crude exports at a record high as US becomes a net oil exporter for the first time in 75 years..

oil prices rose for a second week after 7 ​weeks of ​decreases in volatile trading this past week, as shifting stories out of Washington and the OPEC meeting in Vienna led to large intraday price swings...after rising roughly 1% even while ending November more than 22% lower at $50.93 a barrel last week, the price of US oil contracted for January delivery opened 3% higher on Monday morning and spiked to a 6% increase before settling $2.02 higher at $52.95 a barrel, after the weekend G-20 meeting in Buenos Aires resulted in a 90 day trade truce between the U.S. and China and an extension of a Saudi - Russia cooperation pact on oil supplies, and the Alberta Premier followed by mandating a 325,000 barrel per day reduction in Canadian oil output to alleviate a pipeline bottleneck…oil prices continued rising to as high as $54.55 a barrel on Tuesday before pulling back and settling with a gain of 30 cents at $53.25 a barrel​,​ as cracks started showing up in the US-China trade truce...oil prices again rose as high as 54.44 on Wednesday before again falling back to end the session 36 cents lower at $52.89 a barrel, as oil traders feared the rumored OPEC oil cuts would not be enough to rein in supplies,..prices then tested the $50 a barrel level before ending down $1.40 at $51.49 a barrel on Thursday, after OPEC ended its meeting without a decision on how much crude the cartel would cut...oil prices started out lower again on Friday, but then surged 5% after OPEC, Russia and other producers ​announc​ed an agreement to cut output by 1.2 million barrels per day during the first half of 2019, before ​prices fell back​ to close with an increase of $1.12 at $52.61 a barrel...oil prices thus finished the week 3.3% higher than they ended last week, after trading as high as $54.55 a barrel on Tuesday and as low as $50.08 a barrel on Thursday...

natural gas prices, meanwhile, ended the week 12.4 cents lower at $4.488 per mmBTU, largely on a 27.3 cent drop on Monday to $4.339 per mmBTU, on forecasts for mid-December warming, as​ the​ 8 to 14 day forecasts from the Climate Prediction Center continued to indicate a warming trend for the lower 48 states all week, but they did see a surge of 16.1 cents on Friday, as some models indicated more cold risks...the natural gas storage report for the week ending November 30th from the EIA showed that the quantity of natural gas in storage in the US fell by 63 billion cubic feet to 2,991 billion cubic feet over the week, which left our gas supplies 704 billion cubic feet, or 19.1% below the 3,695 billion cubic feet that were in storage on December 1st of last year, and 720 billion cubic feet, or 19.5% below the five-year average of 3,716 billion cubic feet of natural gas that are typically in storage at the end of November....this week's 63 billion cubic feet withdrawal from US natural gas supplies was pretty much in line with what analysts had been expecting, but it was a bit more than the average of 58 billion cubic feet of natural gas that have been withdrawn from storage during the last week of November in recent years...natural gas storage facilities in the East saw a 26 billion cubic feet drop in supplies over the week, which increased the region's gas supply deficit to 14.2% below normal for this time of year, while natural gas supplies in the Midwest fell by 24 billion cubic feet while their supply deficit slipped to 12.6% below normal for the end of November...meanwhile, the South Central region saw a 9 billion cubic feet drop in their supplies, increasing their natural gas storage deficit to 27.0% below their five-year average for this time of year...at the same time, 3 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region as their deficit from normal rose to 21.1%, while just 1 billion cubic feet were withdrawn from storage in the Pacific region, where their natural gas supply deficit fell to 26.0% below normal for this time of year....  

putting this week into perspective historically, the 2,991 billion cubic feet of natural gas that we had in storage on November 30th was 12.3% lower than the previous 5 year November low of 3,410 billion cubic feet that was set on November 28th of 2014, and was 10.9% below the previous 10 year low of 3​,​358 billion cubic feet that was set on November 28th of 2008...this year's November 30 storage was also 5.5% below the 3​,​166 billion cubic feet of natural gas we had in storage on December 2nd of 2005, and 3.3% below the 15 year low of 3,095 billion cubic feet that were in storage on November 28th of 2003...we have to follow the archived records (xls) back 16 years, to November 29th of 2002, when 2,956 billion cubic feet of natural gas were in storage, to find a lower quantity of natural gas in storage at the end of November than we have now....

S&P Global Platts Analytics is holding a North American Gas Winter Outlook Webinar on December 18th, & i've received an invitation to submit a question which you should be able to read here:

the following is the question that i sent in:

during the winter of 2013 - 2014, 3,010 billion cubic feet of natural gas were pulled out of storage between the November peak and the March 28 nadir...
in that winter, natural gas supplies began the heating season at 3,834 billion cubic feet in storage on November 8th and had seen 59 billion cubic feet withdrawn over the first two weeks...
this year we started the heating season with 3,247 billion cubic feet of natural gas supplies in storage on November 9th and have already withdrawn 193 billion cubic feet over two weeks, including the largest early November withdrawal on record..
that withdrawal, plus other withdrawals during the winter of 2017-18, seem to indicate that greater quantities of natural gas are needed from storage for an equivalent number of population weighted heating degree days now than were needed in prior years..
if we merely match the withdrawals of 2014 from here on, our natural gas supplies would fall to below 200 billion cubic feet by the end of the heating season, and they could possibly go to zero should this coming winter be as cold or colder..
so my question for the webinar is:
are there any contingency plans to ration natural gas if such a scenario should develop, and if so, how would the limited supplies be allocated between residential, industrial, utility and export demand...

The Latest US Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending November 30th, showed that a big drop in the amount of oil we imported and a ​simultaneous jump in our oil ​exports meant that we ​needed to withdraw​ oil from our commercial crude supplies​ for the first time​ in 11 weeks...our imports of crude oil fell by an average of 943,000 barrels per day to an average of 7,219,000 barrels per day, after rising by an average of 608,000 barrels per day the prior week, while our exports of crude oil rose by an average of 761,000 barrels per day to a record average of 3,203,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,016,000 barrels of per day during the week ending November 30th, 1,704,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reportedly unchanged at 11,700,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 15,716,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 17,487,000 barrels of crude per day during the week ending November 30th, 66,000 barrels per day less than the amount of oil they used during the prior week, while over the same period 1,189,000 barrels of oil per day were reportedly being pulled out of 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, from oilfield production, and from storage was still 582,000 barrels per day short of what refineries reported they used during the week....to account for that disparity between the supply of oil and the consumption of it, the EIA inserted a (+582,000) 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"...(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) indicate that the 4 week average of our oil imports fell to an average of 7,597,000 barrels per day, still 0.3% more than the 7,576,000 barrel per day average that we were importing over the same four-week period last year....the total 1,189,000 barrel per day decrease in our total crude inventories included a 1,046,000 barrel per day withdrawal from our commercially available stocks of crude oil, and a 143,000 barrel per day withdrawal from the oil stored in our Strategic Petroleum Reserve, likely part of a sale of 11 million barrels from those reserves to Exxon et al that closed three months ago....this week's crude oil production was reported as unchanged at 11,700,000 barrels because the rounded figure for output from wells in the lower 48 states was unchanged at 11,200,000 barrels per day, while a 1,000 barrel per day increase to 499,000 barrels per day in oil output from Alaska was not enough to change the rounded national total...last year's US crude oil production for the week ending December 1st was at 9,707,000 barrels per day, so this week's rounded oil production figure was 20.5% above that of a year ago, and 38.8% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...  

US oil refineries were operating at 95.5% of their capacity in using 17,553,000 barrels of crude per day during the week ending November 30th, down a bit from last week's 95.6% of capacity, which had been the highest November refinery utilization rate in 20 years....the 17,487,000 barrels per day of oil that were refined this week were still at a seasonal high for the time of year for the 24th time out of the past 27 weeks, and 1.7 higher than the 17,195,000 barrels of crude per day that were being processed during the week ending December 1st, 2017, when US refineries were operating at 93.8% of capacity... 

even with the modest drop in the amount of oil being refined, the gasoline output from our refineries was much lower, decreasing by 502,000 barrels per day to 9,666,000 barrels per day during the week ending November 30th, after our refineries' gasoline output had increased by 132,000 barrels per day during the week ending November 23rd...after that big decrease in this week's gasoline output, our gasoline production during the week was almost 1% lower than the 9,758,000 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) increased by 100,000 barrels per day to a seasonal record 5,571,000 barrels per day, after that output had increased by 270,000 barrels per day the prior week....with that increase, this week's distillates production was 3.1% higher than the 5,402,000 barrels of distillates per day that were being  produced during the week ending December 1st, 2017.... 

even with the big drop in our gasoline production, our supply of gasoline in storage by the end of the week​ still increased by 1,699,000 barrels to 226,250,000 barrels by November 30th, the 2nd increase in the past 8 weeks, a span which left our gasoline supplies 9,922,000 barrels lower than on the 5th of October....our gasoline supplies rose ​this week ​in part because the amount of gasoline supplied to US markets fell by 311,000 barrels per day to 8,877,000 barrels per day and because our exports of gasoline fell by 60,000 barrels per day to 1,001,000 barrels per day, while our imports of gasoline fell by 195,000 barrels per day to 189,000 barrels per day...while our gasoline inventories are no longer at a seasonal high, they are still 2.4% higher than last December 1st's level of 220,882,000 barrels, and roughly 6.2% above the 10 year average of our gasoline supplies for this time of the year...

with our distillates production nearing a record high, our supplies of distillate fuels increased for a second ​consecutive week after nine decreases, rising by 3,811,000 barrels to 125,612,000 barrels during the week ending November 30th, after our distillates supplies had fallen by more than 20 million barrels over the 8 weeks leading up to November 9th...our distillates supplies increased even though the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 468,000 barrels per day to 4,037,000 barrels per day, because our exports of distillates fell by 289,000 barrels per day to 1,426,000 barrels per day while our imports of distillates rose by 250,000 barrels per day to 436,000 barrels per day...but even after this week's increase, our distillate supplies still ended the week 3.0% below the 129,446,000 barrels that we had stored on December 1st, 2017, and roughly 7.4% below the 10 year average of distillates stocks for this time of the year...       

finally, with this week's record oil exports and the simultaneous big drop in oil imports, our commercial supplies of crude oil decreased for first time in 11 weeks and for the 22nd time in 2018, falling by 7,323,000 barrels during the week, from 450,485,000 barrels on November 23rd to 443,162,000 barrels on November 30th...but even with that decrease, our crude oil inventories are still roughly 6% above the five-year average of crude oil supplies for this time of year, and roughly 28.4% above the 10 year average of crude oil stocks for the end of November, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...however, since our crude oil inventories had been falling through most of the past year and a half until just recently, our oil supplies as of November 30th were still 1.1% below the 448,103,000 barrels of oil we had stored on December 1st of 2017, 8.8% below the 485,756,000 barrels of oil that we had in storage on December 2nd of 2016, and 2.3% below the 453,553,000 barrels of oil we had in storage on December 27th of 2015..  

with our record high crude oil exports the major reason for the first drop in our crude supplies in 11 weeks, we'll include here a graph of those oil exports over the past 27 months..  

the above graph of US crude oil exports came from a pdf of oil graphs that John Kemp, senior energy analyst and columnist with Reuters, emailed out last week, which i've updated to reflect this week's oil exports... it shows weekly US crude oil exports in thousands of barrels per day from September 2016 to the current week, and also highlights the exact amount of our crude exports in thousands of barrels per day for this year's previous high and low marks...as you can see, prior to January 2017, our oil exports were minimal, because by law they ​had been outlawed​ for 40 years​, with the exception of oil exports to Mexico and Canada, which were allowed under provisions of the North American Free Trade Agreement (NAFTA)...since that time, however, our exports have steadily risen, often limited by the number and size of ships that could be loaded in one week and the number of ports which could provide such loading​ ​(which also accounts for the volatility you see in the chart above)...contributing to the push to ship our oil offshore has been ​a price differential between US light sweet crude grades such as West Texas Intermediate, and North Sea Brent, the international benchmark price, which has been running close to 10% for most of the past year...as of Friday's close, February Brent was being quoted at $61.67 a barrel, as compared to the $52.81 a barrel pricing for February WTI...so obviously, US oil traders will ​continue selling as much US crude into international markets as our port capacity will allow, all the while pulling down large windfall profits even after paying the roughly $2 a barrel trans oceanic transportation costs...

this week's big jump in oil exports, combined with the drop in imports, also result​ed in another anomaly; the first week that the US was a net exporter of crude and products made from crude in roughly 75 years...to show you ​what led up to ​that, we'll include the last two years of the spread sheet for ​our ​total net imports of crude oil and oil products...

the above table shows the last two years of net US oil & oil product imports in thousands of barrels per day, a metric which includes gasoline, distillates, kerosene (jet fuel), residual fuel oil (bunker fuel), propane/propylene, and other oils in addition to crude...the weekly numbers shown above are arrived at by taking the total of our imports of crude oil and our imports of products made from crude for each week, and subtracting our exports of crude and products made from crude from that to arrive at a net import total...however, as you can see in the lower right hand corner, that number for this most recent week ending November 30th has turned negative for the first time on record...that -211 thus means that we exported 211,000 barrels per day more oil and oil products this week than we imported of the same for the first time in 75 years, although to be fair, methods for keeping such records have changed several times in that span...

This Week's Rig Count

US drilling activity decreased for the third week in a row, and was hence down for the 5th time in the past 11 weeks during the week ending December 7th, as drilling for natural gas increased while drilling for oil slowed​, consistent with the recent changes in price for the two commodities​... Baker Hughes reported that the total count of rotary rigs running in the US decreased by 1 rig to 1075 rigs over the week ending December 7th, which was still 144 more rigs than the 931 rigs that were in use as of the December 8th report of 2017, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil decreased by 10 rigs to 877 rigs this week, which was still 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 9 rigs to 198 natural gas rigs, which was also 18 more than the 180 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...

offshore activity was unchanged with 23 rigs ​continuing to drill in the Gulf of Mexico, which was 3 more rigs than the 20 rigs active in the Gulf of Mexico and in total a year ago...the count of active horizontal drilling rigs decreased by 1 rig to 933 horizontal rigs this week, which was still 137 more horizontal rigs than the 796 horizontal rigs that were in use in the US on December 8th of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the vertical rig count decreased by 4 rigs to 70 vertical rigs this week, which was still up from the 64 vertical rigs that were in use during the same week of last year....on the other hand, the directional rig count increased by 4 rigs to 72 directional rigs this week, which was thus up from the 71 directional rigs that were operating on December 8th 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 December 7th, the second column shows the change in the number of working rigs between last week's count (November 30th) and this week's (December 7th) count, the third column shows last week's November 30th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running 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 the 8th of December, 2017... 

this week's drop of 10 oil rigs might be accounted for by the 10 oil rigs that were shut down in Texas Oil District 8, which would correspond to the core Permian ​- ​Delaware basin; however, at the same time 4 oil rigs were added in Texas Oil District 7C, which would be Permian Midland rigs, and another 2 Permian oil rigs were added in New Mexico...the​ week's​ natural gas rig increases, however, aren't evident in ​these tables, since 10 natural gas rigs were added in "other basins" not tracked separately by Baker Hughes....a good bet would be that some of those were in Texas, though, since 4 rigs were added in Texas Oil Districts 2 and 3 in the southeast, and 4 more were added in District 6 in the eastern wedge of the state, some of which were likely vertical rigs pressed into service to take advantage of the recent 50% rise in natural gas prices...in the major shale basins, however, natural gas rigs were down by one, as two natural gas rigs were shut down in Ohio's Utica while presumably a Utica rig was added in Pennsylvania, while a Marcellus gas rig addition in West Virginia was offset by the idling of a natural gas rig in northwestern Louisiana's Haynesville...

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Norwalk Reflector: Local wind energy project faces opposition — The debate surrounding local wind energy pits neighbor against neighbor. That’s what Chris Bauer, a Bellevue resident who is part of the Seneca Anti-Wind Union, said about the proposed plans for the Emerson Creek Wind Project in Erie and Huron counties.“We moved up here two and half years ago and found out we had wind turbines going through our neighborhood … We got prepared, got educated and now we are here fighting the Emerson Creek Project in Huron County,” Bauer said.The project, if approved, would see the construction of between 65 to 85 wind turbines in Erie and Huron counties. Proponents of wind power recently held at meeting at Ernsthausen Community Center in Norwalk. According to data provided by Apex Clean Energy, the developer for the project, the Emerson Creek Wind Project would provide:

• • $51.3 million in landowner payments
• • $54 million in school payments
• • $27 million in county and township payments
• • 130 construction jobs
• • 30 long-term jobs

Seneca Anti-Wind Union — an activist group opposing wind turbines in western Ohio — hosted its meeting Monday at the Bellevue VFW about possible negative effects. “We all have one enemy in common, and it’s wind,” said Chris Zeman, one of the founders of the anti-wind group, to a packed room. Zeman claimed people are left with land they can’t use after neighbors agreed to have a turbine placed on the edge of their property, away from their home.  “Now they are reaping all the money while you’re stuck with land you can’t do anything with,” Zeman said. “I’m all for property rights, but if it takes away my right for what I want to do with my land, then that becomes a property rights issue.”  But Natasha Montague, an Apex spokeswoman, said turbines stopping a home from being built on a nonparticipating property is a myth.  “Any setback (required distance between a turbine and a home) is on the developer, a non-participating landowner is free to do whatever they want with their land,” Montague said. “Ohio has one of the largest setbacks in the country for nonparticipating houses. A turbine’s tip has to be at about a quarter mile from the property line.”

Ohio excess profits case reflects ripples from FirstEnergy’s challenged credit rider -- Consumer advocates say a proposed deal involving FirstEnergy’s earnings in Ohio ignores the interests of most ratepayers. The Office of the Ohio Consumers’ Counsel says regulators should have included revenue from a credit support rider when calculating Ohio Edison’s allowable earnings last year. A deal struck between its parent company, FirstEnergy, along with state regulatory staff and a group of energy-intensive industrial companies could let the company keep $42 million in “significantly excessive earnings” from last year, according to the state’s consumer advocate.  The Public Utilities Commission of Ohio held a hearing on the proposed “settlement” on Nov. 29. The Office of the Ohio Consumers’ Counsel presented evidence and arguments against the plan. “The PUCO’s settlement process is contributing to the electric utilities’ subsidy culture to the detriment of the consumers who pay for it,” said spokesperson J.P. Blackwood at the Office of the Ohio Consumers’ Counsel.The case reflects a deeper problem with the way the PUCO rules on “settlements” agreed to by only a limited number of intervenors, said Rep. Mark Romanchuk, R-Ontario. “I don’t think that’s the way we should be making policy in the state,” he said. The settlement in FirstEnergy’s excessive earnings case is a stipulation agreed to by FirstEnergy’s Ohio utilities, the staff of the PUCO, and the Ohio Energy Group, which describes itself as a group of 27 large companies in energy-intensive industries. Approval by the commission would basically let FirstEnergy’s Ohio utilities keep all their earnings for 2017, without having to adjust future bills for refunds or credits.According to the stipulation, FirstEnergy’s Cleveland Electric Illuminating Company earned a 4 percent return on equity in 2017, its Toledo Edison utility earned 6.4 percent, and Ohio Edison had an 11.8 percent return on equity. The stipulating parties then agree that none of the three utilities had “significantly excessive earnings” that year.   However, the calculations don’t account for a challenged credit support rider collected by the utility in 2017, and that money should have been included in the calculations, said regulatory economist Daniel Duann of the Office of the Ohio Consumers’ Counsel, in testimony filed with the regulators before last week’s hearing. By his calculations, including those earnings would push Ohio Edison’s rate of return up to 17.39 percent, with $42 million constituting “significantly excessive earnings.”

Shale well drilling still strong in Ohio and Pa. — The Pennsylvania Department of Environmental Protection issued 269 permits across the state for drilling and operating an unconventional well in October and November 2018. In western Pennsylvania, there were 58 permits issued in Washington County; 31 permits issued in Greene County; 21 permits in Westmoreland County; 15 permits issued in Allegheny and Butler counties; and two permits issued in Beaver County.In the first 11 months of this year, there have been a total of 1,687 permits issued across the commonwealth. Of those, there were 301 permits issued in Greene County.Other top counties for drilling/operating permits in western Pennsylvania were: Washington, 282; Westmoreland County, 132; Butler, 88; Allegheny, 73; Beaver, 60; Fayette, 41; and Armstrong, 32. Drilling also remains active in the northcentral region of Pennsylvania, where there are 5,421 active horizontal wells drilled since the beginning of 2008. Statewide, there are 10,817 active horizontal wells.As of Nov. 17, there were 2,081 deep horizontal wells producing in the Utica or Point Pleasant shale plays in Ohio. Another 376 have been drilled, but are not producing at this time, according to the Ohio Department of Natural Resources.  Of the 36 horizontal wells drilled in the Marcellus Shale in Ohio, 23 are producing wells. Eighteen of those 23 are in Monroe County, primarily in Ohio Township. Another three are in Belmont County, and there are single wells producing in Carroll and Jefferson counties in the Marcellus play. The ODNR issued 22 permits in the Utica/Point Pleasant shale plays in October, and 11 permits in November, as of Nov. 17.

• Guernsey County. There were seven permits issued in October and 0 in November in Guernsey County. Of the October permits, six are being drilled, four on the Fineran site in Wills Township and two on the Posey site in Oxford Township. The remaining permit was also issued for a well on the Posey site. All were issued to Eclipse Resources.
• Jefferson County. Ascent Resources Utica received eight new permits in Jefferson County in October, four for the Faldowski site and four on the Lori sites, all in Smithfield Township. Ascent is drilling on six of the sites. Another permit was issued on the Lori site in Smithfield Township in November.
• Monroe County. Equinor USA Onshore Properties (formerly Statoil) received two permits in October for horizontal wells in Green Township, and in November, Eclipse Resources received four permits in Switzerland Township. Three were for the Craig Miller wells, and the fourth on the Pittman site.
• Harrison County. Four permits were issued in October in Harrison County’s Archer Township to Chesapeake Exploration. One of the four, all issued for the Davis Trust wells, is being drilled. Chesapeake received another three permits in November 2018, all for the Wunnenberg wells in Cadiz Township. Also in November, Ascent Resources Utica received three permits for the Ellen well in Moorefield Township.
• Noble County. Triad Hunter LLC received a permit for drilling in Noble County’s Jefferson Township for a site dubbed “Woodchopper.”

The companies with the most Ohio Utica shale permits, as of Nov. 17, are:

• Chesapeake Exploration, with 886 (719 producing)
• Ascent Resources Utica, 485 (367 producing)
• Gulfport Energy Corporation, 406 (299 producing)
• Antero Resources Corporation, 260 (215 producing)

New law allows ODNR to plug more wells - The Ohio Department of Natural Resources is revving up its program to plug oil and gas wells that were left behind by their owners. State lawmakers more than doubled the plugging program’s budget earlier this year to $15 million. ODNR plans to plug 173 wells this fiscal year, and has entered contracts to plug 55 of those wells at a cost of $3.6 million since July 1. ODNR spent $6 million to plug 83 wells last fiscal year, a price tag and number of wells that were records for the plugging program, which has been around since the mid-1970s. The new funding has allowed the program to put together a robust plugging plan, said Steve Irwin, spokesman for ODNR’s Division of Oil and Gas Resources Management. “It’s exponential growth headed in the right direction,” Irwin said. Orphan wells are oil and gas wells that haven’t been plugged properly and don’t have an owner who could pay to do that work. Orphan wells leak oil, natural gas and brine into surrounding water and soil and can cause explosions when natural gas collects in any nearby buildings. ODNR has identified nearly 750 orphan wells in 61 counties across the state, but the true number is unknown. Some 250,000 wells have been drilled in the state since 1860 and just 61,000 are producing. The rest are potential orphans depending on if and how they were plugged, and whether the owners are still around. The cost to plug a well can range from $20,000 to nearly $200,000, depending on the well’s depth, location and the difficulty of the job. State lawmakers passed House Bill 225 earlier this year to beef up ODNR’s plugging program and the law took effect in late September. Ohio already earmarked a percentage of the Oil and Gas Well Fund, which collects a tax on oil and gas production and fees paid by drillers, for the plugging program. Shale drilling ballooned the fund from $8.2 million in 2013 to $75.7 million last fiscal year. The final version of House Bill 225 increased the plugging program’s share of the fund from 14 percent to 30 percent of the previous fiscal year’s collection. The bill also streamlined the steps ODNR must take to locate well owners before plugging a well and allows landowners to hire contractors who are then paid directly by ODNR. Previously, ODNR reimbursed landowners who hired contractors, creating a tax liability for the landowners. Irwin said ODNR has adopted changes to the scope of well-owner searches and notifications and in how it prioritizes which wells get plugged. ODNR also is working on a new contract for the landowner grant program.

Ohio House OKs use of oil and gas brine for road de-icing - cleveland.com - —The Ohio House of Representatives on Thursday passed legislation allowing brine from vertical oil and gas drilling to be used for road de-icing, despite concerns that the salty liquid contains dangerous and radioactive chemicals.House Bill 393, which heads to the Senate after passing the House 52-31, is touted by supporters as a way to promote the use of a product that is a safer and less corrosive alternative to rock salt to keep roads ice-free.State Rep. Anthony DeVitis noted that for more than a decade, the Ohio Department of Transportation used brine from drilling operations.However, in 2014, state lawmakers imposed restrictions on the sale of fracking byproducts that inadvertently applied to vertical wells too. DeVitis said this bill, which would not apply to brine used in horizontal “fracking” drilling operations, would rectify that move. “It encourages recycling. It encourages protecting our environment. It encourages small businesses to invest, do research and establish business in Ohio,” said DeVitis, a Republican from Green. No one spoke on the House floor on Thursday against the legislation.

Ohio EPA Looks to Update Air Quality Rules at Fracking Sites - WKSU News - The Ohio EPA is considering changes to its regulations on air quality at fracking and natural gas transmissions sites.  The state Environmental Protection Agencyis doing what deputy director Heidi Griesmer calls a periodic rules review. One thing it is considering has to do with changes in regulations. Normally they’re applied to new shale wells or compressor stations coming on line. The agency may make them applicable to established sites too. “This would cover air pollution emissions from existing non-conventional oil and gas facilities that aren’t covered by our most current regulations.”As part of the review the sate EPA is also gathering input from interested parties. “It’s just an extra step we take to involve stakeholders before we begin drafting rules.” The open period for ideas is underway through December 19th.

OU student produces documentary about fracking - An Athens County mother turned activist is the subject of a new documentary produced by an Ohio University student about the controversial practice of hydraulic fracturing for oil and gas. “Injection and Outrage” is a 15-minute look at one woman’s fight against drilling-waste injection wells in her community as she strives to protect her own land and that of her mother’s, according to an OU news release. Honors Tutorial College junior Winter Rey Wilson, who’s from Athens, produced the film as part of an honors tutorial class about environmental documentary with professor Nerissa Young. “I’m doing a documentary series about the human dimensions of climate change for my HTC thesis, so this is my debut in the environmental filmmaking world,” Wilson said. The film will premiere at 7 p.m. Monday, Dec. 10, at the Athena Cinema on South Court Street. Admission is free for the event, which will include a Q&A with Wilson after the screening. In the release, Wilson explained, “I grew up in Athens learning about a lot of very important environmental justice issues happening in my own community – injection-well waste being one that’s especially prevalent.” She met the title character on a class field trip and was inspired to tell her story. In turn, Wilson said in the release, she hopes the story will inspire OU students and the community to get informed and take action. “Often students on campus don’t realize that there are significant environmental justice issues that are happening in the broader Athens community,” she said.

Lawsuits allege damage from Nexus pipeline - Several landowners along the Nexus pipeline have sued the pipeline’s owner and its construction contractor, saying the companies broke agreements to protect and restore properties affected by the project. Michael Thompson, the Jackson Township attorney representing the landowners, has filed a dozen lawsuits in Stark, Summit, Wayne and Columbiana counties in the last couple of weeks against Nexus Gas Transmission and Michels Corp. Nexus is a $2.1 billion pipeline backed by Detroit-based DTE Energy and Enbridge, a Canadian company. Michels Corp. is a construction firm in Wisconsin. The 36-inch diameter pipeline can carry up to 1.5 billion cubic feet of natural gas a day from the Utica and Marcellus shales to users in Ohio, Michigan and Canada. Thompson said he anticipated filing more lawsuits in the coming weeks, and Tuesday he added Michels to a lawsuit filed against Nexus in July. Thompson said the goals of the lawsuits are twofold: “One, to hold [Nexus and Michels] accountable for specific damages that they’ve caused, and, two, so that in the future, a message is given to them that they can’t just do what they want and trample on the rights of the property owners.” Nexus spokesman Adam Parker said in an email that the company “doesn’t comment on pending lawsuits, but project representatives have been communicating with landowners for four years.

Two pipelines in Pennsylvania,Ohio rack up more than 800 violations - Two projects stretching across Pennsylvania and Ohio have been racing to build the largest natural gas pipelines in the world. But along the way, they have racked up over 800 state and federal permit violations, according to an analysis released by Reuters on Wednesday.  Energy Transfer's Rover and Sunoco's Mariner East 2 pipelines will carry natural gas and gas liquids from Pennsylvania, Ohio and West Virginia — an area that accounts for more than a third of U.S. gas production, Reuters reports. However, these problems with the pipelines have state officials scrutinizing future projects and considering new laws. Problems with the Mariner recently inspired Pennsylvania legislators to craft bills to tighten construction regulations. “Any pipeline going through this area is going to face resistance which it would not have faced before,” said Pennsylvania State Senator Andy Dinniman, a Democrat, during an interview with Reuters. The Rover and Mariner violations included:

• Spills of drilling fluid, a clay-and-water mixture that lubricates equipment for drilling under rivers and highways;
• Sinkholes in backyards;
• Improper disposal of hazardous waste and other trash.

The Rover alone accumulated 681 federal violations and fines topped $15 million — a more exact breakdown of the Rover's violations can be found here.Reuters compared violations accumulated by the Rover and Mariner to four similar projects, and found that those projects averaged 19 violations each during construction.  The pace of both projects have far exceeded industry norms and expenses. Construction of the 713-mile, $4.2 billion Rover started in March 2017, while work on the 350-mile, $2.5 billion Mariner East 2 started in February 2017.

