oil prices drop another 11% to a 35 month low; record increase in uncompleted wells leaves a 6.7 month backlog

oil prices saw their largest decrease in nearly three years​ this week,​ amid turmoil ​in ​global financial ​markets ​and domestic political chaos....after falling 2.7% to $51.20 a barrel last week despite the OPEC led agreement to remove 1.2 million barrels from production, contract prices of US oil for January delivery fell $1.32 or more than 2.5% to $49.88 a barrel on Monday, the lowest close since September 2017, on fears of oversupply and concerns over global economic growth...with the psychological $50 price support thus pierced, US crude prices plunged $3.64, or 7.3% to a sixteen month low of $46.24 a barrel on Tuesday, as oil supply increases were reported nationally and at the crucial Cushing hub while equity markets fell nearly 2% on signs of a protracted economic downturn in China...oil prices rebounded 96 cents to $47.20 a barrel on Wednesday, after the EIA reported a small drop in domestic crude supplies and the largest draw from distillates supplies since March, as trading in the January contract expired and contract price for February oil rose $1.57 to $48.17 a barrel...now quoting oil contracts for February delivery, those prices fell $2.29, or 4.8%, to a 17 month low of $45.88 a barrel on Thursday, as as equity markets sold off following a Fed rate hike and the Saudis cut prices to Asian buyers...oil prices then fell 29 cents to $45.59 a barrel on Friday, the lowest closing price since January 2016, after earlier hitting $45.13, the lowest intraday price since mid-July 2017, as global oversupply worries kept buyers away from the market ahead of the holidays and the threat of a U.S. government shutdown added to economic uncertainty...oil prices thus ended the week with a loss of more than 11%, the steepest weekly drop since January 2016, leaving them nearly 41% below the 4 year high of $76.41 a barrel seen in trading of November oil on October 3rd...

natural gas prices, meanwhile, ended the week little changed, despite seeing quite a bit of volatility during the week, as weather forecasts were repeatedly revised....trading natural gas contracts for January delivery all week, prices plunged 29.9 cents on Monday, jumped 31 cents Tuesday, fell 11.2 cents on Wednesday and 14.3 cents on Thursday before again jumping 23.3 cents higher on Friday to end the week at $3.816 per mmBTU, just 1.1 cent lower than where they ended the week before.....the natural gas storage report for the week ending December 14th from the EIA showed that the quantity of natural gas in storage in the US fell by 141 billion cubic feet to 2,773 billion cubic feet over the week, which left our gas supplies 697 billion cubic feet, or 20.1% below the 3,470 billion cubic feet that were in storage on December 15th of last year, and 720 billion cubic feet, or 20.6% below the five-year average of 3,493 billion cubic feet of natural gas that are typically in storage after the second week of December....this week's 141 billion cubic feet withdrawal from US natural gas supplies was a bit above the ~136 billion cubic feet that analysts had been expecting, and a bit below the average of 144 billion cubic feet of natural gas that have been withdrawn from storage during the second week of December in recent years...natural gas storage facilities in the East​ern US​ saw a 40 billion cubic feet drop in supplies over the week, which pushed the region's gas supply deficit to 15.8% below normal for this time of year, while natural gas supplies in the Midwest fell by a less than normal 44 billion cubic feet as their supply deficit fell to 13.5% below normal for the second weekend of December...but the South Central region saw an above normal 38 billion cubic feet drop in their supplies, as their natural gas storage deficit increased to 27.2% below their five-year average for this time of year...at the same time, 7 billion cubic feet were pulled out of natural gas supplies in the sparsely populated Mountain region​,​ as their deficit from normal rose to 23.1%, while 11 billion cubic feet were withdrawn from storage in the Pacific region, and their natural gas supply deficit rose to 28.8% below normal for this time of year....however, graphics on the natural gas storage dashboard indicate that all regions of the US saw considerably warmer weather in the week to December 20th, so next week's reports should show that withdrawals have moderated and supply deficits have lessened in each of those regions..

putting this week's storage data into historical perspective, the 2,773 billion cubic feet of natural gas that we had in storage on December 14th was 15.8% lower than the previous five year low for the 2nd week of December of 3,295 billion cubic feet that was set on December 12th of 2014, and was 12.4% below the previous 10 year low of 3167 billion cubic feet that was set on December 12th of 2008...this year's December 14th storage level was also 1.0% below the 15 year low of 2,802 billion cubic feet of natural gas that we had in storage on December 16th of 2005, and 2.7% below the 2,850 billion cubic feet that were in storage on December 12th of 2003, a year when supplies had peaked at a lower level than this one...we have to follow the archived records (xls) back 16 years, to December 13th of 2002, when 2,635 billion cubic feet of natural gas were in storage, to find a lower quantity of natural gas in storage at this time in December than we have now.... 

The Latest US Oil Supply and Dispostion Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting ​on the week ending December 14th, indicated little change in our oil imports, our oil exports, our oil production, and our oil refining, and hence we had another small withdraw oil from our commercial crude supplies for the third in a row, following 10 prior weeks of additions to storage...our imports of crude oil rose by an average of 30,000 barrels per day to an average of 7,423,000 barrels per day, after rising by an average of 174,000 barrels per day the prior week, while our exports of crude oil rose by an average of 51,000 barrels per day to an average of 2,325,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 5,098,000 barrels of per day during the week ending December 14th, 21,000 more 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 11,600,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,698,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 17,408,000 barrels of crude per day during the week ending December 14th, 28,000 barrels per day less than the amount of oil they used during the prior week, while over the same period 132,000 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 578,000 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 (+578,000) 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 7,549,000 barrels per day, ​which was ​still 1.6% more than the 7,432,000 barrel per day average that we were importing over the same four-week period last year....the total 132,000 barrel per day decrease in our total crude inventories included a 71,000 barrel per day withdrawal from our commercially available stocks of crude oil, and a 61,000 barrel per day withdrawal from the oil stored in our Strategic Petroleum Reserve, likely ​representing ​part of a sale of 11 million barrels from those reserves to Exxon et al that closed three and a half months ago....this week's crude oil production was reported as unchanged at 11,600,000 barrels because the rounded figure for output from wells in the lower 48 states was unchanged at 11,100,000 barrels per day, while a 7,000 barrel per day increase to 498,000 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 15th was at 9,789,000 barrels per day, so this week's rounded oil production figure was 18.5% above that of a year ago, and 37.3% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...     

US oil refineries were operating at 95.4% of their capacity in using that 17,408,000 barrels of crude per day during the week ending December 14th, up from last week's 95.1% of capacity, and a rather high capacity utilization rate for December or for any time of year....the 17,408,000 barrels per day of oil that were refined this week were still at a seasonal high for the time of year for the 26th time out of the past 29 weeks, and 2.0% higher than the previous seasonal high of 17,063,000 barrels of crude per day that were being processed during the week ending December 15th, 2017, when US refineries were operating at 94.1% of capacity... 

with the small drop in the amount of oil being refined, the gasoline output from our refineries was also lower, decreasing by 123,000 barrels per day to 10,334,000 barrels per day during the week ending December 14th, after our refineries' gasoline output had increased by 791,000 barrels per day during the week ending December 7th...despite the decrease in this week's gasoline output, our gasoline production during the week was still the highest on record for mid-December, and 2.7% higher than the 10,065,000 barrels of gasoline that were being produced daily during the same week last year....at the same time, our refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 152,000 barrels per day to 5,393,000 barrels per day, after that output had decreased by 26,000 barrels per day the prior week....despite those decreases, this week's distillates production was also the highest on record for mid-December, and 3.6% higher than the 5,206,000 barrels of distillates per day that were being  produced during the week ending December 15th, 2017.... 

even with the pullback in our gasoline production, our supply of gasoline in storage at the end of the week increased by 1,766,000 barrels to 230,103,000 barrels by December 14th, the 4th increase in the past 9 weeks, which still left our gasoline supplies 6,069,000 barrels lower than they were on the 5th of October....our gasoline supplies rose this week even though the amount of gasoline supplied to US markets rose by 207,000 barrels per day to 9,243,000 barrels per day because our exports of gasoline fell by 363,000 barrels per day to 948,000 barrels per day, while our imports of gasoline rose by 70,000 barrels per day to 595,000 barrels...with th​is week's increase, our gasoline inventories are once again at a seasonal high for mid-December, 1.0% higher than last December 15th's level of 227,783,000 barrels, and roughly 3% above the five year average of our gasoline supplies for this time of the year...

even with the ongoing elevated level of our distillates production, our supplies of distillate fuels decreased for the eleventh time in thirteen weeks, falling by 4,237,000 barrels to 119,900,000 barrels during the week ending December 14th, after our distillates supplies had decreased by 1,475,000 barrels during the prior week...our distillates supplies decreased again because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 417,000 barrels per day to a ​​​15 year high ​of ​4,886,000 barrels per day, while our imports of distillates fell by 5,000 barrels per day to 139,000 barrels per day, and while our exports of distillates fell by 180,000 barrels per day to 1,251,000 barrels per day....with this week's decrease, our distillate supplies finished the week 6.9% below the 128,845,000 barrels that we had stored on December 15th, 2017, and roughly 11% below the five year average of distillates stocks for this time of the year...   

finally, with our oil imports, exports and production little changed, our commercial supplies of crude oil decreased for a third straight week after 10 weekly increases, and for the 24th week in 2018, falling by ​a modest ​497,000 barrels during the week, from 441,954,000 barrels on December 7th to 441,457,000 barrels on December 14th...but even with three straight decreases, our crude oil inventories still remained roughly 7% above the five-year average of crude oil supplies for this time of year, and over 28% above the 10 year average of crude oil stocks for the first week of December, 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 this fall, our oil supplies as of December 14th were only 1.1% above the 436,491,000 barrels of oil we had stored on December 15th of 2017, and remained 9.1% below the 485,449,000 barrels of oil that we had in storage on December 16th of 2016, and 2.4% below the 452,477,000 barrels of oil we had in storage on December 18th of 2015..    

This Week's Rig Count

US drilling activity increased for the first time in five weeks, led by an increase in oil drilling, hence defying ​our logic that lower oil prices had been the reason that drilling had been slowing in recent weeks... Baker Hughes reported that the total count of rotary rigs running in the US increased by 9 rigs to 1080 rigs over the week ending December 21st, which was also 149 more rigs than the 931 rigs that were in use as of the December 22nd 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 increased by 10 rigs to 883 rigs this week, which was also 136 more oil rigs than were running a year ago, while it was still well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas​ bearing​ formations fell by 1 rig to 197 natural gas rigs, which was still 13 more rigs than the 184 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...

drilling activity in the Gulf of Mexico increased by a single rig to 24 rigs this week, which was up from the 19 rigs deployed in the Gulf of Mexico a year ago at this time...since there is no other offshore drilling off either coast or ​off ​Alaska at this time, nor was there during the same week of 2017, those Gulf of Mexico totals are the same as the US totals..

the count of active horizontal drilling rigs increased by 13 rigs to 940 horizontal rigs this week, the largest increase in horizontal drilling since 14 horizontal rigs were added in the week ending April 6th...it was also 139 more horizontal rigs than the 801 horizontal rigs that were in use in the US on December 22nd of last year, but down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....on the other hand, the vertical rig count decreased by 2 rigs to 69 vertical rigs this week, which was still up from the 64 vertical rigs that were in use during the same week of last year...in addition, the directional rig count also decreased by 2 rigs to 71 directional rigs this week, which was still up from the 66 directional rigs that were operating on December 22nd 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 21st, the second column shows the change in the number of working rigs between last week's count (December 14th) and this week's (December 21st) count, the third column shows last week's December 14th 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 22nd of December, 2017...  

this week's changes in the Permian included a rig addition in New Mexico and ​​a net ​one rig ​decrease in Texas, as two rigs were added in Texas Oil District 8, which would correspond to the core Permian - Delaware basin, while Texas Oil District 8A, which includes part of the Permian Midland, saw 3 rigs pulled out...other Texas changes include an oil rig pulled out of the Eagle Ford in south Texas, and an oil rig added in the Dallas-Ft Worth area Barnett shale, which is more often accessed for gas...while 4 rigs were pulled out of the Granite Wash straddles the Texas panhandle Oklahoma border, only one of those appears to have been in Texas...Oklahoma's count then includes the loss of three of those Granite Wash rigs and the additions of 2 ​rigs ​in the Cana Woodford and 3 ​rigs ​in the Mississippian shale, which straddles the state's border with Kansas...strangely enough, the Granite Wash, which is usually drilled for oil, saw the addition of a natural gas rig this week, while 5 oil rigs were concurrently pulled out...other natural gas rig additions ​were seen in the Pennsylvania Marcellus and the Haynesville, on the Texas side of the Louisiana border, while natural gas rigs were pulled out of Ohio's Utica and 3 "other basins" not tracked separately by Baker Hughes...also note that other than the states shown above, Alabama saw the start up of two drilling rigs after being quiet for ​three ​weeks, matching their total of a year ago, Mississippi also saw the addition of 2 rigs this week and now has 6 running, equal to the most in the state since 2015, while Florida, a state which has only seen sporadic activity over the past 5 years, had its lone active rig pulled out after drilling for the 3 prior weeks...

DUC well report for November

Monday of this past week saw the release of the EIA's Drilling Productivity Report for December, which includes the EIA's November data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions...for the 8th month in a row, this report showed an increase in uncompleted wells nationally in November, as both drilling of new wells and completions of drilled wells increased, but the new drilling increased at a faster pace....like most previous months, this month's uncompleted well increase was mostly due to a big increase of newly drilled but uncompleted wells (DUCs) in the Permian basin of west Texas, with smaller increases of uncompleted wells in the Anadarko basin of Oklahoma and the Eagle Ford of south Texas also contributing...for all 7 sedimentary regions covered by this report, the total count of DUC wells increased by a record 287 wells, from a revised 8,436 wells in October to 8,723 wells in November, again the highest number of such unfracked wells in the history of this report, and an increase of 35.4% from the 6,442 wells that had been drilled but remained uncompleted in November a year ago...that was as 1,594 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during November, up from the 1,577 drilled in October, while 1,307 wells were completed and brought into production by fracking, a increase of just 9 well completions over the 1,298 completions seen in October...at the November completion rate, the 8,723 drilled but uncompleted wells left at the end of the month now represent a 6.7 month backlog of wells that have been drilled but not yet fracked...  

as has been the case for most of the past two years, the November DUC well increases were predominantly oil wells, with most of those in the Permian basin...the Permian basin saw its total count of uncompleted wells rise by 248, from 3,791 DUC wells in October to 4,039 DUCs in November, as 686 new wells were drilled into the Permian, but only 438 wells in the region were fracked...at the same time, DUC wells in the Anadarko basin region​ centered​ in Oklahoma increased by 45, from 1,090 DUC wells in October to 1,135 DUCs in November, as 210 wells were drilled in the Anadarko basin during November, while 165 Anadarko basin wells were completed...over the same period, the number of DUC wells in the Eagle Ford of south Texas increased by 28 to 1,563, as 215 wells were drilled into the Eagle Ford while 187 Eagle Ford wells were fracked....in addition, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 9 wells to 210, as 64 wells were drilled into the Haynesville during November, while 55 Haynesville wells were fracked during the same period...

on the other hand, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 19 wells, from 607 DUCs in October to 588 DUCs in November, as 118 wells were drilled into the Marcellus and Utica shales, while 137 of the already drilled wells in the region were fracked...in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies' front range decreased by 16 wells to 421, as 179 Niobrara wells were drilled while 195 Niobrara wells were being fracked...lastly, DUC wells in the Bakken of North Dakota fell by 8, from 775 DUC wells in October to 767 DUCs in November, as 122 wells were drilled into the Bakken in November, while 130 of the drilled wells in that basin were completed....thus, for the month of November, DUCs in the 5 oil basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) increased by a net of 297 wells to 7,795 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 10 wells to 798 wells, although as the report notes, once into production, more than half the wells drilled nationally will produce both oil and natural gas...

