oil prices fell for the first time in 5 weeks on a pair of reports showing growing US oil stockpiles and on a broad based selloff in financial markets globally...after hitting a 4 year high and closing 1.3% higher at $74.34 a barrel last week, prices for US crude oil contracts for November delivery recovered from a sharp morning drop to end just 5 cents lower at $74.29 a barrel on Monday, after a new report showed a small drop in oil inventories at the key US storage hub at Cushing, Oklahoma, and as investors bet that a new Chinese monetary stimulus would stimulate crude demand...prices then rose 67 cents to $74.96 a barrel on Tuesday, on evidence of falling Iranian crude exports and on oil production shutdowns in the Gulf of Mexico due to Hurricane Michael...however, with a major stock market selloff gathering steam on Wednesday, oil prices ignored those concerns and followed equities lower, closing down $1.79 at $73.17 a barrel, and extended those losses in post-settlement trade after the American Petroleum Institute reported that US crude inventories rose by 9.7 million barrels over the prior week...oil prices continued to tank on Thursday, falling $2.20 to $70.97 a barrel, as stock markets continued falling and as the EIA confirmed a much larger-than-expected increase U.S. crude inventories...as equity markets steadied and then rose on Friday, oil prices followed stocks higher, rising 37 cents to $71.34 a barrel, even as the International Energy Agency trimmed its forecasts for world oil demand growth for this year and next...US crude prices thus ended with a loss of 4% on the week, while Brent crude for December, the international benchmark, recovered from a Friday morning drop of over a dollar to end up 17 cents at $80.43 a barrel, still with a loss of 4.4% for the week....
natural gas prices for November, meanwhile, jumped 12.4 cents on Monday to $3.267 per mmBTU as Hurricane Michael approached the Gulf Coast and the National Weather Service called for a likelihood of below-average temperatures across much of the US in their 6 to 10 day outlook....gas prices then traded as high as $3.368 per mmBTU on Tuesday, the highest natural gas price since the January cold snap, but ended the day a tenth of a cent lower...after a 1.8 cent increase on Wednesday, natural gas prices then fell 6.2 cents on Thursday and 6.1 cents on Friday to end the week just a half a percent higher at $3.161 per mmBTU, as the natural gas storage reported showed a seasonally large injection in line with expectations...
this week's natural gas storage report from the EIA for week ending October 5th indicated that natural gas in storage in the US rose by 90 billion cubic feet to 2,956 billion cubic feet during that week, which left our gas supplies 627 billion cubic feet, or 17.5% below the 3,583 billion cubic feet that were in storage on October 6th of last year, and 607 billion cubic feet, or 17.0% below the five-year average of 3,563 billion cubic feet of natural gas that are typically in storage after the first week of October....this week's 90 billion cubic feet increase in natural gas supplies was on target with market expectations that clustered in the upper 80s to lower 90s billion cubic feet range, and also matched the 90 billion cubic foot average of natural gas that have typically been added to storage during the first week of October in recent years, but was still only the 4th average or above average inventory increase in the past fourteen weeks...natural gas storage facilities in the Midwest saw a 35 billion cubic feet increase this week, reducing their supply deficit to 13.2% below normal, while supplies in the East increased by 27 billion cubic feet and are now only 9.1% below normal for this time of year...meanwhile, the South Central region saw a 25 billion cubic feet increase in their supplies, as their natural gas storage deficit decreased to 25.0% below their five-year average, but there was no addition to storage in the Pacific region, where natural gas supplies are now 22.9% below normal for this time of year....
back at the beginning of September, we forecast that US natural gas supplies would start this winter at a 15 year low, & maybe even lower than that, based on the level of gas in storage and the ongoing additions at that time...two weeks ago, we confirmed that outlook, as US natural gas supplies seemed certain to end September at their lowest in 15 years....this week, the October Short-Term Energy Outlook from the EIA forecast that U.S. natural gas inventories would reach 3,263 billion cubic feet by the end of October, the lowest since 2005...so we'll take a quick look at the data to see how we differ...
as we mentioned earlier, natural gas supplies as of October 5th were at 2,956 billion cubic feet, so to hit the EIA's target, we'd have to add 77 billion cubic feet of natural gas a week to storage through October, which is certainly possible but becomes increasingly difficult as the the weather gets colder and northern parts of the US begin to burn gas for heat....checking the historical natural gas storage archive files (xls), we find that natural gas supplies were at 3229 billion cubic feet on November 4th of 2005, and continued to rise to 3282 billion cubic feet from there, as apparently the second week in November of that year was exceptionally warm...so to truly better 2005 pre-winter storage levels, we'd not only have to add 77 billion cubic feet per week through October, we'd also have to add 20 billion cubic feet of gas to storage during the first full week of November....on the other hand, 2003 natural gas supplies only rose as high as 3187 billion cubic feet by November 7th, before they began falling as the heating season began...to better that, we'd only have to add 58 billion cubic feet to storage weekly through November 2nd, which considering the two week forecast for colder than normal weather for much of the country, now looks much more doable...so we'll stick with our forecast for natural gas supplies to start this winter at a 15 year low...
The Latest US Oil Data from the EIA
this week's US oil data from the US Energy Information Administration, covering the week ending October 5th, showed that despite lower oil imports and higher oil exports, we were able to add oil to our commercial crude supplies for the third time in eight weeks, partly because of a slowdown in domestic refining...our imports of crude oil fell by an average of 658,000 barrels per day to an average of 7,397,000 barrels per day, after rising by an average of 163,000 barrels per day the prior week, while our exports of crude oil rose by an average of 853,000 barrels per day to an average of 2,576,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,821,000 barrels of per day during the week ending October 5th, 1,421,000 fewer barrels per day than the net of our imports minus exports during the prior week, and our lowest net imports since July 1991...over the same period, field production of crude oil from US wells was reportedly 100,000 barrels per day higher than last week at 11,200,000 barrels per day, which means that our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,021,000 barrels per day during this reporting week...
meanwhile, US oil refineries were using 16,239,000 barrels of crude per day during the week ending October 5th, 352,000 barrels per day less than the amount of oil they used during the prior week, while over the same period 669,000 barrels of oil per day were reportedly being added to the oil that's in storage in the US....hence, this week's crude oil figures from the EIA would seem to indicate that our total working supply of oil from net imports and from oilfield production was 887,000 fewer barrels per day than what refineries reported they used during the week plus what oil was added to storage....to account for that disparity between the supply of oil and the consumption or new storage of it, the EIA needed to insert a (+887,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the daily 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"...with unaccounted for crude oil as large a factor as that, we have to figure one or more of this week's oil metrics is in error by a statistically significant amount (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 slipped to an average of 7,797,000 barrels per day, still 5.3% more than the 7,407,000 barrel per day average that we were importing over the same four-week period last year....the net 669,000 barrel per day increase in our total crude inventories included an 855,000 barrel per day increase in our commercially available stocks of crude oil and a 187,000 barrel per day decrease in the amount of oil in our Strategic Petroleum Reserve, likely part of a sale of 11 million barrels from those reserves to Exxon et al that closed five weeks ago....this week's crude oil production was reported as increasing by 100,000 barrels per day to 11,200,000 barrels per day because of a rounded 100,000 barrels per day increase to 10,700,000 barrels per day in the rounded output from wells in the lower 48 states, while a 4,000 barrels per day increase to 486,000 barrels per day in oil output from Alaska was not enough to impact the national total, which is now being rounded to the nearest 100,000 barrels per day....last year's US crude oil production for the week ending October 6th was at 9,480,000 barrels per day, so this week's rounded oil production figure was roughly 18.1% above that of a year ago, and up 32.9% from 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 88.8% of their capacity in using 16,239,000 barrels of crude per day during the week ending October 5th, down from 90.4% of capacity the prior week, but still a normal utilization rate as we head into the refinery maintenance season....the 16,239,000 barrels per day of oil that were refined this week were fractionally below the 16,258,000 barrels of crude per day that were processed during the week ending October 6th 2017, when US refineries were operating at 89.2% of capacity, and thus only the 2nd time in the past 19 weeks when our refinery throughput was not at a record for the date in question...
with the decrease in the amount of oil being refined this week, gasoline output from our refineries was likewise lower, decreasing by 239,000 barrels per day to 9,711,000 barrels per day during the week ending October 5th, after our refineries' gasoline output had increased by 118,000 barrels per day during the week ending September 28th...with the lower output, our gasoline production during the week was thus fractionally lower than the 9,741,000 barrels of gasoline that were being produced daily during the same week last year...meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by just 1,000 barrels per day to 5,028,000 barrels per day, after that output had increased by 34,000 barrels per day the prior week....hence, this week's distillates production was still 1.3% higher than the 4,964,000 barrels of distillates per day that were being produced during the week ending October 6th 2017, as refineries continue to catch up with this summer's distillates shortfall....
even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week still rose by 951,000 barrels to 236,172,000 barrels by October 5th, the 15th increase in the past 33 weeks, a period encompassing the spring and summer weeks of higher consumption when gasoline supplies usually trend lower....however, part of the reason our supplies of gasoline rose this week was because of a 203,000 barrel per day adjustment to correct for the imbalance created by the blending of fuel ethanol and motor gasoline blending components, as the amount of gasoline supplied to US markets fell by 24,000 barrels per day to 9,102,000 barrels per day, after rising by 115,000 barrels per day the prior week, while our exports of gasoline rose by 312,000 barrels per day to an October record high 1,029,000 barrels per day, and while our imports of gasoline fell by 20,000 barrels per day to 693,000 barrels per day....with this week's increase, our gasoline inventories are again at a seasonal high, 6.7% higher than last October 6th's level of 221,426,000 barrels, and roughly 9.8% above the 10 year average of our gasoline supplies for this time of the year...
meanwhile, with our distillates production essentially unchanged, our supplies of distillate fuels were somewhat lower, decreasing by 2,666,000 barrels to 133,465,000 barrels during the week ending October 5th, their third straight decrease after 8 weeks of increases...our distillates supplies decreased because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 752,000 barrels per day to a record high 4,629,000 barrels per day, while our exports of distillates fell by 597,000 barrels per day to a twenty week low of 967,000 barrels per day, and while our imports of distillates rose by 25,000 barrels per day to 4,629,000 barrels per day....after this week's decrease, our distillate supplies ended fractionally lower than the 133,959,000 barrels that we had stored on October 6th, 2017, and roughly 5.7% below the 10 year average of distillates stocks for this time of the year...
finally, despite higher oil exports and lower oil imports, our commercial supplies of crude oil increased for the 3rd week in a row and for the 19th time in 2018, as they rose by 5,987,000 barrels during the week, from 403,964,000 barrels on September 28th to 409,951,000 barrels on October 5th...that increase means that our crude oil inventories are again above the five-year average of crude oil supplies for this time of year, and roughly 20.6% above the 10 year average of crude oil stocks for the end of September, with the disparity arising because it wasn't early 2015 that our oil inventories first rose above 400 million barrels...but since our crude oil inventories had been falling through most of the past year and a half, our oil supplies as of October 5th were still 11.3% below the 462,216,000 barrels of oil we had stored on October 6th of 2017, 13.5% below the 473,958,000 barrels of oil that we had in storage on October 7th of 2016, and 6.1% below the 436,590,000 barrels of oil we had in storage on October 9th of 2015...
OPEC's Monthly Oil Market Report
next we're going to review OPEC's October Oil Market Report (covering September OPEC & global oil data), which was released on Thursday and is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 58 of that report (pdf page 70), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...
as we can see on this table of official oil production data, OPEC's oil output increased by 132,000 barrels per day to 32,761,000 barrels per day in September, from their August production total of 32,629,000 barrels per day....however, that August figure was originally reported as 32,565,000 barrels per day, so OPEC's August output was therefore revised 64,000 barrels per day higher with this report (for your reference, here is the table of the official August OPEC output figures as reported a month ago, before this month's revisions)...as you can tell from the far right column above, increases of 108,000 barrels per day in the oil output from Saudi Arabia and 103,000 barrels per day in the oil output from Libya were the major reasons for this month's increase, more than offsetting the decrease of 150,000 barrels per day in Iranian output...however, excluding new member Congo, OPEC's August output of 32,761,000 barrels per day was still 281,000 barrels per day below the 32,730,000 barrels per day revised quota they agreed to at their November 2017 meeting, mostly due to the big drop in Venezuelan output, which has also been impacted by US sanctions...
the next graphic we'll look at shows us both OPEC and global monthly oil production on the same graph, over the period from October 2016 to September 2018, and it's taken from the page numbered 59 (pdf page 71) of the October OPEC Monthly Oil Market Report...on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the millions of barrels per day of global output shown on the right scale...
OPEC's preliminary estimate indicates that total global oil production rose by 230,000 barrels per day to a rounded record high 99.0 million barrels per day in September, after August's total global output figure was revised down by 110,000 barrels per day from the 98.88 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by 100,000 barrels per day in September after that revision, with Latin American countries the major contributor to the non-OPEC increase....global oil output for September was also 2.72 million barrels per day, or 2.8% higher than the 96.28 million barrels of oil per day that were being produced globally in September a year ago (see the October 2017 OPEC report online (pdf) for the originally reported year ago details)...with the September increase in OPEC's output following the upward revision to their August output, their September oil production of 32,761,000 barrels per day represented 33.1% of what was produced globally during the month, up 0.1% from their 33.0% of global share in August, which had originally been reported as a 29.9% share....OPEC's September 2017 production was reported at 32,748,000 barrels per day, which means that the 14 OPEC members who were part of OPEC last year, excluding new member Congo, are still producing 299,000 fewer barrels per day of oil than they were producing a year ago, during the ninth month that their production quotas were in effect, with a 693,000 barrel per day decrease in output from Venezuela and a 380,000 barrel per day decrease in output from Iran from that time responsible for the cartel's output drop...
despite the 230,000 barrel per day increase in global oil output in September, elevated summertime demand meant that we again saw a deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...
the table above comes from page 32 of the October OPEC Monthly Oil Market Report (pdf page 42), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line of the fourth column, we've circled in blue the figure that's relevant for September, which is their revised estimate of global oil demand during the third quarter of 2018...
OPEC's estimate is that during the 3rd quarter of this year, all oil consuming regions of the globe have been using 99.35 million barrels of oil per day, which was a downward revision by a rounded 0.04 million barrels of oil per day from their prior oil consumption estimate for the quarter (see demand revisions circled in green above)....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, the world's oil producers were producing 99.0 million barrels per day during September, which means that there was a still a shortfall of around 350,000 barrels per day in global oil production vis-a vis the demand estimated for the month...
while global demand for the 3rd quarter was reportedly revised 0.04 million barrels per day lower, that's a rounded change from the 99.38 million barrels of oil per day that was reported last month, or 0.03 million barrels less than the rounded figure we used last month...meanwhile, total global oil output for August was revised down by 110,000 barrels per day at the same time, which means that the global shortfall of 500,000 barrels per day that we had figured for August last month should thus be revised to 580,000 barrels per day...also a month ago, we estimated there was a shortfall of around 990,000 barrels per day in global oil production vis-a vis the 99.38 million barrels per day demand then reported for July, so we have to revise our July oil shortfall figure to 960,000 barrels per day to account for the downward revision in demand....
in addition, last month we estimated there was a shortfall of around 60,000 barrels per day in global oil production vis-a vis the demand in June, a shortfall for May of 500,000 barrels per day, and a shortfall in April of 310,000 barrels per day... but as we see in the green ellipse above, oil demand for the 2nd quarter was revised 10,000 barrels per day lower, so our revised global oil shortfalls for the 2nd quarter months will thus now be 50,000 barrels per day for June, 490,000 barrels per day for May, and 300,000 barrels per day for April...
while global oil demand figures for the second quarter were revised lower, you can also see circled in green that global oil demand figures for the first quarter of 2018 were revised 40,000 barrels per day higher, which means that our previously recomputed oil surplus for the first quarter of 2018 will also have to be recomputed again....since we had last figured a global oil output surplus of 60,000 barrels per day for March, a surplus of 240,000 barrels per day for February, and a surplus of 80,000 barrels per day for January, that 40,000 barrels per day revision to demand means that our new figures will show a surplus of just 20,000 barrels per day for March, a surplus of 200,000 barrels per day for February, and a surplus of 40,000 barrels per day for January...
finally, by totaling up these 9 monthly revised estimates of surplus or shortfall, we find that for the first nine months of 2018, global oil demand exceeded production by roughly 76,470,000 barrels, actually a comparatively small net oil shortfall that is the equivalent of roughly 18.5 hours of global oil production at the September production rate...
This Week's Rig Count
US well drilling rig activity increased for the second time in 3 weeks during the week ending October 12th, but it still remains off the pace it was at the end of May, as the steady increases in drilling for oil we saw with higher oil prices during the first part of this year have stalled, with the backlog of uncompleted oil wells increasing monthly while oil futures' prices remained in backwardation....Baker Hughes reported that the total count of rotary rigs running in the US increased by 11 rigs to 1063 rigs over the week ending on Friday, which was also 135 more rigs than the 928 rigs that were in use as of the October 13th report of 2017, but was still down from the shale era 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 increased by 8 rigs to 869 rigs this week, their first increase in four weeks, which was 126 more oil rigs than were running a year ago, while it was 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 rose by 4 rig to 193 rigs, which was also 8 more than the 185 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas rigs that were deployed on August 29th, 2008...on the other hand, 1 of the 2 rigs that were categorized as "miscellaneous" was shut down this week, with the one remaining still up from a year ago, when no such "miscellaneous" rigs were deployed ...
offshore drilling in the Gulf of Mexico was unchanged from last week at 22 rigs, which was up from the 20 Gulf of Mexico rigs active a year ago...in addition, a single rig continued to drill offshore from Alaska this week, so the total national offshore count is at rigs, up by 3 from last year's total of 20 offshore rigs, as a year ago there was no offshore drilling other than in the Gulf.....
the count of active horizontal drilling rigs was up by 8 rigs to 927 horizontal rigs this week, which was also 141 more horizontal rigs than the 786 horizontal rigs that were in use in the US on October 13th 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 was up by 4 rigs to 70 directional rigs this week, which was still down from the 79 directional rigs that were in use during the same week of last year....on the other hand, the vertical rig count was down by 1 rig to 66 vertical rigs this week, which was nonetheless up from the 63 vertical rigs that were operating on October 13th 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 October 12th, the second column shows the change in the number of working rigs between last week's count (October 5th) and this week's (October 12th) count, the third column shows last week's October 5th active rig count, the 4th column shows the change between the number of rigs running on Friday and those on the equivalent weekend 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 13th of October, 2017...
as you can see, this week's increases were concentrated in Texas and New Mexico, where 3 of the new Permian basin rigs were located, as drilling in Texas Oil Districts encompassing the Permian only increased by 1 rig...and as you can also see, with an 11 rig increase this week, the basin count table this week is missing data on 9 rigs, as 6 oil directed rigs and 3 targeting natural gas were started up in basins not tracked separately by Baker Hughes...the other natural gas rig addition was in the Arkoma Woodford of Oklahoma, so everything else you see above references oil rigs...meanwhile, other than the changes in activity shown in the major producing states table above, Florida and South Dakota both saw their only active rig shut down this week, drilling activity which in both cases was relatively short lived; last year, neither state had any drilling during the last half of 2017...
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Marijuana legalization pushed by Ohio's third-party governor candidates - Dayton Daily News — Republican Mike DeWine and Democrat Rich Cordray — who together have held public office for more than 60 years — are flooding the airwaves with TV ads and live debates. Meanwhile, Ohio voters will notice two other names on the ballot for governor: Libertarian Party of Ohio nominee Travis Irvine and Green Party nominee Constance Gadell-Newton. Travis Irvine, 35, of Bexley is a self-employed filmmaker and journalist who worked on the 2012 and 2016 presidential campaigns of Libertarian Gary Johnson. He said he wants to give voters a choice beyond the “duopoly” of the two major parties and also represent the interests of millennials. If elected governor, Irvine said he would expand the nascent medical marijuana program, drop many of its regulations and push for legislation to fully legalize marijuana statewide by 2022. Marijuana legalization, he says, would go a long way toward solving the deadly opiate crisis gripping Ohio, giving people the option to use marijuana instead of narcotics. Irvine also said he supports criminal justice reforms that would put non-violent, low-level drug offenders into treatment programs instead of prisons — a move he claims would save $500 million a year. He opposes expanded Medicaid, which currently helps pay for drug treatment for tens of thousands of Ohioans, and instead says savings from the prison system should be used for treatment programs. He opposes all gun control, including the “red flag” bill proposed by Republican Gov. John Kasich that would allow for a court order to remove weapons from individuals who appear to be a danger to themselves or others. Constance Gadell-Newton, 38, is a Columbus-based attorney practicing in the areas of criminal defense and elections. Gadell-Newton also favors marijuana legalization, but if elected she says she would also push for an immediate moratorium on fracking and injection wells in oil and gas exploration, boosting the minimum wage to $15 an hour, and a plan for offering universal health care to all Ohioans. In addition, she said, she would move to convert the state to all-green energy sources by 2035, make Ohio an immigration “sanctuary” state and change the k-12 school funding formula so that it is less reliant on property taxes. When it comes to guns, Gadell-Newton said she favors what she called reasonable restrictions, such as a ban on bump stocks and high-capacity magazines and improvements in the background check system. She noted she would want to see the details of a red flag law before taking a position. On the opioid crisis — a focus of all the governor candidates this year — her plan includes a push for universal health care, she said, that would involve expanding mental health and addiction treatment services. “We cannot incarcerate our way out of this,” she said. Gadell-Newton said she got involved in the Green Party because she fundamentally agrees with its 10 key values, including diversity, feminism and non-violence.
Lordstown's 940-MW Gas-fired CC Plant goes into Operation - Long a hub for making quality Chevrolets, the Ohio village of Lordstown is now home to large-scale, natural gas-fired power generation. The 940-MW Lordstown Energy Center announced this week it had begun commercial operation. The facility, which cost nearly $900 million to build, uses locally sourced natural gas to generate electricity serving about 850,000 households, according to the release. The prolific Utica Shale lies beneath much of Ohio and other states, The nearby Marcellus Shale is the nation’s most productive shale gas play, but the Utica delivers close to 9 million cubic feet per day, according to reports. “We are excited to serve customers with this state-of-the-art, environmentally friendly facility,” said Robert Haley, LEC operations director. “Our team is well-equipped and highly trained, and I’m pleased that we have begun 24/7 operations. “We’re very grateful for the support we’ve received from our investors, employees, suppliers, local and state government leaders and the residents of our community, including hundreds of construction workers,” Haley added.
Utica Shale Academy enrollment on the rise — Enrollment in the Utica Shale Academy is increasing, members of the governing board of the Jefferson County Educational Service Center board learned Wednesday. Tony Delboccio, principal of the Salineville campus, said enrollment is up at the academy’s locations in Salineville and Columbiana. “It’s good,” he said. “There are a a couple of days we are packed in there like sardines, but it’s a good thing.” Delboccio reported the enrollment in the schools is up to 49 students at the Salineville campus and 14 at the Columbiana campus. He said the school now is providing the students with lunches. “They were spending $20 at the vending machines and it was taking away from instruction time,” Delboccio said. He also told the board there is more than $55,000 worth of rollover funds that can be used for the new school year. The academy, which is sponsored by the educational service center, provides curricula required by the Ohio Department of Education, including a customizable digital curriculum allowing for acceleration or remediation along with flexible scheduling and safety certification courses, according to officials. Academy graduates receive a high school diploma, certificates and college credit options offered through Eastern Gateway Community College.
Reliable One Resources Announces Purchase of Ohio Disposal Well Facility --- Reliable One Resources, Inc. today announced the purchase of an existing, operating, water disposal and injection facility in Athens County, Ohio, a key milestone in the company’s strategy to collect and treat produced and flowback water for oil and gas operators throughout the United States. The purchase was made by Reliable One’s wholly-owned Reliable Enterprises, Inc. subsidiary, which does business in the state as Reliable Enterprises Ohio, Inc.The Athens County facility has current contracts with oil and gas producers and water haulers in the Marcellus Shale region. As a result, an existing supply of water is already committed to the site, and operations at the facility will be maintained throughout the ownership change. Existing management has agreed to stay on to ensure a seamless transition with uninterrupted operations at the site.The location of the facility is considered ideal due to its proximity to operators in the Marcellus Shale as well as those in the Utica Shale and adjoining oil and gas producing areas.Near-term plans for the facility include expanding water storage with the installation of additional tanks, which is projected to increase capacity by 30%, followed by the drilling of a second well that will allow for even faster processing of incoming water supplies. The company’s broader operational plan includes securing larger amounts of produced and flowback water for delivery to the Athens County facility as well as for processing at Reliable One’s future water recycling facility in the Marcellus region. To that end, Reliable One also expects to complete the pending purchase of multiple trucking companies that currently haul produced and flowback water from Marcellus-area oil and gas operations.
Ohio Residents Fed Up With Fracking Wastewater - Much of the wastewater from Pennsylvania’s fracking industry is trucked across the border to Ohio. Last year, Pennsylvania and West Virginia contributed nearly half of the more than a billion gallons of frack waste that were injected into underground wells in Ohio. Residents in at least one county say they’ve had enough. Michelle Garman remembers News Years Eve 2011, when a 4.0-magnitude earthquake shook nearby Youngstown, Ohio. Around a dozen smaller quakes followed. The state determined that the quakes were caused by an injection well. And one in New Castle, Pennsylvania was linked to fracking as well. The well believed to have caused the Youngstown quakes has been closed permanently. She didn’t know much about fracking then, let alone frack waste injection wells. But Garman’s view changed in 2013 when an injection well was built on the property next door. “Where your looking at tanks and cement and fencing, it was trees and deer and turkey. And blue jays…and I never see them anymore,” she said. Garman describes big trucks carrying chemical-laced wastewater that squeal into the site at all hours. She can hear the pump from her yard. And Garman fears for her family. “How does it affect our health, my son’s health?” she wondered. “I mean, it is toxic. Plain and simple, that’s poison that they’re pumping into the ground.” Garman says her concerns didn’t get much response from the Ohio Department of Natural Resources (ODNR), the agency with authority over injection wells. In Ohio, there’s no local control of the oil and gas industry. And few leaders in her town would criticize the local company, Kleese Development Associates, that built the well next to her property. Then, in April of 2015, a waste oil spill caused a slew of dead animals and a polluted nearby wetlands. It was caused by another injection well owned by Kleese. Garman says neighbors contacted her for help. “People were scared,” she said. “[The were asking], ‘can I drink the water, can I bathe my children in it, can I cook with it?” On a recent evening, leaders from townships in Trumbull County gathered at the gazebo in the Brookfield town square. Brookfield Township trustee Gary Lees coached people on how to send letters to their representatives in Columbus asking them to consider legislation that would stop more injection wells in Trumbull County. Trumbull County already has 17, among the most in the state, and 6 more are in the works. In Hubbard Township, Bobcat LLC has applied to the Ohio Department of Natural Resources for an injection well.
Fracking begins at Cabot Oil's Ashland County site - The Columbus Dispatch - — Drilling on Cabot Oil and Gas’ third well pad site in northeastern Ohio is beginning just as fracking has commenced on the company’s first site, in Ashland County’s Green Township.Cabot has said it plans eventually to have five exploratory wells built in the Ashland, Richland, Wayne Holmes and Knox County region.Locations for two additional well-pad sites in addition to the pads in Green, Mohican and Vermillion townships in Ashland County have not yet been nailed down, according to George Stark, director of public affairs for the Houston-based company.Stark said two possible sites for well pads are south of Loudonville off County Road 529, or in Richland County’s Monroe Township, near Malabar Farm.“After (the site on state Rt.) 511, we don’t have a place,” he said. “There’s a few locations off of (state Rt.) 39 and we’re just working the permits.“There’s a lot (of locations) on the drawing board, some farther along than others. Soon we need to pull the trigger. Construction season is something we will be mindful of.” Stark said the company is working with landowners to get leases signed so they can apply for the necessary permits from the state.While the company is planning its next steps, the first three wells are in various points in the production process.A drilling rig was placed at the Vermillion well pad on Rt. 511 at the beginning of last week. The rig previously had been at the first well pad site on Green Township off Township Road 2375 and, over the last month at the Mohican Township site on Township Road 257. The well at Township Road 2375, identified as Kamenik Pad 1 by Cabot, was first drilled toward the end of June. Once the rig moved to the Mohican Township pad, containers for water were placed in Green Township to prepare for horizontal hydraulic fracturing, or fracking.