Fracking's Next Boom? Petrochemical Plants Fuel Debate Over Jobs, Pollution - More than 100 people braved freezing temperatures to both listen and have their say in front of Ohio environmental officials at a recent hearing in Belmont County, Ohio. For the three dozen or so people who testified, the stakes were high. The hearing at Shadyside High School focused on a nearly 300-page, densely technical, draft air quality permit. The permit is one more step towards a massive, multi-billion dollar petrochemical plant proposed for the banks of the Ohio River just a few miles away from the auditorium.  Like many at the hearing, Glenn Giffin, president of IBEW Local 141 in Wheeling, West Virginia, used his three minutes to voice a position not merely on the permit at hand, but what this facility could mean for the region. “It is a project such as this that will revitalize the Ohio Valley,” he said. Giffin and other supporters see a potential economic boom in the plant, called an ethane “cracker.” Its natural gas furnaces literally crack apart ethane — which is brought up during natural gas fracking — into smaller molecules used in plastics and chemical manufacturing. But Belmont County resident Jill Hunkler sees this plant as the beginning of something else: an environmental nightmare. “We want better options than a massive petrochemical plant,” Hunkler told the audience. Officially, the hearing was about a permit. But everyone gathered understood that much more is at stake. The growing abundance of natural gas could fuel a new petrochemical industry in the upper Ohio Valley, with all the economic gains and environmental risks that might bring. The decision on the cracker plant permit presents a crossroads moment for those who live here.   A few years ago, Thailand-based PTT Global Chemical began scouting the Ohio Valley for a location to place a cracker plant. JobsOhio, a private economic development corporation created by Ohio Gov. John Kasich (R) in 2011 to help woo jobs to the state, worked closely with the company. Matt Cybulski, sector director of energy and chemicals for JobsOhio, said the group helped PTTG select the Belmont County location and put together an incentive package. That included remediation on the site of FirstEnergy’s old R.E. Burger coal-fired power plant that once stood at the proposed cracker’s location. Cybulski said incentives offered by JobsOhio did not use state tax dollars, but there are tax credits that “can and often are offered to projects like this.”

Perry, US DOE lend support to creation of petrochemical complex in Appalachia - — The US Department of Energy projects Appalachian Basin ethane production will surge to 640,000 b/d by 2025, more than 20 times 2013 levels, leading Energy Secretary Rick Perry to push for a petrochemical storage hub in the region. Not registered? Receive daily email alerts, subscriber notes & personalize your experience. Register Now A 91-page report to Congress, which DOE published Tuesday, highlights the potential for the development of an ethane storage hub in the region to take advantage of the low-cost natural gas and natural gas liquids produced from the Marcellus and Utica shales. In comments made to the National Petroleum Council in Washington, Perry said the US needs to diversify its petrochemical infrastructure beyond Texas and Louisiana. He said an Appalachian ethane storage hub would complement, not compete with, Gulf Coast producers. "If the Appalachian region were its own country, it would be the third-largest gas producer in the world," Perry said. "The potential raw product is there, and they have particularly wet NGLs that can be separated, value added." The establishment of an Appalachian Basin ethane storage and distribution hub in the heart of the Marcellus and Utica plays "could provide benefits to the broader petrochemical and plastics industries along the lines of supply diversity," the report says. "The present-day geographic concentration along the Gulf Coast of petrochemical infrastructure and supply may pose a strategic risk, where severe weather events limit the availability of key feedstocks."  According to the report, US NGL production is expected to nearly double between 2017 and 2050, supported by an increase in global petrochemical industry demand. The largest increases are expected to occur over the next 10 years, driven by crude oil and gas production from the Marcellus and Utica plays in the northeastern US and from the Permian Basin in the Southwest. By 2050, the two regions are forecast to account for more than 60% of total NGL production in the US, the report says.

Rick Perry: Appalachia will seize major share of global petrochemical market  — Energy Secretary Rick Perry said Tuesday that Appalachia will help the U.S. gain a sizable share of the global petrochemical market because of the near-exponential growth in natural gas production the region has experienced in the past decade. “We have done good work in developing the abundance of the Permian Basin and the Gulf of Mexico — and there’s still much more we can do — but we also have a special opportunity in the Appalachian region,” Perry said in a speech at the annual National Petroleum Council Meeting. Perry said that, because of the low-cost resources in the Marcellus and Utica shales in West Virginia, Eastern Ohio, and Western Pennsylvania, the Trump administration would support an ethane storage hub located in the region. Perry quipped that, were Appalachia an independent country, “[it] would be the third-largest national gas producer in the world,” he said. Without a hub in the region, all of the natural gas liquids extracted from the shales are shipped elsewhere or burnt off, which removes potential economic profits or literally burns them in the air. Last summer, West Virginia, Ohio, and Pennsylvania officials formed an agreement, called the Tri-State Shale Coalition, to work together to collaborate to promote the region for shale gas-related investment first while still conducting a healthy competition for the location of the Appalachian Storage and Trading Hub that Perry’s report suggests should be built.

It's time to build an Appalachia energy hub - Rick Perry -- We can use Appalachia’s natural gas to propel progress even further. Appalachian gas contains additional valuable resources in the form of natural-gas liquids (NGLs). NGLs can be separated into familiar products like propane for heating or grilling, or less familiar commodities like ethane, which is a key feedstock for the petrochemical and plastics industries that make products we use every day. But we are not taking full advantage of the ethane in Appalachian natural gas, which is among the cheapest in the world. And in some cases, we actually are sending that advantage up in smoke by burning off “excess” ethane through a process called “rejection.” We should fully harness ethane and other byproducts of gas production to greatly expand value-added manufacturing in Appalachia. This would drive job creation and economic growth in an area that sorely needs it. There now are increasingly efficient ways to deliver these valuable material to a growing global market. Shell is building a $6 billon plant in Beaver County to “crack” ethane into useful building blocks. It will produce hundreds of jobs. This is just the beginning, for the region contains sufficient energy reserves to support additional crackers and provide thousands more petrochemical-related jobs. Doing so would necessitate creating a “hub” for processing and storage as well as the infrastructure to transport NGLs. Fortunately, nearly one-third of U.S. activity in petrochemicals now occurs within 300 miles of Pittsburgh, so the Appalachian region is strategically located. A hub in Appalachia would increase our national ethane supply and petrochemical production capacity in the coming years, increasing the economic vitality of the region and the resilience of the entire U.S. petrochemical complex.

Is This The Next Big Petrochemical Hub In The US? - The U.S. government wants to help build a petrochemical hub in Appalachia, one that could rival, or complement, the concentration of petrochemical facilities on the Gulf Coast. The shale gas bonanza over the past decade has led to a tidal wave of cheap natural gas, which has resulted in shuttered coal-fired power plants, new gas-fired generation and even LNG export terminals. It has also led to a proliferation of pipelines, processing facilities and chemical complexes.Much of the gas is coming from the Marcellus and Utica Shales, located in Pennsylvania, West Virginia and Ohio. While a lot of the gas is burned in the region for heating and electricity, the thousands of shale wells in the region are located far from the downstream facilities on the Gulf Coast that turn gas into plastics and fertilizers.However, that is set to change. Royal Dutch Shell gave the greenlight to a massive $6 billion ethane cracker facility just outside of Pittsburgh, one of a slew of planned petrochemical facilities for the region. Taken together, the chemical and petrochemical boom could turn Appalachia into a new “hub” of sorts of plastics and other petrochemical products. The federal government is hoping to egg this on. The Department of Energy just published a report for the U.S. Congress trumpeting the case for a new petrochemical hub. Shale gas production is growing so quickly that the industry essentially needs more uses for their product. Much of the gas in the Appalachian region is “wet gas,” which means that it comes with a relatively higher concentration of natural gas liquids such as ethane. All of that ethane can be a feedstock for plastics.  To date, a few companies have built pipelines to transport natural gas liquids to the Gulf Coast and to Canada. Nevertheless, ongoing increases in both natural gas (methane) and NGL production (ethane and other liquids) has meant that “the amount of ethane contained in raw natural gas production streams has exceeded domestic demand or the ability to export it abroad,” the EIA wrote in a report earlier this year. “This situation has led producers to leave some of the ethane in the natural gas stream, up to allowable limits set by natural gas pipelines and distribution systems, and to sell it as natural gas, rather than recover and market ethane as a separate product.”

DEP reaches agreement over company’s 17,000 aging wells — A company that has bought up 17,000 aging oil and gas wells in West Virginia has reached an agreement with a state agency to monitor and plug many of them.The big question is whether that’s enough.Diversified Gas & Oil Corporation has received scrutiny in Appalachia’s gas-rich states for its business strategy of buying hundreds of aging wells from other companies.The concern has been that the many aging wells could strain Diversified, leaving it with enormous liabilities and, possibly, resulting in abandoned wells across the region.Pennsylvania regulators ordered three companies selling wells to Diversified to plug more than 1,000 of them.In West Virginia, Diversified announced a consent order with the Department of Environmental Protection on Tuesday.The state and the company agreed that of the wells Diversified has taken over, many are already considered non-producing and abandoned.But those wells haven’t yet been identified.The consent agreement concludes it’s in the best interest of the state to identify them and either placed back into production or plugged.“West Virginia has fostered a healthy environment for both Diversified and the natural gas industry,” stated the company’s chief executive officer, Rusty Hutson.West Virginia’s Surface Owners Rights Organization says the agreement doesn’t go far enough. “I have never been so disappointed in the DEP,” stated lawyer David McMahon, representing the organization. “Weak laws and unsuccessful enforcement policies have already led to 4,000 orphaned wells on farmers and surface owners across the state because the drillers of those wells have gone out of business.

More & More- Drilling Here, Fracking There, Crushing the Roads Overthere - Antero Resources Corp. has been issued permits for three Shiloh-Wick Field-Marcellus Shale ventures in Tyler County, W.Va. The permitted wells will be drilled from a drillpad on a 317-acre lease in Centerville District, Middlebourne 7.5 Quad. The Heintzman Unit 1H well has a planned depth of 17,800 ft and will be drilled to the south. The Heintzman Unit 2H well has a planned depth of 17,500 ft and will be drilled to the southeast. The Heintzman Unit 3H well has a planned depth of 17,400 ft and will be drilled to the east-southeast. Nearby production in the Shiloh-Wick Field is at an Antero Utica producer, Rymer Unit 4HD. It was completed in 2016 flowing 20 MMcf/d of gas. Ascent Resources LLC has received permits for four Utica Shale-Colerain Field wells in Jefferson County, Ohio. The wells will be drilled from a drillpad in Section 34, Mount Pleasant Township. The Ruth E MTP 2H well has a planned depth of 22,000 ft, and the Ruth E MTP 4H well has a planned depth of 22,000 ft. The Ruth E MTP 6H well has a planned depth of 22,500 ft, and the Ruth E MTP 8H well has a planned depth of 23,000 ft. Ascent Resources LLC is underway at two Jewett Consolidated Field wells in Jefferson County, Ohio. The Utica Shell wells are on a 378-acre lease in Section 18-8n 3w. The Geno E SMF JF 5H well has a planned depth of 24,300 ft and will be drilled to the northwest. The offsetting Geno W SMF JF 1H well has a planned depth of 26,000 ft, and it will be drilled to the north. Nearby production is at an American Energy Partners completion in Section 27 in the Dillonvale 7.5 Quad at the Smithfi eld A 1H-27 well. The Smithfield pad discovery was drilled to 18,525 ft (9,631 ft true vertical depth), and it was tested flowing 18.1 MMcf/d of gas. Southwestern Energy Co. has received permits to drill two Marcellus Shale tests from a drillpad in Ohio County, W.Va. The Roy Riggle OHI 6H well has a projected depth of 12,429 ft and a projected true vertical depth of 6,542 ft. It will be drilled to the northeast. The offsetting Roy Riggle OHI 206H well has a planned depth of 15,325 ft and a planned true vertical depth of 6,519 ft. It will be drilled to the southeast. The company also has received permits to drill Marcellus ventures in nearby Brooke County, W.Va., at the Worthley Brk 1H, Worthley 201H, Worthley Brk 210H and Worthley Brk 5H wells.

Man Alleges Fracking Company Considered Him Unmasculine --A West Virginia man filed a federal lawsuit against a fracking company, alleging his co-workers and supervisors verbally, physically and sexually harassed him because they did not believe he was masculine enough. George Keaton, of Clendenin, named two supervisors and Keane Group Inc., a Texas company, as defendants in the case filed in U.S. Western District Court of Pennsylvania in Pittsburgh. Keaton was employed through Keane’s Mount Pleasant, Westmoreland County, Pennsylvania, office, but traveled with a crew of men as an equipment operator for the company starting in October 2017. From the time he started through February 2018, when he quit, Keaton was subjected to harassment his lawyer called “egregious” and “well-below all measures of civility.” “Keaton was stripped of his dignity and threatened repeatedly with violence by his co-workers and superiors at Keane,” attorney Nicholas Pahuta wrote. “When he finally reached out to Keane administrators, he was told that he was lucky to still have a job.” “Explicitly,” Pahuta wrote, “he was singled out for this treatment because his co-workers did not think that he lived up their ideals of masculinity.” The suit alleged two supervisors and other crew members regularly used profanity and slurs toward him, threatened him with physical violence and repeatedly tried to punch him in the genitals. On one instance, a supervisor exposed his genitals to Keaton and tried to make him touch them, Pahuta wrote. That same man also allegedly threatened to sexually assault Keaton, according to the suit. Because the men were required to travel together, staying in the same hotel after working 15-hour days, Keaton was unable to get away from the harassment and began to suffer from depression, the suit alleged. When he tried to report the harassment to the Mount Pleasant office, Keaton’s calls went unreturned, the suit stated. He eventually made a report to the corporate office and after a meeting with human resources, was told that he was fortunate to have a job, Pahuta alleged. 

He is West Virginia's Speaker of the House — and a lawyer for natural gas companies  - Toward the end of this year’s legislative session, a little-noticed bill was moving through the West Virginia House of Delegates to limit legal challenges that had slowed new natural gas-fired power plants in the state.Delegate Roger Hanshaw, a Republican lawyer from Clay County who was serving as vice chairman of the Judiciary Committee, took to the floor to explain the legislation. “This bill is a little inside baseball to practitioners of environmental law in West Virginia,” explained Hanshaw, a supporter of the bill.It wasn’t the first time that Hanshaw engaged in some pretty effective legislative inside baseball on energy bills. Last year, Hanshaw engineered passage of a bill that gave natural gas companies a broad exemption from chemical tank safety standards that West Virginia put in place after a 2014 spill that contaminated drinking water for 300,000 people.Hanshaw was elected speaker in late August, succeeding Tim Armstead, who is now a justice on the West Virginia Supreme Court. Hanshaw is expected to be re-elected speaker in January. In the position, Hanshaw wields significant control over which bills are called up for votes and which are sent to committees to effectively die.  When he’s not in the state Capitol, Hanshaw makes his living as an attorney with the Charleston-based firm Bowles Rice, where his clients have included natural gas companies and gas industry lobby groups. Over the last three years, he has represented the operator of a Fayette County natural gas waste disposal site in legal battles with state regulators and nearby landowners. He argued its case before the state Environmental Quality Board and the state Supreme Court. Then, he filed a brief on behalf of two industry groups when the case went to a federal appeals court.

Company Building West Virginia Pipeline Fined $122K for Environmental Violations - A company building a natural gas pipeline in West Virginia has agreed to pay $122,350 for environmental violations. The Charleston Gazette-Mail cited a consent order made public Monday in reporting that Columbia Gas Transmission agreed to pay the amount to the West Virginia Department of Environmental Protection for 16 violations while building the Mountaineer Xpress Pipeline. Columbia Gas Transmission is a subsidiary of TransCanada and will operate the Mountaineer Xpress Pipeline when it’s completed. TransCanada spokesman Scott Castleman said the company implemented measures to address each environmental issue as it arose and has accepted the draft consent order. The pipeline is one of many being built in the region and would run 170 miles (274 kilometers) from Marshall County to Wayne County.

Mountain Valley Pipeline protests continue - — Another pipeline protester in Monroe County was found attached to a piece of heavy equipment at a work site on the Mountain Valley Pipeline (MVP). A protester climbed and locked themself to a boom tractor, about 20 feet in the air, as supporters gathered nearby, according to Appalachians Against Pipelines. Hanging from the equipment was a banner reading “ANTIPATRIARCHY, ANTIPIPELINE.” The protest was staged on Ellison Ridge, north of Lindside and West Virginia State Police troopers were on the scene working to get the protester down. On Nov. 19, a protester was perched on top of an excavator at an MVP work site on Rt. 219 in Lindside all day. West Virginia State Police eventually removed the protester, identified as Steffi Alexandra Klosterman, 25, of Morgantown. The Monroe County’s Magistrate Office in Lindside said she was charged with obstructing an officer, trespassing, injuring or tampering with a vehicle, and littering. Klosterman was released on a $3,500 bond the same day. A series of protests against the 300-mile MVP, which is operated by Pittsburgh-based energy company EQT Midstream Partners and slated to transport natural gas through a 42-inch diameter pipe from north central West Virginia to Chatham, Va., has been ongoing since construction started last year. Three people fastened themselves to equipment at the same site of last week’s protest where the pipeline crosses underneath Rt. 219 in Lindside. A few miles south on Peters Mountain, two tree sitters were perched in makeshift tree stands in the path of the pipeline for weeks earlier this year, leaving only after food and water supplies were cut off.

Congress considers changing law for pipeline crossing of Appalachian Trail, Blue Ridge Parkway -- Legislation is pending in Congress that would give the National Park Service clear authority to allow construction of the Atlantic Coast Pipeline beneath the Appalachian Trail and Blue Ridge Parkway, both potentially critical obstacles under litigation pending in the 4th U.S. Circuit Court of Appeals. Dominion Energy, lead partner in the $7 billion project, confirmed the legislative proposal, which first surfaced in a blog post from an Alabama group that suggested aid for the 600-mile natural gas pipeline is “tucked into the omnibus spending bill” being negotiated by Sen. Richard Shelby, R-Ala., chairman of the Senate Appropriations Committee. “Congress is considering a legislative amendment that would explicitly authorize the park service to grant a permit for such a crossing,” Dominion spokesman Aaron Ruby said in an emailed statement to the Richmond Times-Dispatch. The park service has twice issued permits for the pipeline to cross the parkway, the second one after the 4th Circuit vacated the original permit in early August as an “arbitrary and capricious” exercise of the agency’s powers. The 4th Circuit has issued a stay of the permit the U.S. Forest Service issued for the pipeline to cross the Appalachian Trail on land within the George Washington National Forest, which is under appeal in the Richmond-based court. “It’s disappointing but not surprising that Dominion would try to bend the law to its will,” said Austin “DJ” Gerken, an attorney for the Southern Environmental Law Center, which has appealed both federal permits for the Sierra Club and other environmental organizations opposed to the pipeline. “It’s already tried to bend the agencies to its will.” Few details about the legislative proposal emerged Monday, but a spokeswoman for Sen. Tim Kaine, D-Va., doubted its chances. “We are aware of the proposal, but Senator Kaine does not support it,”  “We have no indication Senate Democrats would agree to this going in the omnibus.”

Atlantic Coast Pipeline hits another speed bump in Nelson County - Dominion Energy’s Atlantic Coast Pipeline project hit a speed bump after the Nelson County Board of Zoning Appeals voted Monday to deny four variance requests needed to construct part of the 600-mile Atlantic Coast Pipeline through designated floodplain areas in Nelson County. The board’s denial in a 3-2 vote Monday means construction of the pipeline in certain areas of Nelson County will be on hold until ACP can gain the necessary approval to build through designated floodplain areas. The four floodplain areas discussed included Muddy Creek, an unnamed tributary of Rockfish River, Falls Run and Dutch Creek. ACP has not started full construction in Virginia yet and is awaiting approval from the Federal Energy Regulatory Commission. Felix Sarfo-Kantanka, Jr., external affairs manager for the Dominion, lead partner of the ACP, said it plans on starting construction in early 2019. Sandy Shackelford, director of planning and zoning in Nelson County, said ACP now has two options to move forward with the variance requests. “They can appeal the decision through the circuit court or go through the federal court to determine if the county’s decisions would be preempted by federal regulatory decision makers,” Shackelford said Wednesday. Karl Neddenien, media relations manager for Dominion Energy, said in an email he could not comment on the company’s specific next steps after the decision by the BZA. “We are disappointed with the board’s decision and we are evaluating our next steps,” Neddenien said. In Nelson County, securing the variances is a necessary step before the pipeline can be constructed in designated floodplain areas. The ACP sought variances from the BZA because according to a Nelson County zoning ordinance passed in September 2017, the pipeline would qualify as a “critical facility” that normally would not be allowed to be constructed in a floodplain. 

Citizen group's challenge of Murrysville's fracking ordinance to stretch into 2019 - A fight over fracking in Murrysville — a battle already approaching a decade in the making — will continue into 2019, as a group of residents challenged the validity of a local ordinance pertaining to unconventional gas drilling in the well-heeled Westmoreland County community. “This ordinance was not drafted to serve the interests of Murrysville residents,” said John Smith, a Pittsburgh attorney representing the Murrysville Watch Committee, the group opposing the ordinance municipal officials approved in May 2017. “It was not done to ensure the public’s health, safety and welfare. It was done so that Murrysville wouldn’t get sued by the drillers.”The resident committee outlined its challenge before the Murrysville zoning hearing board on Nov. 29. Hearings will continue Jan. 24.  Multiple attorneys for the municipality, landowners who support fracking and a regional driller explained why the ordinance should be left as-is. Murrysville council members voted 6-1 last year to approve their fracking ordinance,which they fine-tuned, re-examined and tweaked over seven years. Monroeville drillers Huntley & Huntley soon after requested state permits to drill a 4-acre well pad and access road on 71 acres in eastern Murrysville. In developing the ordinance, Murrysville officials created an overlay district where drilling could take place. It was added to rules governing existing rural-residential zoned land and encompasses a little more than a third of the municipality. Setbacks and other restrictions, however, shrink drilling opportunities to 6 percent of properties within Murrysville’s boundaries. Smith’s argument centered on drilling as an industrial activity, questioning why it would be permitted anywhere in a rural-residential district. “Apartments are not permitted in a rural-residential district … a senior nursing-care home is not permitted,” Smith said. “So a driller couldn’t have an apartment there, but could have an industrial drill rig.”

Allegheny Township property owners taking fracking fight to Pa. Supreme Court - Allegheny Township property owners are asking the Pennsylvania Supreme Court to appeal a ruling that allows unconventional gas drilling in all of the township’s zoning districts. The plaintiffs are asking the Supreme Court to review a Commonwealth Court ruling that they believe infringed on their “fundamental and constitutionally-protected property and environmental rights.” The appeal was filed Nov. 26 by the plaintiffs and Willowbrook Road residents Dolores Frederick, Patricia Hagaman and Beverly Taylor. The defendants include Allegheny Township, its zoning hearing board, CNX Gas Co. and other township residents. They have been challenging a series of court rulings stemming from CNX Gas Co. in October 2014 winning approval to install an unconventional natural gas well pad, which is used in fracking, within 1,200 feet of township homes. The gas well pad site is on the property of a neighboring farm owned by John and Anne Slike and Northmoreland Farms LP, who are among the defendants in the case. Specifically, the plaintiffs take issue with Allegheny Township’s enactment in 2010 of a zoning ordinance amendment providing for oil and gas drilling operations in all of the township’s zoning districts. They have argued that the intensive hydraulic fracturing process — fracking — and horizontal drilling used to tap deep gas reserves constitute an industrial use.

Homeowners along gas pipelines in Lebanon, Berks counties shocked to find threats of liens in mail - Fallout from the bankruptcy of Welded Construction, the main contractor in two local gas pipeline projects, has ensnared landowners in Berks and Lebanon counties with the threat of liens on their properties.Lancaster County residents are wondering if they could be next.Three homeowner couples and the Twin Valley School District near Morgantown, Berks County, were astounded to find legal letters in their mailboxes recently.The letters were from United Piping Inc., a Minnesota-based subcontractor that says it has not been paid by Welded for work on the controversial Sunoco Mariner East natural gas liquids pipeline that runs through their properties.United Piping was giving the property owners formal notice of the company’s intent to go to Berks County court within 30 days to file “mechanics liens” on their land. “When I saw I was on the hook for a half-million dollars, my stomach was on the floor,” recalls David W. Anspach III, a Caernarvon Township, Berks County, resident who grudgingly granted a right of way for the pipeline near his home. In Lebanon County, meanwhile, Dykon Blasting Corp. — an Oklahoma subcontractor that worked on the Atlantic Sunrise gas pipeline and says it has not been paid by Welded — has mailed similar legal letters to landowners. Sent by McNees Wallace & Nurick, the Lancaster law firm representing Dykon, the letters note that every property owner along the pipeline’s path in Lebanon County is facing liens. The legal action to pursue liens against property owners has its roots in the October decisions by the two pipelines’ builders to sue their main contractor, Ohio-based Welded Construction.  Atlantic Sunrise builder Williams Partners of Oklahoma withheld $23 million in payments to Welded, alleging overcharges, accounting failures and contract breaches.Sunoco, owner of the Mariner East pipeline, also terminated its contract with Welded, alleging the company failed to comply with environmental regulations. Weeks later, Welded declared bankruptcy. That left some of its own suppliers and subcontractors — including United Piping and Dykon Blasting — unpaid.

Mariner East pipelines: Judge reviews request for immediate shutdown - An administrative law judge for the state Public Utility Commission heard testimony this week on whether Sunoco can operate its controversial Mariner East pipelines — a set of export lines moving natural gas liquids across Pennsylvania — while the judge reviews a request to permanently shut down the lines.Seven residents of Chester and Delaware counties filed a petition for emergency relief last week, arguing Sunoco has failed to address public concern around what would happen in the case of an emergency leak. The petitioners also filed a “Notice to Defend,” which asks the PUC for a permanent shutdown.The Mariner East project has faced numerous technical, legal, and environmental problems. It is made up of three parallel natural gas liquids lines — the Mariner East 1, the Mariner East 2, and the Mariner East 2X. The PUC temporarily stopped service on the Mariner East 1 line earlier this year, citing safety concerns related to sinkholes, and saying that a pipeline leak could have a “catastrophic” effect on public safety.PUC administrative law judge Elizabeth Barnes said she intends to render a decision on the residents’ emergency relief petition by Dec. 10 or 11. The residents’ attorney, Michael Bomstein, said a leak in the heavily populated areas in southeastern Pennsylvania could be devastating, and the company’s public notices have been “inadequate, misleading and contradictory.”“They make the assumption people can evacuate on foot, when there are a lot of people who are just unable to do that,” he said. “They also tell people to proceed to a safe location, without telling them what’s safe.” Under cross examination by Bomstein, Zurcher said in the event of a leak, it’s impossible for a pipeline operator to dictate a set distance away from the pipeline that is safe, given the complexities that could be presented by scenarios such as weather conditions, topography and the size of the leak. Instead, he said, it’s the role of emergency responders to direct people what to do in the event of an incident.

Adelphia wants to build 2 compressor stations in eastern Pa. - Adelphia Pipeline Co. is seeking approval to build two compressor stations in eastern Pennsylvania as part of its Adelphia Gateway project, Kallanish Energy reports. The compressor stations are planned in Delaware and Bucks counties. The company also wants to convert 50 miles of an old 84-mile oil pipeline to move natural gas. A total of 34 miles of the line were converted to natural gas in 1996, and that section of the pipeline furnishes natural gas to two power plants. The 18-inch pipeline runs through five counties: Delaware, Chester, Bucks, Montgomery and Northampton. The project would provide an additional 250 million cubic feet per day (Mmcf/d) to the Philadelphia area, enough natural gas to heat 250,000 households. The original pipeline, built in the 1970s, moved oil from Marcus Hook near Philadelphia to a terminal in Northampton County. It was then used to power the Martins Creek Steam Electric Station. The power plant now burns natural gas. The company’s request is being reviewed by the Pennsylvania Department of Environmental Protection. It held public air quality meetings on Tuesday night in Delaware and Bucks counties. 

Delaware County study: Pipeline blast could be devastating, but risk is low -- A worst-case explosion of the Mariner East 2 pipeline in Delaware County would kill anyone within about a mile of the rupture, a new report says, but it concludes the chances of someone dying from a pipeline incident are less than that of dying in a car crash or from falling down stairs.The report says that a flammable vapor cloud could extend 1.3 miles downwind from the point of a full rupture, and calculated that there was a 100 percent probability of dying from a blast over a certain intensity for everyone within a mile radius, whether they were outdoors or indoors.And it said the chances of a natural gas liquids leak igniting from the Sunoco pipeline are higher in a densely populated area like Delaware County than they would be in a rural area, because of the higher number of potential ignition sources like cars, cellphones or doorbells.The size and direction of a flammable vapor cloud would depend on wind speed and atmospheric stability, the report said. "The dispersing flammable cloud could ignite at any point in time and the time of ignition, with respect to the changing size of the flammable cloud means that the resulting consequence can vary greatly," said the report, written for Delaware County Council by G2 Integrated Solutions, an independent consultant.Worries about ME2's safety have been fueled by a long series of drilling-fluid spills and geological problems since the multibillion-dollar pipeline started construction in February 2017, prompting state regulators to issue dozens of violations. Federal data show Sunoco with the second-highest number of pipeline incidents in the industry. Despite its grim predictions, the study concluded that the risk of fatality from such a pipeline incident was in the same category as common sources of risk facing the general population daily.

Construction begins on South Jersey pipeline tied up in court - As Adam Neuman’s wife left her home for work Monday morning, she texted him a photo: a truck filled with sections of 30-inch pipes driving down the street. The couple lives on Fischer Road in Plumsted Township, Ocean County, where construction on the Southern Reliability Link pipeline is now beginning, despite it being tied up in the state’s appellate court. At issue is whether a portion of the controversial project can be built in the Pinelands, New Jersey’s largest nature reserve. “I’d rather have seen the appeals heard before they broke ground,” said Neuman, who lives across the street from where the line is being constructed. New Jersey Natural Gas received final approval in 2017 for the 28-mile pipeline, which will run through Burlington, Ocean and Monmouth counties and portions of the Pinelands. It has been given the greenlight from the Pinelands Commission, the Board of Public Utilities and the state Department of Environmental Protection, as well as municipalities it will cut through.  But environmental groups, including the New Jersey Sierra Club and Pinelands Preservation Alliance, appealed both decisions in the Appellate Division of New Jersey’s Superior Court. A little more than 12 miles of the pipeline’s route runs through the reserve. “Why start building now?” asked Carleton Montgomery, president of the Pinelands Preservation Alliance. “It may well be found unlawful.” The organization plans to ask the BPU and Pinelands Commission this week to issue stays of their prior approval to halt construction.Kevin Roberts, spokesman for New Jersey Natural Gas, said the company is beginning work now to minimize the impact of construction on seasonal local businesses and farms along a section of the pipeline’s route. Crews this week will be doing drilling and open trench work, as well as staging the distribution pipes.  “The pending litigation does not preclude us from beginning construction on the project.”