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Settlement with Patriot Water might be end of gas and oil wastewater treatment in city – Youngstown Vindicator - Though a lawsuit filed by an environmental group against the company Patriot Water is still pending, the recent settlement by Warren would suggest Patriot’s experiment in treating wastewater from the gas and oil industry and have it end up in the Mahoning River might be over. An attorney for Freshwater Accountability Project of Grand Rapids, Ohio, and Warren Law Director Greg Hicks say Warren resolved its part of the case by agreeing to pay $116,616 of Freshwater’s legal fees and no longer allowing Patriot to discharge “drilling mud,” which is wastewater from the gas and oil industry, into the city sewer system, as it did starting in 2011. Patriot, which is located on Sferra Avenue in the Warren Industrial Park, stopped discharging wastewater into Warren sewers June 16, 2017, after the Freshwater suit was filed June 27, 2017, and has not resumed. The plant is still open, however, its president, Andrew Blocksom, said earlier this month. Blocksom said he could not comment on the matter because legal action with Freshwater Accountability is still pending. Hicks said he does not believe Patriot will ever be able to resume discharging gas and oil wastewater into Warren’s treatment facility. Atty. Megan Hunter of Akron, who represents Freshwater, said the settlement with Warren bars the city from accepting total dissolved solids, total suspended solids and barium from Patriot above a certain limit. That effectively stops the city’s wastewater treatment plant from receiving drilling muds, which were causing significant problems for the treatment plant. The plant was not equipped to treat wastewater with total dissolved solids and total suspended solids in those quantities, Hunter said. By failing to treat those wastewaters effectively, the city violated its U.S. Clean Water Act permit regarding water it discharged into the Mahoning River.

Rig Count Stands at 19 in Ohio's Utica – The number of oil and gas rigs operating in Ohio’s Utica shale stood at 19 for the week ended Dec. 15, according to the latest data from the Ohio Department of Natural Resources. Meanwhile, nine new permits for horizontal wells were awarded to two energy companies exploring in the Utica during that week, ODNR reported. Ascent Resources secured six new permits for wells in Belmont and Jefferson counties, while Gulfport Energy Resources was awarded three permits for new wells in Harrison County. As of Dec. 15, ODNR has awarded 2,953 permits for horizontal wells in the Utica shale. Of that number, 2,469 wells have been drilled and 2,092 are in production, ODNR said. There were no new permits issued for Mahoning, Trumbull or Columbiana counties in the northern section of Ohio’s Utica, according to ODNR. No new permits were issued in neighboring Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.

Utica Shale well activity as of Dec. 15 - Nine horizontal permits were issued during the week that ended Dec. 15, and 19 rigs were operating in the Utica Shale.

• DRILLED: 245 (246 as of last week)
• DRILLING: 132 (133)
• PERMITTED: 484 (481)
• PRODUCING: 2,092 (2,088)
• TOTAL: 2,953 (2,948)

TOP 10 COUNTIES BY NUMBER OF PERMITS

• 1. BELMONT: 596 (591 as of last week)
• 2. CARROLL: 525 (525)
• 3. HARRISON: 437 (437)
• 4. MONROE: 421 (421)
• 5. GUERNSEY: 251 (251)
• 6. NOBLE: 223 (223)
• 7. JEFFERSON: 205 (205)
• 8. COLUMBIANA: 159 (159)
• 9. MAHONING: 30 (30)
• 10. WASHINGTON: 22 (22)
• 14. STARK: 13 (13)

TOP 10 COMPANIES BY NUMBER OF PERMITS

• 1. CHESAPEAKE: 895 (895 as of last week)
• 2. ASCENT RESOURCES UTICA: 503 (498)
• 3. GULFPORT: 406 (406)
• 4. ANTERO: 260 (260)
• 5. ECLIPSE: 204 (204)
• 6. RICE: 128 (128)
• 7. XTO: 75 (75)
• 8. HILCORP: 59 (59)
• 9. CNX GAS: 52 (52)
• 10. PENNENERGY RESOURCES: 40 (40)

Utica Oil and Gas Production Soars During Third Quarter – Natural gas and oil production across the Utica shale soared during the three months ended Sept. 30, according to the most recent data made available by the Ohio Department of Natural Resources. The bulk of production comes from wells located in the southern tier of the play, the so-called “sweet spot” of eastern Ohio’s Utica. Oil and gas production, however, slowed slightly in the northern tier of the Utica, which includes Mahoning, Trumbull and Columbiana counties,Most when compared to the previous quarter, according to records. Seventy-four wells reported production in Columbiana County during the period, which together yielded 7.953 billion cubic feet of gas. In the second quarter, the county’s wells delivered 8.992 billion cubic feet of gas. The most productive well in Columbiana County during the third quarter was Chesapeake Energy Corp.’s Paige 3H well in Franklin Township, which produced 727.584 million cubic feet of natural gas over 92 days. Hilcorp Energy Co.’s seven wells in Poland Township in Mahoning County yielded just 336.760 million cubic feet of gas during the period, Northwood Energy Corp.’s three wells in Jackson and Ellsworth townships produced 39.77 million cubic feet, and Pin Oak Energy Partners’ two wells in Jackson Township yielded 23.794 million cubic feet of gas. In Trumbull County, Pin Oak’s six wells together produced 90.891 million cubic feet of gas, while Enervest Operating Co.’s Lennington well in Johnston Township produced 10.468 million cubic feet. Oil production throughout the three-county region was negligible, according to ODNR. During the third quarter, Ohio’s horizontal wells produced 605.7 billion cubic feet of natural gas. This is compared to 554.3 billion cubic feet produced during the previous quarter and 460.8 billion cubic feet produced during the third quarter of 2017. ODuring the third quarter of 2018, Utica wells pumped out 5.545 million barrels versus 4.888 million barrels during the previous quarter. Production of natural gas during the third quarter jumped 31.4% compared to year ago figures, while oil output rose 31.8% versus the third quarter of 2017, according to ODNR. ODNR lists 2,242 shale wells, of which 2,198 reported production during the third quarter. The most productive gas well during the quarter was the Cermak NE 5H, owned by Ascent Resources. The well, located in Jefferson County, yielded 2.986 billion cubic feet of natural gas during a 92-day period. .

Ohio Natural Gas Production Continues Growth - -- According to the Ohio Department of Natural Resources, Ohio Natural gas production has grown every quarter since 2013.Our state currently has over 60-thousand active oil and gas wells.And there are currently more than 2-thousand Utica shale wells in production and 18 active drill rigs.Ohio is number five in the nation in natural gas production and ranked as the 12th oil producing state in the country. According to a recent report by the Ohio Department of Job and Family Services, shale related jobs have increased over the past seven years, nearing 200,000 employees.   And since 2011, the shale industry has invested more than $60-billion dollars in our state. “We are seeing more rigs move into town. We're seeing those rigs being more efficient. More effective, drilling faster, better wells. And the trend is still to the south in those hot areas. So that I believe has lived up to the hype. Particularly that's where you're seeing a lot of the assignment with the processing plants like Markwest. The possible ethane crack plant in Belmont County. So that's really the heart of the play, is in Appalachia,” says Ohio Oil and Gas Association spokesperson Mike Chadsey.  Despite the positive news, many groups around the country including Frackfree America National Coalition say the hydrofracturing process remains a serious risk to resident's health and does irreparable harm to the environment.“Hydrofracturing is a process that cannot be used. It's not sustainable. It uses way too much water, and permanently pollutes it. It's an insane amount of return on a horrible amout of environmental damage. Stop doing it,” says Frackfree America National Coalition member Lynn Anderson.  Chadsey admits there have been some recent challenges with injection wells in Mahoning and Trumbull County.

BLM Auctions 75 Acres in OH's Wayne Natl Forest for $209/Acre - Last week the Bureau of Land Management’s (BLM) Eastern States Office ran another oil and gas lease auction for federal land on the eastern side of the country. Up for auction was 2,456 acres in Ohio, Michigan and Mississippi. Only half of the property listed for auction actually brought bids and sold. Of the 2,456 acres offered, a piddly 75 acres, in two parcels, was located in Ohio’s Wayne National Forest (WNF)–in Monroe County. That is, 3% of all the acreage in the BLM sale was in the Ohio Utica–and yet that 3% brought in 69% of the revenue from the sale: $15,720 total. However, the amount paid per acre for the WNF parcels seems to be small–just $209 per acre. So who picked up the 75 acres for a song?  The winner for all of the acreage sold in the most recent BLM eastern auction, including the acreage in Monroe County, OH, was Texas-based R&R Royalty Ltd.Nearly half of the roughly 2,456 acres in Ohio, Michigan and Mississippi auctioned for oil and gas development last week by the Bureau of Land Management’s (BLM) Eastern States Office received no bids.Instead, about 1,313 acres in all three states were leased by Texas-based R&R Royalty Ltd. The rest of the acreage in Muskegon County, MI, and George County, MS, attracted no bids. The sale generated only about $22,636, but the bulk of those profits came from just 75 acres in Ohio’s Wayne National Forest (WNF).The parcels, in the Utica Shale hotspot of Monroe County, earned about $200/acre and took in nearly $16,000, including bonus payments and other fees.**NGI’s Shale Daily (Dec 18, 2018) – BLM Auctions More Land in Ohio’s Wayne National Forest Here’s a list of the most recent auction and the parcels that sold:

Can Shale Gas Rebuild Ohio's Manufacturing Base? – WOSU - Along the Ohio River, anticipation is mounting for the next phase of the natural gas industry. Beyond cheap electricity, Ohio is looking to use shale gas to rebuild its manufacturing base.The Ohio Valley has long been known for coal and making steel, but the future, according to some predictions, is natural gas and plastics. Richard Regula, a commissioner in Stark County, Ohio, is working to expand the petrochemical industry. “What’s going to happen in this region in the Utica and Marcellus Shale plays is going to impact us positively for the next 100 years in my opinion, at least 50,” Regula said. More than 2,400 gas wells have been drilled using hydraulic fracturing in Ohio since 2012.  Regula is talking not only about the cheap gas from that, but the spinoff industries and development many expect. Excitement has been building since the announcement in 2016 that Shell should be building an ethane cracker plant in Beaver County. Right now, the ethane, which is a component of the natural gas that’s produced at the region’s wells, is exported to China, Europe or piped to the Gulf Coast. Shell’s $6 billion facility along the Ohio River in Pennsylvania will “crack” the ethane at very high temperatures to make ethylene locally. “Ethylene is a major raw material that goes into the making of polyethylene,”  Polyethylene is used to make everything from plastic bags to car parts to medical devices. A study by the American Chemistry Council looked at the ethane supply in Ohio, Pennsylvania, West Virginia, and Kentucky. They concluded that there could be up to five ethane crackers supported in the region, creating an Appalachian petrochemical hub as an alternative to the Gulf Coast. Supporters of this idea like to repeat these numbers: 12,000 manufacturers who use plastics are already located within a day’s drive (600 miles) of the region. But those manufacturers don’t have access to a local supply of polyethylene.

Injection rejection - More than 60 people gathered at the Athens Community Center on Tuesday evening to voice strong objections to a company’s plan to build a new oil-and-gas waste injection well facility in eastern Athens County. The new well would be the fourth operated in the Torch area by K&H Partners, LLC.Opponents of the well argue that fracking-waste injection wells, in general, could poison the community and that this well should be stopped before environmental and health concerns become reality.Meanwhile, the owner of the K&H site, Jeff Harper, has said that the concerns many activists have regarding injection well’s potential dangers are based on misinformation and are unfounded.K&H Partners, LLC, of Parkersburg, West Virginia, has applied for a 4th Class II injection well within a half mile of the existing K&H facilities in Torch. According to a fact sheet provided at the meeting, the application for the well states that it will take up to 840,000 gallons, or 20,000 barrels, of oil-and-gas fracking waste every day, which is 306.6 million gallons of waste per year.The Athens County Commissioners convened the public meeting as an opportunity for concerned residents to share comments to be forwarded to the Ohio Department of Natural Resources.Board President Lenny Eliason said at the start of the meeting that ODNR representatives had informed him that it was “premature” in the permit application process to hold a public hearing on the matter, so no one from ODNR was present. Regardless, Eliason said all comments from the meeting will be submitted to ODNR for the public comment period, which ends Dec. 22, and to “other elected officials” in Columbus, and that another public meeting will be requested once ODNR is willing to approve one. More than 20 Athens County residents spoke at the meeting, all voicing opposition to the proposed well, some of it angry and emotional. Many expressed frustration that ODNR has yet to send representatives to Athens County for a public hearing on the subject.

Pieces of Pennsylvania ethane plant move through the region - Another component of a multibillion-dollar petrochemical plant being built in Pennsylvania passed through the Tri-State Monday. The Gulf Coast tugboat Tristen pulled while a towboat pushed a barge carrying one of many parts of the ethane cracker being built by Shell Polymers along the Ohio River at Monaca, Pennsylvania. Since April, a steady stream of tugboats and towboats has moved equipment assembled along the Gulf Coast and has delivered it to Monaca.There, they are placed in final assembly for what will be the largest industrial installation in Appalachia to deal mainly with ethane, a natural gas liquid found in parts of the Marcellus and Utica shale region of West Virginia, Ohio and Pennsylvania.Often the equipment is moved with a tugboat-and-towboat combination, with the tugboat pulling the barge with a hawser line and the towboat pushing. Often, the towboat pilot sees nothing ahead but the equipment because it is so large and bulky. The cracker plant at Monaca will use high temperatures to crack, or break apart, ethane's large molecules and rearrange the carbon and hydrogen atoms in them to create ethylene. The ethylene will be further processed to create different types of polyethylene pellets. The pellets will be shipped by rail and truck to manufacturers who will use them to make plastic products for commercial and consumer use.

Fracking for Plastics – DeSmog - Fracking continues to open up a huge supply of oil and gas in America, and investors are looking to create a new market for some of those fossil fuels, including so-called “natural gas liquids,” close to the Marcellus and Utica shales.  As a result, companies have begun pumping hundreds of billions of dollars into creating a new petrochemical corridor in the Rust Belt and expanding a heavily polluted corridor along the Gulf Coast known as “Cancer Alley.” The wave of construction plans means fossil fuels from fracked wells will increasingly be turned into plastics, petrochemicals, and other consumer products. This is a DeSmog investigation into the proposed petrochemical build-out in the Rust Belt and the major players involved, along with the environmental, health, and socio-economic implications. We'll explore the claims of how clean and safe the American chemical industry really is, health risks for chemical industry workers, the bait-and-switch argument that bills fracking as moving the U.S. toward energy independence rather than plastic dependence, and the groups involved in pushing for and against stronger health and environmental regulations of this industry.

Two huge pipeline projects in Pennsylvania and Ohio are almost done — but at what cost- In a race to build two of the largest natural gas pipelines in the world, projects stretching across Pennsylvania and Ohio have racked up over 800 state and federal violations — costing millions of dollars in fines and leaving state officials to scrutinize future projects.  Energy Transfer's Rover and their subsidiary Sunoco's Mariner East 2 are expected to carry natural gas and gas liquids from Pennsylvania, Ohio and West Virginia — an area that would account for more than a third of U.S. gas production.  What's next?

• The Rover Pipeline Project was placed into service in sections, with the first section going into service August of 2017. The full 713-mile project was placed into service November of this year.
• Energy Transfer spokeswoman Lisa Dillinger said the Mariner East 2 pipeline is in the final stages of construction required to put the line in service, which is anticipated to be completed by the end of the year.
• New jobs should be emerging in the industry as the Mariner East project is anticipated to create more than 9,500 construction-related jobs a year during construction, and between 360 to 530 permanent jobs.

Violations and fines: The projects racked up over 800 violations, and the Rover alone acquired over 681 violations. According to analysis from Reuters, Energy Transfer's violations include:

• 279 violations for insufficient run-off/erosion controls
• 102 violations for improper or unauthorized use of areas or equipment
• 86 violations for inadequate environmental restoration/damage mitigation practices
• 25 violations for lack of infrastructure
• 18 violations for spills/leaks
• 12 violations for improper disposal techniques

Pipeline firms plagued by accidents, fines — While having success in court, it’s been a rough week in the field for Pennsylvania pipeline companies, with six injuries and recommended fines. Six pipeline employees were injured, in two separate accidents, and the PUC’s Bureau of Investigation and Enforcement recommended that Sunoco pay a $225,000 fine. A fire broke out Thursday night at parent company Marathon Petroleum’s MarkWest natural gas processing plant in Washington County, injuring four workers. The fire broke out in a tank holding 200 barrels of liquid Ethylene Glycol, plus hydrocarbons. In addition, two workers were sent to the hospital following an accident during testing of the Mariner East pipeline site in Westmoreland County. George Alexander, spokesperson for Del-Chesco United for Pipeline Safety said that this was at least the third accident on the Mariner East 1 line in less than a year. Mariner East 1 is an older, smaller pipeline that is already in use carrying ethane, butane and propane from the Marcellus Shale regions to Marcus Hook. Mariner East 2 will utilize a larger, 20-inch pipe, except in spots that have been delayed by work stoppages and other problems. In those areas, Sunoco is planning to use another old, smaller pipeline to fill in the gaps. Opponents have questioned the safety of the move. Sunoco says the old lines have been tested and prove safe. Sunoco ‘tested’ the pipeline multiple ways — right before it failed,” Alexander said. “And, as usual, Sunoco failed to detect that a leak was occurring, so we still don't know how long it had been leaking, or how much explosive material was released.”