Enbridge puts part of Ohio TEAL natgas pipe project into service (Reuters) - Canadian energy company Enbridge Inc (ENB.TO) said on Tuesday it put part of its Texas Eastern Appalachian Lease (TEAL) natural gas pipeline project in Ohio into service, according to a company filing with U.S. federal energy regulators. TEAL is one of several gas pipelines designed to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States and Canada. The U.S. Federal Energy Regulatory Commission (FERC) approved Enbridge’s request to put the 0.95-billion cubic feet per day (bcfd) TEAL project into service on Sept. 12. One billion cubic feet of gas is enough to fuel about 5 million homes for a day. TEAL was designed to provide additional supplies for the $2.6 billion NEXUS gas pipeline from Ohio to Michigan. NEXUS is a partnership between Enbridge and Michigan energy company DTE Energy Inc (DTE.N). Enbridge projected it would be able to put both TEAL and NEXUS into service in the third quarter of 2018. Enbridge asked FERC for permission to put part of NEXUS into service in September but is still waiting for that approval. Once it enters service, the 255-mile (410-kilometer) NEXUS project will carry up to 1.5 bcfd of gas from the Marcellus and Utica shale fields to U.S. Midwest and Gulf Coast and Ontario inCanada. New pipelines built to remove gas from the Marcellus and Utica basins have enabled shale drillers to boost output in the Appalachia region to a forecast record high of around 29.4 bcfd in October from 24.2 bcfd during the same month a year ago. That represents about 36 percent of the nation’s total dry gas output of 81.1 bcfd expected on average in 2018. A decade ago, the Appalachia region produced just 1.6 bcfd, or 3 percent of the country’s total production in 2008
Ohio Supreme Court rules to keep anti-fracking initiative off the ballot - The Columbus Dispatch --The Ohio Supreme has denied an effort by the environmental group, Columbus Community Bill of Rights, to get a measure to ban oil and natural gas extraction and waste disposal in Columbus on the Nov. 6 ballot.Voters won’t be deciding next month whether there should be oil and natural gas extraction and waste disposal in Columbus.The Ohio Supreme Court has denied an effort by environmental group Columbus Community Bill of Rights to get the issue on the ballot after it filed a motion for reconsideration in September.“We are discussing many tactics to face the issue of frack waste in our watershed, as well as the roadblocks to initiatives that many communities and efforts are experiencing,” said Carolyn Harding, a member of Columbus Community Bill of Rights.This marks the third attempt the environmental group has made to get the measure on the ballot. The group was hoping to gain voter support to establish a “bill of rights” for residents related to quality water, soil, and air protection as well as ban oil and gas extraction activities within the city. It's unclear if the group will try to get the item on a future ballot.In 2015 and 2017, there were not enough signatures collected. However, in this latest effort the group collected 12,134 signatures, far surpassing the 8,990-signature requirement. The city of Columbus signed off on the initiative on July 30. In August, the Franklin County Board of Elections questioned the proposed ballot measure’s legality. The Supreme Court ruled in favor of the Board of Elections.
Permitting drops in Pennsylvania amid strong production, tighter purse strings — Half as many natural gas drilling permits were issued during September in Pennsylvania compared with a year ago, indicating a producer response to high production levels and operators' desire to live within their cash flow. This could be in response to continuing robust gas production in the region, which threatens to drive prices down, as well as an effort to live within cash flow. Pennsylvania only issued 134 permits to drill gas wells in September 2018, a big drop compared with September 2017, when 264 permits were issued, according to state Department of Environmental Protection data. The year-on-year decline in Pennsylvania permits issued reflects a general decline in permitting activity across the US Northeast, which could indicate that the years-long Appalachian drilling boom is on the verge of slowing. Gas drilling in Pennsylvania is focused largely in two opposite corners of the state -- the northeast, which overlies the dry-gas window of the Marcellus Shale, and the southwest, which is situated in the wet-gas segment of the play. Among the counties in the state with the most permitting activity in September were two in the southwestern corner -- Washington, with 24 permits; and Greene, which snagged 17 drilling permits for gas wells. Seven permits were issued for wells in nearby Allegheny County. The northeastern corner of the state trailed in the number of permits issued, with Lycoming County receiving five and Susquehanna being awarded four permits. This compares with more robust permitting activity seen in September 2017, particularly in the southwestern part of the state, when 100 permits were issued in Washington County, 33 in Greene County and 22 in Allegheny County. September 2017 also saw more permitting activity in the northeastern counties of Susquehanna, which received 23 permits, and Lycoming, with 10. The year-on-year decrease in the number of drilling permits issued might reflect producers' commitment to maintain capital discipline. Recent earnings statements show that instead of chasing prices, producers are planning for manageable growth within their cash flow.The spot price at Dominion Transmission South, a key Pennsylvania pricing point, has paced well above $2/MMBtu for much of the past 11 months, averaging $2.415/MMBtu since November 7, 2017, Platts pricing data shows. Prices for Dominion South could see more of an upward push heading into the winter as pipeline buildout has provided more optionality for Appalachian gas.In addition, the use of improved drilling technology, such as the drilling of longer-lateral wells, has enabled operators to maintain strong levels of production without having to drill a large number of new wells.
E&Ps Commit to Leidy South Expansion to Boost Appalachian Takeaway - Just days after Williams reached the finish line on its Atlantic Sunrise project, Transcontinental Gas Pipe Line Co. (Transco) has secured 15-year commitments for 100% of the proposed Leidy South expansion, another Marcellus and Utica shale takeaway project designed to serve East Coast markets.Williams said Tuesday it has binding commitments from Seneca Resources Co. LLC and Cabot Oil & Gas Corp. for the full 580,000 Dth/d of designed capacity on Leidy South, which could start up by the end of 2021.The project, comprising compression and looping of existing Transco facilities in Pennsylvania, would further expand the pipeline’s ability to deliver Northeast production volumes from the Leidy Hub and Zick interconnects to points downstream in its Zone 6 market area. “Since 2013 the Transco pipeline’s design capacity has grown by 62%, while its Marcellus takeaway capacity has increased by approximately 3 Bcf/d,” said Williams’ Frank Ferazzi, senior vice president (SVP) of the Atlantic-Gulf operating area. “The Leidy South project allows Williams to continue to grow our strategic footprint in the gas-rich Marcellus region, creating a unique opportunity to expand Transco by leveraging recent expansions on Williams’ Northeast Gathering & Processing assets in Pennsylvania.”
Shell Hits Milestone at Pennsylvania Site - The largest piece of equipment at the world-scale petrochemicals facility Shell is building along the Ohio River northwest of Pittsburgh is now in place. In a statement emailed to Rigzone Wednesday morning, Shell announced that its Shell Chemical Appalachia LLC subsidiary successfully installed the quench tower Oct. 7 at its Pennsylvania Petrochemicals Complex in Monaca, Pa. The company noted that the heavy lift operation represents an important milestone in the project, will use ethane from the Marcellus and Utica basins to produce 1.6 million tonnes of polyethylene (PE) per year. “Eleven months into main construction, I’m delighted with the progress we’re making in Pennsylvania,” Graham van’t Hoff, executive vice president for Shell’s global chemicals business, said in the written statement. “It’s great to see our world-class complex taking shape. The project is providing more economic opportunities in Pennsylvania and the region.” The installation of the approximately 87-meter-tall, 2,000-tonne quench tower followed a nearly four-week journey up the Mississippi and Ohio rivers, Shell stated. Upon arrival at the project site, the large quench tower was unloaded onto a specially designed dock and transported down a newly created road, the company added. Water circulating through the quench tower will cool down cracked gas, condense heavy hydrocarbons and remove coke and tar particles, the company explained.
CPV announces fracked gas power plant is in operation. -After years of fierce community opposition, Competitive Power Ventures (CPV) announced on October 1, 2018 that their fracked gas power plant in Orange County, New York is in operation. ”The announcement came less than a week after the New York Department of Environmental Conservation (DEC) held a session for public comments for an Air State Facility (ASF) permit for the fracked gas power plant. The New Yorkers who commented provided a starkly different view of the plant than the positive image CEO Lambert tried to paint in his statement. Many residents of Orange County told the DEC that when the CPV plant was testing on diesel the region was blanketed in air pollution. One man said he could see the pollution emitted from the stacks hanging over the area and coming right up to his front door. The community is worried that with the plant now running on fracked gas that the pollution will be less visible, but still there. A brand new fracked gas plant not far from CPV in Jessup, PA malfunction on August 29, 2018 and released 3 times the legal limit of poisonous nitrogen oxide. Fracked gas is a precursor for smog, and residents of Orange County are worried the volatile organic compounds, nitrogen oxide and PM2.5 emitted from the CPV power plant won’t dissipate because of the soup bowl formation of the region. New Yorkers also traveled to the hearing from other parts of the state to ask the DEC to deny CPV the ASF permit because of the greenhouse gas emissions from the fracked gas plant. They asked the DEC to take into account the total life cycle of greenhouse gas emissions from the gas burned in the plant.
Overpressurized Pipes Faulted in Massachusetts Blasts - —A series of fires and explosions in Massachusetts last month was likely triggered by an error that caused a natural-gas pipeline system to become overpressurized, sending fuel into people’s homes, a preliminary federal probe has found. The National Transportation Safety Board determined that a contractor for Columbia Gas, a unit of NiSource Inc., was replacing a century-old cast-iron pipe with a new plastic pipe just before the fires began. After shutting down the old pipe, Columbia Gas continued to monitor a gas sensor on it instead of switching the sensor to the new pipe. That sensor registered low pressure, leading Columbia Gas to release a large amount of gas into the new plastic pipe to ensure it was fully pressurized. The pressure inside the plastic pipe exceeded its limit, and gas began leaking into homes, triggering dozens of fires that killed an 18-year-old man and injured at least 21 people. The preliminary findings are in line with remarks made by NTSB Chairman Robert Sumwaltshortly after the incident that improper pipe pressure appeared to have caused the blasts. NiSource said on Thursday said that it wouldn’t discuss details of the investigation until the NTSB, which investigates major pipeline accidents as well as transportation incidents, has completed its work.
US Approves Part Of TransCanada Mountaineer Gas Pipe For Service - U.S. federal energy regulators on Oct. 5 approved a request by TransCanada Corp.’s (NYSE: TRP) Columbia Gas Transmission unit to put part of its $3 billion Mountaineer XPress natural gas pipeline project into service in West Virginia. Mountaineer is one of several pipelines designed to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States and Canada.Specifically, the U.S. Federal Energy Regulatory Commission (FERC) approved Columbia’s request to put Mountaineer’s Elk River compressor station into service.The 2-billion cubic feet per day (Bcf/d) Mountaineer project is designed to increase gas capacity in West Virginia. The project includes construction of 170 miles of new pipeline in the state.One billion cubic feet is enough gas to power about 5 million U.S. homes for a day.New pipelines built to remove gas from the Marcellus and Utica basins have enabled shale drillers to boost output in the Appalachian region to a forecast record high of around 29.4 Bcf/d in October from 24.2 Bcf/d during the same month a year ago. That represents about 36 percent of the nation’s total dry gas output of 81.1 Bcf/d expected on average in 2018. A decade ago, the Appalachia region produced just 1.6 Bcf/d, or 3% of the country’s total production in 2008.
Three Appalachian Gas Pipeline Projects Advanced by FERC - FERC last week issued letter orders to advance a trio of natural gas pipeline projects in the Appalachian Basin. The Federal Energy Regulatory Commission on Friday granted Columbia Gas Transmission LLC (CGT), a TransCanada Corp. affiliate, permission to enter the Elk River Compressor Station into service to support its Mountaineer XPress Project [CP16-357]. Elk River, in Kanawha County, WV, was constructed as part of CGT's WB XPress Project [CP16-38], and was given authorization by the Commission to enter service for the latter project on Thursday. FERC approved a CGT request to increase the initial monthly incremental recourse reservation rate on Mountaineer XPress last August, and issued a certificate of public convenience and necessity for the project in January. It is expected to enter service late this year. In a second letter order, FERC approved a variance request by Rover Pipeline LLC for 0.3 acres of temporary workspace in Monroe County, OH, to repair an off-right-of-way slip and to retrieve sediments associated with the Rover Pipeline Project [CP15-93]. The workspace is along the 42-inch diameter Seneca Lateral. Last month, Rover asked for FERC authorization to start service on two final supply laterals, Sherwood and CGT, to support the 3.25 Bcf/d Appalachian takeaway project. FERC gave authorization for two additional Rover laterals, Burgettstown and Majorsville, to enter service last August. FERC also approved, in a third letter order, a request by Dominion Energy Transmission Inc. to use 0.24 acres in Doddridge County, WV, as additional temporary workspace for truck turn-arounds at its 1.5 million Dth/d Supply Header Project (SHP) [CP15-555]. SHP includes about 37.5 miles of pipeline looping and modifications to existing compressor stations in West Virginia and Pennsylvania, and is related to work on the embattled Atlantic Coast Pipeline.
West Virginia Supreme Court to Hear Nuisance Case Against Antero - The West Virginia Supreme Court is scheduled to hear oral arguments in a case being appealed by a group of Harrison County landowners that claims Antero Resources Corp.’s operations have created a nuisance and ruined the quality of the area.The case could have far reaching implications, according to the landowners’ attorneys, who wrote in court documents that hundreds of similar cases are pending against the natural gas industry in courts across the state. The scale of unconventional gas drilling and the infrastructure build out that comes with it, the landowners say, has amounted to the “industrialization of rural West Virginia.”Landowners allege that Antero’s operations have caused significant damage that has prevented them from enjoying their lives, homes and property. They complain of heavy truck traffic, diesel fumes, vibrations, damage to trees and other vegetation, and excessive lights, noise, dust and disrespectful behavior from the company’s crews.The case was filed in 2013. Last year, the Circuit Court of Ohio County ruled in favor of Antero, finding that the company is entitled to benefit from the surface and subsurface rights it has obtained from the landowners, along with other agreements for things like road use and pipeline easements. The lower court found that the plaintiffs failed to offer admissible evidence to show that using their properties exceeded the agreements they signed with Antero. Justices will hear the case at a time when the state Supreme Court is facing a crisis of sorts. The state House of Delegates over the summer adopted articles of impeachment for four current and former justices amid a scandal about court spending. Justice Allen Loughry, who faces fraud and obstruction charges, only recently began his criminal trial. Complicating matters, the landowners filed a motion requesting that Justice Evan Jenkins, who was sworn in on Oct. 1, disqualify himself from hearing their appeal.
Pipelines Stop and Go as Court Rules Permits Issued In Haste — Construction on two huge gas pipelines through West Virginia and Virginia has repeatedly stopped and restarted, as the 4th federal circuit court stalls permits. Last week the court vacated a Clean Water Act permit for the Mountain Valley Pipeline. The court had also stopped Atlantic Coast Pipeline work on national forest land. Agencies and the companies are pressing for the permits to be reissued. Charlottesville, Virginia, attorney David Sligh is working with some of the conservation groups that have challenged the permits. He said they are pleased to see the court step in to stop permits that critics say should never have been issued. "But a lot of damage is going on out there on the ground,” Sligh said. “And the more of that that happens, the more leverage there will be for the companies to say, 'Hey, you can't really stop us. It's too far along now.'" The pipeline companies argue that the multi-billion-dollar projects to bring natural gas from West Virginia to eastern markets can be built with minimal environmental and landowner impact. Construction has been at times ongoing in West Virginia, but less so in Virginia. A thicket of separate federal and state agencies have a say on the projects. Sligh said many of the technical experts at the agencies understand that building pipelines through the "extreme" mountain landscapes will cause serious problems. But he said the experts charged with studying those impacts and requiring detailed plans from the company to deal with them are often pushed aside under political pressure. "In some cases, agencies avoid those kinds of studies because they don't like the answers that will emerge from those studies,” he said. “And those technical folks get overridden."
Enviros Battle Tree Clearing as Another Tactic to End ACP Construction - Environmental groups are stepping up their calls for FERC to stop all construction of the Atlantic Coast Pipeline (ACP) after the U.S. Court of Appeals for the Fourth Circuit last month stayed federal authorizations allowing the project to work in two national forests.The Southern Environmental Law Center (SELC) said a filing last week from ACP backer Dominion Energy Transmission Inc. requesting a limited notice to proceed (NTP) with tree clearing in Virginia should not be granted because the project now lacks all the necessary authorizations required by the Federal Energy Regulatory Commission certificate to proceed with any construction.Instead, SELC urged FERC to issue a complete stop work order for the entire 600-mile route and said it should require ACP to make public confidential tree felling and environmental constraint maps that were included in the limited NTP request and for all future requests.The Fourth Circuit stayed decisions by the U.S. Forest Service (USFS) allowing tree clearing, blasting and trenching in the George Washington National Forest and the Monongahela National Forest in Virginia and West Virginia. The court stayed the authorizations to review a challenge filed in February by the SELC and the Sierra Club on behalf of several regional environmental organizations.SELC immediately called on FERC to halt work on the project, citing the Commission’s decision in August to stop all construction on the pipeline for more than a month after the Fourth Circuit vacated key permits from the U.S. Fish and Wildlife Service and the National Park Service. FERC said at the time that it was forced to issue the order because the project did not have all the necessary authorizations to continue. FERC lifted the order once those agencies issued revised permits. SELC said in its filing last week that the same logic behind the August stop-work order applies to the Fourth Circuit’s latest decision.
Prices Rise Despite A Higher Than Expected EIA Storage Injection As Absolute Storage Levels Remain Relatively Very Low Highlights of the Natural Gas Summary and Outlook for the week ending October 5, 2018 follow. The full report is available at the link below.
- Price Action: The November contract rose 13.5 cents (4.5%) to $3.143 on a 26.0 cent range ($3.261/$3.001).
- Price Outlook: Prices continued higher and established a new weekly high for the 3rd consecutive week. New pipeline projects are commencing operation and pipeline data will be closely scrutinized for new flows across the gird. The next two weeks represent a chance for +100 bcf injections, but current data suggest a triple digit injection will not occur.
- Weekly Storage: US working gas storage for the week ending September 28 indicated an injection of +98 bcf. Working gas inventories rose to 2,866 bcf. Current inventories fall (642) bcf (-18.3%) below last year and fall (596) bcf (-17.2%) below the 5-year average.
- Storage Outlook: The EIA weekly implied flow was 6 bcf from our EIA storage estimate. Although our weekly storage error has been somewhat disappointing, over the last 5 weeks the EIA has reported total injections of 362 bcf compared to our 349 bcf estimate and that is more tolerable. The forecasts use a 10-year rolling temperature profile past the 15- day forecast. Our joint publication with RBN updates storage projections daily.
- Supply Trends: Total supply rose 0.8 bcf/d to 82.0 bcf/d. US production rose. Canadian imports rose. LNG imports rose. LNG exports fell. Mexican exports fell. The US Baker Hughes rig count fell (2). Oil activity decreased (2). Natural gas activity was unchanged +0. The total US rig count now stands at 1,052 .The Canadian rig count rose +4 to 182. Thus, the total North American rig count rose +2 to 1,234 and now exceeds last year by +89. The higher efficiency US horizontal rig count fell (3) to 919 and rises +127 above last year.
- Demand Trends: Total demand fell (4.5) bcf/d to +68.6 bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand rose. Electricity demand fell (8,328) gigawatt-hrs to 75,251 which trails last year by (3,439) (-4.4%) and exceeds the 5-year average by 1,345 (1.8%%).
- Nuclear Generation: Nuclear generation fell (2,089)MW in the reference week to 83,219 MW. This is (7,473) MW lower than last year and (5,060) MW lower than the 5-year average. Recent output was at 82,508 MW.
The cooling season is now entering its final stretch. With a forecast through October 19 the 2018 total cooling index is at 5,625 compared to 4,789 for 2017, 5,485 for 2016, 4,402 for 2015, 3,451 for 2014, 4,811 for 2013, 7,212 for 2012 and 6,709 for 2011.
Prices Soar As Natural Gas Inventories Hit Decade Low --- Natural gas prices have spiked over the last few weeks as U.S. inventories run low ahead of the peak winter heating season.Nymex natural gas prices have jumped nearly 15 percent over the past month, rising to roughly $3.30 per million Btu (MMBtu). The market has clearly grown a little concerned about adequate supplies heading into the winter and that is reflected in natural gas prices rising to their highest point since the beginning of the year.For the week ending on September 28, natural gas inventories stood at 2,866 billion cubic feet (Bcf), or 636 Bcf lower than at the same point a year earlier, as well as 607 Bcf below the five-year average. Inventories dropped to extraordinarily low levels last winter as much of North America became enveloped in exceptionally cold weather. As tens of millions of people cranked up the heat, the U.S. burned through record levels of natural gas. That stood in stark contrast to the year earlier, when a much milder winter led to above-average levels of gas in storage.Natural gas markets are cyclical, with a buildup in storage between April and November – the so-called “injection season” – and steep drawdowns during the winter. The stockpiling during injection season is necessary to provide enough supply to consumers for winter heating needs. But the problem is that the U.S. is currently on track to finish up the injection season with the lowest level of gas sitting in storage in 13 years. Even though demand sees seasonal peaks and valleys, consumption is rising on a structural basis as more coal plants shut down and more gas is exported in the form of LNG. That trajectory has been clear for much of 2018, but up until only recently, traders were not concerned about shortages. Natural gas production continues to soar, and several new pipelines in the Appalachia region are expected to unlock new markets, allowing drillers to produce eve more natural gas. For example, just days ago, the Atlantic Sunrise pipeline came online, connecting more Marcellus shale gas to the U.S. south. Investors saw this as a boon to natural gas drillers – Cabot Oil & Gas saw its share price jump on the news since it can now ship more gas out of the Marcellus.
October 11 Natural Gas Storage Report: Is There Anything The Market Has Not Already Priced In? - This Thursday, we expect EIA to report 2,956 bcf of working gas in storage for the week ending October 5.We anticipate to see an injection of 90 bcf, which is 9 bcf larger than a year ago, but exactly in line with 5-year average.The key now is to figure out what exactly the market hasn't priced in already. Last week, the number of total degree-days (TDDs) increased by around 9% w-o-w, as cooling demand went up - particularly, in the Central and Southwest parts of the country - while heating demand was still too feeble across the country. We estimate that total energy demand (as measured in total degree-days - TDDs) was no less than 17% above last year's level. Please note that during this time of the year, heating degree-days (HDDs) are starting to have an effect on natural gas consumption. Cooling degree-days (CDDs) are important, but their weight is diminishing. In fact, in the latest weather models, projected CDDs have essentially disappeared.This week, the weather conditions cooled down significantly. We estimate that the number of CDDs will plunge by 20% w-o-w in the week ending October 12, while the number of HDDs will surge by no less than 60% w-o-w. Total energy demand (measured in TDDs) should be some 12% above last year's level. Next week, the weather conditions are expected to cool down even more. The number of HDDs is currently projected to more than double in the week ending October 19. At the same time, CDDs will decline by 60% and will essentially disappear. On balance, total energy is projected to rise by a whopping 32.0% w-o-w (see the chart below). The latest numerical weather prediction models are showing above normal HDDs and TDDs over the next 15 days (October 10-October 25). Consumption-wise, the latest weather models are bullish in absolute terms. Total demand is expected to average 76.8 bcf/d over the next 15 days (some 25% above 5-year average). Natural gas consumption is also supported by a number of non-degree-day factors such as higher nuclear outages. As of Wednesday, there were a total of 20,900 MW of nuclear power generation offline (-100 MW from Tuesday, +18% vs 5-year average). Although the deviation of nuclear outages from the historical norm has been moderating lately, the absolute figures are still high.
EIA Delivers on Target NatGas Storage Data, but Price Damage Already Done - The Energy Information Administration (EIA) reported a 90 Bcf injection into natural gas storage inventories for the week ending Oct. 5, on target with market expectations that clustered around a build in the high 80s Bcf to low 90s Bcf.After the last two wild weeks, with a low miss then a high miss canceling out, Bespoke Weather Services said it has a stronger read on balance again “as it is clear the market has loosened over the past couple weeks.“This fits with our reading of burns loosening off a bit and production continuing to grow with Canadian imports returning last week. The print did come in just below our expectations, so we may not see as much selling initially and could bounce on any colder weather models, especially with production shut-ins from Hurricane Michael and lower Canadian imports off the British Columbia pipeline explosion, Bespoke chief meteorologist Jacob Meisel said.Nymex futures prices were already significantly lower ahead of the report on warmer risks in long-range weather outlooks, and the storage news added slightly more pressure to the market. The November contract was trading more than 9 cents lower at $3.19 just before the EIA’s 10:30 a.m. ET release, then slipped to $3.18 immediately afterward. By 11 a.m. ET, the prompt month was trading at $3.215, down about 7 cents on the day.“I’m still dumbfounded by lack of demand talk, all about production still,” said Corey Lefkof, CEO and meteorologist of CLWS.But Bespoke’s Meisel said the structural growth in power burns appears more impressive than in the residential/commercial sector, which makes the demand story more impressive in summer than in winter, barring extreme winter temperatures. Thursday’s reported 90 Bcf build lifted inventories to 2,956 Bcf, 627 Bcf below year-ago levels and 607 Bcf below the five-year average. Broken down by region, the Midwest injected 35 Bcf, the East injected 27 Bcf and the South injected 25 Bcf, including 10 Bcf into salt dome facilities and 15 Bcf into non-salt facilities.
EIA: US Natural Gas Storage Entering Winter At Lowest Level Since 2005 - The U.S. Energy Information Administration (EIA) forecasts that U.S. natural gas inventories will reach 3,263 billion cubic feet (Bcf) at the end of October in its recently released October Short-Term Energy Outlook (STEO), the lowest end-of-October level for U.S. natural gas inventories since 2005. Lingering cold temperatures in April 2018, the coldest April in the past 21 years, delayed the start of the natural gas storage refill season by about four weeks. Coupled with heavy natural gas withdrawals in January 2018, the delayed start to the refill season led to storage levels that have remained lower than the previous five-year minimum. However, late-season injections during the past four weeks have been close to their five-year averages, with injections averaging 81 Bcf compared with the five-year average of 82 Bcf. Natural gas storage is used to balance seasonal fluctuations in production and consumption. The greatest fluctuations in U.S. natural gas consumption are in the residential and commercial sectors, where natural gas is used as a heating fuel. Across all sectors, U.S. consumption of natural gas during winter months tends to be about 30% to 35% higher than in the spring and fall months, when temperatures are relatively mild. Natural gas is withdrawn from storage facilities throughout the United States during times of high demand and injected into storage facilities during times of low demand. Traditionally, the injection season lasts from the beginning of April through the end of October, though natural gas is now regularly injected through October and into early November in the United States. In 2018, relatively cold winter weather led to more withdrawals from storage, and inventories transitioned from being near the previous five-year average to being lower than average. By mid-July, inventory levels fell to lower than the previous five-year range for that time of year. Increases in U.S. domestic production of natural gas and the buildout of infrastructure to deliver it to consumers may have reduced the need for operators to store as much natural gas. EIA projects that U.S. dry natural gas production will average a record 82.7 Bcf/d in 2018, an 11% increase from 2017. EIA expects U.S. gross exports of natural gas to average 10.1 Bcf/d in 2018, a 16% increase from the previous year, with most of the growth in exports of liquefied natural gas.
U.S. Natural Gas Growth Said Shifting Supply Dynamics for Global Petrochemicals - The United States is poised to return to prominence as a low-cost region for petrochemical production thanks to the unconventional natural gas revolution, the International Energy Agency (IEA) said.In the global energy watchdog’s 132-page report, “Future of Petrochemicals” issued last week, IEA said increasing global competition is being driven by “new supply dynamics” for chemical feedstocks.“Today, the United States is home to around 40% of the global capacity to produce ethane-based petrochemicals,” researchers said. Saudi Arabia and Iran still help the Middle East keep its crown as the low-cost champion for key petrochemicals, however, with a host of new projects announced across the region.Overall, petrochemicals are poised to become the largest driver of global oil consumption and eat up another 56 bcm of natural gas by 2030, equivalent to around half of Canada’s total consumption today, IEA reported. Petrochemical demand should account for more than one-third of oil demand growth by 2030 and nearly half to 2050, eclipsing consumption by vehicles, aviation and shipping.“Our economies are heavily dependent on petrochemicals, but the sector receives far less attention than it deserves,” IEA Executive Director Fatih Birol said. “Petrochemicals are one of the key blind spots in the global energy debate, especially given the influence they will exert on future energy trends. In fact, our analysis shows they will have a greater influence on the future of oil demand than cars, trucks and aviation.”The United States and the China should see the largest near-term petrochemical capacity additions, with longer term growth led by Asia and the Middle East.“The United States is expected to increase its global market share for ethylene (steam cracking) to 22% by 2025, up from 20% in 2017,” researchers said. “Along with the Middle East, the United States has a feedstock advantage in its access to low-cost ethane owing to its abundant natural gas supplies. This advantage allows both regions to gain the lion’s share of ethane-based chemical exports in the short and medium term.”
