants shown on the two graphics above would amount to 44.61 billion cubic feet of natural gas per day, if my off top of my head arithmetic is correct...that's more than half our present daily production, and should we merely continue to use natural gas domestically at today's pace, it would imply an increase in demand for natural gas of over 50%, far exceeding the most optimistic forecasts for future US natural gas production that i've ever seen...in fact, even Platt's own forecast for natural gas output that accompany this report only indicates a ~23% increase in US natural gas production by 2023, so it appears that the analysts at Platts, like the rest of the industry, have so thoroughly bought into their own hype that they can't even put two and two together anymore, publishing an inherent contradiction right there in their own data...
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, covering the week ending June 29th, indicated that due to a big jump in our oil imports and a refinery pullback from the prior week's record throughput, we had a surplus of oil to add to our commercial crude supplies for the twelfth time in the past twenty-three weeks....our imports of crude oil rose by an average of 699,000 barrels per day to an average of 9,055,000 barrels per day, a 16 month high, while our exports of crude oil fell by an average of 664,000 barrels per day to an average of 2,336,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 6,719,000 barrels of per day during the week ending June 29th, 1,363,000 barrels per day more than the net of our imports minus exports during the prior week...at the same time, field production of crude oil from US wells was reported as unchanged at 10,900,000 barrels per day, which means that our daily supply of oil from our net imports and from wells totaled an average of 17,619,000 barrels per day during the reporting week...
at the same time, US oil refineries were using 17,653,000 barrels of crude per day during the week ending June 29th, 163,000 barrels per day less than they used during the prior week, while at the same time 178,000 barrels of oil per day were reportedly being added to oil storage in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 212,000 fewer barrels per day than what was added to storage plus what refineries reported they used during the week...to account for that disparity, the EIA needed to insert a (-212,000) 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 EIA explainer)...
further details from the weekly Petroleum Status Report (pdf) show that the 4 week average of our oil imports rose to an average of 8,438,000 barrels per day, which was 6.6% more than the 7,915,000 barrel per day average we imported over the same four-week period last year....the 178,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the amount of oil in our Strategic Petroleum Reserve was unchanged....this week's crude oil production was reported as unchanged despite a 45,000 barrel per day decrease in output from Alaska, because the EIA has recently decided to round the weekly oil production estimates to the nearest 100,000 barrels per day, to more closely reflect their inability to accurately model oil output from all the wells in the lower 48 states, and there was no change in the rounded total....US crude oil production for the week ending June 30 2017 was reported at 9,338,000 barrels per day, so this week's rounded oil production figure is roughly 16.7% above that of a year ago, and 29.3% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 97.1% of their capacity in using 17,653,000 barrels of crude per day during the week ending June 29th, down from the 17 year high of 97.5% of capacity the prior week, but still a refinery capacity utilization figure higher than any seen in recent years...the 17,653,000 barrels of oil that were refined this week were likewise among the largest refinery throughput figures on record, topped only by the prior two weeks in June and the 17,725,000 barrels per day that were being refined during the last full week of August 2017....this week's refinery throughput was also 3.0% higher than the 17,141,000 barrels of crude per day that were being processed during the week ending June 30th a year ago, when US refineries were operating at 93.6% of capacity....
even with the reduction in amount of oil being refined this week, gasoline output from our refineries was somewhat higher, rising by 169,000 barrels per day to 10,311,000 barrels per day during the week ending June 29th, after our refineries' gasoline output had increased by 43,000 barrels per day during the week ending June 22nd....but even with this week's increase, our gasoline production during the week was still fractionally less than the 10,365,000 barrels of gasoline that were being produced daily during the week ending June 30th of last year...at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 67,000 barrels per day to 5,463,000 barrels per day, after falling by 72,000 barrels per day the prior week...however, this week's distillates production was still 7.1% higher than the 5,100,000 barrels of distillates per day that were being produced during the week ending June 30th, 2017...
even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week fell by 1,505,000 barrels to 239,691,000 barrels by June 29th, the tenth decrease in 17 weeks, but just the 11th decrease in 34 weeks, as gasoline inventories, as usual, were being built up over the winter months....our supplies of gasoline fell because the amount of gasoline supplied to US markets rose by 138,000 barrels per day to 9,869,000 barrels per day, while our imports of gasoline fell by 340,000 barrels per day to 648,000 barrels per day, and while our exports of gasoline fell by 126,000 barrels per day to 487,000 barrels per day....but even after this week's decrease, our gasoline inventories still finished the week at a seasonal high for this time of year, 1.0% higher than last June 30th's level of 240,972,000 barrels, as they remain almost 11.6% above the 10 year average of our gasoline supplies for this time of the year...
meanwhile, with the increase in distillates production, our supplies of distillate fuels increased by 134,000 barrels to 117,557,000 barrels during the week ending June 29th, the fifth small increase in six weeks...that was as our exports of distillates fell by 426,000 barrels per day from last week's record to 1,410,000 barrels per day, while our imports of distillates rose by 38,000 barrels per day to 92,000 barrels per day and while the amount of distillates supplied to US markets, a proxy for our domestic consumption, rose by 514,000 barrels per day to 4,126,000 barrels per day, after decreasing by 692,000 barrels per day the prior two weeks...however, since this week's small inventory increase comes after our distillate supplies had shrunk by 14,452,000 barrels over the six weeks to May 18th, our distillate supplies for the week ending June 29th still remain 21.8% below the 150,422,000 barrels that we had stored on June 30th, 2017, and roughly 16% lower than the 10 year average of distillates stocks for this time of the year...
finally, with our oil imports at a 16 month high and our oil production continuing at a near record pace, our commercial supplies of crude oil increased for the 13th time in 2018 and for the 19th time in the past year, as our commercial crude supplies rose by 1,245,000 barrels during the week, from 416,636,000 barrels on June 22nd to 417,881,000 barrels on June 29th...however, after falling most of the past year, our oil inventories as of June 29th were still 16.9% below the 502,914,000 barrels of oil we had stored on June 30th of 2017, 15.4% below the 493,718,000 barrels of oil that we had in storage on July 1st of 2016, and 3.7% below the 433,714,000 barrels of oil we had in storage on July 3rd of 2015, when the US glut of oil was already well above the nearly stable supply levels of under 400 million barrels of the prior years...
This Week's Rig Count
US drilling activity increased for the first time in four weeks, but for 12th time in the last 15 weeks during the week ending July 6th, as drilling for oil widened after two weeks of contraction...Baker Hughes reported that the total count of active rotary rigs running in the US increased by 5 rigs to 1052 rigs over the week ending on Friday, which was 100 more rigs than the 952 rigs that were in use as of the July 7th report of 2017, but was down from the recent high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began their attempt to flood the global oil market...
the count of rigs drilling for oil was up by 5 rigs to 863 rigs this week, which was also 100 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 unchanged at 187 rigs this week, which down by 2 from the 189 natural gas rigs that were drilling a year ago, and way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...in addition, there continues to be two rigs operating that are considered to be "miscellaneous", in contrast to no such "miscellaneous" rigs in use a year ago....
drilling activity in the Gulf of Mexico was unchanged at 18 rigs this week, which was 3 fewer than the 21 platforms that were deployed in the Gulf of Mexico a year ago...there was also a drilling platform deployed offshore from Alaska this week, so the total US offshore count of 19 rigs is now down by 2 rigs from the total 21 offshore rigs that were drilling a year ago, when there was no drilling being done off of the Alaskan coast....
the count of active horizontal drilling rigs was also up for the first time in four weeks, increasing by 4 rigs to 930 horizontal rigs this week, which was also 126 more horizontal rigs than the 804 horizontal rigs that were in use in the US on July 7th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...in addition, the directional rig count increased by 2 rigs to 67 directional rigs this week, which was still down from the 74 directional rigs that were in use during the same week of last year...on the other hand, the vertical rig count decreased by 1 rig to 55 vertical rigs this week, which was also down from the 74 vertical rigs that were operating on July 7th 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 July 7th, the second column shows the change in the number of working rigs between last week's count (June 29th) and this week's (July 7th) count, the third column shows last week's June 29th active rig count, the 4th column shows the change between the number of rigs running on Friday and those 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 Friday the 7th of July, 2017...
a lot of activity is missing from this summary table this week, as we can see just by adding the totals...for instance, since we know there was an increase of 4 horizontal rigs, the net decrease of 4 rigs drilling in the major basins shown above means that 8 horizontal rigs were added elsewhere, outside of the purview of the Baker Hughes summaries...most of those were likely in outlying areas of Oklahoma's Anadarko basin, since the state saw a one rig increase while the Cana Woodford saw a 6 rig decrease and another rig was pulled out of the Ardmore Woodford...others could have been in states not listed above; for instance, Indiana, Alabama and Mississippi each saw one rig added this week, after Alabama and Mississippi had both seen 2 rigs shut down last week...Indiana now has two rigs operating for the first time since January 2015, and Alabama has just that one rig operating at this time, down from the 3 rigs running in Alabama a year ago, while Mississippi now has 3 rigs operating in the state, the same number of rigs that were running in Mississippi a year ago...
although the Utica shows no change in net activity, that masks the switch of one of the 23 gas rigs that were operating in the formation last week to oil targeted drilling...natural gas rigs, meanwhile, ended unchanged, as the reduction of gas rigs in the Utica and Louisiana's Haynesville was offset by increases in gas rigs elsewhere, in the Anadarko or other formations not tracked separately by Baker Hughes..
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Radium found in commercial roadway de-icing, dust suppression brine – -An Ohio environmental organization is suing to learn more about unhealthy radiation levels in a commercial de-icing and dust suppression liquid made from gas well brine sold in several states, including Pennsylvania. The Buckeye Environmental Network filed suit against the Ohio Department of Natural Resources last week, claiming the agency has illegally denied its request to inspect public records and documents pertaining to the environmental and health impacts of the brine product AquaSalina, manufactured by Brecksville, Ohio-based Nature’s Own Source. According to a July 2017 ODNR report that was released early this year after the network filed a right-to-know request, the department found samples of AquaSalina that contained concentrations of radium, a known carcinogen, that are higher than those naturally occurring in brine produced from “conventional,” that is non-shale, gas wells. The ODNR’s Division of Oil and Gas Resources Management, Radiation Safety Section, tested 14 samples of AquaSalina collected from six locations in Ohio, and found radium 226 and 228 levels that exceeded the state’s “discharge to the environment limits” and its safe drinking water limits by a factor of 300. The study said the production process used by Nature’s Own Source seems to have produced “TENORM,” or Technologically Enhanced Naturally Occurring Radioactive Material, that contains more radiation than the brine had when it was pushed out of the wells. The Buckeye Environmental Network wants to inspect state records to determine where the product has been sold and used, and if follow up testing has been done as recommended by the initial study, said Teresa Mills, BEN’s executive director. “What is the agency trying to hide from the public?” Ms. Mills said. “We requested to review all records held by the agency in order to determine how and if the agency plans to take steps to remove this product from the consumer market … [W]e believe that the public has a right to know how much radiation they have been or may be exposed to if they use this product.”
Unjust, Anti-Environmental Fracking Law Should Be Repealed - Lakewood Observer --Andrew A. Meyer -- I’m a longtime resident of the West side. . However, I own ancestral land in Southeastern Ohio. For years, my family has been hounded and bullied by the fracking industry. We would tell them that we will never sell or lease our land, and they would continue to pester us. Moreover, they bully us by telling us that once they get enough people who are willing to lease their land, they can “force pool” our land by utilizing O.R.C. 1509.27 to take our mineral rights without our consent. In return for having our land violated, they will pay us an amount less than what other people receive because of the “trouble” they would have to go through in order to violate our land. Therefore, they can pressure land owners to sign now, or else they will just be paid even less later, when they don’t have a choice.This law is all that is wrong with state and national politics. It checks the boxes of bad government: A. It is antienvironment B. It manages to simultaneously infringe on people’s property rights C. It creates a perverse incentive to minimize the value received of land owners and maximize the profit of fracking companies and D. It is clearly created and maintained by the stranglehold the oil and gas lobby have in state government.This land is a priceless part of my family heritage, and I would never consent to leasing it for any reason. In addition, I’m an ardent environmentalist, and would never be a willing part of a process harmful to our environment. I will NEVER sign any agreement with the fracking companies to exploit my land, for both of those reasons. I have looked into waging a legal fight to prevent my land from being taken from me, but the oil and gas lobby has done a good job of seeing the law written and maintained. That means once they intimidate a critical mass of neighboring land owners into leasing them their land, my land can be force pooled, and they will have rights to it without my consent.
Dangerous fracking waste bills considered - House Bill 578 would establish 300- foot setbacks for new injection wells and require that municipal corporations or townships where waste is disposed to be paid 37.5 percent of the out-of-district injection well fee directly. Co-sponsors include Democratic Reps. Michael J. O’Brien, Glenn Holmes, John Patterson and Craig Riedel. However, we must insist that the last thing we need to do right now is attempt to monetize fracking’s waste impact on Ohioans, our water, our children and ecosystems. By giving townships a share of the revenue this bill would only incentivize communities to encourage more waste to come into their existing inventory of Class II Salt Water Disposal (SWD) Injection wells, creating yet another race to the bottom. It looks like HB 578 supporters are concerned about the massive quantities of radioactive fracking waste coming across the Pennsylvania border and Ohio River. It is high time we pressure Pennsylvania and West Virginia to start processing their own waste and hold accountable the hydraulic fracturing industry for their increasing demand of resource (i.e., water, land-use and chemicals). Rep. Holmes said publicly that “communities need that money to mitigate the direct hazards or potential hazards that injection wells pose.” Yet, HB 578 would offer “crumbs” to these townships relative to the quantified ä and more importantly unquantifiable – environmental and health costs. If this bill passes, it is a fact that we would see more brine trucks, driving faster, spilling or turning over more often than we do now. We already are way behind in quantifying how often these trucks spill or are involved in accidents with injuries. Furthermore, the fact that much of this waste is radioactive but mandatory characterization of radiation levels is not required should be incentivizing us to move in the opposite direction of HB 578ás intended goals. With all due respect HB 578 and related bills like HB 393 and SB 165 are three of the worst ideas we have seen in our time looking at the fracking industry, and that analysis has included other states where fracking waste is a major factor including Oklahoma, Nebraska and Kansas. Much of the “induced seismicity” in these states has been a result of Class II injection well pressure and volume regimes that the underlying geologies can’t handle and aging Class II well inventory were never designed to accept.
FERC wants Rover Pipeline to complete restoration work -- The Rover natural gas pipeline across northern Ohio has until July 9 to file a plan with the Federal Energy Regulatory Commission for completing restoration efforts along the 713-mile pipeline route, Kallanish Energy reports.The federal agency filed its notice to complete required restoration activities in a two-page letter last Thursday.Failure to comply with restoration deadlines could impact requests by the company to begin service on the pipeline, FERC said.The company must submit a detailed plan on why it will be unable to meet current deadlines on restoration work on its Market Segment of the line. It must also explain how and when it can complete the necessary work.FERC wants the company to explain the delay in restoration work to affected landowners.The notice was filed because FERC does not believe Rover Pipeline, an Energy Transfer Partners subsidiary, will be able to meet June 30 deadlines that had been approved, FERC said.That includes “final grading, reseeding, resolution of all remaining items on the punch list, such as minor restoration to stream banks, soll erosion and repair of erosion- control devices where revegetation has not yet been achieved, and the restoration of subsidence by reshaping the existing soil and/or bringing in soil of the same or better quality,” it said. The company noted it would likely take until at least July 30 to finalize restoration along its Market Segment of the line, FERC said.
Building pipeline support, one chicken, lamb and goat at a time -- Last July, Allen Fore made a name for Kinder Morgan at the Harrison County Fair in the tiny Ohio town of Cadiz, a rural community atop the burgeoning Marcellus shale fields that span the Appalachian Mountains. The Houston pipeline company’s vice president of public affairs, attending the annual livestock auction, bid $4,700 on champion ducks, chickens and rabbits to support the schoolchildren who raised them. It was part of the company’s years-long effort to generate support for its $540 million Utopia pipeline by holding dozens of community meetings and otherwise courting favor along a 215-mile path between Cadiz and the Michigan border. The charm offensive is part of the new reality for the nation’s largest pipeline companies, no longer able to simply push through projects as rising concerns about climate change, pollution and damage to natural resources prompt unprecedented scrutiny and opposition from environmentalists, landowners and political leaders. In the wake of several high-profile controversies that have collectively cost them billions of dollars, Kinder Morgan and other industry giants are amplifying efforts to foster public support and prevent legal challenges that could force costly delays or worse — project abandonment. “It’s really a different ballgame,” Fore said. “You cannot take anything for granted.”
Oklahoma City-based Ascent Resources announces agreements to expand its Utica Shale field operation - A company that grew out of American Energy Partners plans to expand its footprint in Ohio's Utica Shale field. Ascent Resources, based in Oklahoma City, has announced it has entered into agreements to spend about $1.5 billion to acquire natural gas and oil lease and mineral rights holdings in the field from Hess Corp., CNX Resources, Utica Minerals Development, and a fourth undisclosed seller. Officials said the acquisitions will add about 113,400 net leasehold acres and royalty interests on about 69,400 fee mineral acres, noting that those additions span all three hydrocarbon windows in the over-pressured core of the field. The acquisitions also will add 93 operated wells that have a daily net production of about 216 million cubic feet equivalent, about 19 percent of which is liquids, to Ascent Resources' holdings. Plus, the deals would bring it 380 incremental horizontal well locations and an increased working interest in more than 900 horizontal well locations. Officials said the acquisition properties have proved reserves of about 1.1 trillion cubic feet equivalent and total resources of about 5.6 trillion cubic feet equivalent. Once the deals close (that's expected in the third quarter of 2018), officials said Ascent will hold proved reserves and total resources of approximately 5.9 and 16.2 trillion cube feet equivalent, respectively, with a daily net production of about 1.5 billion cubic feet equivalent. Ascent Resources also will hold about 310,000 net leasehold acres and royalty interests on about 70,650 mineral acres.