PUC panel sees ‘statewide concern’ with pipeline corrosion after ME1 leak -- Investigators at the Public Utility Commission blamed corrosion for a leak of natural gas liquids from Sunoco’s Mariner East 1 pipeline in April 2017, and said they are concerned about the company’s corrosion-control program throughout the ageing statewide line. The PUC’s Bureau of Investigation and Enforcement issued a formal complaint late Thursday saying that ethane and propane leaked from the line at Morgantown in Berks County, and the leak was discovered by a resident who reported “bubbling” out of the ground on April 1. Two days later, Sunoco workers dug up that section of the pipe, and concluded that it was corroded at the bottom. That was later confirmed by a laboratory that examined an eight-foot section of the pipe, the complaint said. The company said at the time that about 20 barrels of liquids leaked. The bureau faulted Sunoco’s use of cathodic protection – a technique to prevent metal corrosion – saying that its level did not meet official requirements for minimum protection. And it said the incident raised questions about possible corrosion elsewhere along the line, which was first installed in about 1931 to carry refined petroleum products, and in recent years has been repurposed for highly volatile natural gas liquids. “While the data reviewed was largely specific to the site of the leak, SPLP’s procedures and overall application of corrosion control and cathodic protection practices are relevant to all of ME1 and thus I&E alleges that there is a statewide concern with SPLP’s corrosion control program and the soundness of SPLP’s engineering practices with respect to cathodic protection,” the bureau wrote in the 16-page complaint.

PUC investigators: We didn’t say the 12-inch Mariner East 2 line was safe -- Investigators at the Pennsylvania Public Utility Commission said on Tuesday they didn’t confirm that the 12-inch pipeline component of Mariner East 2 was safe, despite a statement by Sunoco that they had done so. The PUC’s Bureau of Investigation and Enforcement contradicted a claim by Sunoco in the company’s response to seven eastern Pennsylvania residents who filed an emergency petition to the regulator to shut down the Mariner East project. The bureau issued its denial in an intervention to the residents’ case before the PUC, for the limited purpose of clarifying its position on whether the 12-inch line is safe. “Sunoco mischaracterized I&E’s position in this matter in its answer to petitioners’ petition for emergency relief, claiming that I&E acknowledged that respondent’s 12-inch pipeline is ‘safe,’” the bureau said in a five-page filing. “I&E made no such assertion.” Still, the bureau stressed that the filing doesn’t mean that it thinks the pipeline is unsafe. “The purpose of this clarification should also not be construed as a testament that the 12-inch line is unsafe,” it said. The filing said Sunoco based its statement on a letter from Paul Metro, head of the bureau’s safety division, to three school district superintendents on Nov. 1, saying that no leaks were discovered in two tests of the 12-inch line. But Metro’s letter did not mean that the pipeline was characterized as “safe,” the bureau said. “Rather, Mr. Metro stated that it was the responsibility of the I&E Safety Division to monitor and enforce compliance with state and federal regulations while it is ‘Sunoco’s responsibility to operate and maintain their pipeline facilities in a safe manner,’” the bureau said. The safety of the 12-inch line, which was built in the 1930s, has been a focus of Mariner East opponents because of its age and history of leaks, most recently of 33,000 gallons of gasoline into Darby Creek near Philadelphia in June. A section of the pipeline in Delaware and Chester counties is being temporarily repurposed to carry natural gas liquids as part of the Mariner East project so that Sunoco can start to meet customer orders with the long-delayed pipeline. Sunoco says it will start operating Mariner East 2 by the end of 2018.

Prosecutor opens investigation on Mariner East pipeline work (AP) — A county prosecutor in Pennsylvania said Wednesday that he has opened a criminal investigation into construction on three natural gas liquids pipelines that have drawn blame for causing sinkholes and polluting drinking water and waterways across southern Pennsylvania. Tom Hogan, Chester County's district attorney, sent the company that owns the Mariner East pipelines a five-page letter demanding it hand over and preserve a list of documents and electronic records. In a statement, he said he will demand that "every aspect of these pipelines be conducted safely, or we will bring into play all of the tools of the criminal justice system." Hogan also suggested that Gov. Tom Wolf and state utility regulators had not done their jobs. "Quite frankly, I thought the governor or the Public Utility Commission would step in and make sure it's being done safely, and it became apparent to us that it was not," Hogan said in an interview Wednesday. Hogan also accused the company of treating Chester County residents poorly, frightening people who had complained with "subtle and not-so-subtle bullying." Hogan is targeting Sunoco Pipeline's Mariner East 1, 2 and 2X projects stretching across southern Pennsylvania. The projects have weathered more than $13 million in fines and at least two temporary shutdown orders from state agencies, while residents living along the pipelines are suing the parent company, Energy Transfer LP of Dallas, Texas, in federal court. The pipeline construction is blamed for sinkholes that developed within 50 feet (15 meters) of homes and near an Amtrak rail line in southeastern Pennsylvania, drawing a temporary shutdown order. At another point, the state Department of Environmental Protection accused Sunoco Pipeline of a "lack of ability or intention" to comply with environmental regulations after citing it for dozens of violations involving polluting waterways.

Man injured in energy facility explosion dies (AP) — A man who was injured in an explosion at a MarkWest energy facility in Pennsylvania last week has died. The Allegheny County Medical Examiner's Office says 61-year-old Jeffrey Fisher, of Salem, West Virginia, died Tuesday at a hospital burn unit. Fisher was one of four injured in the explosion and subsequent fire at the facility in Chartiers Township Dec. 13. The conditions of the other three people have not been released. MarkWest previously said the explosion happened near two temporary tanks. The company gathers and processes natural gas and stores chemicals related to fracking. Parent company spokesman Jamal Kheiry said Wednesday they are "deeply saddened" about Fisher's death.

Judge rules gas pipeline company can start taking land (AP) — A natural gas pipeline company seeking to build a line from Pennsylvania into New Jersey can go ahead with taking property and compensating landowners as part of the roughly $1.1 billion project, a federal judge in New Jersey ruled Friday. U.S. District Judge Brian Martinotti said Friday that PennEast can begin taking immediate possession of properties in New Jersey along the roughly 120-mile proposed pipeline. The route would stretch from northeastern Pennsylvania to Mercer County, New Jersey. The 50-page ruling says PennEast offered $3,000 for access to parts of land where the pipeline would travel. The judge specifies the order isn't final and that PennEast first has to satisfy environmental conditions laid out by federal regulators. But the ruling is a setback for towns, landowners, the state and environmental groups, who all sought to stop the company's use of eminent domain. "Although disappointed, we are even more steadfast in our resolve to stop this project by proving that this it is not needed," said Vincent DiBianca in a statement. He's a resident of Delaware Township and owns a small farm along the potential pipeline's path.

PennEast now faces tough scrutiny from DEP after winning court battle -- Now comes the hard part for PennEast.  While the pipeline company won a long-awaited federal court ruling on Friday, allowing it access to private and public lands in New Jersey, it must next meet a long list of permit requirements from other agencies, notably the Department of Environmental Protection, which is expected to provide the sternest test yet over whether the pipeline can be built.  To build its proposed 120-mile natural gas pipeline through New Jersey, the company must satisfy the DEP that it will not violate federal water-quality standards, and that it complies with many other state rules including those on flood hazards, storm water and endangered species.  In the hope of meeting those standards, PennEast must conduct surveys for environmentally sensitive features such as streams and wetlands on the properties of 136 landowners who have previously refused access but are now required by the ruling to allow PennEast officials on their land for surveying purposes.  U.S. District Judge Brian Martinotti granted PennEast the right of eminent domain over the properties some eight months after hearing oral arguments over whether it has the right to take properties from landowners, including the state, which have rebuffed its offers of compensation. Martinotti rejected the landowners’ arguments that a federal certificate approving the $1 billion pipeline was not final, and that the company could not “condemn,” or take possession of, portions of the properties immediately.  The New Jersey Attorney General’s office, which earlier this year asked FERC to suspend its approval for PennEast, said it was reviewing Martinotti’s ruling, and would have no comment.

PennEast pipeline: Malinowski, Congressmen join homeowners in opposition - A bipartisan group of local, state and federal officials on Wednesday joined conservation leaders and landowners opposing a federal court ruling that paved the way for PennEast to acquire land for a natural gas pipeline through eminent domain. The federal court in Trenton ruled Friday that PennEast, which is proposing to build a the pipeline through western Hunterdon and Mercer counties, can have access to properties on the pipeline route to perform surveys in preparation for the acquisition of the land through condemnation. Wednesday's event, which took place at a property in PennEast's proposed route, included mayors, municipal leaders and members of Congress. The property belongs to Loretta Varhley, one of more than 100 homeowners whose property was approved for surveying by PennEast in the court decision, according to a news release. PennEast officials have said that it would allocate "millions of new dollars to new open space preservation" because the project would mitigate existing preserved space.The speakers strongly denounced the decision in the U.S. District Court in Trenton, and vowed their continued opposition to the pipeline project that still needs approval from the state Department of Environmental Protection and Delaware River Basin Commission.

Franklin Park Council Tables Vote On Fracking Lease (KDKA) — Shale Gas drilling rigs have sprouted up throughout the region in recent years, but few companies have actually drilled inside Allegheny County. A groundswell movement of folks in Franklin Park are opposing the drilling of a new well in adjoining Economy, Beaver County. “There will be a significant amount of gases released at the well sites that will drift into Franklin Park and potentially cause respiratory problems and other health problems,” resident Robert Davis said. The Franklin Park Borough Council was set to vote to approve a lease with the PennEnergy Resources gas exploration company Wednesday night, allowing their fracking laterals to burrow under Franklin Park and frack the shale rock strata below. But, the proposal was facing headwinds and residents like Davis say not so fast. “They are ignoring the will of the people and are trying to rush this through six days before Christmas when they know that people are going to be busy with their holiday activities,” Davis said. The resident said they would show up in large numbers Wednesday to ask council to deny the lease, which would allow PennEnergy to tunnel underneath Linbrook Park. While PennEnergy did not return phones calls requesting an interview, environmentalist Doug Shields of the Food and Water Watch says council has over-stepped its authority. “This park belongs to the public. It is not there for the council or any other entity to do with it what it will. The council has not consulted with the community. There have not been public hearings,” Shields said. Franklin Park Council decided at Wednesday’s meeting to table a vote on whether to allow fracking underneath the borough. The issue was postponed to a meeting on Jan. 14. But, the crowd of about 200 people who had jam-packed the meeting room still wanted to speak out. “I will not hesitate to move out of this borough if this decision goes forward,” one man said.

Environmental groups ask BPU, Pinelands Commission to order stop to pipeline construction -— Two environmental groups have asked the New Jersey Board of Public Utilities and the state Pinelands Commission to order a utility company to stop construction of a controversial natural gas pipeline through northern Burlington, Monmouth and Ocean counties. Both agencies already have approved construction of the 30-mile pipeline, but those decisions are under appeal, and the Pinelands Preservation Alliance and the New Jersey Sierra Club want the two agencies to suspend their approvals until the litigation is resolved. If either agency consents, it could force New Jersey Natural Gas to halt construction of the pipeline, which began earlier this month in Plumsted, Ocean County, and is proceeding at the company’s “own risk,” meaning the utility will accept responsibility for the expense of restoring any disturbed property if the courts end up scuttling the project. The transmission feed, called the Southern Reliability Link, is planned to run from a compressor station another utility company has built off Route 528 in Chesterfield and travel west through North Hanover, Joint Base McGuire-Dix-Lakehurst and other towns in Monmouth and Ocean counties to a connection with the utility’s distribution system in Manchester, Ocean County. New Jersey Natural Gas insists the project is critically important to the reliability of gas delivery to its more than 1 million customers, mostly in Ocean and Monmouth counties, because it will provide a second transmission feed to its territory. But opponents have waged an unrelenting battle against the project, arguing that the close proximity of the compressor station and pipeline route to residences and businesses in Bordentown Township, Chesterfield and North Hanover will pose a significant safety and pollution risk. Environmental groups also argue the infrastructure promotes hydraulic gas drilling in Pennsylvania, which they say pollutes water and contributes to climate change.

Williams Gets Final FERC Approval For Gateway Project -- Bringing in pleasant news for the company, the Federal Energy Regulatory Commission (FERC) recently approved Williams Companies Inc.’s WMB Gateway project, which is an expansion of the firm’s Transco pipeline. Notably, the Transco pipeline delivers almost half of the natural gas consumed in New York and New Jersey. With the existing Transco pipeline capacity being fully utilized, the expansion will allow additional gas volumes to be delivered to the northeastern markets. Notably, the company had applied for the Gateway expansion project’s FERC permit in late 2017. In July 2018, FERC released its Environmental Assessment for the Gateway project, citing that it meets the requirements of the National Environmental Policy Act and the approval of the project is not likely to prove detrimental to the environment. Very recently, the FERC completed its review process and gave the final go-ahead to the project. Upon the receipt of the required regulatory approvals, the company is scheduled to commence the construction of the project in spring 2019. The Gateway expansion project is expected to come online by November 2020. With the Gateway expansion project, Williams will be able to fulfill its commitment to supply an incremental 65,000 dekatherms per day of firm transportation capacity and the mounting natural gas needs of customers in the Northeast during the winters of 2020 to 2021. The project will help provide additional natural gas service to UGI Corporation’s UGI affiliate UGI Energy Services LLC and utility firm Public Service Enterprise Group Inc.’s PEG unit, PSEG Power, LLC. Importantly, the Gateway Expansion development is expected to add 27,500 horsepower of electric motor at the New Jersey compressor station of Transco. The project also calls for the upgradation of two meter stations of Transco. The company believes that the Gateway Expansion development will provide customers with cost-effective clean energy, significantly reducing carbon dioxide emissions. The pipeline is also expected to add value to its existing energy infrastructure, which will provide it with a steady flow of revenues in the future.

Massachusetts senators press Columbia Gas on whistleblower’s warning -- U.S. Sens. Edward J. Markey and Elizabeth Warren are demanding answers from Columbia Gas after a whistleblower claimed job cuts in the crew that monitored the system’s pressure may have contributed to the September explosions. Whistleblower Bart Mederios, a retired Columbia Gas employee, claims he told the company that the cuts could lead to disaster.  “We want to know who knew that at Columbia Gas. What was their response to the warning from Bart Maderios, so that we can get right to the bottom of how this accident occurred,” Markey told the Herald on Monday. “This could have been a preventable accident. It never had to happen if Bart Maderios had been listened to.”Attorney General Maura Healey’s office said they find the claims concerning and will be reaching out to Maderios to get more information, but couldn’t otherwise comment on the issue. They also pointed to orders from the AG’s office requiring that Columbia Gas and NiSource preserve documents for a potential state investigation. Maderios, a 42-year employee, told NBC10 recently that he warned the utility about the dangers of their policy changes and drastic cuts to the meters and regulation department, which is responsible for monitoring the pressure of the gas distribution system, according to NBC10 Boston. As the former manager of the meters and regulation department, Maderios said he asked for more resources for Greater Lawrence “multiple times,” and that the company cut his department from four employees to one. That particular department also maintains maps detailing the gas pipeline system and was not consulted in preparing the work plan that led to the Merrimack Valley disaster. Maderios also said the company’s decision to no longer have a technician on site to monitor gas pressure – which could have prevented the Sept. 13 explosions – was driven by a lack of resources.

Powerless. What it looks and sounds like when a gas driller overruns your land. -- Lee Martin loved her 104-acre farm in Wetzel County, West Virginia. The family raised chickens there and rode horses. The kids played in mud puddles. They all took walks in the woods.  Then, starting in about 2012, Martin had to begin sharing the farm with Stone Energy.  . Stone built a new bridge across the creek and a new road right in front of the Martins’ house. The company told Martin it needed the road to reach the new natural gas wells it drilled on the new well pad for which it flattened an area she used to go to pray, bucolic hills forested with huge oak trees. Soon, hundreds of trucks rumbled past her house every day, spewing exhaust. Martin had asked the company to build the bridge farther up the creek, away from her house, and the well pad away from the oaks. But Martin didn’t have a say over any of this. While she owns the house and the surface land it sits on, she doesn’t own the natural gas underneath. And that gave Stone Energy not only the right to access her property, but also the right to tear down trees, build structures and send as much traffic as it deemed appropriate onto it. “It took the very core out of me to watch this pristine farm get torn up like this,” Martin said. “It just hurt.”. In West Virginia, century-old legal doctrines have allowed gas companies that have leased those minerals to do what's “reasonably necessary” to get to them, even if the surface owners object. The underground horizontal wells often cross surface property lines.