Michael shuts 812 MMcf/d of offshore gas production; prices remain robust - — Hurricane Michael slammed into the Florida Panhandle as a Category 4 storm early Wednesday afternoon, causing disruptions to gas supplies from the offshore Gulf of Mexico and threatening to dampen gas demand and drive down prices in the region along its path. The most immediate impact of the storm is expected to be on gas supplies from the offshore Gulf producing region, as a total of 812 MMcf/d of production, representing about 32% of total Gulf production, was shut in, the US Bureau of Safety and Environmental Enforcement said in a statement. Prices in the Southeast region Wednesday were robust, driven by the significant production declines in the Gulf as well as expectations for warm weather on Thursday in areas on both sides of Hurricane Michael's path. The Louisiana benchmark Henry Hub continued to set this year's highs dating back to the end of January. It gained modestly, adding 1 cent to trade at $3.375/MMBtu. "As most of the offshore production across Mississippi and Alabama has been shut in as a result of the storm, the next big question to answer will be: how soon will that production return after it moves up and out of the Gulf?" While details of the storm's impacts to onshore natural gas infrastructure were not readily accessible on Wednesday afternoon, Michael is expected to destroy demand across the US Southeast as a result of lower temperatures and power outages. The core of Michael was forecast to move inland across the Florida Panhandle on Wednesday afternoon and across southeastern Alabama and southwestern Georgia Wednesday night, BSEE said that personnel have been evacuated from 89 offshore production platforms, 13% of the 687 manned platforms in the Gulf. In addition, staff have been evacuated from three non-dynamically positioned rigs equivalent to about 14% of the rigs of this type currently operating in the Gulf. Four dynamically positioned rigs have moved off location out of the storm's path as a precaution, representing about 24% of the rigs of this type currently operating in the Gulf. About 719,000 b/d of crude oil production, representing about 42% of the Gulf's crude output, was shut in as the rigs were evacuated or moved in advance of the storm's approach, BSEE said.
Factbox: Hurricane Michael impact turns from production loss to demand destruction — Hurricane Michael made landfall at the Florida panhandle as a Category 4 hurricane Wednesday with 155 mph winds, quickly destroying demand for power, natural gas and refined oil products. Shut-in oil production rose modestly from Tuesday to over 700,000 b/d, but the storm has stayed east of much of the region's production, which means supply should be back online quickly. Meanwhile, the severity of the storm has surprised to the upside, which could a mean longer lasting and more severe impact on demand for power, natural gas, refined products and ultimately crude oil."We expect the impact on refined products demand to be below that of previous hurricanes in the Gulf Coast such as Harvey in 2017, as the region impacted by Michael has lower population density than Houston ... Nevertheless, the impacts are favoring the high side of our estimates given the sheer severity of the storm," said Claudio Galimberti, Head of Demand and Refining at S&P Global Platts Analytics.As of 7 pm EDT, the eye of Michael was moving over southwestern Georgia with maximum sustained winds still at 100 mph, according to the National Hurricane Center. The storm is expected to move northeast across the Carolinas before heading back out to sea Friday morning. Here are the key takeaways across commodities:
- **As of 11:30 am EDT Wednesday, 718,877 b/d of all production had been shut in, according to the Bureau of Safety and Environmental Enforcement, representing 42.3% of total Gulf of Mexico production.
- **After more than doubling from Monday to Tuesday, shut-in production was up just 7% from Tuesday to Wednesday.
- **Assuming most fields resume production by the end of the week, the cumulative lost oil production for the month of October will be 90,000-100,000 b/d, according to Platts Analytics.
- **The demand impact for products is expected to be 30,000-50,000 b/d for gasoline, 10,000-15,000 b/d for distillate and 10,000-20,000 b/d for jet fuel for the next five weeks. Those impacts are favoring the high side of estimates given the intensity of the storm so far.
- **The US Coast Guard declared port status Yankee for the port of Savannah, Georgia and the port of Charleston, South Carolina, preventing ships from entering the ports, and requiring ships seeking to depart to "arrange immediate departure." The USCG declared X-Ray for Wilmington, North Carolina, keeping the port open, but requiring departing vessels to "do so within 12 hours of gale-force winds." The three ports are key regional bunkering centers.
- **The port of Panama City, Florida, where Chevron has a petroleum products terminal, and the port of Pensacola are closed.
EIA says US gasoline exports set October record - — US exports of gasoline in the week ended October 5 averaged 1.029 million b/d, which set a new record high for that month, Energy Information Administration data showed Thursday. The data shows that the previous high for October exports occurred in the week ended October 20, 2017, when they averaged 906,000 b/d. Last week was just the seventh time US exports averaged above 1 million b/d for weekly data going as far back as 2010. Among other factors, exports appear to be supported by brimming US gasoline inventories. Last week they were reported at 236.172 million barrels, which is more than 14 million barrels above their level from the year-ago week. US gasoline exports have also been supported this year by suboptimal gasoline production in Latin America, most notably in Mexico and Venezuela. Data from SENER, Mexico's Energy Secretariat, shows that gasoline production in that country has been below historic norms all year. In Mexico, this output drop is intentional. Pemex has said it wishes to shore up margins at its midstream refining unit, which it can accomplish by only processing crude when it is economically attractive. This allowed Pemex's refining division to turn a profit in 2017 for the first time in years, even as it processed less crude oil. In Venezuela, many refineries have been running below historic norms this year, which, in contrast to Mexico, has been largely unplanned. Venezuela's entire oil sector has been rocked in 2018 by a combination of political instability, economic turmoil, and hyperinflation.
"We were here first’: Tribes say Line 5 pipeline tunnel ignores treaty rights - Michigan officials have spent the past year pursuing a plan to tunnel an oil pipeline beneath the Straits of Mackinac while ignoring the 182-year-old treaty rights of Native Americans, multiple tribal leaders say.While the Snyder administration formally met with tribes three times over the past year under a State-Tribal Accord, tribal chairpersons say these consultations were little more than an “airing of grievances” for them.The last meeting between tribes and Gov. Rick Snyder happened on September 27, less than a week before the state announced an agreement with Enbridge to pursue a $500 million tunnel for the company’s Line 5 pipeline. In other meetings, officials have been unwilling to share information from Enbridge or modify any agreements, tribes say.“They more or less told us to pound sand,” said Bryan Newland, chairperson of the Bay Mills Indian Community in the Upper Peninsula. “Our objective is not to show up and shake our fist at the state. It’s to propose solutions.”Thurlow “Sam” McClellan, chairperson of the Grand Traverse Band of Ottawa and Chippewa Indians, called the September 27 meeting with Gov. Rick Snyder a “formality.”“As far as consulting, negotiating or looking at what’s best for the tribe in this situation, that’s not what we see or hear,” McClellan said.The five tribes making up the Chippewa Ottawa Resource Authority are particularly frustrated because they retained fishing rights in the area under a treaty in 1836, while Line 5 was built by Enbridge in 1953. Their criticism aligns with others who have called the tunnel plan a sweetheart deal for Enbridge made behind the scenes that would keep Line 5 operating in the Straits while the tunnel is built, which could take up to 10 years. The Detroit Free Pressreported last week that members of the Mackinac Bridge Authority, an independent state agency that would own the tunnel, weren’t even consulted about the plan.
US onshore, offshore rig count totals 1171 this week, down five - US combined oil and gas rigs totaled 1,171 this week, down five, with the biggest swings seen in the Permian and Williston Basins, S&P Global Platts data showed Thursday. The total US rig count is up from 1,048 a year ago as the industry has recovered from a three-year oil price collapse that began in late 2014. But the pace of new activity is slowing as E&P operators exhaust capital budgets for the year. Domestic rigs drilling for oil totaled 933, down nine on the week but up from 811 during the same week a year ago. Rigs chasing natural gas totaled 221, up four on the week, and up three from last year. Rigs drilling for both oil and gas totaled 17, unchanged from last week and down a bit from 20 this same week in 2017. Permian rigs in West Texas and New Mexico inched up by four this week to 480, while Williston Basin rigs, largely in North Dakota, dropped five to 59. In other major basins, the rig count remained flattish. Of total active rigs this week, 954 were horizontal, down two from the prior week, and 139 were vertical, down by seven. The remaining rigs were directional at 78, up four. In specific oil-prone plays, Eagle Ford Shale rigs working in the South Texas play fell by three to 95 this week, while SCOOP-STACK rigs in Oklahoma were down one to 105. And in Colorado's DJ Basin, the number of rigs stood at 31 this week, unchanged. Despite the decrease in rigs this week, the Eagle Ford has gained rigs in recent months as activity in the Permian, which is facing a crunch in available pipeline takeaway capacity, has slowed. That has allowed some operators with existing Eagle Ford leases to temporarily transfer capital there. The play's 95 rigs this week compares to 80 the first week of 2018. And even though rigs fell this week in the Williston - home to the giant Bakken Shale oil reservoir - the basin has become more active this year from the roughly 50 rigs at the start in 2018, as oil prices have risen to around the mid-$70s/b. That is up nearly 50% from a year ago. Also, rigs drilling for gas were largely stable this week. The Marcellus Shale basin, centered mostly in Pennsylvania, inched up by one rig to 55, while the Utica Shale chiefly in Ohio and the Haynesville Shale in East Texas/Louisiana were both flat week-on-week at 17 (for the fourth consecutive week) and 56, respectively. While rigs have been fairly stable in the Marcellus over the past year, their number in the Haynesville has ramped up from the high 40s a year ago as drilling has become more economic there. Internal return rates were about 9% in September 2017, but are currently about 21%, according to Platts' Well Economics Analyzer. The other two gas plays have higher current IRRs also, as drilling efficiencies have continued to evolve in well completions and costs, although the increase is not as dramatic as the Haynesville. Drilling permits also increased by 8% this week to 1,135. That is up from 997 during the same week in 2017, as oily basins across the US have gained traction with higher crude prices.
Michael shuts nearly 40 percent of U.S. Gulf of Mexico oil output (Reuters) - Nearly 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael. Oil producers - including Anadarko Petroleum Corp, BHP Billiton, BP and Chevron Corp - have since Monday evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday on the Florida Panhandle. The country’s largest privately owned crude terminal, the Louisiana Offshore Oil Port LLC, said on Tuesday it had halted operations at its marine terminal. The facility is the only port in the United States capable of fully loading and unloading tankers with a capacity of 2 million barrels of oil. Companies turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, according to offshore regulator the Bureau of Safety and Environmental Enforcement (BSEE). The evacuations affected about 11 percent of the occupied platforms in the Gulf, it said. U.S. crude futures CLc1 settled up less than 1 percent at $74.96 per barrel, reflecting the declining importance of the Gulf of Mexico in output because of the growth of production from the nation’s onshore shale fields. Crude output lost in the two days of storm shut-ins represents about 9 percent of the U.S. production of 11.1 million barrels per day, according to data from the Energy Information Administration. In addition to shutting in wells, oil producers also halted most offshore drilling operations by evacuating three drilling rigs and moving eight others out of the storm area, BSEE said. Coastal and onshore energy businesses also started preparations for what is expected to become a Category 3 storm packing winds of at least 111 miles per hour (178 km per hour).
Factbox: Oil and gas production losses crest as Tropical Storm Michael moves across Southeast — While Tropical Storm Michael has left hundreds of thousands without power, shut-in oil and gas production was already beginning to come back online Thursday. Michael's impact contributed to price declines for crude oil, refined products and natural gas on the day. The storm will likely have a short-lived impact on oil and gas production, but be a longer term headwind for demand for energy commodities given the severe and widespread damage."Similar to Tropical Storm Gordon, Michael's path was east of the bulk of offshore production facilities ... Most production should restart by the end of the week and the average volume loss for October will amount to 90,000-100,000 b/d," said Connor Wiik, analyst with the oil Supply and Production team at S&P Global Platts Analytics. As of 8 pm EDT Thursday, Michael was north of Raleigh, North Carolina near the border with Virginia, according to the National Hurricane Center. The storm is expected to head back out to sea by Friday morning. Here are the key takeaways across commodities: Click here for full-size image
- **As of 11:30 am EDT Thursday, 680,107 b/d of oil production was shut in, 40% of US Gulf of Mexico production, down from 718,877 b/d Wednesday, according to the Bureau of Safety and Environmental Enforcement.
- **Assuming most fields resume production by the end of the week, the cumulative lost oil production for the month of October will be 90,000-100,000 b/d, according to Platts Analytics.
- **The demand impact for products is expected to be 30,000-50,000 b/d for gasoline, 10,000-15,000 b/d for distillate and 10,000-20,000 b/d for jet fuel for the next five weeks. Those impacts are favoring the high side of estimates given the intensity of the storm so far.
- **In North Carolina, the ports of Wilmington and Morehead City have been closed and all operations have been suspended, according to the US Coast Guard. The port of Charleston, South Carolina was open, with normal operations taking place, while the port of Savannah, Georgia, was open with some restrictions.
Gulf Coast Crude Export Capacity Another Looming Challenge, Says Raymond James -- Permian Basin takeaway constraints may draw today’s headlines, but the next potential challenge could be opening the spigot on the Gulf Coast for more U.S. crude exports, Raymond James & Associates said Monday. Because the U.S. refining system overall is set up to run large amounts of heavy sour crude, and shale/tight formations mostly produce light sweet oil, the industry has no choice but to expand exports, said analysts Justin Jenkins and J.R. Weston. “We have already seen exports increase meaningfully since last summer, and that ramp will only continue over the next decade,” analysts said. Given the expected growth in Gulf Coast oil exports, some bottlenecks are likely to emerge. Year-to-date through July, domestic oil exports surged 50% from 2017 to an average of more than 1.8 million b/d. “Incredibly, the U.S. has exported a whopping 2 million b/d-plus over the past three months,” analysts wrote. “This compares to an average of 1.2 million b/d in 2017 and represents a huge structural shift to the global oil market in the wake of the shale revolution and lifting of the oil export ban in December 2015.” Analysts expect the recent trend to continue as discounts for U.S. crude and production growth from capacity constraints lead to more exports. Over the next 12-18 months, “we may well need to push exports to 4 million b/d-plus, simply to keep pace with U.S. production growth.”
Deep Water, Part 5 - More Plans For Offshore Crude Oil Export Terminals Along The Gulf Coast - Just as midstream companies are in a fierce competition to build new crude oil pipelines from the Permian to the Gulf Coast, there’s a race on to develop what would be the first Gulf Coast terminal in a generation capable of handling fully laden Very Large Crude Carriers. There’s a lot at stake. Currently, 2-MMbbl VLCCs can be filled to the brim without reverse lightering only at the Louisiana Offshore Oil Port (LOOP), and even if U.S. crude production continues to rise at a fast clip, it’s unlikely that more than another one or two high-capacity, VLCC-ready terminals would be needed over the next five years. And, assuming there’s not an overbuild situation, the project or projects that ultimately advance would be expected to be in-demand and highly utilized — VLCCs are the preferred mode of transporting crude to Asia and other far-away markets, and being able to fully load VLCCs saves the considerable cost and time associated with reverse lightering these supertankers in deep water. Today, we conclude our series on the fast-paced efforts to develop export terminals in waters deep enough to float VLCCs chock-full of oil. This is the fifth episode in our series. In Part 1, we discussed the ongoing boom in U.S. crude oil exports, which have been rising steadily since the 40-year ban on most exports was lifted in December 2015. Crude exports averaged 590 Mb/d in 2016, 1.1 MMb/d in 2017, and more than 1.8 MMb/d so far in 2018. While 2-MMbbl VLCCs are by far the most cost-efficient way to haul crude to Asia, their very large physical dimensions restrict the number of land-based terminals they can use. A typical VLCC is about 1,100 feet long, with a beam (or width) of nearly 200 feet and a fully loaded draft of 72 feet. And even those land-based terminals that can accommodate VLCCs can only load these supertankers part-way — “reverse lightering” out in deeper, open waters is required to fill a VLCC to the brim. (LOOP — green diamond in Figure 1 — is the only facility along the Gulf Coast that can fully load a VLCC today.)
As oil and gas exports surge, West Texas becomes the world’s “extraction colony” - Midland — Drilling booms have come and gone in this oil town for nearly a century. But the frenzy gripping it now is different. Overwhelming. Drilling rigs tower over suburban backyards. There’s a housing crunch so severe that rents are up 30 percent in the last year alone. Tax-averse city officials raised fees this spring just to keep basic services afloat.This boom is engulfing the rest of West Texas, too, extending to areas that drilling hasn’t touched before. As communities welcome the jobs and the new business, they’re struggling with an onslaught of problems that include spikes in traffic accidents and homelessness.What’s happening is unprecedented. In December, companies in the Permian Basin — an ancient, oil-rich seabed that spans West Texas and southeastern New Mexico — were producing twice as much oil as they had four years earlier, during the last boom. Forecasters expect production to double again by 2023. Texas Gov. Greg Abbott and others say the drilling spree is ushering in a new era of American energy independence, but American demand isn’t driving it. Foreign demand is.In late 2015, Congress cut a deal to lift 40-year-old restrictions on the export of crude oil. That opened the floodgates. The U.S. sold 230 million more barrels of crude to other countries in the first half of this year than it did three years earlier — a surge made possible by a virtually identical spike in Permian production. The U.S. just surpassed Russia as the world’s top oil producer. The International Energy Agency predicts that American oil — most of it from the Permian — will account for 80 percent of the growth in global supply over the next seven years. That’s bringing big profits to oil companies as well as lung-searing pollution to places where drilling has skyrocketed, while threatening to exacerbate climate change. U.S. refineries built for heavier varieties of oil than the Permian produces can’t handle the enormous new quantities of Texas light crude. Instead, companies are shipping it abroad and finding lucrative new markets. “Every single molecule from here on out has to be exported,” . American crude is now sold to countries from South Korea and India to Italy and Colombia. Even the oil-rich United Arab Emirates buys some. The lifting of the export restrictions “is tantamount to one of the most important things that’s ever been done for the industry,” But the country is not “energy independent” in the way most Americans would conceive of the idea. That’s because the U.S. is still importing oil. Substantially less than the high point in 2005, but plenty: 1.4 billion barrels in the first half of this year alone, a third of which came from the foreign oil cartel known as OPEC, whose membership includes political minefields like Saudi Arabia and Venezuela.
Oil exports will continue to grow - and only price swings are likely to stop it - The U.S. has fundamentally changed the global energy market in the last decade, becoming the world’s largest oil producer in 2018 when it surpassed first Saudi Arabia and then Russia.But a growing share of that oil production is flowing overseas, with Department of Energy data showing that crude oil exports hit a record 2.2 million barrels a day in June. Through July, U.S. crude oil exports have averaged more than 1.8 million barrels a day out of an average production of 10.5 million barrels a day. In other words, one in six barrels of oil were shipped out of the country. So why isn’t more oil being consumed at home in the U.S? The answer goes back decades, when refiners in Texas and Louisiana Gulf Coasts looked at declining U.S. oil production rates and retooled their refineries to run heavier, denser crude oils produced in places like Mexico, Venezuela, and the Middle East region.What American refiners weren’t ready for was the rapid development of unconventional shale oil and gas reserves in West and South Texas, North Dakota and other states, made possible by the combination of horizontal drilling techniques and hydraulic fracturing.The Bakken of North Dakota and Eagle Ford shale of South Texas were reborn as large oil and gas producing fields. The Permian Basin in West Texas followed soon after, reversing years of declining production to become the largest oil field in the U.S. by oil production. It’s natural gas production is second only to the Appalachia region, home to the Marcellus and Utica shale formations.U.S. refiners have, according to analysts, absorbed as much of the new U.S. crude oil — which is lighter and less dense than imported oil — as they can. Chevron Corp., which operates refineries in California and Mississippi, said Wednesday that it is looking for opportunities to buy or build a new refinery in the Houston area to process its own growing production out of the Permian.Chevron’s proposal may be an anomaly. As U.S. crude oil production continues to ramp up — the Energy Department predicts U.S. production will reach nearly 12 million barrels a day in 2018 — most companies plan to put that oil out on the global market. S&P Global Platts and Raymond James expect crude oil exports to be around 4 million barrels a day by 2020, and companies up and down the Gulf Coast are investing billions to move the growing volumes to foreign markets.
Permian basin pipeline constraints to limit 2019 production -- A lack of pipelines to carry oil and natural gas out of the Permian basin in West Texas and southeastern New Mexico will limit exploration and production and weaken realized prices until late 2019, when new pipeline capacity comes online, Moody’s Investors Service said in a recent report. The surge in Permian development over the past 2 years has constrained labor resources, proppant supplies, infrastructure, and pipeline takeaway capacity for oil, natural gas liquids, and gas. According to the report, pipeline takeaway capacity for oil and gas to markets outside the Permian is likely to be insufficient for the region’s strong growth in oil and gas production for much of 2019. New pipelines will likely go into service at various times in second-half 2019, alleviating the bottleneck, but until then capacity constraints will likely limit producers’ activities. Some E&P companies in the Permian lack firm direct transportation contracts with pipelines, raising their risk of capacity shortfalls, and leaving them vulnerable to any price drop, the report says. Pioneer Natural Resources Co., Concho Resources Inc., and Diamondback Energy Inc. all hold contracts that cover all or most of their anticipated production for 2019, but smaller Permian-focused producers Laredo Petroleum Inc., Jagged Peak Energy LLC, and Endeavor Energy Resources LP have only limited transportation contracts in hand for 2019. Though they can still sell their products through other means and hedge the basis differentials, a lack of contracted capacity can leave producers vulnerable to capacity shortfalls, as anticipated in 2019, or any stress on realized prices. The potential shortfall in takeaway capacity from the Permian, however, will not have significant negative credit implications for most of the rated E&P companies operating there, says Moody’s.
Peak Permian Basin? What the bulls and bears say - CNBC video -CNBC's Brian Sullivan reports from the Permian Basin in Texas on the state of the oil market.
Colorado's Weld County Tweaks Oil/NatGas Pipeline Permitting Process - After more than a year of stakeholder discussions, the Weld County Board of Commissioners has unanimously approved a new administrative process for oil and natural gas pipelines in the heart of Colorado's Denver-Julesburg (DJ) Basin.The changes, which take effect Feb. 1, apply to pipelines that are 12-inch diameter or larger and have received mixed reviews from the industry, landowners, and government officials.The Colorado Oil and Gas Association (COGA) supports the changes. A landowner told local news media that he’s concerned the changes don’t go far enough because they don’t cover smaller pipelines.County officials emphasized that the commissioners' action was limited to switching to an administrative process after years of using a "special review" process. The administrative approach would find planning staff interacting more with pipeline officials, but critics said that leaves little room for more public participation.County planning officials said that the new requirements include a location assessment for pipelines (LAP) in response to landowner concerns. Under the new approach, operators are required to provide information on how they would mitigate conflicts with irrigation ditch companies or ditch easement owners who have land that is crossed by pipelines. The former special review process did not include such a requirement."Over the past year, COGA has worked closely with its membership and with Weld County to advance the newest portion of the county code -- the location assessment, or LAP," said COGA CEO Dan Haley."We are grateful to Weld County leadership for giving us the opportunity to participate as a stakeholder," Haley said. "It can be lengthy and at times a difficult process, but Weld County serves as a model of how local governments can create win-win scenarios through strong stakeholder discussions when drafting new regulations." Landowners contend that their concerns have always been about getting early notification from pipelines and an attempt by them to get agreements with the private property owners before they start the public process of getting local governmental permits.
Valve Turners on Trial: Judge Acquits Three Climate Activists Who Shut Down Tar Sands Pipelines - Democracy Now! video & transcript - A month before the 2016 election, anti-pipeline activists staged an unprecedented coordinated action to shut down the flow of oil from Canada to the United States. On October 11, 2016, activists in North Dakota, Washington, Montana and Minnesota turned the manual safety valves on four pipelines, temporarily halting the flow of nearly 70 percent of the crude oil imported to the United States from Canada. They came to be known as the “valve turners.” What followed was a lengthy legal battle that ended with some of the activists in jail. But on Tuesday, three valve turners who broke into an oil pipeline facility in Minnesota on that day in 2016 were acquitted. We speak with the valve turners themselves, Annette Klapstein and Emily Johnston, about their acquittal. Johnston is a poet and co-founder of 350Seattle.org, and Klapstein is a retired attorney for the Puyallup Tribe and member of the Raging Grannies. We also speak with their attorney, Kelsey Skaggs.
Poll: Most Montanans Want Natural Gas Companies to Fix Leaks – Montanans and other westerners overwhelmingly want oil and gas companies to stop operational gas leaks, according to a new poll. That puts them at odds with recent moves by the Trump administration. According to a Center for Western Priorities survey, 92 percent of Montana voters support requiring companies operating on public lands to detect and repair gas leaks in their equipment. Last week, the Interior Department rolled back an Obama-era methane waste rule and the U.S. Environmental Protection Agency has proposed doing the same. Rick Potts, interim executive director of Montana Conservation Voters, says this is troubling on many fronts, and could cost Montanans jobs."The oil and gas companies, in order to do these inspections and maintenance and repair of their oil and gas facilities, are going to require labor,” he points out. “And that means there's good-paying jobs in the oil and gas fields that are being eliminated by the rollback of these protective regulations and rules." Potts says wasted methane at these operations is costing oil and gas companies in lost revenue and notes that methane is a powerful greenhouse gas that is harmful to the environment. The survey also polled voters in Arizona, Colorado, New Mexico and Nevada and found 89 percent of people overall support waste prevention. The Trump administration says the rules are burdensome, especially on small drilling operations.
Leaking pipe spills crude oil at Torrance Refinery - Nearly 1,900 gallons of crude oil leaked from a ruptured pipe over the weekend at the Torrance Refinery, though none of it left the site, fire department officials said Monday, Oct. 8. The leak of 44 barrels of oil was discovered about 9:30 a.m. Saturday, said Assistant Fire Chief Steve Treskes, who was also the platoon commander on the incident. The oil seeped through a one-inch crack in an eight-inch diameter pipe, Treskes said. It’s unknown how long it took for the leak to be discovered, but a temporary clamp was attached to the pipe to stop it. “It was leaking into a concrete containment area so it didn’t leave the site,” Treskes said. “We were able to get a vacuum truck to vacuum up the material and dispose of it.” Torrance Refinery spokeswoman Gesuina Paras confirmed the incident Monday, but did not disclose what caused the leak. The hazardous materials spill was reported to the Governor’s Office of Emergency Services as required. The refinery has been under greater scrutiny in the community since a February 2015 explosion almost caused a “catastrophic” leak of highly-toxic hydrofluoric acid that could have killed and injured thousands, federal officials said. Since then, a series of incidents — including excessive flaring that has led to millions in fines by the regional air quality watchdog — have occurred.
'Major incident' confirmed at Canada's largest refinery after reports of explosion - Irving Oil confirmed a "major incident" at Canada's largest refinery following reports of an explosion at the facility, a critical source of fuel for the U.S. Northeast market.The explosion reportedly rocked the neighborhood around the Irving Oil refinery in Saint John, New Brunswick. It was not immediately clear what facilities at the plant were impacted.@irvingoil: We can confirm that a major incident has occurred at our Saint John refinery this morning. We are actively assessing the situation at this time and will share more information when available.The plant has the capacity to refine 320,000 barrels per day of gasoline, diesel heating oil, jet fuel and other petroleum products. Irving Oil exports more than half of that supply to the United States. Photos of Irving's Saint John refinery posted to social media showed flames and black clouds against a blue sky. Residents reported that a blast shook homes. The refinery employs 1,400 workers and is situated on a 780-acre plot in an area with "thousands" of neighbors, according to Irving Oil's website. Irving Oil tweeted that all employees and contractors have been accounted for. Several contractors were being treated for non-life threatening injuries related to the incident, the company said. Crude oil and gasoline futures moved higher after the reports. The refinery is likely the most important in terms of fuel imports to the U.S. Northeast market, according to Tom Kloza, global head of energy analysis at Oil Price Information Service. We probably import more gasoline from that single refinery than any other single refinery around the world," he said.
Risk of power outages in Puget Sound after Canadian pipeline explosion cuts off natural-gas supply - Seattle Times - A pipeline explosion in British Columbia on Tuesday cut off the flow of Canadian natural gas into Washington, raising the risk of power outages around the state. Puget Sound Energy (PSE), Avista Corp. and Cascade Natural Gas said Wednesday that their gas supplies had been disrupted due to the explosion that occurred a day earlier and asked their customers to reduce consumption. The three companies serve almost 2.4 million customers combined, mostly in Washington, according to the companies’ websites. The explosion caused no injuries, The Canadian Press reported. Enbridge Inc., the company that owns the pipeline on the Canadian side, shut down the ruptured pipeline and a parallel pipeline Wednesday. The company received government approval to reopen the parallel pipeline, the company said in a statement at 9:25 p.m. Enbridge has now begun a “multi-hour process” to return the parallel pipeline to service. The company has not said when the ruptured pipeline may reopen.
Gas prices soar in Northwest, Canadian crude sinks to record low - A natural gas pipeline rupture in British Columbia forced refineries in Washington to cut output, pushing gasoline prices higher in the Pacific Northwest. Enbridge Inc.’s WestCoast Mainline ruptured near Prince George late Tuesday. The fire has been extinguished, Michael Barnes, a company spokesman, said Wednesday in an emailed statement. The line, along with an adjacent one, has been depressurized, and he said the company “cannot speculate about how long it will take to resolve the situation.” Canada’s National Energy Board issued an order late Wednesday local time allowing Enbridge to restart the adjacent line at reduced pressure, the regulator said in a statement on its website. The company can later apply to resume full pressure. The company will only be allowed to restart the damaged line when the regulator is satisfied it can be operated safely.