Ascent Spending $1.5B to Inflate Utica Shale Position - Ascent Resources LLC announced on Friday that it would acquire 113,400 net Utica Shale acres for $1.5 billion in a package of deals with multiple sellers, ballooning the company’s position in the play to more than 300,000 net acres and becoming one of the country’s largest private exploration and production (E&P) companies in the process.The deals, cut with Hess Corp., CNX Resources Corp., Utica Minerals Development and another undisclosed seller are expected to close in the third quarter. The package also includes 93 operated wells and 216 MMcfe/d of production, including 19% liquids.CEO Jeff Fisher said the bolt-on was a “milestone” for the company, which had its beginnings in 2013 when the late Chesapeake Energy Corp. co-founder Aubrey McClendon started a predecessor company to develop affiliates across the country with basin-specific strategies.“We continue to consistently deliver basin-leading well results through our best in-class operations and after completion of these acquisitions, we will become one of the largest privately held E&P companies in the U.S. in terms of asset size and net production,” Fisher said.Ascent and its affiliates plan to fund the transactions with about $965 million of common equity and $535 million of borrowings under the company’s revolving credit facility, which was recently upsized. The announcement further consolidates the Appalachian Basin as Ascent said the assets are largely contiguous with its existing position, allowing the company to extend lateral lengths, improve efficiencies and gain more exposure to liquids.Hess Corp. and CNX Resources Corp. came forward to enable a large part of the deal by agreeing to sell their 50/50 joint venture assets in Ohio for $800 million as both look to continue funding share repurchase programs and core development.The JV divestiture includes 78,000 net Utica Shale acres, 52,000 of which are undeveloped.* Each company would receive $400 million in proceeds at closing, a CNX spokesperson said.The assets are located in the wet gas window of Belmont, Guernsey, Harrison and Noble counties. Full-year 2018 production from the properties is forecast to a verage 14,000 boe/d, of which 70% is expected to be residue gas, Hess said.
Eliza Griswold's 'Amity and Prosperity': Fracking, profit, and human costs in western Pa. – interview transcript 0 Eliza Griswold says her new book, Amity and Prosperity: One Family and the Fracturing of America (Farrar, Straus & Giroux, $27), “is about the price of energy.” More than seven years in the making, Amity and Prosperity studies Marcellus Shale families in Washington County, Pa., and their encounters with big energy and its pluses and minuses.Range Resources, one of the biggest oil exploration companies operating in the Marcellus Shale Deposit, comes to the town of Amity, bringing the severely mixed blessings of the fracking era. Range improves roads and infrastructure, injecting millions into the local economy. But families like that of single mother Stacey Haney, whose story is chronicled here, start to get ill. Their pets sicken and die. High levels of arsenic and other compounds are found in their blood.Three families sue the company, and after years of wrangling, their case goes all the way to the state Supreme Court, which finds in their favor. Griswold is an eminent investigative reporter, author (The Tenth Parallel), and poet. She spent several of her growing-up years in Chestnut Hill, as the daughter of the Rev. Frank T. Griswold III, rector for more than a decade at the Church of St. Martin-in-the-Fields. She spoke with the Inquirer on both ends of a flight from Pittsburgh to Philadelphia.
Why Is This Happening? Examining the consequences of fracking in Trump country with Eliza Griswold: podcast and transcript - NBCNews.com Chris Hayes and journalist Eliza Griswold look at precisely what happens when fracking comes to town in rural America. What does it look like when fracking comes to town? For folks in poor rural areas, parts of Trump Country before we had Trump Country, fracking can mean opportunity, wealth, and autonomy for some, destruction and ruin for others. Journalist Eliza Griswold tells a story that begins in the Niger delta and brings her to the doorstep of a family farm in southwest Pennsylvania in the midst of the energy boom. There, in the towns of Amity and Prosperity, she learns about the intimate and complex reasons why people chose to bring fracking to their town, and the crisis they face when mysterious illnesses begin to appear.
EQT and CNX sell off more assets narrowing focus on Pa. shale gas -- A pair of Pittsburgh-based oil and gas companies announced asset-shedding deals on Friday that further narrows their focus on shale gas in Pennsylvania.Downtown-based EQT Corp. said it reached an agreement to sell its substantial holdings in the Huron Shale in Kentucky, Virginia and West Virginia for $585 million to Diversified Gas & Oil PLC.It also said it would “transfer” 250 employees in the deal “work in or support production, pipeline, compression, and measurement operations.” In a public document, Diversified disclosed that for a year after the close of the deal, it has agreed to give those employees comparable compensation to what they currently receive. Diversified, a company out of Alabama, has been picking up a lot acreage and wells in Appalachia recently, including in Pennsylvania. CNX was the other firm announcing a deal on Friday. It is selling its share of Utica Shale assets in Eastern Ohio for $400 million to Ascent Resources-Utica, another rising player in the area.Ascent, whose West Virginia-focused Marcellus Shale division went through a quicky bankruptcy restructuring earlier this year, was founded by Aubrey McClendon after his departure from Chesapeake Energy Corp. Both deals were foretold by the Pittsburgh firms in previous discussions with analysts.EQT’s activity in the Huron had gone through stops and starts as gas prices fell and rose over the past several years. Earlier this year, the company wrote down the value of certain assetsincluding the Huron properties by $2.3 billion. CNX’s Utica acreage being sold to Ascent was part of a 50-50 joint venture with Hess Corp. CNX said in a statement that it will use the proceeds to repay debt, repurchase shares of its stock, buy more acreage and invest in its operations.
As Industry Pushes Billion-Dollar Fracked Petrochemical Projects, State Regulators Struggle To Keep Up - --Fueled by fracking in the region, petrochemical and plastics projects in the Ohio River Valley are attracting tens of billions of dollars in investment, but as plans for this build-out hit the drawing boards, signs already are emerging that state regulators are unprepared for this next wave of industrialization. And the implications of their inexperience could mean major threats to the region's health and environment. One of the projects currently underway, an underground natural gas liquids (NLG) storage site — designed to support the construction of several huge petrochemical complexes — is undergoing review by state regulators who have little experience with NGL storage facilities of its size. “We had to juggle a lot of regulatory input in a relatively undefined setting since there are few regulations in Ohio, and that really goes for Pennsylvania and West Virginia as well,” Jonathan Farrell, a project manager with Civil and Environmental Consultants, told attendees at a petrochemical industry conference on June 18. That lack of well-established state regulations harkens back to the early days of the shale gas rush, when state regulators struggled to keep up with the emergence of hydraulic fracturing (fracking) and horizontal drilling technologies. The rush to drill while safeguards were still being designed and implemented led to inadequately treated toxic waste being dumpedinto drinking water supplies for millions of people and problems with radioactive waste that to this day.Today, the petrochemical industry is dreaming big about prospects for manufacturing plastics, styrofoam, vinyl, chemicals, and fertilizers from cheap ethane and other natural gas liquids from the Marcellus Shale — marketed as currently the cheapest in the world. The goal? To build a new petrochemical corridor in Pennsylvania, Ohio, West Virginia, and the surrounding region, one second only in size to the Gulf Coast’s — and one that could bring along with it the public health and environmental impacts that have given rise to that region’s reputation as a “cancer alley.”
Money available for $10B NGL storage hub: experts — The $10 billion price tag for a natural gas liquids underground storage facility proposed near the Ohio River in Pennsylvania, West Virginia or Ohio, is mind-boggling to most outsiders. The storage is seen as a crucial part of the equation needed by the Appalachian Basin to again attract the U.S. petrochemical industry born here, but moved elsewhere decades ago. But to financial experts – the money men who work with millions, billions of their clients’/partners’ money daily — there’s no question funding for such a massive project not only is available, the money is looking for good projects for its funds. But proponents must keep a couple truisms in mind: Competition for funding is not regional or national – it’s global. And when talking about any energy project in the U.S. with private equity players, they must be convinced to consider the Appalachian Basin. “That giant sucking sound you hear is Texas; every time you talk with private equity players about energy, their eyes look toward Texas,” said an investment banker/equity capital markets expert, who requested anonymity. His remarks, part of a panel discussion on financing the storage hub, were made to roughly 120 attendees at the Second Annual Appalachian Storage Hub conference, held last week at Southpointe Business Park, south of Pittsburgh. The program was produced by Shaledirectories.com and TopLine Analytics. Kallanish Energy was in attendance. While $10 billion is a huge number, it’s only a puny 2% of the private equity money looking for investment opportunities, according to Damian Georgino. “Right now, there is $500 billion in infrastructure funds sitting on the sidelines worldwide,”
Construction of Mountain Valley Pipeline temporarily suspended — The Virginia Department of Environmental Quality and Mountain Valley Pipeline project teams have agreed to temporarily suspend pipeline installation in Virginia.This comes after issues during inspections and complaint inspections.The pipeline company is directing crews to enhance and restore controls along the pipeline route to ensure proper soil erosion and sediment controls are implemented.Construction will resume within the project's 125-foot-wide right of way after MVP receives approval by the DEQ.This comes after the 4th U.S. Circuit Court of Appeals granted a temporary stay last week as part of a lawsuit brought by conservation groups challenging a water-crossings permit.At that point, company attorneys said in court filings that a stay would delay work on an 80-mile stretch of the natural gas pipeline at a cost of $600 million.A filing said such a delay would push back completion of the project by at least eight months. It had been scheduled to be in service by the end of the year.You can find a list of all the sites along the pipeline path under investigation here. Inspectors from the DEQ will stay at the site to monitor and review construction once it resumes. You can submit pollution reports through the DEQ website here.
Mountain Valley Pipeline suffers another setback with suspension of some Virginia work — EQT Midstream Partners' Mountain Valley Pipeline, under pressure from environmental groups and facing construction challenges because of poor weather, said Friday it was temporarily suspending pipeline installationwork in Virginia. The work stoppage will make it even more difficult for the developer to meet its December startup target for the 2 Bcf/d natural gas project.Analysts had already been expecting a delay of up to a year or possibly longer. A message posted on the pipeline's website said the decision was made after consulting with the Virginia Department of Environmental Quality about ensuring that appropriate erosion and sediment controls were in place amid recent heavy rainfall. The brief statement gave no specific time line for resuming welding,trenching and stringing of pipe in Virginia. Spokeswoman Natalie Cox saidin an email that the operator was maintaining its current in-service target. "It's really a matter of adjusting our task sequence in order to continueto maintain the late 2018 in-service date, which is what we have been,and will continue, doing," Cox said. Any delay would be a blow for downstream utilities seeking better supply access and for producers awaiting more takeaway capacity out of theAppalachian Basin. The project is seen as a key conduit to serve downstream markets, including LNG exports. "The MVP project team takes its environmental stewardship responsibilities very seriously and wants to redirect its work efforts to focus exclusively on erosion controls affected by recent weather events," the pipeline operator said. In April, EQT Midstream proposed to add an offshoot to MVP that would extend about 70 miles south from the mainline to new delivery points in North Carolina and service customers of utility PSNC Energy with Appalachian Basin natural gas. The company said at the time that MVP Southgate was expected to start up in late 2020.
Woman Locked to Construction Equipment to Protest Mountain Valley Pipeline → The pipeline fighter is STILL locked to construction equipment at a Mountain Valley Pipeline work site on Brush Mountain in VA. 7 hours and counting! Pipeline construction is STILL halted. “Virginians have tried every way we know how to tell our elected representatives that these fracked gas pipelines are a mistake,” said the protester locked to equipment in today’s action, a 46-year-old mother from Blacksburg, VA.“We may not have lobbyists outside your doors like Dominion does, but we can stop construction to tell you that southwest Virginia does not want the Mountain Valley Pipeline. MVP is bad for Virginia and bad for the planet. The State Water Control Board and DEQ can stop this pipeline. Governor Northam can stop this pipeline. Revoke water quality certification now and inspire a new generation of voters. Because if you don’t act to protect our water and our mountains, we will.” In late February, pipeline fighters took to the trees in Jefferson National Forest in Peterstown, West Virginia, in the path of the proposed 42 inch Mountain Valley Pipeline (MVP). The resistors are stationed on the site where MVP LLC intends to drill directly through the mountain and beneath the Appalachian Trail. To complete this section of the pipeline route, MVP LLC would drill a 42-inch boring hole through the ridge of Peters Mountain. The Karst limestone terrain of Peters Mountain generates and filters fresh drinking water. Karst terrain also makes this area especially susceptible to landslides and sinkholes. Pipeline construction in this area would destroy a unique biome filled with caves, underground streams, and springs inhabited by life found nowhere else in the world.
Meet the Activists Arrested for Opposing the Mountain Valley Pipeline -- On April 11, high school English teacher Stephanie Stallings stood her ground with a group of protesters in opposition to the Mountain Valley Pipeline on the property of Mary Beth Coffey in Bent Mountain, Virginia. Under eminent domain, the pipeline is being constructed through Coffey’s property and that of several other landowners who oppose its construction. Mountain Valley Pipeline LLC was conducting tree-cutting on the property at the time to clear a path for construction. According to Stallings, Roanoke County Police told protesters at the scene to move two tree-lengths away from a designated tree-cutting area, citing standards set by the Occupational Safety and Health Administration. Stallings, one of the first Mountain Valley protesters to be arrested, refused to move. “I felt this tiredness of being pushed around by these people who are breaking the laws consistently … that are in place to protect us, the land and the water,” Stallings told Truthout. “I didn’t want them to continue cutting the trees.” Arrests of Mountain Valley Pipeline protesters have been a regular occurrence along the construction route of the pipeline since March 2018. Mountain Valley Pipeline LLC has cleared forest and begun construction of the $3.5 billion, 303-mile pipeline from northwestern West Virginia to southern Virginia, with a proposed 70-mile extension into North Carolina. According to the Roanoke Times, at least 20 people have been arrested in opposing the pipeline, though none of the charges have yet been successfully prosecuted.
Little public input in decision to route pipeline through WV state forest - Following a series of public meetings and input from a host of state and federal regulators, environmental groups and forest users, developers of the Atlantic Coast Pipeline opted in February 2016 to re-route 12 miles of the proposed natural gas line out of the Monongahela National Forest. While that decision left only 5.1 miles of the pipeline still within the Monongahela, the detour added about 30 miles to its overall length, most of which will be absorbed by private landowners in Pocahontas County. But one tract of public land — Seneca State Forest — ended up encompassing nearly as much pipeline mileage as the Monongahela under an agreement worked out by state officials and pipeline representatives with virtually no public involvement. About 4 miles of the pipeline will extend through Seneca, the state’s oldest state forest, from the Greenbrier River and the adjacent Greenbrier River Trail, near Cloverlick, eastward across W.Va. 28 and up Michael Mountain past the forest’s eastern boundary. While nearly all recreational amenities inside the forest will be bypassed by the ACP, the pipeline will follow, and obliterate, the route of the Allegheny Trail for a little less than a mile, forcing a re-routing of the 330-mile cross-state pathway through the Seneca. “The deal had already been done without them telling us anything about it,” said Robert Martin, attorney for the Pocahontas County Commission. “Previous county commissions had paid the [Dilley’s Mill] electric bills, and most of the construction work that needed to be done out there was done by locals.” State officials would not comment on whether the former BSA land had been transferred to Seneca State Forest. But earlier this month, Ann Simonelli of The Conservation Fund said in an email that the 1,200 acres had been transferred to the State of West Virginia in May 2018.
Army Corps Reinstates MVP Permit in West Virginia; Court Stay Still in Effect - The U.S. Army Corps of Engineers Huntington District has reinstated the Mountain Valley Pipeline’s (MVP) Nationwide Permit (NWP) 12 for four river crossings in West Virginia, but a stay issued last month by a federal appeals court remains in effect. In a letter dated Tuesday, the Army Corps cited the less impactful but more time-consuming dry-ditch crossing method proposed for the Elk, Gauley, Greenbrier and Meadow river crossings in its determination to reinstate the NWP 12 with modifications. MVP posted notice of the reinstatement to the project docket this week [CP16-10]. Last month, the U.S. Court of Appeals for the Fourth Circuit granted a motion to stay MVP’s NWP 12 pending a ruling on a legal challenge brought by the Sierra Club and other groups. A spokeswoman for MVP told NGI’s Shale Daily the pipeline would seek relief from the court’s stay following the Army Corps’ decision to reinstate the NWP 12. The reinstatement “relates only to these four previously suspended crossings and will require MVP to utilize the dry-ditch crossing method, which is significantly more protective of the environment,” MVP’s Natalie Cox said. “While MVP is conducting other upland construction work, this reinstatement does not authorize MVP to conduct in-stream activities due to the stay imposed by the Fourth Circuit; however, with this reinstatement” by the Army Corps, “options are being evaluated to obtain relief from the stay.”
TransCanada extends W Virginia Leach natgas pipe return to mid-July (Reuters) - TransCanada Corp’s Columbia Gas Transmission unit pushed back the date the section of its Leach Xpress natural gas pipeline in West Virginia will resume service to mid-July from an earlier forecast of early July. The pipe was damaged in a blast on June 7. The company changed the restoration date in a notice to shippers using the line on Friday. The Leach shutdown forced producers using the line to find other pipes to move gas out of the Marcellus and Utica shale regions of Pennsylvania, West Virginia and Ohio. Alternative pipelines include ETP’s Rover, Tallgrass Energy Partners LP’s Rockies Express (REX), EQT Midstream Partners LP’s Equitrans and Enbridge’s Tetco, according to analysts at S&P Global Platts. Columbia Gas, which declared a force majeure after the blast, said the damaged section of pipe in Marshall County could affect movement of about 1.3 billion cubic feet per day. One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day. Energy analysts, however, said overall output in the Appalachian region was little changed by the blast as producers, like Range Resources Corp and Southwestern Energy Co , found other pipes to move their gas. Appalachian output has actually increased to around 28.0 bcfd in recent days, up from around 27.5 bcfd before the blast, according to Thomson Reuters data. The 1.5-bcfd Leach Xpress in West Virginia and Ohio, which entered full service at the start of this year, transports Marcellus and Utica shale gas to consumers in the U.S. Midwest and Gulf Coast. The 12,000-mile (19,312-km) Columbia pipeline system, which TransCanada acquired in 2016, serves millions of customers from New York to the Gulf of Mexico.