Stream crossing issues are complicating work on the Mountain Valley Pipeline — The clear, cold waters of Little Stony Creek cascaded over granite bedrock as Rick Sizemore watched from the banks and wondered. How will the company building the pipeline, after taking his land and water, return them to their natural state? “How do you put something back that God did?” Sizemore said. The developers of the Mountain Valley Pipeline have a plan to part the waters — “kind of like Moses,” in the words of a federal judge — long enough to bury a 42-inch diameter steel pipe under Little Stony Creek and more than 1,000 other streams and wetlands in the project’s path. Or they had a plan, until the 4th U.S. Circuit Court of Appeals intervened. In October, the court threw out a federal stream-crossing permit for the pipeline, creating what is perhaps the largest legal obstacle to face the deeply divisive project since it was proposed four years ago. Another potential roadblock popped up unexpectedly last week, when Virginia’s State Water Control Board voted to reconsider its earlier decision to grant a water quality certification to Mountain Valley. With no action likely until next year, construction crews still have state authorization to clear land, dig trenches and bury the pipeline in earth away from water bodies. But before it can complete the 303-mile pipeline, Mountain Valley must again obtain the approval of the U.S. Army Corps of Engineers for stream crossings. And that may prove to be more complicated the second time around. Under the federal Clean Water Act, the Army Corps is required to review the company’s plan to use dams and pumping systems to temporarily divert streams and rivers, dig trenches along their dry beds, bury the pipe some six feet deep and then restore the current to its original flow. Last December, the agency issued what’s called a Nationwide Permit 12 for the pipeline, a kind of general authorization for utility construction projects that are not expected to have a major environmental impact. Critics said the one-size-fits-all approach failed to analyze each water body the pipeline will cross. In a lawsuit against the Army Corps, the Sierra Club and four other environmental groups argued that the Nationwide Permit contained a fatal flaw: It overlooked a requirement by West Virginia regulators that pipeline stream crossings must be completed with 72 hours. With Mountain Valley conceding that it would take four to six weeks to span four major rivers in West Virginia, a three-judge panel of the 4th Circuit vacated a permit issued by the Army Corp’s Huntington district.

US District Court Vacates Forest Service Approval of the Atlantic Coast Pipeline - The Fourth Circuit Court of Appeals vacated on December 13 the U.S. Forest Service’s approval for the Atlantic Coast Pipeline (ACP) to cross two national forests and the Appalachian Trail. The Court’s 60-page opinion came on a case brought by several ABRA members and others that was argued on September 28 (see ABRA Update #200 for details).The plaintiffs, represented by Southern Environmental Law Center, were Cowpasture River Preservation Association, Highlanders for Responsible Development, Shenandoah Valley Battlefields Foundation, Shenandoah Valley Network, Sierra Club, Virginia Wilderness Committee and Wild Virginia.The Court concluded that the Forest Service’s decisions amending its Forest Plans and granting a Special Use Permit (SPU) for the ACP violate the National Forest Management Act (NFMA) and National Environmental Policy Act (NEPA), and that the Forest Service lacked statutory authority pursuant to the Mineral Leasing Act (MLA) to grant a pipeline right of way across the Appalachian National Scenic Trail.  In its opinion, the Court detailed how the Forest Service initially expressed serious skepticism about the ACP’s ability to be constructed through the steep slopes of the central Appalachian mountains in West Virginia and Virginia. In an October 24, 2016 letter to the Atlantic Coast Pipeline, LLC (Atlantic), the Court noted that the Forest Service had requested ten site-specific stabilization designs for selected areas of challenging terrain to demonstrate the effectiveness of Atlantic’s proposed steep slope stability program, which Atlantic called the “Best in Class” (“BIC”) Steep Slopes Program” because the agency needed to be able to determine that the project was consistent with the Forest Plans of the George Washington National Forest(GWNF) and the Monongahela National Forest (MNF). The ACP would cross a combined 21-miles of National Forest lands in the two forests. Then, the Court noted, the Forest Service changed its mind and without explanation ultimately approved the project without requiring the requested ten stabilization designs for the project. The Court ruled that the Forest Service, in amending the GWNF and MNF plans, did not follow its own criteria and procedures for doing so.

Panel Delays Vote on Pipeline Compressor Station (AP) — A Virginia air pollution panel delayed a closely watched vote Wednesday on whether to approve a key permit for a planned multistate natural gas pipeline. The State Air Pollution Control Board decided instead to open up another public comment period on a proposed permit to build a natural gas compressor station in a historic African-American community about an hour west of Richmond. The vote was 3-1. Board members said they wanted to let the public weigh in on new information about the project's potential impact. State officials said they were still determining when the vote will be scheduled. The delay is the latest setback for the planned 600-mile (966-kilometer) Atlantic Coast Pipeline, which would carry fracked natural gas from West Virginia into Virginia and North Carolina. Last week a federal appeals court threw out a permit for the pipeline to cross two national forests, including parts of the Appalachian Trail. "While we're disappointed with the additional delay, we're confident the board will approve the permit after considering all of the facts," said Dominion Energy spokesman Aaron Ruby.

Virginia regulators unexpectedly delay decision on controversial gas project — State regulators unexpectedly postponed action Wednesday on a permit for a gas compressor station in a historic African American community. And at the heart of the delay is a strange disagreement about identity. The decision marked the second time members of the State Air Pollution Control Board have delayed action over questions about whether the project, being proposed by Dominion Energy as part of its Atlantic Coast natural-gas pipeline, amounts to environmental racism. More than 100 protesters, many of them residents of the Union Hill community in Buckingham County, chanted and turned their backs on board members Wednesday for what they said was an attempt to impose a dangerous industrial facility on a community of color, including many elderly residents. With two rows of Dominion executives sitting in reserved front-row seats, staffers from Virginia’s Department of Environmental Quality told the board that there is no cause for concern. They presented an analysis showing that the area around the proposed compressor is sparsely populated and has no greater concentration of minorities than the rest of the state. In addition, the staffers said, Union Hill has few historic resources of any significance. So how can two depictions of the same community be so different? That question is part of the reason board members delayed their vote and called for an extended public comment period. Lakshmi Fjord, a visiting scholar in anthropology at the University of Virginia, said Dominion and the state are trying to downplay its significance. “They actively have erased the key evidence,” she said. Union Hill was settled after the Civil War by freedmen and emancipated slaves. Dominion bought the land for the compressor station from white descendants of a plantation owner. 

Pipeline company sues Nelson County over zoning decision— Following the denial of permitting requests at the local level this month, Atlantic Coast Pipeline LLC took an unprecedented step in an attempt to move the project forward, filing a lawsuit against a locality — Nelson County — for the first time in the years-long approval process.Three days after Nelson’s Board of Zoning Appeals denied the company’s variance requests for floodplain crossings, ACP filed suit against Nelson County and its Board of Supervisors.The lawsuit, filed in the U.S. District Court’s Western District of Virginia on Dec. 6, is seeking a judgment stating the Natural Gas Act “preempts” the requirements of Nelson’s floodplain ordinance, which would include “obtaining any zoning permits for any of the floodplain crossings.”According to officials from Dominion Energy, lead partner of the ACP, the suit against Nelson County is the first of its kind for the project — a 600-mile natural gas pipeline that will stretch from West Virginia to North Carolina and through Virginia.“While it was not our preference, now that the Nelson County Board of Zoning Appeals has denied our applications, we have no choice but to take the next step of seeking preemption from the federal courts,” Dominion spokesman Karl Neddenien said in a statement Monday. “… There is a well-established process for resolving conflicts between the decisions of a local governing authority and a federal agency, in this case the [Federal Energy Regulatory Commission].”FERC approved the route and issued a Certificate of Public Convenience and Necessity for the ACP in October 2017.The denial of four variance requests, thanks to a 3-2 vote of the BZA on Dec. 3, also represents the first time a locality has denied floodplain crossing requests, according to project officials. Elsewhere along the route, ACP also was required to obtain local permits for floodplain crossings, but Nelson County was unique in its review of the requests.

Ingram- Natural Gas Pipeline Puts Pittsylvania at Risk - Pipeline companies have been working on the Atlantic Coast Pipeline and the Mountain Valley Pipeline (MVP) since 2015; both are proposed to transport fracked gas from West Virginia, through Virginia to the coast. A third pipeline, the Southgate pipeline, a 72-mile extension of the MVP, has now been proposed to transport 300 million cubic feet of natural gas per day from the compressor station in Chatham to North Carolina. While some people are fine with allowing millions of cubic feet of dangerous natural gas to be pumped through their land for an easement that will diminish their property values and put them at the mercy of energy companies including Dominion and Duke Energy — many of the landowners along the pipeline are not fine with it. Unfortunately, for those who are not fine with it, it barely matters. Those who continue to resist pipelines will eventually have their land taken through eminent domain.Thousands of acres of farmland, pastures, rivers and streams that have been cared for by the same families for generations will be heavily damaged for no public benefit. The pipelines will also put the health and safety of landowners and their families at risk. Since 2010, there have been 137 fires and explosions along interstate pipelines.Once a pipeline crosses your property, the door is open for additional pipelines. This is also true for compressor stations. With the Southgate pipeline, Pittsylvania County (ground zero for compressor stations) is now slated for a second compressor station — a second enormous industrial facility that has huge impacts on air quality. Contrary to popular belief, the pipeline companies have not proven that these pipelines will provide public benefits. Analysis shows that demand for gas-fired electricity is not growing in our region and is not expect to grow significantly for the foreseeable future. The lack of need has been supported by the North Carolina Department of Environmental Quality, whose letter in November to Federal Energy Regulatory Commission or FERC, the body (composed of mostly former energy officials) that issues federal pipeline permits, stated it questioned whether the Southgate pipeline met the criteria to “deem it in the public interest.” Even two of FERC’s own commissioners stated in August that neither the MVP nor the ACP is in the public interest.

Watchdog Finds Shortfalls in US Pipe Security-- Government auditors found widespread shortfalls in how the Transportation Security Administration protects the U.S. network of pipelines carrying natural gas, petroleum products and other hazardous liquids. A Government Accountability Office report released Wednesday said TSA’s guidelines on pipelines don’t reflect the latest best practices for physical security and cyber protections. Action is needed to address the problem, the auditors said. “A successful pipeline attack could have dire consequences on public health and safety, as well as the U.S. economy,” the report said. “Recent coordinated campaigns by environmental activists to disrupt pipeline operations, and the successful attempts by nation-state actors to infiltrate and obtain sensitive information from pipeline operators’ business and operating systems, demonstrate the dynamic and continuous threat to the security of our nation’s pipeline network.” Out of the 100 top pipeline systems by volume, which were classified as the highest risk, at least 34 hadn’t done an assessment to determine their most critical facilities, GAO found. The number of security reviews conducted by TSA has varied considerably since 2010, ranging from about 180 to fewer than 40 a year, according to the GAO report. Staffing for TSA’s Pipeline Security Branch has also been inconsistent, going from 14 positions in 2010 to only one in 2014. In response to the report, a pipeline group said a number of initiatives had been undertaken since the study was commissioned. But the group stressed that “flexibility” is key to addressing future threats. “Experience shows that mandatory standards are all too often outdated almost as soon as they are introduced,”

Groups sue Trump administration for ‘harassing’ whales with seismic blasting  -- There’s one kind of “gun” control that many south Carolinians seem to agree on — stopping the use of seismic airguns to search for oil and gas deposits in the Atlantic ocean.  Even before any new offshore drilling can take place in the Atlantic, this type of oil and gas exploration could be devastating to coastal communities and marine life — including endangered right whales.  Seismic airgun blasting works like this: a ship tows an array of airguns, which release powerful bursts of compressed air through the water and into the seabed approximately every 10 seconds. The blasts can continue 24 hours a day for weeks at time. By documenting the reverberations sent back up to the ship, surveyors can figure out what’s beneath the sea floor. In November, the National Marine Fisheries Service, a federal agency responsible for conserving resources and preventing lost economic potential associated with unsustainable fishing practices, authorized five geophysical services companies to use sonic blasting off the shores of east coast states stretching from New Jersey to Florida. The permits give the companies permission to “incidentally, but not intentionally harass marine mammals” as they use airguns to search for fossil fuels along the ocean floor. That harassment has a lot to do with the deafening noise associated with the blasts. “Imagine a hand grenade going off around your house every 10 to 15 seconds,” says Scott Kraus, vice president and chief scientist of marine mammal conservation at the New England Aquarium. The blasts can continue to raise noise levels even miles away, he says. The North Atlantic right whale could be extinct in as little as two decades. Scientists fear that allowing seismic airgun blasting now — which hasn’t been done in the region for over 30 years — could keep the species from bouncing back. Right whales are already under stress from ship strikes, commercial fishing (they get tangled in fishing lines), and climate change. “We need to minimize all potential stressors for it to recover and noise is a significant stressor,” says Kraus. There were no calves born during right whales’ last breeding season. Kraus points to recent research from Syracuse University that shows that communication between mother right whales and their calves is extremely quiet, and a change in ambient noise levels could disrupt that communication.

SC Lawmakers look to file offshore drilling bill - South Carolina lawmakers plan to present a bill that could prohibit offshore drilling in South Carolina during legislative session. Earlier this month, President Trump's administration approved 5 permits for companies to complete seismic airgun testing from New Jersey to Central Florida. This testing allows companies to harrass and harm sea animals while searching for oil and gas. With South Carolina smack dab in the middle of New Jersey and Central Florida, state lawmakers are making it their mission to avoid offshore drilling at all costs. "We have to stand up for our community," Charleston County State Representative, Leon Stavrinakis, said. Stavrinakis said many SC lawmakers have made it clear they are against testing and infrastructure for offshore drilling, and offshore drilling as a whole. "People of the Lowcountry strongly oppose offshore drilling and seismic airgun blasting," said Congressman-elect, Joe Cunningham. State representatives are proposing a pre-filed bill that could prohibit any state agency or local government from approving anything as it relates to offshore drilling. "Any kind of infrastructure, permitting that would facilitate testing or drilling on South Carolina land or in our waters," Stavrinakis said. The goal is to make it difficult, or even impossible, for companies to want to drill off the coast.

Nine U.S. states seek to stop Trump administration's Atlantic oil testing (Reuters) - Attorneys general from nine U.S. states sued the Trump administration on Thursday to stop future seismic tests for oil and gas deposits off the East Coast, joining a lawsuit from environmentalists concerned the tests harm whales and dolphins. Seismic testing uses air gun blasts to map out what resources lie beneath the ocean. Conservationists say the testing, a precursor to oil drilling, can disorient marine animals that rely on fine-tuned hearing to navigate and find food. The tests lead to beachings of an endangered species, the North Atlantic right whale, they say. New York Attorney General Barbara Underwood said the tests would harm marine species, jeopardize coastal ecosystems and pose a “critical threat” to the natural resources, jobs and lives of New Yorkers. “The Trump administration has repeatedly put special interests before our environment and our communities,” Underwood said in a statement. The lawsuit, which names Commerce Secretary Wilbur Ross and the National Marine Fisheries Service as defendants, says the prospect of seeing marine mammals is an important draw for tourists to the states and helps coastal economies. The Department of Commerce declined to comment. Last month the fisheries office of the National Oceanic and Atmospheric Administration, part of the Commerce Department, issued permits to WesternGeco LLC, a subsidiary of Schlumberger Ltd, and CGG to harass, but not kill, marine mammals with air gun blasts in a region of the Atlantic from Delaware to Cape Canaveral, Florida. Jennie Lyons, a spokeswoman at the fisheries office declined to comment on the lawsuit but said the department only authorized harassment, not outight killing, of the marine animals in issuing the permits. A marine biologist at the office told reporters last month that no seismic tests have been known to cause whale beachings. 

Florida lawmaker tries again with bill to ban fracking - After failed attempts to pass such a bill in the past, a Senate Democrat filed a proposal Thursday that would ban the controversial oil- and natural-gas drilling process known as “fracking.” Sen. Linda Stewart, D-Orlando, filed the proposal (SB 146) for consideration during the 2019 legislative session, which will start in March. Environmental groups and some lawmakers have long wanted to block potential fracking in Florida, but bills have died. During the 2018 session, a Senate version was approved by two committees, while a House version was never heard. Fracking, in part, involves injecting water, sand and chemicals underground to create fractures in rock formations, allowing natural gas and oil to be released. While supporters say fracking increases production and holds down energy costs, opponents argue it threatens water supplies and can cause environmental damage.