Mysterious Oil Spill on Massachusetts’ Charles River Spurs Major Emergency Response  An oil spill on Massachusetts' Charles River drew a major emergency response Wednesday night, as several fire trucks and emergency vehicles, including a hazmat team, raced to help with the cleanup, 7 News Boston WHDH reported.The spill was detected in Waltham, MA, a town about 12 miles west of Boston. Authorities were alerted by a report of the smell of fuel coming from a patch of river behind Shaw's Supermarket, state police said."The truck got down here with the deputy and they had a strong odor of oil and a definite sheen in the water," Waltham Fire Chief Tom MacInnis told Boston25News.Containment booms were placed on the river to stop any oil from spreading downstream. The Massachusetts Department of Environmental Protection (DEP) also arrived on the scene, and the private cleanup organization National Response Corp. was called in to assist Wednesday into Thursday, The Boston Globe reported."We don't know how much has spilled," DEP spokesman Ed Coletta told The Boston Globe. "Oil like this, it basically collects at the surface of the water."In total, cleanup crews vacuumed up around 300 gallons of mixed oil and water, NBC10 Boston reported.The spill was contained by 8 p.m. Wednesday night, but DEP and the Waltham police and fire departments continued to investigate the source of the spill, Boston25News reported."How does an oil spill happen here?" local resident Maureen Green asked Boston25News. Green said she was especially worried about the wildlife. "There are so many ducks and geese in this area. I take all the kids that I watch down here and we feed the ducks," she said.

FERC gives Portland Xpress environmental OK  - The US Federal Energy Regulatory Commission (FERC) gave a positive environmental assessment for the 24.4mn cf/d (689,813 m³/d) Portland Xpress natural gas pipeline project in the New England region. FERC staff concluded that the project on the Portland Natural Gas Transmission System in Maine and Massachusetts would not significantly affect the environment as long as the pipeline undertakes appropriate mitigating measures. In addition to boosting capacity on Portland Natural Gas' own facilities, the $90.3mn expansion will also increase capacity by 22.3mn cf/d on a system it jointly owns with Maritimes & Northeast pipeline from Westbrook, Maine, to Dracut, Massachusetts. The project's capacity is relatively small, but the added flows could be significant for end users in the New England region. The area often experiences power disruptions and soaring natural gas prices in times of cold weather because of gas pipeline constraints. Encana in May permanently shuttered its Deep Panuke drilling platform off the coast of Nova Scotia, removing what once was a key source of flows into the region from Canada. Net flows on Maritimes & Northeast pipeline at the border, which interconnects with Portland Natural Gas, have since flipped to serve Canadian demand. The project includes the installation of a new compressor unit at the Eliot compressor station in York County, Maine, and modifications to infrastructure at the Westbrook compressor station and Dracut metering and regulating station in Cumberland County, Maine, and Middlesex County, Massachusetts, respectively. The expansion includes three phases and is planned to begin full service in November 2020. Receiving an environmental assessment or environmental impact statement is the final step for pipeline projects before FERC makes a final decision on whether to approve the project.

US natural gas proved reserves increase to record levels— Stronger oil and natural gas prices, combined with development of shales and low permeability formations, lifted U.S. crude oil and natural gas proved reserves to record levels in 2017. That’s according to U.S. Crude Oil and Natural Gas Proved Reserves, Year-End 2017, released by the U.S. Energy Information Administration (EIA). Proved reserves of crude oil in the United States increased 19.5 percent from year-end 2016, rising to 39.2 billion barrels and surpassing the previous peak level of U.S. crude oil proved reserves of 39.0 billion barrels set in 1970. Proved reserves of natural gas increased 36.1 percent to 464.3 Tcf at year-end 2017 and breaking a 2014 record for total natural gas proved reserves. Both U.S. proved reserves of crude oil and natural gas are approximately double their levels from a decade ago. The annual average spot price for natural gas at Louisiana’s Henry Hub increased 21 percent in 2017. Natural gas spot prices throughout 2017 (at the Henry Hub) did not vary much from the annual average price of $2.99 per million British thermal units (MMBtu). The U.S. total net increase in proved reserves of natural gas was 123.2 trillion cubic feet, or 36.1 percent, for a total of 464.3 trillion cubic feet. U.S. production of natural gas increased 4 percent from 2016.   Producers in Pennsylvania added 28.1 trillion cubic feet (Tcf) of natural gas proved reserves, the largest net increase of all states in 2017, as a result of increased prices and development of the Marcellus and Utica shale plays. After regions in Texas and Louisiana, the fourth- and fifth-largest net increases in natural gas proved reserves occurred in West Virginia and Ohio (11.1 Tcf, each), respectively, as a result of development of the Marcellus and Utica shale plays. The share of natural gas proved reserves from shale increased from 62 percent of total U.S. natural gas proved reserves in 2016 to 66 percent in 2017. Estimated production of natural gas from shale increased 9 percent — from 17.0 Tcf in 2016 to 18.6 Tcf in 2017. Extensions and discoveries of natural gas reserves were highest in Pennsylvania and West Virginia at 21.6 Tcf and 13.7 Tcf, respectively. These were from extensions in the Marcellus shale play, the largest natural gas shale play in the United States by volume of reserves.

Prices Rise As Storage Levels Continue To Expand Yearly And 5-Year Average Storage Deficits - Highlights of the Natural Gas Summary and Outlook for the week ending November 30, 2018 follow. The full report is available at the link below.

• Price Action: The now prompt January contract rose 25.7 cents (5.9%) to $4.612 on a 73.8 cent range ($4.776/$4.03.8.
• Price Outlook: Despite the weekly increase, early prices weakness actually established a new weekly low as weather forecasts moderated and the EIA reported a much lower than expected storage withdrawal. The market is extremely sensitive to change weather forecasts and will remain volatile. If temperatures remain below normal, last weeks’ $4.929 high will likely not be the high. However, forecasts now project above normal temperatures at the end of the forecast and a continuation of above normal temperatures will lead prices lower. CFTC data indicated a 26,610 contract increase in the managed money net long position as longs added and shorts covered. The is the smallest short position on record for comparable data. Total open interest fell (302,354)to 3.829 million as of November 27. Aggregated CME futures open interest fell to 1.264 million as of November 30. The is the smallest CME OI since February 20, 2017. The current weather forecast is now cooler than 6 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 3.2 bcf. Cove Point is net exporting 0.8 bcf.
• Weekly Storage: US working gas storage for the week ending November 23 indicated a withdrawal of (59) bcf. Working gas inventories fell to 3,054 bcf. Current inventories fall (639) bcf (-17.3%) below last year and fall (727) bcf (-19.2%) below the 5-year average.
• Supply Trends: Total supply rose 0.9 bcf/d to 81.4 bcf/d. US production rose. Canadian imports rose. LNG imports rose. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (3). Oil activity increased +2. Natural gas activity decreased (5). The total US rig count now stands at 1,076 .The Canadian rig count fell (5) to 199. Thus, the total North American rig count fell (8) to 1,275 and now exceeds last year by +124. The higher efficiency US horizontal rig count rose +5 to 934 and rises +142 above last year.
• Demand Trends: Total demand fell (7.4) bcf/d to +89.9 bcf/d. Power demand fell. Industrial demand fell. Res/Comm demand fell. Electricity demand fell (5,039) gigawatt-hrs to 72,136 which exceeds last year by +2,633 (3.8%) and exceeds the 5-year average by 173 (0.2%%).
• Nuclear Generation: Nuclear generation rose 3,848 MW in the reference week to 86,512 MW. This is (4,702) MW lower than last year and (1,295) MW lower than the 5-year average. Recent output was at 89,937 MW.

The heating season has begun. With a forecast through December 14 the 2018/19 total cooling index is at (827) compared to (713) for 2017/18, (509) for 2016/17, (495) for 2015/16, (743) for 2014/15, (821) for 2013/14, (659) for 2012/13 and (667) for 2011/12.Natural Gas Summary and Outlook for the week ending November 30, 2018

Mid-December Warmth Crushes Gas -- It was a bloodbath at the front of the natural gas curve today, as after a decent gap down last evening the January contract accelerated lower through the day. A bounce into the settle helped prices close decently off the lows, but the January contract still settled 6% below Friday's close.  All the losses came at the front of the natural gas strip, as the from April 2019 and beyond prices actually caught a bit today. The role of weather was clear with the January contract logging the biggest loss as well.   Over the weekend we saw long-range warm risks roll forward into the medium-range, as we noted in our Morning Update that Week 2 warmth would likely cancel out Week 1 cold. This fit very well with our expectations, as the overall 15-day forecast did not change much from our Friday outlook for clients either.  In our Pre-Close Update we warned clients that we expected bearish weather trends over the weekend as long-range warmth would roll forward.  In that same Pre-Close Update we warned of prices likely moving back below $4.5 this week, something that quickly occurred last evening.  The focus today was all about that long-range warmth, with Climate Prediction Center forecasts increasing coverage of expected above average temperatures in Week 2.  Meanwhile, we did see cash prices remain a bit more firm today with cold expected across the country this week. All eyes will be on the cash market tomorrow too with significant cold expected Wednesday.

Another Round Of Storage Concerns Get Gas Going -After significant selling yesterday the entire natural gas futures curve got a bid today, with significant gains at the front of the strip. By the end of the day the January natural gas contract settled up just less than 3%, solidly in the middle of its recent range.  It was clear early in the day that storage concerns were front and center as the March contract got going first, dragging the rest of the strip higher.  We highlighted this in our Morning Update, where we outlined that "...a bit more March contract strength indicates that storage concerns are back elevated...thus we cannot rule out bounces towards $4.5 short-term..." even though overnight models did not significantly increase cold risks in the next two weeks.  Afternoon Climate Prediction Center forecasts highlighted this too, as warm risks seemed to tick down slightly but day-over-day forecast changes were minimal. Yet a key climate model trended far colder early in January last evening which seemed to first get prices moving higher, and they never looked back. In our Seasonal Trader Report for subscribers today we outlined our winter weather expectations through March, explaining when cold could return after mid-December warmth and demonstrating our forward natural gas storage expectations. Of note was strength seen along the 2019 natural gas curve as of yesterday's settle which continued today.  Certainly weather will be a central focus moving forward, as traders are looking for hints of when cold could return in the long-range as well as how intense any warmer weather in the longer-range is likely to be.

Warmer Mid-December Trends Send Gas Back Lower -- It's been quite the back-and-forth in the natural gas market this week, with colder short-term trends and tightening balances helping prices bounce early but warmer trends later in the month keeping prices in check. With some warmer overnight trends the January natural gas contract settled down over 3% on the day for its lowest settle of the week.  Losses were largest at the front of the strip, a sign that weather was a key driver today.   In our Afternoon Update yesterday we shifted our natural gas sentiment to "Slightly Bearish" citing long-range warm risks and technical signals that were flashing more bearish risks.  This was reiterated in our Morning Update where we highlighted that $4.25 was "back in play" off long-range warmth, with European model guidance losing a solid number of GWDDs overnight. Prices got within 2 cents of that level, eventually bouncing on some colder afternoon guidance.  The Climate Prediction Center picked up on some of these warm risks in their long-range forecasts this afternoon.  Colder trends in the Southeast on afternoon American GEFS guidance helped give prices a bid later in the day though (images courtesy of Tropical Tidbits).  Now, traders are gearing up for tomorrow's EIA print while also trying to guess how weather model guidance will shift over the weekend.  In our Note of the Day for clients today we took a deeper look at climate guidance, including American CFSv2 and Japanese modeling. We noted the continued warm bias on the CFSv2 model, but we also saw it finally trend colder for January in its most recent run, a trend that should continue on its output tomorrow too.

January Natural Gas Shrugs Off 63 Bcf Storage Withdrawal - The Energy Information Administration (EIA) reported a 63 Bcf withdrawal from Lower 48 natural gas inventories for the week ending Nov. 30, on the higher end of market expectations but within the range. Market observers characterized the draw as “neutral” as estimates had clustered around a withdrawal in the low to mid-60 Bcf range ahead of the report’s 10:30 a.m. ET release. Nymex natural gas futures similarly reflected a neutral stance on the data as the January contract had already climbed about 12 cents ahead of the report, and then only inched up another penny or so to $4.457 as the print hit the screen. By 10:50 a.m., the prompt month was trading at $4.458, up 13.1 cents on the day. “This moderately tighter print misses in about the same direction as last week’s print missed loose; we had expected slightly more lingering holiday impact in the number and were surprised by the size of the draw in the South Central,” Bespoke Weather Services said. In fact, a larger 9 Bcf draw in the South Central accounted for almost the entire miss, the firm said. “We see this as indicating the market is slightly tighter than we had been expecting, and are looking for a tighter number to be announced next week with production off solidly over the last few days,” Bespoke chief meteorologist Jacob Meisel said. This should make it harder for prices to fall off meaningfully unless long-range cold risks ease as such a print will keep storage concerns elevated, “and we would be surprised to see next week’s print do much to ease those concerns,” he said. The EIA reported a 26 Bcf withdrawal in the East, a 24 Bcf pull in the Midwest and a 9 Bcf draw in the South Central region. Salt caverns in the South Central region, however, reported a 4 Bcf injection. Inventories as of Nov. 30 sat at 2,991 Bcf, 704 Bcf below year-ago levels and 725 Bcf below the five-year average, according to EIA. Even though this week’s storage report failed to move the needle much, colder weather is expected in the next few weeks. The risk to upside is certainly there, market observers said. If long-range weather models that are currently showing a return to colder weather come to fruition, then the February contract could move into $5 territory, according Wood Mackenzie natural gas analyst Gabe Harris.

Analysis- Midwest utilities hoard storage, despite cold, demand — Risk-averse storage holders in the US Midwest appear to be hoarding their inventory so far this withdrawal season, despite cold weather, strong gas demand and historically high prices. Over the past three weeks, withdrawals in the region have averaged 2.1 Bcf/d, which compares to a five-year average withdrawal rate over the same period at 2.8 Bcf/d, S&P Global Platts Analytics data shows. This year, though, early winter weather across the Midwest has been colder than usual. Over the past 30 days, population-weighted temperatures have averaged about 8 degrees Fahrenheit below normal. As a result, gas demand led by the residential-commercial sector has been stronger, too. In the past month, total demand averaging 17.8 Bcf/d has outpaced the prior five-year average by 3.1 Bcf/d, or about 21%. EVENTS North American Gas Winter Outlook Webinar | 9-10 am CST Tuesday, December 18, 2018 Join S&P Global Platts Analytics for a North American natural gas outlook webinar to learn about our expectations for this winter and how it compares with last winter. If elevated demand weren't enough to incentivize more hefty draws on storage this season, consider that the recent rally in the cash market has lifted gas prices at Chicago and other Midwest hubs by nearly $1/MMBtu over the past month, S&P Global Platts data shows. Despite mounting incentives to drawdown stocks, it appears that end users and utilities are hoarding their inventory as they hedge against this winter's coldest, highest demand gas days that lie ahead. A recent and preliminary analysis of this year's storage activity shows that many inventory holders are sticking to a conservative strategy this year, according to Platts Analytics. Through late November, that strategy was particularly notable in the South Central and Midwest regions. Given this season's record-low storage levels, the supply risk posed by abnormally cold weather is outsized compared with previous winters. Last January, a series of snow and ice storms lifted Midwest gas demand to multi-year highs in the upper 29 Bcf/d range, and briefly to almost 32 Bcf/d -- the fourth highest on record. During those events, single-day draws on storage approached and even topped 15 Bcf, severely drawing down available inventory to manage cold weather that came much later in the season and even into April.

A Little Cold Risk And Nat Gas Soars - It was a bullish end of the week for natural gas prices, as the very end of European weather model guidance showed marginally more favorable upstream conditions for cold and that was all it took for prices to shoot almost 4% higher on the day.  It was another day where the March contract led the charge higher as well, something we again highlighted in our Morning Update seemed to skew short-term risk higher.   These came even as weather model guidance lost GWDDs over the next two weeks, indicating the market is more focused on what comes down the road instead of the warmth that has already been identified.  In our Weekly Update published Monday, we highlighted that warmth would likely intensify through the week and put at least $4.25 in play. That was hit again last night, and likely would have broken and put the $4 lower level in play if not for the long-range -EPO that arrived on European ensemble guidance.   Climate Prediction Center guidance showed how confidence in this Week 2 warmth increased yet again today, something we had highlighted in that Weekly Update would be a trend through the week.  This came after our Friday Pre-Close Update last week warned of "Slightly Bearish" weather trends and that gas prices were likely over-valued above the $4.5 level, allowing clients to position for this recent move lower. Yet consistently we also cautioned prices can spike on the first sign of cold; it remains early, and GWDDs are likely to remain below average through December 21st, but in our Morning Update we highlighted that Week 3 changes had turned bullish and 12z model guidance risks were less bearish, which verified well with gas prices up just .2% at the time.  An in-line EIA storage announcement today also did little to stunt the rally, as we were looking for a solidly smaller withdrawal than the 63 bcf withdrawal that was announced today.  This ended up being a bit tighter than the previous EIA print as it included less Thanksgiving holiday demand destruction.  No doubt part of today's rally was positioning in case end of December cold weather risks increase over the weekend. In our Pre-Close Update today, we highlighted those risks and how we expected them to change over the weekend.

Coast Guard responding to sunken vessels, oil discharge on Ohio River — The Coast Guard is responding to diesel fuel discharging from two sunken vessels on the Ohio River near Greenup, Kentucky, according to a news release from the Marine Safety Unit Huntington. Personnel from MSU Huntington are conducting assessments of potential environmental and waterway impacts as well as determining how much oil is being discharged, according to the release. In addition, Clean Harbors, an oil spill response organization, is en route with hard boom to contain the spill. The Coast Guard, Kentucky Department of Environmental Protection and Ohio Environmental Protection Agency have established a Unified Command to direct response and mitigation operations, according to the release.

Snyder scraps plan to put Line 5 tunnel under bridge authority - – The Snyder administration has scrapped plans to put a proposed Line 5 tunnel under the control of the Mackinac Bridge Authority and is scrambling to draft legislation to create a new entity for that job, a key senator confirmed Monday.The move comes after the Republican-controlled Senate heard strong opposition to putting the controversial tunnel under control of the bridge authority, which Gov. Rick Snyder had hoped would approve the new role at a meeting this year.The decision also comes as incoming House Speaker Lee Chatfield, R-Levering, came out Monday against putting the proposed tunnel under bridge authority control, saying it could be a distraction from the authority's primary role. It's important for both Snyder, a Republican, and Enbridge, the Canadian oil transport giant that owns the pipeline, to enshrine the deal by the end of 2018. On Jan. 1, 2019, Democratic Gov.-elect Gretchen Whitmer and Attorney General-elect Dana Nessel take office. Both oppose the tunnel plan and want to shut down Line 5, because of concerns about the potential for an environmentally catastrophic spill.

MDEQ grants permit for Enbridge Energy to install 48 new anchor supports on Line 5 | Michigan Radio - Enbridge Energy has been granted its request for a permit to install 48 new anchor supports on Line 5, which runs under the Straits of Mackinac.  The company says the new supports are a proactive measure meant to ensure the pipeline is supported every 75 feet along the lakebed in the future.   At a public hearing earlier this year, environmental groups testified against the request. They say so many supports make the pipeline an entirely new structure.  They want the pipeline shut down. But Governor Snyder agreed to a deal with Enbridge for the construction of a tunnel and new section of pipeline under the Straits. Enbridge says anchor supports are a key part of its maintenance program for the current pipeline, and further increase overall safety.

Michigan GOP pushing in lame duck for tax cuts for oil and gas companies --  The latest controversial bill in Michigan Republicans' ongoing lame duck blitz would give the state's oil and gas companies a tax cut.House Bill 6485 would provide oil companies with a cut worth about $4 million to $5 million annually, and would be retroactive to 2012.The bill, according to an independent legislative analysis, would "exclude certain costs and allowances related to oil and gas production from exemption from certain categories of taxable income and from the corporate income tax."But the bill's opponents note that the costs are already deducted at thefederal level, and the changes constitute a "double dipping" of exemptions.  The state House is expected to vote on the legislation today.

Michigan Senate approves Line 5 tunnel plan — Michigan's Republican-led Senate on Wednesday approved legislation designed to facilitate a deal between the state and Enbridge Inc. to move a controversial oil and propane pipeline into a planned tunnel under the Straits of Mackinac. The proposal would create a new Mackinac Utility Corridor Authority to oversee the tunnel — which would be drilled 100 feet beneath the lake bed — instead of the existing Mackinac Bridge Authority. Michigan Gov. Rick Snyder, who is working to finalize the deal before he leaves office at the end of the year, would appoint all three members of the new authority, which could include no more than two Republicans. Members would serve six-year terms. Snyder had proposed using the Mackinac Bridge Authority to oversee the tunnel, but lawmakers balked amid opposition from former members wary of expanding the bridge authority's scope. Enbridge has agreed to finance the tunnel construction project, which could take 10 years to complete and cost up to $500 million.The new authority would not have the power to seize land for the project using eminent domain.If Snyder finalizes state agreements with Enbridge, the legislation specifies that the new authority would be required to enter into enabling agreements by Dec. 31, the governor’s last day in office.Republicans hope to quickly wrap up tunnel plans to avoid looming road blocks next session. Democratic Gov.-elect Gretchen Whitmer and Attorney General-elect Dana Nessel have both vowed to decommission Line 5 by attempting to revoke the easement that allows it to run through the Straits.The legislation specifies that if the attorney general declines to represent the tunnel authority in a legal proceeding, including a claim that the tunnel agreement is invalid, Nessel or a successor would have to provide for the costs of outside legal counsel.

Eyeing expanded drilling, Trump OKs seismic tests off Atlantic coast that could harm dolphins, whales The Trump administration took an important step toward future oil and natural gas drilling off the Atlantic shore, approving five requests allowing companies to conduct deafening seismic surveys that could harm tens of thousands of dolphins, whales and other marine animals, according to studies. In an announcement Friday, the National Marine Fisheries Service, a division of the National Oceanic and Atmospheric Administration, declared that it issued final "incidental take" authorizations permitting companies conducting the surveys to harm wildlife if its unintentional. "NOAA Fisheries is clear in the documentation related to [incidental take authorizations] that we do not expect mortality to occur as a result of these surveys," said a spokeswoman, Katherine Brogan. But numerous scientific studies show acoustic sound can harm or potentially kill animals. The decision is likely to further antagonize governors in states along the Eastern Seaboard who strongly oppose the administration's proposal to expand federal oil and gas leases to the Atlantic. The authorizations clear the way for surveys across a stretch of ocean between Delaware and Florida. Every state executive on the coast below Maine opposed the plan. Federal leases could lead to exploratory drilling for the first time in more than a half-century. Several Democrats representing those states in the House and Senate decried the authorizations. In addition to harming sea life, acoustic tests - in which acoustic waves are sent through water 10 to 12 seconds apart to image the sea floor - can disrupt thriving commercial fisheries. Governors, state lawmakers and attorneys general along the Atlantic coast say drilling threatens beach tourism that has flourished on the coast in the absence of oil production. 

SC mayors to fight Trump Administration's seismic testing permits  - The Trump Administration approved permits to begin seismic testing in the Atlantic, Friday, a preparatory step for possible offshore drilling. With nearly 200 miles of coastline in South Carolina, mayors and conservation groups say they won't go down without a fight."I'm disappointed, but not surprised... We knew that under the radar, these permits have been pending for close to three years," said Beaufort Mayor Billy Keyserling.The National Marine Fisheries Service approved incidental harassment authorizations for five companies to start seismic air gun testing in the ocean from Delaware to Florida."The damage that could be caused by this seismic testing to dozens of species along the Atlantic Coast is just ill advised and it's really unconscionable," said Rikki Parker with the Coastal Conservation League in South Carolina. The air guns test for fossil fuels below the ocean floor, conservationists say blasting every ten seconds louder than a jet and potentially disturbing and threatening marine life.In South Carolina, another big concern surfaced when a study found old military munition sent to the bottom of the ocean in the 1900's harboring hazardous chemicals.Those who support offshore drilling see the money. A recent study from the American Petroleum Institute estimates offshore drilling to add nearly 280,000 jobs and $23 billion dollars to the U.S. economy every year.But conservationists say not without impacting other coastal industries.  "It stands the potential to really cost millions of dollars in tourism dollars, and fisheries, those industries are really going to be harmed," Parker told News 3.

Kinder Morgan maintains current timeline for LNG project startup — Kinder Morgan stuck Wednesday to its latest startup target for the LNG export terminal it is building in Georgia and said it heads into 2019 expecting a boost to volumes across its North American transportation and storage network.   Kinder Morgan supplies 42% of the current US liquefaction capacity with feedgas that moves through its pipelines, and it is hoping to increase that market share as more terminals come online, including its Elba Island facility near Savannah in the first quarter of next year. Contract renewals have been robust, as has been the ability to command higher rates, Kean said. "We are benefiting from the growth in both supply and demand, on both ends of our system," Kean said. Those trends are also aiding growth efforts by other players in the US midstream sector.  Kinder Morgan has proposed two gas pipelines to boost takeaway capacity from the Permian Basin in West Texas, to demand centers, including the Texas Gulf Coast. Permian Highway Pipeline will be designed to transport up to 2 Bcf/d of from the Waha area to the Gulf and Mexico markets. Gulf Coast Express is a 1.98 Bcf/d project. Kean said forecasts showing continued strong demand in Mexico for US supplies of natural gas are good news for Kinder Morgan, which is positioned to capitalize on the growth, with its existing network and planned projects.   In July, Kinder Morgan pushed Elba's expected initial in-service to the fourth quarter of this year from the third quarter previously. Now, it doesn't anticipate the first of 10 liquefaction units to come online until the first quarter of 2019.  Time lines aside, LNG market fundamentals remain strong, even amid trade tensions that have invited a degree of uncertainty.

Louisiana judge rules in favor of Bayou Bridge Pipeline’s seizure of private land -- A Louisiana judge on Thursday (Dec. 6) ruled that the company building the controversial Bayou Bridge Pipeline has the right to seize private property to construct the 162-mile-long oil pipeline.Judge Keith Comeaux of the 16th District Court in St. Mary Parish also ruled that the pipeline’s owner, Energy Transfer Partners, had trespassed when it began construction before finalizing land seizure procedures.  Louisiana is one of the few states that allows oil companies to take private land through expropriation, commonly known as eminent domain. This right is usually reserved for governments constructing highways or other public works.  Comeaux’s ruling indicate Energy Transfer could have avoided trespass and been granted access to the lands had it followed the legal procedures properly. In a statement, Energy Transfer said it was “pleased with the ruling” and looking forward to “bringing the pipeline into service before the end of the year.” The pipeline’s opponents said they plan to appeal.

US Coast Guard orders Louisiana oil company to stop 14-year old Gulf of Mexico leak - The United States Coast Guard (USCG) has ordered Taylor Energy Company to contain and clean up an ongoing oil spill in the Gulf of Mexico, which the federal government says has leaked more than a million barrels of oil since 2004. According to the Washington Post the order was issued on 23 October 2018, and the company faces fines of $40,000 per day if it fails to comply.  Taylor Energy’s MC-20 Saratoga platform was destroyed by Hurricane Ivan in September 2004 when an underwater mudslide snapped the 550-foot-tall platform’s legs and buried a cluster of wells.  Taylor plugged some of the 28 wells and added three containment domes but between 300 to 700 barrels (50,000 to 115,000 litres) of oil per day still spews from wells around the platform, according to a recent government-commissioned study. Taylor Energy and federal officials have established a $666 million trust to pay for the leak response. Although the company has spent hundreds of millions trying to stop the leak, it has proven difficult to cap the affected wells that are deep underwater and buried beneath 100 feet of mud. Taylor Energy has mostly ceased to exist as a company and President William Pecue is its last remaining employee. He has argued that because the hurricane was an act of God under the legal definition of the term, the Government should return the $450 million of the trust fund not so far spent and absolve the company of responsibility for stemming the leaks. Now the Coast Guard has directed Taylor Energy to decide on a new containment plan and a contractor to do the work. The new method of containment “must eliminate the surface sheen and avoid the deficiencies associated with prior containment systems,” the Coast Guard wrote in the administrative order. The company will be fined up to $40,000 per day for failing to comply. Full containment of the leak could cost upwards of $1 billion, according to Taylor Energy. The company disputes the new leak estimates and the cause of the chronic sheens that often stretch for miles from the well site. According to scientists employed by Taylor Energy, the sheens are caused by oil and gas bubbling up from the oil-saturated seafloor, and not from leaking wells.

Corpus Christi LNG likely loading first cargo (Argus) — The first export from Cheniere Energy's Corpus Christi LNG terminal in Texas is likely being loaded, and the second cargo could be exported soon after that. The Maria Energy LNG vessel docked at the facility yesterday and the Golar Kelvin LNG vessel has been moored in the northern Gulf of Mexico, just south of Corpus Christi, since 29 November, according to shipping records. The Maria Energy, which has capacity of 174,000m³, equivalent to 3.6 Bcf (102mn m³) of gas, is chartered by Cheniere, while the 162,000m³ Golar Kelvin is chartered by Spain's Naturgy, formerly known as Gas Natural Fenosa. Houston-based Cheniere declined to comment. Cheniere previously planned to load the first Corpus Christi cargo on the 170,000m³ Golar Tundra that it charters. But on 21 November that vessel left Corpus Christi empty to load a cargo at Cheniere's Sabine Pass LNG terminal in Louisiana. Gas intake at Corpus Christi increased significantly on 23 November and has averaged 369mn cf/d since then, for a total of about 4.1 Bcf. Intake averaged 56mn cf/d from 19 October to 22 October, when the storage tank and loading terms were being cooled down before higher production could safely begin. About 10pc of the feed gas is used in the liquefaction process, so enough LNG has likely been produced to load the Maria Energy. Cheniere has said it expects to export the first cargo from Corpus Christi train 1 and Sabine Pass train 5 in the fourth quarter. It has not commented on when Sabine Pass train 5 would load its first cargo, or if that has already happened. Each train that Cheniere has completed or is building at Corpus Christi and Sabine Pass has baseload production of 4.5mn t/yr, equivalent to about 620mn cf/d, and peak capacity of 5mn t/yr. Each train would typically produce a full LNG cargo in about five to seven days if it is operating at or near capacity. Each new train is expected to produce five to seven test cargoes before starting long-term commercial operations in the first quarter next year. The second train at Corpus Christi is expected to start long-term operations in the second half of 2019, and train 3 in 2021.