Clean Water Advocates Ask For Halt to Second Fracked Gas Pipeline — Today, the coalition of clean water advocates that forced a halt of stream crossing construction activities for the Mountain Valley Pipeline (MVP) in West Virginia has formally requested the same for the Atlantic Coast Pipeline (ACP). The coalition took two actions today. First, it filed a petition for review with the Fourth Circuit. Second, it formally asked the United States Army Corps of Engineers to stay the stream construction permit during litigation. If the Corps refuses to stay the permit, the coalition will ask the Court to do so.The Atlantic Coast Pipeline stream crossing permit suffers from the same defects as the Mountain Valley Pipeline permit that the Fourth Circuit stayed last week. Specifically, Atlantic Coast’s planned crossing of the Greenbrier River–the longest remaining free-flowing river in the East–will take longer to complete than allowed by law.The coalition includes the West Virginia Rivers Coalition, the West Virginia Highlands Conservancy, Appalachian Voices, Chesapeake Climate Action Network, and the Sierra Club, and is represented by Appalachian Mountain Advocates. In response, Sierra Club Beyond Dirty Fuels Campaign Director Kelly Martin released the following statement: “We know we can’t trust the polluting corporations behind these fracked gas pipelines to build them without doing serious damage to our water and communities. Construction should be immediately halted on the Atlantic Coast Pipeline, just like it was on the Mountain Valley Pipeline.” Cindy Rank of the West Virginia Highlands Conservancy said: “The West Virginia Highlands Conservancy is concerned about the overall impacts of mucking about in streams whatever the activity – including by the gas industry. The value of the hundreds of miles of streams being crossed and disturbed by the ACP gas pipeline demand that more specific evaluation be given to each and every crossing than the general considerations provided by nationwide permits.”
Communities Fighting Fracked Gas Infrastructure Crack FERC Open – Vimeo - On Monday, Sane Energy joined our allies at Beyond Extreme Energy in Washington D.C. for the Crack FERC Open action where two bamboo 15 foot tall “fracked gas drilling rigs” with protesters locked inside were set up to blockade the entrance in front of the Federal Regulatory Energy Commission (FERC) building to prevent business as usual to operate.It wasn’t the first time we’ve been there.For years we’ve traveled down to DC with communities being harmed by fracked gas infrastructure to call out FERC for their role in approving infrastructure projects that poison people and exacerbate climate change.Although FERC is the agency responsible for regulating interstate natural gas pipelines, it is widely criticized as a rubber stamp for the fossil fuel industry, approving almost every single pipeline that comes across their desk due to the distorted process created by the Energy Policy Act of 2005, under Dick Cheney’s direction and former president George W. Bush’s approval. FERC actually facilitates the construction of interstate gas infrastructure rather than regulating it.“We call this action Crack FERC Open,” said BXE organizer Ted Glick. “The reason is that there are cracks appearing in FERC. It’s within FERC in many ways because of what’s happening outside of FERC.”FERC is governed by 5 commissioners that for years were lock-in-step on approving fracked gas infrastructure, but recently two commissioners, Richard Glick and Cheryl LaFleur, have provided dissenting opinions saying the agency needs to consider climate impacts into their decisions. FERC employees have also thanked citizens protesting outside their building. BXE and other allies have been a consistent presence at FERC for years now, staging creative protest that tell the stories of those being harmed by FERC’s pipeline approvals. The message isn’t getting across to all the commissioners though.
US gross gas output hit record in April: EIA -- US natural gas output hit a record high in April above 89 Bcf/d (2.5bn m³/d) as production rose in Texas, Louisiana and Oklahoma. Gross gas production from the lower-48 states rose in April to 89.1 Bcf/d, up by 0.3pc, or 252mn cf/d from March, the US Energy Information Administration (EIA) said today in its monthly production report. April output has surged by 12pc from a year earlier as new infrastructure allowed more northeast gas to reach market and as producers continued to shore up fresh oil supplies from places like the Permian basin. Rising gas production and expectations for future supply growth has put downward pressure on prices this year. Natural gas futures so far this summer have failed to sustain a rally above $3/mmBtu, despite low inventories and hot weather, a sign of confidence in continued growth. Output from Texas, the largest gas-producing state by volume, rose to nearly 23 Bcf/d, up by 1pc from a year earlier and a year-over-year increase of 9pc. Texas is home to a large swath of the Permian, where oil wells can produce large volumes of associated gas. New Mexico production, which sits atop part of the Permian, increased to 4.1 Bcf/d, a 3.3pc gain from a month earlier and a 13pc rise from a year earlier. Louisiana output moved 0.5pc higher to 7.5 Bcf/d, a year-over-year increase of 44pc. Louisiana production can act as a bellwether for the Haynesville shale, a gas-rich formation in underlying the northern part of the state and east Texas. Output from Oklahoma was up by 0.7pc in April to 7.8 Bcf/d, 15pc higher than a year earlier. Producers in that state are developing the Stack and Scoop formations, two oil- and gas-rich fields. The combined gas production from Ohio, West Virginia and Pennsylvania — three states that represent the Marcellus and Utica shales — dropped in April to 27.1 Bcf/d, down by 0.7pc from March. Production there will likely increase in subsequent reports because new pipelines such as Energy Transfer Partners 3.25 Bcf/d Rover pipeline have expanded service to the area..
Production Overwhelms as Natural Gas Bears Gain Upper Hand; East Coast Spot Higher on Heat - Surging natural gas supply continues to act as a yoke on futures prices; data showing record-level production, combined with expectations for more seasonal weather later in the month, helped send futures lower Monday despite large storage deficits and bullish near-term forecasts. In the spot market, hot temperatures along the Interstate 95 (I-95) corridor lifted Northeast and Mid-Atlantic points as restored pipeline capacity out of the Permian Basin helped boost prices in West Texas; the NGI National Spot Gas Average finished 7 cents higher at $2.76/MMBtu.The August futures contract settled 6.2 cents lower Monday at $2.862, not far off the $2.852 intraday low after trading as high as $2.927. September settled at $2.844, down 5.7 cents.The drop to start the week suggests “production is just too strong for the markets to ignore, aided by reports of weekend production at or exceeding all-time highs, thereby weighing more heavily on prices than hefty deficits and hotter than normal temperatures,” NatGasWeather said.Prices now are down 15 cents since last Thursday when the Energy Information Administration issued “a bearish revision” to the prior week’s storage data, while “the markets appear to be stating record production is back in the driver’s seat and hotter trends might be needed for bulls to regain momentum.”Lower 48 production appears to have cracked the 80 Bcf/d mark, according to recent data from Genscape Inc. Following pipeline reported revisions to nominations data, its production team showed volumes hit around 80.05 Bcf/d on June 28 and 29. Bespoke Weather Services attributed Monday’s sell-off to production reaching “record levels” over the weekend and to a slight cooling in medium-term forecasts.
EIA's Storage Figure Tops Survey Averages as Natural Gas Futures Steady - Bulls hoping for a lean natural gas storage report from the Energy Information Administration (EIA) Friday left disappointed as the agency came out with a net build on the higher side of average estimates. Still, futures prices stayed the course after briefly dropping on the news. EIA, issuing its weekly report a day later than usual due to the Independence Day holiday, said Lower 48 natural gas stocks saw a net 78 Bcf build for the week ending June 29, versus a 60 Bcf injection recorded a year-ago and a five-year average 70 Bcf build. The number also topped major survey averages by around 3 Bcf, a reversal from the prior week’s bullish miss (although that report also included a bearish revision to stocks for the week ended June 15). Immediately after the 10:30 a.m. ET release of the injection figure, August Nymex futures shed about 2 cents to reach as low as $2.826, testing what analysts have pegged as a key support area for the prompt month. But prices bounced back within minutes, and by 11 a.m. ET August was trading around $2.848, up about 1.1 cents from Thursday’s settle and in line with prices prior to the open. In the lead-up to Friday’s report, a Reuters survey of 21 traders and analysts had showed respondents on average expecting EIA to report a 75 Bcf build for the week, with responses ranging from 63 Bcf to 81 Bcf. A Bloomberg survey had produced an average 75 Bcf injection, with a range of 66 Bcf to 81 Bcf. Intercontinental Exchange EIA Financial Weekly Index futures had settled Wednesday at a build of 77 Bcf. Bespoke Weather Services said the 78 Bcf build confirmed its estimate prior to the report.
Ineos Says New European Ethane Cracker to Benefit from U.S. Natural Gas - Global petrochemical giant Ineos said Tuesday it plans to invest more than $3 billion to build a world scale ethane cracker and propane dehydrogenation unit in northwest Europe to take better advantage of U.S. natural gas supplies. Ineos said the facility would be Europe’s first new cracker in two decades. Both units, the company said, would “benefit from U.S. shale gas economics.” The company, which already operates crackers in the region in Scotland and Norway, said a site would soon be determined, likely somewhere on northwest Europe’s coast. The facility is expected to be completed within four years. “This new project will increase Ineos self-sufficiency in all key olefin products and give further support to our derivatives business and polymer plants in Europe,” said Chairman Gerd Franken, of Ineos’ olefins and polymers north business. “All our assets will benefit from our ability to import competitive raw materials” from the United States and the rest of the world. The company has long-term supply agreements with several unconventional gas producers, particularly those operating in the Appalachian Basin. Ineos became the first European company to contract for U.S. shale gas feedstock in 2012 in an agreement with Marcellus Shale heavyweight Range Resources Corp. Ineos delivered the first U.S. gas to Europe in 2016, a shipment of Appalachian ethane that was picked up at the Marcus Hook Industrial Complex near Philadelphia. The company also takes deliveries from the only other ethane export facility in the country, Enterprise Products Partners LP’s Morgan’s Point terminal on the Houston Ship Channel.
Insurgent shale: prospects and perils for US LNG exports – pdf – Platts LNG special report June 2018 - The emergence of the US as a major exporter has rapidly transformed the way the global LNG industry operates, but its economic success will not come without challenges, first and foremost from a potential bottleneck at the Panama Canal. In just a matter of years, American shale gas exports have loosened the grip of traditional exporters and restrictive long-term contracts. The impact has been particularly strong in the Asian markets, the epicenter of the traditional LNG business model, based on destination-restricted, oil-indexed, longterm contracts, and by far, the largest recipient of US LNG volumes since exports began in February 2016. The ramp-up in US LNG exports has only just begun. By 2020, volumes are forecast to more than quadruple from around 14.4 million mt in 2017 to 62 million mt, after the completion of Elba Liquefaction Project, Freeport LNG, Cameron LNG and Corpus Christi LNG. Significant surplus gas production, increasingly competitive E&P techniques, rising oil prices and export-favorable policies at home are likely to support growth in the US LNG industry, with eleven LNG export projects approved by the US Department of Energy and 16 others proposed so far. These projects, however, come with their own set of challenges, and their success depends on four key factors: cost competitiveness, midstream optionality, commodity price spreads and potential constraints in the Panama Canal, a major threat to US LNG global expansion,
Methane leaks threaten natural gas' climate-friendly image (Reuters) - Executives from natural gas companies call their increasingly cheap and plentiful fuel the world’s best answer to climate change: it produces about half the carbon dioxide of coal when burned in a power plant and it can fuel trucks, trains and ships. While some outside the industry see natural gas as but a stepping stone to a future when all energy will be provided by wind, solar and other renewable sources, “This idea of natural gas as a transition fuel to renewables is strange,” Total SA chief executive Patrick Pouyanne said. “Natural gas is a solution,” he said this week at the World Gas Conference in Washington, the industry’s biggest global summit. But environmentalists, regulators, and many in the industry itself warn of a dirty underbelly to natural gas, or methane. Before it is burned, it is one of the most potent greenhouse gases and can reach the atmosphere through leaks in wellheads, compressor stations and chemicals plants. A study published in the scientific journal Nature last week put methane emissions from the U.S. oil and gas industry at about 13 million metric tonnes per year, 60 percent higher than the official U.S. Environmental Protection Agency estimate. Carbon dioxide emissions from U.S. energy sources, meanwhile, are around 5 billion tonnes. The United States is the world’s top natural gas producer, one of its biggest crude oil producers, and a growing exporter of both thanks to improved drilling technology that has vastly increased output. While methane emissions are relatively small compared to carbon dioxide, they are a major force in short-term global warming. Scientists say methane can trap more than 80 times more heat than carbon in the first 20 years after escaping into the atmosphere.
NYMEX August natural gas futures inch higher at $2.874/MMBtu on warm spell — The NYMEX August natural gas futures contract increased slightly Tuesday, as warmer-than normal temperatures trumped two consecutive US dry gas production records on Sunday and Monday. As of 10:53 am EDT (1453 GMT), the front-month contract was trading 1.2 cents higher at $2.874/MMBtu after sitting in a narrow range of $2.852/MMBtu-$2.876/MMBtu. The front-month contract has only settled above $3.00/MMBtu mark two times in the last six months, including posting a settle of $2.999/MMBtu last week, but has now eased back. Record production and cooler-than-expected temperatures both put pressure on the market. "If temperatures moderate a little, prices should balance out a bit," according to Phil Flynn, Price Futures Group senior market analyst. US dry gas production continues to rise, reaching 80.7 Bcf on Monday, an all-time high, according to S&P Global Platts Analytics data. The climb in output was driven primarily by the Marcellus and Utica shale plays, who contributed 27.66 Bcf of the total, according to Platts Analytics. Looking ahead, the most recent six- to 10-day outlook from the US National Weather Service continues to call for warmer-than-average temperatures for much of the Northwest and Rockies, in line with the weather service's most recent one-month forecast, which projected a warmer-than-average July. Pacific Northwest power burn averaged 6.28 Bcf/d in the first two days of July, a 70% increase compared with power burn at the same time last year. Total US demand, including Mexican and LNG feedgas exports, over the same period averaged 71.1 Bcf/d, compared with 63.3 Bcf/d in the year-ago period, according to Platts Analytics data. Strong dry gas production in the US could see domestic gas inventories build at an above-average pace over the coming weeks. Platts Analytics expects a 75 Bcf build in storage stocks to be announced by the US Energy Information Administration for the week that ended June 28.
Fracking appears to be out: group gets Ron DeSantis to voice support for ban - Republican U.S. Rep. Ron DeSantis became the seventh and final major gubernatorial candidate to say he supports a ban on oil and gas fracking in Florida when the activist group Food & Water Action pinned him down at a campaign event Monday.Following DeSantis’ rally in Tampa Monday he shook hands with members of the crowd, and that’s when Food & Water Action volunteer Ginger Goepper asked him if he supports a ban on fracking in Florida. “Yeah, yep, yeah,” DeSantis replies, as shown in a video the group released Tuesday afternoon.Last month Goepper asked Republican Agriculture Commissioner Adam Putnam if he opposed fracking. Putnam replied a bit more loquaciously, “We don’t need to be fracking in Florida. Our geology, our limestone, we do not need to be fracking in Florida for oil and gas. It is just not the right spot.”Putnam’s campaign then confirmed that was his position. As of mid-afternoon Tuesday, DeSantis’ campaign had not yet confirmed his support for a fracking ban. With the two leading Republican gubernatorial candidates apparently in opposition to fracking in Florida, the group declared victory, since all five major Democratic candidates for governor are on the record supporting a ban.
Terminal reports sharp rebound in LOOP Sour cavern exports for June - The Louisiana Offshore Oil Port delivered more than 1.1 million barrels of the blended crude LOOP Sour ex-cavern in June, more than double the amount it delivered in May, the oil terminal said Monday. LOOP Sour is comprised of the US Gulf of Mexico grades Mars and Poseidon and a crude blend called Segregation 17, into which the Middle Eastern grades Arab Medium, Basrah Light and Kuwait Export Crude can be delivered. Last month, about 37,000 b/d of LOOP Sour were exported from the cavern. That compares with both a 2018 and the 12-month average of 49,000 b/d. It also represents a sharp rebound from May, when about 500,000 barrels of LOOP Sour were delivered from the cavern. That was the lowest monthly total since one year earlier, when no LOOP Sour was exported from the cavern. The record-high was April, when more than 3.2 million barrels, or 107,000 b/d, were delivered ex-cavern. In related news, LOOP and Matrix Markets will host Tuesday their monthly storage futures auction for LOOP Sour capacity allocation contracts, Matrix Markets said last week. The companies will auction 11,900 CACs worth the equivalent of 11.9 million barrels of storage. The front-month of August will see 2,250 CACs put up for sale while the most for any contract will be in Q4 2018, where 4,800 CACs will be auctioned. The 11,900 CACs to be auctioned represent the largest amount to be offered in one auction since April 2015, which was just the second storage futures auction held by the companies. Over the past year, LOOP has typically offered just shy of 9,000 CACs. The value of those CACs has traded between 5-8 cents/b since December 2017, when the minimum bid was lowered to 5 cents/b. Market participants do not appear interested in paying up to store crude, particularly in a backwardated market. It is worth noting that the backwardation lately has increased.
What Michigan's new fracking regulations will mean - This afternoon, the Michigan Department of Environmental Quality (MDEQ) announced that it would be proposing new rules for the development of oil and gas wells using hydraulic fracturing, or "fracking." These rules are the result of numerous public meetings throughout the state over the last two years. The rules themselves will not become official until they go through a public notice and comment process. But once that process is completed and the rules are finalized, Michigan will have a new set of rules that will apply to fracking operations. So, what does MDEQ say about what we can expect from these rules? Well, Michigan already has regulations in place relating to oil and gas operations. MDEQ is now proposing to change the rules in four specific areas:
- Michigan has in place a tool to determine if water withdrawals have the potential of harming flows in surface waters. Fracking operations will also be required to install a well to monitor groundwater levels if there is a water supply well within 1,320 feet of the fracking operation.
- Fracking operations will be required to collect baseline samples from up to 10 water supply wells (if they are within 1,320 feet of the operations) six months or less before drilling operations begin. This will establish the groundwater quality before fracking begins in order to determine if and when drilling operations have affected higher aquifers.
- Operators will be required to inform MDEQ whether the specific well development will require high volumes of water, submit separate applications for high volume hydraulic fracturing (HVHF) operations for already existing wells, provide 48-hours notice before beginning well operations, and monitor and report fluid pressures and volumes for all HVHF operations.
- Operators must disclose the chemical constituents of fluids used in HVHF operations using an internet registry, although the operator may protect the identity of certain chemicals that have trade protection under federal law.