Are Russians Secretly Backing US Enviros? Lawsuit Intends To Find Out -An open records lawsuit filed against the State Department is attempting to uncover whether Russian entities attempted to financially support U.S. environmentalist causes.The Institute for Energy Research (IER) — a free-market energy group based in Washington, D.C. — filed the lawsuit on Monday. IER has requested that the State Department hand over correspondence concerning hydraulic fracturing, environmental advocacy and Russia that was exchanged to and from high-ranking employees.The lawsuit follows a Freedom of Information Act request filed by IER back in October. However, the free-market group claims State Department officials are dragging their feet on providing the requested information.“Any foreign attempts to covertly influence U.S. energy policy must be exposed and met with full consequences,” read a Monday statement from IER President Thomas Pyle. “Particularly given what we have already learned, the State Department’s evident lack of interest in examining this issue of obvious concern to congressional oversight, or in bothering with a substantive response to our request even when pressed, is deeply concerning.”The State Department failed to hand over responsive records to IER by Nov. 23, despite a legal obligation to do so, according to the free-market group’s press release. Department officials have cited a “backlog” as reason for their slow pace, and have only acknowledged receipt of the request.“We hope State corrects this matter immediately by providing the necessary records to document what has been happening behind the backs of the American people. The State Department must be clear: foreign meddling in U.S. energy policy or markets will not be tolerated under any circumstances,” Pyle continued in his statement.

VIDEO: Police dashcam captures massive, deadly gas explosion in Wisconsin  — Authorities in Wisconsin this week released new dashcam video showing a deadly explosion that occurred in July. The video shows emergency crews standing near an evacuated zone in downtown Sun Prairie, Wisconsin, when the blast rocks the area. Debris shoots into the air as people run to take cover. Officials said the explosion happened after a private contractor hit a natural gas main. Volunteer firefighter Cory Barr, 34, was killed by the blast. Several others were injured in the incident. VIDEO: Police dashcam captures massive, deadly gas explosion in Wisconsin

Frac sand producers spent millions and filled wetlands for now underused rail yards - In 2016, the startup frac sand producer Smart Sand began construction on a state-of-the-art rail yard along the Union Pacific line in Monroe County, claiming it is the largest private industrial rail loop in the state. The company already had a rail loading facility a few miles away at its Oakdale mine, but according to an application to fill almost 2.5 acres of wetlands at the site, it needed access to Union Pacific, the sand industry’s line of choice because of its direct connection to the booming oil fields in Texas. Later expanded, the facility has more than 6 miles of track in spurs and concentric loops on about 70 acres. It was built to handle multiple “unit trains” — chains of 110 or more cars of bulk cargo all heading to the same destination, faster and cheaper than regular rail, and by some accounts a necessity for survival in an increasingly competitive industry. But less than a year after the first unit train rolled out of Smart Sand’s new Byron facility, Union Pacific has phased them out for Wisconsin sand customers as part of a new strategy to cut costs to keep locomotives moving by picking up cars more frequently. It’s a change that industry analysts say could increase costs for already struggling Wisconsin sand producers, and it calls into question the need to fill ecologically sensitive wetlands, including some at projects still under development.

What’s next for Line 5: studies, permits and ‘inevitable’ lawsuits - A three-member board overseeing the tunnel project for the state is scheduled to hold its first meeting Wednesday. With a legislative and legal framework in place to build a tunnel for Enbridge’s Line 5 pipeline in the Straits of Mackinac, attention now shifts to a board overseeing the project, geological studies, and potential lawsuits. Michigan’s Republican governor, Rick Snyder, last week swiftly approved legislation, appointed members to the newly created Mackinac Straits Corridor Authority, and presented two draft agreements meant to lock in the project before his Democratic successor takes office next month. Public comments on the agreements will be taken through Dec. 18 — five days after the agreements were announced. As outlined in an earlier agreement between the state and Enbridge, the authority would ultimately be required to approve the “tunnel agreement” if it meets a set of criteria under legislation passed on Dec. 12. The authority — which would own the tunnel after it’s built and lease it to Enbridge — holds its first meeting Wednesday in the Upper Peninsula. At least one appointee to the Mackinac Straits Corridor Authority — a three-member board overseeing construction and operation of the tunnel — said permitting, geotechnical studies, economic and political considerations will take place before construction begins. A geotechnical report is required by the end of 2019, according to the agreement. Though he expects the process to move forward as planned, circumstances could change in the coming months and years. “There are some things that have to be done between now and actually starting to dig a tunnel that could stop it,” said Anthony England, dean of the University of Michigan-Dearborn’s College of Engineering and Computer Science. “Permitting and the public concern must be taken into account. It’s not the authority’s business to do that, but it is a political question.”

Michigan panel approves Line 5 oil pipeline tunnel beneath Straits -- A newly created state panel gave a green light Wednesday to a controversial oil pipeline tunnel beneath the Great Lakes. The Mackinac Straits Corridor Authority, at its inaugural meeting in St. Ignace, approved an agreement with Canadian energy giant Enbridge Energy LLC to build a tunnel beneath the Straits of Mackinac that will house a replacement segment for Enbridge's Line 5 pipeline and other utilities, state officials announced. The authority approved a transfer of property rights that will allow Enbridge to construct the tunnel in bedrock. Gov. Rick Snyder and leaders of the state departments of Natural Resources and Environmental Quality also inked an agreement with Enbridge that requires the company "to undertake an enhanced inspection and stewardship regimen," according to a news release from the state. The agreement includes financial penalties for Enbridge for missed construction deadlines. Line 5 carries oil and natural gas liquids between Superior, Wisconsin, and Sarnia, Ontario. Environmental groups have strongly opposed the tunnel and want Line 5 shut down.

A submerged oil pipeline triggers a winter of frigid protest --- The modest camp in the woods of northern Michigan is the symbolic base for protesters battling an aging oil pipeline that crosses one of the most environmentally critical locations in the country. A short drive up the highway, some 23 million gallons of oil flow daily through the Straits of Mackinac, an iconic waterway that connects Lake Michigan and Lake Huron and the state’s two peninsulas. Line 5, operated by the Canadian multinational company Enbridge, has been enveloped in controversy for months. And even as calls for a shutdown have increased, Michigan’s outgoing governor has pressed for a new agreement to ensure it continues. The “water protectors,” as those at the camp call themselves, vow to stay until the pipeline is decommissioned. “I’m doing it for my people,” said Patrick Deverney, a 39-year-old member of the Grand Traverse Band of Ottawa and Chippewa Indians. “Without that water, we’re going to die.” Enbridge’s Straits of Mackinac operation represents only a tiny fraction of an extensive system that originates at the tar sands of northern Alberta. The network, built in 1953, starts in Superior, Wis., and transports a daily average of 540,000 barrels of light crude and natural gas liquids east and south across Michigan before arriving at a distribution center in the border city of Sarnia, Ontario. The company provided 102 jobs in Michigan last year, according to Enbridge data, and nearly $62 million in property and other taxes. Line 5’s twin metal pipes also deliver much of the state’s propane, heating thousands of homes in the Upper Peninsula. But the route primarily serves as a shortcut across the Great Lakes to help meet Canadian demand. “The value of this pipeline almost exclusively goes to Enbridge Energy,” said Mike Shriberg, who heads the National Wildlife Federation’s regional center for the Great Lakes and sits on the Michigan Pipeline Safety Advisory Board. “Yet it’s risking arguably our most valuable asset.” The stakes could hardly be higher. The larger Great Lakes system supplies drinking water for some 40 million people, sustains thousands of plant and animal species and supports vital industries such as fishing, logging and tourism. (The Straits of Mackinac, where an expanse of dazzling blue freshwater ripples below one of the world’s great suspension bridges, offers one of Michigan’s most famous images.) 

Enbridge moving ahead with St. Clair River line replacement -- A section of a controversial pipeline will be replaced starting next year. Enbridge Energy says their line five beneath the St. Clair River is in the process of receiving the necessary regulatory approvals. Spokesperson Ryan Duffy says the oil pipeline will be drilled horizontally below the river between Marysville and Sarnia, with work expected to begin next fall. Meanwhile to our north, an agreement between the State of Michigan and Enbridge have been reached which would create a state-owned utility corridor in the Straits of Mackinac. The tunnel would run underneath the water between Mackinac City and St. Ignace. Duffy says that project could take up to a decade to complete and in the meantime the utility will closely monitor the existing pipeline. However many in Lansing are speculating that opponents of line five will file a lawsuit against the state’s new pipeline authority, halting its construction. Enbridge Energy’s line five runs from Superior, Wisconsin to Sarnia, Ontario.

Line 3 pipeline opponents file suit challenging state approval -- Several environmental groups and two northern Minnesota Native American tribes have filed separate lawsuits to try to block the state's recent approval of the Line 3 oil pipeline replacement project. The White Earth and Red Lake Ojibwe, together with the Sierra Club and Honor the Earth environmental organizations, filed a joint appeal Wednesday at the Minnesota Court of Appeals. The northern Minnesota-based group Friends of the Headwaters filed a separate challenge. They're asking the court to overturn the Minnesota Public Utilities Commission's June 28 decision to grant the Line 3 project a certificate of need, a crucial approval signifying that the project is needed by the state of Minnesota. The Calgary-based Enbridge energy company needed the PUC's approval in order to build the $2.6 billion project across the northern half of the state. In that decision, the PUC determined that the safety benefits of allowing Enbridge to replace the old, corroding Line 3 pipeline with a larger, modern line outweighed the risks of allowing the old pipeline to continue to operate. In their court challenges, the groups argued that reasoning is flawed. The groups argued that Enbridge failed to provide a long-term energy forecast to prove that the increased capacity the new pipeline would provide is needed in Minnesota. The Minnesota Department of Commerce also pressed that argument before the Public Utilities Commission. 

North America LNG Rebound to Continue in 2019 - North America should lead an expected record year for global liquefied natural gas (LNG) project sanctions in 2019, Wood Mackenzie reported Tuesday. According to Wood Mackenzie’s latest quarterly North America LNG projects update, three U.S. Gulf Coast developments – Sabine Pass Train 6, Golden Pass and Calcasieu Pass – are expected to reach final investment decision (FID) in the first half of 2019. In addition, the consultancy contends that two additional U.S. projects should follow shortly thereafter and another two projects in Canada and Mexico are “on the horizon.”“With FID imminent on three U.S. Gulf Coast LNG projects, North America is set to lead an expected record year for LNG project sanctions,” Alex Munton, principal analyst for Americas LNG with Wood Mackenzie, said in written statement emailed to Rigzone. “With at least two other Gulf Coast projects – Freeport Train 4 and possibly Driftwood LNG – also not far behind, the first half of 2019 will be an especially busy one for the U.S.”Recalling that the North American LNG market experienced a “lull in investment” before 2018, Wood Mackenzie noted that the market has “sprung back to life.” Since September of this year, it pointed out that:

• Six LNG project developers – Cheniere Marketing (CMI), Venture Global, Sempra, Tellurian, Freeport and Woodfibre – have announced long-term offtake agreements
• 13 million tonnes per annum (mtpa) of sales have been announced, raising the total sales figure for the year above 20 mtpa

“2018 was a stellar year for sales of North American LNG, and U.S. LNG in particular,” said Munton. “Renewed confidence in the outlook for LNG, combined with the choice, flexibility and competitiveness of the U.S. market offers, facilitated this surge in interest.” Wood Mackenzie stated that the construction of the three Gulf Coast LNG facilities, representing up to 30 mtpa of capacity, could translate into $20 billion worth of investment for the region over the next four years. Outside the United States, Wood Mackenzie’s analysis finds that Canada’s Woodfibre LNG could reach FID in 2019; but, it observes that FID hinges on the execution of an engineering, procurement and construction (EPC) contract. In Mexico, the Costa Azul Phase 1 export terminal still needs a final EPC contract, binding offtake agreements, permitting and financing arrangements, stated Wood Mackenzie. However, the firm noted that a 2019 FID for that project is achievable as well.

US Department of Energy softens LNG reporting requirement, faces pressure over study that backed exports — The US Department of Energy on Wednesday eased reporting mandates for LNG exporters, scrapping a requirement that they track down the ultimate end use of the natural gas. Energy Secretary Rick Perry said the move would help "better provide reliable US LNG to our friends and allies abroad." The shift was welcomed by the LNG sector as adding certainty for potential buyers. Some companies had worried their export authorizations would be at risk if they failed to comply with the requirement, which they found to be impractical or impossible in some cases, according to the policy published in the Federal Register. The policy change came as DOE separately drew further pressure from a manufacturing group over a study used to justify approvals for increasing volumes of exports to countries without free trade agreements. That report is important to advancing a dozen pending projects that would provide over 20 Bcf/d of additional export capacity, on top of the 23 Bcf/d of long-term exports already backed by the department. DOE is responsible for making a determination on whether such exports are in the public interest. A NERA Economic Consulting report issued in June on behalf of DOE found even extreme scenarios of high LNG exports correlate with higher economic performance than lower export levels. The Industrial Energy Consumers of America wrote to the Office of Management and Budget to say DOE failed to respond within the required 60 days to the group's request for a Data Quality Act correction for the report. The group contended that third-party economists found the results of the study were not reproducible, a requirement of the act it said prompted the need for a correction. IECA also sought evidence about whether individuals and entities involved in the study were adequately independent from the gas and LNG sector. When it comes to the altered reporting requirements, DOE said exporters will still be required to report on the destination to which the LNG is originally delivered, but not to report the final country of the end use. While the policy would affect future exports, DOE simultaneously struck the end-use requirement from existing export authorizations.

Qatar Petroleum to invest $20 billion in US in major expansion --Qatar Petroleum (QP) is looking to invest at least $20 billion in the United States over the coming few years, its chief executive told Reuters, after the Gulf Arab state quit OPEC, freeing Doha from potential legal risks in the United States.  Saad al-Kaabi, who holds the energy portfolio of the world's top liquefied natural gas (LNG) producer, also said on Sunday QP aimed to announce its foreign partners for the new LNG trains it is building by the middle of next year.But he added QP could carry out the project alone, with no international oil company at its side, if no good offers were made."Mark my words, if I don't get a good deal, we go alone," Kaabi said in an interview at his office in Doha.

Petronas LNG purchase deal with Cheniere to support sixth train at Sabine Pass — Malaysia's Petronas will buy LNG from Cheniere Energy under a 20-year agreement that will support building a sixth liquefaction train at the exporter's Sabine Pass terminal in Louisiana. The long-term offtake deal for approximately 1.1 million mt/year of LNG will be shipped on a free-on-board basis beginning following the date of first commercial delivery from Train 6. Cheniere CEO Jack Fusco told S&P Global Platts in October that the company hoped to make a final investment decision on the train by early next year.In a statement announcing the sale and purchase agreement with a unit of Petronas, Cheniere said the deal is expected to support the continued progress toward an FID in 2019. The purchase price for the LNG will be indexed to the monthly Henry Hub price, plus a fee."We think SPL6 is money-good, and the real questions are really at what price/contract structure and when," Wells Fargo Securities analyst Michael Webber said in a note to clients after the announcement. "With execution of the EPC contract with Bechtel (November), the one milestone they now need to sort out over the next 3-4 months is financing."Despite market uncertainty and continuing US trade tensions with China, Cheniere has projected a confident market outlook in recent months, and on both the financial and commercial fronts it has managed to outmaneuver many of its US peers, thanks in part to being first to market among major US LNG exporters when Sabine Pass started up in 2016.  Cheniere has been stressing to the Trump administration the importance of US LNG in the global marketplace and encouraging it to ease tensions with Beijing. China imposed tariffs on imports of US LNG starting September 24, and with less than two weeks before the end of 2018 there is no sign of the duties being lifted anytime soon.

Exxon Becomes Permian Drill Chief- Exxon Mobil Corp. has overtaken rivals to become the most active driller in the Permian Basin, showing the urgency with which the world’s biggest oil company by market value is pursuing U.S. shale. After a slow start in the West Texas and New Mexico basin, Exxon is now operating more drilling rigs than Concho Resources Inc., which merged with RSP Permian Inc. earlier this year to create one of the biggest Permian-focused explorers, according to statistics from RigData Inc. supplied to Bloomberg Intelligence. It’s not hard to see why the Permian has become so important to Exxon. A series of strategic mistakes sent the oil giant’s overall production careening to a 10-year low by the middle of this year. Drilling wells in the the Permian, the world’s premier shale field, yields low-cost oil in months rather than the years required for megaprojects to begin producing crude. “They need to get the production and returns back up, and the Permian is where you can ramp up the fastest,” said Fernando Valle, a New York-based analyst at Bloomberg Intelligence. Exxon isn’t alone in tapping U.S. shale after years of pursuing overseas resources. Chevron Corp. will spend the highest portion of its capital budget at home in at least a decade. The Permian now accounts for about 10 percent of Chevron’s overall production. BP Plc this year agreed to spend $10.5 billion on BHP Billiton Ltd.’s shale assets to gain access to the Permian while Royal Dutch Shell Plc is mulling a bid for one of the basin’s largest private companies, people familiar with the matter said Monday. For Exxon, the Permian is still small when placed in the context of its global reach. In the third quarter of this year it produced just a fraction of the oil titan’s total production. But CEO Darren Woods expects strong growth each year through 2025. By then, he’s targeting as much as 800,000 barrels a day from the Permian and the Bakken in North Dakota, which would be about 20 percent of today’s overall production.