46.3B Barrels of Oil in Wolfcamp-Bone Spring - The Wolfcamp shale and overlying Bone Spring Formation in the Delaware Basin portion of Texas and New Mexico’s Permian Basin province contain an estimated mean of 46.3 billion barrels (bbl) of continuous (unconventional) oil, according to a new U.S. Geological Survey (USGS) assessment. In addition, the USGS analysis finds that the Wolfcamp holds 281 trillion cubic feet of natural gas and 20 billion bbl of natural gas liquids. The USGS – part of the U.S. Department of the Interior – stated that the figures refer to undiscovered, technically recoverable resources. “Christmas came a few weeks early this year,” U.S. Secretary of the Interior Ryan Zinke said in a written statement Thursday from his department. “American strength flows from American energy, and as it turns out, we have a lot of American energy. Before this assessment came down, I was bullish on oil and gas production in the United States. Now, I know for a fact that American energy dominance is within our grasp as a nation.” According the Interior Department, USGS in 2016 conducted a separate assessment of the Wolfcamp shale in the Midland Basin portion of the Permian. The new Delaware Basin assessment of the Wolfcamp and Bone Spring is more than two times larger than the 2016 study, the department noted. “In the 1980s, during my time in the petroleum industry, the Permian and similar mature basins were not considered viable for producing large new recoverable resources,” USGS Director Jim Reilly said in Thursday’s announcement. “Knowing where these resources are located and how much exists is crucial to ensuring both our energy independence and energy dominance.”

Texas and New Mexico shale basins hold 49 years worth of oil: USGS - (Reuters) - The largest oil field in the United States holds as much as 49 years worth of oil at current production rates, according to data from a report released on Thursday by the U.S. Geological Survey (USGS). In its first assessment of the Delaware portion of the Permian shale field that spans west Texas and New Mexico, the USGS, which is part of the U.S. Department of the Interior, said it contains about 46.3 billion barrels of oil and 281 trillion cubic feet of natural gas. The government estimates include all underground shale oil and gas that is technically recoverable but may not be economic to extract at current prices. The estimate is twice the size of the country’s next largest shale reserve - the Midland Basin - another portion of the Permian. In 2016, that was found by the USGS to have about 20 billion barrels of oil and 16 trillion cubic feet of natural gas. Survey results “demonstrate the impact that improved technologies such as hydraulic fracturing and directional drilling have had on increasing the estimates,” said Walter Guidroz, an official in the USGS Energy Resources Program. Hydraulic fracturing forces water and sand underground at high pressure to free oil and gas trapped in shale rock. The Permian Basin, which includes both shale regions, is expected to pump 3.7 million barrels of crude oil per day this month, up 30 percent from a year ago, according to the U.S. Energy Information Administration. The Delaware and Midland basins combined would take 49 years to produce if all the oil was profitable to recovery, according to the EIA figures.  

Permian’s Wolfcamp is largest potential oil and gas resource ever assessed - The Permian Basin's Wolfcamp and Bone Spring formations in West Texas and New Mexico hold the most potential oil and gas resources ever assessed, the U.S. Interior Department said Thursday. The region in the Permian's western Delaware Basin holds more than twice as much oil as the largest previous assessment - the Wolfcamp shale in the Permian's separate Midland Basin southeast of Midland. That study was completed two years ago. To put the new results into perspective, the Delaware Basin's Wolfcamp and Bone Spring plays would hold almost seven times as much oil as North Dakota's Bakken shale. The Wolfcamp shale and overlying Bone Spring in the Permian's booming Delaware Basin hold an estimate 46.3 billion barrels of oil, 281 trillion cubic feet of natural gas, and 20 billion barrels of natural gas liquids, according to the U.S. Geological Survey's new assessment. Much of the new activity in the Permian is in the Delaware's Wolfcamp in Loving, Winkler, Reeves, Culberson and Ward counties on the Texas side, and primarily Eddy and Lea counties in New Mexico. The U.S. is producing record volumes of oil and gas, and nearly one-third of the nation's total crude oil volumes are coming from the Permian. Those amounts are continuing to grow. An older basin, the Permian has become the center of the oil and gas world in recent years through the combination of horizontal drilling techniques and modern hydraulic fracturing, or fracking, technologies. RELATED: Midland Basin's Wolfcamp shale holds 20 billion undiscovered barrels of oil The study is based on undiscovered oil and gas that's considered technically recoverable based on these modern extraction methods. That's different from the proven reserves that oil companies list on their budgets after they drill exploratory wells and study the reservoirs. 

Permian Pipeline to Access Texas Deepwater Ports - Jupiter Energy Group has launched its 90-day open season for binding shipper commitments on the Jupiter Pipeline, the privately held midstream company reported Friday.“Construction of the Jupiter Pipeline is a key element in achieving our vision of providing our customers with the best hydrocarbon solutions from the wellhead to the world,” Albert Johnson, president of Jupiter Pipeline LLC, said in a written statement.According to the company, the 650-mile-long Jupiter Pipeline will be the only pipeline out of the Permian Basin that will access all three of Texas’ deepwater ports – Houston, Corpus Christi and Brownsville. The 36-inch-diamater crude oil pipeline will originate near Crane, Texas, and Gardendale-Three Rivers, Texas, and it will have an offtake point in Brownsville, Texas, Jupiter stated. Also, the company noted that the pipeline will have direct access to a fully capable very large crude carrier (VLCC) off-coast loading facility at Brownsville.The pipeline, which could begin service in the fourth quarter of 2020, could boast a capacity of up to 1 million barrels per day of crude oil, Jupiter states in its open season notice. As a previous Rigzone article about the project notes, the pipeline will directly link to Kinder Morgan’s Double Eagle and Crude & Condensate pipeline systems. In addition, Jupiter has received permits to load and unload up to Panamax-sized vessels at the crude upgrading, processing and export terminal it is building in Brownsville.

US Crude Oil Exports Surge to Record 3.2 Million Bpd Last Week: EIA — U.S. crude oil exports surged to 3.2 million barrels per day (bpd) last week, the highest on record, based on data going back to 1991, U.S. Energy Information Administration data showed on Thursday. The surge in exports helped push weekly net imports of crude to the lowest on record last week at about 4 million bpd, the data showed.

Oil and water: Finding new uses for fracking waste water -—Fracking requires a huge amount of water, a major concern in dry Western states that otherwise welcome the practice. But New Mexico thinks it can mitigate that problem by pushing oil companies to treat and recycle fracking waste water for use in agriculture —or even as drinking water.State officials, with the help of the U.S. Environmental Protection Agency, are still working out the details. If they move forward with the strategy, other arid states may follow New Mexico's lead."Oil and gas in New Mexico provide over a third of our general fund," said Ken McQueen, who heads the New Mexico Department of Energy, Minerals and Natural Resources. "We have to be concerned we're doing what's necessary into the future to make sure this industry continues to be alive and vibrant."In addition to keeping a vital industry going, McQueen thinks the reclaimed waste water could be a boon to New Mexico farmers and ranchers who need water for their crops and herds. Factories could use it, and it might help revive parched wildlife habitat, he said. And even though the waste water is filled with salt and other minerals, it might even be treated and used for drinking.In a typical month, the amount of waste water generated by the fracking process in New Mexico, the country's third-largest producer of oil, would be enough to fill Elephant Butte, the state's largest lake."Our hope is that it has a significant impact," McQueen said, eyeing figures that might total a billion barrels of water a year. "As we see the produced water volumes increase, it just makes sense that we explore other methods of disposal, particularly if those methods may have an upside or beneficial use to New Mexico." But even in the nation's fifth-driest state, where water is as precious as crude, environmentalists are skeptical of a strategy many state leaders view as a greener approach to dealing with waste water. Even after it is treated, they argue, the water can be tainted by harmful metals or chemicals used in fracking, creating long-term risks for people and the environment.

A push to make fracking waste water usable in agriculture — and even for drinking - WaPo  --Fracking requires a huge amount of water, a major concern in dry Western states that otherwise welcome the practice. But New Mexico thinks it can mitigate that problem by pushing oil companies to treat and recycle fracking waste water for use in agriculture — or even as drinking water. State officials, with the help of the Environmental Protection Agency, are still working out the details. “Oil and gas in New Mexico provide over a third of our general fund,” said Ken McQueen, who heads the New Mexico Department of Energy, Minerals and Natural Resources. “We have to be concerned we’re doing what’s necessary into the future to make sure this industry continues to be alive and vibrant.” In addition to keeping a vital industry going, McQueen thinks the reclaimed waste water could be a boon to New Mexico farmers and ranchers who need water for their crops and herds. Factories could use it, and it might help revive parched wildlife habitat, he said. And even though the waste water is filled with salt and other minerals, it might even be treated and used for drinking. In a typical month, the amount of waste water generated by the fracking process in New Mexico, the country’s third-largest producer of oil, would be enough to fill Elephant Butte, the state’s largest lake.  For every barrel of oil fracking produces in New Mexico, it yields up to five barrels of “produced water” — a combination of the excess fracking water and water released from the rock.Sometimes oil companies reuse the waste water to bring up more oil, but in many cases they dispose of it by pumping it deep underground using bore holes called injection wells.Injecting the waste water has created serious problems in states such as Oklahoma and Kansas. Both states have passed restrictions on injecting the water after scientists concluded that the practice has caused earthquakes, sometimes several in a single day. But even in the nation’s fifth-driest state, where water is as precious as crude, environmentalists are skeptical of a strategy many state leaders view as a greener approach to dealing with waste water. Even after it is treated, they argue, the water can be tainted by harmful metals or chemicals used in fracking, creating long-term risks for people and the environment.

Feds Move to Slash Sage Grouse Protections For More Oil & Gas Development -- The Interior Department's Bureau of Land Management published proposals on Thursday designed to roll back critical measures that protect the imperiled greater sage grouse on public lands in order to boost fossil fuel development and mining in the American West.The spectacular bird once numbered 16 million and roamed across 13 Western U.S. states and three Canadian provinces. But rampant oil and gas development and other factors have cut its habitat in half. Its population has significantly plunged to an estimated 200,000 to 500,000 individuals across 11 western states and southern Alberta.In 2015, the charismatic bird saw a glimmer of hope with the Greater Sage Grouse Conservation Plan, which then-Interior Secretary Sally Jewell called a "truly historic moment—one that represents extraordinary collaboration across the American West." A remarkable coalition of scientists, ranchers, environmental groups, extractive industries, federal agencies and state and local governments worked together to create a management plan for the keystone species.As the New York Times explained, that Obama-era effort to protect the sage grouse set out to ban or sharply reduce drilling in 10.7 million acres of its habitat. But the Trump administration's plan would effectively limit the grouse's protected habitat to a mere 1.8 million acres, "essentially opening up nine million acres of land to drilling, mining and other development," the paper said.

U.S. to conduct additional Keystone XL pipeline review (Reuters) - The U.S. State Department will conduct another environmental review of TransCanada Corp’s long-pending Keystone XL oil pipeline, a U.S. official said on Friday, a move that could lead to additional delays of the project. The so-called supplemental environmental impact statement was ordered by Judge Brian Morris of the U.S. District Court in Montana in his ruling on Nov. 8 that blocked construction of the pipeline planned to bring heavy crude from Canada’s oil sands to the United States. Morris said in his ruling that previous environmental analysis of Keystone XL fell short of a “hard look” at the cumulative effects of greenhouse gas emissions and the impact on Native American land resources. The $8 billion pipeline, which is supported by Canadian oil interests and U.S. refiners, but opposed by landowners and environmentalists, has been pending for a decade. President Donald Trump announced a permit for the project soon after he took office. Former President Barack Obama nixed the pipeline, saying it would do little to help U.S. consumers and would add greenhouse gases. TransCanada spokesman Terry Cunha said that the State Department’s announcement of an additional review was expected after the judge’s ruling. Earlier this week, TransCanada asked Morris, the District Court judge, to allow it to resume some U.S.-based pre-construction activities blocked by the initial ruling. Morris’ decision on Thursday gave the Calgary, Alberta-based company permission to resume some activity on the pipeline project, including project development work and stakeholder meetings. It is not allowed to resume physical field work like moving pipe and equipment, preparing work camp sites or undertaking road upgrades at this time, Cunha said. Morris is set to rule on that work after Dec. 5. “It is too soon to say what the injunction will mean to the timeline of the Keystone XL pipeline but we remain confident the project will be built,” Cunha said. 

Energy Transfer Partners and Banks Lost Billions by Ignoring Early Dakota Access Pipeline Concerns -- Roughly four years ago, Energy Transfer Partners (ETP) filed a federal application to build a 1,172 mile oil pipeline from North Dakota's Bakken shale across the U.S. to Illinois at a projected cost of $3.8 billion.Before that application was filed, on Sept. 30, 2014, the Standing Rock Sioux Tribe met with ETP to express concerns about theDakota Access pipeline (DAPL) and fears of water contamination. Though the company, now known as Energy Transfer, had re-routed a river crossing to protect the state capital of Bismarck against oil spills, it apparently turned a deaf ear to the Tribe's objections.Following that approach proved to be a very costly decision, a new analysis concludes, with ETP, banks, and investors taking billions in losses as a result."This case study estimates that the costs incurred by ETP and other firms with ownership stake in DAPL for the entire project are not less than $7.5 billion, but could be higher depending on the terms of confidential contracts," a new report, "Social Cost and Material Loss: The Dakota Access Pipeline," concludes, noting that the figure represented nearly double the initial project cost. "The banks that financed DAPL incurred an additional $4.4 billion in costs in the form of account closures, not including costs related to reputational damage." In addition, the company's "poor social risk management" caused taxpayers and "other local stakeholders" to incur at least $38 million in costs, the report concludes.

Pipeline spills crude oil on private property near Belt - An oil pipeline spilled 3,400 barrels of crude oil on about 4 acres of private property southeast of Great Falls, near Belt.ABC Fox Montana reports the spill from the Phillips 66 pipeline happened on Nov. 14.  Cleanup has included vacuuming up spilled oil and removing contaminated soil.State environmental regulators say the oil did not reach surface or groundwater. Phillips 66 says there was no impact to people or wildlife.The Department of Environmental Quality says Phillips 66 is complying with the state's cleanup requirements and the pipeline has been repaired.  DEQ officials say when the cleanup is complete the agency will determine if any fines are warranted.

How Did Public Land Drilling Rights Become Cheaper Than a Cup of Coffee? - Last December, a London-based energy company secured drilling rights to 67,000 acres in Montana for the paltry sum of $1.50 per acre – a steal compared to the $100 per acre average price tag for land leased under the final four years of the Obama administration, according to The New York Times.This wasn’t some end-of-the-year clearance sale. While you might think public lands would be more safeguarded than most from oil and gas development, the Trump administration has actually made it dangerously affordable to lease drilling rights. That’s especially concerning in light of a new federal report that found drilling on public lands accounts for nearly a quarter of greenhouse gas emissions in the U.S.“We clearly have a system that is incentivizing speculation,” said Jeremy Nichols, the Climate and Energy Program Director at WildEarth Guardians. He said the low lease prices allowed companies to take advantage of public lands and make money off the backs of taxpayers.“I call it a liquidation. When you’re selling public lands for $1.50 an acre, you are liquidating.”Recent oil and gas lease sales, listed by the Bureau of Land Management, show parcels frequently selling for about $2 an acre — the minimum legal bid, which can drop as low as $1.50 per acre if there are no other bidders — as was the case for the Montana drilling rights. This devaluing of public lands and their wholesale leasing is not only alarming because of the associated greenhouse gases. Drilling can end up cutting off wildlife corridors, threatening native flora and fauna. It can also lead to massive spikes in air pollution — which is why some towns located near the gas fields in western Wyoming have experienced higher smog levels than Los Angeles.

In the Blink of an Eye, a Hunt for Oil Threatens Pristine Alaska — It is the last great stretch of nothingness in the United States, a vast landscape of mosses, sedges and shrubs that is home to migrating caribou and the winter dens of polar bears. Aside from a Native village at its northern tip, civilization has not dented its 19 million acres, an area the size of South Carolina. There are no roads and no visitors beyond the occasional hunter and backpacker. But the Arctic National Wildlife Refuge — a federally protected place of austere beauty that during a recent flyover was painted white by heavy snowfall — is on the cusp of major change. The biggest untapped onshore trove of oil in North America is believed to lie beneath the refuge’s coastal plain along the Beaufort Sea. For more than a generation, opposition to drilling has left the refuge largely unscathed, but now the Trump administration, working with Republicans in Congress and an influential and wealthy Alaska Native corporation, is clearing the way for oil exploration along the coast.Decades of protections are unwinding with extraordinary speed as Republicans move to lock in drilling opportunities before the 2020 presidential election, according to interviews with over three dozen people and a review of internal government deliberations and federal documents. To that end, the Trump administration is on pace to finish an environmental impact assessment in half the usual time. An even shorter evaluation of the consequences of seismic testing is nearing completion. Within months, trucks weighing up to 90,000 pounds could be conducting the tests across the tundra as they try to pinpoint oil reserves. While actual oil production would be a decade or more away, the turnaround represents a prized breakthrough in the Trump administration’s campaign to exploit fossil fuels and erase restrictive policies protecting the environment and addressing global warming. 

In major shift, U.S. now exports more oil than it ships in -- The United States last week exported more crude oil and fuel than it imported for the first time on record, according to data released on Thursday, the same day OPEC ended a meeting without a decision to curb global output to balance out the historic surge in U.S. supply. When adding in all imports and exports of crude and refined products, the U.S. exported a net 211,000 barrels per day for the week through Nov. 30 – the first time that has happened, according to U.S. Energy Department figures dating to 1973. That was on the back of a jump in crude exports to a weekly record of more than 3.2 million bpd. “So when does the U.S. send a delegate to OPEC meetings?” said Kyle Cooper, consultant at ION Energy in Houston. “It’s really quite amazing. I do think that will occur more and more often in coming years.” The United States historically has been a heavy importer of crude oil in part due to a four-decade ban on crude exports that was lifted in late 2015 by then-President Barack Obama. Petroleum exports until recently were dominated by products like gasoline and diesel, but that has changed since the U.S. shale revolution that has sped up drilling and extraction of oil, helping boost overall U.S. production to a record 11.7 million bpd. The data comes on the same day that the Organization of the Petroleum Exporting Countries adjourned a meeting without announcing a supply-cut agreement as it grapples with sinking prices due in part to the surge in U.S. output that has upended the global supply equation. Crude inventories fell 7.3 million barrels last week, the first drawdown since September, as net crude imports hit a record low of 4 million bpd, the U.S. Energy Information Administration said on Thursday. 

The U.S. Just Became a Net Oil Exporter for the First Time in 75 Years -- America turned into a net oil exporter last week, breaking 75 years of continued dependence on foreign oil and marking a pivotal -- even if likely brief -- moment toward what U.S. President Donald Trump has branded as "energy independence." The shift to net exports is the dramatic result of an unprecedented boom in American oil production, with thousands of wells pumping from the Permian region of Texas and New Mexico to the Bakken in North Dakota to the Marcellus in Pennsylvania. While the country has been heading in that direction for years, this week’s dramatic shift came as data showed a sharp drop in imports and a jump in exports to a record high. Given the volatility in weekly data, the U.S. will likely remain a small net importer most of the time. “We are becoming the dominant energy power in the world,” said Michael Lynch, president of Strategic Energy & Economic Research. “But, because the change is gradual over time, I don’t think it’s going to cause a huge revolution, but you do have to think that OPEC is going to have to take that into account when they think about cutting.” The shale revolution has transformed oil wildcatters into billionaires and the U.S. into the world’s largest petroleum producer, surpassing Russia and Saudi Arabia. The power of OPEC has been diminished, undercutting one of the major geopolitical forces of the last half century. The cartel and its allies are meeting in Vienna this week, trying to make a tough choice to cut output and support prices, risking the loss of more market share to the U.S. The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined products such as gasoline and diesel, compared to net imports of about 3 million barrels a day on average so far in 2018, and an annual peak of more than 12 million barrels a day in 2005, according to the U.S. Energy Information Administration. The EIA said the U.S. has been a net oil importer in weekly data going back to 1991 and monthly data starting in 1973. Oil historians that have compiled even older annual data using statistics from the American Petroleum Institute said the country has been a net oil importer since 1949, when Harry Truman was at the White House.

U.S. oil reserves rise to record despite production boom: Kemp (Reuters) - U.S. crude oil reserves hit record levels at the end of 2017, as annual reserve additions outstripped production for the eighth time in nine years, government data published last week shows.Reserve growth is the main reason predictions about future oil shortages have been repeatedly proved wrong.  U.S. policymakers have long fretted about the damage to the economy and national security of exhausting domestic oil reserves. As early as 1909, the U.S. Geological Survey was predicting reserves might be exhausted by 1935.   Scarcity concerns became prominent again in the 1940s, the 1970/80s and the 2000s (“Market madness: a century of oil panics, crises and crashes”, Clayton, 2015). Policymakers responded by pressing for more conservation, encouraging the development of overseas reserves, reserving domestic supplies for future military needs, or experimenting with alternatives. But scarcity forecasts have underestimated the impact of improvements in technology, mostly driven by price changes, of which shale extraction has been the most recent and dramatic. And we will have cooked the planet through global warming long before we run out of fossil fuels. “No mineral, including oil, will ever be exhausted,” wrote the late Morris Adelman, an economist at the Massachusetts Institute of Technology (“Genie out of the bottle”, 1995). “If and when the cost of finding and extraction goes above the price consumers are willing to pay, the industry will begin to disappear.” And as former Saudi oil minister Zaki Yamani observed in 2000: "Oil will be left in the ground. The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil."

Schlumberger's Year-End Frack Forecast is a Lump of Coal -- The North American fracking market -- already expected to be a downer for the holidays -- is turning out to be even worse than expected, according to the world’s biggest oil-service provider. Schlumberger Ltd. expects sales in the U.S. and Canada to drop 15 percent in the final three months of the year compared with the third quarter, the company said Tuesday. A trio of factors including a plunge in crude prices, exhausted exploration budgets and maxed-out pipelines in America’s busiest field is prompting oil companies to let go of frack crews. “We are seeing a significantly larger drop in activity than we expected, which is leading to a larger drop in pricing than we anticipated,” “We continue to see the weakening of the hydraulic fracturing market as temporary, with the expectation of a gradual recovery taking place over the first half of 2019.” The number of fracking crews at work in the Permian Basin of West Texas and New Mexico is down 13 percent from a 2018 high in June, according to Primary Vision Inc. Fracking, which involves blasting water, sand and chemicals underground to release trapped hydrocarbons, is the most expensive part of drilling wells. The 15 percent drop in overall North American sales implies at least a 25 cut to fracking revenue in the region, Brad Handler, an analyst at Jefferies, wrote Wednesday in a note to investors. Jefferies slashed its price target for Schlumberger shares 28 percent to $54. The projected decline in North American sales is just the latest in a series of downward revisions by Schlumberger. In September, the company said a dearth of new pipeline capacity in the Permian was cooling off the red-hot region, leading to lower-than-expected third-quarter fracking results. Then a month later, the company said the fourth quarter would be even worse.

North Atlantic oil refinery reports oil leak About 8:30 a.m. Friday, a pipeline was observed to be leaking bunker oil into Placentia Bay from the North Atlantic Refinery. North Atlantic Refining Ltd. in a statement said it immediately activated its response procedure, and within one hour the product was contained. The spill is estimated to have leaked less than one barrel into the water. The refinery said situation is under control and clean up was underway Friday, insisting there is no risk to the general public and no further risk to the environment.

SeaRose spill proves we can’t open marine protected areas for drilling - The largest-ever oil spill off the coast of Newfoundland has come and almost gone from sight, with little fanfare and only a fraction of the notice it should have elicited. Husky’s SeaRose platform leaked a quarter-million litres of oil into the Atlantic on Nov. 16. Having occurred during the worst storm in the world at the time, the spill avoided capture by TV cameras. The oil disappeared from sight over the course of four days, sparing coastal residents the image of a blackened coastline such as the one caused by the Exxon Valdez.Due to weather conditions near the spill, even remote-sensing equipment was unable to record the 250,000 litres spilled into the ocean. Thanks to near-eight-metre waves and four days of storming, images of the fish, seabirds and other marine life affected by the oozing slick remain unseen. To date, just one image of the spill has been publicly released. The spill has become an “out of sight, out of mind” PR home run for Husky. Meanwhile, government issued vague platitudes about self-regulation, instead of setting and enforcing real standards.And so, we move on. Not so fast.  Return to March 2017, when Husky continued operations at the same SeaRose platform while a massive iceberg approached, putting the operation, crew and marine environment at risk. Following that close call, the Canada-Newfoundland and Labrador Offshore Petroleum Board said it “lack(ed) full confidence” that Husky would take appropriate action in an emergency situation, and that Husky would need to “rebuild confidence.” Husky Oil was found negligent in failing to shut down and move its platform out of harm’s way, instead playing an ill-advised game of chicken with an iceberg measuring 60 by 40 by eight metres, which dodged the SeaRose by less than 200 metres. The 84 people on board were ordered to “muster and to brace for impact.” But even after being investigated and the SeaRose’s operations were suspended for nine days, Husky’s procedures appear unchanged. Months later, CBC uncovered documents proving the decision to continue operations that day were “economically driven.”

Earthquake in northern B.C. 'very likely' caused by fracking -An earthquake that struck northeastern B.C. on Thursday evening was "very likely" caused by fracking, a preliminary investigation has found. Earthquakes Canada said the quake had a preliminary magnitude of 4.5, with the epicentre about 16 kilometres southwest of Fort St. John. The epicentre coordinates from Earthquakes Canada: It hit around 5 p.m. PT, followed by another tremor of similar magnitude, classified as an aftershock, less than an hour later. The Geological Survey of Canada and the B.C. Oil and Gas Commission launched an investigation to figure out what caused the tremor. On Friday, a statement said they had confirmed there was active fracking happening near the epicentre when the quake struck. "The likelihood this was induced … there's a very high correlation," said Honn Kao, seismology research scientist with the Geological Survey of Canada. Kao stressed the link was a preliminary finding and more investigation is required before the agency confirms the quake was "100 per cent" a result of fracking — but said it's "very likely" that's the case. Western Alberta and northeast B.C. have a high rate of fracking-induced earthquakes, according to a study from the University of Alberta. People in Fort St. John, as well as Taylor, Chetwynd and Dawson Creek, reported feeling the earthquake on social media, but there are currently no reports of damage. Kao said early data suggests the quake had a relatively shallow depth, which is likely why the quake was widely felt. "This is certainly an event that has been felt quite a bit by the local residents," Kao said. "Although this is a significant event for the region, I don't think it's going to cause significant damage." According to the U.S. Geological Survey, the quake had a preliminary magnitude of 4.2.

Fracking Linked to Quake that Jolted Fort St. John - -- The earthquake that rattled Fort St. John last Thursday evening wasn’t a natural phenomenon. The quake, which shook up an area south of the city, was likely caused by energy companies’ massive fracking of one of the many wells in the region. B.C.’s Oil and Gas Commission (OGC) ordered one or more operators to stop drilling and says more details will be forthcoming. The industry currently has no way of telling how these induced fractures will behave or if they will connect with natural faults in the rock formations. The latest quake occurred at the same depth that industry is fracking shale rock, about two to three kilometres from the surface, said Honn Kao, the leader of induced seismicity research project at Natural Resources Canada in Victoria, B.C. “Based on this information the OGC and Natural Resources Canada concluded that there is a very high chance the earthquake was induced by injection operations nearby,” Kao told The Tyee. The tremor and accompanying aftershocks shook houses in Fort St. John, Charlie Lake, Taylor, Chetwynd, Dawson Creek and Hudson’s Hope reported the Alaska Highway News. It was also felt at the construction site of the Site C dam. More than 100 local residents submitted “felt” forms to Natural Resources Canada on the extent of the shaking and damage. Research scientists have found hydraulic fracturing and related activities have changed seismic patterns in both northeastern B.C. and northwestern Alberta over the last six years. Ever-growing injection volumes, uncharted faults and over-pressured shale formations have all played a role in the explosion of industry-made quakes. According to presentations by the OGC, industry-made earthquakes can pose a hazard to roads, pipelines, dams, groundwater and public safety.  Between 2013 and 2015 the fracking industry has likely caused more than 700 seismic events in western Alberta, according to a report from the TransAlta/Nanometrics monitoring network.

Alberta to mandate 325,000 oil production cut starting Jan 1: Premier — Alberta will mandate a 325,000 b/d oil production cut starting January 1, 2019 in order to tighten wide crude price discounts, the province's Premier, Rachel Notley, said Sunday. "This is a short-term measure," Notley said during a webcast press conference. In the long term, Notley said she will focus on getting new pipelines built and purchasing rail cars to move more crude out of Alberta. Those new rail cars will start coming on line next year, she said. The 325,000 b/d, or 8.7%, crude production cut will be spread out to all producers, Notley said, and over the course of the year the amount of the cut will drop. The volume of the cut will be reviewed every month to determine what is needed, she said. The Canadian Association of Petroleum Producers' latest forecast shows Western Canadian production rising from an estimated 4.54 million b/d in 2018 to 5.2 million b/d in 2023, and 6.2 million b/d in 2035. Notley said last week she submitted a proposal to Canada's Prime Minister Justin Trudeau asking the federal government to join Alberta in buying unit trains and up to 7,000 cars to move additional crude out of Alberta. Notley said Alberta is already in negotiations with a third party to purchase the rail cars, and anticipates a deal to get done in weeks. The additional trains would be able to move 120,000 b/d of crude, she said. A typical 100-car train would carry roughly 600,000 barrels of crude, and each train would likely only make two trips across the border every month. Getting 120,000 b/d of extra capacity would require buying another 2,500 to 3,000 rail cars (or 25 to 30 100-car trains). It is difficult to tell where those cars would come from. Roughly 1,500 DOT 117 newbuild and retrofitted combined cars entered the crude market during the third quarter of 2018 for the US and Canada, according to S&P Global Platts Analytics. Western Canadian Select crude was assessed by S&P Global Platts at a $29/b discount to WTI Friday, tightening from a $45.25/b discount November 1. Still, that discount is out from an average of $15.38/b in November 2017. Even with a tighter discount, lower WTI benchmark prices have helped to pull WCS outright prices down, assessed at $21.14/b Friday. That puts WCS well below breakeven costs, which are estimated by S&P Global Platts Analytics at roughly $57/b for new projects. 