Enbridge pipeline gets Minnesota nod in win for oil sands -- Canada’s oil industry just moved one step closer to getting some relief from its pipeline woes. Enbridge Inc.’s planned $7 billion replacement and expansion of its Line 3 conduit, linking Alberta’s oil fields to refineries in the U.S., was given the green light by regulators in Minnesota on Thursday, clearing the way for the project to move ahead. The state’s Public Utilities Commission approved a certificate of need for the project in a 5-0 vote and signed off on a pathway for the conduit that hewed closely to Enbridge’s preferred route on a 3-2 vote. While opponents of the pipeline may continue to fight the project through protests and legal challenges, the votes represent a victory for Canada’s oil industry, which has supported the Line 3 expansion as a way to alleviate the pipeline bottlenecks that have weighed on prices for its crude. The 1,000-mile (1,600-kilometer) Line 3 project would help carry about 370,000 more barrels of heavy and light crude a day from Hardisty, Alberta, to a storage hub in Superior, Wisconsin. “Projects like this help us make sure we’re getting product to market, which is good for Canada,” Enbridge Chief Executive Officer Al Monaco said in response to reporters’ questions at the World Gas Conference in Washington while the hearing was ongoing.
Water Protector Suspended 25 Feet in Demonstration Against Line 3 Pipeline - A water protector ascended a 25-foot steel tripod structure erected in the street in front of the Public Utility Commission (PUC) office to demonstrate ongoing resistance against Enbridge’s proposed Line 3 tar sands pipeline. Today marks one of the final public hearings held by the PUC on its decision to grant a certificate of need to the controversial pipeline. All five of the directly affected Objibwe Tribal Nations in Minnesota oppose the dangerous project because of the threat it poses to their fresh water, culturally significant wild rice lakes, and tribal sovereignty. Line 3 will accelerate climate change by bringing carbon-intensive tar sands bitumen from Alberta to refineries in the Midwest. Climate change disproportionately impacts Indigenous and frontline communities across the world. This deadly infrastructure project is another example of the genocidal legacy of colonialism faced by Native peoples and the ecological destruction caused by corporate greed. Water protectors, climate justice advocates, landowners, and faith leaders stand united alongside Native communities against this dangerous pipeline. At around 7AM CST water protectors blockaded traffic by erecting 25-foot steel poles in a tripod structure on 7th Pl. in front of the PUC offices in downtown Saint Paul, MN. Ben, a 30-year-old Minneapolis resident, ascended the structure and unfurled a banner that reads, “Expect Resistance,” a clear message to Enbridge and the PUC that fierce opposition to this pipeline will continue to grow at every stage.
We're Not In Kansas Anymore - The Conway Vs. Mont Belvieu Propane/NGL Differential Blowout -- For 10 years prior to 2018, the differential between propane prices at the Conway, KS, hub averaged less than a nickel per gallon below Mont Belvieu. In fact, between 2013 and 2017, the price spread was only 3.5 c/gal — excluding a winter 2014 Polar Vortex aberration — which basically reflects the cost of moving barrels 700 miles north-to-south. Not this year, though. After starting 2018 at 3 c/gal, the propane price spread took off, and has averaged 18 c/gal since April, some days moving above 26 c/gal, far above the per-bbl cost of transporting propane 700 miles south to Mont Belvieu. Is it pipeline capacity constraints? In part. But there is a much more significant factor driving this differential wider, not only in the propane market, but across all five of the NGL purity products. What is this mysterious factor? To find out, read on. But here’s your first clue: the problem is not in Kansas anymore.
Boulder County commissioners back proposed oil and gas state ballot measure - Boulder Daily Camera - Boulder County commissioners on Friday announced their support for a proposed state law that — if it makes it onto November's election ballot and is then approved by Colorado voters — would increase the distances that future oil and gas development has to be set back from homes, schools and hospitals.The proposed ballot initiative would require that oil and gas development be a minimum of 2,500 feet away from such "occupied structures."That setback requirement would also apply to oil and gas development near such "vulnerable areas" as playgrounds, permanent sports fields, amphitheaters, public parks, public open space, public and community drinking water sources, lakes and reservoirs, rivers and creeks, and irrigation canals. Current Colorado Oil and Gas Conservation Commission regulations require that new oil and gas wells be at least 500 feet away from homes and 1,000 feet away from such high-occupancy buildings as schools and hospitals. "This initiative, if approved by voters in the fall, would be an important step in providing greater protection for those living, attending school, or obtaining drinking water within a half mile of fracking sites," . "We need to take every opportunity to move these heavy industrial facilities away from vulnerable populations across the state," "A setback of at least 2,500 feet would provide a more protective minimum buffer area for Colorado residents,"
Damage during installation led to oil pipeline crack — The National Transportation Safety Board says a fatigue crack caused last year's rupture of the Keystone oil pipeline in South Dakota. The NTSB said in a report released Thursday that the crack likely originated from mechanical damage to the pipe exterior caused by a metal-tracked vehicle during installation. Investigators say the crack grew to a "critical size" and resulted in the Nov. 16 rupture near Amherst. An estimated 210,000 gallons of oil spilled from the TransCanada Corp. pipeline between the Ludden, North Dakota, and Ferney, South Dakota, pump stations. There were no injuries associated with the incident. TransCanada spokesman Matthew John says the impacted property has been cleaned up and the pipeline has returned to service. John says the company is committed to achieving its goal of "zero incidents."
5 Crazy Ways the House Is Pushing Extreme Drilling on Public Lands -Some members of Congress are trying to rig the system to use public lands primarily for oil and gas drilling, and they are threatening to silence and punish anyone who objects.Under the Trump administration, public lands are being offered up for drilling at higher rates than ever before. Last year the U.S. government offered up 11.8 million acres for lease, or equivalent to Vermont and New Hampshire together. Vital protections for our air, land and water have been eliminated and public input has been minimized.New legislation is being considered by the House Natural Resources Committee that would hurry the selling of public lands by punishing states and citizens opposed to drilling. It would also relax safety requirements.These are five of the worst ideas under consideration:
- 1. Making citizens pay to protest drilling. Rep. Liz Cheney (R-WY) introduced HR 6087, a bill that would require citizens and groups like The Wilderness Society to pay a fee to file comments opposing reckless oil and gas leasing. Oil and gas companies, however, would not have to pay a fee for expressing interest in these parcels.
- 2. Rigging the system to benefit polluters. Rep. Steve Pearce from New Mexico introduced HR 6106 and HR 6107, bills that would limit the ability of federal regulators to review environmental, safety or public health impacts of projects. HR 6106 would stop Bureau of Land Management employees from taking a closer look at several types of oil and gas projects—including roads and pipelines—regardless of the impact they may have. HR 6107 would similarly bar federal regulators from reviewing certain oil and gas projects regardless of impact. The bill proposes to exempt any project that taps less than 50 percent of the federal mineral resources available, so long as the land surface is owned by another party.
- 3. Handing out drilling permits as fast as possible. Rep. John Curtis (R-UT) proposed HR 6088, a bill creating a new program for drilling permits on many public lands. It would make it so that after a permit has been filed, a company does not need a site inspection or environmental review to drill. All they have to do is wait 45 days. The only exception is if the Secretary of the Interior personally objects. This idea to rubber-stamp drilling permits would eliminate nearly all scrutiny of public health, safety or environmental impacts of a drill site.
- 4. Tying our children's education funding to oil drilling. Rep. Scott Tipton's (R-CO) HR 5859 bill would require that we expand onshore energy production to provide funds for education. It would do so by encouraging expansion of drilling on our public lands and incentivizing drilling. The bill would also potentially ignore dangerous consequences on public health, wildlife habitat, and air and water quality. It creates a false choice between selling out children's wellbeing and funding their education.
- 5. Handing drilling on public lands over to the states and penalizing states that oppose drilling. Possibly the worst idea yet is the "Enhancing State Management of Federal Lands and Waters" bill. This proposal would allow states to apply to manage an unlimited number of acres of federal lands that were within their borders. It would also exempt oil and gas projects from federal environmental laws and put states in charge of all permitting and project regulation. States would then be forced to continue to drill these lands at increasing intervals, as they would be rewarded for drilling more and penalized or have management stripped from them for drilling less.
Trump's BLM Ready to Sacrifice Ancient Rock Art for Gas Drilling - While the Ancestral Puebloan people of the Southwest were building citadels like Chaco Canyon, the Fremont people were carving mysterious petroglyphs depicting horned, broad-shouldered triangular men and sweeping carvings of desert snakes. Nowhere is their legacy more apparent than in eastern Utah’s Molen Reef. Fremont artifacts dominate this cultural heritage site, but its rock art ranges from 3,000-year-old panels from the Barrier Canyon tradition to etchings by Mormon pioneers crossing the Utah desert. They aren’t easy to see, but that’s not a bad thing. You won’t find these cultural treasures on a map, and Jonathan Bailey, a Ferron, Utah-based photographer and author of Rock Art: A Vision of a Vanishing Cultural Landscape, thinks it should stay that way. “There are hundreds of rock art panels in the Molen Reef, and maybe a dozen are known,” he says. “They are mostly pristine, unexcavated sites that have very little vandalism.” Bailey worries about the resources being compromised by human activity before they can be cataloged and protected. But the Bureau of Land Management (BLM) has different plans for the area. In January 2018, the agency approved the leasing of 32,000 acres for mineral exploration between the San Rafael Swell and Molen Reef—just as it has in many other places in Utah. In Molen Reef, instead of highly publicized conservation efforts led by environmental organizations, tribal groups, or multibillion-dollar outdoor recreation outfitters, the resistance is being led by a scrappy group of rock art enthusiasts fighting to save the sites they love to explore.
U.S. Hydraulic Fracturing Market Size to Reach $13.91 Billion by 2025: Hexa Research - The U.S. hydraulic fracturing market to reach USD 13.91 billion by 2025, owing to the rise in the oil and gas exploration and extraction activities in the country over the forecast period. There is a rise in the demand for primary energy resources owing to the rise in population and industrialization. To meet these demands and ensure the continuous supply of natural resources in the country, the market for unconventional techniques such as hydraulic fracturing is expect to grow over the forecast period. . In 2015, around 67% of natural gas was produced from hydraulically fractured wells in the country.The U.S. hydraulic fracturing market is expected to grow significantly owing to the rise in the recent developments and innovations such as using hydraulic fracturing in combination with horizontal drilling during shale formations. This has revealed new sources for huge amount of natural gas supplies, which is fulfilling the energy needs of the nation and is expected to transform the energy future. The use of this technology was first employed around the year 2000 after which it was continuously being used in the oil and gas production and extraction processes. There is a significant rise in the domestic oil and gas production from hydraulically fractured oil and gas production wells. In 2015, the production of oil from hydraulically fractured reservoirs accounted for more than 50% of the total oil production and the gas production accounted for around 70% of the total gas production in the country. This combination technology of directional drilling and hydraulic fracturing allows the oil and gas reservoirs to be punctured directionally or horizontally alongside the foundation of targeted rocks, giving exposure to the rock formation bearing oil and gas in the production well, which is expected to drive the growth for this market over the forecast period.
Fracking: Further Investigations into the Environmental Considerations and Operations of Hydraulic Fracturing, 2nd Edition -- Wiley - 954 pages - Since the first edition of Fracking was published, hydraulic fracturing has continued to be hotly debated. Credited with bringing the US and other countries closer to “energy independence,” and blamed for tainted drinking water and earthquakes, hydraulic fracturing (“fracking”) continues to be one of the hottest topics and fiercely debated issues in the energy industry and in politics. Covering all of the latest advances in fracking since the first edition was published, this expanded and updated revision still contains all of the valuable original content for the engineer or layperson to understand the technology and its ramifications. Useful not only as a tool for the practicing engineer solve day-to-day problems that come with working in hydraulic fracturing, it is also a wealth of information covering the possible downsides of what many consider to be a very valuable practice. Many others consider it dangerous, and it is important to see both sides of the argument, from an apolitical, logical standpoint. While induced hydraulic fracturing utilizes many different engineering disciplines, this book explains these concepts in an easy to understand format. The primary use of this book shall be to increase the awareness of a new and emerging technology and what the various ramifications can be. The reader shall be exposed to many engineering concepts and terms. All of these ideas and practices shall be explained within the body. A science or engineering background is not required.
US crude by rail traffic rebounds in 1Q - Every US railroad reported an increase in crude carloads during the first quarter, as the total number reported by all seven Class I carriers rose to its highest level since late 2016.The major North American railroads combined for 88,571 crude carloads in the US, according to the latest data available from the Surface Transportation Board. That is up from 79,891 in the last quarter of 2017 but still well shy of the record 242,149 in the third quarter of 2014.Crude-by-rail leader BNSF, which dominates Bakken crude movements out of the Williston basin centered in North Dakota, reported 39,799 crude carloads in the first three months of 2018, down from 39,937 in the year-prior period and 106,534 in the fall of 2014.BNSF crude carloads plunged to 23,981 in the third quarter of 2017 upon the inauguration of the 525,000 b/d Dakota Access pipeline to Patoka, Illinois, and Nederland, Texas. But growing production in the Williston basin along with continued profitable rail movements to some destinations — mostly the west coast but increasingly the east coast — helped boost volumes in the ensuing quarters.BNSF, along with fellow western US railroad Union Pacific (UP), also can pick up crude from Canada and deliver it to the increasingly busy USD Group terminal at Stroud, Oklahoma. Last week it was a BNSF train hauling Canadian crude that derailed in Iowa, causing 32 cars to topple and leak oil into the Little Rock river. UP reported 7,710 crude carloads in the first quarter, its highest-volume quarter since the third quarter of 2016. UP, a Bakken crude-by-rail pioneer earlier this decade, had seen volumes decline as the US Gulf coast became a less viable destination as pipeline capacity rose.
Canadian crude-by-rail volumes reach record level of 193,468 b/d in April: NEB - Steadily wide differentials have sent crude-by-rail volumes out ofAlberta and Saskatchewan to refineries in the US and East Coast Canada29% higher year on year to 193,468 b/d in April, the National EnergyBoard said in its latest report. This figure is likely to rise in the coming six months as railroads signmore offtake contracts and deploy resources, industry officials saidMonday. Volumes loaded on rail cars were 149,903 b/d in April 2017, the NEB said. The April 2018 volume was the highest since 2012 and compared with178,989 b/d and 175,654 b/d in September 2014 and December 2014respectively, a study of the NEB data showed. A wider differential can help account for costly rail economics. WesternCanadian Select differentials averaged a $24.50/b discount to WTI overMarch, S&P Global Platts data shows. That spread narrowed to around $17/bin April and May, before widening back out to $21/b over June. "The high volumes indicate multiple unit trains are now being hauled outof Western Canada each day, with bigger producers now loading theirbarrels at the Edmonton and Hardisty loading terminals due to the[continuing] restriction in pipeline takeaway capacity," said SandyFielden, an analyst with Morningstar. A unit train comprises of roughly 100 cars with each tank car capable ofshipping some 650 barrels depending on the quality of crude. Fielden did not name any major producer, but ConocoPhillips said lateJune it was shipping crude from its oil sands facilities in Alberta inrail cars to Stroud in Oklahoma. ConocoPhillips is the operator of the Surmont oil sands facility inAlberta of current gross capacity 140,000 b/d.
Syncrude Outage Churns Market -- The outage of Syncrude's 350,000 barrel per day upgrader in Alberta, Canada is roiling markets. The facility experienced a power outage late in June and is expected to be off line through July, which means refiners in the US Midcontinent are scrambling to replace the lost supply of light, sweet barrels. The results are wide-ranging and potentially long-lasting. Taking Syncrude out of pipelines helps alleviate bottlenecks facing heavier grades, tightening the differential between light and heavy crude. The outage has also reversed recent price spreads as barrels at Cushing, Oklahoma and along the US Gulf Coast must be incentivized to move north rather than to tidewater. Brent's premium to West Texas Intermediate (WTI) has been slashed almost in half, and what at first glance looks like a relatively minor disruption to supply could slow down burgeoning US crude oil exports. In addition, the forward curve for WTI is getting more volatile as the market prices in the implications of going at least 31 days without access to Syncrude.
Enbridge Selling BC, Alberta Natural Gas Midstream Operations for $3.3B - Production gathering pipelines and processing plants in Canadian natural gas hot spots changed hands Wednesday, when Enbridge Inc. sold field operations in northern British Columbia (BC) and Alberta for C$4.3 billion ($3.3 billion). The leader of the buyer consortium, Toronto-based Brookfield Infrastructure Partners, called the deal “an exciting opportunity to invest in scale in one of North America’s leading gas gathering and processing businesses based in Western Canada.” The asset package includes 3,350 kilometers (2,010 miles) of pipelines that supply 19 processing sites with 3.3 Bcf/d of raw liquids-rich natural gas from the Montney, Peace River Arch, Horn River and Liard geological formations. “The business is strategically positioned for the continued development of the prolific Montney Basin,” the richest and most active area in the acquired midstream service network, said Brookfield CEO Sam Pollock. Calgary-based Enbridge kept long-haul routes to markets from the northern gas-rich areas: the Westcoast conduits to southwestern BC and the northwestern United States, and an interest in the Alliance Pipeline to Chicago. Enbridge acquired the Westcoast system and allied northern field services in its mid-2016 takeover of Spectra Energy for US$28 billion. The asset sale was sought to repay takeover debt and clean up the corporate profile on investment markets. The deal raises Enbridge’s total asset sales so far this year to C$7.5 billion ($6 billion).
Canada becomes competitor to Gulf Coast petrochemical industry - Even a short drive east from Houston toward Baytown shows how the U.S. shale boom is transforming the Gulf Coast. Dense clusters of petrochemical plants, with their towering chemical reactors and mazes of pipes, line roads busy with semi-trucks hauling the goods needed to keep the industry running. Construction cranes promise more development to come. Not so in Canada, where petrochemicals investments have slowed in recent years despite the country’s vast reserves of low-cost natural gas feedstock for plastics and other products. The reason is obvious: Compared to the Gulf Coast, Canada has limited port access, higher costs of building and carbon taxes in its four most populous provinces. But Canada is pushing to change that dynamic, vying to become more competitive with its neighbor at a time when U.S. trade policy and tariffs threaten to increase the cost of building and expanding Gulf Coast petrochemical plants. In June, the provincial government of Alberta offered petrochemical companies the chance to apply for a range of multi-million-dollar incentives to develop reserves of natural gas-derived chemical feedstocks — namely ethane, methane and propane — and process them into plastics and other materials. It was the latest in a series of incentive packages Alberta has offered to offset the higher costs of operating there. A recent analysis by research firm WoodMackenzie showed the push has already created new development opportunities in Canada, pitting it against the U.S., the Middle East and China in the race to build new plants. Last year, during an Alberta’s first incentive push, companies applied for assistance with 16 projects worth $20 billion.