Weak demand, falling prices signal new troubles for oilfield services - (Reuters) - The recent drop in U.S. oil prices to around $46 a barrel and insufficient demand are throwing into doubt the prospects for oilfield service companies in 2019 and may portend a wave of restructuring and consolidation of an industry still recovering from the 2014 downturn in energy markets. Despite record U.S. oil production and exports, producers are reducing their spending and learning to do jobs with fewer crews. There has not been the wholesale staff cutbacks such as the ones that occurred three years ago, but investors and analysts expect consolidation in the services sector as work dwindles and share prices fall. Even service companies that have strong businesses have been unable to get contract prices back to pre-crash levels. At onshore driller Scandrill Inc, all of its 15 rigs are active in U.S. oilfields. When two clients decided to stop drilling, new customers picked up the slack. However, the rates that Scandrill charges for its rigs are below where they were at the depths of the 2014 oil price crash, said President Paul Mosvold. “We won’t see an increase in daily operating margin or the daily rig contracting rate soon,” he said in a phone interview this month. Some oil producers have cut services work. Diamondback Energy FANG.N this month released two of its 10 hydraulic fracturing crews and next year plans to operate between 18 and 22 drilling rigs, down from 24 rigs at work earlier this month. Oilfield services company investors are cutting their holdings. The Philadelphia SE Oil Service Index .OSX, which tracks some of the largest oilfield service companies, this week fell below 81, the lowest since 2003 and below where it traded when oil prices crashed to near $26 a barrel in 2016. With oil prices at their lowest level in over a year, the services sector should brace for a wave of restructurings and consolidation, analysts and attorneys told Reuters in interviews. “The oilfield sector has the largest group of struggling companies within the energy industry. I think these companies need to consolidate, no matter what,” said Sean Wheeler, a mergers and acquisition attorney at law firm Kirkland & Ellis. Wheeler has been fielding inquiries from service providers wanting to evaluate options for restructuring if prices do not recover. Contract driller Parker Drilling PKDSQ.PK in December filed for pre-arranged bankruptcy after failing to earn an annual profit since 2014, when oil prices started a long decline. One problem is the number of companies operating in the market, attorneys and analysts said. Competition for fewer jobs is making it hard for service companies to raise prices - something that is benefiting shale producers.

US rig count rebounds after three-week decline, up three to 1175 - The US oil and gas rig count rose by three this week to 1,175 on Thursday, reversing three weeks of declines from the recent peak a month ago, S&P Global Platts Analytics said Thursday. Oil rigs were up by three to 936, while gas rigs were unchanged. Rigs that were classified as chasing both oil and gas were up one to 17. Platts data in this report covers eight large US unconventional oil and gas basins and does not reflect all domestic activity. A handful of rigs not detailed also are used for coal bed methane and steam injection, and some others, mainly offshore, are classified as both oil and gas. The DJ Basin in Colorado gained the most rigs this week -- five, for a total 38 -- while the Williston Basin in North Dakota and Montana rose by three as the Bakken Shale play continued to gain traction again after losing rigs and production during the 2015-16 downturn when oil prices dropped. Production in North Dakota, from which most Bakken output comes, hit an all-time high of 1.392 million b/d in October, that state's officials said last Friday. The Permian Basin of West Texas and New Mexico, which has multiple more rigs working than any other basin, added a rig in the past week for a total of 481 as did the Haynesville Shale in Northwest Louisiana and East Texas, for a total of 60. The Haynesville is a gas-weighted basin as is the Utica Shale in mostly Ohio, which gained two rigs last week for a total of 16. Also, the Eagle Ford Shale of South Texas lost three rigs, leaving 90, while the SCOOP/STACK plays in Oklahoma combined lost two rigs for a total of 106. The giant Marcellus Shale gas basin of mostly Pennsylvania and surrounding states was unchanged at 61. In addition, there were 201 more US permits issued this week than last week, for a total of 1,730, although permitting was down in six of those eight large basins. Permits in the Eagle Ford were up by 11 to 78, and the SCOOP/STACK saw permits rise by eight for a total of 29 permits. Otherwise, permitting was down by double-digits in the Marcellus, where it was down by 29 to 30; in the Haynesville, where it was down by 27 permits to 11; and the Permian, where it was down by 19 to 197. Overall gains in rig count and permitting came during a week where oil and gas prices fell. WTI dropped $2.16 from the prior week to average $49.42/b, while WTI Midland was down $1.25 to an average of $41.74/b. The Bakken Composite price was $46.51/b, down $0.75. Also, the Henry Hub gas price averaged $3.80/MMbtu, down 62 cents for the week, while Dom South price averaged $3.54/MMbtu, down 65 cents. Click here for full-size graphic.

US shale oil production to rise to 8.166 million b/d in January: EIA — US shale oil production in January is expected to rise 134,000 b/d month on month to 8.166 million b/d, the Energy Information Administration said Monday. January's expected growth is one of the more robust monthly increases of late. In November, EIA predicted December's oil output would be 7.944 million b/d, an increase of 113,000 b/d month on month. EIA also forecast monthly increases of 98,000 b/d for November and 79,000 b/d for October. Earlier in December, EIA raised its projection for this month to 8.032 million b/d, the first time the monthly average will have crossed the 8 million b/d threshold. US oil production generally is weighing in higher than expected in recent months, surpassing earlier targets, as drilling has become progressively more efficient as operators continue to employ better technology to eke more oil and gas out of each well, EIA analyst Jozef Lieskovsky said. The agency predicts 2018 production to average 10.88 million b/d, including 11.5 million b/d for the fourth quarter, and 12.06 million b/d next year. That compares with estimates of 10.79 million b/d for 2018 and 11.76 million b/d for 2019 just six months ago. "We could probably take 100 rigs out and still keep up with the completions we're doing right now." EIA eyes production in the Permian Basin at 3.8 million b/d in January, up 73,000 b/d, even though additional takeaway capacity is about full. In addition, EIA forecasts oil production from the Bakken Shale of North Dakota/Montana at 1.461 million b/d, up by 18,000 b/d, and from the Eagle Ford Shale of South Texas at 1.427 million b/d in January, up by 19,000 b/d. Both the Niobrara Shale and the Anadarko Basin should see their production rise by 10,000 b/d each in January, to 679,000 b/d and 599,000 b/d respectively, the agency said.

America's top oil-producing region has a new problem: $40 crude -- If Tuesday's collapse in U.S. crude prices below $46 a barrel looked ugly, try being a driller in the Permian Basin, the epicenter of the U.S. shale oil boom. Crude is trading at about $40 a barrel in the western Texas region that sits atop most of the Permian Basin. At that price, oil is selling for less than the cost of developing new wells, raising concerns for a region that emerged from a bruising downturn just two years ago. "When you get down below $40 a barrel in the Permian, you are talking about a potential recession in a sector that you probably never ever thought might be prone to a recession in 2019," said Tom Kloza, global head of energy analysis at fuel price service OPIS. That is a stark prospect for a region where oil production is booming and energy companies can't seem to find enough workers. Surging output from the Permian has powered American production to all-time highs above 11 million barrels a day, making the United States the world's top crude oil producer. But all that new supply has created bottlenecks in a region with too few pipelines to bring the crude to market. That has caused the regional crude grade in the Midland, Texas, area to trade at a steep discount to benchmark U.S. West Texas Intermediate crude futures, which are based on deliveries at the storage hub in Cushing, Oklahoma. On Tuesday, Midland-based WTI was trading at about $7.25 to $7.60 below benchmark U.S. crude prices, according to OPIS. The lowest transaction confirmed by OPIS saw Midland crude sell for $40.10 per barrel. "Those are really weak numbers, and they're not very good for people who had debt in the Permian Basin as well as operations there," Kloza said. "If you're producer that drilled a long time ago and has some mature assets and doesn't owe any money to private equity, it's not that big of a deal. But they're not real happy about it."

Despite falling oil prices, the 'glory days for US shale are far from over' --Oil prices stabilized on Wednesday after a "toxic mix" of market forces triggered one of the biggest falls for years.However, despite a protracted sell-off in crude futures, the meteoric rise of U.S. shale should continue undeterred over the coming months, analysts told CNBC.  "In short, as much as the recent price slump has injected a fresh dose of uncertainty, it is unlikely to derail the U.S. shale engine," Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note published Wednesday."The fact is that U.S. tight oil supply is expected to expand by at least 1 million bpd in 2019. In doing so, it will go a long way to cementing America's newfound position as the world's biggest oil producer." "For now, when it comes to the U.S. shale patch, the glory days are far from over," Brennock said.Since climbing to four-year highs in early October, crude futures have tumbled by more than a third. The latest wave of heavy selling comes at a time when the energy market as well as the global economy is gripped by a flurry of bearish factors.Heightened concerns of oversupply, reports of swelling inventories, forecasts of record U.S. and Russian output and intensifying concerns about a slowing global economy have all placed downward pressure on the value of a barrel of oil.International benchmark Brent crude traded at around $56.61 on Wednesday, up around 0.6 percent, while U.S. West Texas Intermediate (WTI) stood at around $46.59, more than 0.75 percent higher.OPEC and allied non-OPEC oil producers including Russia agreed earlier this month to curb output by 1.2 million barrels per day (bpd). That's equivalent to more than 1 percent of global demand, in a bid to drain tanks and boost prices.But, the cutbacks do not go into effect until January, and Russia has warned that it will only gradually taper off output. Meanwhile, production has been at or near record highs in the U.S., Russia and Saudi Arabia. And the White House has said shale production could climb to more than 8 million bpd for the first time by the end of December.

Cushing -- still the preeminent crude oil hub for the US. - The Cushing, OK, storage and trading hub plays critically important roles in both the physical and financial sides of the crude oil market. Located at a central point for receiving crude from a wide range of major production areas — Western Canada, the Bakken, the Rockies, SCOOP/STACK and the Permian among them — the hub also has numerous pipeline connections to Gulf Coast refineries and export docks, and to a large number of inland refineries. And, with Cushing’s 94 MMbbl of storage capacity and status as the delivery point for NYMEX futures contracts for West Texas Intermediate, the hub’s inventory levels and the WTI-at-Cushing price are closely watched market barometers. But like a lot of other U.S. energy infrastructure in the Shale Era, Cushing’s place in the energy world has been in flux. Most importantly, Permian production has been surging, the ban on U.S. oil exports is a fading memory, and the Gulf Coast — not Cushing — is where most U.S. crude production wants to go. Today, we discuss Cushing’s changing role and highlights from RBN’s new Drill Down Report on the U.S.’s most important crude hub.

Kansas lawmakers could face debate over earthquake damage(AP) — Kansas lawmakers are likely to face renewed debate in the next legislative session about how or whether to hold oil and gas companies accountable for property damage caused by earthquakes in Kansas.Earthquakes have increased in Kansas since 2013 when fracking, or hydraulic fracturing, became more common for oil and gas exploration, although the intensity has been reduced in recent years. Some researchers believe injection of wastewater from the explorations into underground wells contributes to the quakes — a claim that industry officials dispute, The Topeka Capital-Journal reported . Joe Spease, chairman of the Legislative, Energy, and Hydraulic Fracturing committees for Kansas Sierra Club, said the Legislature should impose a fee on companies using injection wells to dump wastewater. He suggested the rate could be based on volume of material injected with the money distributed to property owners with damage.   “We want some type of justice for these people,” Spease said. “KIOGA attacks us. But people understand most of us concerned about ‘frackquakes’ are not out to get the oil and gas industry.” Ed Cross, executive director Kansas Independent Oil and Gas Association, said companies would go out of business and jobs would be lost if such fees were imposed on the industry. He said it is not possible to link specific damage to a particular injection well. “I don’t think there’s any proof out there that says it was this or that injection well,” Cross said. New research, which is challenged by the oil industry, concluded wastewater injection was responsible in 2017 for several earthquakes felt hundreds of miles from injection hot spots. The disposal of hundreds of millions of barrels of salty water from oil and gas corporations increased pressure within rock formations and that pressure migrated north along faults through Kansas, causing quakes felt in Hutchinson, Hays and Salina, with some felt as far as Jewell County near the Nebraska border.  “The people around here shouldn’t have to deal with it. It scares people and damages their property.”

Where water goes after fracking is tied to earthquake risk - - In addition to producing oil and gas, the energy industry produces a lot of water, about 10 barrels of water per barrel of oil on average. New research led by The University of Texas at Austin has found that where the produced water is stored underground influences the risk of induced earthquakes.Beyond supporting the link between water disposal and induced seismicity, the research also describes factors that can help reduce earthquake risk."If we want to manage seismicity, we really need to understand the controls," said lead author Bridget Scanlon, a senior research scientist at UT's Bureau of Economic Geology.The research was published Oct. 31 in the journal Seismological Research Letters. Co-authors include Matthew Weingarten, assistant professor at San Diego State University; Kyle Murray, adjunct professor at the University of Oklahoma; and Robert Reedy, research scientist associate at the Bureau of Economic Geology. The bureau is a research unit at the UT Jackson School of Geosciences. The researchers found that the increased pressure that is caused by storing produced water inside geologic formations raises the risk of induced seismicity. The risk increases with the volume of water injected, both at the well and regional scale, as well as the rate of injection. Researchers specifically looked at water stored near tight oil plays, including the Bakken, Eagle Ford and Permian shale plays, and Oklahoma overall, which has high levels of induced seismicity in concentrated areas. Researchers found marked differences in the degree of seismic activity associated with underground water storage. The study reported that the different levels of induced seismic activity relate to, among other reasons, how the water is managed and where it is stored underground. In Oklahoma, the tendency to store water in deep geologic formations -- which are often connected to faults that can trigger earthquakes when stressed -- has increased the risk of induced seismicity. In the other areas, water is stored at shallower depths, which limits exposure to potentially risky faults. In conventional energy production, water is usually injected back into the reservoir that produced the oil and gas, which stabilizes pressure within the reservoir. However, water produced during hydraulic fracturing -- the method used to access energy in tight oil plays -- cannot be returned because the rock pores are too small for the water to be injected back into the rock. That water is usually injected into nearby geologic formations, which can increase pressure on the surrounding rock.

Living Near Oil and Gas Wells Linked to Increase in Cardiovascular Disease - People who live near oil and gas operations are more likely to have early indicators of cardiovascular disease than those who don’t, according to a recent study. Cardiovascular disease resulted in 900,000 deaths in 2016 and is the leading cause of mortality in the US, and more than 17.4 million Americans now live within one mile of an active oil and gas well. The small pilot study, which was published in the journal Environmental Research on December 6, found that those who live in areas with more intense oil and gas development, including fracking, showed more early signs of cardiovascular disease including high blood pressure, changes in the stiffness of blood vessels, and markers of inflammation. Researchers at the Colorado School of Public Health examined 97 relatively healthy adults living in an area of Northeastern Colorado with pockets of dense oil and gas activity, including extensive truck traffic, pipelines, and both fracking and traditional well pads. “To date most of the research on the health impacts of oil and gas development has used data from existing health registries,” lead author and assistant research professor at the Colorado School of Public Health Lisa McKenzie told Environmental Health News. “For this study, we actually went out and took direct measurements from people, which meant we knew a lot more about them.” Study participants were selected carefully: None of them smoked or had jobs that exposed them to dust, fumes, solvents or oil or gas development activities, and none had histories of diabetes, chronic obstructive pulmonary disease or chronic inflammatory diseases like asthma or arthritis. Throughout the study, they were regularly asked about their stress levels and recent life events in an attempt to ensure that researchers would be made aware of any factors that could influence test results. Each participant made three visits to the researchers’ clinic over a nine-month period to be tested for signs of cardiovascular disease including higher blood pressure, markers of inflammation, and changes in the stiffness of their arteries — referred to as the “augmentation index.” “We found that people living in the areas with the highest levels of oil and gas activity around their homes had a higher augmentation index by about 6 percent,” McKenzie explained. “For blood pressure, we didn’t notice too much of a difference when we looked at everyone, but when we looked only at people not taking any prescribed medication, we did observe higher blood pressure among those living in areas with the most oil and gas development.”