Alberta to force oil output cuts to deal with price woes (Reuters) - Alberta Premier Rachel Notley said on Sunday that the Western Canadian province would mandate temporary oil production cuts to deal with a pipeline bottleneck that has led to a glut of crude in storage and driven down Canadian crude prices. The left-leaning New Democratic Party government will force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), until the excess crude in storage is drawn down. The cuts will then drop to 95,000 bpd until Dec. 31, 2019. There are some 35 million barrels of oil in storage in Alberta, which is twice the normal level, the province said. “When markets aren’t working, when companies are forced to sell our resources for pennies on the dollar, we must act,” Notley said in a live public address on Facebook. Alberta estimates that current production outstrips pipeline and rail capacity by 190,000 bpd. The production cuts, to be applied by producer rather than per project, will be implemented starting in January. The discount on Western Canada Select (WCS) heavy blend hit a record at $52.50 below the West Texas Intermediate (WTI) benchmark last month, which meant producers were getting about $14 a barrel compared with about $67 for WTI. It has since narrowed slightly as the WTI benchmark price has fallen and crude by rail volumes has ramped up. The province said the curtailment would narrow the differential by at least $4 a barrel. There will be penalties for non-compliance, but no specifics were given. Notley said last week her government was moving ahead with plans to buy about 80 locomotives and 7,000 rail cars to boost crude by rail capacity by 120,000 bpd by mid-2020. The premier, who will face voters in an election that must be held by the end of May, noted that pipelines were preferred to all other options, but blamed successive federal governments for delays getting projects built. Enbridge Inc’s Line 3 pipeline replacement, which runs from Alberta to U.S. markets, is expected to be online by late 2019. Two other planned export pipelines are facing regulatory delays. 

Is This the Beginning of the End for Canada’s Tar Sands? - When hundreds of activists protesting the Keystone XL pipeline were arrested at the White House in 2011, their ultimate target lay thousands of miles away: Canada's tar sands. If they stopped the pipeline, they argued, that could slow the growth of this particularly dirty source of oil and score a limited but significant win for the climate.This week, with the market saturated and prices depressed, Alberta's premier announced that her government would temporarily curtail the province's oil production, chiefly from the tar sands, because there isn't enough pipeline capacity to ship the crude to market.It was a startling announcement from a government whose prevailing energy policy has been to promote more production of its bitumen—known as tar sands or oil sands—which ranks among the most carbon-polluting sources of oil."This is definitely a big deal," said Josh Axelrod of the Natural Resources Defense Council, one of the advocacy groups that has tried to block Keystone XL. "When the aim of the campaign is to level off production," he said, "to see that day when the first cuts happen for exactly the reason you have argued would happen, it's quite amazing."The reasons for Alberta's decision to rein in production are complex—the government's goal is for output to eventually grow again. It's an effort to buy time for the industry, but it doesn't fix the underlying problems. And it raises the question: is this the beginning of the end for Canada's oil sands?

Canada's Plan to Cut Oil Output Boosts Crude, Stocks - Alberta’s announcement that it will cut oil production next year to bolster prices sent crude soaring and boosted shares of Canadian producers. The unprecedented move by the country’s largest oil-producing province is aimed at easing the crisis in the nation’s energy industry. The plan announced on Sunday will lower production of raw crude and bitumen from Alberta by 325,000 barrels a day, or 8.7 percent, from January until excess oil in storage is drawn down. The reduction would then drop to 95,000 barrels a day until the end of next year at the latest. The discount of Western Canadian Select crude to U.S. benchmark West Texas Intermediate oil narrowed $9.25 to $19.75 a barrel as of 10:11 a.m. New York time Monday, the tightest it’s been since July, data compiled by Bloomberg showed. WTI itself climbed as much as 5.7 percent, the biggest intraday gain since June, to $53.85 a barrel. Shares of oil producers operating in Alberta also surged, while there were declines for refining companies who had benefited from supplies of cheap crude. The planned cuts by the world’s fifth-biggest producer follows a renewed commitment over the weekend by Saudi Arabia and Russia to extend their deal to manage the oil market. Global prices crashed last month by the most in more than a decade, a plunge that battered producers in Alberta in particular amid surging oil-sands output, a shortage of pipeline space and heavy U.S. refinery maintenance. Alberta Premier Rachel Notley is following the advice of producers like Cenovus Energy Inc. and Canadian Natural Resources Ltd., which have been hammered by record low prices for heavy Canadian crude, which at one point were $50 a barrel less than U.S. grades. The crisis has caused some producers to reduce production on their own, slash dividends and delay next year’s drilling plans. “Every Albertan owns the energy resources in the ground, and we have a duty to defend those resources,” Notley said in a statement. “But right now, they’re being sold for pennies on the dollar. We must act immediately, and we must do it together.” The amount being cut is more than the total production of each of OPEC’s three smallest members: Equatorial Guinea, Gabon and the Republic of Congo.

Canadian Heavy Crude Surges After Alberta Imposes Oil Cuts - Canadian heavy crude strengthened the most since June after the Alberta government mandated production cuts across the province. Western Canadian Select’s discount to U.S. benchmark West Texas Intermediate narrowed $6 to $23 a barrel as of 3:51 p.m. New York time, data compiled by Bloomberg show. The discount shank to as much as $19.75 a barrel earlier in the day, the tightest since July. On an outright basis, prices were up more than $8 a barrel. Alberta announced late Sunday that oil producers will have to collectively cut output by 325,000 barrels a day, or 8.7 percent, starting in January to alleviate rising inventories and pipeline bottlenecks. The reduction would drop to 95,000 barrels a day by the end of next year. A surge of production from oil sands projects such as Suncor Energy Inc.’s Fort Hills mine earlier this year ran into limited pipeline space, causing inventories to rise and prices to decline. WCS’s discount to futures fell to $50 a barrel in October amid refinery maintenance in the U.S. Midwest. Already, Canadian oil producers including Canadian Natural Resources Ltd. and Cenovus Energy Inc. announced that they had curtailed output. Those cuts added up to about 150,000 barrels a day, according to Explorers and Producers Association of Canada. The province is producing 190,000 barrels a day more than can be shipped out and inventories are “nearing capacity,” Alberta’s government said in a release Sunday. The cuts will reduce volatility and narrow the Canadian crude differential by $4 a barrel relative to what it would otherwise have been. WCS swaps for calendar year 2019 traded at $19.50 a barrel discount to WTI earlier Monday, compared with $25.75 on Friday, according to market participants. Prices have since retreated, with bids at minus $21.45.

Some Canadian producers push back as Alberta orders oil cuts (Reuters) - Several oil companies in Canada pushed back on Monday against Alberta’s mandated cuts in crude production, warning about excessive government intervention even as the discount on Canadian crudes narrowed sharply on the curtailment plan. Alberta Premier Rachel Notley said on Sunday the government would force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), until excess crude in storage is reduced. The move is unusual for a market economy like Canada, in comparison with members of the Organization of the Petroleum Exporting Countries whose oil companies are often state-owned. Prices for Canadian grades of crude oil moved sharply upward Monday, narrowing the deep discounts they had been trading at, relative to their U.S. counterparts. While producers said they would comply with the mandatory cuts, executives from Canada’s Suncor Energy Inc, Husky Energy Inc and Imperial Oil, integrated producers with domestic refinery and upgrading capacity, expressed disappointment. “We believe the market is working and view government-ordered curtailment or other interventions as possibly having serious negative investment, economic and trade consequences,” said Husky in a statement. However, major producers like Cenovus Energy Inc and Canadian Natural Resources Ltd were vocal with their support. “At $35 or $45 differentials - the lion’s share of companies in this industry are barely breaking even or actually losing money,” Cenovus Chief Executive Alex Pourbaix said in an interview. Canada is one of the world’s largest oil producers, supplying more than 4.2 million barrels a day, but WCS prices slumped in October to a discount of more than $52 a barrel below WTI due to the transportation constraints and storage glut. Heavy Western Canadian Select oil traded at a $25 a barrel discount to U.S. crude on Monday, compared with a $32 discount on Friday. Light synthetic crude from the oil sands settled at $17 below the benchmark, $8 narrower than Friday. Following the cuts, Pourbaix said Cenovus expects discounts closer to $20 a barrel in 2019, supporting investment of C$1.5 billion ($1.1 billion) in 2019, in line with 2018 capital spending. “That would not have been the case if the government hadn’t take action,” Pourbaix said. 

Refinery margin tracker- Distressed Canadian crude margins slip, Bakken margins fall in their wake  — Margins for refiners running highly discounted crude from Western Canada inched lower last week as crude prices rose ahead of expected production cuts by Alberta's premier, Rachel Notley, an analysis by S&P Global Platts showed Monday. Rising Canadian crude prices pulled up the price of North Dakota's Bakken as well, weakening margins enough to possibly slow the current resurgence of crude by rail to the US Atlantic Coast and tamp down demand for nascent crude exports from Buckeye's Perth Amboy, New Jersey, terminal.Notley on Sunday announced an 8.7% cut in Alberta's oil production, which will take 325,000 b/d of Canadian crude off the market beginning in January 2019 for at least three months in order to draw down record high storage and support higher prices.Expectations are for even lower Western Canadian crude refining margins this week as Western Canadian Select, Mixed Light Sweet and Syncrude crude prices continued to gain early Monday.WCS' discount to WTI narrowed by $10/b in early Monday trade, and was heard to trade at the NYMEX calendar-month average minus $19.50/b, compared with Friday trades at minus $29/b.  Last week, coking margins for Western Canada Select, Alberta's heavy benchmark crude, fell across US refining centers, with Midwest coking margins dropping over 7% to $35.96/b for the week ended November 30, Platts margin data showed, down from the $42.10/b average margin the week earlier.  While rising Bakken prices could curtail volumes of the crude railed to the US Atlantic Coast and the US West Coast, Bakken cracking margins for both regions still far exceed those of alternate crudes. USAC Bakken cracking margins averaged $24.73/b the week ended November 30, compared with the $6.71/b Bonny Light cracking margin. However, both USAC refining margins and nascent demand for exporting Bakken out of Buckeye's Perth Amboy, New Jersey, terminal could be impacted if Bakken prices and/or rail costs rise significantly. Crude by rail to the USAC has regained some of the momentum lost in 2015, when crude-by-rail volumes from the Bakken averaged about 370,000 b/d. September volumes of crude by rail to the USAC averaged 80,000 b/d, Energy Information Administration data showed.

NB Tories survive throne speech vote, plan to end ban on fracking— New Brunswick Premier Blaine Higgs says his government will change regulations to allow limited shale gas development — and could have it done before the end of the year. The Tories' throne speech passed 25-23 in the legislature Friday, a crucial victory on a confidence vote for the minority government. It included a subamendment that urges government to allow limited natural gas development — if the regulations are changed, the Sussex, N.B., area would be the only location east of Ontario where fracking would be allowed.   Lowe said developing natural gas supplies would mean increased activity for the LNG terminal near Saint John. "If there's enough gas in Sussex and we can get gas through it and reverse it, then I hope there's more taxes coming for the city," he said. "I told the caucus a week ago what I was going to do and today nobody gave me the finger. So they're still my friends, I guess," Lowe said. Higgs said the vote gives him the ability to amend the province's fracking moratorium. "No further vote (needed) at this time, because we had a vote that accepted doing the shale gas fracturing in the region that we're focused on," Higgs told reporters. There was originally no mention of shale gas or fracking in the throne speech, but Higgs said when the Liberals introduced an amendment to maintain a moratorium imposed in 2014, the Tories had to respond with the subamendment — which was passed.  Opponents have raised concerns that shale gas development in the Sussex area could extend into neighbouring Albert County and possibly affect the city of Moncton's watershed. "The air pollution, the water pollution and the climate change gasses that escape from that don't follow political lines on a map. They are going to go where the air and water goes, and of course climate change affects the whole planet," said Jim Emberger, spokesman for the New Brunswick Anti-Shale Gas Alliance.

Mexico’s natural gas production declines as imports from the United States increase - Dry natural gas production in Mexico has fallen 38% since 2012 because of declining reserves, a low price environment, and limited exploration and production of new wells. Mexico’s dry natural gas production was 2.4 billion cubic feet per day (Bcf/d) in October 2018, according to Petróleos Mexicanos (PEMEX). This level is down 7% from year-ago levels, when production averaged 2.5 Bcf/d, and down 21% from two years ago, when production averaged 3.0 Bcf/d. President-elect Andrés Manuel López Obrador from the National Regeneration Movement, a Social Democratic party, is set to take office on December 1. One of his initiatives is to reevaluate Mexico’s current energy reforms, enacted in 2013 by the previous administration. Because of declining production and increasing demand, Mexico has had to rely on natural gas imports—from the United States by pipelines and liquefied natural gas (LNG) shipments by vessel—to meet demand. EIA’s data show that for the month of August, U.S. natural gas pipeline exports to Mexico grew 13% from year-ago levels as a result of several new pipeline projects that have entered service. U.S. pipeline exports to Mexico were 5.1 Bcf/d in August 2018 compared with 4.5 Bcf/d in August 2017. They comprised an average of 60% of Mexico’s natural gas supplies in 2018 through August, compared with 58% for the entirety of 2017. LNG imports are generally more expensive than pipeline natural gas imports because of the infrastructure required to liquefy and re-gasify natural gas and the relatively high transportation costs associated with using specialized LNG vessels. The President-elect has denounced the high cost of LNG.  LNG imports into Mexico are currently necessary to meet demand. The interior of Mexico relies primarily on LNG imports from the west coast’s Manzanillo terminal until domestic pipelines connecting to pipeline supplies from the United States are placed in service. More specifically, Wahalajara, the pipeline corridor connecting Permian natural gas from the Waha hub in western Texas to the population centers of Mexico City and Guadalajara, is currently scheduled to be in service in May 2019, according to S&P Global Platts.

Mexico's new president throws down gauntlet to oil majors (Reuters) - Mexico’s new president, Andres Manuel Lopez Obrador, said on Wednesday he would not cancel contracts issued to foreign and national oil companies by his predecessor but challenged them to pump oil quickly or no further oil fields would be offered. Lopez Obrador took office on Saturday, promising to increase the government’s role in the energy industry and roll back what he described as a 36-year neo-liberal era in which successive governments gradually opened up the economy. During the election campaign, he pledged to review the contracts issued under a landmark energy reform for any signs of corruption. He and his team have not said they have uncovered any wrongdoing in the contracts already awarded. “The contracts will not be canceled, so there won’t be a loss of confidence,” he told reporters at a daily news conference. Under Mexican law, the independent oil regulator known as the National Hydrocarbons Commission (CNH) runs the auctions, supervises the contracts and is the only entity that can cancel the contracts. How Lopez Obrador handles the energy industry will be one of the biggest challenges of his six-year term. He has promised to raise oil production from historic lows but has not fully clarified how, beyond promising more investment in the public sector. During the transition the former Mexico City mayor issued a series of abrupt policy changes that battered stocks, bonds and the peso. Despite the new president’s efforts to reassure investors in recent days, markets have yet to recover lost ground. The 65-year-old president, however, did not rule out inviting more private-sector investment to Mexico’s untapped deepwater fields in the Gulf of Mexico even as he sharply criticized the energy reform a few days before in his inauguration speech. He said companies that have already won contracts should hurry up with their investment and with pumping oil. “We can’t keep on giving out territory for the extraction of hydrocarbons if there is no investment and there is no production,” he said, adding he was opposed to companies “speculating” with the contracts. “We want them to demonstrate that they are going to invest and produce oil. We will make a decision based on results,” he said, adding that there will be a three-year “truce,” without giving further details. 

Lopez Obrador halts Mexico's upstream auction rounds for three years — Mexico will halt its hydrocarbon auction rounds by three years, new President Andres Manuel Lopez Obrador said Wednesday. "More than an ideological or political situation, it is a practical one," Lopez Obrador said at a webcast press conference. "With the contracts, not a single barrel of oil has been extracted, so we can't continue granting acreage for hydrocarbon extraction if there isn't investment nor production." Since the energy reform was enacted four years ago, contract-holding operators only invested 2% of Pemex's public investment over the same period, said Lopez Obrador, who took office December 1. Lopez Obrador's announced halt is a year longer than the two-year pause previously disclosed by the new Mexican energy secretary Rocio Nahle a week ago. Industry sources have told S&P Global Platts they are concerned the new president was ignoring the long-term nature of the upstream sector. The postponement of auction rounds will have a long-term, material impact on Mexico's oil and gas output, according to a transition report issued by the outgoing administration of Enrique Pena Nieto over the weekend. According to the report, by halting auction rounds by two years, Mexico's output will only reach 2.46 million b/d by 2027, not 3.07 million b/d. Similarly, if auctions continue, Mexico would produce 7 Bcf/d of natural gas by 2028, 640 MMcf/d more than if the lease sales are shelved for two years, it said. Lopez Obrador said he is going to respect the 111 upstream contracts Mexico has signed to date. "What we want is for the awarded companies to show they are going to invest and they are going to produce oil," he said. The great majority of blocks awarded to date are for early exploration acreage in offshore regions. Contract-holding companies will invest $46 billion in exploration and development activities through 2025, according to the report's forecast. As a result, private operators are expected to drill over 100 new exploration and development wells over the coming four years. Lopez Obrador has historically been an opponent of private investment in Mexico's energy sector and the country's recent historical energy reform. The new administration is concerned new operators won't invest and instead speculate on the acreage awarded to date, he added.

Peru oil pipeline remains under siege - State-owned PetroPeru is still struggling to access a segment of its 100,000 b/d northern crude pipeline that was severed by protesters last month. PetroPeru suspended the pipeline operations on 27 November. Canada's Frontera Energy, which uses the line to move crude from block 192 in the northern jungle, began to shut in wells on 3 December. Frontera accounted for roughly one-fifth of the 55,000 b/d of crude produced in Peru in November, according to regulator PeruPetro. Felipe Cantuarias, head of the Peruvian Hydrocarbons Society, said the conflict is not only suppressing production but also harming longer-term investor sentiment. Frontera's contract for block 192 expires in August 2019 and PetroPeru is looking for an investment partner. Cantuarias said the pipeline attack could keep interested companies away. The dispute is having environmental consequences as well. Aerial photos from drones show a large oil spill near the Mayuriaga indigenous community in the Loreto region. PetroPeru estimates that more than 8,000 bl of heavy crude has already spilled into the zone around the Morona pumping station along the 1,100km pipeline. The protests in the community began shortly after 7 October local elections. A group of residents targeted the pipeline in mid-November to call attention to alleged fraud, first by briefly kidnapping oil workers and then sabotaging the pipeline. President Martin Vizcarra's sent a team to negotiate, but protest leaders rejected the overture, demanding the presence of Peru´s prime minister Cesar Villanueva. More than 100 police officers have been dispatched to the area, but authorities are wary of sparking violence. A large-scale protest in June 2009 led to a deadly clash between indigenous protesters and police officers, killing 23 officers and 10 protesters.

Gazprom Export sells another 17 million cu m of Russian gas for Jan delivery — Russia's Gazprom Export sold 17 million cu m of gas on its Electronic Sales Platform on Monday for delivery in January at the German hub Gaspool, according to the latest auction update Tuesday. It brings the sales for Q1 2019 delivery to 117 million cu m since volumes for 2019 delivery were first offered on November 26.The total sold on the ESP since auctions started in late September is now 1.15 Bcm.   The relative success of the auctions for Q1 delivery -- the first six days of sales have seen 10% of total ESP sales -- may have prompted Gazprom Export to widen its offering as of Tuesday. The auction set to take place Tuesday offers for the first time volumes for January delivery to the Austrian hub of Baumgarten, or alternative Austrian delivery options at the Austrian virtual trading point and the Oberkappel and Arnoldstein interconnection points.

The EU Weighs Risks of Rising Gas Imports - The EU is facing the perfect storm of dwindling local supply, rising demand and increased dependence on Russian state-owned Gazprom for its supply of natural gas, as analysts and observers mull what, if any governmental action, must be taken. At issue is mainly how output from the Groningen field in the Netherlands will continue to decline, thus making the EU more dependent on both pipeline and liquid natural gas (LNG) from outside the EU borders. According to European Commission data, the EU imported 69 percent of its natural gas in by the first semester of 2018. Over 37 percent of the gas the EU member countries imported by the first semester 2018 came from Russia, while 33 percent and 11 percent came from Norway and Algeria, respectively. Excluding Turkey, the EU imported record high pipeline volumes from Norway and Russia, which increased to 116 billion cubic meters and 169, respectively, in 2017, according to data from Rystad Energy. “We expect Europe to increase its imports over the next years as the Groningen field will continue to decline driven by the announced scale backs,” Sindre Knutsson, senior analyst, gas markets, Rystad Energy. “Post 2020, both Norwegian and UK production is set to decline, strengthening this effect.” Russia aside, the risk of over-dependence on a single supplier is more important than the possible downsides of boosting gas imports overall, said Thierry Bros, senior research fellow, Oxford Institute for Energy Studies, said. Declining gas production in the region is coupled with rising demand, which obviously means the EU will need more gas from different sources — but that not necessarily mean the EU member states will be “overly dependent” per se, Bros said. “So yes, we will be more dependent, but perhaps the right question to ask is how can we make sure we achieve security of supply by vetting the suppliers,” Bros said. 

State blocks MP briefing on economic research critical of fracking - A briefing for West Australian government MPs on a report into the economics of fracking from think-tank The Australia Institute was cancelled at the last minute this week, after the report's authors had already flown to Perth. The Australia Institute says two of the report’s three authors were to brief MPs in Parliament House on Thursday, but the state government cancelled the meeting late on Wednesday. Premier Mark McGowan had announced on Wednesday the government would open up roughly five million hectares of WA to fracking, and on Thursday published an opinion piece saying more gas would pave the way for lower gas prices. But the Canberra-based research institute’s report, Economic impacts of unconventional gas in Western Australia, found fracking in WA would bring few jobs, little revenue and could instead increase gas prices. "WA’s moratorium on fracking has been overturned without consideration of economic impacts," it said. "Economic logic, and the lived experience of Queensland and the USA, shows the industry has an incentive to expand as much and as fast as possible. "This has a negative impact on communities, provides few jobs, little revenue and could increase domestic gas prices." Research director Rod Campbell said it was "surprising" the government would cancel the briefing, particularly at such late notice. "The WA government made no consideration of the social and economic impacts of fracking, even though it has been very disruptive in the eastern states," he said. "Our research shows that fracking does not bring jobs. The gas industry employs less people per dollar of output than any other industry. If employment growth is the policy goal, then investment in virtually any other industry is will deliver better results."  Mr Campbell pointed to Queensland, where he said there was a loss of 1.8 agricultural jobs for every new gas job created in rural areas: "gas jobs come at the cost of displacement of jobs in other industries." 

'Premier falls for myth of fracking'- protesters unite across WA -  To coincide with the release of the inquiry last week, Mr McGowan said the moratorium would be lifted on existing petroleum titles, that landowners and traditional owners would get veto rights, and royalties would go into a fund for renewable energy. The move ignited fury among anti-fracking campaigners who had hoped the government would not break its promise. More than 300 people protested the announcement at City Beach on Sunday morning fighting for a statewide ban on fracking, holding banners accusing the government of delivering a broken promise. Lock the Gate Mid West region coordinator Simone van Hattem said it was shocking that gas companies had once again been put ahead of regional communities’ wants. “Polling and community declarations show that people don’t want fracking, we’ve been fighting this for years, with 23 communities declaring themselves gasfield free,” she said.

U.S. Oil Majors To Break The Contract Of The Century - Since the oil industry started to recover from the 2014 price crash, U.S. supermajors ExxonMobil and Chevron have been re-aligning their global operations with their longer-term priorities, betting more on the shale patch at home and on several strategic projects worldwide. The companies are now looking to exit Azerbaijan, including the country’s biggest oil field and some pipeline infrastructure. This would mark the withdrawal of U.S. companies from the Azeri oil industry a full 25 years after western majors, including five U.S. firms, signed what is known as “the Contract of the Century” in the former Soviet republic.  As part of a re-prioritization of its global operations, ExxonMobil is looking to sell its minority stake in the giant Azeri oil field Azeri-Chirag-Gunashli (ACG) in the Caspian Sea, hoping to obtain as much as US$2 billion for its interest, Reuters reported on Tuesday, citing banking and industry sources. Chevron, for its part, is reviewing its global asset portfolio and has “decided to initiate the process of marketing, with a view to a potential sale, of our Chevron affiliate interests in the Azeri Chirag and Deep Water Gunashli (ACG) project and the Baku-Tbilisi-Ceyhan (BTC) Pipeline,” the company said in a statement to Reuters.Chevron has an 8.9 percent stake in the BTC pipeline, which carries oil from the ACG field and condensate from Shah Deniz across Azerbaijan, Georgia, and Turkey.Chevron also owns a 9.6-percent stake in the ACG oil field, and is currently the third-largest shareholder behind field operator BP and Azeri state firm SOCAR. Exxon holds 6.8 percent in the field, while the other foreign partners in the venture include the operator BP, INPEX, Equinor, TP, ITOCHU, and ONGC Videsh. Azeri-Chirag-Gunashli was Azerbaijan’s first offshore oil Production Sharing Agreement (PSA) contract with Western majors, and was hailed as “the Contract of the Century”. The country and a consortium of foreign oil companies signed a 30-year deal in 1994 to develop the field. Exxon was part of the initial group of companies that signed the contract with Azerbaijan, which also featured four other U.S. companies at the time— Amoco, Unocal, Pennzoil, and McDermott. Last year, the deal was extended to 2050.

Qatar to quit OPEC after more than 57 years, denies decision related to Saudi-led boycott -- Qatar announced plans to pull out of OPEC on Monday, just days before a crucial meeting between the influential oil cartel and its allies.Speaking at a news conference, Qatar's Energy Minister Saad al-Kaabi said the country would withdraw from OPEC on January 1, 2019, ending a membership which has stood for more than half-a-century.The decision comes after Qatar reviewed ways in which it could improve its global standing and plan its long-term strategy.While Qatar is one of OPEC's smallest oil producers, especially when compared to the likes of de facto leader Saudi Arabia, it is one of the world's largest producers of liquefied natural gas (LNG).The country's energy minister said Monday that the move represents a "technical and strategic" change, Reuters reported, and was not politically motivated.Qatar's Al-Kaabi also said the decision was not linked to the 18-month political and economic boycott of Doha.Since June 2017, OPEC kingpin Saudi Arabia — along with three other Arab states — has cut trade and transport ties with Qatar, accusing the country of supporting terrorism and their regional rival, Iran. Qatar denies the claims, saying the boycott hampers its national sovereignty.The Middle East-dominated group's final meeting of the calendar year is now expected to be Qatar's last. It has been an official OPEC member si nce 1961.

Qatar to leave OPEC and focus on gas as it takes swipe at Riyadh (Reuters) - Qatar said on Monday it was quitting OPEC from January to focus on its gas ambitions, taking a swipe at the group’s de facto leader Saudi Arabia and marring efforts to show unity before this week’s meeting of exporters to tackle an oil price slide. Doha, one of OPEC’s smallest oil producers but the world’s biggest liquefied natural gas (LNG) exporter, is embroiled in a protracted diplomatic row with Saudi Arabia and some other Arab states. Qatar said its surprise decision was not driven by politics but in an apparent swipe at Riyadh, Minister of State for Energy Affairs Saad al-Kaabi said: “We are not saying we are going to get out of the oil business but it is controlled by an organization managed by a country.” He did not name the nation. Al-Kaabi told a news conference that Doha’s decision “was communicated to OPEC” but said Qatar would attend the group’s meeting on Thursday and Friday in Vienna, and would abide by its commitments. He said Doha would focus on its gas potential because it was not practical “to put efforts and resources and time in an organization that we are a very small player in and I don’t have a say in what happens.” Delegates at OPEC, which has 15 members including Qatar, sought to play down the impact. But losing a long-standing member undermines a bid to show a united front before a meeting that is expected to back a supply cut to shore up crude prices that have lost almost 30 percent since an October peak. “They are not a big producer, but have played a big part in (OPEC’s) history,” one OPEC source said. It highlights the growing dominance over policy making in the oil market of Saudi Arabia, Russia and the United States, the world’s top three oil producers which together account for more than a third of global output. Riyadh and Moscow have been increasingly deciding output policies together, under pressure from U.S. President Donald Trump on OPEC to bring down prices. Benchmark Brent is trading at around $62 a barrel, down from more than $86 in October. “It could signal a historic turning point of the organization towards Russia, Saudi Arabia and the United States,” said Algeria’s former energy minister and OPEC chairman, Chakib Khelil, commenting on Qatar’s move. 

Factbox- Qatar exits OPEC to focus on LNG — Qatar's decision to become the first Middle East member country to leave OPEC and focus on its core strength of gas exports has stunned the cartel. Qatar's energy minister Saad Al-Kaabi said Monday that the gas-rich sheikhdom will exit the oil producer group on January 1 after 57 years of membership to concentrate on building its position as the world's top LNG supplier. OPEC is scheduled to meet on December 6-7 and potentially agree to cut output to support falling prices. S&P Global Platts Analytics forecasts a 1.2 million-1.4 million b/d reduction from October levels. "This suggests that Qatar may have an agenda to raise production whilst others in OPEC are curbing production, although Qatar's oil output has been very steady in recent years with limited prospects of increases (given maturing fields)," said Ehsan Khoman, Head of MENA Research and Strategy at MUFG. The following are the key facts around Qatar's energy repositioning.