Gas Flows Resume After Canada Pipe Rupture Hits Oil Refiners - -- Natural gas has begun flowing again on a pipeline in British Columbia after a rupture on an adjacent line forced oil refineries in Washington to cut output and sent gasoline prices soaring up and down the West Coast. An explosion Tuesday on Enbridge Inc.’s Westcoast Mainline gas system rippled through energy markets in the Pacific Northwest. Late Wednesday, Canadian regulators OK’d Enbridge’s plan to pump gas through a 30-inch (76-centimeter) line that is in the same right of way as the 36-inch line that exploded. The smaller line, shut as a precautionary measure after the rupture, will be returned to about 80 percent of its capacity, Enbridge said in a statement. Wholesale gasoline in Portland, Oregon, jumped 19 cents to 55 cents a gallon over New York-traded futures contracts, the highest level in five years, according to data compiled by Bloomberg. San Francisco prices climbed 6 cents to the highest premium in more than a year. Heavy Canadian crude traded at a record $52.40 discount to West Texas Intermediate, the U.S. benchmark. Fortis Inc., a Canadian company that distributes gas from the system, said in a statement Thursday that the line has begun flowing, but it asked customers to “avoid non-essential use of gas until the situation is completely resolved” because supplies are still tight. Williams Cos. said it’s working with local distribution companies to supply residential and other “critical gas users” with fuel shipped on its Northwest Pipeline. Starting Thursday, the Williams line will be able to draw up to 1.2 billion cubic feet per day of gas from a storage facility in southwest Washington, which is being placed back into service after it underwent scheduled maintenance. The Enbridge pipeline is part of its Westcoast Energy network, and carries as much as 2.9 billion cubic feet of gas a day -- supplying half of the demand from Washington, Oregon and Idaho -- from the Fort Nelson processing plant in northern British Columbia to the U.S. border. The 1,751-mile (2,818-kilometer) line connects to gas fields as far north as the Yukon and Northwest Territories.
Trans Mountain pipeline shut down after possible oil spill —The Trans Mountain pipeline has been shut down as a precautionary measure after a possible oil spill in Surrey.In a statement, the company said it is investigating the source of a “gasoline-like substance” found in a ditch near the pipeline. Trans Mountain has shut down its oil pipeline due to a possible spill discovered late Saturday, Oct. 6, 2018, in Surrey, B.C. (Darryl Dyck / The Canadian Press)“At this time, we have found no evidence that the source of the product is the pipeline,” the company said. Surrey fire department assistant chief Shelley Morris said fire crews deployed a hazardous-materials team to the scene on Douglas Rd. around 11 p.m. Saturday. A petroleum product was discovered in a rainwater ditch near the pipeline, but there’s no indication as to how much petroleum was in the ground as some petroleum could have seeped into soil. Morris said Trans Mountain shut down the pipeline as soon as it was notified by the fire department. Since then, Trans Mountain’s own teams have taken over the investigation to determine the source of the spill. By Sunday afternoon, Morris said the pipeline had deployed four spill cleanup trucks and was using vacuums to clean the area around the ditch. The Trans Mountain pipeline has been shut down as a precautionary measure after a possible oil spill in Surrey . . .
Enbridge Pipeline Explosion Forces First Nations Community to Flee - A 36-inch natural gas transmission pipeline owned and operated by Enbridge exploded around 5:45 p.m. in rural land north of Prince George, British Columbia on Tuesday, the Canadian pipeline company said in amedia release. The blast forced 100 people to evacuate from the nearby Lheidli T'enneh First Nation as a precaution, Enbridge said. "I was able to see it very clearly from the hill," Prince George resident Dhruv Desai commented to theCanadian Press. "It was huge even from this distance."There are no reports of injuries as a result of the blast and most residents have been allowed to return home. The line has been shut down and an investigation has been launched to determine the cause of the incident, the company said.Chief Dominic Frederick of Lheidli T'enneh First Nation, who posted video footage of the explosion onto Facebook, told CBC News that the explosion happened only about 2 kilometers (1.2 miles) from the reserve."We sort of trained for it ... because of the wildfires," Frederick added about the speedy evacuation. "Everything was just left behind."Frederick told the Associated Press that Enbridge contacted him soon after the explosion."They had told me there was gas building up in the underground. For some reason or another the gas had stopped flowing and it built up and it just exploded," he said.The blast may lead to a natural gas shortage to homes in British Columbia as well as bordering American states. According to the Associated Press, the damaged Enbridge pipeline connects to the Northwest Pipeline system, which feeds Puget Sound Energy in Washington State and Northwest Natural Gas in Portland. On Wednesday, Enbridge said in a media release that it received the National Energy Board's approval to restart its 30-inch line located in the same right of way as the impacted 36-inch line.
B.C. tribe sues U.S. barge company over 2016 spill - A First Nations tribe in British Columbia is suing the operator of a U.S. fuel barge that spilled thousands of gallons of diesel near the tribe’s reserve nearly two years ago. Heiltsuk First Nations member Kelly Brown got close enough in his boat to make out the name of a grounded tug in the Inside Passage. “Nathan E. Stewart has sunk,” Brown says in the video. “There’s fuel just flowing out of the boat – you can see it from here.” Brown shared video of the encounter in the Seaforth Channel that was re-posted by the Vancouver Sun. Fortunately the tug’s accompanying fuel barge had already delivered its load in Ketchikan and was nearly empty.Still, around 26,000 gallons of diesel and other oils from the southbound tug Nathan E. Stewart spilled that morning. An NTSB investigation later found the crew member standing watch had fallen asleep.The First Nations tribe says its subsistence clam beds were contaminated and haven’t been harvested since.Nearly two years later to the day, the Heiltsuk Tribal Council filed a lawsuit against the B.C. and Canadian governments.The suit also names crew members and their employer: Kirby Offshore Marine which regularly ships fuel from Washington State to ports in Southeast Alaska.“Our law has been violated and the legal action we are taking in the B.C. Supreme Court today is our attempt, our bid to hold industry and government accountable for this negligence,” Heiltsuk First Nations hereditary chief Frank Brown told reporters in Vancouver on Wednesday. The Kirby Corporation released a short statement admitting no wrongdoing.
As Canadian pipeline plans falter, more oil is moving by rail — prompting familiar fears — For years, Canadians have heard a common refrain: If a new pipeline doesn’t materialize to get their oil to market, the oil will just travel a different way — by rail. It’s a trade-off that can inspire fear in a country where an oil-by-rail disaster killed 47 people just five years ago. Environmentalists have sometimes described the rail option as a threat or “boogeyman” looming over the pipeline debate. But now the prediction appears to be coming true, as the volume of oil traveling by rail out of Canada — to the United States — has surged in the past few months as the country’s latest pipeline project foundered. The problems around the Trans Mountain pipeline project have led to increasing pessimism among oil producers and an increasing willingness to invest in rail capacity. That means Canadians are preparing for even higher oil-by-rail volumes over the next few years while sorting out how their fears stack up against reality. “It’s a storm that’s been brewing for a while,” said Kent Fellows, an economist at the University of Calgary, in the heart of Canada’s oil country. “The risks of spills are higher [by rail], but the fact that this stuff needs to get to market because people are buying it means it’ll search out the lowest-cost pathway,” he said. The spike is dramatic. Before 2012, little oil was shipped by rail out of Canada. This past June, the country’s energy regulator announced a record-breaking average of 200,000 barrels per day exported that way. The Paris-based International Energy Agency estimates that the 2019 annual average will reach 390,000 barrels per day. But the oil world had been preparing before this summer. Imperial Oil decided to build a new rail terminal in Edmonton in 2013. “At the time, we said it would be a bit of an insurance policy if market access — i.e. new pipelines — did not come about in the needed time frame,” Imperial Oil CEO Rich Kruger said during a public conference call in late July. “Like any insurance policy, our hope was that we did not have to use it too much. Over time . . . we have increased volumes at it.”
Western Canadian Select (WCS) crude topples to 10-year low. - The price of northeastern Alberta’s key crude oil benchmark, Western Canadian Select (WCS), has been dropping like a rock. Last week, the heavy, sour blend of crude fell to a $45/bbl discount against U.S. benchmark West Texas Intermediate (WTI) — the biggest differential in at least 10 years. With an unplanned summertime outage at a Syncrude upgrader now over, Alberta production rising and pipeline takeaway capacity static — at least for now — the value of Canada’s crude may have even bleaker days ahead, despite a recent global rally in oil prices. Today, we explain why Western Canada’s oil producers are facing the prospect of mile-wide spreads for months to come.Pipeline capacity constraints out of prolific oil-producing regions have played an oversized role in North American crude pricing this year. Not only are takeaway constraints an issue in Alberta, but they’ve also wreaked havoc in the Permian Basin in West Texas. Those two regions, West Texas and Alberta have a few things in common — weather not included — and the lament of limited crude pipeline space to match growing output is one of them. Without enough capacity to remove oil from the producing market, the value of the commodity suffers as supplies pile up. (This blog will focus on Western Canada, but if you want to get your Permian fix on this issue, dive into the All Dressed Up With Nowhere to Go series.) The Western Canadian Sedimentary Basin (WCSB) has more than 4 MMb/d of crude pipeline takeaway capacity, but it’s simply not enough to match production in the region, which is seen rising to 5 MMb/d by 2025. (See our "The Shape I'm In" Drill Down Report for more on current and projected production.) The pipelines in the area actually operate at a lower level than that nameplate capacity, so space is quite limited. This same problem afflicts Permian producers, too, but there’s hope on the horizon: pipeline permitting approvals are easier to get in Texas, and producers there are looking forward to the completion of a multitude of projects aimed at relieving constraints and assuaging the current price discount. That’s not the case in Western Canada, where the spotlight on pipeline companies burns brighter and environmental backlash is much stronger. The years-long (going on a decade-long) battle over TransCanada’s Keystone XL project is the quintessential example. Now the Trans Mountain Expansion (TMX) Project is under fire, too.
Mexico Facing 'Perfect Storm' on Reduced Natural Gas Production, Pipeline Imports - Concern is growing in Mexico over supplies of natural gas to industry, and the leader of the powerful lobby of Monterrey industrialists, Juan Ignacio Garza, told the daily Reforma last week that "a perfect storm" is brewing in the country. Garza is president of the Monterrey-based Cámara de la Industria de Transformación de Nuevo León (Caintra), the Manufacturing Chamber of the state of Nuevo Leon. He said while gas production by state-owned Petroleos Mexicanos (Pemex) is falling, so too are imports from the United States, largely because of community protests against pipelines, and liquefied natural gas imports have consequently doubled. The upcoming conclusion of the undersea Sur de Texas-Tuxpan pipeline between Texas and Mexico is critical, Garza said. If it is delayed, problems will only grow worse, he said. Ironically, however, Mexico has more natural gas resources than the United States in per capital terms, Hector Moreira, a member of the upstream regulator, Comision Nacional de Hidrocarburos (CNH) explained recently at the regulator’s presentation on the nation's natural gas sector. At present, proven gas reserves stand at 10.02 Tcf, down from 16.82 Tcf in 2010. Of prospective resources, by far the largest are those in the Gulf of Mexico (GOM) deepwater, with about 43 Tcf, of which about 40% is dry gas. However, the resources remain untapped. The others are the Sabinas and Burro Pichacos basins, where almost all the prospective reserves are of dry gas, as are those of Tampico-Misantla, Veracruz, and the Southeast basins. Together they have prospective reserves of about 20 Tcf. Burgos Basin, across the border from Texas, has prospective resources of around 13 Tcf, about 90% of which is wet gas.
Gas fracking to start in England next week after seven-year halt (Reuters) - Shale gas developer Cuadrilla Resources expects to start gas fracking in northwest England next week, seven years after its first attempt to hydraulically fracture a well led to earth tremors, public protests and an overhaul of regulations. The process, behind a surge in U.S. gas production, involves fracturing rock deep under ground using a mixture of water, sand and chemicals to encourage the flow of hydrocarbons from shale, a dense and tightly-packed sedimentary rock. It has draw criticism from the public and campaigners concerned about the environmental impact of fracking and the pollution caused by fossil fuels. Protests against the practice led to work at Cuadrilla’s site being halted in 2011. But the government, keen to cut Britain’s reliance on gas imports which soared to more than 50 percent of gas supplies, has tightened regulations and earlier this year gave consent for Cuadrilla to go ahead again. Cuadrilla Chief Executive Francis Egan told Reuters that fracking of two wells and associated work would test gas flows. The industry’s future in Europe may hinge on the outcome. Although fracking has grown rapidly in the United States, it has not been proved viable in Europe despite several attempts, including projects that failed in Poland five years ago. Fracking has been banned in France, Germany and several other European countries. The British Geological Survey estimates shale gas resources in northern England alone could amount to 1,300 trillion cubic feet (tcf) of gas, 10 percent of which could meet the country’s demand for almost 40 years. Britain has just 6.5 tcf in proved reserves and last year pumped 1.5 tcf, according to the BP Statistics Review. Proved reserves are the strictest calculation of oil and gas that can be commercially extracted. They change as discoveries are made.
It Once Caused Earthquakes. Now a Driller in Britain Tries Fracking Again - NYT — In a farmer’s field in northwestern England, a decade-old energy company hopes to overcome its decidedly rocky history of shale drilling in the United Kingdom. Seven years after earthquakes followed its first attempt at hydraulic fracturing, that company, Cuadrilla Resources, has returned with a government-enforced go-slow approach. It has set up a chain of seismic monitors three miles beyond its dig to gauge tremors. Contractors from Schlumberger, the oil field services firm, plan to pace themselves and spend up to three months stimulating the wells using the process known as fracking. In the United States, a similar effort would take just a few days. Francis Egan, the chief executive of Cuadrilla, will be monitoring closely when the first gush of water, sand and chemicals cracks the shale bed called the Bowland basin. So will wary homeowners and environmentalists who have battled Cuadrilla in court. On Friday, a judge in London rejected the latest bid to delay the drilling, and Cuadrilla promptly announced it would start work on Saturday. This plot of land outside the city of Blackpool, where cows graze and anti-fracking activists have set up camp nearby, may decide the future of fracking in Britain and other parts of Europe. Mr. Egan, in an interview last week, said his own business calculation could be reduced to a simple truth: “It’s all down to the rocks.” In a country that has long valued a robust oil industry, fracking has been an exercise in frustration for energy explorers. Britain has been ambivalent about the innovative water-blasting method even as it has transformed the United States into a major petroleum exporter.The central government of Prime Minister Theresa May has supported shale exploration, in part because of the declining output from oil and gas fields in the North Sea. But local councils have been far more critical of possible environmental and community costs. Their skepticism matters because they have a large sway over land use. A series of small earthquakes in 2011, when Cuadrilla drilled in another site, was documented by the British Geological Survey and stoked discontent with fracking. The controversy stirred demands for more stringent safety measures as well as debate over the risk to water and green space in the English countryside.
Protesters march in Preston for jailed anti-fracking activists - Hundreds of supporters of the three environmental activists who became the first people to be jailed for an anti-fracking protest have demonstrated outside the prison where they are being held after an appeal against their imprisonment was lodged. Protesters marched across Preston chanting “Free the three”, “Protest is not a crime”, and “We said no”, in reference to the local council’s decision to ban fracking in the county that was later overturned by Sajid Javid. Simon Blevins, Richard Roberts and Rich Loizou were jailed for more than a year each at Preston crown court last week after being convicted of public nuisance following a protest outside energy firm Cuadrilla’s site in Lancashire in July 2017. Organisers said that about 500 people came from across the country to demonstrate against their “inappropriate imprisonment”. “It is an outrage and a scandal that three men are currently sat behind bars for the supposed crime of public nuisance for sitting quietly on top of a lorry,” said Leigh Coghill, an activist from the campaigning group Frack Free Lancashire. “This is an emergency: fracking is imminent, our opposition has been broad and unrelenting, and individuals such as the frack-free four decided to take civil disobedience because democracy has been exhausted. Their imprisonment is inappropriate, not in the public interest, and an appeal is ongoing.” Among the supporters were Loizou’s parents Sharron and Platon. Mr Loizou said things had been difficult since his son had been sentenced, and added: “We’re very sad for what’s happened. We never believed it would come to a prison sentence. We were shocked.”
Judge who jailed Fracking Three has family links to oil and gas firms- The judge who jailed three anti-fracking campaigners for climbing on lorries at a drilling site has family links to the oil and gas industry, it was claimed today. Judge Robert Altham jailed the trio on September 26 after they spent days illegally sitting on top of lorry cabs to try to disrupt controversial shale gas drilling at a Cuadrilla site in Lancashire. But the married father-of-three's family's business JC Altham and Sons is said to supply offshore gas and oil platforms. And his sister Jane Watson, has backed an open letter promoting fracking, which said 'it's time to give shale a chance' - claiming that it would create jobs. Ms Watson, 54, is listed on Companies House as managing director of the firm - based in the Lancashire ferry port of Heysham – while the judge's parents John, 86, and Linda, 84, are directors. The company, which supplies food, tools, rigging equipment and clothes to ships' stores, says online that it is a 'specialist supplier to offshore gas and oil platforms'. However, it is not known which companies it supplies.
Analysts Bearish on UK Shale Prospects -Analysts at Fitch Solutions Macro Research have announced that they remain “widely bearish” on the prospects of UK shale gas in a new report. “Despite hydraulic fracturing of two wells expected within days, the first fracturing in the UK for seven years, we remain widely bearish on the prospects of UK shale gas,” the analysts stated in the report, which was sent to Rigzone. “For shale gas to be commercially produced in the UK, extensive drilling work must be carried out to better understand the potential resource base, the social and political scope for which we believe remains small,” the analysts added. “The proposed review of regulation of shale drilling and fracking regulation is likely to prompt a significant political and social fallout. Subsequently, we do not expect the proposed measures to offer much upside to the development of the unconventional sector in the UK,” the analysts continued. Cuadrilla announced Friday that it expects to start hydraulically fracturing the shale rock around the first of its two horizontal shale gas exploration wells at its UK Preston New Road site in Lancashire in the next week. The company currently has eight sites, including Preston New Road, in its Lancashire Bowland shale gas exploration license area, according to its website. Cuadrilla states on its website that it believes “at least” 200 trillion cubic feet of natural gas is trapped in the shale rock in its license area.
UK government looks to weaken tremor standards after fracking starts – Unearthed - The UK’s energy minister has suggested the government could weaken seismic activity standards at fracking sites, according to documents obtained by Unearthed. In a letter sent to Conservative MP Kevin Hollinrake in July, Claire Perry said the traffic lights system (TLS) the government currently uses to issue alerts of seismic activity is “set at an explicitly cautious level but, as we gain experience in applying these measures, the trigger levels can be adjusted upwards without compromising the effectiveness of the controls”.This comes as Cuadrilla looks to start fracking in Lancashire this week, days after the UN’s scientific body on climate change delivered a special report that warned global carbon emissions need to be halved by 2030 in order to meet the ambition set by the landmark Paris Agreement. In order to achieve this, it suggested natural gas use would have to fall sharply without the rapid and widespread deployment of untested carbon capture technology.Government advisers have previously warned that new onshore oil and gas extraction could jeopardise the country’s legally-binding climate targets. The traffic light system came into effect in 2014 following a series of earthquakes linked to early fracking efforts. The policy is widely-regarded as stringent, with drillers required to ‘proceed with caution at reduced rates’ in the event of any seismic activity, no matter how small, and to stop fracking immediately if activity exceeds 0.5 on the richter scale. Activity at this level would be imperceptible to households. Hollinrake, MP of the Thirsk and Malton constituency in North Yorkshire, who has supported fracking if well regulated, declined to back the government’s proposal, claiming it was premature. “At this point in time I think we need to know a lot more before I’d support that position. The Traffic Light System is there for a reason,” he told Unearthed.
Fuel spill feared as cargo ships collide off Corsica - A cargo ship rammed into another freight vessel near the French Mediterranean island of Corsica early Sunday, causing no injuries but causing a leak which officials say is most likely fuel. The Ulysse, operated by the Tunisian operator CTN, struck the Cyprus-based CLS Virgina while it was anchored about 30 kilometres off the northern tip of the island at around 7:30 am, the regional naval authority said. According to the CTN's published shipping schedule, the Ulysse was travelling from Genoa in Italy to the Tunisian port at Rades near Tunis. The Virginia was not carrying any cargo at the time. "The collision caused considerable damage, with an opening several metres long in the CLS Virginia's hull," the naval authority said, adding that the leaking liquid was spread over "several hundred metres". Officials said they had not yet identified the liquid, but a source close to the inquiry said it was probably leaking "from one of the fuel tanks". The cause of the accident was not yet known, though weather conditions are not thought to have been a factor, with relatively calm seas and good visibility in the area at the time. The Tunisian ship "was maybe going too fast compared to its ability to react," the source told AFP. A tugboat has been dispatched to the scene and the French navy has also sent a vessel specialised in containing and cleaning up pollution spills. Italy has also offered its assistance as part of the Ramogepol accord between France, Italy and Monaco to jointly intervene in cases of maritime pollution.
11 Tcf Discovery Made in Russia - PJSC Novatek has announced the discovery of a new gas field in the Ob Bay area, which is estimated to hold natural gas reserves of more than 11 trillion cubic feet. The discovery was made via an exploration well in the North-Obsk license area. “The discovery of a new field is an important starting point for the start of one of our future Arctic LNG projects,” Leonid Mikhelson, chairman of the board of Novatek, said in a company statement posted on Novatek’s website, which was translated into English. “Its favorable geographical location, a huge resource base and our accumulated experience suggest good prerequisites for the successful implementation of the new LNG project,” he added. Wood Mackenzie flagged the discovery on its Russia upstream focused Twitter account. Novatek’s subsidiary, LLC Arctic LNG 3, started drilling the North Obsk license area well in July this year. Drilling was carried out using the “self-lifting floating drilling rig ‘Amazon’ of the contractor LLC ‘Gazprom Fleet,’” Novatek revealed in a translated statement on its website.
Russia to resume gas imports from Turkmenistan — The head of Russia's giant state-controlled gas company says it plans to resume imports from Turkmenistan after a three-year break over a pricing dispute. Gazprom chief Alexei Miller said in televised remarks while visiting Turkmenistan that the company expects to start buying gas from the Central Asian country starting Jan. 1. Miller said he discussed the prospect of renewed imports with Turkmen officials on Tuesday, but volumes and other details are yet to be worked out. Russia was the main importer of Turkmenistan's gas before it stopped buying it at the start of 2016 amid a slump in global prices, citing alleged contract violations. Turkmenistan then halted shipments of natural gas to Iran, citing Iran's debt for previous supplies, and was left with China as its sole customer.
Larry Kudlow Says American Energy Can Upend Russia's Influence - President Donald Trump’s chief economic adviser said the U.S. is capable of upending Russia’s “hegemony” in the international energy market. “Some of the things we’re talking about do focus on the energy sector,” Larry Kudlow said during an interview with Hill.TV that aired Monday. “We are the dominant energy power. We will be producing 15 million barrels of oil per day in a couple of years. We’re passing the Saudis. We’re passing Russia.” Kudlow, who currently serves as director of the National Economic Council, bragged that there is so much natural gas coming out of the Permian Basin, for example, American producers don’t even know what to do with it. Numerous regions across the U.S. are experiencing a natural gas boom, thanks in large part to the implementation of hydraulic fracturing. “So what does that mean? Means we have to have infrastructure for pipelines, east, west, west, east. Get this stuff to the northeast, get this stuff to Europe and challenge Russia’s hegemony on nat gas and LNG [liquified natural gas],” he said. “This is doable. We have to really focus on the energy sector. Most of this stuff can be done privately.” Kudlow ended the segment by explaining that the government simply has to “speed up” the permitting process and deregulate the industry in order to unlock the country’s full energy potential. This approach, of course, has been the bedrock of the Trump administration’s agenda. Since entering office, Trump has made moves to roll back a number of Obama-era environmental regulations, including the Clean Power Plan, Waters of the United States, and has withdrawn the U.S. from the Paris climate accord. More recently, Trump has rolled back more rules that have hindered the fossil fuel industry, such as methane, mercury and offshore drilling regulations.
Bipartisan group of senators forward plan to break Russia’s ‘energy stranglehold on Europe’ - Aiming to break Russia’s “energy stranglehold on Europe” and the Kremlin propaganda efforts it fuels, a bipartisan group of senators has introduced a proposal to fund $1 billion worth of energy projects across the continent.Chairman of the Senate Foreign Relations Subcommittee on Europe and Regional Security Cooperation, Ron Johnson, Wisconsin Republican, and the panel’s top Democrat, Chris Murphy, Connecticut, have introduced the European Energy Security and Diversification Act to provide “new tools for the United States to combat malign Russian influence and create economic opportunities at home and abroad,” according to a subcommittee statement.Russia is the largest exporter of oil and natural gas to the European Union. Recent years have seen it accused of using energy pipeline shutdowns to intimidate and blackmail governments that the Kremlin targets in disputes.In a bid to diversify its energy sources. EU officials have also investigated the Russian state-owned energy company, Gazprom, for stifling competition in Central and Eastern European.“Russia uses its dominance of the energy market, along with bribery, corruption and propaganda to undermine Western institutions and install pliant governments that are unable or unwilling to counter Russia or its president, Vladimir Putin,” the subcommittee said on Wednesday.
Trump Rerouting World's Oil Tankers-- U.S. President Donald Trump is redirecting global oil flows. West African and Latin American producers are sending ever-growing volumes of crude to China. America’s exports to the Asian country have slumped in favor of its neighbors. There’s an urgent global need to find replacement barrels for Iran’s, whose exports might just collapse next month. The thing that connects the shifting flows is Trump’s foreign policy. China’s slumping purchases of American crude -- and its extra buying from elsewhere -- have coincided with a trade war between the U.S. and the Asian country. Likewise, reimposed sanctions on Iran, which start Nov. 4, have increased the need for the type of heavy, sour crude that the Persian Gulf state sells. “If you combine the impact of U.S. sanctions on Iran and the U.S. trade war with China, it is Trump’s foreign policy which is reshaping oil flows,” said Olivier Jakob, managing director of consultancy Petromatrix GmbH. “The U.S. is becoming a great energy power and they will use that, we are starting to see the implementation of that in different parts of the energy scene, part of that is being seen today in the oil flows.” Oil markets are also grappling with record U.S. output, fueled by shale production, and America’s removal in late 2015 of longstanding crude-export limits. Those shipments -- just a few hundred thousand barrels a day a few years ago -- now consistently top an average of 2 million barrels a day each month. American crude increasingly flows to markets in Asia, Europe and Latin America, data from the U.S. Energy Information Administration show. But there have been recent changes in precisely where those barrels are going. China, the world’s largest energy consumer, in August didn’t import any U.S. crude for the first time since September 2016, according to the most recent data from the U.S. Census Bureau. That compares with almost 12 million barrels in July, when China was the second-largest recipient. Shipments to South Korea soared to a record 267,000 barrels a day in August -- a 313 percent year-on-year increase, according to Bloomberg calculations from Census data. Volumes to Japan and India rose by 198 percent and 165 percent, respectively. Exports to the U.K., Italy and the Netherlands have also surged this year. “The pattern of trade does look as though it’s going to ebb away from a focus on China to other Asian countries, and Europe,”
Is The U.S. Using Force To Sell Its LNG To The World? The Trump Administration trade policy is nowhere so clear as in the energy area. For years it was thought that the younger Bush Administration was one of the most energy industry friendly in history. But the Trump Administration has gone far beyond that. Hiring Ray Tillerson, the former CEO of ExxonMobil, as U.S. Secretary of State, sent a strong signal to the entire industry, even though his tenure proved to be temporary. Prior to that, the Administration withdrew from the Paris Climate Agreement, a long-held priority of Exxon and the entire oil industry. Following hard upon that, the Environmental Protection Agency (EPA) has reduced or eliminated regulations limiting carbon and other pollutants. Going further, the Trump Administration has removed and reduced regulations that hampered the industry expansion, including allowing drilling on both ocean coast, while easing safety regulations that were brought into effect after BP’s Gulf of Mexico disastrous spill, the worst in U.S. history. Government protected nature preserves are being opened to exploration and drilling for the first time in generations. Added to that was the dropping of regulations that for many years prohibited export of U.S. crude. The Administration currently plans to rescind and lower fuel efficiency standards for autos and trucks. That is likely to encourage increased purchase of larger SUVs, increased oil consumption, and rising gasoline prices. The Administration corporate tax cut, one of the largest in U.S. history, also strongly benefitted the energy industry, as it did other industries. . Increasingly, Trump has become the top promoter for increasing exports of U.S. Liquid Natural Gas (LNG) to world markets. He openly threatened to place economic sanctions on Germany if it went ahead with the deal for Russia’s new Nordstream 2 pipeline, that would nearly double natural gas supplies from Russia, Germany’s largest supplier. As most observers noted, the U.S. sanction threat was accompanied by the offer of U.S. LNG to Germany and Europe, as a replacement of Russian gas. No doubt that Trump’s bullying offended European sensibility, but despite the German protest regarding outside interference in its domestic economic affairs, and its intention to complete the Russian pipeline, Germany is quietly building up LNG importing facilities, "as a gesture to American friends." It's no accident that sanctions are aimed at the U.S. largest energy competitors, Russia and Iran, nor is it coincidence that the largest energy importers, Europe, China, Japan, south Korea are also under threat of U.S. tariffs or sanctions.Instead, it clearly shows that the U.S. is using the threat of economic warfare and possible military conflict as leverage to open markets to the newest player on the world's energy market, American LNG. If the U.S. is successful in these deals, it's likely that in future, there will be a parallel attempt to make inroads for US crude export to the very same oil importing countries, relying upon the very same LNG game plan.