Campaigners call for fracking moratorium in former mining areas after new report reveals shale gas plans overlooked key geological data - Fracking companies have failed to use all available geological data when applying for planning permission, according to a report launched at Westminster this afternoon. The study, by a former Downing Street adviser, shows that historic coal mining data has been overlooked or ignored. It calls on planning committees to consider detailed maps of faults when deciding applications. Anti-fracking campaigners have called for a moratorium on fracking in mining areas and a public investigation. The report’s author is Professor Peter Styles, a former President of the Geological Society of London and Head of Geology at Keele University. He established the link between fracking at Cuadrilla’s Preese Hall well and the Blackpool earthquakes of 2011. He also advised David Cameron on seismic regulation of fracking. He concluded:“It is critical that this high resolution, carefully mapped data set should be included in any planning process for unconventional oil and gas activities.”In an interview with DrillOrDrop last month, he warned of the risks of fracking near geological faults in former coal mining areas. The said the operation could trigger earthquakes and should not take place without assessment of all available geological data.He recommended a gap of 850m – described as a respect distance – between fracking wells and known faults. His report, launched this afternoon to MPs and peers at the Houses of Parliament, overlaid historic mining data from South Yorkshire and North East Derbyshire, where Ineos proposes to drill for shale gas, onto maps from the British Geological Survey (BGS), which show only major fault lines.
Another Pre-Summit Dividend - No Sanctions On Nordstream 2 - I hate to say “I told you so,” but, “I told you so.” There will be no sanctions on the Nordstream 2 pipeline. The reason is because sanctions won’t stop the project at this point. Sputnik is reporting that the U.S. has told the German Economic Ministry there will be no sanctions on Russian pipeline projects. If true then this is an indication that we just about reached the peak of Trump’s full-court press on the economic health of the planet through financial control. I’ve been steadfast in my position that sanctions are not only an act of war but also, ultimately, have limits. And once those limits are reached all that is left is the face-saving. And since the first rule of being a politician is never back down no major policy can be reversed without a means to save face.Look at the situation Angela Merkel is facing in Germany. She can’t cave on Nordstream 2 because she will look like a weak U.S. quisling (which she is). She can’t reverse sanctions on Russia over Crimea because there has been no movement towards implementing the Minsk II accord. And she can’t back down over her immigration policy because it would betray the people who put her in power — the Soros Set.Trump has used this to pressure her ruthlessly on trade issues and NATO funding.As for Trump, he’s not said much directly about Nordstream 2. Members of his administration have, especially State Department Spokesperson Heather Nauert. They are the ones who would have to eat crow over Nordstream 2, not Trump. Trump has made it clear he doesn’t like the project but I think that’s more about his desire to bring Germany low rather than stifle Russia. The worry is that Germany, through Nordstream 2 and no more supply coming from Ukraine, would then control eastern European politics by having control of their gas supplies. This, I believe, is now the main focus for Poland in their fight to retain some semblance of sovereignty from the EU. This is why Poland continues to overpay for Qatari and U.S. LNG as well as invest in a new pipeline from Norway. But, that said, Trump knows that Europe’s future gas market is big enough to ensure, if indirectly, a market for U.S. LNG. So, Russia’s dominance in Europe is not something he can compete with in the long run.
Gazprom boosts natural gas production to solidify top position in Europe - Gazprom increased gas production by 8.7 percent in the first half of 2018, compared to the same period last year, to 253 billion cubic meters. Exports to Europe increased by 5.8 percent to 101.2 billion cubic meters. Through June this year, Gazprom’s exports to Germany increased by 12.4 percent, to Austria – by 1.5 times, to the Netherlands – by almost 1.7 times, to France – by 13 percent, to Croatia – by 1.5 times. Supplies to Poland grew by 6.9 percent. Earlier, the head of Gazprom, Aleksey Miller, said that gas exports to Europe could reach a record 200 billion cubic meters this year. Miller also noted that LNG supplies from the United States will never substitute Russian fuel in Europe. “America will never catch up and will not overtake Russia in delivering LNG to the European market. The reason for this is that price and reliability of supplies are crucial for consumers,” and Gazprom is leading there, he said.
The 1,600 olive trees holding up a $5.2 billion pipeline - On a recent visit to a construction site near an olive grove along the coast of southern Italy, a reporter’s phone buzzed with an ominous text message: “We know you’re there.” The text came from one of the people fighting to stop the final construction of a 4.5 billion-euro ($5.2 billion) natural gas pipeline that’s designed to run right beneath the olive trees, an area farmed for centuries and now surrounded by barbed-wire fencing. They have been working in shifts, monitoring progress of a project meant to carry gas from the Caspian Sea and provide the cornerstone of a European Union plan to wean itself off Russian gas. Now their yearslong fight to block the Trans-Adriatic Pipeline, known as TAP, has been given a boost. The ministers in Italy’s new government have threatened to put the project under review, aligning more with the protesters than the companies working on the pipeline, including British oil giant BP Plc and Italy’s state-owned gas company, Snam SpA. The threats have thrown into question whether the final stretch will be ready by the planned 2020 deadline—or completed at all. The companies that invested in TAP and the larger pipeline it connects with could face billions in losses if the project is delayed, said Elchin Mammadov, a utilities analyst at Bloomberg Intelligence. “There is a 90% probability that it will not be ready,” he said. On Wednesday, the board of the London-based European Bank for Reconstruction and Development gave the project a vote of confidence, approving a loan of up to 500 million euros and saying the initial annual capacity of 10 billion cubic meters of natural gas would be enough for 7 million European households. What began as a squabble about olive groves has grown into a larger protest against globalization, a theme that courses through populist rhetoric.
China keeps LNG off tariff list for now, could be trade weapon later (Reuters) - China’s omission of liquefied natural gas (LNG) from its vast list of U.S. products that face hefty import duties from Friday has preserved a potential weapon should the trade war with Washington deepen. It also underscores Beijing’s desire to ensure supplies of gas as it pushes to switch millions of households and businesses away from using coal as a key part of its ‘war on pollution’. China will on Friday impose tariffs on $34 billion of U.S. goods from pork to soybeans to cotton in retaliation for a similar move by Washington as trade relations sour between the world’s top two economies. “If the (trade) war escalates, (I expect) the government will not hesitate to add LNG,” a state oil and gas company executive said, declining to be identified due to the sensitivity of the issue. Although U.S. LNG supplies to China have so far been tiny in volume and value compared with the around $12 billion per year of U.S. crude that arrives in the country, analysts say those levels could be set to shoot up as Beijing forges ahead with its battle to clear its skies. Morgan Stanley has estimated annual Chinese imports of U.S. LNG could rise to as much as $9 billion within two or three years, from $1 billion in 2017. The amount could be even larger if the United States resolves a logistics bottleneck. That would go a long way to helping balance China’s trade surplus with the United States, a major bugbear of Washington’s in the trade dispute. But the strategy also hands Beijing another weapon in its arsenal if the spat deteriorates further. China’s Commerce Ministry did not immediately respond to requests for comment. FILE PHOTO: A Sinopec worker walks past liquified natural gas (LNG) storage tanks at Sinopec's LNG terminal in Tianjin, China February 6, 2018. REUTERS/Stringer/File PhotoHowever, some industry sources said the country would feel the impact of any increased tariffs on U.S. LNG, as there are a limited number of major alternative suppliers.
Ghost ships no more: Explorers resume oil, gas search as prices perk up (Reuters) - A growing fleet of ships is scanning oceans in search of new oil and gas fields as energy companies, now with more cash thanks to stronger crude prices, gradually resume spending on seismic services after a four-year downturn. A doubling in the area contracted for seismic work in the first quarter this year from the last three months of 2017 has injected optimism into surveillance firms, with a global fleet of about 24 vessels, most of whom struggled to survive in the past years. But they say the road to recovery remains bumpy with producers big and small not keen on drilling for new reserves unless oil prices, which have more than doubled from 2016 lows, stay high for at least a year. Still, with crude prices stabilizing well above $60 a barrel in the past six months, companies including mid- and small-sized independents such as Woodside Petroleum, Kosmos Energy and Tullow Oil have helped boost demand for surveillance. The total area tendered by upstream companies for seismic work doubled to 40,000 square kilometres in the first quarter this year from October-December last year, said Duncan Eley, chief executive officer at Polarcus, which owns a seismic fleet. “That’s positive in isolation,” said Eley, keeping his optimism in check even as he pointed to a busy fourth quarter for geophysical work in Asia Pacific, particularly for gas with demand forecast to soar in coming decades. Gas projects in Myanmar could take two to three vessels from the global fleet, while there are also potential activities in Malaysia, Australia, India and Papua New Guinea, where Exxon Mobil and Total plan to feed more gas into their existing liquefied natural gas infrastructure, Eley said. That marks a stark change from the dark days of 2015 and 2016 when orders for geophysical survey work came to a grinding halt as oil prices plummeted from over $100 a barrel to less than $50. Petroleum Geo Services (PGS), the world’s largest seismic operator, was also seeing better opportunities now than last year. “The recent increases we’ve seen are primarily driven by Africa and Brazil when it comes to bidding for contract work,” said Bård Stenberg, PGS’ senior vice president for investor relations and communication.
Venezuela Says China Investing $250 Million to Boost Oil Output - Venezuela’s distressed oil sector may get some much needed financing from China, Finance Minister Simon Zerpa said after meetings with officials from China Development Bank and China National Petroleum Corporation. China Development Bank will invest more than $250 million to boost Venezuela oil production in the Orinoco Belt, Zerpa, who is currently in Beijing for bilateral talks, said in a ministry statement. “We’ve received the authorization for a direct investment of more than $250 million from China Development Bank to increase PDVSA production, and we’re already putting together financing for a special loan that China’s government is granting Venezuela for $5 billion for direct investments in production,” Zerpa said. The two countries will sign an additional three or four financing deals in the coming weeks, he said.Venezuela’s oil output averaged 2.9 million barrels a day in 2013, when President Nicolas Maduro was first elected. In June, output dropped to around 1.36 million barrels per day, according to International Energy Agency data. State oil company PDVSA has been struggling to send oil shipments to China after a legal order granted to ConocoPhillips froze its assets in Caribbean ports and terminals.Maduro has vowed to boost production by 1 million additional barrels, while critics say output will plummet to 1 million barrels a day by the end of 2018. Venezuela and China officials will continue meetings Wednesday, the ministry said in its statement. Zerpa, who has served in the post since October, was sanctioned by the U.S. Treasury Department before his appointment.
Turkey Defies Trump, Will Keep Importing Iranian Crude - Defying the Trump administration, Turkey said it would ignore the State Department’s call on US allies to stop importing Iranian crude oil by November 4, when the latest sanctions against Iran are set to kick in. Earlier this week, the State Department called on all US allies to completely stop buying Iranian crude, sending the price of oil to 4 year highs in the process. While many are trying to find a way around the sanctions, it is for now proving tricky, and many buyers are winding down their purchases of Iranian crude.But not Turkey."The decisions taken by the United States on this issue are not binding for us. Of course, we will follow the United Nations on its decision. Other than this, we will only follow our own national interests,” Turkey’s Economy Minister Nihat Zeybekci said according to Turkish daily Hurriyet, adding that “we will pay attention so our friend Iran will not face any unfair actions." Turkey is hardly alone in its defiance: oil importers including Japan, South Korea, and India, as well as European countries have said they will continue buying Iranian crude, although whether they will really do that remains to be seen - French oil giant Total has already stopped purchasing Iranian products.The European Union is particularly concerned about the situation because not only because it relies on substantial Iranian imports, but because there is only so much that the three European signatories to the Iran nuclear deal could do to prevent Tehran from exiting it, which might happen if it stops seeing benefits from it, President Hassan Rouhani said.
Turkey And India Have Leverage In Trump's Iran Sanction War - Both India and Turkey have said they will defy President Trump’s call for them to stop buying Iranian oil once the U.S. reapplies sanctions in November. That isn’t really news. Both of them defied the Obama administration in 2012, albeit in different way. Turkey changed its banking rules to monetize gold and used its gold reserves as a means to launder Iranian oil payments for third parties through its banking system. India bypassed cutting off Iran from the U.S. dollar by beginning a goods-for-oil swap program. Today, however, the geopolitical background is far different. Today, Iran can and does list its oil for sale in Shanghai’s futures market payable in Chinese Yuan. Turkey can recycle its Yuan it receives from its large trade deficit with China to up its purchases of Iranian oil if need be. But, more importantly, both India and Turkey have geopolitical freedoms they didn’t have in 2012. I have covered the Turkey angle on this at length. India, on the other hand, I haven’t. Iran has become Turkey’s biggest oil importer. Turkey, a NATO ally, is dependent on imports for almost all of its energy needs. In the first four months of this year, Turkey bought 3.077 million tons of crude oil from Iran, almost 55 percent of its total crude supplies, according to data from Turkey’s Energy Market Regulatory Agency (EPDK). President Recep Tayyip Erdoğan last year said Turkey was looking to raise the volume of its annual trade with Iran to $30 billion from $10 billion. And it doesn’t look like this will change with Trump’s sanctions.
How The Iran Sanctions Drama Intersects With OPEC-Plus - Major states buying oil from Iran are unlikely to heed the US call to drop imports; key allies want a waiver to avoid sanctions; OPEC, meanwhile, will have trouble boosting output in the short-term; the puzzle is not solved, but there are dark clouds... History may have registered stranger geoeconomic bedfellows. But in the current OPEC-plus world, the rules of the game are now de facto controlled by OPEC powerhouse Saudi Arabia in concert with non-OPEC Russia. Russia may even join OPEC as an associate member. There’s a key clause in the bilateral Riyadh-Moscow agreement stipulating that joint interventions to raise or lower oil production now are the new norm. Some major OPEC members are not exactly pleased. At the recent meeting in Vienna, three member states – Iran, Iraq and Venezuela – tried, but did not manage to veto the drive for increased production. Venezuela’s production is actually declining. Iran, facing a tacit US declaration of economic war, is hard-pressed to increase production. And Iraq’s will need time to boost output. Goldman Sachs insists: “The oil market remains in deficit… requiring higher core OPEC and Russia production to avoid a stock-out by year-end.” Goldman Sachs expects production by OPEC and Russia to rise by 1.3 million barrels a day by the end of 2019. Persian Gulf traders have told Asia Times that’s unrealistic: “Goldman Sachs does not have the figures to assert the capability of Russia and Saudi Arabia to produce so much oil. At most, that would be a million barrels a day. And it is doubtful Russia will seek to damage Iran even if they had the capacity.” In theory, Russia and Iran, both under US sanctions, coordinate their energy policy. Both are interested in countering the US shale industry. Top energy analysts consider that only with oil at $100 a barrel will fracking become highly profitable. And oil and gas generated via fracked in the US is a short-term thing; it will largely be exhausted in 15 years. Moreover, the real story may be that shale oil is, in the end, nothing but a Ponzi scheme. Yet the game drastically changes when Venezuela loses a million barrels a day in production and Iran, under upcoming sanctions, may lose another million. As Asia Times has reported, OPEC (plus Russia) can at best increase their production by 1 million barrels a day.
New Unrest Roils Iran as U.S. Ramps Up Pressure – WSJ -- Spreading unrest in Iran raises the prospect of broader antigovernment protests as the political leadership in Tehran faces mounting pressure from a Trump administration effort to cut the country’s oil sales. Hundreds of people took to the streets in the southwestern city of Khorramshahr over the weekend in a demonstration prompted by anger at dirty drinking water that turned into an expression of broader grievances against the government in Tehran. The upheaval came after thousands of people swarmed Tehran’s Grand Bazaar last week, as the government of Iranian President Hassan Rouhani struggles to deal with soaring unemployment, a collapsing currency and other economic woes. Businesses in the bazaar shut down for days. In Khorramshahr, a video shared Friday on social media showed large crowds chanting “Death to Rouhani.” Other videos that purported to capture the events of the weekend showed people clashing with security forces and setting fires in the street. What appeared to be gunfire could be heard in the background of some. The videos couldn’t be independently verified. An Iranian interior ministry official said 10 police officers were injured in clashes on Saturday. Iranian authorities said no one had died.
US eases off of Iran oil ultimatum: Update - The US administration today backed away from its earlier insistence that countries eliminate all crude purchases from Iran by 4 November. Officials had pledged to target countries that fail to reduce their oil purchases from Iran to zero within four months. But today the State Department said the US will consider granting some waivers to the sanctions on Iranian crude sales. "Our focus is on getting as many countries importing Iranian crude down to zero as quickly as possible," State Department policy planning chief Brian Hook said. "We are not looking to grant licenses and waivers broadly, but we are prepared to work with countries that are reducing their imports on a case by case basis."Confusing messages last week from the US administration on the intensity of Iran sanctions have upended global oil markets. A background briefing by the State Department on 26 June, ruling out the possibility of waivers from the US' sanctions on Iran that go into effect on 4 November, sparked a surge in oil futures prices — something Washington has been at pains to avoid.Today's briefing seemed an attempt at damage control. "Our goal with respect to the energy sanctions is to increase pressure on the Iranian regime by reducing to zero its revenue from crude oil sales," Hook said. "We are working to minimize disruptions to the global oil markets. We are confident there is sufficient spare global oil production capacity." US law requires there be sufficient production capacity as a prerequisite for enforcing sanctions on Iran's oil sector. The White House in May, following President Donald Trump's decision to reimpose sanctions on Iran, informedCongress that enough crude supply is available globally to enable buyers of Iranian crude to significantly reduce imports from that country.