• **Qatar Petroleum plans to raise its total production to 6.5 million b/d of oil equivalent (boe/d) in the next decade, from around 5 million boe/d at present.
• **A relatively small crude producer within OPEC, Qatar pumped just over 600,000 b/d last month. This accounts for less than 2% of OPEC's production, according to an S&P Global Platts survey. Its three main crude grades are Al Shaheen, Qatar Marine and Qatar Land, which are shipped almost exclusively to refiners in Asia/Far East.
• **Qatari condensate, natural gas liquids and non-conventional output -- mostly from the North Field - averaged around 1.24 million b/d in 2017. This is the second largest non-crude OPEC output behind Saudi Arabia, according to the International Energy Agency. The IEA estimates Qatar's non-crude liquids output will increase by 70,000 b/d to above 1.30 million b/d by 2023.
• **Adding in natural gas, supplied to its neighbors by pipeline and globally as LNG, which amounts to around 3.2 million boe/d, and the nation's output rises to the equivalent of 5 million boe/d.
• **Qatar is the world's largest LNG supplier, having exported 78.8 million mt of LNG in 2016. This accounts for more than 30% of a total global supply of 257.8 million mt. An increasing share of its production is being delivered to emerging Middle Eastern buyers, including Egypt and Jordan. Qatar has been exporting about 300 million cu m/d of LNG so far in 2018.
• **Doha plans to boost LNG output to 110 mt/year by 2024 by adding liquefaction capacity. In 2018, Qatar contracted 35.6% of its LNG to Europe, 56.9% to Asia Pacific, 21.6% to the Middle East, with the rest to North America and unknown destinations, according to S&P Global Platts LNG Navigator.
• **Saudi Arabia and the United Arab Emirates have maintained a political and economic boycott on Qatar since June 2017, accusing it of supporting terrorism. Doha denies the charges and says the boycott is aimed at impinging on its sovereignty. Qatar insists the move to leave OPEC is a strategic, not a political decision.
• **Qatar supplies 2 Bcf/d of gas to the UAE and Oman via the Dolphin pipeline. With a capacity of 3.2 Bcf/d, it is the only pipeline transporting natural gas across borders between Arabian Peninsula countries.
• **Qatar Petroleum plans to develop a new gas project in the southern sector of the North Field. The company has entrusted Qatargas to execute this megaproject. In January, Qatar merged its two LNG producers -- Qatargas and RasGas -- under a single operator, Qatargas.
• **Qatar's huge offshore gas and condensate field, known in that country as North Field, straddles its maritime border with Iran, which calls the field South Pars. Together, the two sides of the field contain as much as 1.4 Tcf of proven gas reserves, making it the world's largest conventional non-associated gas field. Abu Dhabi is reliant on North Field gas.

Qatar quitting OPEC means the oil cartel is now just a 'two-member organization,' oil analyst says --The future of OPEC is on shaky ground, an analyst told CNBC on Monday, after Qatar abruptly announced it would sever ties with the influential oil cartel after almost six decades. Qatar's Energy Minister Saad al-Kaabi said at a news conference Monday that Doha would leave OPEC on January 1, 2019. The decision comes just days before OPEC and its allies are scheduled to hold a much-anticipated meeting in Vienna, Austria. "This is big," Andy Critchlow, head of EMEA energy content at S&P Global Platts, told CNBC's "Squawk Box Europe." "In the 20 years that I've been covering OPEC, I can't think of anything that is bigger than this (and) that is a more systemic risk to the future of OPEC." Qatar's energy minister said the country would leave OPEC and focus on gas production. He denied the move was linked to an 18-month political and economic boycott of the country.Since June 2017, OPEC kingpin Saudi Arabia — along with three other Arab states — has cut trade and transport ties with Qatar, accusing the country of supporting terrorism and its regional rival Iran. Qatar denies the claims, saying the boycott hampers its national sovereignty.The Middle East-dominated group's final meeting of the calendar year is now expected to be Qatar's last. It has been an official OPEC member since 1961.Qatar is not a major oil producer when compared to other OPEC members. But, Critchlow said, when looking at the small Gulf country's total energy output, it is on course to produce more than 6 million barrels of oil equivalent per day by 2022. "This is a major supplier of energy to the world," Critchlow said, highlighting Qatar's status as one of the world's largest producers of liquified natural gas (LNG).He also underlined the importance of Qatar's tactful approach to negotiating energy policy with regional rivals in recent years, saying the country had often acted as a "diplomatic bridge" in the Middle East-dominated group. "OPEC really doesn't exist anymore, it is a two-member organization — Russia and Saudi Arabia,"

Qatar's OPEC Exit Shows Growing Sway of Moscow-Riyadh Oil Axis -- When Qatar shocked the oil world on Monday by announcing plans to quit the OPEC cartel after 57 years, its energy minister said the decision was made for "technical" reasons.That story didn’t last long. A few hours later, a leading member of the country’s ruling family used Twitter to blast the Organization of Petroleum Exporting Countries, a group where Qatar was once a diplomatic force despite being a relative minnow in oil production terms, accounting for less than 2 percent of total output."The withdrawal of Qatar from OPEC is a wise decision, as this organization has become useless and does not bring us anything," said former prime minister Hamad bin Jassim bin Jaber Al Thani. "It is just being used for purposes that harm our national interest.”His real target was Saudi Arabia, by the far the biggest producer inside OPEC. For decades the kingdom’s power was cloaked in a desire for consensus that saw the group through wars, sanctions and revolutions. But the more aggressive foreign policy pursued since the rise to power of Crown Prince Mohammed bin Salman drove Qatar out. "The longstanding Saudi-led economic and political boycott of Qatar is bound to have played a large part in the decision,"  As Qatar was finishing up plans to leave, Russian and Saudi officials were meeting in Moscow to hammer out a bilateral deal to extend the so-called OPEC+ agreement first struck in 2016. That pact turned around the oil market, but depended so heavily on the world’s two largest exporters that others felt like bystanders. "There is a sense of frustration prevailing, especially among small producers,” said Hossein Kazempour, Iran’s OPEC governor, who has represented Tehran’s interests at the cartel for decades and been a consistent critic of Saudi oil policy. Even the larger OPEC members can do little to influence decisions. Iran’s production is constrained by U.S. sanctions. Venezuela, a founder member and once a major force, has been undone by years of economic crisis and collapsing output. Libya’s oil industry has experienced prolonged turbulence since the fall of Muammar Qaddafi’s regime in 2011.

US legislation aimed at reining in OPEC's power over oil markets is a 'big concern,' Barclays says -- The risk of U.S. legal action against OPEC could prompt more members of the influential oil cartel to sever ties with the group, according to the head of energy markets research at Barclays.  Washington is reportedly considering legal claims against OPEC for allegedly manipulating the energy market.If passed, the proposed No Oil Producing and Exporting Cartels Act — more commonly referred to as NOPEC— could revoke the sovereign immunity that has long shielded members of the Middle East-dominated group from U.S. legal action."This is a big concern," Barclays' Michael Cohen told CNBC's "Squawk Box Europe" on Tuesday."I think it's something that could very easily weigh on the messaging of this meeting that is going to happen on Thursday and Friday," he added.The NOPEC bill would amend U.S. antitrust laws to allow OPEC members to be sued for collusion. OPEC controls production from member nations by setting output targets. Historically, former U.S. presidents have opposed NOPEC legislation. But, some external observers say President Donald Trump could give the bill fresh momentum after repeatedly attacking the group for keeping oil prices "artificially very high."

Iraq could be the next to break ranks with OPEC, analyst says --Compliance across OPEC is in question amid conflicting interests regarding oil production cuts and an abrupt withdrawal announcement from Qatar. While the tiny Gulf kingdom's departure is largely symbolic and unlikely to lead to further exits, a top energy analyst believes that if any country were to break ranks next, it would be Iraq. "I think in terms of all the OPEC countries, to me the one that stands out over the last six to eight months is Iraq," Michael Cohen, head of energy markets research at Barclays bank, told CNBC's "Squawk Box Europe" on Tuesday. "Iraq has been out of line with its target frequently... so if restrictions to cut were too stringent, Iraq might feel it in its best interest to no longer be a member of the organization," Cohen added. As the 15-member OPEC's second-largest oil producer and still suffering from swathes of debilitated infrastructure and poverty after years of war and sanctions, Iraq has an incentive to keep its taps turned on. According to the International Energy Agency, more than 90 percent of Iraq's government revenue comes from oil. In pointing to Iraq, Cohen cited the visits of Saudi oil minister Khalid al-Falih to Baghdad over the last two months, although he admitted he did not know the content of officials' conversations, which were not all made public. "We're not privy to the nature of those conversations, but clearly there is a lot of concern in terms of keeping Iraq to what it says," Cohen said.

Iraqi crude exports slump to seven-month low in November at 3.372 mil b/d — Federal Iraq's crude oil exports fell to 3.372 million b/d in November, the lowest since April this year, as loadings were affected by rough weather, according to a statement from the oil ministry released over the weekend. Not registered? Exports from the Persian Gulf terminals fell to 3.363 million b/d while loadings of Kirkuk crude transported through the Kurdistan-Turkey pipeline rose to 9,000 b/d, after pipeline exports from the Kirkuk fields resumed for the first time since October last year. November exports by the federal government of Iraq dropped by 106,000 b/d compared to October and were down by 211,000 b/d compared to August when they reached an all-time high of 3.583 million b/d. The fall in exports is attributed to a dip in loadings from its southern terminals as five days of rough weather during the month affected berthing and loadings. On November 09, shipments of Basrah Heavy and Basrah Light were halted, according to shipping sources. Loadings from Iraq's Khor Al-Amaya terminal continue to remain due to pipeline leaks and overall maintenance. Exports from this terminal have been suspended since the start of 2018. Federal Iraq saw its first exports from Ceyhan since it was suspended unilaterally by the semi-autonomous Kurdistan Regional Government in June 2017. But the government of Iraq and the KRG agreed a tentative deal in mid-November under which the latter has given assurances that it will transfer all federal Iraqi crude to storage tanks operated by North Oil Company at Ceyhan for Iraq's State Oil Marketing Organization to sell. Shipping sources told S&P Global Platts the accumulated quantity in the SOMO tanks had now reached 600,000 barrels and this will be pumped to the Turkish refinery at Kirikkale through the pipeline linking it to the terminal.

Putin Confirms No New Oil Production Cuts; Hopes For US, UK Detente - Russian President Vladimir Putin praised Trump, pummeled Poroshenko, and poured cold water on oil market bulls' hopes in a statement following the G-20 meetings. Putin began by confirming what White House Press Secretary Sanders noted earlier - he and Trump had spoken broefly on the sidelines of the G-20 and discussed the Ukraine incident. Putin added that "Trump is not afraid of [him]" and expressed "pity that he could not have a full format meeting with President Trump" pointing out that "Russian needs to maintain dialog with US," and "hopes to meet [Trump] when US is ready." Putin also mentioned Russia's relationship with the United Kingdom, noting that "UK is an important partner for Russia" adding that he "hopes to overcome differences, to normalize relations with UK in the near future." But perhaps the most important aspect of Putin's comments - related to markets - was his statement on crude production cuts. Russian news service RIA noted earlier that Putin and Saudi Arabian Crown Prince Mohammed bin Salman (MbS) discussed oil, haven’t taken concrete decisions yet, including production cuts, Kremlin’s foreign police aide Yuri Ushakov said. And Putin just confirmed that there are no additional cuts over and above the OPEC+ Vienna Accord levels currently in place:

China data: Russia tops the supplier list to independent refineries in Nov  — Russian crude oil shipments by China's independent refineries rose 12.8% on month to a historical high of 2.84 million mt in November, once again the top supplier for the sector, S&P Global Platts monthly survey showed. Meanwhile, Russian ESPO imports hit a fresh record high of around 2.47 million mt last month, up 28.9% on month. This accounts for about 87% of the total imports from Russia, with the rest being Urals and Sokol.Those ESPO barrels were imported by 14 buyers, compared with 1.92 million mt of ESPO imports by 12 independent refineries in October. ESPO crude loaded from Far East Russia -- which has the shortest voyage to China and has good yields of gasoil -- is usually the first choice for Shandong independent refineries when considering imports. However, with the buying interest slowing down since October, premiums for the grade have fallen recently, according to market sources.  Premiums for ESPO against ICE Brent Futures on a DES Shandong basis for end January loading cargoes this week were around $2.8-3.0/b, down from around $3-3.5/b in early November, independent refinery sources said. The ESPO crude is a good feedstock for producing low vapor gasoil to meet winter demand, due to its low pour point. The heavy inflows from Russia in November have pushed up the total imports from the country by 7.4% on year to 17.76 million mt over January-November.This is low compared with a jump of 93.2% for imports from Brazil. Imports of Brazilian crudes have increased to around 14.7 million mt over January-November, making it the second top supplier to China's independent refineries.Meanwhile, Brazil's Petrobras will start to export a new grade of crude oil, known as Buzios from end 2018. Cargoes of the grade is likely to arrive in China end January, according to market sources. Buzios is a medium heavy crude, rich in middle and heavy distillates, with an API gravity of around 28.4 degrees. The sulfur content is around 0.31%. "The grade has similar quality as Lula, but is offered at relatively lower premiums as it is new in the market," a trader source said. Lula was the top grade imported by China's independent refineries from Brazil, totaling 9.7 million over January-November, up 190.2% on year. But imports from traditional suppliers Angola and Venezuela dropped by 3.6% and 20%, respectively, from 2017 over the same period.

China oil traders await directions from Beijing to resume US crude purchases — Chinese state-owned refiners were awaiting more instructions from Beijing before resuming US crude purchases while commodity trading houses began evaluating their options in the physical market after the trade agreement signed over the weekend. Oil traders were cautious about resuming US crude supply to China due to market uncertainties and concerns over a narrow trading window until March, but market participants were keen to exploit the opportunity, several traders and refinery executives said, requesting anonymity. "Theoretically, imports from the US are unlikely to resume immediately due to the long trading cycle between the two countries, and the three-month window from December 1 is too short," a Beijing-based crude oil trader said, citing risks of cargoes being stranded on the water. But the Chinese government was likely to nudge state-owned companies to increase US crude imports to express sincerity following the trade deal, he added. State-owned oil refineries were major consumers of US crude, purchased largely through Unipec, the trading arm of Sinopec, China's largest refiner by capacity. Their crude procurement strategy depends on both the government's mandate and commercial requirements. China's crude oil imports from the US fell to zero in October for the first time since February 2017, latest data released by the General Administration of Customs showed. November volumes also remained thin. As of Tuesday afternoon, the VLCC New Courage, carrying about 1 million barrels of US-origin Southern Green Canyon crude, was waiting for a berth in Lanshan port of Rizhao city in the eastern Shandong province, according to traders. New Courage departed the US Gulf Coast in late September and loaded a second time at Aruba in the Mediterranean in early October, according to S&P Global Platts vessel tracking software cFlow. It discharged part of its cargo at Zhoushan port in eastern Zhejiang province, before heading to Lanshan.

China's Unipec to buy U.S. oil after Xi-Trump tariff truce (Reuters) - Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March after the Xi-Trump deal at the G20 meeting reduced the risk of tariffs being imposed on these imports, three sources with knowledge of the matter said. The sources told Reuters that Unipec - trading arm of state refiner Sinopec (600028.SS) - is looking to import U.S. oil by March 1, which marks the end of a 90-day negotiating period agreed by the leaders of the world’s two biggest economies. China’s crude oil imports from the United States ground to a halt in October as this year’s trade war between the two countries escalated. “Chinese buyers who want to buy U.S. crude will rush to import the oil during this window,” a senior executive from Asia’s largest refiner Sinopec said, adding that the oil has to arrive in China before March 1. “Oil prices are low, so it makes economic sense to store some crude as commercial inventories,” said the executive, who asked not to be named. Sinopec said it has a policy not to comment on specific trade deals. Unipec did not respond to an email. Oil prices have slumped by around a third since early October amid an emerging glut, triggering expectations that the Organization of the Petroleum Exporting Countries (OPEC) will agree to supply cuts at a meeting this week. [O/R] It was unclear how much oil Unipec - China’s largest crude oil importer - would order from the United States, but one of the sources said the company could lift a record volume of oil in January. China’s previous record for a month came in January 2018, when it imported about 472,000 barrels per day (bpd) from the United States, according to Chinese customs data. Before the trade dispute erupted in mid-2018, China had become the largest importer of U.S. crude. China imported on average 325,000 bpd of U.S. crude in the first nine months of 2018 before imports fell to zero in October, customs data shows. 

Iran won’t discuss its OPEC quota while under sanctions: Iran will not discuss its OPEC quota as long as it is under sanctions, Iranian Oil Minister Bijan Namdar Zanganeh said on Wednesday. “As long as Iran is under sanctions, the Islamic Republic’s OPEC quota will not be discussed with anyone,” Zanganeh said, speaking ahead of a meeting of the Organization of Petroleum Exporting Countries in Vienna which is due to debate oil production cuts, Reuters reported. OPEC meets on Thursday, followed by talks with allies such as Russia on Friday, amid a drop in crude prices caused by global economic weakness and fears of an oil glut due largely to a rise in US production. The exporters’ group and its allies, known as OPEC+, see themselves at the same juncture they did in 2016. However, this time there is less certainty of a consensus to cut amid the exit of Qatar on January 1. Qatar was on board in 2016 when OPEC agreed to reduce inventories by slashing 1.2 million barrels per day out of its production. On top of that, allies cut 600,000 bpd. Four sources said OPEC+ is working toward a deal to reduce oil output by at least 1.3 million barrels per day. The sources added that Russia’s resistance to a major cut was so far the main stumbling block. Qatar said on Monday it will quit OPEC to focus on gas in a swipe at Saudi Arabia, the de facto leader of the oil exporting group which is trying to show unity in tackling an oil price slide.

The price of black gold - Ever since the former president of the United States of America, Richard Nixon, delinked the US dollar from gold, the currency, paradoxically enough, turned into the dominant means of payment in world trade. The details of that story were discussed in this column and do not call for repetition. Suffice it to say that the most significant impact of Nixon reneging on the ‘gold standard for the dollar contract’ was felt in the world oil market. Producers began not only to quote the price of crude oil in units of dollars, but also to demand that US dollars be actually used to compensate them for their oil supply. It is against this backdrop that Donald Trump’s sanctions on Iran have to be viewed. The sanctions will not only prevent Iran from selling oil against dollars, but also put a stop to other nations doing business with the country. Amongst others, several European countries have been affected by Trump’s edict. These are France (in the automobile and aviation sectors and in investment in the South Pars gas field in the Persian Gulf), Germany (in automobiles), Italy (in railways and ship building) and possibly others. Why should economically advanced countries such as France and Germany be worried about the sanctions? The answer is clear. Like any other industrialized country, they need oil as well to run their economies and the US dollar is pretty much the only currency with which oil has to be paid for. The commanding position of the US lies in the fact that it has the power to instruct banks and other financial institutions to refuse to sell dollars. This means that world-renowned firms like Airbus and Volkswagen will lose access to dollar trade, which in turn will have ugly consequences for France and Germany, since they need to use the dollars earned by their industries to purchase oil to keep the same industries running. It is no wonder, therefore, that these countries retracted from their business deals with Iran with alacrity.

Oil just had its worst month in a decade, and its next move may depend on Saudi Arabia and Trump -- Last month was crude oil's worst in a decade, battered by supply concerns and global politics.West Texas Intermediate, or U.S. crude, lost 21 percent in November, tumbling to its lowest level in a year and logging its worst performance since October 2008.After sinking below $50, the days ahead could bring some relief, according to Helima Croft, global head of commodity strategy at RBC Capital Markets. This week, the cartel of oil producing nations known as OPEC will make a decision on future levels of production that may determine where prices head in the near term."What we really need to get on the path to $60 is we need to see a substantial cut coming out of OPEC... at the Thursday meeting," Croft told CNBC's "Futures Now" on Thursday. "We anticipate that OPEC will pull a significant quantity of barrels, at a minimum a million barrels." OPEC, which includes top producer Saudi Arabia, is set to meet in Vienna on Thursday. Along with non-OPEC member Russia, oil producing countries are expected to agree to a supply cut to counteract tumbling oil prices.  "The one cloud over this is really Saudi Arabia and their relationship with President Trump," added Croft. "President Trump has made the explicit ask to Saudi Arabia to keep the taps open, so at the eleventh hour that they potentially try to force the Saudi crown prince to keep the barrels on the market," she said. "I think that's the big concern." Croft said that Saudi Arabia will probably act in their "economic self-interest" and agree to a production cut at the OPEC meeting — though they will have to walk a tightrope to avoid offending Trump. The International Monetary Fund estimates Saudi's breakeven point at $88 a barrel for Brent oil, which is almost half of current levels.If OPEC's smaller producers join Saudi in agreeing to a production cut, crude oil could surge, Croft told CNBC. "We heard that Russia will probably go along and then there are these countries that have exemptions – Libya, Nigeria, will they participate in a cut?" she asked. "If they do something higher around 1.5 million, I think that's a catalyst on Friday to start moving higher," explained Croft.

Hedge funds finish selling crude but increasingly bearish on diesel (Reuters) - Hedge fund managers had largely completed the recent wave of selling in crude oil futures and options by the middle of last week but there were heavy sales of derivatives linked to middle distillates. Hedge funds and other money managers were net sellers of 41 million barrels in the six most important futures and options contracts linked to petroleum prices in the week to Nov. 27 (https://tmsnrt.rs/2Rxg24a).Funds have been net sellers of 649 million barrels in the last nine weeks, the largest reduction over a comparable period since at least 2013, when the current data series began.But there were clear signs the wave of selling was ending, at least in crude, with combined sales in Brent and WTI of just 12 million barrels last week, the lowest weekly total since September.Portfolio managers sold 14 million barrels of Brent, but for the second week running they bought NYMEX and ICE WTI, boosting holdings by 2 million barrels.Managers who shorted NYMEX WTI between late August and early November covered some open positions, with shorts down to 78 million barrels from a recent peak of 94 million on Nov. 13. As the selling pressure has eased, oil prices have stabilised, suggesting the market may have found a temporary floor around $50 for WTI and $60 for Brent. But there were continued heavy sales of futures and options contracts linked to middle distillates such as gasoil and diesel, in a worrying sign for the global economy.

Heavy Sweet Oil Rises as Unlikely Star - Dense, low-sulfur oil, known in industry parlance as heavy sweet crude, is fetching increasingly stronger prices relative to benchmark lighter grades. For example, Angola’s Dalia traded at just 10 cents below Brent oil last month, up from a discount of $4.50 in January 2016, according to S&P Global Platts. Australian Pyrenees traded at $4 more than Brent, its widest premium in more than three years, according to trading sources. The shifting values are indicative of the powerful forces that are pulling apart long-held relationships between oil prices around the world, in particular the U.S. shale boom and an overhaul of marine fuel regulations. Heavy sweet crude has come into favor because it yields a lot of diesel and low-sulfur fuel oil when it’s refined. Those fuels are seen coming into heavy demand as new rules due to take effect in 2020 mean ships will use them more as an alternative to high-sulfur fuel oil, which is produced readily from sour crude. What’s more, lighter prices are under pressure because of a glut of U.S. shale oil and the gasoline it yields in abundance.  “What’s really in the sweet spot are heavy sweet crudes, which is offshore Angola and Brazil,” Martijn Rats, an analyst with Morgan Stanley, said in an interview. “Those should trade very strongly, but it’s a relatively small part of the oil market.” Only about 500,000 barrels a day of heavy sweet oil are exported globally, accounting for just 1 percent of total seaborne trade, according to Matt Smith, director of commodity research at ClipperData LLC. Angola, Brazil and Chad are among the biggest sources. Driving the focus on crude quality is the spread between the two most prevalent oil products, gasoline and diesel, which historically have had similar values. Gasoline futures in New York tumbled in November to nearly $25 a barrel less than diesel, the largest discount since 2014.Most of the growth in crude production in recent years has come in the form of light shale oil in the U.S., while heavier exports from Iran and Venezuela are in decline because of sanctions and political disarray. That’s helped boost gasoline production and sent stockpiles of the fuel in the U.S. to a record seasonal high.

Oil prices surge after US, China agree trade war ceasefire --Oil prices jumped by more than 5 percent on Monday after the United States and China agreed a 90-day truce in a trade dispute, Canada's Alberta province ordered a production cut, and as exporter group OPEC looked set to reduce supply.U.S. light crude oil rose $2.92 a barrel to a high of $53.85, up 5.7 percent. The contract last traded $2.12, or 4.2 percent, higher at $53.05.Brent crude rose 5.3 percent or $3.14 to a high of $62.60. It was up $2.36, or 4 percent at $61.71 shortly after 9 a.m. ET (1400 GMT).China and the United States agreed during a weekend meeting in Argentina of the Group of 20 leading economies not to impose additional trade tariffs for at least 90 days while they hold talks to resolve existing disputes.The trade war between the world's two biggest economies has weighed heavily on global trade, sparking concerns of an economic slowdown.Crude oil has not been included in the list of products facing import tariffs, but traders said the positive sentiment of the truce was also driving crude markets.  Oil also received support from an announcement by the Canadian province of Alberta that it would force producers to cut output by 8.7 percent, or 325,000 barrels per day (bpd), to deal with a pipeline bottleneck that has led to crude building up in storage."From Argentina to Alberta, the oil market news is about supply curtailments," said Norbert Rücker, head of commodity research at Swiss bank Julius Baer. "A brightening market mood will likely extend today's price rally in the very near term."OPEC meets on Dec. 6 to decide output policy. The group, along with non-OPEC member Russia, is expected to announce cuts aimed at reining in a production surplus that has pulled down crude prices by around a third since October. "Markets are expecting to see a substantial production cut after Russian President Vladimir Putin said his country's cooperation on oil supplies with Saudi Arabia would continue," Within OPEC, Qatar said on Monday it would leave the producer club in January. Qatar's oil production is only around 600,000 bpd, but it is the world's biggest exporter of liquefied natural gas (LNG). The Gulf state has also been at loggerheads with its much bigger neighbor Saudi Arabia, the de facto OPEC leader.

Oil Surges on US-China Trade Truce, OPEC Cut Speculation, Alberta Output Pledge - Global oil prices surged Monday, lifting the shares of major producers around the world, as investors bet a trade truce between the U.S. and China, as well as possible production cuts from OPEC, will reverse the market's steep autumn decline heading into 2019. Crude bulls were also supported by news that the producers in the Canadian province of Alberta, which ships the bulk of its oil to the United States, to trim output by around 325,000 barrels, nearly 9% of its daily total, starting next year in order to address a bottleneck that has tested storage capacity and troubled government officials concerned over "fiscal and economic insanity", according to Premier Rachel Notley. However, some of the markets gains were pared slightly upon news that Qatar, a relatively small OPEC member that produces about 600,000 barrels of crude per day, will leave the cartel on January 1.That said, both Saudi Arabia and Russia, an non-OPEC state that nonetheless co-operates frequently with the group's agenda, agreed over the weekend G20 to push for an extension of current production cuts into 2019, adding further upward pressure to prices ahead of their two-day meeting that begins Thursday in Vienna."Regarding oil prices and our agreements. Yes, we have an agreement to extend the deal," Russia President Vladimir Putin told reporters Saturday in Argentina. "No final agreement has been reached on output, but we will work on this together with Saudi Arabia." Brent crude contracts for January delivery, the global benchmark, jumped 4% on Monday changing hands at $61.81 per barrel. West Texas Intermediate contracts for the same month, which are more tightly linked to U.S gas prices, rose 4.63% to $53.29 per barrel.

Oil Jumps Most Since June on Saudi-Russian Pact, Trade War Truce - Oil surged the most in more than five months as Saudi Arabia and Russia extended a cooperation pact and U.S.-China trade tensions cooled.Unprecedented supply cuts in Canada also drove prices higher.Futures in New York advanced 4 percent Monday, bouncing back from the worst monthly loss in a decade. Although Russia and Saudi Arabia have yet to confirm any fresh cuts, their agreement opened the door for a deal when OPEC and allied producers meet this week in Vienna.Crude prices plunged over the past two months on fears of a global oversupply. This weekend’s agreement between Saudi Crown Prince Mohammed bin Salman and Russian President Vladimir Putin buoyed those hoping for an output cut enough to shrug off more ambiguous signs on Monday, including Qatar’s announcement that it would quit OPEC.“There’s going to be a cut, I think it’s going to be more than people expected, and I think the market realized that today,” said Bob Iaccino, chief market strategist at Chicago-based Path Trading Partners. For a time, oil pared gains on Monday after an OPEC advisory panel was said to make no recommendation for action and people familiar with negotiations said Russia and the Saudis still haven’t agreed on details of a cut. Iranian OPEC Governor Hossein Kazempour Ardebili, meanwhile, raised doubts about whether producers can reach unanimity in Vienna. Over the weekend, U.S. President Donald Trump and his Chinese counterpart Xi Jinping called a pause in their trade dispute after a dinner at the G-20 event. Alberta Premier Rachel Notley followed on Sunday by announcing the Canadian province would order local producers to curb production by 325,000 barrels a day starting next month.

Oil Rides Biggest 2-Day Gain Since June  | Rigzone - Oil headed for its biggest two-day advance since June as concerns over a supply glut eased on hopes that OPEC and its allies will strike a deal to stabilize the market. Futures in New York rose as much as 1.5 percent, extending Monday’s 4 percent gain. An agreement between Saudi Arabian Crown Prince Mohammed bin Salman and Russian President Vladimir Putin over the weekend raised the possibility of an output accord when OPEC and its partners meet in Vienna on Dec. 6. Prices also received a boost after Canada’s Alberta province announced plans to cut production by 325,000 barrels a day. Crude is rebounding from the worst monthly drop in a decade on growing optimism the world’s top oil exporters will tackle the risk of a glut. Still, Moscow and Riyadh have yet to agree on details, including the size of potential output cuts. A U.S.-China trade truce also sparked bullish sentiment across global markets, pulling the American benchmark out of “oversold territory” for the first time in almost a month. “Even if Russia shows a willingness to refrain from ramping up production, that’s a positive sign for Saudi Arabia and the rest of OPEC,”   “Oil’s also getting a boost from the easing trade tensions between America and China, as well as Canada’s output cuts which will lift Western Canadian Select’s discount to the U.S. marker.” West Texas Intermediate for January delivery rose as much as 77 cents to $53.72 a barrel on the New York Mercantile Exchange, and was at $53.51 at 7:47 a.m. in London. Futures jumped $2.02 to close at $52.95 on Monday. Total volume traded Tuesday was about 28 percent above the 100-day average. Brent for February settlement gained 68 cents to $62.37 a barrel, after closing at $61.69 on London’s ICE Futures Europe exchange on Monday.

Oil prices extend gains on expected OPEC-led supply cuts -- Oil prices rose more than 2 percent on Tuesday, extending gains ahead of expected output cuts by producer cartel OPEC and a mandated reduction in Canadian supply. International Brent crude oil futures rose 58 cents, or nearly 1 percent to a high of $62.27 by 9:26 a.m. ET (1426 GMT). The contract earlier rose as high as $63.58. U.S. West Texas Intermediate (WTI) crude futures were 21 cents higher at $53.16, off a session high of $54.55. Both benchmarks climbed around 4 percent on Monday after U.S. President Donald Trump and Chinese President Xi Jinping agreed at a meeting of the Group of 20 industrialized nations (G-20) to pause an escalating trade dispute. "The market seems positively oriented following the G-20 developments and heading into the OPEC meeting on Thursday,"   "A commitment by Russia to cooperate with Saudi Arabia and achieve an agreement at the next OPEC meeting has certainly lifted spirits," he added. The Middle East-dominated OPEC will meet on Thursday in Vienna to agree future output and will discuss strategy with other producers outside OPEC, including Russia. OPEC and its allies are working towards a deal to reduce oil output by at least 1.3 million barrels per day (bpd), OPEC sources have told Reuters, adding that they were still talking to Russia about the extent of its production cuts. "We expect OPEC to follow suit and agree to a production cut in Vienna this coming Thursday," U.S. bank Goldman Sachs said in a note to clients.