Qatar Petroleum CEO warns of upcoming,'very big' LNG shortage - — The head of Qatar Petroleum, Saad al-Kaabi, on Tuesday warned there would be a significant shortage of LNG on global markets sooner than expected as he reaffirmed the company's plans to reach a final investment decision on its domestic LNG expansion project by end-2019. Speaking at the Oil & Money conference in London, al-Kaabi also said Qatar Petroleum would be able to reach a FID on the expansion project without binding LNG sales agreements. Qatar Petroleum revealed in July last year plans to raise the country's LNG production capacity from 77 million mt/year to 100 million mt/year with the construction of three new mega-trains. Last month, it committed to a fourth train, bringing its planned capacity to 110 million mt/year. First LNG production from the new trains is due online by the end of 2023. Al-Kaabi was optimistic on future LNG demand given the current state of the market. "We think the shortage will come much sooner than people anticipate and there is going to be a very big shortage in the market," al-Kaabi said. Industry officials expect the LNG market to tighten significantly in the period after 2021 due to a lack of FIDs for new production projects globally over the past few years. Al-Kaabi said Tuesday that tenders for the FEED contract for the major expansion project have already been released and the process would end in March, followed by the release of an EPC tender. "We are at the tendering stage for all the rigs and the costs, we will have a good handle on the costs next year," al-Kaabi said. A decision on the structure of the project's financing has not yet been decided, but Qatar Petroleum may choose to finance the expansion entirely through its own balance sheet. "We will finance it all from our own financing if we need to, we do not need outside investment," he said.
Egypt to Receive First Israeli Gas as Early as March -- Egypt will begin importing natural gas from Israel under a $15 billion deal as early as March if an undersea pipeline connecting the Mediterranean neighbors is found to be in good condition, moving the country closer to its goal of becoming an energy-exporting hub. Mohammed Shoeib, chief executive officer of East Gas Co., a major Egyptian partner in the pipeline, said supplies would begin at 100 million standard cubic feet of gas per day in the first quarter of 2019 and gradually rise to a maximum of 700 million scf a day. “We expect the pipeline is in good condition,” he told Bloomberg in an interview. “We aim to reach the pipeline’s full capacity or maximum flow rate within three years.” East Gas and the companies developing Israel’s largest natural gas fields agreed last month to buy 39 percent of the East Mediterranean Gas Co., which owns the pipeline connecting southern Israel to Egypt’s Sinai peninsula, clearing the main legal obstacle to the 10-year export contract signed in February. East Gas separately made a deal to buy a further 9 percent from MGPC. The EMG pipeline was originally built to export Egyptian gas to Israel, but has been idle for about six years.
Shell’s oil spill polluted over 113 hectares in Bayelsa -- Leakage from an oilfield operated by Shell Petroleum Development Company (SPDC) at Aghoro community in Bayelsa has discharged some 1,114 barrels of crude oil into the environment. The leakage has adversely affected the fishing vocation of residents who had withdrawn from fishing to pave way for clean-up. The resulting oil spill impacted and polluted an estimated area of 113.03 hectares, according to a joint Investigation Visit (JIV) report of the incident obtained by News Agency of Nigeria (NAN) in Yenagoa on Monday. Community leaders, who participated in the JIV to determine the cause of the spill, reportedly refused to sign the report. The refusal was attributed to wide disparity between the impacted areas claimed by Shell and the community, but Bamidele Odugbesan, the Media Relations Manager at SPDC, said that the grey areas had been sorted out. The report indicated that only 247.5 out of the 1,114 of SPDC’s crude blend had been recovered at the spill site, while the remaining were yet to be accounted for. According to the spill incident report, the oil leak was reported on May 17, but the joint visit could not be immediately conducted until June 23. The report said the spill was caused by equipment failure resulting from weak integrity of the 24 inch Trans Ramos Pipeline giving rise to cracks on the pipeline at Aghoro in Ekeremor Local Government area of Bayelsa State.NAN gathered that repair work on the leaking pipeline is underway, while recovery of spilled oil from the site is still ongoing. Reacting to the development, Mr Odugbesan expressed regret about incessant spills on the Trans Ramos Pipeline, saying that although the May 17 spill was traced to equipment failure, other leaks were predominantly caused by sabotage.
Why China may soon regret its tariffs on US natural gas - Beijing's tariffs on U.S. liquefied natural gas threaten to raise prices for buyers throughout Asia and deal a self-inflicted wound to China's state-owned energy companies. The import tax on American LNG essentially removes U.S. suppliers from consideration at trading desks across China's growing LNG market. There are plenty of supplies elsewhere in the world, but in closing the door to U.S. LNG, China is throwing a wrench into the market and giving sellers an opportunity to hike prices. In the year through June, China was the second biggest buyer of U.S. LNG, according to energy research firm Wood Mackenzie. China is trying to shift from coal to cleaner-burning natural gas as the government aims to reduce air pollution. But the country's domestic gas production and pipeline imports are not growing fast enough to meet demand, so China is turning to LNG, a form of natural gas super-chilled to liquid form and transported by sea in massive tankers. Despite its dependence on LNG, Beijing nevertheless imposed a 10 percent tariff on U.S. supplies last month, retaliating after the Trump administration slapped a 10 percent import tax on $200 billion of Chinese goods. The world's two largest economies play an influential role in the on-demand market for LNG — China as a buyer and the United States as a seller. Their trade dispute promises to redirect LNG trade routes and reverberate throughout the market. It also comes ahead of winter, when demand is highest and LNG customers are vulnerable to price spikes. "The market has been balanced to tight this year," said Bob Ineson, IHS Markit executive director for global LNG. "You're probably going to be in a fairly strong pricing environment through the winter." Chinese buyers have already moved to limit the impact by purchasing most of the LNG they'll need to meet demand this winter, according to Wood Mackenzie. The firm estimates that China will need to buy about 8 million tons of LNG on the spot market, where commodities are purchased for immediate delivery or shipment in the near future.
The Perfect Storm Bringing China And Russia Together - Relations between Russia and the West are at their lowest point since the Cold War due to the crisis in Ukraine and the annexation of Crimea in 2014. Despite the EU’s reliance on Russian gas, which is a third of its annual consumption, Moscow’s dependence on European gas demand is much more severe, with the bulk of its gas exports heading West. This overdependence caused Russia to speed up negotiations on a gas pipeline to China and its ‘pivot to the east’ after relations with the West deteriorated. The result of this pivot was the $400 billion deal concerning the Power of Siberia pipeline. Despite Moscow's claims, it can hardly be called a game changer as the capacity, 38 bcm annually, is just a fraction of Russia’s gas export to Europe, almost 200 bcm in 2017. However, negotiations have been ongoing for years on a second pipeline via the western route or the Altay pipeline. Moscow would prefer to provide both Europe and China with natural gas from production areas in Western Siberia due to its lower costs because of partially existing infrastructure. China originally opposed this option as gas is needed in its more densely populated northeast and domestic production already provides for the local needs in the northwest. The trade war between the U.S. and China has led to a strategic recalculation. Beijing’s approach to Trump has gone through three phases: first, a state visit was organized full of ceremonial displays of respect in an effort to appease the U.S. president. Trump’s increasing bellicose language showed that it hadn’t worked, which led to a period of strategic patients. The escalating trade war, however, has made Beijing reconsider its passive strategy and growing energy relations with the U.S.Until recently, negotiations between Russia and China on a second pipeline concerned a direct connection between the countries through the Altay region. However, during the Eastern Economic Forum in Vladivostok in September 2018, the Presidents of Russia, China, and Mongolia hinted at an alternative route through Mongolia. This makes sense in two ways. First, constructing a giant pipeline through the steps of Mongolia is much cheaper and easier to achieve than through the pristine Altay region which is designated as a world heritage site by UNESCO at an elevation of 2,650 meters or 8,690 feet. Second, gas would be delivered to densely populated areas in the east instead of the west, which Beijing would prefer. Moscow is happy with both scenarios as long as gas is exported from fields in Western Siberia which also serve Europe.
Oil storage tank explodes, burns in Goyang (Yonhap) – The explosion of an oil storage tank in Goyang, northwest of Seoul, caused a massive fire on Sunday, though no casualties were reported, authorities said. The tank, owned by the state-run Daehan Oil Pipeline Corporation (DOPCO) in Goyang, Gyeonggi Province, caught fire at 11 a.m. and exploded with a roaring sound at around noon, Goyang fire station said. The blaze has sent fumes and toxic gas to nearby areas, even noticeable in some parts of Seoul on Sunday afternoon, according to several witnesses. The tank contained about 4.4 million tons of gasoline and is surrounded by a wall with a thickness of 60 centimeters, which prevented the fire from spreading in other areas, Goyang fire station said. No casualties were reported because no employees were at the site at the time of the explosion. Oil mist in the tank was suspected to have caused the fire, authorities said, noting an in-depth analysis is currently underway to figure out the exact cause of the accident. Kim Kwon-un, the chief of Goyang fire station, said it took longer than expected to extinguish the fire because of a large pool of oil kept in the storage, adding that another large explosion is unlikely. DOPCO CEO Choi Joon-sung offered an apology for the accident, noting the fire is expected to put out around 11 p.m.
ONGC plans to buy 27 rigs for up to Rs 3,500 cr --Oil and Natural Gas Corp is planning to purchase 27 drilling rigs to replace nearly half of its ageing onland rigs in a deal that could cost Rs 3,000-3,500 crore. The state-run explorer has floated a tender seeking bids from interested suppliers by November 14. ONGC had initially planned to purchase nearly 50 rigs but later curtailed it to 27. Fresh purchases will help partly replace its ageing fleet of 67 drilling rigs that’s currently operating at its onshore fields, a company executive said. “Most of our onshore rigs are old and that have an impact on the quality of operation. Which is why we are trying to replace them. New rigs will make things more efficient,” a company executive said. ONGC has traditionally owned onshore rigs, instead of hiring them, due to scarce availability of quality onshore rigs, the executive said. For offshore, however, the rigs are always hired due to their adequate availability, he added.
India will keep buying Iranian crude despite the threat of US sanctions, oil minister says - Two Indian oil companies have placed orders to import Iranian crude next month, Oil Minister Dharmendra Pradhan said Monday, defying a call from President Donald Trump's administration for countries to completely cut-off the Islamic republic. U.S. sanctions targeting Iran's crude oil exports come into force from November 4, with Washington ratcheting up the pressure on governments and companies around the world to slash their Iranian oil imports to zero.However, Oil Minister Pradhan said India would continue to purchase Iranian crude in November, according to Reuters.Speaking at the "The Energy Forum" in New Delhi on Monday, he said the world's third-largest oil importer did not know whether it would receive a waiver from U.S. sanctions.Pradhan also added the country was considering evolving a different payment system to buy Iran's oil and that it could pay using Indian rupees. This would signal an attempt to bypass U.S. sanctions on Iranian transactions using the dollar — the dominant currency in global oil trade.U.S. Secretary of State Mike Pompeo said in India last month that the White House would only consider waivers for Iran's oil buyers if they vowed to eventually bring their imports to zero. Indian refiners imported around 10 million barrels of Iranian crude in October, although its November shipments are likely to be lower.
India to keep buying Iranian oil despite U.S. sanctions: sources (Reuters) - India will buy 9 million barrels of Iranian oil in November, two industry sources said, indicating the world’s third-biggest oil importer will continue purchasing crude from the Islamic republic despite U.S. sanctions coming into force on Nov. 4. “Refiners have placed November nominations to lift 1.25 million tonnes (about 9 million barrels) of oil from Iran,” one of the sources said. Indian Oil Corp will lift 6 million barrels of Iranian oil and Mangalore Refinery and Petrochemicals Ltd 3 million barrels, the source told Reuters. The United States plans to impose new sanctions targeting Iran’s oil sector on Nov. 4 to try to stop the country’s involvement in conflicts in Syria and Iraq and bring Tehran to the negotiating table over its ballistic missile program. The sources declined to be identified as they were not authorized to speak to the media. Indian Oil and Mangalore Refinery did not immediately respond to a request for comment. “India is continuing with its relationship with both its key energy partners Iran and the U.S.,” a second source said. A U.S. government official said the Trump administration is “in the midst of an internal process” of considering waivers for countries that are reducing imports of Iranian crude. The official spoke on the condition of anonymity. U.S. Secretary of State Mike Pompeo said in India last month that the Trump administration would consider waivers for Iranian oil buyers such as India but they must eventually bring the imports to zero. Indian refiners imported around 10 million barrels of Iranian oil in October, and its November shipments are expected to be lower. In the previous round of sanctions from 2012 to 2015, India continued to buy Iranian crude although it had to cut purchases significantly to protect its wider exposure to the U.S. financial system. India’s foreign minister said in May it abides only by sanctions imposed by the United Nations and not those imposed by any other country. With the European Union considering the creation of a “special purpose vehicle” before November to facilitate trade with Iran, India hopes to find a way to settle payments to Tehran. “Previously there was no European channel,” the second source said. “This time Europe is not working with the U.S., so we intend to evolve a mechanism.” India, Iran’s top client after China, has close diplomatic ties with Iran, where it is building a strategic port called Chabahar that is expected to be operational by 2019. At the same time, India is closely working with the United States to further its strategic interests. “It is still early to say how India will settle its trade with Iran,” the first source said, adding that India could consider paying Iran for crude with the rupee currency.
Moscow offers New Delhi access to oil-&-gas-rich northern sea route - Russia, that holds significant part of resource-rich Arctic region, has offered India access to the Northern Sea Route that connects Europe with the Pacific Rim including additional supplies of natural gas and joint development of gas fields to meet New Delhi’s growing energy needs. Russian President Vladimir Putin made this announcement here on Friday in the presence of Prime Minister Narendra Modi while addressing a business summit. “…the Prime Minister and I discussed this earlier today; we welcome our Indian partners to join the work in the Arctic as well. This is a very promising, long-term and very serious project that looks decades ahead, one with good investment and good return. As the climate continues to change — in some places, this is good, and elsewhere perhaps not so good —the Northern Sea Route offers growing opportunities,” Putin said in his address. “We are building a nuclear-powered fleet, eight nuclear-powered ships, which will be steadily put into operation. This work is in progress. This will ensure reliable LNG supplies to the Indian and world markets. So this could be very interesting joint work,” he said.
U.S. actively considering waivers on Iran oil sanctions (Reuters) - The Trump administration is actively considering waivers on sanctions it will reimpose next month for countries that are reducing their imports of Iranian oil, a U.S. government official said on Friday. The administration withdrew from a deal over Tehran’s nuclear program in May and is unilaterally reimposing sanctions on Iran’s crude oil consumers on Nov. 4. The sanctions aim to force Tehran to stop its involvement in conflicts in Syria and Iraq and halt its ballistic missile program. Iran says it has abided by the 2015 nuclear deal, which was struck with five other world powers, besides the United States. The administration is “in the midst of an internal process” of considering exceptions called SRE waivers, or significant reduction exemptions, said a government official, who spoke on the condition of anonymity. It was the first time a U.S. official said the administration was in the process of considering waivers. Secretary of State Mike Pompeo said in India last month that the administration would consider waivers and that some buyers of Iranian oil would take a “little bit of time” to unwind their trade with Iran. White House National Security Adviser John Bolton said on Thursday that the administration’s objective was that there be no waivers and “exports of Iranian oil and gas and condensates drops to zero.” He added that the administration would not necessarily achieve that. The administration is “prepared to work with countries that are reducing their imports on a case-by-case basis,” the official said. The comments followed news that India, Iran’s No. 2 oil customer after China, will buy 9 million barrels of Iranian oil in November. It was an indication that India will continue purchasing crude from Iran, despite the Trump administration’s push to get countries to stop their purchases.
Saudi Arabia to supply extra oil cargoes to India in November as Iran sanctions loom (Reuters) - Saudi Arabia, the world’s biggest oil exporter, will supply Indian buyers with an additional 4 million barrels of crude oil in November, several sources familiar with the matter said on Wednesday. The extra cargoes indicate a willingness by Saudi Arabia to increase crude supply to make up the shortfall once sanctions by the United States on oil exports from Iran, the third-largest producer in the Organization of the Petroleum Exporting Countries (OPEC), start up on Nov. 4. India is Iran’s top oil client after China, though several refiners have indicated they will stop taking Iranian barrels because of the sanctions. Reliance Industries Ltd, Hindustan Petroleum Corp, Bharat Petroleum Corp and Mangalore Refinery Petrochemicals Ltd are seeking an additional 1 million barrels each in November from Saudi Arabia, the sources said. Three of the companies did not immediately reply to an email from Reuters seeking comment. MRPL replied “no comments” when contacted by email. State-owned oil producer Saudi Aramco was not immediately available for comment. Given their dependence on Iranian oil supplies, the Indian refiners are concerned about the loss of Iranian crude once the sanctions start and are seeking exemptions. Refiners in the country have placed orders to buy 9 million barrels from Iran in November. One of the reasons for the additional demand for Saudi oil is that the crude arbitrage from the United States is shut so the Indian buyers have to turn to Middle Eastern barrels, said one of the sources. India, the world’s third biggest oil importer, is grappling with a combination of rising oil prices and falling local currency, which makes imports of dollar-denominated oil more expensive. Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers.
Saudi Crown Prince to Trump: We've Replaced All Iran's Lost Oil -- Saudi Arabia’s crown prince, facing U.S. pressure to tame surging oil prices, insisted that the kingdom is fulfilling promises to make up for Iranian crude supplies lost to American sanctions. “The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that,” Mohammed Bin Salman, heir to the Saudi throne, said in an interview. “And that happened.” Yet the action appears lost on President Donald Trump, who continues to attack the Organization of Petroleum Exporting Countries for letting prices rally while he seeks to choke off supplies from Iran, a political antagonist of the Saudis. On Wednesday the State Department urged OPEC to tap its reserve supplies. The Saudis’ efforts have also failed to prevent crude hitting a four-year high above $86 a barrel in London this week. Oil traders are concerned that the kingdom isn’t ramping up quickly enough, and that it may not have enough capacity to fully cover Iran’s losses. Yet a coalition of producers from OPEC and beyond has recently boosted output by 1.5 million barrels a day, double the 700,000-barrel decline suffered so far by Iran, according to the crown prince. “We export as much as two barrels for any barrel that disappeared from Iran recently,” Prince Mohammed said. “So we did our job and more.” Saudi Arabia is now pumping about 10.7 million barrels a day -- close to a record -- and can add a further 1.3 million “if the market needs that,” the prince said. However, many analysts doubt that 12 million barrels a day can be reached quickly, or maintained for an extended period. “Near-term spare capacity is effectively maxed out,” Amrita Sen, chief oil analyst at consultant Energy Aspects Ltd., said last week. Prince Mohammed said that the kingdom could push capacity beyond 12 million barrels a day with additional investment, and that extra supplies are also available from Saudi Arabia’s allies. The so-called OPEC+ coalition spans other Gulf producers like the United Arab Emirates, as well as countries outside OPEC such as Russia.
Iran's oil minister reiterates Saudi Arabia will not be able to fill looming oil supply gap — Iranian oil minister Bijan Zanganeh on Monday dismissed claims by Saudi Crown Prince Mohammed bin Salman that Saudi Arabia was prepared to make up for any oil market shortfall caused by US sanctions on geopolitical rival Iran. "It seems that such remarks were made under US pressure on Saudi authorities," Zanganeh said, according to oil ministry news service Shana. "Otherwise in reality, neither the Saudis nor any other countries could replace Iran's exports." Iran's crude and condensate exports fell by 11.5% to 1.7 million b/d in September from 1.92 million b/d in August, their lowest in at least two-and-a-half years, an S&P Global Platts analysis of trade flow data found Monday. Platts Analytics expects Iranian crude and condensate exports to fall to 1.1 million b/d by October loadings, and to 800,000 b/d by Q4 2019, down from 2.91 million b/d in April. But shipping and trading sources say clandestine deliveries may be occurring, as Iran attempts to continue shipments to key buyers without being detected by US authorities. In an interview with Bloomberg News published Friday, the Saudi crown prince said the kingdom and its allies in an OPEC/non-OPEC coalition have recently boosted output by some 1.5 million b/d, more than doubling the 700,000 b/d loss in Iranian supplies. "We export as much as two barrels for any barrel that disappeared from Iran recently," Prince Mohammed said. "So we did our job and more." Saudi Arabia has been under pressure by the US to pump more barrels to prevent oil prices from overheating. Platts first reported Wednesday that the US State Department accused OPEC of withholding some 1.4 million b/d in spare production capacity from the market. Prince Mohammed, in his interview, said the US had only asked Saudi Arabia to replace shut-in Iranian barrels, not to flood the market with extra crude. "The request that America made to Saudi Arabia and other OPEC countries is to be sure that if there is any loss of supply from Iran, that we will supply that," he said. "And that happened." Zanganeh, however, reiterated his skepticism that Saudi Arabia has enough spare capacity to keep the market sufficiently supplied to prevent any price spike caused by US sanctions. Saudi Arabia has never pumped higher than 10.7 million b/d across an entire month, the level that Saudi energy minister Khalid al-Falih last week said the kingdom would average in October. But it claims to be able to produce 12 million b/d at will.
Lukoil to start production at Iraq's newest massive discovery in 2021 -- Lukoil's massive new discovery in southern Iraq -- part of the Russian firm's sizable growth plans in the Middle Eastern country -- will start production in 2021, the head of Iraq's regional state-run oil company said. Aggressive exploration continues at Block 10, Dhi Qar Oil Company Director General Ali Warid said in a statement emailed to S&P Global Platts, following Lukoil's announcement earlier this year that "recoverable reserves in excess of 2.5 billion barrels of crude" from the Eridu-1 well was the biggest find in Iraq in 20 years. "The Chinese Bohai company has started to drill the 4th well in the 10th exploration block," Warid said. "The drilling work comes along the same time of the 3D scan conducted by the (Iraqi state-run) Oil Exploration Company." He added: "I predict that the actual production of the field will start in 2021 according to the plans made by Lukoil in coordination with the Oil Ministry." Lukoil won Block 10 in a 2012 bidding round. It's located mostly in Dhi Qar province, west of Lukoil's 400,000 b/d West Qurna-2 project, located in the Iraqi oil capital of Basra province. Yaroslav Okulov, the chief financial officer of Lukoil Mid East, said at a conference in Istanbul on Tuesday that Eridu was a "very promising discovery" and appraisal work was ongoing. "I believe that once we finish the appraisal, reserves will come to life, so it will bring additional capacity for oil production," he said. Lukoil is a significant foreign investor in Iraq's oil sector. The West Qurna-2 field, signed in 2010, has reached 400,000 b/d capacity, with an additional 50,000 b/d to 100,000 b/d expected by the end of 2019. Ihsan Ismaael, the director general of the state-run Basra Oil Company, said at the Istanbul conference that the 800,000 b/d production plateau target might be increased by "20% because there are new opportunities to develop." Okulov said the next phase of the project will be to drill additional wells for a water injection system to boost reservoir pressure, and "expand capacity of the oil treatment and water treatment facilities."
Kuwait Stops Shipping Oil to US for First Time Since 1990-1991 Gulf War - Kuwait has all but stopped shipping crude to the U.S. for the first time since the aftermath of Saddam Hussein’s invasion in 1990, eroding an economic link between Washington and the Arab petro-monarchy. The halt is the latest sign that booming demand for oil in Asia, particularly as the U.S. re-imposes sanctions on Iran, and rising supplies from America on the back of the shale revolution are re-drawing petroleum trade routes. U.S. imports of Kuwaiti crude fell to zero over four weeks through late September, the first time that shipments have completely stopped since weekly data became available in June 2010, according to the U.S. Energy Information Administration. Based on monthly data, Kuwaiti shipments to the U.S. haven’t stopped since May 1992, when the OPEC producer was still recovering from oil-field fires ignited by retreating Iraqi troops in the first Gulf War. Kuwait is diverting its barrels instead into the more lucrative Asian market, where prices are higher for the type of high-sulfur crude the small Middle Eastern nation pumps, according to a person familiar with the matter, who asked not to be identified because the matter isn’t public. Kuwaiti oil fetches about $80 a barrel in Asia compared with about $79 in the U.S., according to Bloomberg calculations based on benchmark prices and the country’s official selling prices. Kuwaiti crude sells at about $76 a barrel in Europe. “Iranian sanctions are providing a chance for others to sell more into Asia where prices are better than for sales into the U.S.,” Andy Lipow, president of consultant Lipow Oil Associates LLC, said in Houston. While its shipments to the U.S. have plunged, Kuwait faces limits on its production due to a dispute with Saudi Arabia over shared oil fields along their border where both nations in the past pumped as much as 500,000 barrels a day. The shared fields in the so-called neutral zone halted production more than three years ago, though the two governments are in talks to reactivate them. Kuwait Petroleum Corporation’s reduction of crude exports were "coordinated with U.S. and European clients," the company said in a statement on Kuwait News Agency (KUNA) website. The American market is "strategically important" and its supply contracts are "functional", the state-owned oil producer said.
Libya’s crude oil output slips again -- Libya's crude oil output has dipped again due to the deteriorating security situation around its largest oil field, Sharara, sources said Tuesday. Sources with knowledge of Libya's production said an increase in local militia activity in the past week led to some oil workers evacuating fields. Crude output in Libya had recently touched five-year highs at a critical time for global markets ahead of the imposition of US sanctions on Iran. By the end of last week, the Sharara field was producing around 250,000 b/d. However, output is expected to have dropped over the last two days because of security concerns. In September, Sharara was producing around 300,000 b/d. Concerns over security around the field come as international oil companies BP and Eni alongside National Oil Corporation (NOC) announced their intention to resume exploration activities in the war-torn country. Sharara -- a joint venture between state-owned NOC and a consortium of Total, Repsol, Statoil and OMV -- has seen several closures over the past few years due to worker protests and attacks on export pipelines. Meanwhile, sources indicated to S&P Global Platts that the situation remains tense around Sharara and security issues have hindered travel arrangements to and from the fields. NOC shut Sharara mid-July after gunmen entered a substation and kidnapped four staff members. The state producer also declared force majeure on crude oil exports from Zawiya at the time. Representatives at NOC were unavailable for comment.
OPEC oil output to average 32.46 million b/d in 2018, 32.14 million b/d in 2019: EIA - The US Energy Information Administration on Wednesday boosted its Brent and WTI crude oil price forecasts on uncertainty over the impact of the looming re-imposition of US sanctions on Iranian crude exports. In its Short-Term Energy Outlook, which was delayed a day because Monday was a holiday in the US, EIA forecast Brent to average $74.43/b in 2018, up $1.59 from last month's forecast, and WTI at $69.56/b in 2018, up $2.53 from last month. The agency forecasts Brent to average $75.06/b and WTI to average $69.56/b in 2019, up $1.38 and $2.20, respectively, from last month's forecast. The jump in the price forecast was caused by "uncertainty about the amount that Iranian crude oil production could decline, and how much of the decline can be offset by other supplier," EIA said in the report. Iranian oil output averaged 3.4 million b/d in September, down 120,000 b/d from the August EIA outlook and the country's lowest output since February 2016. The latest S&P Global Platts OPEC supply survey estimated Iranian output at 3.5 million b/d in September. The US is expected to re-impose sanctions on Iranian crude November 5, which caused oil prices to rise to four-year highs in the second half of August and could lead to additional price increases, the agency said. "If the reduction in Iranian crude oil production and exports is larger than expected, the disruption to the crude oil market in the fourth quarter of 2018 could result in price increases," EIA said. Along with Iran, Venezuelan oil output also continued to fall, declining to 1.23 million b/d in September, down about 30,000 b/d from August and down 1.17 million b/d from December 2015, when the monthly output decline began. But some OPEC members, along with Russia, have "largely offset production decreases" in Venezuela and Iran, EIA Administrator Linda Capuano said Wednesday in a statement. Saudi oil production averaged 10.52 million b/d in September, up 100,000 b/d from August and the highest output level since November 2016, EIA said. Total OPEC oil production is expected to average 32.46 million b/d in 2018, down 220,000 b/d from 2017, EIA said. Total OPEC oil production is expected to continue to fall to 32.14 million b/d in 2019, EIA said. EIA Wednesday also raised its forecast for US oil output, which it said will average 10.74 million b/d in 2018 and 11.76 million b/d in 2019. Those forecasts were up 80,000 b/d and 260,000 b/d, respectively, from last month's forecast.