Saudis agree to boost output by 2mn b/d: Trump -- US president Donald Trump says he has extracted a pledge from Saudi Arabia's King Salman bin Abdel-Aziz to boost that country's oil output by up to 2mn b/d to make up for Iranian and Venezuelan production losses.Trump made the announcement via Twitter. "Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction (sic) in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference...Prices to (sic) high! He has agreed!"The Saudi version of the conversation, relayed via the official Saudi Press Agency, said that the leaders "stressed the need to make efforts to maintain the stability of oil markets, the growth of the global economy, and the efforts of producing countries to compensate for any potential shortage of supplies."Global oil markets have been upended by the US insistence earlier this week that foreign buyers of Iranian crude eliminate their imports from that country - about 2.39mn b/d in May - by November as Washington enforces sanctions on Tehran. The timing coincides with the midterm congressional election in the US, with Republicans defending their control of both the House of Representatives and the Senate. Saudi Arabia already was preparing to boost its production to 10.8mn b/d in July, an increase of nearly 800,000 b/d from May, as assessed by Argus. That target level already would have marked record high Saudi output. An agreement to boost output by 2mn b/d would, theoretically, take Saudi production to 12mn b/d - a level cutting close to the Saudi-claimed production capacity of 12.5mn b/d. Separately, Russia is preparing to increase production by 200,000 b/d.
Oil Tumbles After Al Jazeera Reports Saudis Agree To Trump Demand To Pump More Oil - With oil rising to the highest price since November 2014 less than an hour ago, with WTI hitting $75, oil suddenly tumbled on what appeared to be no news, prompting traders to ask if the US had sold even more oil from the SPR.It turns out the reason is to be found in an article published moments ago by Al Jazeera, according to which the Saudis "have agreed to US demands to pump more oil", and which quoted the official Saudi Press Agency that Saudi Arabia's cabinet on Tuesday "endorsed the kindgdom's readiness to pump more oil to maintain market balance and stability.""The kingdom is prepared to utilise its spare production capacity when necessary to deal with any future changes in the levels of supply and demand," a cabinet statement said, following a meeting chaired by King Salman.Some more details from the Al Jazeera report:US President Donald Trump on Saturday said Saudi Arabia's King Salman had agreed to his request to increase oil output "maybe up to" two million barrels. Trump said the agreement was reached after a phone call with the Saudi King about oil production but mentioned no specifics.Both leaders also discussed "efforts by the oil-producing countries to compensate for any potential shortage in supplies," SPA reported. Trump's claim comes after the Organization of the Petroleum Exporting Countries (OPEC), a grouping of oil-producing states that includes Saudi Arabia, already agreed to ramp up production by a million barrels a day at a meeting earlier this month. If the Saudis are indeed prepared to cave to Trump, it creates an existential threat to OPEC which may see Iran and other members quit immediately, if Riyadh has made a unilateral decision to pump more. Iran's OPEC governor, Hossein Kazempour Ardebili, accused the United States and Saudi Arabia of trying to push up oil prices and said both countries are acting against the foundation of OPEC.
White House, Saudi Arabia Pour Cold Water On Trump's "Saudi Deal" - On Saturday morning, president Trump triumphantly tweeted that following a phone call with the Saudi King, OPEC's largest producer had conceded and in defiance of the OPEC agreement reached just last week, had agreed to pump as much as 2 million barrels of oil extra in an attempt to lower prices:“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference ... Prices to high! He has agreed!”However, subsequent remarks by both the White House and Saudi Arabia via Reuters curbed Trump's enthusiasm. In a statement issued by the White House late on Saturday, it said that the White House said that the Saudi king had promised President Donald Trump that he can raise oil production if needed and the country has 2 million barrels per day of spare capacity."King Salman affirmed that the Kingdom maintains a two million barrel per day spare capacity, which it will prudently use if and when necessary to ensure market balance."No guarantees, no promises, just a vague reference to what many believe is peak, or even beyond, Saudi oil production.As a reminder, Trump's comments came just one week after Saudi Arabia along with the rest of OPEC nations including Russia had agreed on June 22 to boost production by a combined 700,000 to 1 million barrels a day, so any 2 million bpd-increase would be at least double market expectations, prompting a furious backlash from the likes of Iran. According to a Bloomberg report last week, Saudi Arabia would shoulder the bulk of this excess production, boosting output by a little under 1mmb/d to a record high 10.8mmb/d from the current 10mmb/d pace.
Saudi Crude Oil Production -- Summer -- Part 2 -- June 30, 2018 --Yesterday I mentioned that we were going to start seeing a lot of stories on increased crude oil production by Saudi Arabia. In anticipation of that, I posted part 1 of a 2-part series on this subject. This is part 2. Observations / data points:
- there's a huge difference between production and exports
- right now, both President Trump and Saudi Arabia are talking about production, not exports
- US refiners are operating flat out, as fast as they can, operating at 97%+ capacity
- there's already a 65-day global supply of crude oil; compare to about 23 days for the US; how much more oil does the world need
- right now there are four BP supertankers floating off the shore of China; oilprice opines that China teapots are unable to come up with the cash for these 8 million bbls of oil
- many years ago, on the blog, I clearly stated that I doubted the Saudis could significantly increase crude oil exports
- Saudi always increases production in the summer: they use crude oil to generate electricity for air conditioning and the hottest Arabian days are yet to come; see this post from June, 2015;
- we're not quite there yet, but since 2015, there has been a huge course correction in Saudi's strategic plan; Prince Salman will increase domestic consumption by huge amounts for new petrochemical operations and refineries -- see the Prince Salman plan linked at the sidebar at the right;
- the Saudi Aramco IPO continues to be delayed, probably for any number of reasons, not least of which Prince Salman said he needed $100-oil to launch that IPO; that was two years ago; we're still nowhere close to $100-oil, though we are moving in that direction
OPEC oil output climbs in June as Saudi opens taps: Reuters survey (Reuters) - OPEC oil output rose last month as Saudi Arabia pumped at a near-record rate, a Reuters survey found on Monday, a sign the world’s top exporter is heeding calls from the United States and other consumers for more oil. The Organization of the Petroleum Exporting Countries pumped 32.32 million barrels per day in June, the survey found, up 320,000 bpd from May. The June total is the highest since January 2018, according to Reuters surveys. Saudi Arabia’s move comes as U.S. President Donald Trump has been urging Riyadh to offset losses caused by new U.S. sanctions on Iran and to dampen prices, which this year hit $80 a barrel for the first time since 2014. OPEC and a group of non-OPEC countries agreed last month to return to 100 percent compliance with oil output cuts that began in January 2017, after months of underproduction by Venezuela and other countries pushed adherence above 160 percent. “We are entering the second half of the year with a huge amount of uncertainty surrounding the supply side of the equation,” said Tamas Varga of oil broker PVM. “Depending on your belief you could just as easily bet on $100 as $60 by the end of the year.” Saudi Arabia said the OPEC decision would translate into an output rise of about 1 million bpd, although the group’s statement gave no clear volume. A Reuters survey published on Friday showed Saudi Arabia had boosted supply to 10.70 million bpd in June, close to the record high of 10.72 million bpd, to make up shortfalls in Venezuela and other countries, and expected losses in Iran. This has lowered OPEC’s collective adherence with supply targets to 110 percent from 167 percent in May, meaning the group is still cutting more than agreed even after the Saudi increase. The Saudi supply boost, apparently set in train before OPEC met in Vienna on June 22 to discuss policy, has infuriated Iran and surprised some other OPEC members with its scale. Saudi Arabia’s Gulf allies, Kuwait and the United Arab Emirates, have yet to follow the Saudi lead, keeping output steady in June, the survey found.
Why Trump is pressing Saudi Arabia to lower oil prices: Kemp (Reuters) - The United States and Saudi Arabia appear to have reached an understanding: Washington will reduce or eliminate Iran’s oil export revenues and in return Riyadh will guarantee oil supplies and stabilise prices. The basic deal is well understood by policymakers in both countries, with U.S. President Donald Trump repeatedly emphasising his great personal relationship with the Saudi king and crown prince. But strong personal relationships between the leaders and agreement on the overall deal obscure disagreement on some key details, not least the desirable level for oil prices. Saudi Arabia and its allies believe prices should be stabilised around $75 a barrel. Trump, meanwhile, clearly thinks they should be stabilised at a significantly lower level. Trump made the link between Iran sanctions and Saudi production policy explicit in a television interview with Fox News on July 1. The United States will counter the influence of Iran, Saudi Arabia’s major regional rival, by imposing tough sanctions. In return Saudi Arabia will protect U.S. motorists against an increase in gasoline prices. “We are protecting those countries, many of those countries,” he said. In a follow-up Twitter message on July 4, the president said that “the United States defends many of those countries for very little $’s”. U.S. and Saudi objectives are not fully aligned, however, on oil prices. Saudi Arabia’s objective, revealed at the OPEC meeting in June, has been to stabilise production and prices around current levels. Trump, however, is not satisfied with either the current level of oil prices or the announced production increase. “They have to put out another 2 million barrels in my opinion,” he said in the July 1 Fox interview.
Saudi Spare Capacity Back in Market Spotlight With collapsing Venezuelan output, Iranian barrels at risk from US sanctions and other geopolitical disruptions potentially on the horizon, Saudi Arabia has assured nervous oil markets that it is waiting in the wings to help address any runaway supply shortfall. But is this easier said than done for Opec's de facto kingpin? Political considerations aside, the kingdom has the technical capability to bring on an additional 2.25 million barrels per day of domestic supply and a further 250,000 b/d if its spat with Kuwait in the shared Neutral Zone is resolved. How quickly this capacity can be brought into production -- and at what cost to its fields -- is another matter. Saudi Arabia's production is holding around 10 million b/d, down some 500,000 b/d as a result of its pledge to the Opec/non-Opec production cut agreement. While returning to its pre-alliance levels would give the market a quick fix that could offset much of the near-700,000 b/d Energy Intelligence estimates could come off line just from Iran by mid-2019, running much above 10.7 million b/d presents complications. When Saudi Arabia ran at such record levels in the recent past, Saudi industry sources told PIW it was a costly endeavor that strained its fields. Pushing output to full capacity would take months to implement and risk exhausting the kingdom's fields if done for any extended length of time (PIW Aug.21'17). To potentially make this spare capacity less taxing to tap and more responsive, Saudi Aramco is prioritizing upstream investments that will significantly expand its offshore output even as its overall production capacity remains at 12.5 million b/d. The kingdom is also exploring international acquisitions in gas and LNG to free up crude barrels burned for power generation in the heat of the summer (PIW Feb.12'18). With more than half of its $300 billion spending program over the next decade headed offshore, the kingdom expects production from its three flagship developments, Marjan, Barri and Zuluf, will grow from 1.35 million b/d currently to 2.5 million b/d by 2022-23, offsetting declines at older onshore fields (PIW Aug.14'17). Aramco has already started rolling out tenders for several offshore field expansions, including Marjan and Barri, with awards expected by early 2019, industry sources say.
Opec's Shrinking Spare Capacity Raises Risks -- Mounting concern over future production declines led by Venezuela and Iran has flipped the oil market's focus from tightening inventory levels to global spare capacity. To be sure, a severe supply crunch is not expected soon, as US output alone is able to meet the bulk of demand growth this year. But with spare capacity additions often needing significant investments and long lead times, the world will have to lean on its current production cushion for some time. And the picture is bleak. How much spare capacity is out there and how quickly it can come on stream are untested and far from certain. What is clear, however, is that the oil market is far less robust than it was before the downturn. Compared with five years ago, Opec's effective spare capacity is down some 1 million barrels per day, PIW estimates. PIW calculates that effective global spare capacity has shrunk 17% since 2013 to 3.55 million barrels per day, but even this risks presenting too rosy a scene. Less than one-third of that capacity fits the International Energy Agency's (IEA's) technical definition of spare capacity -- namely, output that can be turned on within one month. What spare capacity does exist remains highly concentrated, with roughly 70% of the cushion residing in just one country: Saudi Arabia (see table). Although the kingdom has long been the world's key purveyor of spare capacity, Riyadh is not keen to bear too much of the burden given that surging to full capacity quickly could damage its reservoirs. Reaching its full 12.5 million b/d capacity would likely take more than a year to achieve, and it is only with the expansions of its Marjan, Berri and Zuluf fields that Riyadh is likely to feel comfortable doing so (PIW May28'18). Those expansions will not be completed until 2022-23. The spread of spare capacity is more balanced under the IEA's month-long definition, with Saudi Arabia able to bring on some 400,000 b/d, and Kuwait, the United Arab Emirates and Russia contributing roughly 300,000 b/d apiece. If new members Gabon and Equatorial Guinea are removed, Opec's group productive capacity has fallen some 800,000 b/d over the past five years, whereas global oil demand has risen by some 10 million b/d.
Saudi-Kuwait neutral zone's Khafji oil field to be restarted in 2019: Toyo— The Khafji oil field in the Partitioned Neutral Zone shared by SaudiArabia and Kuwait is being prepared to restart production in 2019, Japan'sToyo Engineering said Monday. Toyo has agreed to a third renewal of its general engineering servicesagreement, originally signed in 2002, with Al-Khafji Joint Operations,operator of the Khafji and Hout oil fields located in the neutral zone, itsaid. KJO is owned 50:50 by Aramco Gulf Operations Co. and Kuwait Gulf Oil Co. Under the GESA, which will remain valid until 2023, Toyo said it willsupport KJO on the project planning feasibility study, FEED and technicalsupport for operations of the oil fields. "Maximum oil production rate of the fields is 350,000 b/d," Toyo said."Because of oil price recovery, KJO starts the preparation work tore-produce the oil from the fields from 2019," it added. Kuwait oil minister Bakheet al-Rashidi told the Kuwaiti National Assemblyon June 26 that production had been stopped in the offshore Khafji andonshore Wafra fields for "technical" reasons, and would restart as soon as anagreement with Saudi Arabia was reached. "We are working with the Saudi side to address these technical reasonsand soon we will return to production," Rashidi was quoted as saying by theKuwait News Agency. Operator Saudi Aramco unilaterally shut production from the 300,000 b/dKhafji field in October 2014, citing new government emission standards for gasflaring. The onshore Wafra field, operated by KGOC and Saudi Arabian Chevron,stopped pumping in May 2015. Sources in Kuwait, however, told S&P Global Platts earlier thatfacilities at both fields have been mothballed, so restarts at the fieldscould take months.
Russian oil output up by 100,000 bpd in June as production curbs eased (Reuters) - Russian average monthly oil output exceeded 11 million barrels per day (bpd) in June for the first time since April 2017 as leading global oil producers started to ease output curbs, Energy Ministry data showed on Monday. Production rose to 11.06 million bpd in June from 10.97 million bpd in May, up around 100,000 bpd. In tonnes, Russian oil output was 45.276 million versus 46.377 million in May. The Organization of the Petroleum Exporting Countries and some other leading global oil producers led by Russia agreed last month to return to 100 percent compliance with previously agreed oil output cuts, after months of underproduction by some OPEC countries. Russia has pledged to restore output by 200,000 bpd in the second half of the year. The country's largest oil producer Rosneft led the output increase, ratcheting up extraction by 1.6 percent last month to 3.89 million bpd, the data showed. The energy ministry's data does not include some of Rosneft's joint ventures. Top oil exporter Saudi Arabia also boosted supply to 10.70 million barrels per day in June, close to a record high. The deal, which has been in place since early 2017, was aimed at smoothing out bloated global oil stockpiles and supporting oil price. Initially, Russia said it would cut its production by 300,000 bpd from a record-high level of 11.247 million bpd reached in October 2016, the baseline for the current global deal which expires by the end of the year. For the first half of the year, Russian oil output declined by 0.4 percent to 271.1 million tonnes year-on-year.
Russia Takes Outsize Role in Boosting Oil Supply – WSJ —Russian oil companies are priming the pumps to significantly boost crude output this summer, taking on an unusually important role in a global effort to keep prices in check. Alongside Saudi Arabia, Russia is one of just a few countries that can quickly ramp up production, a capability that could help a group of big producers—who agreed in late June to boost output—as they try to cool a sizzling global oil market. About 18 months after the Saudi-led Organization of the Petroleum Exporting Countries began limiting supply amid lower prices, the group has the opposite problem. Stored inventories of crude have fallen, demand is strong and supply has been disrupted in Iran, Venezuela and Libya. That has all conspired to send prices sharply higher. .U.S. crude hit 3½-year highs last week. On Saturday, President Donald Trump called on Saudi Arabia to boost production to help meet the world’s needs. Russia joined last month with OPEC in agreeing to open the taps, and was already inching its output upward. It produced 10.97 million barrels a day in May, according to the Russian energy ministry, about 60,000 barrels a day above the level that it agreed to in 2016, when it joined OPEC in the deal to reduce supply to boost prices. OPEC and 10 other oil producers agreed on June 22 to boost output by one million barrels a day, most of which analysts expect will come from Saudi Arabia and Russia. The countries have yet to decide how the quotas will be distributed. Russian Energy Minister Alexander Novak has said the country hopes to expand output by 200,000 barrels a day, clawing back two-thirds of what it initially agreed to cut back in 2016. Estimates of what it might be able to deliver on top of that vary. Goldman Sachs forecasts Russia’s overall spare capacity—essentially idle fields that can be turned on quickly—at about 500,000 barrels a day. The big question is how quickly Russia can get that to world markets. In Saudi Arabia, a single, state-run company pumps all the oil, allowing it to be more nimble in crises. Not so in Russia, where the industry is fragmented among state and private firms.
The New Oil Cartel Threatening OPEC -- When reports emerged that India and China are in talks about forming an oil buyers’ club, OPEC was probably too busy with its upcoming June 22 meeting to concern itself with that dangerous alliance. Now, it may be time for it to start worrying.“The timing is right. The boom in U.S. oil and gas production gives us greater leverage against OPEC,” the Times of India quoted an Indian official as saying last month after the formal start of said talks. The two countries, after all, account for a combined 17 percent of global oil consumption and they are the ones that would be the hardest hit if prices rise as a result of OPEC’s actions.What’s more, they might not be alone in this attempt to curb OPEC’s clout on the global oil market. According to Bloomberg’s Carl Pope, Europe and Japan, previously reluctant to take part in any anti-OPEC projects, may now join in. The reason they are likely to join in is that unlike in previous oil price cycles, now there are alternatives to fossil fuels. Electrification is where OPEC may have to face off with a future oil buyers’ cartel. India, China, and Europe are all very big on EV adoption. Japan is a leader in battery manufacturing.If they set their minds to it, these four players could upend the oil market and effectively cripple OPEC. A recent surveysuggested that as many as 90 percent of Indian drivers were willing to switch to EVs if the government built the necessary charging infrastructure, reduced road taxes, and increased subsidies. Another survey identified price and range as additional roadblocks towards the mass adoption of EVs in India. Because of these challenges, New Delhi recently amended its ambitious goal of having an all-EV fleet on the roads of the country by 2030 to having 30 percent of the fleet electric. China, for its part, is the undisputed leader in global EV adoption: the country accounted for more than 50 percent of global EV sales last year in case you were thinking, “Wait, wasn’t that Norway?” However, this was in large part made possible by generous government subsidies for EV manufacturing. These subsidies are due to be wound downto 0 by 2020, and carmakers are already beginning to brace for a future without the support of the state. It’s safe to say it remains uncertain if the EV boom will continue after 2020.