Oil Makes Gains Ahead Of OPEC Summit - - Oil gained for a second day in a row on Tuesday, pushed up by a trade war truce, pending OPEC+ production cuts, and surprise mandatory output reductions in Canada. . The U.S. and China agreed to delay their trade war, although both sides have sold the temporary agreement differently to their home audiences. Trump played up a lowering of Chinese tariffs on U.S. autos, something that China did not confirm they agreed to. Still, global markets welcomed the ceasefire, even if it only kicks the can down the road. The U.S. will hold off on the scheduled increase in tariffs from 10 to 25 percent that was set to take effect in January. The two sides now have 90 days to reach an agreement.  OPEC’s production was flat in November at 33.13 million barrels per day, down a slight 10,000 bpd from the month before. Saudi output exceeded 11 mb/d for the first time in history, but those gains were offset by a declines elsewhere, including 230,000 bpd from Iran and 160,000 bpd from Iraq.   Russian President Vladimir Putin said over the weekend at the G20 summit that Russia has agreed to go along with a production cut in Vienna. The size of the cut is undecided at this point. Saudi Arabia wants something more aggressive, but is also wary of angering Washington. Most analysts predict a middle-of-the-road production cut. “Given Saudi Arabia’s need to balance a host of conflicting interests, our basecase scenario is a de-facto Saudi-led cut with Russian participation, but a flexible agreement that shies away from specific targets,” Verisk Maplecroft said in a note to clients. Saudi oil minister Khalid al-Falih said on Tuesday that it was still “premature” to lay out the specifics of the deal. Alberta required its oil industry to lower output by 325,000 bpd beginning in January to erase the stockpile glut and ease the strain on the region’s takeaway capacity. The move is intended to boost WCS prices – and by all accounts, the move seems to have worked. WCS jumped this week. According to Scotiabank, WCS discounts could average just $20 per barrel in the first quarter of 2019, down sharply from a more painful $29-per-barrel discount had the policy not been enacted.

Oil prices advance 1% on expectations of OPEC-led output cuts: Oil prices rose by more than one percent on Tuesday, extending bigger gains from the previous day amid expected OPEC-led supply cuts and a mandated reduction in Canadian output. US West Texas Intermediate (WTI) crude futures CLc1 were at $53.53 per barrel at 0742 GMT, up 58 cents, or 1.1 percent, from their last close, Reuters wrote. International Brent crude oil futures LCOc1 were up 70 cents, or 1.1 percent, at $62.39 per barrel. Both crude benchmarks climbed by around four percent the previous session after Washington and Beijing agreed a truce in their trade disputes and said they would negotiate for 90 days before taking any further action. “Oil prices look likely to move up gradually this week as investors anticipate supply cuts by OPEC+,” said Benjamin Lu of Singapore-based brokerage Phillip Futures, referring to the producer group and Russia. The Middle East-dominated Organization of the Petroleum Exporting Countries (OPEC) will on Dec. 6 meet at its headquarters in Vienna, Austria, to agree a joint output policy. OPEC will also discuss policy with non-OPEC production giant Russia. “We expect OPEC to follow suit and agree to a production cut in Vienna this coming Thursday,” US bank Goldman Sachs said in a note to clients. “A cut in OPEC and Russia production of 1.3 million barrels per day (bpd) will be required to reverse the ongoing counter-seasonally large increase in inventories,” the bank said. It added that it expected a joint effort by OPEC and Russia to withhold supply to push Brent oil prices “above the mid-$60 per barrel level”. 

Oil ends modestly higher after recent rally in lead-up to expected - Oil futures ended Tuesday with a modest gain after a strong start to the week ahead of an OPEC meeting that is expected to result in a production cut.That expectation was strengthened after Russian President Vladimir Putin said over the weekend that he and Saudi Crown Prince Mohammed bin Salman agreed to extend reductions while meeting on the sidelines of the G-20 summit. They formally meet later this week, with oil prices down some 30% from the four-year high struck in early October. The CME’s OPEC Watch Tool on Tuesday afternoon, however, pegged the probability of a “small production cut” at the Dec. 6 meeting at 59.2%—down from the 65.4% on Tuesday morning. The chance of little or no change to output was at 40.8%. West Texas Intermediate crude for January delivery rose 30 cents, or 0.6%, to settle at $53.25 a barrel, pulling back from a high of $54.55. It surged 4% Monday on the New York Mercantile Exchange. The contract tumbled 22% in November, the biggest monthly fall since October 2008.  Global benchmark February Brent crude tacked on 39 cents, or 0.6%, to $62.08 a barrel after a nearly 4% advance a day earlier. January Brent, which expired on Friday, also marked a 22% decline for November, and the biggest monthly percentage drop in 10 years.Russia’s Putin made the announcement to extend output cuts in a news conference late Saturday, after a meeting with the Saudi prince, though he said there was no final decision on the amount. The comments came ahead of the Thursday-Friday OPEC meeting in Vienna. Plans for a broad output curb isn’t a done deal, analysts caution. “There has been some confusion about who is supporting the cut and the amount of possible reductions, with reports even this morning that the decision could be delayed if Russia doesn’t agree to cut substantially,” said Craig Erlam, senior market analyst at Oanda. “Coming in a week in which Qatar has announced it end its 57-year association with OPEC, it does suggest that the cohesion that made the last cut so successful is weakening.”

Oil prices wobble in choppy trade ahead of key OPEC meeting - Oil pared gains in choppy trade on Wednesday ahead of a meeting of the world's biggest exporters who will discuss cutting output to help shore up prices and curb excess supply.OPEC, Russia and other producers meet in Vienna this week to discuss a potential cut in production, although it faces pressure from U.S. President Donald Trump not to reduce output."Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!" Trump wrote on Twitter on Wednesday.OPEC is keen to avert the kind of build-up in global oil inventories that sent prices tumbling for more than a year and a half from late 2014. At the start of 2016, benchmark Brent was trading below $30 a barrel.Brent crude futures were up 24 cents $62.32 a barrel by 12:21 p.m. ET, off a session high of $63.39 and bouncing from a low of $60.80. U.S. West Texas Intermediate crude futures rose 20 cents to $53.45. Brent is still well below a peak in October above $86.

WTI Extends Loss After Surprise Crude Build - Amid doubts over global economic growth (and demand) as well as rising Russia-Saudi decisions on supply (and Alberta production cuts), WTI has rebounded modestly post-trade-truce, holding around $53 (despite today's carnage in stocks).In an interview Tuesday, Saudi Energy Minister Khalid Al-Falih walked back recent calls for 1 million barrels of cuts to daily output by OPEC and other major exporters.“It’s premature to say what will happen” in Vienna, Al-Falih said in an interview at a United Nations climate-change conference in Poland. “We need to get together and listen to our colleagues, hear about their views on supply and demand and their projections of their own countries’ production.”The note of caution combined with news that the Saudis had slashed the pricethey charge to Asian customers to dent traders’ optimism.“It’s not a good price signal,” said Bob Yawger, director of futures at Mizuho Securities USA in New York. “Either demand is bad or all the talk about cutting production is just lip service.” API :

• Crude +5.36mm (-900k)
• Cushing +1.44mm
• Gasoline +3.61mm
• Distillates +4.32mm

API reports a surprise 5.36mm barrel build in crude inventories (expectations were for a 900k draw). The 11th consecutive crude build in a row prompted a drop in WTI prices, back below $53... Additionally builds across Cushing and products is not positive.

Trump says he hopes OPEC will be keeping oil flows 'as is' -- President Donald Trump urged OPEC to continue pumping oil at current high levels on Wednesday, one day before the group of petroleum exporting nations is expected to agree to cut output. "Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!" Trump tweeted. OPEC meets on Thursday in Vienna, Austria, and is reportedly aiming to remove at least 1.3 million barrels per day from the market. The group began managing crude supply in partnership with Russia and several other nations last year in order to end a punishing downturn in oil prices.The alliance's policy of capping output has drawn Trump's ire because the president wants fuel costs to fall at U.S. gas stations. Throughout the year, Trump has publicly blamed OPEC for rising oil prices and ordered the group to take measures to reduce the cost of crude.In June, OPEC agreed to increase output after the alliance removed more barrels from the market than it had intended. Top OPEC producer Saudi Arabia, a close U.S. ally, is responsible for most of the surge in supply since midyear. The kingdom's output reportedly surpassed a record 11 million bpd in November. At the time OPEC agreed to hike output, the Trump administration was preparing to restore sanctions on Iran, the group's third-biggest producer. That raised concerns about supply shortages and pushed up prices throughout much of the year. However, OPEC now expects the oil market to swing into oversupply. The group is trying to prevent a repeat of 2014, when a global crude glut crushed oil prices. The cost of crude has collapsed more than 30 percent over the last two months, putting pressure on budgets in oil-exporting nations. Analysts say current low prices will likely cause American oil drillers to issue conservative spending plans for 2019 and potentially return less money to shareholders. Still, Trump urged Saudi Arabia to drive prices even lower last month. The kingdom now faces the challenge of pushing through production cuts without alienating Trump.

Does Trump control OPEC policy? A critical meeting is set to test the energy markets' 'biggest fear' --Oil markets are deeply concerned about the power President Donald Trump has over some of the world's largest crude producers, energy analysts told CNBC on Wednesday, ahead of a much-anticipated meeting between OPEC and non-OPEC members.The influential oil cartel and its allied partners are gathering in Vienna, Austria, this week, with the aim of reaching an accord to deliver a fresh round of supply cuts.But, even with the oil market near the bottom of its worst price plunge since the 2008 financial crisis, few external observers expect the energy alliance to engineer a succinct production quota that satisfies oil traders."This is the first time I think we have come into an OPEC meeting that is so political. We literally don't know how they are going to message this," Amrita Sen, chief oil analyst at Energy Aspects, told CNBC's Hadley Gamble in Vienna."Given how fragile the market is, the market's biggest fear is that it doesn't matter whether OPEC understands fundamentals, it is Trump that is controlling OPEC policy.""And if they are unable to communicate what they are going to do very clearly — which I think there is a big risk that they can't — the market is going to sell-off because their biggest fears are going to get confirmed," Sen said.Crude futures have fallen more than 28 percent since climbing to a four-year peak in early October, amid intensifying oversupply concerns and worries over slowing economic growth.This collapse has ratcheted up the pressure on OPEC and its allied partners to orchestrate another round of production cuts at its final meeting of the calendar year. International benchmark Brent crude was trading at $62.04 a barrel at around 10:50 a.m. London time (5:50 a.m. ET), down around 0.1 percent, while West Texas Intermediate (WTI) stood at $53.27, little changed from the previous session.

US crude slips 36 cents, settling at $52.89, ahead of key OPEC meeting -- Oil slipped in choppy trade on Wednesday ahead of a meeting of the world's biggest exporters who will discuss cutting output to help shore up prices and curb excess supply. Brent crude futures were down 24 cents $61.84 a barrel by 2:17 p.m. ET, off a session high of $63.39 and bouncing from a low of $60.80. U.S. West Texas Intermediate crude futures ended the session down 36 cents at $52.89. The Organization of the Petroleum Exporting Countries, Russia and other producers will meet in Vienna this week to discuss a potential cut in production. A monitoring committee of OPEC and its allies, including Russia, agreed on the need to cut oil output in 2019, two sources familiar with the discussions said, adding that volumes and the baseline for cuts were being debated. Tamar Essner on the lead up to OPEC Tamar Essner on the lead up to OPEC 6:48 AM ET Wed, 5 Dec 2018 | 03:14 "A deeper production cut still remains the most probable outcome of the meeting, but finer details of any agreement are in short supply, which in turn is prompting volatility," said Abhishek Kumar, senior energy analyst at Interfax Energy in London. Russian Energy Minister Alexander Novak told reporters he had a "good" meeting with his Saudi counterpart Khalid al-Falih on Wednesday and they planned more talks. Russia's No. 2 oil producer Lukoil is ready to cut oil production if OPEC and other leading producers agree to do so, though it would be technically difficult in winter, RIA news agency quoted the company's head Vagit Alekperov as saying. OPEC wants to avert a build-up in global oil inventories like the one that sent prices from late 2014 into a prolonged slump that brought Brent to below $30 a barrel at the start of 2016. "The market is expecting that OPEC is going to announce production cuts," said Regina Mayor, global and U.S. sector leader for energy at KPMG. "There has been quite a lack of discipline of late. When you look at U.S. shale production and Saudi production and Russia production, everyone has the pedal to the metal."

OPEC and Russia poised to impose steep production cuts despite US pressure --- OPEC has reportedly agreed to cut oil production, but the cartel ended its closely-watched meeting on Thursday without specifying how many barrels it would aim to remove from the market.The influential OPEC oil cartel gathered at its headquarters in Vienna, Austria with the aim of reaching an accord over throttling back output. The 15-member organization will hold talks with allied oil-producing nations including Russia on Friday.  The much-anticipated meeting comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis. Oil prices have crashed around 30 percent over the last two months, ratcheting up the pressure on budgets in oil-exporting countries. Yet Russia's refusal to commit to a production quota and OPEC's failure to hammer out the details of a deal underscore the divisions within the two-year-old alliance, despite consensus that the group needs to take some form of action to boost the market. OPEC has agreed in principle to reduce its output, two sources told Reuters on Thursday. However, OPEC delayed making a decision on how deeply it would cut production until after it meets with Russia on Friday. With few details to offer journalists, OPEC canceled a scheduled press conference.  "The fact that they're saying the debate will continue tomorrow emphasizes the disarray," said John Kilduff, founding partner at energy hedge fund Again Capital.Saudi Arabia, OPEC's largest producer, signaled earlier on Thursday that the group may reduce production less than the market expected. The Saudis have been leading calls for the group to trim output, amid surging supply and fears that an economic slowdown will erode fuel demand. The oil-rich kingdom has previously indicated it wants the group to curb output by at least 1.3 million barrels per day.However, Saudi Arabia's Energy Minister Khalid al-Falih told reporters Thursday morning that an output cut of 1 million bpd would be sufficient for OPEC and its allied producers. That is in part because Alberta, Canada announced this week it would require producers to cut output by about 325,000 bpd to drain the province's brimming crude stockpiles.

Oil Crashes After Saudis Propose Smaller Than Expected Production Cut - As if plunging equity futures were not enough for traders to worry about this morning, in the past two hours oil, which had rebounded heading into this week's 2-day OPEC meeting, tumbled sharply, dropping as much as 5%, with WTI sliding as low as $50.23 - less than a dollar from this year's low of $49.41 - from above $53/barrel earlier in the session as Saudi Arabia said producers were working towards a deal to cut output that could fall short of market expectations. Brent crude fell 4.2% to $58.99 a barrel. Saudi energy minister Khalid al-Falih told reporters ahead of today's critical closed-door meeting of oil ministers in Vienna that OPEC and allies outside of the cartel including Russia were still working towards reaching an agreement by Friday. Falih said Saudi Arabia’s preference was for a "sufficient cut but not overly large", adding that a 1 million barrels a day "would be adequate", but noting that "there is no deal yet." He may have been remembering Trump's tweet from yesterday, and realizing that if the US president gets angry with his boss, and de facto real OPEC leader, Crown Prince MbS, things could get much worse. The kingdom also called for contributions from all countries, saying that the deal should be "fair and equitable" and should include Russia, as well as countries that were exempt from previous deals, such as Libya and Nigeria. Quoted by the FT, when asked if a pact might not be reached, he said all options were on the table, but added that Russia, the largest oil producer in OPEC+ but slightly behind the US, and seen as crucial to reaching a deal, had “made a promise” to cut. Oil has crashed more than 30% since its October peak as the US issued sanctions waivers to big buyers of Iranian oil, while production from global producers surged. The planned output cuts come despite pressure from US president Donald Trump, who has advocated for high levels of production, describing lower oil prices as a “tax cut” for consumers. So what would be needed to stop the latest oil rout? According to energy analysts on Wall Street, any cut less than 1mmb/d will likely not help oil much, to wit (via Bloomberg): OPEC+ would need to cut by 1.5m b/d for crude to rise to $70 a barrel, according to Rystad. Saudi Arabia needs to pledge a reduction in supply of more than 500k b/d, Petromatrix says, while Saxo Bank says prices could fall if curbs don’t exceed the 1m b/d level.

WTI Slumps As Postponed OPEC Conference Trumps Crude Inventory Surprise - While all eyes are focused on Vienna and the OPEC+ meeting, inventory data will likely not be completely ignored following Tuesday's surprise API-reported crude build. With refinery utilization surging, there’s a danger of an oversupply of gasoline, says Bob Yawger, futures director at Mizuho Securities USA. “The market needs to see a draw”  DOE:

• Crude -7.323mm (-2mm exp) - biggest crude draw since July
• Cushing  +1.729mm
• Gasoline +1.699mm (+1.75mm exp)
• Distillates +3.811mm

The 10-week trend of crude builds is over as DOE reports a surprisingly large 7.3mm barrel draw (the most since July) but at the same time builds were notable at Cushing and for products... Most of the surprise crude draw came from the Gulf Coast - the biggest weekly decline in the region since December 2012. Oil production growth took a small breather last week after a magnitude 7 earthquake in Alaska struck on Friday, affecting oil producing and transportation assets in the region. Alyeska Pipeline Service shut the 800-mile Trans Alaska Pipeline System for seven hours while Hilcorp Energy temporarily shut some of its operations, which include oil platforms in Cook Inlet. WTI traded between $50.50 and $51 as we moved into the DOE data (as OPEC pessimism dominated after Saudi Arabia's energy minister backed a smaller-than-expected supply cut) then right before the data, this headline hit - *OPEC WON'T HOLD PRESS CONFERENCE AFTER MEETING TODAY: DELEGATE.. However, the big draw prompted some buying in futures...

US crude sinks 2.7%, settling at $51.49, after OPEC delays decision on production cut levels  - Oil prices tumbled about 3 percent on Thursday as OPEC reportedly agreed to cut production, but ended its closely-watched meeting without a decision on how much crude the cartel will take off the market. OPEC agreed in principle to cut production during a meeting at its headquarters in Vienna, Austria on Thursday, two sources told Reuters. However, the cartel delayed a decision on specific quotas until it consults Russia on Friday. OPEC began capping supply in partnership with Russia and several other nations last year in order to end a punishing downturn in oil prices. However, Moscow has not yet specified how much it will cut production during the fresh round of supply caps that is now under consideration.  “This is obviously a big disappointment to the market," said John Kilduff, founding partner at energy hedge fund Again Capital. "It certainly gives the appearance of disarray within the cartel — and disunity more than unity for sure." International benchmark Brent crude fell $1.77, or 2.9 percent, at $59.79 a barrel by 2:22 p.m. ET, after falling to a session low at $58.36. U.S. West Texas Intermediate crude ended Thursday's session down $1.40, or 2.7 percent, at $51.49, bouncing from a session low of $50.08. Oil prices briefly pared losses after government data showed U.S. crude stockpiles fell by 7.3 million barrels in the week through Nov. 30.The two benchmarks have fallen more than 30 percent over the last two months. The oil price has been hammered by concerns that supply will outstrip demand next year, weakness in global markets and technical trading that has extended the selling.

OPEC Waits on Putin's Decision -- OPEC ended talks in Vienna without a deal on oil production cuts as the size of Russia’s contribution remained a sticking point before further talks on Friday. Saudi Energy Minister Khalid Al-Falih said he isn’t confident of an agreement, after discussions of a combined 1 million barrel-a-day output reduction concluded without a consensus. That left the oil market dangling in uncertainty before non-OPEC allies join a second day of talks on Friday. “Not everybody is ready to cut equally,” Al-Falih told reporters in Vienna. “Russia is not ready for a substantial cut.” Oil in London tumbled as much as 5.2 percent to $58.36 a barrel, before paring losses to $59.34 at 5:07 p.m. local time. The kingdom’s dependence on Russia shows how much OPEC has changed since 2016, when the two countries ended their historic animosity and started to manage the market together. The alliance has transformed OPEC into a duopoly in which Russia, which isn’t a formal member of the cartel but part of the production-cuts alliance, is asserting its power. “The impression that the group can’t really come to a decision without first checking with Moscow is going to be difficult for some members to swallow,” Earlier on Thursday, ministers were discussing a proposal to curb combined OPEC and non-OPEC output by about 1 million barrels a day, said a delegate. That was in line with Saudi Arabia’s preference for a moderate reduction that wouldn’t “shock the market.” The group is under pressure after a collapse in oil prices last month. Saudi Arabia, the largest producer in the cartel, is seeking to walk a fine line between preventing a surplus next year and appeasing President Donald Trump. S Although Russia, the largest producer in the OPEC+ group, had agreed to a cut in principle, the eventual size of their contribution remains undefined through this week’s talks in Vienna. In private conversations earlier this week, OPEC delegates said that Saudi Arabia had favored a Russian cut of about 300,000 barrels a day, but Moscow was seeking a smaller reduction of about 150,000. 

Are OPEC+ Talks Over- Russian Energy Minister Will Not Return To Vienna -- WTI is trading back below $51 (and Brent below $60) after Saudi Arabian Energy Minister Khalid Al-Falih says he is "not confident of reaching agreement tomorrow," adding that the "main sticking point is getting agreement from all producers." Al-Falih notes that a cutback of about 1m b/d is the main scenario considered but added that they still don’t know if Russia is on board with cuts deal, pointing out that he wants Russia to cut as much as possible (well he would, wouldn't he?) But don't hold your breath for any imminent cut from Russia as even if they come on board tomorrow with the promise of an output cut, don't expect it to start immediately. Winter is never a favored time for shutting in wells in Siberia. Just like 2017, it will take until the spring thaw for Russia to deliver in full on any pledge it may make tomorrow.  Update: It would appear OPEC+ talks are over... Russian Energy Minister Alexander Novak won’t make it back to Vienna Thursday to discuss cutting oil output with the OPEC+ group of crude producing countries, RIA Novosti reports, citing the ministry.

Iran seeks exemption from OPEC oil cuts because of US sanctions: oil minister — Iran will seek an exemption from any OPEC production cut agreement, its oil minister said Wednesday, potentially complicating the group's already fraught negotiations. "Iran should be excluded from any decision on production levels," Bijan Zanganeh said on arrival in Vienna ahead of OPEC's Thursday meeting, adding that while the US maintains sanctions targeting Iranian oil sales, "we won't participate in any agreement on production." He declined to reveal how much Iran was currently producing, saying that disclosing such information would provide the US with leverage on how tightly to enforce the sanctions. S&P Global Platts, through a survey of industry officials, analysts and shipping data, estimates Iran's November crude output at 2.98 million b/d. OPEC is set to decide on its 2019 production policy Thursday, with Russia and nine other non-OPEC allies joining talks Friday. A six-country OPEC/non-OPEC monitoring committee, co-chaired by Saudi Arabia and Russia, met Wednesday and recommended a production cut of at least 1 million b/d, according to Omani oil minister Mohammed al-Rumhy, who sits on the committee. But Zanganeh said he rejected the committee's work, saying it has exceeded its mandate to merely monitor market conditions. ICE Brent futures were trading at $61.52/b at 2236 GMT. "I think an oil price between $60-$70/b is fair," Zanganeh said. Earlier Wednesday, Saudi energy minister Khalid al-Falih met with Brian Hook, a top US State Department official on Iran sanctions. Neither side would disclose what the conversations entailed but analysts said they likely involved an exchange of views on how the US plans to enforce its sanctions on Iranian crude and how Saudi Arabia might adjust its output in response to any anticipated lost Iranian volumes.

OPEC Goes Back into Crunch Talks-- OPEC prepared for a further day of talks on oil-production curbs after a summit on Thursday ended with no deal, as Russia resisted the big output cut that Saudi Arabia was demanding. After a six-hour meeting in Vienna, Saudi Energy Minister Khalid Al-Falih said he wasn’t confident of an agreement when the Organization of Petroleum Exporting Countries meets its allies on Friday. A proposal for a combined OPEC and non-OPEC cut of 1 million barrels a day was left dangling in uncertainty. “Not everybody is ready to cut equally,” Al-Falih told reporters in Vienna. “Russia is not ready for a substantial cut.” Another sticking point in the talks was Iran’s contribution, a delegate said. The Persian Gulf nation is currently subject to U.S. sanctions and as such won’t participate in any curbs, Oil Minister Bijan Zanganeh said. Other members said it should participate, according to a delegate. The failure to secure a deal so far is the latest example of how OPEC is under pressure from forces that are re-drawing the global oil map, leaving it increasingly dependent on the support of non-member Russia. In a striking development, the U.S. government revealed that it turned into a net exporter of petroleum for the first time in 75 years last week thanks to the shale boom. The oil market reacted negatively to OPEC’s setback, with Brent crude sliding 2.4 percent to $60.06 a barrel in London on Thursday. Prices extended declines on Friday. Russia, which initially sought a 100,000 to 150,000-barrel-a-day reduction as part of a new deal, may agree to a slightly larger cut depending on OPEC’s decision on its own output, a delegate said. Moscow insists its cut should be gradual and reconsidered after the first quarter since the market may shift, the delegate said, asking not to be identified discussing private deliberations. 

What OPEC+ Must Do for Oil to go Above $70 in 2019 - OPEC+ countries must cut 2019 supply growth by 1.5 million barrels per day if they want oil prices back above $70 per barrel next year, according to Rystad Energy. “We believe a cut announcement that effectively removes anything less than one million barrels per day of 2019 supply would be interpreted negatively by the market,” Bjornar Tonhaugen, head of oil market research at Rystad Energy, said in a statement posted on the company’s website on Thursday. “To surprise the market in a bullish fashion, we believe cuts approaching two million barrels per day would have to be announced,” he added. “Should OPEC+ announce a 1.5 million barrel per day cut, we believe the market reaction would be neutral at first, but gradually pave the way for a recovery in oil prices above the $70 level for Brent in 2019,” Tonhaugen continued. If OPEC+ decides this week not to cut production substantially, the market can “probably wave goodbye to any hopes of short term recovery in prices from current levels, and more likely say hello to even lower levels for parts of next year,” according to Tonhaugen. The 175th ordinary OPEC meeting is scheduled to take place in Vienna, Austria, today. The fifth OPEC and non-OPEC ministerial meeting is scheduled to take place on Friday. In an emailed statement sent to Rigzone on Wednesday, Michael Burns, an oil and gas partner at law firm Ashurst said, "the outcome of the meeting in Vienna would seem to be finely balanced”. “Whilst cuts in production look likely, the extent of the cuts would appear to be a striking of a balance between the needs of OPEC members, agreements made with non-OPEC members outside of Vienna and political discussions ongoing with the United States,” he added. 

Oil prices drop as market awaits specifics on the OPEC production cuts - Crude-oil prices settled sharply lower Thursday, after OPEC failed to offer details on its expected production cut, opting to wait until after it meets with other producers Friday.  Growing concerns that oil producers won’t reach an agreement to aggressively reduce output has also weighed on prices, but U.S. government data revealing the first decline in domestic crude supplies in 11 weeks did offer a brief respite in prices from the session’s lows. The large draw in U.S. crude stockpiles was “surprising,” but the data also showed production held up at a record, said Tariq Zahir, managing member at Tyche Capital Advisors. The market’s focus remains on OPEC, he added. Members of the Organization of the Petroleum Exporting Countries have concluded their meeting in Vienna, without deciding on output-cut figures, the Wall Street Journal reported, citing comments from OPEC delegates. The delegates also said OPEC plans to debate output figures with non-OPEC producers during their meeting Friday.   Against that backdrop, West Texas Intermediate crude for January delivery lost $1.40, or 2.7%, to settle at $51.49 a barrel on the New York Mercantile Exchange—off the session’s low of $50.08. Shortly after U.S. futures prices settled, Russian news agency TASS reported that OPEC reached a “preliminary agreement” to cut oil production, but that specifics on the amount to be cut have not yet been decided. The agency also said that according to sources, oil production will be reduced from the October 2018 level.  Global benchmark February Brent crude also fell $1.50, or 2.4%, to $60.06 a barrel on ICE Futures Europe. Oil prices were under pressure, “somewhat reflecting the selloff in stocks, some reflecting skepticism OPEC will come through with sufficient production cuts to support prices,”  There are a number of stumbling blocks to reaching a decision. Iran, OPEC’s third-biggest producer, said Thursday that it can’t participate in any cuts until the U.S. lifts sanctions against the country.

Brent crude soars 5% as OPEC reaches deal to cut oil production - Oil prices rose on Friday after OPEC reached a tentative agreement to cut output, according to the Iranian Energy Minister. The meeting was still continuing and an agreement with non-OPEC producers including Russia was not yet finalized.OPEC producers agreed to cut output by 800,000 barrels per day beginning in January, according to Iranian Energy Minister Bijan Zangeneh. Non-OPEC producers were proposing a 400,000 barrels a day cut, he said.The combined cut of 1.2 million bpd is roughly in line with expectations for a reduction of 1 million to 1.4 million bpd heading into the meeting. West Texas Intermediate crude futures were up $2.18, or 4.2 percent, at $53.67 per barrel at 10:21 a.m. ET.Brent crude, the international benchmark for oil prices, rose $3.05, or 5.1 percent, to $63.11 a barrel.The talks between OPEC and non-OPEC members including Russia comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis. Oil prices have plunged more than 30 percent from their highs in early October. Discussions had earlier hit an impasse because Saudi Arabia refused to agree to an exemption for Iran, OPEC sources told Reuters. However, OPEC ultimately granted Iran an exemption, Iranian Energy Minister Bijan Zangeneh told CNBC as he departed from the cartel's headquarters. Iran's Zangeneh had said his country should not be forced to cut production in light of U.S. sanctions on the Islamic Republic, OPEC's third-largest producer. The sanctions, which are backed by the Saudis, have already significantly reduced Iran's exports. Energy Aspects says communicating a deal properly is imperative because the market is fragile right now. The energy research firm warns that a "jumbled statement referring to some broad intention to prevent the market from being oversupplied will undoubtedly trigger a further sell-off in prices." Crude futures fell sharply during the previous session, after OPEC was unable to agree on the terms of cuts. The talks made progress on a critical front on Friday, with news agencies saying Russia has agreed to cut output by 200,000 barrels per day. The 15-member OPEC group had delayed a decision on how many barrels it would take off the market until Moscow committed to a specific reduction.