Oil Demand and Supply Close to New Peaks - Both global oil demand and supply are now close to new, historically significant peaks at 100 million barrels per day, according to the International Energy Agency. Both global oil demand and supply are now close to new, historically significant peaks at 100 million barrels per day (MMbpd) “and neither show signs of ceasing to grow any time soon,” according to the International Energy Agency (IEA). “Fifteen years ago, forecasts of peak supply were all the rage, with production from non-OPEC countries supposed to have started declining by now. In fact, production has surged, led by the US shale revolution, and supported by big increases in Brazil, Canada and elsewhere,” the IEA said in a statement published on its website Friday. “In future, a lot of potential supply could come to the market from places like Iran, Iraq, Libya, Nigeria and Venezuela, if their various challenges can be overcome,” the IEA added. “There is no peak in sight for demand either. The drivers of demand remain very powerful, with petrochemicals being a major factor,” the IEA continued. The IEA said it is an “extraordinary achievement” for the global oil industry to meet the needs of a 100 (MMbpd) market but announced that twin peaks for demand and supply have been reached “by straining parts of the system to the limit”. “Recent production increases come at the expense of spare capacity, which is already down to only 2 percent of global demand, with further reductions likely to come,” the IEA said. “This strain could be with us for some time and it will likely be accompanied by higher prices, however much we regret them and their potential negative impact on the global economy,” the IEA added.
Rising use of plastics to drive oil demand to 2050 – IEA (Reuters) - Plastics and other petrochemical products will drive global oil demand to 2050, offsetting slower consumption of motor fuel, the International Energy Agency (IEA) said on Friday. Despite government efforts to cut pollution and carbon emissions from oil and gas, the Paris-based agency said it expected the rapid growth of emerging economies, such as India and China, to propel demand for petrochemical products. Petrochemicals that are derived from oil and gas feedstocks form the building blocks for products that range from plastic bottles and beauty products to fertilisers and explosives. Oil demand for transport is expected to slow by 2050 due to the rise of electric vehicles and more-efficient combustion engines, but that would be offset by rising demand for petrochemicals, the IEA said in a report. "The petrochemical sector is one of the blind spots of the global energy debate and there is no question that it will be the key driver of oil demand growth for many years to come," IEA Executive Director Fatih Birol told Reuters. Petrochemicals are expected to account for more than a third of global oil demand growth by 2030 and nearly half of demand growth by 2050, according to the world's energy watchdog. Global demand for petrochemical feedstock accounted for 12 million barrels per day (bpd), or roughly 12 percent of total demand for oil in 2017. The figure is forecast to grow to almost 18 million bpd in 2050. Most demand growth will take place in the Middle East and China, where big petrochemical plants are being built. Oil companies such as Exxon Mobil and Royal Dutch Shell plan to invest in new petrochemical plants in the coming decades, betting on the rising demand for plastics in emerging economies. In the Middle East, major producers such as Saudi Arabia and Kuwait are also investing in large petrochemical plants because in some cases they can make more money by converting crude oil directly into plastics rather than oil products such as gasoline and diesel, Birol said. Plastics use has come under increased scrutiny as waste makes its way into the oceans where it harms marine life, prompting several countries to ban, partly ban or tax single-use plastic bags. But the IEA report said government efforts to encourage recycling in order to curb carbon emissions would have only a minor impact on petrochemical growth. "Although substantial increases in recycling and efforts to curb single-use plastics take place, especially led by Europe, Japan and Korea, these efforts will be far outweighed by the sharp increase in developing economies of plastic consumption," it said.
Forget cars, plastics could soon become the 'single most important driver' of oil demand --Petrochemical products like plastics will become the most prominent driver of oil demand over the coming years, the executive director of the International Energy Agency (IEA) told CNBC Monday."When we discuss oil demand, peak oil demand (and) oil market dynamics, the focus is solely on cars — which is completely wrong," Fatih Birol, executive director at the IEA, told CNBC's "Street Signs" Monday."When we look at the next 10 to 15 years, the single most important driver of global oil demand growth is petrochemicals," Birol said.In a report published late last week, the IEA said it expects robust growth in emerging economies — such asIndia and China — to propel demand for plastics and other petrochemical products.Meanwhile, oil demand for transport is projected to slow by 2050 because of the meteoric rise of electric vehicles and more efficient combustion engines, the IEA said. The Paris-based agency added this would then be offset by rising demand in petrochemicals.Petrochemicals that are derived from oil and gas feed-stocks form the building blocks for products that range from plastic bottles and beauty products to fertilizers and explosives. Oil companies such as Exxon Mobil and Royal Dutch Shell both plan to invest in new petrochemical plants over the coming decades, betting on the explosive demand for plastics in emerging economies.
The Next Pillar Of Oil Demand Growth -- The debate about peak oil demand always tends to focus on how quickly electric vehicles will replace the internal-combustion engine, especially as EV sales are accelerating. However, the petrochemical sector will be much more difficult to dislodge, and with alternatives far behind, petrochemicals will account for an increasing share of crude oil demand growth in the years ahead. Petrochemicals don’t receive much attention in the media, but its fingerprints are everywhere. They are used in plastics, fertilizers, packaging, clothing, dyes, cleaning products, cosmetics, medicines, tires – a seemingly limitless number of end-uses. They are so ingrained and embedded into modern life that they are almost unnoticeable. Producing the zillions of consumer and industrial products coming from petrochemicals requires huge volumes of feedstocks. Needless to say, as the name suggests, the feedstocks are derived from petroleum – oil and gas. Moreover, demand for petrochemicals is soaring, as hundreds of millions of people in emerging markets move into the middle class. A new report from the International Energy Agency positions the petrochemical industry as one of the driving forces behind oil demand growth for the next few decades. “The growing role of petrochemicals is one of the key ‘blind spots’ in the global energy debate,” the IEA wrote. “The diversity and complexity of this sector means that petrochemicals receive less attention than other sectors, despite their rising importance.” The IEA says that the petrochemical sector could account for more than a third of oil demand growth to 2030, and nearly half to 2050, “ahead of trucks, aviation and shipping.”
Brent falls as fund managers take profits after rally: John Kemp (Reuters) - Hedge fund managers started to take some profits after the strong rally in crude oil prices, even before details emerged last week of output increases from Saudi Arabia and sanctions waivers by the United States. Hedge funds and other money managers cut their combined net long position in the six most important petroleum futures and options contracts by 19 million barrels to 1.081 billion barrels in the week to Oct. 2. Portfolio managers cut their net long position in NYMEX and ICE WTI by 13 million barrels to the lowest level for almost a year, according to exchange and regulatory records (tmsnrt.rs/2Pmbr3E). More significantly, funds cut their net long position in ICE Brent by 14 million barrels, the first reduction in six weeks, after increasing it by 172 million barrels since Aug. 21. Elsewhere, there were minor increases in net length in U.S. gasoline (+6 million barrels) and U.S. heating oil (+7 million barrels) but a small offsetting reduction in European heating oil (-4 million barrels). The shift from accumulation to liquidation in Brent was especially notable because the fund managers had previously built the largest net long position since late May. Fund managers had accumulated long positions amid fears U.S. sanctions on Iran would leave the market short of seaborne crude, pushing Brent prices to their highest in almost four years. Brent long positions had outnumbered short ones by a near-record margin of 19:1 before long liquidation and some fresh shorting trimmed the ratio to 15:1. But the very stretched hedge fund position in Brent by the end of September significantly increased the risk of a reversal in prices, even before Saudi Arabia, Russia and the United States issued statements to cool the market. U.S. officials have revealed they are actively considering sanctions waivers for at least some of Iran’s customers, which should ease fears about a potential supply crunch. And Saudi officials have confirmed the kingdom plans to raise its exports even further in October and November to relieve any shortfall from Iran.
Crude Touches One-Week Low as Iranian Shortage-- Oil slipped to a one-week low amid signs that Iranian supply disruptions may not be as severe as expected. Futures declined 5 cents a barrel on Monday after last week touching the highest since 2014. U.S. government officials were said to be in talks with countries seeking exemptions from American sanctions that will ban crude purchases from Iran within weeks. Saudi Arabia and allied producers already have raised output to mitigate any drop in Iranian exports. Absent clear indicators of fundamental supply and demand trends, so-called technical signals followed by chart-watching traders may hold sway. The next bearish threshold is the 20-day moving average just below $72 a barrel. “Oil is going to do one of two things -- make another leg higher after this little pullback, or it’s likely to retest $71-72,” said Josh Graves, senior market strategist at RJO Futures in Chicago. Oil has rallied since early September on concerns that OPEC and other major producers wouldn’t raise output enough to make up for the squeeze on Iranian shipments. Major buyers of crude from the Islamic Republic have been shunning or scaling back purchases as a Nov. 4 cutoff date set by the Trump administration approaches. Meanwhile, Hurricane Michael is poised to hit the Florida Panhandle and is forecast to become the second hurricane to make landfall in the U.S. in a month. Offshore oil and natural gas producers have begun shutting down installations on the Gulf of Mexico, taking 19 percent of the Gulf crude production offline. West Texas Intermediate for November delivery settled at $74.29 a barrel on the New York Mercantile Exchange, the lowest close since Sept. 28. Brent for December settlement fell 24 cents to $83.91 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.74 premium to WTI for the same month.
Oil Climbs as Storm Halts Output -- Crude traded near $75 a barrel as storm Michael in the U.S. strengthened and shut some oil output, while American inventories were predicted to have risen for a third week. Futures in New York rose 0.7 percent after slipping 0.1 percent on Monday. Nationwide crude stockpiles as well as those at the key storage hub of Cushing, Oklahoma, gained last week, according to a survey of analysts and a Bloomberg forecast. Meanwhile, Michael -- currently a category 1 storm on the Saffir-Simpson scale -- is poised to head toward Florida after shutting about 19 percent of oil production in the Gulf of Mexico. Crude has gained more than 20 percent this year as volatility surged on uncertainty over a potential supply crunch. U.S. sanctions on Iranian oil exports are set to be implemented next month, while other producing nations such as Venezuela and Libya saw disruptions to output and America struggled with a pipeline bottleneck. Meanwhile, tensions flared between the world’s top two economies as U.S. Secretary of State Michael Pompeo cited “fundamental disagreement” with his Chinese counterpart in a testy exchange in Beijing. Disruptions to oil supply as well as “the hurricane will provide a near-term fillip to crude prices, but the other and more worrying thing is the American inventory build-up, especially in Cushing,” said Stephen Innes, Singapore-based head of Asia Pacific trading at Oanda Corp. “While the market wasn’t overly sensitive to the increase last week, this week could be different given the supply concerns back in the fore.” Prices Steady West Texas Intermediate for November delivery was 54 cents higher at $74.83 a barrel on the New York Mercantile Exchange at 2:45 p.m. in Singapore. The contract lost 5 cents to $74.29 a barrel on Monday. Total volume traded was about 15 percent above the 100-day average. Brent for December settlement added 63 cents at $84.54 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a $9.83 premium to WTI for the same month. Fast-moving storm Michael is poised to slam the Florida panhandle as a hurricane, the second to make landfall in the U.S. in a month. The impact is already being seen in the energy sector, after operators evacuated 10 platforms, moved five rigs out of the storm’s path and shut in 19 percent of oil and 11 percent of natural gas production in the Gulf of Mexico, according to the Interior Department.
Oil prices fall as US may grant some waivers on Iran crude sanctions - Oil prices fell on Monday, pressured by expectations that some Iranian oil exports will keep flowing despite U.S. sanctions, easing a strain on supplies.Two companies in India, a big buyer of Iranian oil, have ordered barrels in November, India's oil minister said on Monday. The Trump administration is considering waivers on sanctions, a U.S. government official said on Friday."One way or another, it looks as though India is going to take some Iranian crude," said Olivier Jakob of Petromatrix, adding that the development was helping oil to "retrace some of the price surge we saw last week."Oil prices pared losses after Irving Oil confirmed a "major incident" at Canada's largest refinery in St. John, New Brunswick following reports of an explosion.Brent crude, the international benchmark, was down 74 cents to $83.42 per barrel at 10:43 a.m. ET (1443 GMT). It hit a four-year high of $86.74 last week.U.S. crude was down 55 cents at $73.79, slipping further from last week's four-year high at $76.90.U.S. sanctions will target Iran's crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero."This is one of the single biggest supportive factors for crude," said analysts at JBC Energy of the U.S. re-imposition of Iran sanctions. "Having said that, it may well be that we are already in the most supportive phase coming from this change and the effect will soon begin to ease."Oil also dropped as investors focused on rising output from other producers, such as top exporter Saudi Arabia, to compensate for lower Iranian supplies.Saudi Arabia said last week it plans to raise production in November from October output of 10.7 million barrels per day (bpd), indicating Riyadh will be boosting its supply to the highest ever level."Chatter that Saudi Arabia has replaced all of Iran's lost oil" is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore. Concern that the U.S.-Chinese trade war could slow down economic growth and hit oil demand also weighed on the market, traders in Asia said. Chinese equities fell sharply on Monday. Oil has been supported by concern that the Iranian export loss will leave a thinner margin of unused production capacity to deal with supply shocks. The bulk of spare capacity is held by Saudi Arabia.
Oil prices fall 1% as US considers granting some waivers on Iran crude sanctions - Brent crude oil prices fell by more than 1 percent on Monday after Washington said it may grant waivers to sanctions against Iran’s oil exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran. International benchmark Brent crude oil futures were at $83.25 per barrel at 0115 GMT, down 91 cents, or 1.1 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were down 57 cents, or 0.8 percent, at $73.77 a barrel. U.S. sanctions will target Iran’s crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero. However, a U.S. government official said on Friday that the country could consider exemptions for nations that have already shown efforts to reduce their imports of Iranian oil. Hedge funds cut their bullish wagers on U.S. crude in the latest week to the lowest level in nearly a year, data showed on Friday. Further weighing on prices, Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said there was also “chatter that Saudi Arabia has replaced all of Iran’s lost oil”. But Innes warned that limited spare production to deal with further supply disruptions meant “the capacity is quickly declining due to Asia’s insatiable demand”. The U.S. oil drilling rig count fell for a third consecutive week, as rising costs and pipeline bottlenecks have hindered new drilling since June. Drillers cut two oil rigs in the week to Oct. 5, bringing the total count down to 861, energy services firm Baker Hughes said in its weekly report on Friday. That is the longest streak of weekly cuts since October last year. With Iran sanctions still on the table, potential spare capacity constraints and also a slowdown in U.S. drilling, U.S. bank J.P.Morgan said in its latest cross-asset outlook for clients that it recommended to “stay long Jan ‘19 WTI on supply risks to crude”.
Refinery explosion, approaching hurricane push refined products higher - Refined products futures settled higher Monday as the market weighed news of a refinery explosion in New Brunswick, Canada, and the potential impact of an approaching hurricane in the Gulf of Mexico. Early on Monday reports of a fire and explosion at Irving Oil's 300,000 b/d Saint John refinery sent product futures higher. The refinery is a major supplier of gasoline to Atlantic Canada and New England, and futures contracts moved higher in the immediate aftermath of the news emerging.But the market impact was partially muted by planned work being underway at the refinery, sources said. Futures prices slid into negative territory later in the session as the market weighed how much supply the incident could take offline.A source familiar with refinery operations said the fire was in the hydrogen unit. Several sources said the plant had been carrying out a turnaround, with one adding that the crude distillation unit, residue fluid catalytic cracker and gasoline desulfurization units were shut October 1. There have been intermittent problems with the gasoline-making units in recent weeks, sources noted,Product inventories in New England are ample. Regional gasoline stocks rose 306,000 barrels in week ended that September 28 to 4.638 million barrels, according to the latest US Energy Information Administration data. Diesel stocks rose to 6.327 million barrels, according to EIA, 2.417 million barrels above the year-ago level and the highest level seen since the agency began recording data in April 2004.The potential for a demand bump ahead of Hurricane Michael's landfall later added support for prices. The storm was expected to enter the Gulf of Mexico on Monday evening and is forecast top make landfall along the Florida Gulf Coast as a major hurricane late on Wednesday.The storm was also bullish for US crude futures. Although current forecasts show the storm avoiding major production and refining centers, any hurricane in the Gulf adds uncertainty to markets. BP and ExxonMobil said Monday they were evacuating personnel from key Gulf of Mexico producing platforms that may be at risk due to Hurricane Michael. NYMEX November WTI settled 5 cents below its open at $74.29/b, and ICE December Brent was down 25 cents at market close at $83.91/b.
Crude oil futures firm on Hurricane Michael, Iranian sanctions; ICE Brent up at $84.64/b, NYMEX WTI $74.79/b Crude oil futures were higher at midday in Europe Tuesday, supported by concern about the effect of Hurricane Michael on US Gulf Coast infrastructure and by renewed worries about the impact of Iranian sanctions on global supply. At 1107 GMT, December ICE Brent crude futures were up 73 cents/b at $84.64/b, while the NYMEX November light sweet crude contract rose 50 cents/b to $74.79/b. Despite the US announcing possible waivers on the impending sanction on Iran, crude remained supported on falling oil exports from Iran which hit a new low in September. Total estimated export volumes on Aframaxes, Suezmaxes and VLCCs from Iranian ports fell 11.5% month on month to 1.7 million b/d in September, according to data from Platts cFlow, trade flow software. Meanwhile, BP and ExxonMobil were evacuating personnel from key producing platforms that may be near the path of Hurricane Michael as the storm moves through the Gulf of Mexico toward landfall, which was anticipated in the Florida panhandle later this week, the companies said. ExxonMobil said it was removing crews from the Lena platform, which was undergoing decommissioning, and also keeping staffing of its Mobile Bay operations offshore Alabama at "minimal" levels. BP was, meanwhile, evacuating crews and has shut in production from its four operated platforms: Atlantis, Mad Dog, Na Kika and Thunder Horse, the company said. The impact on prices of Iranian sanctions and Hurricane Michael seemed to prevail over expectations of a stock rise in this week's US inventory data. Analysts surveyed by S&P Global Platts Monday were looking for US crude inventories to have increased by 1.61 million barrels in the week ended Friday, October 5, amid lower refinery utilization rates and weak export activity. Analysts expected refinery runs to have dropped by 0.45 percentage point to 89.95% of total capacity last week. Total refinery utilization has been above 90% since early March.
Oil prices rise on signs that Iranian crude exports fall further --Oil prices rose on Tuesday on growing evidence of falling crude exports from Iran, OPEC's third-largest producer, before the imposition of new U.S. sanctions and a partial shutdown in the Gulf of Mexico due to Hurricane Michael.Benchmark Brent crude was up 43 cents at $84.34 a barrel by 10:01 a.m. ET (1401 GMT), having fallen as low as $82.66 on Monday. Brent hit a four-year high of $86.74 last week.U.S. West Texas Intermediate crude was up 30 cents at $74.59. WTI hit $76.90, a nearly four-year high, last week."The oil market mood is exceptionally bullish, with fears growing that the U.S. demands for an Iran oil embargo could cause a significant supply shortfall," said Julius Baer commodities research analyst Carsten Menke.Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of U.S. sanctions that take effect on Nov. 4.Iran exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. An industry source who also tracks exports said October shipments were so far below 1 million bpd. That is down from at least 2.5 million bpd in April, before President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and reimposed sanctions. The figure also marks a further fall from 1.6 million bpd in September.
Oil Prices Rise On Iran, Hurricane Outages - The slump in oil prices, which began last week, came to an end on Tuesday on renewed fears of supply outages in Iran, combined with disruptions in the Gulf of Mexico related to Hurricane Michael. “The oil market mood is exceptionally bullish, with fears growing that the U.S. demands for an Iran oil embargo could cause a significant supply shortfall,” said Julius Baer commodities research analyst Carsten Menke, according to Reuters. President Trump is expected to announce a lift on the ban on using E15 for year-round sales on Tuesday, hoping to heal a rift with farm country that caused by the tenure of former EPA Administrator Scott Pruitt. Pruitt’s EPA offered a series of waivers to oil refineries that allowed them to escape their obligations to purchase ethanol, which hurt ethanol prices and enraged the corn and ethanol industries. Tuesday’s announcement will allow sales of higher-concentrated E15 ethanol during summer months, something that has been off limits to date. BP and ExxonMobil evacuated personnel from the Gulf of Mexico as Hurricane Michael intensified at the start of the week. BP shut in four platforms and Exxon removed staff from its Lena platform, but said production won’t be affected. Equinor and BHP Billiton also removed staff from some platforms. As of now, it appears that around 20 percent of the region’s production has been temporarily idled. The IEA pleaded with OPEC and other major oil producers to increase production. “We should all see the risky situation, the oil markets are entering the red zone,” IEA Executive Director Fatih Birol said Tuesday, according to Bloomberg. “We should try to comfort the markets all together because it may be bad news for the consumers, importers today, but I believe it may well be bad news for the producers tomorrow.” Birol went on to add that “if there are no major moves from the key producers, the fourth quarter of this year is very, very challenging.” He noted that the run up in oil prices is occurring at a time when more red flags regarding the global economy are emerging, something that will ultimately spell trouble for the oil industry if it leads to demand destruction.
Oil Over $74 on Concerns Storm May Worsen Supply Risk -- Oil traded above $74 a barrel on concerns Hurricane Michael in the U.S. may exacerbate a supply crunch, while the International Energy Agency warned higher prices may put the world economy at risk. Futures were little changed in New York after gaining 0.9 percent on Tuesday. OPEC and other key producers need to boost output as the oil market is entering a “red zone,” and high prices are inflicting damage on the global economy, IEA Executive Director Fatih Birol said in an interview. Adding to supply risks is Hurricane Michael, which curtailed production in the Gulf of Mexico by 40 percent as it heads to Florida. “The oil market remains overly bullish on the dwindling spare capacity argument,” said Stephen Innes, Singapore-based head of Asia Pacific trading at Oanda Corp. Still, the IEA’s comment suggests “prices are peaking at the most opportunistic time given the waning global growth narrative.” Crude has climbed more than 15 percent since mid-August as uncertainties remain on whether the Organization of Petroleum Exporting Countries can replace shrinking supplies from Venezuela to Iran. While Russian President Vladimir Putin says impending U.S. sanctions on the Persian Gulf state is to blame for the gains, his American counterpart Donald Trump has attacked OPEC for letting prices surge. West Texas Intermediate for November delivery was at $74.82 a barrel on the New York Mercantile Exchange at 7:55 a.m. in London, down 14 cents. The contract rose 67 cents to $74.96 a barrel on Tuesday. Total volume traded was about 23 percent below the 100-day average. Brent for December settlement was 5 cents lower at $84.95 a barrel on the London-based ICE Futures Europe exchange. The contract climbed 1.3 percent to $85 on Tuesday. The global benchmark crude traded at a $10.27 premium to WTI for the same month.
Oil prices gain as Iranian crude exports fall, Hurricane Michael nears (Reuters) - Oil prices rose about one percent on Tuesday on growing evidence of falling Iranian crude exports before the imposition of new U.S. sanctions, as well as a partial production shutdown in the Gulf of Mexico because of Hurricane Michael.Brent crude futures rose $1.09 to settle at $85.00 a barrel, a 1.30 percent gain. The global benchmark hit a four-year high of $86.74 last week but slipped as low as $82.66 on Monday.U.S. West Texas Intermediate (WTI) crude futures rose 67 cents to settle at $74.96 a barrel, a 0.90 percent gain.Iran's crude exports fell further in the first week of October, according to tanker data and an industry source, as buyers sought alternatives ahead of U.S. sanctions that take effect on Nov. 4.Iran, OPEC's third-largest producer, exported 1.1 million barrels per day (bpd) of crude in that seven-day period, Refinitiv Eikon data showed. An industry source who also tracks exports said October shipments so far were below 1 million bpd.That is down from at least 2.5 million bpd in April, before U.S. President Donald Trump in May withdrew the United States from a 2015 nuclear deal with Iran and re-imposed sanctions. The figure also marks a further fall from 1.6 million bpd in September.
Expect 'extreme volatility' for oil prices due to the Iran sanctions, BP CEO says -- Uncertainty surrounding Iran's oil industry ahead of forthcoming U.S. sanctions could prompt "extreme volatility" for oil prices, BP's chief executive told CNBC Wednesday."I think it's going to be 45 days of extreme volatility, it could spike up, it could also go the other way," he told CNBC's Steve Sedgwick in London.Dudley's comments come at a time when oil market players are closely watching what happens when U.S. sanctions on Iran's oil industry come into force on November 4.It's hard to be precise over how much of Iran's production will be affected by the sanctions. It largely depends on whether the country's oil-buying customers are afraid of secondary sanctions from the U.S. if they do business with Iran. BP's competitor Total announced in August that it was pulling out of a giant oil and gas project in the Islamic republic.But BP and Serica Energy were granted a new license Tuesday to run a North Sea gas field partly owned by Iran showing the U.S. is willing to make some exemptions to the reach of the sanctions. "If waivers were granted to others, to big oil consuming countries, you could see it (the price) go down, there's a lot of uncertainty right now," Dudley said.Some analysts predict as much as 1.5 million barrels per day could be removed from the market, an event that could cause prices to rise further. On Wednesday, Brent crude futures were trading at $84.96 per barrel while U.S. West Texas Intermediate was trading at $74.92.Dudley didn't see demand falling as a result of high prices due to global GDP growth (seen at 3.7 percent in 2018 and 2019 by the International Monetary Fund) still being robust. "It's still growing, demand, it might be a little bit off but we don't see that destruction yet," he said."You look at the GDP (gross domestic product) growth in the world and that's a very indicator on the demand growth for oil and it has been for decades and decades so … If you start to see half a percent come off GDP growth around the world, it might be a 200,000 barrel a day drop in demand, the way our economists view it, and it's not that much," he said.
Goldman Sachs on oil prices: 'We don't have a problem today, but we potentially have one tomorrow' -- Iran's crude export numbers are falling much faster than many analysts anticipated ahead of planned U.S. sanctions on the country's oil sector on November 4. Still, we don't have an oil price problem today, if Goldman Sachs' global head of commodities is to be believed — but we may have one tomorrow.As OPEC's third largest oil producer sees its customers shrink away for fear of U.S. penalties, some market watchers predict oil surpassing $100 a barrel. Late September saw Brent crude break $80 a barrel, its highest level since 2014. The benchmark commodity is up 26.6 percent year-to-date, while WTI crude is up 24 percent in the same time period.Jeff Currie, global head of commodities for Goldman Sachs, is less bullish about oil prices for now. Speaking to CNBC's Street Signs Europe on Tuesday, he expressed skepticism about the triple-digit forecasts."It's definitely not our base case. I'm not saying it cannot happen, but it would require a sustainable outage in Iranian exports going down to zero plus another disruption someplace like Venezuela," he said. "The way we're seeing it is long dated oil prices are rising, the front-end is weakening which is telling you that hey, we don't have a problem today, we potentially have a problem tomorrow."Data from this week showed Iran exported 1.1 million barrels per day (bpd) in first week of October — down from 1.6 million in September and a far cry from its high of 2.6 million bpd in April of this year. That was one month before President Donald Trump announced U.S. withdrawal from the Iran nuclear deal, which lifted economic sanctions on Iran in exchange for curbs on its nuclear program. But giving an accurate call for oil prices once the sanctions officially come down is impossible at this point, Currie stressed, particularly because we don't yet know how many barrels will ultimately vanish from the market.
Oil dips as IMF lowers global growth outlook; eyes on US hurricane -- Oil prices fell on Wednesday after the IMF lowered its global economic growth forecasts, raising concerns that demand for oil products may slump as well. Brent crude futures were down $1.31, or 1.5 percent, at $83.69 a barrel by 10:52 a.m. ET (1452 GMT), after a 1.3 percent gain on Tuesday. U.S. West Texas Intermediate (WTI) crude was down by $1.18, or 1.6 percent, at $73.78 a barrel, after rising nearly 1 percent in the previous session. The International Monetary Fund downgraded its global economic growth forecasts for 2018 and 2019 on Tuesday.Trade wars and rising import tariffs have been taking a toll on commerce, while emerging markets struggle with tighter financial conditions and capital outflows, the IMF said.But supply concerns are keeping the market on edge.In the United States, nearly 40 percent of daily crude oil production was lost from offshore U.S. Gulf of Mexico wells on Tuesday because of platform evacuations and shut-ins ahead of Hurricane Michael.Michael has strengthened into an "extremely dangerous" Category 4 hurricane, according to the latest advisory from the U.S. National Hurricane Center.Oil producers evacuated personnel from 75 platforms as the storm made its way through the central Gulf on the way to landfall on Wednesday in Florida.Companies had turned off daily production of about 670,800 barrels of oil and 726 million cubic feet of natural gas by midday on Tuesday, Several of the world's biggest trading houses expect U.S. sanctions on Iran to keep oil prices high with crude staying above $65 and possibly breaking above $100 in the medium term.Jeremy Weir, chief executive of Trafigura, told an oil conference in London on Wednesday he would not be surprised to see oil trade over $100 next year. Alex Beard, chief executive for oil and gas at Glencore, said at the same event he forecast a mid-term oil price of $85-$90 per barrel.