Crude oil is sizzling; WTI price may hit $78 in the short term - Crude oil is turning into a hot commodity as prices are soaring on falling inventories and the Trump administration's warning to companies to cease buying Iranian oil. Oil prices traded lower in the first half of June, which was followed by huge gains in the second half. This month was a period of erratic global politics that injected a considerable amount of volatility and the stage is set for further geopolitical confrontation. Last month, OPEC oil ministers reached a deal to raise production quotas to add 600,000–800,000 barrels a day, effectively returning a third of the barrels that have been withheld since January 2017. OPEC ministers have agreed to a nominal production increase of a million barrels a day to be divided between cartel members and non-OPEC partners, including Russia, which together cut production last year by about 1.8 million barrels a day. That decrease eliminated inventories in developed countries by about 340 million barrels and returned total inventories to around their five-year average. The Saudis appear to have emerged as the winners from last week's meeting of OPEC, and the subsequent talks between OPEC and its allies in the deal to restrict output. The outcome of meetings seems to indicate that crude oil supply should rise by as much as 1 million bpd.
American "Consumers Held Captive" As WTI Crude Tops $75, Gas Prices Highest Since Nov '14 - For the first time since Nov 2014, WTI Crude futures front-month contract has topped $75. All of which means Trump better get back on the phone and ask for 3mm b/d from the Saudis as Americans are about to face a huge tax rise as gas prices at the pump are high and about to get higher...As RBC analyst Michael Tran writes in a report today, "retail gasoline is pricing the highest in years, but demand remains relatively firm, " because consumers are "held captive to the type of vehicle owned."This ensures that gasoline demand is less "price-elastic" than in previous comparable periods, but leaves the disposable income taking a bigger hit. And as OilPrice.com's Robert Rapier notes, the irony of this huge rally is that it was sparked by the announcement by OPEC that it would increase production.Oil prices had weakened over the past month following a call from President Trump for OPEC to increase production in response to rising oil prices. After rising above $70 per barrel in May, the price of West Texas Intermediate (WTI) had dropped back to $65/barrel leading up to OPEC’s June 22nd meeting.It was widely anticipated that the group would decide to bump output at the meeting. At the meeting’s conclusion, OPEC, in agreement with Russia, announced that it would increase production for the first time since implementing production cuts in November 2016.But WTI rallied by more than 4% following the announcement. Why? Because the market was underwhelmed by OPEC’s decision.
U.S. oil prices slip, but global prices sink as traders fret over potential for higher output --U.S. oil prices slipped on Monday marked a modest decline, finding some support from crude export disruptions in Libya and recent data showing tighter U.S. supplies. Brent prices, however, suffered a sharp loss as traders weighed expectations for higher global output. Crude had seen even sharper losses in early trading, stemming from a weekend tweet from President Donald Trump that talked about a big potential production increase from Saudi Arabia. August West Texas Intermediate crude on the New York Mercantile Exchange fell by 21 cents, or 0.3%, to settle at $73.94 a barrel, after trading as low as $72.51. September Brent dropped $1.93, or 2.4%, to $77.30 a barrel.Last week’s surge to fresh 3 1/2-year highs for the U.S. benchmark, which contributed to strong monthly, quarterly and first-half 2018 gains, was somewhat disconcerting, said Barnabas Gan, an economist at Overseas-Chinese Bank. He added that the language in Trump’s weekend tweet—which suggested that Saudi Arabia may increase output by 2 million barrels a day—left scope for wide interpretation. Donald J. Trump @realDonaldTrump: Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference...Prices to high! He has agreed! A senior Saudi Arabia official told The Wall Street Journal on Saturday that no specific promise had been made over production, but rather assurances were given that the country had the capacity to meet demand. A White House statement released that same evening backed off that tweet from Trump, according to reports. It said King Salman of Saudi Arabia had told the president that his country would increase oil production “maybe up to 2,000,000 barrels.” Saudi Arabia, OPEC’s swing producer, and Russia reached an agreement at a closely watched Vienna meeting last weekend to raise output less aggressively than had been anticipated.
Libya Stops Pumping Oil - Libya’s National Oil Corporation has declared force majeure on crude oil loadings from two oil terminals, which effectively removed 850,000 bpd from the country’s production, Libyan media report. “Despite our warning of the consequences and attempts to reason with the LNA General Command, two legitimate allocations were blocked from loading at Hariga and Zueitina this weekend. The storage tanks are full and production will now go offline,” NOC’s chairman Mustafa Sanalla said.Hariga and Zueitina, like the rest of the terminals in the Oil Crescent, are controlled by the Libyan National Army, which handed control over them to the Benghazi-based NOC. Both are affiliated with the eastern government, which is not recognized by the UN.On Saturday, the Benghazi-based NOC refused two loadings, one at Zuetina and one at Hariga, claiming the tankers waiting to load had not asked for its approval, which was now mandatory.The LNA has controlled the Oil Crescent ports since 2016, but last month its grip on them was challenged by other groups led by a Petroleum Facilities Guard commander who is wanted by the Tripoli authorities for the two-year blockade of the ports. Yet unlike in 2016, when it handed the ports to the Tripoli-based NOC, the LNA now passed control of the facilities to the Benghazi NOC, signaling that the divide in Libya between East and West is deepening instead of closing.
OPEC Losing Control After Libya Outages - Oil prices surged in early trading on Tuesday as the supply outages in Libya began to take center stage, but Saudi Arabia and Russia quickly moved to calm markets. The loss of 850,000 bpd nearly offsets all of what OPEC+ plans on adding to the market, although it remains to be seen how high Saudi Arabia plans on going unilaterally. For now, the oil market is looking tighter by the day, and Brent is within striking distance of $80 per barrel.. Saudi Arabia ramped up production in June ahead of the OPEC+ meeting, pushing the group’s overall output to 32.32 million barrels per day (mb/d), according to Reuters, an increase of 320,000 bpd from May. That puts OPEC’s production level at its highest point since January 2018. The increase came from a massive increase in production from Saudi Arabia, which pushed output close to a record high at 10.70 mb/d. The enormous increase of from May levels from Saudi Arabia was offset by outages in Libya and declines in Venezuela. “We are entering the second half of the year with a huge amount of uncertainty surrounding the supply side of the equation,” Tamas Varga of oil broker PVM, told Reuters. “Depending on your belief you could just as easily bet on $100 as $60 by the end of the year.” Over the weekend President Trump tweeted that OPEC would add 2 mb/d of new supply, a statement that confused the oil market. The White House had to walk back that comment, issuing a statement that said that the Saudi King merely told Trump that there was 2 mb/d of spare capacity that could be called upon if needed. Nevertheless, Trump’s tweet led to a dip in oil prices on Monday as traders tried to figure out if Saudi Arabia planned on adding more oil than expected. In early trading on Tuesday, however, it seemed that expectations of a wave of supply subsided, with traders refocusing on the outages in Libya and Canada. WTI and Brent jumped more than 1 percent in early trading before falling back again.
Oil settles higher in volatile pre-holiday session (Reuters) - Crude prices ended slightly higher on Tuesday after a volatile session in which the U.S. benchmark passed $75 a barrel for the first time in more than three years before turning negative and later recouping its losses. Oil rallied early in the session on supply concerns, then slid as traders booked profits ahead of the July Fourth holiday in the United States, and bet that global supply shortages would not persist as long as expected. Crude pared its losses late in the session, turning positive on market sentiment that supply disruptions would not resolve faster than previously expected. U.S. light crude settled up 20 cents at $74.14 a barrel, rebounding from a session low of $72.73 a barrel. In early trade, the contract rose to $75.27, a 3-1/2-year high. Brent crude was up 46 cents at $77.76 a barrel, after trading as low as $76.67 and as high as $78.85. In post-settlement trade, prices extended gains after the American Petroleum Institute said crude stockpiles had fallen more than expected last week. Stockpile data from the U.S. Energy Information Administration is expected on Thursday after a delay due to the July 4 holiday. The early gains came after Iran appeared to threaten to disrupt oil shipments from the Middle East Gulf if Washington pressed ahead with sanctions. U.S. crude rose above $75 a barrel for the first time since 2014. Prices retreated as some thought talk of supply disruptions might be overblown, said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut. He also said traders could be moving to liquidate bullish positions. Pressure to liquidate may have accelerated ahead of the U.S. holiday on Wednesday, said Tariq Zahir, managing member at Tyche Capital in New York. Traders said supply disruptions could be short-lived as OPEC and allied producers ramp up output.
Oil prices edge up as U.S. supply tightens, Iran sanctions loom - (Reuters) - Brent oil rose on Wednesday, driven higher by a threat from an Iranian commander and a drop in U.S. crude inventories for the second week in a row. The price rose above $78 a barrel after an Iranian Revolutionary Guards commander said he was ready to prevent regional crude exports if Iranian oil sales were banned by the United States. The most-active Brent LCOc1 futures contract for September delivery settled up 48 cents at $78.24 per barrel. U.S. crude futures CLc1 were up 19 cents at $74.33 a barrel, within sight of Tuesday’s 3-1/2-year high above $75 a barrel. The U.S. market will not have a settlement price due to the U.S. Independence Day holiday. Iranian President Hassan Rouhani appeared on Tuesday to threaten to disrupt oil shipments from neighbouring states if Washington continued to press all countries to stop buying Iranian oil. Looming U.S. sanctions on Iranian crude exports, force majeure in Libya and unplanned pipeline outages in Nigeria have been clouding the supply outlook despite rising output by the Organisation of the Petroleum Exporting Countries. “In an ideal world an increase in global or regional oil production would have downward pressure on prices. These are, however, no normal times as supply outages are almost weekly occurrences,” Crude inventories fell by 4.5 million barrels in the week to June 29 to 416.9 million, compared with analysts’ expectations for a decrease of 3.5 million barrels. Crude stocks at the Cushing, Oklahoma, delivery hub fell by 2.6 million barrels, API said. Crude stockpiles at oil storage facilities in Cushing have dropped after an outage at Syncrude Canada’s 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta.
Trump to OPEC: 'Reduce pricing now!' (Reuters) - U.S. President Donald Trump again accused the Organization of the Petroleum Exporting Countries of driving gasoline prices higher on Wednesday and urged the oil producer group to do more. “The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!” Trump wrote on Twitter. The Republican president has lashed out at OPEC in recent weeks. Rising gasoline prices could create a political headache for Trump before November mid-term congressional elections by offsetting Republican claims that his tax cuts and rollbacks of federal regulations have helped boost the U.S. economy. In a tweet on Saturday, Trump said Saudi Arabia had agreed to increase oil output by up to 2 million barrels, an assertion that the White House rowed back on in a subsequent statement. The leader of Saudi Arabia, OPEC’s biggest member, has assured Trump that the kingdom can raise oil production if needed and that the country has 2 million barrels per day of spare capacity that could be deployed to help cool oil prices to compensate for falling output in Venezuela and Iran. Trump has been complaining about OPEC at the same time that Washington is piling pressure on its European allies to stop buying Iranian oil. Iranian OPEC Governor Hossein Kazempour Ardebili said on Thursday that Trump had raised oil prices through his tweets. “Your tweets have increased the prices by at least $10. Please stop this method,” the Iranian oil ministry’s news agency, SHANA, quoted Kazempour as saying. Kazempour said Trump was trying to intensify tensions between Iran and Saudi Arabia. He also called on the United States to join world powers in a meeting with Iran in Vienna on Friday. Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in the Austrian capital to discuss how to keep the accord alive after the U.S. withdrawal from the pact. Iran has threatened to block oil exports through a key Gulf waterway in retaliation against any hostile U.S. action.
Iran’s OPEC boss says Trump’s tweets have added $10 to oil prices (Reuters) - U.S. President Donald Trump, who recently called on OPEC producers to help reduce oil prices, has raised prices through his tweets, Iranian OPEC Governor Hossein Kazempour Ardebili was quoted as saying by news agency SHANA on Thursday. “Your tweets have increased the prices by at least $10. Please stop this method,” the oil ministry news agency quoted Kazempour Ardebili as saying. Kazempour Ardebili said Trump was trying to intensify tensions between Iran and Saudi Arabia and he called on the United States to join world powers in a meeting with Iran in Vienna on Friday. Foreign ministers from the five remaining signatories of a nuclear deal between Tehran and world powers will meet Iranian officials in Vienna to discuss how to keep the accord alive after the U.S. withdrawal from the pact.
Russia Gets $63.5 Billion Windfall From OPEC Deal - Russia’s budget has received more than US$63.5 billion (4 trillion Russian rubles) in additional revenues thanks to the production cut deal between OPEC and non-OPEC nations led by Russia that boosted oil prices, Kirill Dmitriev, chief executive of the Russian Direct Investment Fund (RDIF), said in an interview with Russian television channel NTV. In May, the Russian finance ministry said that due to the oil price rally, Russia expects its oil and gas revenues to jump fivefold compared to the expected revenues set in its 2018 budget. Oil and gas exports account for around 40 percent of Russia’s federal budget revenues.
OPEC Production Jumps In June As Saudis Near Production Record - OPEC’s oil production in June increased by 320,000 bpd from May to stand at 32.32 million bpd, as the cartel’s biggest producer Saudi Arabia produced close-to-record volumes, according to a monthly Reuters survey tracking oil supply to the market. Saudi Arabia’s oil production in June surged by 700,000 bpd to 10.70 million bpd, very close to its highest-ever production of 10.72 million bpd from November 2016, a Reuters survey showed, in a clear sign that OPEC’s leader had started boosting production before the June 22 meeting and is making up for supply drops elsewhere within the cartel. Saudi Arabia interprets the vague OPEC statement from the June meeting to ease compliance rates as implying that there will be indirectly a reallocation of quotas within the cartel. The main Saudi rival in the Middle East, Iran, strongly disagrees that OPEC members should be allowed to make up for production losses in other nations, and publicly criticized Saudi Arabia for boosting production. According to the Reuters survey, the Saudi allies in the Gulf—the UAE and Kuwait—maintained steady production in June compared to May, so they have yet to increase production following the Saudi lead.
WTI/RBOB Slammed On Surprise Crude Build - API reported a significant crude draw yesterday and after last week's record US exports and biggest crude draw in two years, DOE reported a surprising crude build of 1.245mm barrels and sent WTI/RBOB tumbling. DOE:
- Crude +1.245mm (-5mm exp)
- Cushing -2.113mm (-2mm exp)
- Gasoline -1.505mm (-750k exp)
- Distillate +134k
Following last week's massive crude draw (biggest in 2 years) and API's 4.5mm draw, DOE reported “The acute shortage at Cushing is creating an additional headache,” Energy Aspects analysts say in note. “The priority for the physical market right now is to refill Cushing in August as we will reach tank bottoms at the hub in July”U.S. Weekly Canada Crude Imports at highest on record.All eyes were on US crude production once again to see if the Permian pipeline bottlenecks were still holding back output...and for the 3rd week in a row production was unchanged.
Doubts Grow Aramco IPO Will Ever Happen – WSJ -- Preparations for the public listing of Saudi Arabia’s state oil company, a centerpiece of the government’s plan to open its economy, have stalled, leaving government officials and people close to the process doubting that it will go forward at all. The initial public offering of Saudi Arabian Oil Co., better known as Aramco, was meant to be the cornerstone of the kingdom’s plan to be less reliant on oil. It would create the largest public company in the history of capital markets, an opportunity coveted by Wall Street’s biggest names.Yet doubts have crystallized in recent months, after two years of work to prepare Aramco for its debut. Saudi officials and people close to the process say the company and the country simply aren’t ready for an IPO that could raise $100 billion but also bring unprecedented scrutiny to the kingdom’s crown jewel. Representatives for the Saudi energy ministry and the government didn’t respond to questions. First proposed by Saudi Crown Prince Mohammed bin Salman in January 2016, the IPO was originally meant to be done last year. It has been pushed back several times and was most recently slated for next year.Until recently, despite the delays, work on the IPO had appeared to be progressing, if slowly. Aramco executives and outside advisers have become more vocal in recent months about telling Prince Mohammed about the problems with listing the company, government officials said.Saudi officials say they have determined that listing on a large stock exchange in New York, London or Hong Kong would carry too many legal risks, exposing Aramco to shareholder lawsuits, for example.
Oil Drops As WSJ Reports Aramco IPO "Almost Certainly Won't Happen" Last we heard from inside the kingdom, the Aramco IPO had been put on hold, with inside sources telling the FT that plans for the IPO had been temporarily shelved, and that the process for selecting a venue for listing the shares had been put off until at least 2019. Then there were rumors about a private sale directly to some of the world's sovereign wealth funds - which would cutting out the investment banker middlemen who've been salivating at the prospect of winning a piece of the world's largest IPO. But six months into 2018, with oil prices at their highest level in three-and-a-half years and President Trump pushing Saudi Arabia and the rest of OPEC to ramp up production to help quell rising crude prices, the Wall Street Journal has dropped what looks like a bombshell on the oil market. The Aramco IPO, which would've likely been the biggest offering in history given the company's valuation, is almost certainly not going to happen. According to the paper's inside sources, the death of the IPO has been all but officially announced. Furthermore, WSJ reported that the IPO would bring "unprecedented scrutiny" to the Kingdom's "Crown Jewel", according to Saudi officials. "Everyone is almost certain it is not going to happen," said a senior executive at Aramco, speaking of the IPO. Oil prices are sliding as expectations surrounding the offering had been one of the factors supporting crude prices.