OPEC Agrees on Larger-Than-Expected Cut After Marathon Talks -OPEC finally broke an impasse over production curbs, agreeing on a larger-than-expected cut with allies after two days of fractious negotiations in Vienna.The cartel and its partners agreed to remove 1.2 million barrels a day from the market, with OPEC itself shouldering 800,000 barrels of the burden. Iran emerged as a winner from the contentious talks, saying it’s secured an exemption from cuts as it suffers the effects of U.S. sanctions.Crude surged as much as 5.8 percent in London, raising the risk that the deal could anger U.S. President Donald Trump, who had urged the group to keep the taps open and prices low.The breakthrough at the Organization of Petroleum Exporting Countries’ secretariat followed a series of bilateral meetings convened by non-OPEC member Russia, which emerged as the key broker between arch rivals Saudi Arabia and Iran. OPEC has been under increasing pressure from forces re-drawing the global oil map, leaving it ever more dependent on Russia’s support while also subject to vehement opposition from Trump.The final deal is a surprise, since discussions had earlier centered on a proposed output reduction from OPEC and its allies of about 1 million barrels a day, with OPEC cutting 650,000 barrels of the total, according to delegates. “Given how much expectations were down played around the outcome of this meeting, this result comes as a welcome surprise,” Producers will use October output levels as a baseline for cuts and the agreement will be reviewed in April. Russia has proposed a contribution equivalent to a 2 percent reduction from that month, according to one delegate, who said figures are still under discussion. Such a cut would equate to 228,000 barrels a day, Bloomberg calculations show, higher than its initial pitch for no more than 150,000 barrels a day.

OPEC Surprises Markets With Last Minute Deal - The obvious major news of the day comes from Vienna. OPEC+ agreed, despite a lot of jockeying, to cut 1.2 mb/d of supply beginning in January. OPEC will contribute 800,000 bpd and non-OPEC will cut by 400,000 bpd. The group met on Thursday but cancelled a press conference, raising doubts about the ability to reach an agreement. Iran held up the talks early Friday because it refused to accept limits on its production, although, to be sure, any limit would be symbolic anyway since its output is declining due to sanctions. Iran was exempted from the deal. Oil sank on Thursday and in early trading on Friday, but prices spiked by more than 4 percent when an agreement was announced. On Thursday, the Trump administration announced plans to roll back protections on the sage grouse, effectively opening up 9 million acres of federal lands to mining and drilling. The move would open up more land than any other policy change to date, according to the New York Times. The proposal is expected to be finalized next year.  The U.S. has on multiple occasions considered slapping painful sanctions on Venezuela, and the downturn in oil prices has opened up another opportunity to do so. S&P Global Platts reports that “hawkish White House officials are urging” Trump to target Venezuela’s PDVSA over human rights violations. “If the White House were to pressure Caracas to block a new constitution, we would not expect [Trump] to pull many punches,” ClearView Energy Partners said in a recent note to clients. At the request of the U.S., Canadian authorities arrestedMeng Wanzhou, a top executive at Huawei, a Chinese technology firm, for violating sanctions on Iran. The detention came while the Trump-Xi meeting was going on in Buenos Aires last weekend. Earlier this week, China said it was preparing to step up purchases of American soybeans, LNG and crude oil again in a show of good faith towards the recent trade ceasefire with Trump. However, the Huawei affair significantly complicates the trade negotiations between the U.S. and China.

Oil Prices Hold Steady As US Oil Rig Count Take Steep Dive - Baker Hughes reported a 1-rig decrease for oil and gas in the United States this week—a loss in rigs for the second week in a row, with a 10-rig decrease in the number of oil rigs.The total number of active oil and gas drilling rigs now stands at 1,075 according to the report, with the number of active oil rigs decreasing by 10 to reach 877 and the number of gas rigs increasing by 9 to reach 198.The oil and gas rig count is now 144 up from this time last year, 126 of which is in oil rigs.Crude oil prices skyrocketed on Friday after a rather abysmal November, as OPEC managed to pull it together in the final hour of production cut talks with its members and Russia. Despite the talks ending yesterday without a resolution as Russia’s Alexander Novak flew back home to discuss its options with President Vladimir Putin, Friday saw a resolution to the cuts as the group came together, with Russia, to shave 1.2 million bpd off its October production levels. The WTI benchmark was trading up 4.14% (+2.13) at $53.62 at 12:38pm EST—a roughly $2 per barrel increase week on week. Brent crude was trading up 4.46% (+2.68) at $62.74—about $3 up week on week. .Canada’s oil and gas rigs for the week decreased by 17 rigs this week after losing 5 rigs last week, bringing its total oil and gas rig count to 186, which is 33 fewer rigs than this time last year, with a 17-rig decrease for oil rigs, and a 4-rig increase for gas rigs.  The EIA’s estimates for US production for the week ending November 30 continues to weigh on prices, averaging 11.7 million bpd­ for the fourth week in a row and the highest production rate for the United States. By 1:07pm EDT, WTI had increased by 4.53% (+$2.33) at $53.82 on the day. Brent crude was trading up 4.96% (+$2.98) at $63.04 per barrel.

US Oil Rig Count Tumbles by 10, Boosting Prices Already Spurred by OPEC Cuts - In the week ending December 7, 2018, the number of land rigs drilling for oil in the United States totaled 877, a drop of 10 compared to the previous week and up by 126 compared with a total of 751 a year ago. Including 198 other land rigs drilling for natural gas, there are a total of 1,075 working rigs in the country, one less than a week ago and up by 144 year over year. The data come from the latest Baker Hughes North American Rotary Rig Count released on Friday afternoon. West Texas Intermediate (WTI) crude oil for January delivery settled at $51.49 a barrel on Thursday and traded down up about 4.5% Friday afternoon at around $53.82 shortly before regular trading closed. WTI is on track to close the week up by about 3%. Brent crude for February delivery traded at $63.02 a barrel, up about 5% for the day. The natural gas rig count rose by nine to 198 this week, and the number of “miscellaneous” rigs remained at zero. The count for natural gas rigs is now up by 18 year over year. Natural gas for January delivery traded up more than 5% at around $4.55 per million BTUs, up by about a penny compared to last Friday.Today’s report on U.S. natural gas in storage combined with expectations for cooler weather in the last half of December has sent natural gas prices soaring. Crude oil prices are up on reports that OPEC and its partners plan to reduce production by 1.2 million barrels a day for six months beginning in January.Among the states, Baker Hughes reports that five of them added one rig each during the week: Alaska, Kansas, Pennsylvania, Utah and West Virginia. Oklahoma lost three rigs, Ohio and Texas dropped two rigs each, and Louisiana lost one rig.In the Permian Basin of west Texas and southeastern New Mexico, the rig count now stands at 489, down by four compared with the previous week’s count. The Eagle Ford Basin in south Texas has 80 rigs in operation, one more week over week, and the Williston Basin (Bakken) in North Dakota and Montana has 56 working rigs, unchanged for the week. Producers dropped one horizontal rig this week and the count fell to 933, while offshore drillers reported a total of 23 rigs, unchanged from the previous week’s count.

US crude rises 2.2%, settling at $52.61, after OPEC and allies reach deal to cut output --Oil prices surged higher on Friday after OPEC, Russia and several other producers reached an agreement to cut output next year in order to boost the market.The new agreement comes at a time when the oil market is near the bottom of its worst price plunge since the 2008 financial crisis. Oil prices have dropped more than 30 percent from their highs in early October, hammered by concerns about oversupply, weakness in global markets and technical trading that exacerbated the slide.OPEC and its allies agreed to throttle back output by 1.2 million bpd during the first six months of 2019.The production cut is roughly in line with expectations heading into the meeting. Commodity watchers were expected the alliance to remove 1 million to 1.4 million bpd from the market.Brent crude, the international benchmark for oil prices, rose $1.61, or 2.7 percent, to $61.67 a barrel. Brent earlier rose more than 5 percent to $63.73. U.S. West Texas Intermediate crude futures ended Friday's session up $1.12, or 2.2 percent, at $52.61 per barrel, off a session high of $54.22.Energy research firm Wood Mackenzie forecasts the production cut will tighten markets by the third quarter of 2019 and cause Brent to rise back above $70 a barrel. "It would help producers contend with the strength of US supply growth in 2019 when we expect a year-on-year increase of 2.4 million b/d in non-OPEC production as US supply continues to gain sharply," .The United States is pumping at all time highs near 11.7 million bpd, according to preliminary government figures. Last week, the country exported more oil and refined fuels than it imported for the first time in decades.Meanwhile, Russian production hit a post-Soviet era high at 11.4 million bpd this fall, and Saudi oil production rose to a record 11.1 million bpd in November.The supply surge from the world's top three oil producers is as forecasters warn oil demand growth will be softer than anticipated next year. OPEC members agreed on Friday to cut production by 800,000 bpd, while non-OPEC producers aim to shave 400,000 bpd off the market.

G20: You Can Smell Tear Gas in the Streets as the Oil Industry Squabbles - Last week, two important meetings took place—one, in Buenos Aires, Argentina, of the Group of 20 (G20) nations, and two, in Vienna, Austria, of the Organization of the Petroleum Exporting Countries (OPEC) and other oil producers. The two meetings did not produce any resolution to the major economic challenges in the world. But they did soothe the nerves of financial markets. At the G20, the United States and China dialed down the temperature over trade but did not settle the long-term grievances each side has of the other. At the OPEC+ meeting, Russia and Saudi Arabia agreed to cut production and raise the price of oil despite pressure from the United States and others to keep oil prices low.At neither meeting did the major powers find solutions to their problems. They are all caught in mazes from which there are no easy exits. But what calmed the world of finance was that the geopolitical tension between the major powers seemed to have lessened. What impact this reduced tension has for the world’s people, however, is not clear. The “trade war” engineered by U.S. President Donald Trump against China began with tariffs and ended with a damp squib. At the G20, Trump told China’s Xi Jinping that the U.S. tariffs that would have gone up to 25 percent on $200 billion worth of Chinese imports will no longer be applied. China, for its part, said that it would import more goods from the United States. No specifics were announced, which is why the tensions over even this agreement spilled over onto Twitter (courtesy of Trump’s hyperbole) and into more sober statements from the Chinese government. The more fundamental questions of intellectual property and currency valuation remain unsolved. The United States accuses China of theft of the intellectual property of U.S. firms, but the Chinese counter—as they have in the arbitration panels of the World Trade Organization—that they merely draw from technology transferred as a result of commercial agreements freely made by firms eager to use Chinese labor. It will be impossible to resolve these two problems, since neither side sees the issues in the same way. Their worldviews regarding intellectual property and currency valuation are utterly alien to each other. If the United States believes that China is unfairly valuing its currency, the Chinese point to the unfair advantage that the dollar has over every currency in the world since it is used as one of the major global currencies for facilitation of trade and for the storage of wealth.

What's Really Being Taught In MbS' So-Called Reformed Saudi Schools - The US Commission on International Religious Freedom criticized Saudi Arabia’s “backsliding” on religious tolerance in a new report on middle and high school textbooks today, further undermining the embattled kingdom’s reformist credentials.The independent federal government commission contracted a study of 22 textbooks focusing mostly on religious studies published by the Saudi government for the 2017-2018 academic year. It notably found that the books “caution students to avoid friendship with members of other religions […] encourage both violent and non-violent jihad against non-believers [and] espouse the death penalty for women who have an affair, and for gay men.”“This review revealed an apparent reversal in the previous trend toward tolerance in Saudi textbooks,” the commission concludes. “They reflect core Wahhabi doctrines and not other trends of Islamic scholarship that are more accepting.” The report comes as Saudi Arabia’s reputation is already reeling in the United States and around the world following the murder of Saudi journalist Jamal Khashoggi. It is especially damaging to Crown Prince Mohammed bin Salman and the multimillion-dollar public relations campaign touting him as a progressive reformer championing a vision of a modern Saudi Arabia by 2030. The Anti-Defamation League, which combats attacks against the Jewish people, released a similar report last week that found that “intolerant language of all kinds still abounds in Saudi Arabia’s government-published textbooks for schoolchildren. The incitement is particularly egregious at the high school level.” While the US commission does not provide a definitive conclusion for the reasons behind the alleged backsliding, speculation is rife that horse-trading between the royal family and traditional clerics over reforms such as lifting the ban on women driving may have played a role.“What’s most troubling here is that we’re seeing some backtracking in the education system where they had made progress, which we had verified over the years, in terms of cleaning up some of the worst passages in the textbooks,”

Jamal Khashoggi: private WhatsApp messages may offer new clues to his murder  - In his public writings, Jamal Khashoggi's criticism of Saudi Arabia and its Crown Prince Mohammed bin Salman was measured. In private, the Washington Post columnist didn't hold back.In more than 400 WhatsApp messages sent to a fellow Saudi exile in the yearbefore he was killed at the Saudi consulate in Istanbul, Khashoggi describes bin Salman -- often referred to as MBS -- as a "beast," a "pac-man" who would devour all in his path, even his supporters.CNN has been granted exclusive access to the correspondence between Khashoggi and Montreal-based activist Omar Abdulaziz. The messages shared by Abdulaziz, which include voice recordings, photos and videos, paint a picture of a man deeply troubled by what he regarded as the petulance of his kingdom's powerful young prince. "The more victims he eats, the more he wants," says Khashoggi in one message sent in May, just after a group of Saudi activists had been rounded up. "I will not be surprised if the oppression will reach even those who are cheering him on."The exchanges reveal a progression from talk to action -- the pair had begun planning an online youth movement that would hold the Saudi state to account. "[Jamal] believed that MBS is the issue, is the problem and he said this kid should be stopped," Abdulaziz said in an interview with CNN.But in August, when he believed their conversations may have been intercepted by Saudi authorities, a sense of foreboding descends over Khashoggi. "God help us," he wrote. Two months later, he was dead.

Coalition allows evacuation of wounded Houthis before Sweden hosts Yemen talks (Reuters) - Yemeni Houthi officials are expected to travel to Sweden shortly for talks as early as Wednesday to end the nearly four-year-old war after the Saudi-led coalition allowed the evacuation of some of their wounded for treatment. Prospects for convening talks have risen as Western allies press Saudi Arabia, leader of the Sunni Muslim alliance battling the Iranian-aligned Houthis, over a war that has killed more than 10,000 people and pushed Yemen to the brink of famine. U.N. special envoy Martin Griffiths arrived in the Houthi-held capital Sanaa on Monday to escort the Houthi delegation, a U.N. source told Reuters. The Saudi-backed government has said it would follow the Houthis to the talks, the first since 2016. The peace talks may start on Wednesday, two sources familiar with the matter said. Griffiths shuttled between the parties to salvage a previous round that collapsed in September after the Houthis failed to show up. Western powers, which provide arms and intelligence to the coalition, may now have greater leverage to demand action on Yemen after outrage over the murder of Saudi journalist Jamal Khashoggi in Riyadh’s consulate in Istanbul led to increased scrutiny of the kingdom’s activities in the region. The U.S. Senate is due to consider this week a resolution to end support for the conflict, seen as a proxy war between Saudi Arabia and its arch-foe in the Middle East, Iran. Mohammed al-Bukhaiti, a member of the Houthi politburo, told Reuters their delegation would travel to Sweden Tuesday morning on a plane provided by Kuwait and accompanied by Griffiths. 

Yemen Rivals Lash Out Before Peace Talks Begin in Sweden — Yemen’s high profile peace talks in Sweden are set to open, but already look to be on the brink of collapse, with both sides lashing out at one another, and Houthi officials openly questioning whether the talks are even serious and worth pursuing. The big stumbling block is that, having finally gotten both sides to the table to discuss a settlement of the multi-year war, the pro-Saudi Hadi government reiterated the same demands they had at the start of the war, insisting that the Houthis unconditionally disarm, and cede the city of Hodeidah to them. The Houthis are being a bit more modest in their goals, focusing on trying to get the Sanaa International Airport reopened to civilian traffic. They’d also like Hodeidah to remain open to aid, though that’s a matter the UN is already pushing hard for without them. Though every side went into these talks expressing support for a peace process that would end the war, the Hadi government has continued to make it clear their demands are an unconditional victory, and as ever that is putting a roadblock in front of serious efforts to start making a permanent deal.

US exerting pressure on Iran through propaganda campaign: The US withdrawal from Iran’s nuclear deal in May was the main episode in a psychological campaign against Iran that has been in the making for years, the president’s chief of staff said. “The modus operandi of the enemies against Iran has now changed from military to propaganda,” Mahmoud Vaezi said. “The front (of this propaganda) is a psychological war that wants to ruin the achievements of the JCPOA,” he added. He was referring to the official name of the 2015 Iran nuclear deal, the Joint Comprehensive Plan of Action (JCPOA). Iranian President Hassan Rouhani managed to ease years of tension between Iran and the US when he opened up to the West and curbed Iran’s nuclear program in exchange for sanctions relief. Vaezi said that “the government could finally see sanctions lifted which would facilitate the economic conditions in Iran by the implementation of the JCPOA.” “But the triangle of the US, Israel, and Saudi Arabia wanted to increase the pressure on Iran while their main objective was to cause the JCPOA to collapse,” he added. The US expected Iran to react in the same way and abandon the JCPOA, something that Vaezi said would pave the way for the return of international sanctions and pressure against Iran. “They (US officials) had planned a massive propaganda against Iran,” he said. President Rouhani said in May that the US president expected Tehran to leave the nuclear deal after the US withdrawal, but he miscalculated Iran’s reaction. He said Tehran had refused to follow that plan by trying to save the deal with its remaining signatories. “It is well-known that Iran is a country which treads down the path of peace and acts in line with international regulations,” the president said at the time. “Today, the US should come under pressure as a country going against its promises and acting in contravention of regulations.” 

Pompeo, Bolton Say Iran Test-Launched Ballistic Missile Capable Of Striking Europe, Violated UN Ban - U.S. Secretary of State Mike Pompeo on Saturday condemned what he described as Iran's testing of a medium-range ballistic missile capable of carrying multiple warheads as a violation of the international agreement on Tehran's nuclear program. As Haaretz reports, amid tension between Washington and Tehran over ballistic missiles, Pompeo warned in a statement released on Twitter that Iran is increasing its "testing and proliferation" of missiles and called on the Islamic Republic to "cease these activities." Full State Department Statement: Iran Test Launches Ballistic Missile Violating UN Security Council Ban The Iranian regime has just test-fired a medium range ballistic missile that is capable of carrying multiple warheads. The missile has a range that allows it to strike parts of Europe and anywhere in the Middle East. This test violates UN Security Council resolution 2231 that bans Iran from undertaking “any activity related to ballistic missiles designed to be capable of delivering nuclear weapons, including launches using such ballistic missile technology . . .” As we have been warning for some time, Iran’s missile testing and missile proliferation is growing. We are accumulating risk of escalation in the region if we fail to restore deterrence. We condemn these activities, and call upon Iran to cease immediately all activities related to ballistic missiles designed to be capable of delivering nuclear weapons. And national Security Advisor John Bolton was quick to jump on this 'violation' warning that "this provocative behavior cannot be tolerated."

Reuters Creates Fakenews About Iran – Intentionally Conflates Two Different Missiles – Misquotes Official -  A just published Reuters piece claims: “Iran wants to expand missile range despite U.S. opposition.” That claim is false and is based on a willful misrepresentation of the source Reuters cites.  (Reuters) - Iran wants to increase its missiles’ range, a senior military official was quoted as saying on Tuesday, a move that would irk the United States which views Tehran’s weapons program as a regional security threat.  “One of our most important programs is increasing the range of missiles and ammunition,” said the head of the Iranian air force, Brigadier General Aziz Nasirzadeh, according to the semi-official Fars news agency. “We don’t see any limitations for ourselves in this field.” The Reuters piece conflates ground launched ballistic missiles with air-to-air missiles that the air force commander wants to develop. The U.S. does not care about Iran's air-to-air missiles. It itself has far superior ones. The U.S. does care about Iran's ballistic missiles. But the Iranian general did not talk about those at all. The quote Reuters attributes to the Iranian general it is taken out of context and used to propagandize a non-issue. The FARS piece Reuters cites is absolutely clear with what the air force commander means, even while its headline is probably too generalized: Iran Sees No Limit for Increasing Range of Missiles Commander of the Iranian Air Force Brigadier General Aziz Nasirzadeh announced the country's plans to boost the range of its air-to-air missiles. "Today, we are after increasing the range of our air-to-air missiles. Therefore, one of our most important plans is increasing the range of missiles and ammunition. We are after Beyond-Visual-Range (BVR) missiles and ammunition and consider no limitations in this regard for ourselves because the Air Force should heighten the country's deterrence power along with other (Armed) Forces," General Nasirzadeh told FNA on Tuesday. The underlined part is the only one Reuters cites. In the original that part is led and followed by its context - air-to-air missiles. That very clear context is simply left out. Reuters thus frames the quote as related to ballistic missiles even though it has absolutely nothing to do with them.

11 Times In Past Two Years - Iran Slams U.S. Attempts At Fresh Nuclear Negotiations -- Seeking to humiliate the United States after it abandoned the 2015 JCPOA and reinstated crippling sanctions, Iranian President Hassan Rouhani made public prior U.S. efforts to restart negotiations during statements made on Tuesday.Rouhani claimed the U.S. approached Tehran 11 times in order to begin negotiations afresh over a period of the last two years. Rouhani confidently noted that all of these overtures were firmly rejected by Iran.As part of Trump's promise to scrap the Obama brokered nuclear deal, which he formally backed out of last May, he said he would negotiate the whole thing anew from the ground up. Rouhani touted the failed attempts as a major Iranian victory: “If you think America is victorious, know that today Iran is victorious and Trump has been defeated,” he said said in comments reported by the Islamic Republic of Iran Broadcasting (IRIB) news agency.“Last year America requested negotiations eight times directly and this year three times indirectly which we did not accept on the basis of the dignity of the people,” Rouhani added. However, he did not detail precisely what was on the table or which aspects of the deal would be renegotiated. Notably Trump had unexpectedly stated last July that he's open to meeting President Rouhani "without preconditions". He had stated, “If they want to meet, we’ll meet,” at a moment when relations were quickly worsening. Meanwhile also on Tuesday Iran used the opportunity of Qatar quitting OPEC to slam the organization, saying "OPEC has problems," and and that "the reasons for Qatar’s exit from the organization must be examined," according to separate statements by Iranian Oil Minister Bijan Zanganeh.

Iranian president threatens to close key oil trade route if US blocks exports - Iranian President Hassan Rouhani threatened on Tuesday to close the strait of Hormuz, the world's busiest sea lane for oil shipments, if the United States moves to block the Islamic Republic's oil exports.  In an interview with Iranian State TV President Hassan Rouhani was quoted as saying: "if someday, the United States decides to block Iran's oil [exports], no oil will be exported from the Persian Gulf." The Trump administration restored sanctions on Iran's energy industry on Nov. 5. The administration is trying to choke off Iran's economy in order to pressure Tehran to accept tighter restrictions on its nuclear program, cease ballistic missile tests and end its support for U.S.-designated terror groups.  The sanctions have already cut Iran's exports by about 1 million barrels per day, but Rouhani is vowing to continue shipping crude. The Strait of Hormuz is a key waterway for the transport of oil. In 2016, 18.5 billion barrels of crude passed through the waterway, or about one-third of all seaborne-traded crude oil, according to the U.S. Energy Information Administration.

U.S. Aircraft Carrier Heads To Persian Gulf In Show Of Force After Iran Ballistic Missile Test - Days after Iran unveiled its first stealth destroyer in a televised ceremony on Saturday which saw the warship launched into operation in the Persian Gulf, and after the US condemned Iran's test firing a medium-range nuclear capable ballistic missile on Sunday, Pentagon officials have announced the U.S. is sending an aircraft carrier strike group to the Persian Gulf in a show of force against Iran. US officials told the Wall Street Journal the USS John C. Stennis and support ships will arrive in the Middle East "within days" — which will bring a close what's been described as the longest period in two decades that a carrier group was absent from the region. Specifically the unnamed officials identified the purpose as to "exhibit a show of force against Iran" at a moment tensions are soaring after Nov. 4 renewed sanctions targeting Iran's energy sector. The White House has vowed that it will work with international allies to reduce Iran's oil exports to zero in continuing economic warfare that could easily spark direct military confrontation.  The WSJ reports: The Stennis is scheduled to remain in the region for about two months, the officials said, spending most of that time in the Persian Gulf. Its presence “certainly provides a deterrence” against any potentially hostile Iranian activity in the region’s waters, one of the officials said. Responding to the unprecedented sanctions regimen after President Trump withdrew the US from the 2015 JCPOA, Iran's military leadership has over the past months issued a counter threat of blockading the vital Strait of Hormuz in the Persian Gulf, which would strangle global oil shipping. The US carrier presence inches the world closer to witnessing a major flare up in the gulf which could send the price of oil soaring.  Shia cleric Ayatollah Ahmad Alamolhoda grabbed headlines at the time by declaring, "If Iran decides, a single drop of this region's oil will not be exported and in 90 minutes all Persian Gulf countries will be destroyed." It appears the presence of the USS John C. Stennis is designed to prevent such a possibility from happening. Officials also said the carrier group will support the US war in Afghanistan as well as operations against remnant ISIS pockets in Iraq and Syria.

At Least 206 Civilians Killed in November by US Airstrikes in Syria — The Syrian Observatory for Human Rights has issued a new report over the weekend summarizing the massive civilian death toll of US-led airstrikes against a handful of eastern towns in Syria. At least 206 civilians were killed in November in those strikes.The strikes center on three towns and some adjoining villages under ISIS control along the Iraq border. Kurdish YPG forces are attacking the towns, and the US is trying to provide air support, which mostly means bombing populated areas in the towns themselves.The observatory’s previous reports have indicated that a lot of the civilians killed were suspected of being family members of ISIS fighters. At least 77 children and 57 women are among the slain civilians. While the US clearly hasn’t had a problem with endangering civilians in this way, they’ve done little to practically support the Kurdish offensives by doing so. After over a month of such strikes, there are a lot of people dead, but ISIS still controls the towns, and has retaken which villages were lost.

Hezbollah On High Alert As Israel Begins 'Operation Northern Shield' Along Lebanese Border - Hezbollah is on full alert in Lebanon and Syria, calling on its forces to be ready for war if Israel initiates attacks on Lebanon, according to Middle East war correspondent Elijah Magnier. This measure came following Israel's Tuesday morning launch of “Operation Northern Shield” to "destroy Hezbollah tunnels on the Israeli border." The Lebanese Army, though significantly weaker than Hezbollah, has also been placed on high alert and soldiers have been deployed to the border.  The Israeli Defense Forces (IDF) announced its new operation to “expose and thwart” tunnels stretching from Lebanon into northern Israel which it says were built by the Hezbollah militant group. Amid soaring tensions in the region due to the Syrian war and US-led attempts to choke Iran's economy, Israeli military officials were quick to name Iran as a culprit behind Hezbollah acts of aggression, including infrastructure like the tunnels.  Lt. Col Jonathan Conricus, an Israeli military spokesman, said, “We see Hezbollah’s activities as a flagrant and blatant violation of Israeli sovereignty” and of U.N. resolutions. He added, “This activity is another example of the negative effects of Iranian entrenchment in the region.”

Netanyahu Refuses to Resign After Israeli Police Recommend Fraud, Bribery Charges (CD) — Prime Minister Benjamin Netanyahu is facing calls to resign after Israeli police on Sunday recommended indicting him and his wife on fraud and bribery charges.It’s the third such recommendation to hit the prime minister this year.The New York Times lays out the alleged wrongdoing: Between 2012 and 2017, the police said, Mr. Netanyahu “intervened in a blatant and ongoing manner, and sometimes even daily,” in coverage at Walla, a news website owned by [telecommunications company] Bezeq, ensuring “flattering articles and pictures” were published and “removing critical content” about him and his family.The police said Mr. Netanyahu and his associates sought to sway Walla’s hiring of senior editors and reporters. In return, the police said, Mr. Netanyahu, who personally oversaw the communications ministry from 2014 to 2017, rewarded Bezeq with enormously lucrative concessions, including approval of its merger with Yes, a satellite television company, despite the objections of lower-level ministry officials.It’s up to the attorney general whether to indict.The other two corruption scandals involve bribery as well. In one, “Netanyahu is suspected of receiving gifts worth at least a million shekels ($270,000; £210,000) from Hollywood mogul Arnon Milchan and other supporters,” the BBC reports. The other also involves bribing a newspaper, this time Yediot Aharonot, for positive coverage.The new case, however, “is the most serious of all those of which Netanyahu has been accused,” the Associated Press reports: Two of his top confidants have turned state witnesses and are believed to have provided police with incriminating evidence. Netanyahu held the government’s communications portfolio until last year and oversaw regulation in the field. Former journalists at the Walla news site have attested to being pressured to refrain from negative reporting of Netanyahu. Netanyahu, for his part, denies wrongdoing.

America Is Headed For Military Defeat in Afghanistan - . Maj. Danny Sjursen -- Consider this: the U.S. military has advised, assisted, battled, and bombed in Afghanistan for 17-plus years. Ground troop levels have fluctuated from lows of some 10,000 to upwards of 100,000 servicemen and women. None of that has achieved more than a tie, a bloody stalemate. Now, in the 18th year of this conflict, the Kabul-Washington coalition’s military is outright losing.  Let’s begin with the broader measures. The Taliban controls or contests more districts—some 44 percent—than at any time since the 2001 invasion. Total combatant and civilian casualties are forecasted to top 20,000 this year—another dreadful broken record. What’s more, Afghan military casualties are frankly unsustainable: the Taliban are killing more than the government can recruit. The death rates are staggering, numbering 5,500 fatalities in 2015, 6,700 in 2016, and an estimate (the number is newly classified) of “about 10,000” in 2017. Well, some might ask, what about American airpower—can’t that help stem the Taliban tide? Hardly. In 2018, as security deteriorated and the Taliban made substantial gains, the U.S. actually dropped more bombs than in any other year of the war. It appears that nothing stands in the way of impending military defeat. Then there are the very recent events on the ground—and these are telling. Insider attacks in which Afghan “allies” turn their guns on American advisors are back on the rise, most recently in an attack that wounded a U.S. Army general and threatened the top U.S. commander in the country. And while troop numbers are way down from the high in 2011, American troops deaths are rising. Over the Thanksgiving season alone, a U.S. Army Ranger was killed in a friendly fire incident and three other troopers died in a roadside bomb attack. And in what was perhaps only a (still disturbing) case of misunderstood optics, the top U.S. commander, General Miller, was filmed carrying his own M4 rifle around Afghanistan. That’s a long way from the days when then-General Petraeus (well protected by soldiers, of course) walked around the markets of Baghdad in a soft cap and without body armor.