Colorado regulators OK bigger buffer zone for oil, gas drilling near schools -- The Colorado Oil and Gas Conservation Commission voted unanimously Tuesday to approve bigger buffer zones for oil and gas drilling near schools. New wells will have to be at least 1,000 feet from school buildings and childcare centers as well as outdoor areas used by schools, including sports fields and playgrounds. It’s the areas around the building that the policy change takes into account. The old regulation required a 1,000-foot setback from the building itself, which meant wells could be closer to playgrounds and other school outdoor facilities. The new setback will take effect Jan. 30. The vote comes six weeks after Colorado voters rejected Proposition 112, a ballot proposal that would have required a buffer of 2,500 feet between wells and occupied buildings as well as areas described as vulnerable. Those included parks, creeks and irrigation ditches. Efforts to increase the setbacks from school property have been in the works for at least a year. The League of Oil and Gas Impacted Coloradans — LOGIC — made the proposal to state regulators, said Travis Duncan, spokesman for the Colorado Department of Natural Resources. “It is past time the COGCC consider the health and safety of kids. Implementing a 1,000-foot setback from all school-use areas and child care centers where kids learn and play is the least the COGCC can do,” Sara Loflin, LOGIC executive director, said in a statement. “It is ridiculous that we have had to fight to get oil and gas sites further away from kids and the places where they learn and play.”

GOP lawmakers push Trump to take ‘any appropriate action’ to save Keystone XL -- Dozens of Republican lawmakers are pushing President Trump to save Keystone XL after a court ruling last month blocked the controversial oil pipeline’s construction. Forty-four lawmakers, led by Sen. Steve Daines (Mont.) and Rep. Greg Gianforte (Mont.), wrote to Trump on Friday, saying the court decision by the District Court for the District of Montana “has brought real and immediate consequences, halting critical preconstruction activities and invalidating the analysis that underlies the approval issued by your administration.” They asked Trump to “take any appropriate action necessary to move construction forward.” The lawmakers didn’t specify what they want that action to be. Judge Brian Morris, nominated to the bench by former President Obama, ruled last month that the State Department under Trump didn’t conduct a proper environmental review of the planned Canada-to-Texas pipeline. He went on to say officials “simply discarded” climate change concerns related to the project, and should have better explained the reversal from Obama’s 2015 rejection of the project. Trump quickly slammed the ruling as a "political decision" and a "disgrace." Later, Morris rejected TransCanada Corp.’s request to continue “preconstruction” activities like maintaining rights-of-way and hauling pipe in preparation for building. The State Department hasn’t notified the court if it intends to appeal the ruling, fix the problems the judge identified or take some other action. State or TransCanada would have to notify the court by Feb. 5 if they intend to appeal.

State board gives natural gas company time to comply with permits -- After years of violating contracts with the state, a company operating 40 natural gas wells in northwestern South Dakota is getting one last chance. The Department of Environment and Natural Resources’ Board of Minerals and Environment met on Thursday in Pierre to discuss the fate of Spyglass Cedar Creek LP. The board was originally scheduled to conduct a contested enforcement hearing to possibly rescind the company’s permits, but ultimately gave them one more month to turn their operations around. Prior to the board’s meeting, a lawyer for Spyglass negotiated with the state’s Office of Attorney General a consent agreement that requires Spyglass to obtain a $200,000 bond by Jan. 15, which will be financed by investors, according to Deputy Attorney General Richard Williams, who presented the negotiated agreement to the board. Spyglass also agreed to make improvements to bring their wells back into compliance by July 1 and to bring a total of 20 wells back into production by Sept. 1. Spyglass owns and operates 40 wells in South Dakota. Spyglass also admitted fault in the agreement to several violations of its permits, including leaving unproductive wells unplugged and having wells improperly signed or suffering “erosion issues.” The Texas-based company also caught heat when they cashed out a previous $20,000 bond, saying they did not remember the purpose of the money. The board unanimously approved the agreement by a roll call vote Thursday, with chairman Rexford Hagg calling it “the last straw.”

US miscalculated benefit of better train brakes (AP) — President Donald Trump’s administration miscalculated the potential benefits of putting better brakes on trains that haul explosive fuels when it scrapped an Obama-era rule over cost concerns, The Associated Press has found. A government analysis used to justify the cancellation omitted up to $117 million in estimated future damages from train derailments that could be avoided by using electronic brakes. Revelation of the error stoked renewed criticism Thursday from the rule’s supporters, who called the analysis biased. Department of Transportation officials acknowledged the mistake after it was discovered by the AP during a review of federal documents. They said a correction will be published to the federal register. But transportation spokesman Bobby Fraser said the decision not to require the brakes would stand under a Congressional act that said the costs couldn’t exceed the rule’s benefits. “This was an unintentional error,” Fraser. “With the correction, in all scenarios costs still outweigh benefits.” Safety advocates, transportation union leaders and Democratic lawmakers oppose the administration’s decision to kill the brake rule, which was included in a package of rail safety measures enacted in 2015 under President Barack Obama following dozens of accidents by trains hauling oil and ethanol in the U.S. and Canada. The deadliest happened in Canada in 2013, when an unattended train carrying crude oil rolled down an incline, came off the tracks in the town of Lac-Megantic and exploded into a massive ball of fire, killing 47 people and obliterating much of the Quebec community’s downtown. There have been other fiery crashes and fuel spills in Alabama, Oregon, Montana, Virginia, West Virginia, North Dakota, Illinois and elsewhere. 

Energy boom, carbon cost -- Lisa DeVille lives in the heart of the Bakken oil formation. DeVille is a member of the Mandan Hidatsa Arikara Nation and lives in Mandaree on the Fort Berthold Reservation. Living in the Bakken, she and her family see natural gas flares almost daily. “We witness it, we live with oil and gas,” DeVille said. “The night sky is lit up like day. You can feel the earth rumble under you when those flares happen, you can hear it and smell it.” The air quality is poor in this area because the flares put off toxic chemicals, DeVille said. The oil and gas industries have other adverse effects on the land and health of the people living there. According to an Earthworks study done in the Mandaree area, “visible and concerning” emissions were found at sites near Williston and the Fort Berthold Reservation. “If they don’t get it under control, it’s going to be worse than what it is today,” she said. “Things need to happen now.” North Dakota produced more than 2.5 billion cubic feet of natural gas per day in September. With all of the economic benefits oil and gas production bring to North Dakota, there is also a downside to this level of production. Last year, there were 392 million barrels of oil produced in North Dakota. Approximately 168.6 million metric tons of carbon dioxide are emitted from consuming that much oil, according to data from the Environmental Protection Agency. That is equivalent to carbon dioxide emissions from 36,105,912 cars. North Dakota has been the second-largest oil-producing state since 2012. North Dakota has also become one of the biggest carbon dioxide emitters in the country. The region produces 10 billion to 15 billion metric tons of carbon dioxide, according to the EPA. 

North Dakota oil output averages record 1.39 million b/d in October - North Dakota's oil output averaged over 1.39 million b/d in October, up nearly 32,600 b/d from September and another monthly production record, the North Dakota Pipeline Authority reported Friday. The record production could be short-lived as producers slow investment, according to Lynn Helms, the state's top oil and gas regulator. Helms told reporters Friday that a combination of low oil prices, limited gas capture infrastructure and cold weather could slow future production.  Helms said that investment in drilling, hydraulic fracturing and well completions are all expected to decline, at least through April 2019, causing statewide output to stagnate or dip going forward. Helms said that investment in gas gathering and pipelines will likely increase going forward. North Dakota's oil output has posted a record in five months so far this year: in May, when the December 2014 record was broken, and in July, August, September and, now, October. Oil production has risen nearly 215,000 b/d since January, according to state data. State natural gas production averaged more than 2.56 Bcf/d, also an all-time high, according to the state's Department of Mineral Resources. The state had 15,344 producing wells in October, up 57 from September and also a new record, the DMR reported Friday. There were 183 drilling permits issued in October, up from 113 in September, well below the all-time high of 370 in 2012. There were 116 drilling permits issued in November, the DMR said. At the end of October, there were 959 wells waiting on completion, up 31 from the end of September.

Fracking in 2018: Another Year of Pretending to Make Money - 2018 was the year the oil and gas industry promised that its darling, the shale fracking revolution, would stop focusing on endless production and instead turn a profit for its investors. But as the year winds to a close, it’s clear that hasn’t happened.Instead, the fracking industry has helped set new records for U.S. oil production while continuing to lose huge amounts of money — and that was before the recent crash in oil prices. But plenty of people in the industry and media make it sound like a much different, and more profitable, story.Going into this year, the fracking industry needed to prove it was a good investment (and not just for its CEOs, who are garnering massive paychecks). In January, The Wall Street Journal touted the prospect of frackers finally making “real money … for the first time” this year. “Shale drillers are heeding growing calls from investors who have chastened the companies for pumping ever more oil and gas even as they incur losses doing so,” oil and energy reporter Bradley Olson wrote.Olson’s story quoted an energy asset manager making the (always) ill-fated prediction about the oil and gas industry that this time will be different.Is this time going to be different? I think yes, a little bit,” said energy asset manager Will Riley. “Companies will look to increase growth a little, but at a more moderate pace.”Despite this early optimism, Bloomberg noted in February that even the Permian Basin — “America’s hottest oilfield” — faced “hidden pitfalls” that could “hamstring” the industry.They were right. Those pitfalls turned out to be the ugly reality of the fracking industry’s finances. And this time was not different.

PG&E falsified gas pipeline records for years after deadly explosion, regulators say - Pacific Gas & Electric Co. continued to commit pipeline safety violations in the years after a gas explosion that killed eight people in the Bay Area suburb of San Bruno, regulators said Friday as they launched a new investigation into California’s largest utility. The fresh accusations add to growing uncertainty over PG&E’s viability as the power provider for 16 million people from Humboldt to Santa Barbara counties. The company could face bankruptcy if its infrastructure is found to have sparked the Camp fire, which killed 86 people last month. Critics have called for state regulators to break up the utility monopoly. The California Public Utilities Commission said Friday that a staff investigation found PG&E had violated rules requiring utilities to locate and mark natural gas pipelines to make sure other companies or people don’t accidentally damage them during construction and other projects that involve digging. The commission’s investigation found that PG&E didn’t have enough employees dedicated to that work and that PG&E supervisors, facing pressure from their bosses, falsified data “so requests for pipeline locating and marking would not appear as late.” The violations occurred from 2012 to 2017, the commission said. PG&E’s safety practices and culture have been subject to enormous scrutiny since 2010, when one of the company’s gas pipelines exploded in San Bruno near San Francisco International Airport, killing eight people. “This Commission would expect that after such a tragedy, caused by multiple proven violations of law, PG&E would have sought to vigorously enhance and increase its effectiveness in all aspects of its gas safety,” the commission said in an order announcing the new investigation, which could lead to additional financial penalties for the embattled utility. PG&E was fined $1.6 billion by the commission and $3 million by a federal judge after the San Bruno explosion.

PG&E natural gas storage system enters heating season well below average - — Inventories on the Pacific Gas & Electric storage system entered the heating season at historically low levels, which could likely lead to upward pressure on prices this winter. Entering the winter, PG&E storage inventories were 145 Bcf, which was 66 Bcf below 2017 and 65 Bcf below the five-year average. Despite inventories being so depressed, stockpiles still appeared sufficient to withstand a normal or colder-than-average winter. However, sustained high demand so far this winter may lead to steep storage deficits later this winter and strong upward pressure on PG&E balance of winter prices.PG&E on-system demand has averaged 2.63 Bcf/d winter to date, the strongest level this early in the season since 2013, according to data from S&P Global Platts Analytics. The elevated early season demand has caused PG&E to pull a total of 25.4 Bcf from storage, which is also the largest early season storage withdrawal since 2013.With current inventories at 120 Bcf and following along the same withdrawal patterns as the winter of 2013/2014, storage inventories stand to lose another 103 Bcf, which would place season-ending inventories at their lowest levels in history by more than 50 Bcf. The likelihood of both demand and storage activity following the polar vortex winter exactly is unlikely; however, it does paint a concerning picture for inventory levels exiting the winter. Using the last two winters as guides, storage withdrawals from now until the end of the season ranged from 51 Bcf to 81 Bcf. If either the low or high case were to happen this year, storage inventories would exit the season at a high of 69 Bcf or 39 Bcf, both of which would be a 10-year low for PG&E storage.

2018-19 winter preview: narrowing US demand growth to allow supply to overwhelm balances this winter despite atypically low storage - US demand for the 2018-19 winter is apt to breech the 100 Bcf/d mark for the first time ever, barring mild temperatures. Even so, Y/Y gains will continue to narrow, with growth anticipated to be limited to ~2.3 Bcf/d — well below this summer’s gain of ~6.8 Bcf/d and a far cry from the ~9.3 Bcf/d increase posted during the 2017-18 winter. With US-production led supply growth poised to continue to yield outsized Y/Y gains in the area of ~8 Bcf/d, bullish price concerns tied to the still massive storage deficit will fade as the heating season unfolds — without extended and sustained cold weather. Despite our caution, the risk of bullish weather still leaves NYMEX futures and Henry Hub cash exposed to upward price spikes and heightened volatility in the weeks ahead, given the US storage deficit in general, and the large shortfall in the EIA South Central region in particular as partly reflected by Platts Southeast and Texas cell regions. The bullish price risks, though, have a “shelf life” given that the US storage deficit (as well as regional shortfalls) will be cut nearly in half before end-year even, if temperatures are merely normal. With that in mind, there is a decided premium on heating demand-supportive weather in the early months of the heating season, given the entrenched supply momentum in place. Without such weather support, net US storage builds could carry well into November, led by injections in the pivotal South Central region. All told, beyond the storage carry-in and related consideration of probabilities surrounding the end-March carry-out tied to weather, the obligation to ensure a high enough maximum daily withdrawal rate to meet daily demand peaks will color near-term price perceptions. Additionally, our stress testing of US balances show that protracted cold-conditions during the winter could result in gas-scarcity issues in terms of end-March 2019 storage levels. As a result, Henry Hub price risks remain asymmetrical to the upside — at least for the next several weeks. 

Prices Collapse On Moderating Weather Forecasts --Sunday, 12/16/2018 - Highlights of the Natural Gas Summary and Outlook for the week ending December 14, 2018 follow..

• Price Action: The January contract fell 66.1 cents (14.7%) to $3.827 on a 87.9 cent range ($4.666/$3.787.
• Price Outlook: Continuing the extreme volatility witnessed in recent weeks, this week posted both a new high and high. With weather forecasts still fluctuating and meaningfully impacting end of season storage projections, the volatility is likely to continue until the end of winter comes into view.   CFTC data indicated a (10,161)contract reduction in the managed money net long position as longs liquidated and shorts added. Total open interest rose 11,432 to 3.745 million as of December 11. Aggregated CME futures open interest rose to 1.290 million as of December 14. With December 31 on a Monday and liquidity already low, if more traders take a 4-day weekend price moves on that day may be extreme. The current weather forecast is now warmer than 7 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 2.9 bcf. Cove Point is net exporting 0.8 bcf.
• Weekly Storage: US working gas storage for the week ending December 7 indicated a withdrawal of (77) bcf. Working gas inventories fell to 2,914 bcf. Current inventories fall (712) bcf (-19.6%) below last year and fall (727) bcf (-20.0%) below the 5-year average.
• Storage Outlook: The EIA weekly implied flow was 2 bcf from our EIA storage estimate.  Over the last 5 weeks, the EIA has reported a total withdrawal of (294) bcf compared to our (295) bcf estimate.
• Supply Trends: Total supply rose 0.3 bcf/d to 81.6 bcf/d. US production rose. Canadian imports rose. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (4). Oil activity decreased (4). Natural gas activity was unchanged +0. The total US rig count now stands at 1,071 .The Canadian rig count fell (12) to 174. Thus, the total North American rig count fell (16) to 1,245 and now exceeds last year by +77. The higher efficiency US horizontal rig count fell (6) to 927 and rises +126 above last year.
• Demand Trends: Total demand rose +2.0 bcf/d to +92.6 bcf/d. Power demand rose. Industrial demand rose. Res/Comm demand rose. Electricity demand rose +3,109 gigawatt-hrs to 79,147 which exceeds last year by +1,481 (1.9%) and exceeds the 5-year average by 3,017 (4.0%%).
• Nuclear Generation: Nuclear generation rose 390 MW in the reference week to 89,654 MW. This is (4,042) MW lower than last year and (1,676) MW lower than the 5-year average. Recent output was at 91,527 MW.