Oil near 3-1/2-year high despite Trump demand that OPEC cut prices - Oil traded near its highest in 3-1/2 years on Thursday, boosted by potential disruptions to flows from Iran and the Middle East despite a fresh demand from U.S. President Donald Trump that OPEC cut prices. Continue Reading Below Brent crude futures were at $78.12 a barrel at 1050 GMT, down 12 cents. U.S. crude futures were up 32 cents at $74.46, within sight of Tuesday's 3-1/2-year high above $75. "If Trump continues to believe that OPEC are not doing enough, we would not rule out an SPR (Strategic Petroleum Reserve) release from the U.S., or possibly even export restrictions on petroleum products," ING said in a note. "However with plenty of uncertainty over Iranian supply, and the Syncrude outage in Canada, the market is likely to remain fairly well supported in the near term." Trump again on Wednesday accused the Organization of the Petroleum Exporting Countries of driving up fuel prices."The OPEC Monopoly must remember that gas prices are up & they are doing little to help," Trump wrote on his personal Twitter account. "If anything, they are driving prices higher as the United States defends many of their members for very little $'s." "This must be a two way street," he wrote, adding in block capitals, "REDUCE PRICING NOW!"
Oil slips as U.S. crude stockpiles show surprise build (Reuters) - Oil fell on Thursday after U.S. government data showed an unexpected build in crude oil stockpiles. U.S. crude futures fell $1.20 to settle at $72.94 a barrel, retreating from Tuesday’s 3-1/2-year high of over $75. Brent crude futures lost 85 cents to settle at $77.39 a barrel. U.S. crude stockpiles rose 1.3 million barrels last week, according to U.S. Energy Information Administration data. Analysts had expected a 3.5 million-barrel draw. [EIA/S] “Because it’s driving season, you expect a lot of crude to go through refineries right now - so that’s why we were looking for a draw,” On Thursday, The Wall Street Journal reported that public listing preparations of state-run Saudi Aramco have stalled. That may reduce the pressure on Saudi Arabia to keep oil prices high, Saudi Arabia has wanted to sell shares in Aramco to bring in foreign investment to diversify its economy, but legal concerns about listing in places like London or New York have presented complications. Inventories at Cushing, Oklahoma, the delivery point for U.S. crude futures, fell to their lowest level since December 2014. Flows into Cushing dropped following an outage at the 360,000 barrel per day (bpd) Syncrude facility in Alberta, which is expected to persist through July. “With those continued drawdowns at Cushing, we were approaching a situation where you could soon start to consider us nearing a shortage,” Kilduff said. The inventory report also showed an increase in imports, which “provided some relief...and showed that even with the Syncrude situation, all is not lost,” Kilduff said. Oil prices have been rocked by recent comments from President Donald Trump. On Wednesday, he accused the Organization of the Petroleum Exporting Countries of driving up fuel prices. OPEC, together with a group of non-OPEC producers led by Russia, reduced output in 2017 to prop up the market. Last month, the group agreed to lift production by about 1 million bpd to offset losses from Venezuela and Iran. Prices have risen as a result of Washington’s plans to reimpose sanctions against Iran, OPEC’s No. 3 producer, analysts said. On Wednesday, an Iranian Revolutionary Guards commander said Tehran might block oil shipments through the Strait of Hormuz. A blockade of the strait, through which roughly 30 percent of all seaborne oil travels, would have “dramatic consequences for global oil supply and an impact on prices that is almost impossible to put into figures,” Commerzbank said in a note.
Oil Falls Back On Saudi Supply Surge - Oil prices dipped on Thursday and in early trading on Friday following a disappointing report from the EIA, which showed an unexpected build in crude inventories. Meanwhile, the U.S.-China trade war began in earnest on Friday, raising concerns about a slowdown in demand. Finally, an increase in oil production from Saudi Arabia dragged down prices. U.S. tariffs on $34 billion worth of Chinese goods began on Friday, with retaliatory tariffs from China immediately implemented. China said the U.S. has now initiated the largest trade war in history. The escalation of the trade war is showing no signs of reaching a resolution, and it comes at a time when global trade is slowing down anyway, raising threats to global economic growth. And as China moves to put tariffs on U.S. crude, Chinese refiners are looking elsewhere for oil imports. China is expected to import around 400,000 bpd from the U.S. in July. Meanwhile, the EU is compiling a list of American goods for new tariffs. New reports surfaced recently suggesting that Saudi Arabia ramped up production in June, but the latest from Reuters pegs the figure at 10.5 million barrels per day, or an increase of 500,000 bpd from a month earlier. Saudi Arabia’s all-time record high stands at about 10.7 mb/d, and by all indications, Riyadh is planning to breach that threshold this month. President Trump issued several demands via twitter this week for more production, and the Saudis look set to comply. A dearth of investment in new sources of oil production could lead to a price spike, and investors who demanded capital discipline from oil companies may soon regret that position. “Investors who had egged on management teams to reign in capex and return cash will lament the underinvestment in the industry,” Sanford C. Bernstein & Co. wrote in a note. “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008.”
US Oil Rig Count Inches Higher As WTI Pops - Baker Hughes reported an increase in the number of active oil rigs in the United States today. The overall rig count increased by 5 rigs, according to the report, with all of that increase coming from oil rigs, the number of gas rigs stayed the same.The oil and gas rig count now stands at 1,052—up 100 from this time last year.Canada, for its part, gained 10 oil rigs for the week—after last week’s gain of 12 oil and gas rigs. After multiple weeks of significant gains, Canada’s oil and gas rig count is now up 7 year over year.Oil benchmarks went in different directions again on Friday afternoon, with WTI trading up and Brent trading down as fears of the escalating U.S.-Chinese trade war and increased production by Saudi Arabia and Russia pulled against concerns over supply disruptions from Venezuela and Libya as well as the looming sanctions on Iran. Saudi Arabia had earlier reported to OPEC that they had pumped 10.488 million bpd in June, up by 458,000 bpd from their self-reported figure for May, OPEC sources told Reuters. At 08:23 a.m. EDT today, WTI Crude was down 0.78 percent at $72.37, and Brent Crude traded down 1.23 percent at $76.44. At 11:39am EDT, the WTI benchmark had rallied and was trading up 0.88% (+$0.64) to $73.58—although still down week over week, while Brent traded down 0.47% (-$0.36) to $77.03 at that time—also down week over week.The steady upward climb that U.S. oil production has been on throughout 2018 appears to have leveled off at 10.900 million bpd, where it has hovered for four weeks now. At 6 minutes after the hour, WTI was trading up 1.14% at $73.77, with Brent trading down 0.30% at $77.16.
Crude Oil Prices Settle Higher But Can't Avoid Weekly Loss - – WTI Crude Oil prices settled higher Friday, despite data showing a ramp up in the number of U.S. oil rigs, signalling a potential expansion in domestic crude output.On the New York Mercantile Exchange crude futures for August delivery rose 1.2% to settle at $73.80 a barrel, while on London's Intercontinental Exchange, Brent fell 23 cents to trade at $77.16 a barrel.Oilfield services firm Baker Hughes reported on Friday that the number of U.S. oil drilling rigs in operation rose by 5 to 863 in the week to June 29. That comes on the back of two-straight weeks of falling rig counts. Crude oil prices were supported, however, by ongoing bets on a shortage in global crude supplies amid rising oil demand, the potential for a larger drop in Iranian crude exports – amid looming U.S. sanctions – and ongoing challenges in Venezuela's energy industry.Expectations for a shortage in global crude supplies come against the backdrop of rising Russian and Saudi output.The Saudis reportedly informed OPEC that they raised output by 458,000 barrels a day (bpd) in June, from the prior month, Reuters reported, citing OPEC.A monthly S&P Global Platts OPEC survey, meanwhile, showed Saudi Arabia pumped 10.39 million bpd in June, up from 10.01 million bpd in May – the highest Saudi production level since December 2016.Crude oil prices posted a weekly loss after suffering a hefty sell-off Thursday, when U.S. crude supplies unexpected rose as imports surged. Inventories of U.S. crude rose by 1.245 million barrels for the week ended June 30, confounding expectations for a draw of 5.20 million barrels, according to data from the Energy Information Administration (EIA).
Sanctions On Iran May Send Oil Prices Above $90 Next Year - According to Bank of America Merrill Lynch, oil prices will hit $90 a barrel by the second quarter of 2019, as Iranian oil barrels are removed from the market and other supply disruption risks threaten the tightening oil market.The United States signaled this week that it would look to take as much Iranian oil as possible out of the market with the renewed sanctions on Tehran.Although Saudi Arabia and Russia had OPEC and allies pledge last week to ease compliance rates, in other words to boost production by an unspecified number, production increases will make the global spare capacity thinner at a time of low inventories, setting the stage for higher oil prices in case of additional supply disruptions, analysts believe.“We are in a very attractive oil price environment and our house view is that oil will hit $90 by the end of the second quarter of next year,” Hootan Yazhari, head of frontier markets equity research at Bank of America Merrill Lynch, told CNBC.“We are moving into an environment where supply disruptions are visible all over the world… and of course President Trump has been pretty active in trying to isolate Iran and getting U.S. allies not to purchase oil from Iran,” Yazhari noted.“With inventories still declining and spare capacity uncomfortably low, there is very little cushion for any supply disruption caused by rising geopolitical risks,” ANZ bank told Reuters. Even before OPEC’s much-talked-about meeting last week, the International Energy Agency (IEA) expected—like many analysts—that there would be some sort of production increase. But even if the Iran and Venezuela supply gap is to be plugged, “the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption,” the Paris-based agency said in its Oil Market Report in mid-June.
Iran Accuses US Of Docking Chemical Weapons-Laden Ship In Persian Gulf - Multiple Russian and Middle East news sources are reporting new accusations by the Iranian military that that a US ship carrying chemical weapons has recently anchored in the Persian Gulf and in engaged in a "dangerous plot", though not naming the particular "Gulf state" territorial waters at which the ship docked. The accusation comes just as a major seven week US military exercise, Operation Nautical Horizon, has concluded in the Persian Gulf which involved the same military transport ship that decommissioned Syria's declared chemical weapons stockpiles. Iran's Press TV reported that senior Iranian military spokesman Brigadier General Abolfazl Shekarchi said the US Navy's MV Cape Ray vessel had docked at the coast of one of the Persian Gulf Arab countries after recently being escorted into the region by an American warship, and implied further that chemicals carried by the ship could be transferred to US-backed groups in Syria.“After suffering consecutive blows by the resistance front, the Americans have now resorted to dangerous ways to continue their presence in Iraq and Syria,” Shekarchi stated, according to Iranian state-run media. Press TV further cited the general as saying, "The news proves that chemical attacks in Iraq and Syria have been engineered and led by the Americans," and that, "The Western countries have used the alleged gas attacks in Syria as a pretext to target military positions inside the Arab country." He said:
Iran Threatens To Close Strait of Hormuz - - Iranian president Rouhani stated on Tuesday in Bern, Switzerland that his country could block the Strait of Hormuz for all Arab shipping traffic if Washington fully implements its zero oil export targets for Iran in the coming months.Rouhani, who is currently on a lobbying mission in Europe in an effort to salvage the JCPOA deal (the Iran nuclear deal) and mitigate U.S. sanctions, seems to be have been pushed by hardliners to increase threats against Iran’s neighbors.Rouhani, considered by European politicians to be a reformist, appears to be showing a hardline streak that is nearer the strategy of the country’s supreme leader, Ayatollah Khamenei. Khamenei has already been pushing for a direct confrontation with the U.S. and the Arab Alliance. Several hours after Rouhani made his statement, Major-General Qassem Soleimani, one of the leaders of the Iranian Revolutionary Guard Corps (IRGC), told the press that the IRGC is fully prepared to implement any action ordered by Rouhani or Khamenei. Soleimani, well-known for his direct involvement in the Syrian civil war and the set up of Iraqi Shi’a militias, has a reputation for taking strong and direct military action if needed. No direct threats were made, but the closure of the Strait of Hormuz, the main thoroughfare of the Arabian/Persian Gulf region, is of strategic importance to all. At present, according to the Energy Information Agency (EIA.gov), more than 17 million bpd of crude oil and products travel through the strait every day. If taking into account that all of Qatar’s LNG exports are also going through it, the importance is clear.
US Vows To Keep Gulf Waterway Open After Iran Threatens Blockade --Iranian President Hassan Rouhani suggested Iran could stop all regional gulf oil exports in retaliation for the US seeking to collapse the nuclear deal, and in response to aggressive new US sanctions. "The Americans have claimed they want to completely stop Iran's oil exports. They don't understand the meaning of this statement, because it has no meaning for Iranian oil not to be exported, while the region's oil is exported," the state-run website, president.ir, quoted Rouhani as saying. “The Americans say they want to reduce Iranian oil exports to zero... It shows they have not thought about its consequences,” Rouhani said. After the provocative Iranian statements, widely understood as a threat to impose military blockade on the world's most crucial oil choke point, spokesman for the US military's Central Command, Captain Bill Urban, told the Associated Press on Wednesday that US sailors and its regional allies "stand ready to ensure the freedom of navigation and the free flow of commerce wherever international law allows". Washington has issued an ultimatum to countries dealing with Iran: halt all imports of Iranian oil from Nov. 4 or face punitive US economic measures with no exemptions. Rouhani called these threats "crime and aggression" and an act of "self-harm" as the unwavering stance is “against U.S. national interests and the interests of other countries.” He said this while in Vienna attempting to rally European governments to stand against Trump's policies targeting Tehran. Previous threats by Iranian officials to possibly take the drastic action of blocking the the Strait of Hormuz — though once easily shrugged off as empty talk — are now coming to a head as the elite Islamic Revolutionary Guard Corps (IRGC) has thrown its full weight behind Rouhani's words, to which the Pentagon responded, issuing its firm response promising to keep the waterway open through military action if need be.
Iraq executes 13 and orders hanging of hundreds more amid fears of Isis resurgence - Iraq has put to death 13 people convicted of terrorism offences hours after the prime minister, Haider al-Abadi, ordered the execution of hundreds of prisoners on death row in retaliation for the killing by Isis of eight members of the security forces.The hangings are aimed at quelling public anger over signs that Isis is re-emerging as a threat after the group showed eight captives, who were badly bruised and looked as if they had been severely beaten, on a video last weekend and said that they would be killed unless Sunni women prisoners were released by the government within three days. The government says that autopsies on the bodies of dead men, six of whom belonged to the logistics department of the paramilitary Hashd al-Shaabi, or Popular Committees, showed that they were shot and killed before this deadline expired. An Iraqi government official, speaking to The Independent just before the discovery of the bodies, said that Isis fighters targeting the main Baghdad-Kirkuk road were based in the rugged Hamrin mountains, a traditional Isis stronghold.Isis suicide bombers based in the Syrian border area are continually trying to reach Baghdad but “so far they have failed”. He added that Iraqi security forces now have good intelligence about Isis plans and personnel after luring back to Iraq five senior Isis leaders it had captured and interrogated. It appears Isis is keen to revert to guerrilla war similar to that which it waged successfully before its explosive expansion when it captured Mosul in 2014, but so far it has had only limited success.
Son Of ISIS Leader Reported Killed In Suicide Attack - - While his father has been declared dead many times, only to miraculously reemerge in defiance of western (and Russian) media reports, Hudhayfah al-Badri, the son of ISIS leader Abu Bakr al-Baghdadi, was recently killed in an "Inghimasi" operation in Homs province while fighting against Russian and Syrian forces, according to the Telegraph, which cited an official ISIS announcement. An "Inghimasi" attack is essentially a suicide mission where ISIS soldiers fight for as long as they can until they are either gunned down, or detonate suicide vests as a last stand.The statement announcing his death was circulated on Telegram, a popular chat app that's also regularly used for spreading terrorist propaganda."The son of the Caliph Abu Bakr al-Baghdadi was killed in the "Nasiriyah" at the hotspot location in the state of Homs," the ISIS statement said. According to Al Arabiya, the term "Nasiriyah" refers to the Alawite sect, of which Syrian leader Bashar al-Assad is a member. Badri is believed to have been born in 2000 to an Iraqi woman named Asmaa Fawzi Mohammed al-Kubaisi, which would make him 18 at the time of his death. In a photograph released by ISIS, he can be seen as a teenager holding an assault rifle, although that image may have been digitally altered. The ISIS statement didn't say when Badri was killed. Badri was born in the Iraqi City of Samarra before his father became a senior al-Qaeda leader. Al Baghdadi is believed to have at least four other children.
Israel Demolishes Palestinian Bedu Community Near East Jerusalem - Israeli forces on Wednesday demolished a Palestinian Bedouin community near East Jerusalem in the occupied West Bank.“Military bulldozers, backed by Israeli forces, stormed the Abu al-Nawwar Bedouin community at dawn and demolished ten Palestinian homes and livestock barracks,” Daoud Jahaleen, a spokesperson for the community, told Anadolu Agency.He said the community is home to 687 Palestinians, 65% of them are children.In February, Israeli bulldozers razed the only school in the Bedouin community, which is surrounded by two Israeli settlements, Ma'ale Adumim and Kedar.For years, the Israeli government has tried to dismantle the Abu al-Nawwar community to make way for its massive E1 settlement project in East Jerusalem.
Israel Poised For Complete Annexation Of West Bank, UN Warns -- Just prior to a United Nations Human Rights Council meeting on the Israeli-Palestinian conflict this week, a UN legal expert has declared that Israel is moving closer to formal annexation of the West Bank. “After years of creeping Israeli de facto annexation of the large swathes of the West Bank through settlement expansion, the creation of closed military zones and other measures, Israel appears to be getting closer to enacting legislation that will formally annex parts of the West Bank,” UN official Michael Lynk said. Lynk's warning was posted on the web site of the UN Office of the High Commissioner for Human Rights (UNHRC) — the rights monitoring body that both the United States and Israel are boycotting, with the US recently stunning the council by announcing its pullout last month, citing a general anti-Israel bias. The UN statement highlighted Israeli expansion: “This would amount to a profound violation of international law, and the impact of ongoing settlement expansion on human rights must not be ignored,” Lynk continued. “This is my third mission to the region since I assumed the mandate in May 2016, and the reports I received this week have painted the bleakest picture yet of the human rights situation in the Occupied Palestinian Territory,” he said after returning from an information gathering mission to the region. The statement also highlighted restriction on Palestinian movement, night raids and the lack of building approvals, and what the UNHRC has called a creeping de facto annexation of West Bank territory. Lynk will deliver a full and final presentation of his findings before the UN General Assembly 73rd session in October — this as a formal UN investigation into the recent shootings of hundreds of Palestinian protesters in Gaza by Israeli security forces is simultaneously underway, an inquiry which was also condemned by the United States and Israel in a May vote.
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