WTI Slumps To 2-Week Lows After Biggest Crude Build In 20 Months - After holding around $75 yesterday amid storm news as Hurricane Michael shut more offshore oil platforms and the International Energy Agency warned that the global market is entering a “red zone," today saw risk-off sentiment slam it lower, back below $73 ahead of tonight's API data.Globally, supplies from Iran and Venezuela have been shrinking, creating a “risky situation” for the world economy, said IEA Executive Director Fatih Birol.Gulf operators shut 718.9k b/d of oil production (around 42%), 89 platforms evacuated amid Hurricane Michael, BSEE says in notice."Yesterday there was some concern about more extensive losses of production due to Hurricane Michael," said John Kilduff, partner at Again Capital LLC. "Now that the oil infrastructure is in the clear, this weeks EIA report will help ease concerns once we see a build printed. API:
- Crude +9.75mm (+2.5mm exp) - biggest build since Feb 2017
- Cushing +2.3mm (+800k exp) - biggest build since March 2018
- Gasoline +3.4mm - biggest build since June 2018
- Distillates -3.5mm - biggest draw since May 2018
Storm-related impact should not be present in this data but after last week's huge crude build we saw another massive crude build... Bloomberg notes that sanctions on Iranian oil exports are hitting much harder than most people predicted as the Trump administration takes a tough line on enforcement, said executives from the world’s largest energy traders. However, Saudi Aramco will supply about 4 million barrels of additional crude to Indian customers for November, according to a person familiar with the matter. That’s on top of their monthly contractual supplies from Aramco.
Crude oil futures slump more than 1% on US stock build, EIA report — Crude oil futures were lower in mid-morning trade in Asia Thursday after a larger-than-expected build in US crude stocks and a bearish US production and demand forecast. At 10:30 am Singapore time (0230 GMT), December ICE Brent crude futures were down $1.21/b (1.46%) from Wednesday's settle at $81.88/b, while the NYMEX November light sweet crude contract was down 89 cents/b (1.35%) at $72.18/b. US crude inventories rose 9.75 million barrels in the week ended October 5, according to data released by the American Petroleum Institute to analysts Wednesday. "The biggest build since February 2017," The PRICE Futures Group analyst Phil Flynn said in a note. Analysts surveyed Monday by S&P Global Platts had been expecting a more modest 1.61 million-barrel build. The API also reported US gasoline inventories were up 3.4 million barrels in the week ended October 5, while US distillate inventories were down 3.5 million barrels, analysts said. The official report on last week's US inventory levels is due for release by the US Energy Information Administration later Thursday. Prices were also pressured down Thursday by bearish factors reported in the EIA'S Short-Term Energy Outlook released Wednesday. "A bearish EIA monthly report, along with a risk-off tone of the market, weighed on crude oil prices," ANZ analysts said in a note Thursday. EIA raised its forecast for US oil output to an average 10.74 million b/d in 2018 and 11.76 million b/d in 2019, up 80,000 b/d and 260,000 b/d respectively from last month's forecast. It forecast US oil production, which crossed 11 million b/d in August, to exceed 12 million b/d by October 2019. "On the other hand, US oil demand growth has been revised lower by 20,000 b/d to 450,000b/d," the ANZ analysts added.
Oil extends losses as other markets fall, inventories rise - Oil prices slumped to two-week lows on Thursday as global stock markets fell, with investor sentiment made more bearish by a report showing U.S. crude inventories rising more than expected.Crude inventories climbed by 6 million barrels in the week to Oct. 5, the U.S. Energy Information Administration reported, compared with analyst expectations for an increase of 2.6 million barrels.Brent crude fell $1.55, or 1.9 percent, to $81.54 a barrel by 10:53 a.m. ET (1453 GMT), off the session low of $81.14, its weakest since Sept. 26. Brent lost 2.2 percent on Wednesday. On Oct. 3, it hit a four-year high of $86.74.U.S. light crude dropped $1.42, or 1.9 percent, to $71.75 after hitting a low of $71.63. The contract lost 2.4 percent in the previous session."Oil bulls are bearing the brunt of another bruising session as yesterday's selling frenzy intensifies," said Stephen Brennock, analyst at London brokerage PVM Oil. "At the heart of the price malaise are concerns that oil demand will be adversely impacted by a myriad of downside risks facing the global economy." Stock markets in Asia plunged to a 19-month low on Thursday after Wall Street's worst losses in eight months led to broader risk aversion, a rise in market volatility gauges and concerns over overvalued stock markets in an environment of rapidly rising dollar yields. "The clear risk-off mode that we are seeing across all markets is also hitting oil," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
Oil price extend losses as other markets fall, stockpiles climb - Oil prices fell to two-week lows on Thursday as it extended big losses from the previous session amid a rout in global stock markets, with prices also hit by an industry report showing U.S. crude inventories rose more than expected. Supply worries also eased as Hurricane Michael likely spared oil assets from significant damage as it smashed into Florida, even as it caused at least one death, injuries and widespread destruction. Brent crude futures were down $1.32, or 1.6 percent, at $81.77 a barrel by 0543 GMT. They earlier touched their lowest since Sept. 27 at $81.35, after closing 2.2 percent lower on Wednesday. U.S. West Texas Intermediate (WTI) crude futures were down by $1.10, or 1.5 percent, at $72.07, having fallen to their lowest since Sept. 28. They dropped 2.4 percent in the previous session. Stocks on major world markets slid to a three-month low on Wednesday, with the benchmark S&P500 stock index falling more than 3 percent, its biggest one-day decline since February. Technology shares tumbled on fears of slowing demand and concerns about U.S.-China tensions. Japan’s Nikkei 225 was down more than 4 percent on Thursday. “The clear risk-off mode that we are seeing across all markets is also hitting oil and those previous supply concerns have simply evaporated,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney. Volumes for Brent are four times the average for the Asian timezone, while WTI contracts were about 75 percent above typical turnover, McCarthy said. “So there is real commitment in the selling ... adding to the idea that we are seeing a turn in the market,” he said. U.S. crude stockpiles rose more than expected last week, while gasoline inventories increased and distillate stocks drew, industry group the American Petroleum Institute said on Wednesday. Crude inventories climbed by 9.7 million barrels in the week to Oct. 5 to 410.7 million, compared with analyst expectations for an increase of 2.6 million barrels.
WTI Crude Oil Falls 3% | Rigzone -The bears reigned in crude oil markets Thursday.November West Texas Intermediate (WTI) crude oil futures slid 3 percent, falling $2.20 to settle at $70.97 a barrel. During Thursday’s session, the WTI peaked at $72.76 and bottomed out at $70.51. The front-month Brent contract price sustained a 3.4-percent decline, losing $2.83 to settle at $80.26 a barrel.As a Bloomberg article earlier Thursday indicated, fears tied to the ongoing U.S.-China trade war as well as reduced fuel demand in the U.S. Southeast – curtailed by Hurricane Michael – contributed to the bearish sentiment. Michael, which slammed into the Florida Panhandle Wednesday as a strong Category 4 hurricane on the Saffir-Simpson scale, had weakened into a tropical storm and made its way across Georgia and into the Carolinas by 4 p.m. Central time on Thursday.Like the major crude oil benchmarks, the price of a gallon of reformulated gasoline (RBOB) for November delivery ended the day lower. RBOB lost nearly 9 cents to settle at $1.93.On Wednesday, November Henry Hub natural gas futures managed to rally – unlike the other benchmarks that Rigzone tracks on a daily basis. Gas did not extend its midweek rally on Thursday, falling 6 cents to settle at $3.22.
Oil Set for Worst 2-Day Drop Since July-- Oil headed for the biggest two-day drop since July, with fuels from diesel to gasoline also declining as fears over a worsening trade war rattled markets across the board. Futures dropped as much as 1.9 percent in New York, after sliding 2.4 percent Wednesday. As trade tensions between the U.S. and China escalate, investors are shunning risk assets from equities to oil on fears over slowing growth. The S&P 500 Index slumped the most since February while the Nasdaq 100 Index had its worst day in seven years. Meanwhile, Hurricane Michael became the strongest storm to hit the U.S. mainland since 1992 as it made landfall in Florida, slashing fuel demand in the Southeast. “It’s a typical spillover effect and oil’s been hit by the widespread sell-off in risk assets as the intensifying trade row stokes concerns over sluggish global demand,” Will Yun, a commodities analyst at Hyundai Futures Corp., said by phone. “If it were not for the trade dispute, the oil market probably would have kept its momentum on lingering supply risks.” Crude had surged to a four-year high earlier this month with impending American sanctions against Iran set to curtail exports from the OPEC’s third-largest producer. U.S. President Donald Trump has repeatedly demanded the Organization of Petroleum Exporting Countries pump more to temper prices. While the rally has eased, traders continue to speculate whether the cartel and its allied producers can offset dwindling supplies from Iran to Venezuela. West Texas Intermediate for November delivery declined as much as $1.37 to $71.80 a barrel on the New York Mercantile Exchange, and was at $72.37 at 7:55 a.m. in London. Prices are on course for the worst two-day slide since July 17 after closing at the lowest level since Sept. 27 on Wednesday. Total volume traded was about 77 percent above the 100-day average. Brent for December settlement was 93 cents lower at $82.16 a barrel on the London-based ICE Futures Europe exchange, after falling $1.91 on Wednesday. The global benchmark crude traded at a $9.90 premium to WTI for the same month. In equity markets, both the S&P 500 Index and the Dow Jones Industrial Average slipped more than 3 percent, while the Nasdaq 100 Index fell as much as 4.5 percent. The rout continued into Asian hours, with equity benchmarks from Japan to Hong Kong plunging.
Oil prices shed more than 5% during two-day stock market sell-off -- Last week, $100 oil was the talk of Wall Street. This week, a broad market sell-off has made that chatter seem like distant noise. Brent crude oil, which last week rocketed above $86 a barrel for the first time in nearly four years, now sits at a three-week low just above $80. The international benchmark lost nearly $5 a barrel, or 5.6 percent, in the two days that saw the Dow Jones Industrial Averageshed more than 1,300 points.U.S. oil did not fare much better. Over the two days, West Texas Intermediate crude is down $4 a barrel, or 5.3 percent, to $70.97, also a three-week low. Last week, it nearly hit $77 a barrel, posting its best level since November 2014.Both benchmarks slipped from those highs immediately, before clawing back some gains on Tuesday. But the fear factor in the market after heavy selling on Wednesday and Thursday has many investors getting rid of risk-oriented assets like oil, said Tamar Essner, director of energy and utilities at Nasdaq Corporate Solutions."There was a fare amount of bullish momentum and potentially froth in the oil market, so I think there was room to come down," she said. "If you think about it from a market technicals perspective, pullbacks are often around 5 percent."To be sure, on Thursday the market also got a bearish report showing U.S. crude stockpiles rose by 6 million barrels and gasoline inventories jumped 1 million barrels. Earlier in the day, OPEC reported that its members are so far offsetting production declines in Iran and Venezuela, helping to alleviate some of the concern about supply shortages that have pushed up oil prices.The stock market sell-off is also exacerbating fears about slower global growth and weakening oil demand amid trade tensions, said Andrew Lipow, president at Lipow Oil Associates. Crude oil is also a highly liquid asset, making it a good candidate to offload in a sell-off for many traders, he said."If you had a day like yesterday and today where the market is going down and you're leveraged, then you're sitting there with a margin call and you're looking at things you can sell," Lipow told CNBC. However, the main story driving the oil market remains the loss of Iranian crude exports ahead of the full renewal of U.S. sanctions on Nov. 4, Lipow said. That deadline is still looming large over the market and could help push oil prices back up.
Oil prices hold ground, but are set for 4 percent weekly fall -Oil prices rose on Friday, slightly reversing two days of steep declines in the previous sessions, though a closely watched forecaster said the outlook for crude demand is weakening. Crude was still heading for its first weekly drop in five weeks, pressured by a big rise in U.S. inventories and fading concerns for now that looming U.S. sanctions on Iran will cut supplies significantly. Oil found support on Friday from a gain in world stocks. A drop in equities amid wider risk-off investor sentiment had pressured crude on Wednesday and Thursday. "A rebound in equity markets would help Brent to rebound from $80," said Olivier Jakob, analyst at Petromatrix, adding that a dip below $80 on Thursday did not clearly break that level as a source of technical support.Brent crude futures rose 80 cents, or 1 percent, to $81.06 a barrel by 9:04 a.m. ET (1304 GMT), havingdropped by 5.6 percent over the previous two sessions.U.S. West Texas Intermediate (WTI) crude futures were up 83 cents, or 1.2 percent, at $71.80 a barrel, after falling 5.3 percent during the two-day sell-off.Brent was on track for a weekly loss of 3.7 percent, while WTI was set to drop 3.4 percent this week.The monthly report by the International Energy Agency (IEA) on Friday said the market looked "adequately supplied for now" and trimmed its forecasts for world oil demand growth this year and next."This is due to a weaker economic outlook, trade concerns, higher oil prices and a revision to Chinese data," said the IEA, which advises industrialized countries on energy policy.The IEA report is the latest government assessment to predict weaker demand ahead and conclude that supply is adequate. The Organization of the Petroleum Exporting Countries (OPEC) made a similar move on Thursday.
Baker Hughes data show U.S. oil-rig count up for first time in 4 weeks - Baker Hughes (BHGE) on Friday reported that the number of active U.S. rigs drilling for oil (http://phx.corporate-ir.net/phoenix.zhtml?c=79687&p=irol-rigcountsoverview ) climbed by 8 to 869 this week. That was the largest weekly rise since the week ended Aug. 10. The oil-rig count had posted declines in each of the past three weeks. The total active U.S. rig count, which includes oil and natural-gas rigs, was also up by 11 at 1,063, according to Baker Hughes. November West Texas Intermediate crude was up 9 cents, or 0.1%, at $71.06 a barrel from Thursday's finish, compared with $70.97 before the rig data Friday. Saudi Crown Prince Discusses Trump, Aramco, Arrests: Transcript - Bloomberg’s Senior Executive Editor for Economics, Stephanie Flanders, and five other Bloomberg journalists spoke to Saudi Arabia’s Crown Prince Mohammed bin Salman Al Saud Wednesday night at a royal compound in Riyadh. In the wide-ranging interview, the prince spoke about his relationship with Donald Trump, his commitment to IPO Aramco, plans to invest a further $45 billion in Softbank, energy markets and the recent arrests in the kingdom. Below is a full transcript of the interview.
Permian Paces Gains in U.S. Onshore as BHGE Rig Count Up 11 - The United States added 11 rigs, mostly oil-directed, for the week ended Friday (Oct. 12), led by gains in the Permian Basin, according to data from Baker Hughes, a GE Company (BHGE).The U.S. rig count finished the week at 1,063 as eight oil rigs and four natural gas rigs returned to the patch, offsetting the departure of one miscellaneous rig. Eight horizontal units and four directional units returned to action, while one vertical rig packed up shop, according to BHGE.All of the net drilling gains in the United States for the week were on land. Rig activity in the Gulf of Mexico, which sawproduction shut-ins during the week because of Hurricane Michael, held steady at 22 rigs, up from 20 running a year ago.Canada saw 13 rigs return to the patch, including eight oil and five natural gas. But the Canadian rig count continues to lag its year-ago tally, finishing at 195 rigs as of Friday, down from 212 active rigs at this time last year. The combined North American rig count ended the week at 1,258, up from 1,140 in the year-ago period.Among plays, the biggest mover on the week was the Permian, which added four rigs to climb to 489 active units, well above its year-ago tally of 384. According to a detailed breakout of BHGE data by NGI’s Shale Daily, the Permian’s Delaware sub-basin added three rigs for the week, while the Midland sub-basin saw two rigs return to action. Those gains offset the loss of one rig from the “Other Permian” category.Meanwhile, the Cana Woodford saw two rigs depart on the week. The Shale Dailybreakout of BHGE data shows the SCOOP (aka, the South Central Oklahoma Oil Province) adding one rig, with the STACK (Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties) dropping three units.Also among plays, the Arkoma Woodford and Denver Julesburg-Niobrara each added one rig, while the Eagle Ford and Utica shales each dropped one, according to BHGE.The two states underlying the Permian unsurprisingly posted strong gains for the week. Texas added eight units to grow its tally to 532, while New Mexico added three rigs to 102 (up from 69 a year ago). Louisiana added two rigs, while Colorado and Wyoming each added one. Ohio and Oklahoma each finished the week with one less rig.While the domestic rig count increased for the week, declines could be imminent after U.S. oil and gas drilling permits slid in September, down 21% sequentially and 27% from a year ago, according to analysts with Evercore ISI.
Oil prices rise, but still set for weekly fall amid equities rout(Reuters) - Oil prices rose on Friday slightly reversing two days of declines in the previous sessions driven by sharp falls in equity markets and indications that supply concerns have been overblown, but were still on track for a weekly fall. Brent crude LCOc1 futures rose 33 cents, or 0.4 percent, to $80.59 a barrel by 0256 GMT. The contract fell 3.4 percent on Thursday, dropping to as low as $79.80, its weakest since Sept. 24. It is heading for a 4.2 percent decline this week, the first weekly drop in five. U.S. West Texas Intermediate (WTI) crude CLc1 futures were up 26 cents, or 0.4 percent, at $71.23 a barrel, after falling 3 percent in the previous session to the lowest since Sept. 21. WTI is on track for a 4.2 percent decline this week, also the first weekly drop in five. Wall Street extended its slide into a sixth session and a global equity index fell to a 1-year low on Thursday as investors feared an escalating U.S. trade war with China and risks from a recent climb in interest rates. Japan’s Nikkei .225 was down 0.5 percent on Friday. On the oil front, U.S. crude inventories USOILC=ECI rose by 6 million barrels last week, the Energy Information Administration said, more than double analysts’ expectations of a 2.6 million-barrel increase. [EIA/S] The Organisation of the Petroleum Exporting Countries (OPEC) cut its forecast of global demand growth for oil next year for a third straight month, citing headwinds facing the broader economy from trade disputes and volatile emerging markets. OPEC sees the oil market as well supplied and is wary of creating a glut next year, the group’s secretary-general said on Thursday. “We still estimate oil demand growing at 1.2 million to 1.5 million barrels per day for this year, and see the risk of a slowdown in 2019 if trade tension escalates,” ANZ Research analysts said in a report.
U.S. oil benchmark gains for the session, but weekly loss is first in five weeks - Prices for the U.S. oil benchmark edged higher Friday as investors assessed the next leg of a volatile stock market, but signs of rising crude supplies contributed to an overall weekly loss of 4%. “While there are risks of Middle East conflicts and further outages in production, growing output from the U.S., Saudi Arabia and Russia is likely to keep markets reasonably supplied,” said Rob Haworth, senior investment strategist at U.S. Bank. Also helping to keep prices in check were “fears of an economic slowdown, which could damage [oil] demand growth,” he said. November West Texas Intermediate crude rose 37 cents, or 0.5%, to settle at $71.34 a barrel on the New York Mercantile Exchange. It suffered a weekly loss about 4%. The global benchmark, Brent crude for December delivery on the ICE Futures Europe exchange, added 17 cents, or 0.2%, to $80.43 a barrel after briefly dipping as low as $79.23. It posted a weekly decline of roughly 4.4%. Both benchmarks, which registered their first weekly declines in five weeks, shed some 3% Thursday. They were moving in step with a two-day selloff across global stock markets — a move that raised concerns about economic resiliency and eventual energy consumption. Global equities climbed and benchmark U.S. stock indexes were moving higher on Friday, however. Overall, production data remain the overarching driver of market sentiment. A monthly report from the Organization of the Petroleum Exporting Countries released Thursday revealed a rise in OPEC and Russian crude-oil production in September, more than making up for a continuing decline in Iranian output ahead of the implementation of U.S. sanctions on Iran’s oil industry. Earlier this week, the Energy Information Administration boosted its forecast for U.S. oil production, which added another headwind. OPEC lowered its global oil demand growth forecast for this year and next, the third month in a row for a downgrade. On Friday morning, the International Energy Agency shared that view, saying global oil demand will grow at a slower pace than initially expected this year and next amid economic risks stemming from trade tensions and higher oil prices.
BP Chief- Saudi Arabia Is Holding Back Production “I think Saudi Arabia does have capacity that can bring to the market,” BP’s chief executive Bob Dudley told CNBC on Wednesday on the sidelines of the Oil & Money Conference in London. “But on the other side of it you have very unpredictable circumstances in Venezuela and of course, with the Iran sanctions,” Dudley noted, commenting on the current market forces driving the oil prices. As the start date of the U.S. sanctions on Iran’s oil is less than four weeks away, the market is jittery and prone to emotional reactions regarding the two key uncertainties over the next couple of months—how much Iranian oil will be lost to the U.S. sanctions, and how much spare capacity Saudi Arabia can bring (or is willing to bring) to offset possible steep losses. Analysts are estimating that the sanctions on Iran will remove at least 1 million bpd from the market, with some predicting losses could be as large as 2 million bpd. The only really large spare capacity is in Saudi Arabia, but the issue with this is that it has never been tested, because Saudi Arabia has never pumped more than 10.72 million bpd, its all-time high record from November 2016. Last week, the Saudis hastened to inform the market that they are currently pumping 10.7 million bpd - just shy of the all-time record high - and could even tweak that 10.7 million “slightly higher” next month. In view of those uncertainties, BP’s Dudley told CNBC that he expects in terms of oil prices that “it’s going to be 45 days of extreme volatility, it could spike up, it could also go the other way.” “If waivers were granted to others, to big oil consuming countries, you could see it (the price) go down, there’s a lot of uncertainty right now,” Dudley said. Asked about whether oil prices at $85 have already resulted in demand destruction, Dudley told CNBC, “we don’t see that destruction.” Volatility in prices won’t be permanent and we’ll get back to the fundamentals, BP’s chief executive said, noting that the UK supermajor is keeping disciplined spending by budgeting at oil prices at $60 to $65 a barrel.
Saudi Women Who Fought for the Right to Drive Are Disappearing - As recently as a year ago, Loujain al-Hathloul and those like her held out hope that the state-endorsed push for reform could create conditions for progress on other issues, such as the rights of political prisoners and the kingdom’s male guardianship laws, which subject women to the will of their male “custodians” in various areas of social and civil life. “We weren’t sure how serious the government was about its promises, but we thought, maybe we can work within the system and use their own words to push for change now,” said one woman activist, speaking of last year. “We thought we could present ourselves as allies, to support their work, and maybe they would accept us.” For al-Hathloul, this hope would be short-lived. Beginning on May 15, 2018, just weeks before the end of the ban on female drivers, the government began a series of arrests targeting prominent activists. Al-Hathloul was among the first to disappear into custody, along with Eman al-Nafjan and Aziza al-Yousef, fellow advocates for human rights and reform. Simultaneously, photographs of the women began to circulate on local media and online, accompanied by state accusations of treason and collusion with foreign governments. A hashtag, #AgentsofEmbassies, went viral, as did speculations that al-Hathloul was a Qatari operative intent on harming the Saudi state. The arrests were the latest example of a new and expanding tactic in Saudi Arabia of the state using anti-terrorism laws to silence dissent. “In the past few years, there has been an increasing trend of using nationalist rhetoric and accusations of terrorism to squelch anyone who might question the state,” said Zayadin. Such allegations allow for the authorities to hold people for months without trial and prosecute them in the so-called Specialized Criminal Court, where they could face heavy sentences for nonviolent crimes. “We’ve seen it used against conservatives and liberals alike,” Zayadin added, citing a slew of arrests in September 2017 during which the government rounded up a group of clerics, academics, and journalists under similar chargesof treason. (The Saudi embassy in Washington did not respond to a request for comment.)
U.S. Soldiers Secretly Fighting Saudi Arabia's War in Yemen, Report Says - U.S. Army Special Forces have been covertly aiding in Saudi Arabia's war against Zaidi Shiite Muslim insurgents in neighboring Yemen, where the rebels control the capital and often fire ballistic missiles, according to a new report by The New York Times.Citing information provided by U.S. officials and European diplomats, the Times reported Thursday that about a dozen Green Berets were deployed to Saudi Arabia's border with Yemen in December, a month after the Houthi rebels fired a Burkan-2 ballistic missile at Riyadh's international airport. Saudi Arabia claimed to have intercepted the November attack with its U.S.-built MIM-104F Patriot missile defense system, but analysts have cast doubt on this official version of events.Saudi Arabia's Crown Prince and Defense Minister Mohammed bin Salman reportedly reached out to the U.S. for help in locating and destroying Houthi missile launch sites shortly after, opening what may be a new shadowy front for the Pentagon's operations in the Middle East.Yemen's current unrest began with the ouster of longtime President Ali Abdullah Saleh amid a wave of regional protests in 2012. Saleh was replaced by his deputy Abed Rabbo Mansour Hadi, who himself faced growing dissent as well as dueling Shiite Muslim and ultraconservative Sunni Muslim insurgencies. The former, allied with Saleh loyalists, stormed Sanaa in 2014 and took control early the following year. Saudi Arabia accused the Houthis of being a proxy for the kingdom's top regional rival, Iran, and gathered a coalition of Arab allies to begin bombing the rebels and attempt to restore Hadi's rule, which was relegated to the southern port city of Aden. Three years later, Saudi Arabia has helped its local allies gain some ground, but the conflict remains mostly in a stalemate, even after two major schisms within the warring alliances.
Trump-Mattis Shambles in Yemen - General Mattis is rabidly anti-Russian and hostile to a great many other countries, people and organizations. It is now almost forgotten that he is the man who replied to a question in 2005 about the US war in Afghanistan by uttering the psychotic pronouncement that “Actually it’s quite fun to fight them, you know. It’s a hell of a hoot. It’s fun to shoot some people. I’ll be right up there with you. I like brawling.” He is obviously a person who can bring balance and sympathetic understanding to international affairs.As recorded in the New Yorker, “on January 22nd, two days after President Trump was inaugurated, he received a memo from his new Secretary of Defence, James Mattis, recommending that the United States launch a military strike in Yemen.” Yemen is in a state of civil war. The country has nothing to do with the United States, but in 2017 the intelligence community in the US said they had discovered that a group of alleged anti-American terrorists were in a village called al-Ghayil and it was decided by the Best and the Brightest in Washington to attack the place. The operation Mattis wanted the president to authorize was intended to kill a supposed leader of Al Qaeda, so Mattis and the National Security Adviser, General Michael Flynn, and the Chairman of the Joint Chiefs of Staff, General Joe Dunford had dinner with President Trump, who then decided to go ahead with what turned out to be a totally disastrous military operation. It was a tragic farce. As reported in the Washington Post, instead of a clean quick special forces’ attack on the village, “a massive firefight ensued, claiming the life of an American sailor and at least one Yemeni child, and serving as an early lesson for President Trump’s national security team about the perils of overseas ground operations. An elite Special Operations air regiment was then sent in to pull the team and its casualties out of the fray, banking into the night under heavy fire to link up with a Marine quick-reaction force that had taken off in MV-22 Ospreys from the US ship Makin Island floating offshore.” In the course of the operation, Chief Petty Officer Ryan Owens, a navy commando, was killed, and one of the $75 million Ospreys was destroyed. And the Bureau of Investigative Journalism reported Zabnallah Saif al Ameri, a villager who lost nine family members, five of whom were children, as saying “It is true they were targeting Al-Qaeda but why did they have to kill children and women and elderly people?
Qatar blockade ‘has been a catalyst for change for the entire nation,’ says investment chief An economic blockade on Qatar that's being upheld by its Middle Eastern neighbors has forced the country to step up reforms and its quest for foreign inflows, an investment head told CNBC on Thursday. "We are seeing a shift in Qatar economics and the entire region. As you know, Qatar is currently going through a blockade from neighboring countries but that hasn't been all that bad," Yousuf Al-Jaida, chief executive of the Qatar Financial Centre, a key agent for attracting foreign direct investment (FDI) to the state, told CNBC's Nancy Hungerford. "It's been a catalyst for change for the entire nation," Al-Jaida added. Qatar is still experiencing a Saudi Arabian-led blockade of the country after a high-profile diplomatic rift with its influential and powerful neighbors. The Saudi Kingdom, along with Bahrain, the United Arab Emirates and Egypt imposed an economic blockade on (and severed diplomatic ties with) the small Arab state in June 2017, accusing it of supporting terrorism. Qatar vehemently denies the accusations. The blockade has impacted air travel, shipping and trade routes and media, among other sectors. However, the economic impact of the blockade has been seen as short-lived, the International Monetary Fund said in May. "Growth performance remains resilient. The direct economic and financial impact of the diplomatic rift between Qatar and some countries in the region has been manageable," the IMF said in its recent report published earlier this week on the country in May, predicting respectable gross domestic product (GDP) growth of 2.6 percent in 2018.
Is Saudi Arabia the Middle East’s Next Failed State? -Reports are growing that Muhammad bin Salman, Saudi Arabia’s hyperactive crown prince, is losing his grip. His economic reform program has stalled since his father, King Salman, nixed plans to privatize 5 percent of Saudi Aramco. The Saudi war in Yemen, which the prince launched in March 2015, is more of a quagmire than ever while the kingdom’s sword rattling with Iran is making the region increasingly jumpy.Heavy gunfire in Riyadh last April sparked rumors that MBS, as he’s known, had been killed in a palace coup. In May, an exiled Saudi prince urged top members of the royal family to oust him and put an end to his “irrational, erratic, and stupid” rule. Recently, Bruce Riedel, an ex-CIA analyst who heads up the Brookings Institution’s Intelligence Project, reported that the prince is so afraid for his life that he’s taken to spending nights on his yacht in the Red Sea port of Jeddah. Some 800,000 foreign workers have left the country while capital is fleeing in the wake of last November’s mass roundup in which hundreds of princes and businessmen were herded into the Riyadh Ritz-Carlton and forced to turn over billions in assets. Foreign direct investment has plummeted from $7.5 billion to $1.4 billion since 2016 while a series of super-splashy development projects are in jeopardy now that Saudi Aramco privatization, which MBS was counting on as a revenue source, is on hold. While granting women permission to drive, MBS has imprisoned women’s rights advocates, threatened a dissident cleric and five Shiite activists with the death penalty, and cracked down on satirical postings on social media. He preaches austerity and hard work, yet plunked down $500 million for his yacht, $450 million for a painting by Leonardo da Vinci, and $300 million for a French chateau. The hypocrisy is so thick that it’s almost as if he wants to be overthrown. As for the lean and hungry fundamentalists whom Ibn Khaldun said would administer the final blow, there’s no doubt who fits that bill: ISIS and al- Qaida. Both are fierce, warlike, and pious, both inveigh against a Saudi regime drowning in corruption, and both would like nothing more than to parade about with the crown prince’s head on a pike.
Saudi journalist ‘killed inside consulate’ – Turkish sources - Turkish officials believe that missing Saudi journalist Jamal Khashoggi was killed inside the Saudi consulate in Istanbul and his body later driven from the compound. Authorities say they believe Khashoggi’s death was premeditated and that Saudi officials had travelled to Istanbul from Riyadh after receiving word that the high-profile critic of the current Saudi leadership planned to visit the consulate. In an evening of quickfire developments, following four days of silence since his disappearance, officials in Ankara pledged to on Sunday release evidence that they say supports claims that the journalist was killed shortly after he entered the consulate to sign divorce papers. The evidence is expected to include video footage and focus on a black car. Two Turkish officials claimed to Reuters that Khashoggi, 59, had been killed. The Reuters claim was circulated by a government spokesman, and confirmed by numerous other officials, some of whom claimed to have knowledge of how the body had been disposed of. Several officials alleged, without tabling evidence, that Khashoggi had first been tortured. Officials believe that a team of 15 Saudis arrived on Tuesday to conduct the killing, then left the country soon afterwards. The president, Recep Tayyip Erdoğan, is expected to release a statement about the incident on Sunday. Aside from summonsing the Saudi ambassador in Ankara, senior officials had remained mute about Khashoggi’s fate, leading to speculation that he had been smuggled out of the country with Turkish consent. The dramatic Turkish claim instead squarely focuses attentions on Riyadh, in particular Crown Prince Mohammed bin Salman, who on Friday denied any knowledge of Khashoggi’s whereabouts. “If he was here, I would know about it,” the 33-year-old heir to the throne told Bloomberg. “My understanding is, he entered and he got out after a few minutes or one hour,” said Prince Mohammed. “I’m not sure. We are investigating this through the foreign ministry to see exactly what happened at that time.
How the disappearance of a journalist and a humiliating remark by Trump shows Saudi Arabia’s weakness Patrick Cockburn. - Over the past half century, critics have often predicted the fall of the House of Saud or emphasised the fragility of its rule. They were invariably proved wrong because the Saudi monarchy enjoyed limitless oil revenues, had the support of the US, and avoided becoming a front-line combatant in Middle East crises. Saudi strengths and weaknesses may have been long debated but the Kingdom’s vulnerabilities have seldom been so starkly on display as they were last Tuesday because the coincidence of two very different events. Before a rally in Mississippi, President Trump stated – brutally and without qualification – the dependence of the Saudi monarchy on US support and the price it must pay for such backing. “We protect Saudi Arabia,” Trump told the cheering audience. “Would you say they’re rich? And I love the King, King Salman. But I said ‘King – we’re protecting you – you might not be there for two weeks without us – you have to pay for your military’.” Outbursts by Trump tend to be more calculated than they sound and he only humiliates allies in this way when he knows he can get away with it.Trump’s contemptuous reference to the instability of Saudi Arabia was given greater significance by another dramatic event which happened a few hours earlier some 6,000 miles away in Istanbul. The prominent Saudi journalist and critic of his country’s government, Jamal Khashoggi, failed to emerge from the Saudi consulate where he was doing some paperwork relating to his divorce and impending marriage. Khashoggi has not been seen since. The Turkish authorities, no doubt delighted to be able to present themselves as defenders of journalistic freedom, say he is still inside the consulate. Saudi officials claim that he left the building, though surveillance cameras prove he did not do so on foot, so, if he did leave, it was presumably in a diplomat’s car, possibly in the boot. Khashoggi’s fiance was left waiting disconsolately outside the consulate gates. The fate of Khashoggi, whatever the outcome of the present furore, carries an important message about the present state of Saudi Arabia. If he has been forcibly detained, as the Turkish government says, then it is a self-harming act of stupidity. It elevates him from being a minor irritant to a cause célèbre and a continuing mystery about his whereabouts ensures that the story is not going to go away.
Turkish president calls Jamal Khashoggi’s disappearance ‘very, very upsetting’ - WaPo — Turkish President Recep Tayyip Erdogan on Sunday called the disappearance of Saudi journalist Jamal Khashoggi “very, very upsetting” but stopped short of confirming reports that Khashoggi had been killed inside Saudi Arabia’s consulate in Istanbul last week. “I am following this issue, pursuing it, and whatever the result, we will be the ones to tell the world,” Erdogan told reporters. The Washington Post reported Saturday that Turkish investigators had concluded that Khashoggi, a critic of the Saudi leadership, had been killed inside the consulate Tuesday by a team sent from Saudi Arabia. A person familiar with the investigation called it a “preplanned murder.” A U.S. official confirmed that Turkey’s government had determined that Khashoggi was probably killed inside the consulate by a team that arrived on two private jets. Turkish officials further concluded that his body was probably dismembered, removed in boxes and flown out of the country, the official said. Saudi Arabia has denied the accusations, calling them “baseless,” and said that Khashoggi, 59, left the consulate soon after he arrived. The suspected murder of Khashoggi, a contributor to The Washington Post’s Global Opinions section, could flare tensions between Saudi Arabia and Turkey, two regional powers whose rivalry has played out across the Middle East. Saudi Arabia is wary of Turkey’s expanding military power in the Persian Gulf, its support for political Islamists and its cooperation in the Syrian war with Iran, Saudi Arabia’s archrival. Turkey was alarmed by the Saudi leadership’s support for a military coup against former Egyptian president and Muslim Brotherhood leader Mohamed Morsi in 2013. Erdogan, who spoke to reporters Sunday after a speech in the capital, Ankara, said that Khashoggi was “actually a journalist I have known for a long time, a friend of ours.” He added, “God willing, we will not come face to face with a situation that we do not desire.”
Erdogan Believes Saudi Arabia Ordered Brutal Killing Of Missing Dissident At Istanbul Consulate -- As we suggested on Saturday, the suspected extrajudicial torture, murder and dismemberment of a Washington Post columnist inside the Saudi consulate in Istanbul is already straining tensions between Riyadh and Ankara. To wit, on Saturday, Turkish prosecutors officially launched an investigation into the disappearance of Jamal Khashoggi, according to Turkey's official Anadolou news agency, after a "Turkish security team" was allowed inside the consulate by Saudis (presumably under the assumption that they would produce a clean bill of health). Meanwhile, a handful of anonymous Turkish officials reportedly tipped off the Washington Post and Reuters about the murder. Commenting on the potential fallout form this latest diplomatic crisis, the BBC's Mark Lowen said Saturday that if these reports are accurate, the clandestine state-sponsored murder on Turkish soil of a high-profile dissident would further strain already deteriorating relations between Turkey and the Saudis. Tensions between the two countries date back to 2011, when Ankara encouraged the Arab Spring uprisings that helped plunge Syria into a brutal civil war, and also prompted a crackdown by the Saudi government on its own brush with domestic unrest. And in the latest hint that Khashoggi's disappearance is becoming a national issue, Turkish President Recep Tayyip Erdogan has confirmed to Reuters that Turkish authorities believe Khashoggi was murdered inside the Saudi consulate in Istanbul last week, in an example of KSA's deliberate targeting of a prominent dissident. Erdogan added that Turkish authorities were looking into all camera records and monitoring incoming and outgoing air transit, but cautioned that Turkey would "await the results of the investigation." Khashoggi's fiance, who was reportedly waiting for him outside the Consulate, said he simply never left the building. What's more, Erdogan said that he would "personally" would be involved in the case (though he said he is holding out hope for a positive outcome). Saudi officials have vehemently denied even detaining Khashoggi and have repeatedly said he freely left the embassy not long after he entered. Saudi Crown Prince MbS himself on Friday invited Turkish authorities to enter the building, saying "We are ready to welcome the Turkish government to go and search our premises."
Erdogan Demands Saudis Produce Proof That Missing Journalist Left Consulate Alive As 'Murder' Pr It has been nearly a week since renowned Saudi journalist and Washington Post columnist Jamal Khashoggi walked into the Saudi consulate in Istanbul on Oct. 2 and never walked back out. In the ensuing days, the Western media has become incensed by reports that the Saudis sent a 15-man "hit squad" to the consulate to carry out the "preplanned" torture and murder of Khashoggi. Afterwards, they reportedly dismembered his body and smuggled his remains out of the building, all while Khashoggi's Turkish fiance waited outside in her car. After sending a "security team" to the consulate to look for the missing dissident, Turkish investigators launched an investigation into Khashoogi's disappearance on Friday - an investigation for which Turkish President Recep Tayyip Erdogan has pledged his "personal involvement". After anonymous officials shared suspicions that Khashoggi had been murdered inside the consulate with Western journalists, Turkish investigators said publicly that they believe Khashoggi is alive inside the building. Saudi officials have maintained that he left a short while after arriving. But as a condition of the investigation, Erdogan demanded that Saudi Arabia "prove" that Khashoggi (who in addition to being a journalist once served as an advisor to Saudi's intelligence chief) left the consulate alive. "We have to get an outcome from this investigation as soon as possible. The consulate officials cannot save themselves by simply saying 'he has left,'" Erdogan told a news conference in Budapest, where he is on an official visit. "If he left, you have to prove it with footage." According to media reports, the consulate's surveillance cameras didn't capture Khashoggi leaving the embassy, Reuters reported. And in the latest escalation that threatens to expose Saudi Crown Prince Mohammad Bin Salman for his flagrant human rights abuses, Turkey requested on Sunday that investigators be allowed to search the Saudi consulate, a request that was made during a Sunday evening meeting with the Saudi ambassador in Ankara, per the Washington Post.
Crown prince's silence on journalist Khashoggi's disappearance could derail the Saudi reform agenda - For many months, Trump administration officials have worried privately that Saudi Arabia's young princeMohammed Bin Salman – in whom President Donald Trump and his son-in-law Jared Kushner had invested so much – was through rash actions endangering his own historic project of a more religiously moderate, socially open and economically diverse Saudi Arabia.Yet these officials had held fire and damped their public criticism, as had many other Saudi friends including me, because of what seemed the larger prize. MBS, as the 33-year-old Saudi crown prince is known, could act impulsively, emotionally and repressively, but the larger, strategic stakes of his efforts to transform his country were of historic and global significance. By his own admission, the crown prince was an autocratic representative of an ancient monarchy, but he had in his cross-hairs the austere Saudi Arabia that had emerged in the years after the Grand Mosque seizure by militants in 1979. It was a worthy target as it had become the midwife and financer of an extreme and puritanical vision of Islam that seeded the 9/11 terrorist attacks, killing some 3,000, and al-Qaeda, ISIS and much more. That was the larger context when Saudi journalist Jamal Khashoggi disappeared 10 days ago. Reports now are more convincing, in addition to being more persuasive and gruesome, that he was murdered by Saudi agents. So, it soon may be time to mourn even more than the tragic and grisly passing of this intelligent, honorable and principled individual, whom I had known for years as a fellow journalist. It may also mark the death of the crown prince's best ambitions, if not handled far more decisively and transparently than has been the case thus far. What's at risk is a Saudi shift that had geopolitical, geo-economic and, most of all, geo-religious consequences. Given those stakes, President Trump has been understandably reluctant to condemn his Saudi partners, but he missed the primary danger with his concerns about the $110 billion US defense sales, a few more billion in Saudi investments in the United States, and the US jobs they may spawn. The religious and cultural stakes are far more significant. That's because the Saudi turn after 1979, along with the Iranian revolution of the same year, altered the course of history by setting back the modernization efforts that previously were blossoming across the region.
Jamal Khashoggi case: All the latest updates - Al Jazeera - US and Turkish officials told The Washington Post there are audio and video recordings proving Khashoggi was tortured and murdered inside the Saudi consulate in Istanbul.Video recordings show a Saudi assassination team seizing the journalist after he walked in on October 2. He was then killed and his body dismembered, the officials told the Post - the newspaper that Khashoggi wrote for as a columnist.The audio was particularly gruesome, the sources said. "The voice recording from inside the embassy lays out what happened to Jamal after he entered," said one official speaking anonymously because the intelligence is classified. "You can hear his voice and the voices of men speaking Arabic. You can hear how he was interrogated, tortured, and then murdered." Another unnamed official confirmed men could be heard beating Khashoggi on the recording. It was unclear how the Turkish and American officials obtained the recordings. David Katz, CEO of Global Security Group, told Al Jazeera the intelligence officials quoted by The Washington Post likely have audio and video that clandestinely recorded Khashoggi's killing. "There is clearly tension between the Saudis and the Turkish government, so that suggests Turkey is going to be directing its very considerable intelligence apparatus at everything to do with the Saudi government in Turkey for sure," said Katz. "So it's very possible that they do in fact have audio and video recordings of things that have gone on inside the consulate, whether that was bugs planted or electronic intercepts. So you wouldn't really need full forensics if you have evidence of that nature. And if the report in The Washington Post is correct, that's apparently what they have."Katz said spies have "robust electronic devices" that can allow them to listen to what's going on inside buildings from outside."You'll actually hear what happened, you'll hear the voices. There was a suggestion there was an interrogation followed by a very brutal murder. If that's the case - and if that's on audio and/or videotape - you don't need anything else. That's the case right there."
Joint Turkish-Saudi team to investigate journalist's disappearance (Xinhua) -- Turkey and Saudi Arabia agreed to set up a joint team to investigate the disappearance of Saudi journalist Jamal Khashoggi, Turkish presidential spokesman Ibrahim Kalin said Thursday. Kalin told reporters that the agreement was reached upon Riyadh's request. "A joint working team between Turkey and Saudi Arabia will be formed to investigate the case in all its aspects," he said. Khashoggi, a journalist and columnist for The Washington Post, has been missing since he entered the Saudi consulate in Istanbul on Oct. 2 to get documents for his marriage. Turkish prosecutors have launched a probe into the whereabouts of the Saudi journalist. Turkish police said that 15 Saudis, including several officials, arrived in Istanbul on two planes and entered the consulate while Khashoggi was inside. Eight out of the 15 suspects linked to the missing Saudi journalist have been identified by Turkish police. Unconfirmed reports said that Khashoggi was likely killed inside the compound, which was dismissed by Saudi authorities as "baseless". Saudi Arabia on Tuesday invited Turkish experts and officials to visit the consulate after Turkey demanded to search the building.
Commentary: How Khashoggi’s disappearance could change Middle East politics --The disappearance and possible murder of Saudi journalist Jamal Khashoggi has cast a long shadow over Saudi Arabia’s global image. If the Saudi government did in fact kill or kidnap him, the crime would have significant implications for Middle East politics. Human rights activists and friends of Saudi journalist Jamal Khashoggi hold his pictures during a protest outside the Saudi Consulate in Istanbul, Turkey October 8, 2018. REUTERS/Murad SezerA high-profile critic of Saudi Crown Prince Mohammed bin Salman and a self-exiled Washington Post columnist, Khashoggi disappeared after entering the Saudi consulate in Istanbul on October 2. He has not been seen or heard from since, according to his friends and fiancée. Turkish authorities believe he has been killed and his body, possibly dismembered, has been transferred out of the building. A security source also told Reuters that a group of 15 Saudi nationals, including some officials, arrived in Istanbul in two planes and entered the consulate on the same day Khashoggi was there, then later left the country. A Turkish pro-government newspaper has said it had identified the members of that group. A Saudi source at the consulate has denied that Khashoggi has been killed or abducted at the mission, and dismissed the accusations as baseless. If the Turkish claims are correct, a Saudi state-sponsored murder of Khashoggi would send ripples throughout the region. It would also provoke renewed criticism of Prince Mohammed, who since assuming office in June 2017 has overseen a crackdown on dissent, including frequent arrests of religious leaders, intellectuals, activists as well as royals critical of his rule.
The Cruelty and Stupidity of Iran Sanctions - Esfandyar Batmanghelidj warns that stricter U.S. sanctions will be a boon for the Islamic Revolutionary Guard Corps (IRGC) while the rest of the population suffers: Importantly, the evidence that sanctions line the pockets of the IRGC is stronger than the evidence that sanctions relief benefits Iran’s proxies. In his May 2017 testimony before the Senate Committee on Armed Services, Lt. Gen. Vince Stewart, then-director of the Defense Intelligence Agency, gave his assessment of Iran’s use of its proceeds from sanctions relief, telling the committee that “the preponderance of the money [has] gone to economic development and infrastructure.” To this end, the Trump administration’s characterization of its sanctions policy is dishonest, at least in its presentation of the intended and unintended consequences of the policy. If limiting the financial means of the IRGC and its proxies were the intended consequence of the sanctions policy, the current strategy would be falling short while very demonstrably having the unintended consequence of unduly harming the Iranian people through economic hardship. In this formulation, the administration is failing to achieve its stated goals despite the ample evidence that its chosen strategy will not work. But if you flip the intended and unintended consequences, a more likely explanation becomes clear. The boon for the IRGC is the unintended consequence of a strategy that is designed foremost to put pressure on the Iranian economy at large. It should come as no surprise that reimposed sanctions will work to the IRGC’s benefit, because this is just what happened before the nuclear deal. Regime insiders are able to take advantage of the difficulties created by sanctions and use their connections to enrich themselves while the rest of the country is impoverished. When legal trade is restricted or cut off, those that profit from illicit trade are in a position to gain the most. As Batmanghelidj says: The IRGC and its proxies are enriched by smuggling and enabled by sanctions. The Trump administration seems all too eager to feed this seven-headed dragon. Iran hawks have wrongly portrayed sanctions relief under the nuclear deal as a boost for the IRGC when the exact opposite is the case. Punitive sanctions help Iran’s hard-liners, and it is the civilian population that endures the collective punishment that the U.S. is meting out. Strengthening Iran’s hard-liners at the expense of the population is a cruel and stupid policy, but it is consistent with an administration that seeks confrontation with the regime and has nothing but contempt for the people.
US Officials Say Russia To Seize Syria's Oilfields As Moscow Presses Europe On Reconstruction - Russia is attempting to woo European countries like Germany into a program of reconstruction cooperation in Syria, where broad swathes of the country have been destroyed through seven years of grinding proxy war; however, Pentagon officials have charged Russia with wanting to "seize" Syria's oil and gas resources. This comes as the United States has resolved to keep its over 2,000 troops in the east of Syria while vowing zero reconstruction aid so long as Iranian troops and advisers are present in the country. This week a top US military official even went so far as to accuse Russia of seeking "to take advantage in any way they could" and that a "great power competition" for Syria will continue to shape its post-war future. Air Force Brig. Gen. Leah Lauderback, who served as director of intelligence for Operation Inherent Resolve until June, told an Army conference that “Great power competition was an objective by Russia,” and that specifically they are looking to "seize" oilfields in Syria. But a Russian official has slammed the US and Europe as living in a "fantasy land" if they still have removal of Assad on the table as "radicals will take over that will slit people’s throats’’ should regime change happen. Gen. Lauderback said of Russia in the context of discussing US anti-ISIS operations at an Army conference in D.C. this week: “Economically, they wanted to seize oilfields, they wanted bids and contracts to develop Syria for infrastructure in order to stabilize Syria over the long term,” she said according to Al-Monitor news.
Settlers destroy 40 olive trees in village near Ramallah - Israeli settlers on Sunday morning have cut and destroyed about 40 olive trees in the town of Turmusaya, north of Ramallah, in the West Bank. According to local sources, farmers who went ot their lands today found out that over 40 olive trees in their own lands near the settlement outpost “Adi Aad” have been cut down and destroyed. This is the second consecutive attack on olive trees in the area during this week. This month is the season for “olive picking” in Palestine, known for its quality product of olives and olive oil.
Israeli mass murder of Gazans targets children --The Israeli army opened fire on Palestinian protestors in the Gaza Strip Friday, killing three people, including a 12-year-old boy.Fares Hafez al-Sersawi died along with Mahmud Akram Mohammed Abu Samane, aged 24, after being shot in the chest during demonstrations east of Gaza City, while Hussein al-Rakab, aged 28, died after being shot in the head near the southern city of Khan Yunis. A further 376 people were wounded, seven of whom remain in a critical condition.The previous Friday, following a relatively quiet period as Israel and Hamas discussed a now-stalled agreement brokered by Egypt, the Israel Defense Forces (IDF) escalated its slaughter of unarmed civilians, shooting and killing seven Palestinians demonstrating near Gaza’s border with Israel, and injuring 500.The seven murdered included 12-year-old Naser Azmi Musbeh and 14-year-old Mohammed Naif al-Houm, while 90 children, four medics and four journalists were among those wounded by live fire. Not a single Israeli was hurt during this bloodbath.According to Gaza’s Ministry of Health, Friday’s toll brings the total number of Palestinians killed to 197 and the number injured to at least 21,600 since the March of Return protests began on March 30. According to the United Nations, 77 Palestinians have required amputation, including 14 children and one woman, while 12 people have been left paralysed due to spinal injuries. The most powerful military force in the Middle East faces an impoverished and essentially unarmed population. In the most brutal and cowardly fashion, it is slaughtering civilians who have faced an economic siege, the destruction of their livelihoods, repeated bombardments, and military assaults over the last 11 years.
Netanyahu says army prepping for possible military campaign against Gaza - The Israeli Prime Minister Benjamin Netanyahu has reportedly informed his cabinet that the army is preparing for a possible military campaign against the blockaded Gaza Strip in case the situation was not improved, according to Israeli media. “If the reality of civil distress in Gaza is diminished, that is desirable, but that is not certain to happen, and so we are preparing militarily — that is not an empty statement,” Netanyahu said. For the past six months, Palestinians have been protesting on the border of Gaza as part of the “Great Return March” in which 190 Palestinians have been killed, 64 of whom were killed on the day the US moved its embassy from Tel Aviv to Jerusalem. In 2014, Israel waged a devastating 51-day military onslaught on the Gaza Strip, in which more than 2,300 Palestinians were martyred and tens of thousands injured.
Wife of Israeli prime minister goes on trial for fraud (Reuters) - Israeli Prime Minister Benjamin Netanyahu’s wife, Sara, appeared in court on Sunday for the first hearing in the fraud trial against her, in which she is alleged to have misused state funds in ordering catered meals. According to the indictment, Sara Netanyahu, along with a government employee, fraudulently obtained from the state more than $100,000 for hundreds of meals supplied by restaurants, bypassing regulations that prohibit the practice if a cook is employed at home. Netanyahu denies any wrongdoing. She was charged in June with fraud and breach of trust and of aggravated fraudulent receipt of goods. If convicted, Sara Netanyahu could face up to five years in prison. Looking tense, Netanyahu made no comment to reporters who had packed the tiny courtroom. She sat on a bench behind her lawyers. “Can we ask them to move the cameras away?”, she asked the lawyer for the other defendant, who replied: “You’re used to it.” “Not like this,” Netanyahu answered. She shook her head as the prosecutor described the gravity of her case. The session, however, dealt mainly with procedural matters. The judge set a meeting with the prosecutors and the defendants’ lawyers for Nov. 13 in which he said he hoped all sides could narrow their differences “or even resolve the case”. But a settlement at this stage appears remote because the prosecutors would likely demand Netanyahu plead guilty, something her lawyer has ruled out. She was not asked at the hearing to enter a plea. Netanyahu’s lawyers contend the indictment does not hold up because the regulations for ordering meals were legally invalid and a household employee had requisitioned the food despite Netanyahu’s protestations. The prime minister, who himself is embroiled in corruption investigations, has called the allegations against his wife absurd and unfounded.
Beheadings, roadside bombs and airstrikes: one day in Afghanistan - The first death happened soon after midnight, a policeman killed on night watch near the Tajik border. The bloodshed continued as the sun rose, and as night fell again. Three beheadings at a school, and an airstrike after 11pm were the last of the conflict-related violence recorded in Afghanistan on the first day after a three-day ceasefire, these incidents were the culmination of a day of murder and maiming, shootings, explosions, aerial bombardments and one unclaimed political assassination.For everyone except the injured survivors and families of the dead, it was an unexceptional day in a conflict that much of the world appears to have forgotten. There were no such attacks in big cities, no key battles, just the ceaseless grind of war. On 7 October, it will be 17 years since US troops launched Operation Enduring Freedom to topple the Taliban government in Kabul. In the intervening years, foreign troop numbers have surged and been cut back again; leaders in the US and the UK have declared “our war” in Afghanistan over, and their “mission accomplished”.Yet the Taliban have kept fighting and a regional affiliate of Isis has joined them on the battlefield. Today, insurgentscontrol or threaten more territory than they have done since 2001, and civilian casualties are setting grim records. In a bid to illustrate the relentless nature of violence, the Bureau of Investigative Journalism and the Guardian and Observer have compiled a list of all attacks reported on a single day – using unpublished official documents and on-the-ground reporting to give a snapshot view of the war. This timeline details the death of at least 60 people, and the wounding of over a dozen more, in over 30 different attacks across 16 provinces – or nearly half the country.
China Blinks First In LNG Face-Off With US - Amid the ongoing trade war between the U.S. and China, it seems that Beijing may be getting the short end of the stick already. On Sunday, the People’s Bank of China said it was cutting the reserve requirement ratio for most banks by 100 basis points, which will result in an injection of 750 billion yuan ($109.2 billion) in cash into China’s banking system. The move is intended to provide easier lending and more liquidity in China's economy as the impact of U.S. sanctions start to hit manufacturing and the overall economy. Several analysts are claiming that the ratio move shows China is getting nervous about a protracted trade war with the U.S. However, if China is getting the jitters, the official tone coming out of Beijing is more stiff lipped defiance. The government claims in a 71-page paper that it’s not afraid of a trade war and that its economy is “heavily resilient.”Fraser Howie, an independent analyst and China watcher told CNBC on Monday that "China is probably facing its worst period since the global financial crisis.”“All news is against it,” he said. "They certainly want to play down any talks of panic or near panic ... but they're clear it's not business as usual in China.”Bloomberg News said in a report that the Bank of China move was understandable as a short-term response to a more challenging growth environment, but it risks being another attempt to crank up an old economic- model whose effectiveness has declined and whose unfavorable side effects could increase. The bank move also could be a preemptive step to avoid massive outflows of investor money from its financial system if the trade war continues. On the energy front, China has already blinked, maybe even twice or thrice (if that is a word).
- First, it conceded in August by removing U.S. oil imports from a list of possible duties. Two months earlier, China - perhaps trying to either intimate U.S. oil producers (who have been largely supportive of Trump’s policies thus far) who would in turn pressure President Trump, or either by pressuring Trump directly, indicated it would levy a 25 percent duty on U.S. oil imports.
- Second, since China is the largest buyer of American crude, Beijing likely discarded one of its strongest bargaining chips in the trade war so far. Some reports claim that U.S. oil imports to China are worth $8 billion all by themselves, so erasing oil from the tariff list reduced the value of sanctioned goods by roughly one-third.
- As far as Beijing’s LNG tariff threats are concerned, the reduction from an earlier 25 percent duty to 10 percent could also be considered another blink on China's part. Beijing, though it does have a host of other gas and LNG suppliers, at the end of the day still needs American LNG as the country continues to pivot away from dirtier burning coal needed for power production in favor of cleaning burning natural gas. By 2020, per government mandate, gas is earmarked to make up at least 10 percent of China’s energy mix, with further earmarks by 2030.
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