The heating season has begun. With a forecast through December 28 the 2018/19 total cooling index is at (1,102) compared to (998) for 2017/18, (804) for 2016/17, (683) for 2015/16, (961) for 2014/15, (1,132) for 2013/14, (932) for 2012/13 and (938) for 2011/12.

Why we might see $10 Henry Hub gas this winter – Platts pdf - The US gas market is finely balanced entering the winter. US storage is forecast to peak at 3.2 Tcf, its lowest mark in the past 10 years. More specifically, Southeast and Texas storage levels, which play a critical role balancing swings in demand around Henry Hub because of their quick cycling ability, enter the winter with deficits well below their 5-year low. As weather forecasts for November trend colder, the market appears to be growing more concerned about having sufficient gas to meet demand this winter, as evidenced by the +25 cent move on Monday. However, this rally may be the start of something bigger. With SE/TX storage limited in its ability to meet sustained, elevated demand given current low stockpiles, and with elasticities in the power sector reduced by structural shifts in the generation stack away from coal to gas, the destruction of LNG exports and exports to Mexico could be the final market balancing mechanism in the event more supply needs to be retained domestically. Shutting off either demand source won't come cheap. US storage levels stand at 3.14 Tcf as of the week ending October 25 and look set to start the withdrawal season at 3.23 Tcf after upcoming injections the next two weeks, roughly 600 Bcf below the 5-year average. But what matters to Henry Hub prices is the deficit in the Southeast and Texas. The Southeast has 437 Bcf in the ground, 40 Bcf below the 5-year low inventory for this time of year and almost 100 Bcf below the 5-year average. Texas stands at 332 Bcf, 45 Bcf lower than the 5-year low and more than 100 Bcf below the 5-year average. Bottom line, the cushion provided by these largely salt dome fields in the Gulf simply is not what it has been historically entering the winter, which becomes a big problem should sustained, elevated demand materialize.

The Gas Crash Continues --The natural gas crash continued today, with the January contract giving back almost 8% on the day after a solid gap down last evening.  The entire natural gas strip got sold hard today, but losses were by far the most significant for the next few winter months, as forecasts remained warm and the winter premium from storage concerns is rapidly getting priced out of the market.  This is of course best seen on the H/J March/April spread, which encapsulates the "stockout" fear (or fear that natural gas stocks get dangerously low before the end of high demand/storage withdrawal season in March). The spread is not yet where it was before prices spiked in November, but it is moving much closer to those levels and is over $1 off the highs. This comes on continued confidence that warmth dominates through Week 2 and into the end of December, as seen in the latest Climate Prediction Center forecast here.  Then this morning in our Morning Update we highlighted that "we do not see much reason for prices to move much below $3.75, and would look for $3.5 to be firm..." as weekend models fit our expectations well.   Sure enough, the January contract spiked up to $3.742 this morning before reversing and selling off through the day, setting a low at $3.516 and fitting our expectations almost exactly. We noted that though models were actually a touch cooler than we had forecast on Friday in our "Monday Expected" forecast, Week 3 forecasts in our Morning Update had trended even more bearish and we forecast that 12z model runs today would continue that trend.  Warmer PM model runs, and especially very warm European model guidance, seemed to help keep prices right near support and limit any rallies as we continued to see widespread warmth in the medium-range on American GEFS guidance as well (images courtesy of Tropical Tidbits).

Gas Short Squeezes Right Back Up --If you're having trouble keeping track of all these daily natural gas moves, you're not alone. After falling almost 8% yesterday the January natural gas contract shot back higher almost 9% today to settle a cent above where it settled last Friday as long-range models began to hint at colder risks to start off January.  Once again today's rally was front-led with the January contract logging the largest gain on the day.  This comes as the January/February F/G spread was just finally beginning to move closer to past historical levels. If you're looking for evidence of today's rally on Climate Prediction Center products it would be hard to come by, as warmth through Week 2 remained on most model guidance.   Rather, as noted in our Morning Update, Week 3 trends were solidly less bearish on overnight weather model guidance and overnight GWDDs were generally steady. We saw this as putting short-term upside to $3.75 resistance in play. The market continues to shoot around on the extrapolated Week 3 weather forecast as traders attempt to judge when cold weather can return and how that could impact natural gas stockpiles that will still be dangerously low even after this warm December limits drawdowns. Thursday's EIA print should offer clues as to how storage draws will look in upcoming cold shots; much of our research today dove deeper into our expectations for that print and where gas price risk is accordingly skewed around it.

Natural Gas Bulls May Get What They Wanted After All - A January Cold Blast - We expect a -130 Bcf change in the storage report for the week ended Dec. 14. A storage report of -130 Bcf would compare with -182 Bcf last year and -144 Bcf for the five-year average. Natural gas bulls may get what they wanted after all... a January cold blast Are you surprised by the move up today? You shouldn't be if you saw what the ECMWF-EPS long-range forecast for January yesterday. Let's just say it was a "cold" reaction. Natural gas bulls for the past few weeks have been banking on the idea that 2019's January may be a repeat of 2002 and 2014 as we wrote here. The issue at the time was that it was far too early to have any confidence in a forecast that far out. With the ECMWF-EPS long-range posted last night, natural gas bulls just got a bit more confidence. Combine this with the fact that weather models turned more bullish in the 11-15 day range as we noted yesterday (thanks to King Euro), and natural gas prices are once again off to the races.  But are bulls getting a bit too excited too early?  Yes, we think so. One of the big reasons is that if you break down the forecast into the two clusters above, what the natural gas bulls really need is that nice deep red or known as a ridge in Alaska to form starting Jan 7. Without that signal, the outlook may just be slightly neutral to bullish at best. This still leaves participants with plenty of time (up to a week) to validate the data via the daily model updates before buying into the idea that the cold blast arrives by the second week of January.Again, prices could never pull back and we are fine giving up this trade opportunity, but the risk that participants are taking betting on a guaranteed cold blast is just as silly as people who accuse us of being too conservative.

Weekly Gas Storage: Winter Draw Accelerates - The EIA released its weekly Natural Gas Storage Report today, outlining how national natural gas stocks have changed in the last week. In total, the EIA reports natural gas stocks fell by 141 Bcf last week, decreasing to 2,773 Bcf from 2,914 Bcf. This is 20.1% below the 3,470 Bcf that was in storage at this point last year and is 20.6% below the five-year average of 3,493 Bcf. This week’s storage draw was in line with expectations, as analysts predicted a draw of 136 Bcf.Every region saw a draw this week, with the largest in the East and Midwest region where stocks fell by 40 Bcf and 44 Bcf. Stocks in every region are below the five-year average. Gas in storage in nonsalt stocks in the South Central region is the farthest from normal, 29.1% below the 5 year average.

Gas Retests Lows On Warmer Mid-Day Weather Trends --Volatility remains the name of the game in natural gas, with at the money implied volatility continuing higher through this past week for the January natural gas contract which shot higher early this morning. It then plunged to re-test lows into the settle, and is now bouncing post-settle yet again. At the settle prices were down almost 4% on the day after being up even more than that earlier this morning.  Again it was the January contract logging the largest loss on the day, with significant losses for the February and March contracts as well.  Each of the moves seemed to have a reason today too. Overnight and early this morning traders were speculating that we could see a significantly bullish EIA print at 10:30 AM Eastern, and we noted small GWDD gains overnight too.  Then the EIA announced that 141 bcf of natural gas was withdrawn from storage last week, which was a bit bullish to our estimate of 133 bcf.   Yet despite this bullish miss to our expectations we highlighted to clients immediately after that we still only saw the print as "Neutral" for natural gas prices today as next week's print should be looser and weather remained in charge with more mixed risks.  Sure enough, right after the print prices pulled back to the $3.75 level that we had highlighted in our Morning Update prices were likely to test. We then released our intraday Note of the Day highlighting that prices seemed fairly valued there, but much warmer afternoon model guidance would put $3.6 in play while colder guidance would put $3.9 back in play again today.  American model guidance trended significantly warmer, and that was the impetus for the price move down to the $3.6 level that we settled near (model images courtesy of Tropical Tidbits).  However, European model guidance post-settle trended colder, allowing prices to recover many of their losses and bounce back up. Climate Prediction Center forecasts showed these decreased warm risks in the long-range too.  Just recently in our Afternoon Update we broke down the differences in modeling guidance and which we favored to win out over the coming week. We highlighted how that skewed natural gas price risk as well as what the latest balance readings indicated for end of draw season storage estimates. This comes after our Note of the Day looked at the latest weather-adjusted power burns and demand and our EIA Rapid Release showed whether today's EIA print was tight or loose to the 5-year average.

Despite Volatility, January Gas Ends Week Flat - It was another wild week in the natural gas space, with prices gapping down and plunging Monday before shooting back higher Tuesday and falling Wednesday into Thursday. We then shot higher again today before a warmer European ensemble model run pulled prices lower into the settle where we are set to go into the electronic close right in the middle of the weekly range.  Price settled on the highs for the day, though, and the result was actually a week that was basically flat for the January and February contracts.  More weakness in the March contract meant that the January/March F/H contract spread settled near its highs for the week too.  Generally, trading through the week fit our expectations. When prices were off significantly on Monday we highlighted that our Weekly Sentiment was still neutral as prices could test $3.5 but that early in the week prices should set a bottom with more impressive cold risks on model guidance later in the week likely allowing prices to bounce.  This verified well as weather models trended colder through the week for early January, with forecasts in our Morning Update today showing much of Week 2 with GWDDs around to slightly above average. Yet we were cautious all week, warning that model guidance can still trend warmer into the end of December and that models can sometimes rush these colder changes as we highlighted in that Monday Report.  This led to the overall Neutral sentiment, which we held into our Morning Update today while also explaining that "...risk increasing looks to be skewed upwards from these levels..." as "Under $3.75 gas seems relatively cheap." Sure enough, prices bounced through the day to settle above that level, but noted model volatility was enough to keep prices in check post-settle and verify our daily Neutral sentiment with Week 3 forecasts ticking a bit more bearish.  We saw these mixed risks on Climate Prediction Center forecasts this afternoon too which kept some warmth across the East but showed a bit more cold risks in the center of the country.  We expect choppy trading next week with low volume on a half day Monday for the Christmas Holiday. But traders will be closely watching the latest weather developments in the first half of January while also awaiting Friday's delayed EIA print, which will demonstrate just how much the market has loosened in warmth through the past week.

US shale oil production to rise to 8.166 million b/d in January: EIA— US shale oil production in January is expected to rise 134,000 b/d month on month to 8.166 million b/d, the Energy Information Administration said Monday. In November, EIA predicted December’s oil output would be 7.944 million b/d, an increase of 113,000 b/d month on month. EIA also forecast monthly increases of 98,000 b/d for November and 79,000 b/d for October. Earlier in December, EIA raised its projection for this month to 8.032 million b/d, the first time the monthly average will have crossed the 8 million b/d threshold. US oil production generally is weighing in higher than expected in recent months, surpassing earlier targets, as drilling has become progressively more efficient as operators continue to employ better technology to eke more oil and gas out of each well, EIA analyst Jozef Lieskovsky said. The agency predicts 2018 production to average 10.88 million b/d, including 11.5 million b/d for the fourth quarter, and 12.06 million b/d next year. That compares with estimates of 10.79 million b/d for 2018 and 11.76 million b/d for 2019 just six months ago. EIA eyes production in the Permian Basin at 3.8 million b/d in January, up 73,000 b/d, even though additional takeaway capacity is about full. In addition, EIA forecasts oil production from the Bakken Shale of North Dakota/Montana at 1.461 million b/d, up by 18,000 b/d, and from the Eagle Ford Shale of South Texas at 1.427 million b/d in January, up by 19,000 b/d.Both the Niobrara Shale and the Anadarko Basin should see their production rise by 10,000 b/d each in January, to 679,000 b/d and 599,000 b/d respectively, the agency said. Also, Appalachian oil production from the Marcellus and Utica shales in Pennsylvania and Ohio should be up in January by 4,000 b/d, while Haynesville Shale oil output from northwest Louisiana/East Texas is estimated at 43,000 b/d, unchanged on the month. Last week, a total 1,172 drilling rigs were drilling in oil and gas plays, up about 11% from the same week last year, according to S&P Global Platts Analytics data. Of last week’s rigs, 80% were located in oil-weighted plays. The number of actual domestic drilled but uncompleted (DUC) wells also rose in November, to 8,723, up by 287 from the previous month, EIA said. Of those, 248, or 86%, came from the Permian, where DUCs rose to 4,039 – a record level and the first time the number has surpassed 4,000.

Interior Dept. Moves Toward Selling Oil Leases in Arctic Refuge-- The Interior Department on Thursday took a key step toward allowing oil and gas drilling in a pristine wildlife refuge in Arctic Alaska, putting forth proposals it said would protect the animals there but that would end decades of environmental protections. The four possible plans, which would determine what parts of the coastal plain of the Arctic National Wildlife Refuge could be opened to drilling, were included in a draft environmental report prepared by the Bureau of Land Management. After a 45-day public comment period, the bureau is expected to select one of the alternatives and approve a final report early next summer. If the process survives expected court challenges by environmental and conservation groups, as well as efforts by the incoming Democratic majority in the House of Representatives to slow it down, lease sales for rights to drill for oil and gas could be held before the end of 2019. Oil company exploration and development plans would require additional studies and approvals, however, so any actual drilling could be a decade or more away. The draft report, called an environmental impact statement, was issued exactly a year after Congress approved legislation opening the refuge to oil and gas development. “We have undertaken a rigorous effort here,” said Joe Balash, an assistant Interior secretary. Mr. Balash, who oversees the bureau, said each of the four proposed alternatives had “built-in protections” for the coastal plain, known as the 1002 Area, where the migrating porcupine caribou herd goes to give birth. Of the alternatives, two would exclude one-third of the 1.5 million acres of the coastal plain from any lease sales, while the other two would have no exclusions. In all four, some acreage would be subject to operating restrictions.

Trump Administration Sued Over Controversial Arctic Drilling Project - Conservation groups are suing the Trump administration to halt construction of a controversial oil production facility in Alaska's Beaufort Sea, the first offshore oil drilling development in federal Arctic waters.  Hilcorp Alaska received the green light from the Interior Department in October to build the Liberty Project, a nine-acre artificial drilling island and 5.6-mile underwater pipeline, which environmentalists warn could risk oil spills in the ecologically sensitive area, threaten Arctic communities and put local wildlife including polar bears at risk.In the lawsuit filed Monday, the Center for Biological Diversity, Friends of the Earth, Greenpeace, Defenders of Wildlife and Pacific Environment—all represented by the environmental law nonprofit Earthjustice—claim the administration's approval violated federal laws and ignores the causes and effects of climate change."We can't let this reckless administration open the Arctic to offshore oil drilling. It threatens Arctic wildlife and communities and will only make climate chaos worse around the world," said Kristen Monsell, oceans legal director with the Center for Biological Diversity in a press release. "Liberty is the bad step down a very dangerous path. An oil spill in the Arctic would be impossible to clean up in a region already stressed by climate change."The Arctic is warming at twice the rate of anywhere else on Earth, and the region's air temperatures in the past five years between 2014-2018 have exceeded all previous records since 1900, government scientists warned in a report earlier this month. Ironically, the Liberty Project has already been delayed because of the effects of climate change. The region's unusual warmth has resulted in unstable land-fast sea ice, meaning that the ice simply isn't thick enough to transport construction materials.

Groups sue to block oil production in Alaska's Beaufort Sea - Five conservation groups filed a lawsuit Monday seeking to block oil production from a proposed artificial gravel island in federal Arctic waters.The groups asked the 9th U.S. Circuit Court of Appeals to review an offshore production plan approved for the Liberty project in the Beaufort Sea off Alaska's north coast.The groups said the plan violates federal law governing outer continental shelf drilling, the environment and endangered species. The Trump administration failed to consider impacts of an oil spill in remote Arctic waters or effects of drilling on polar bears and other endangered species, said Kristen Monsell of the Center for Biological Diversity, one of the groups that sued."An oil spill in the Arctic would be impossible to clean up in a region already stressed by climate change," she said.Drilling law requires the administration to reject development if the risks to the human and marine environment outweigh the benefits of oil extraction. That includes both spills and climate change, Monsell said."Here the agency used the totally inadequate analysis that actually found that the 'no action' alternative — not approving the project — would actually result in more greenhouse gas emissions, which is just completely ridiculous on its face, and also ridiculous given the modeling they used," Monsell said.The Bureau of Ocean Energy Management did not immediately respond to an email request for comment Monday.BOEM in October approved a plan submitted by Houston-based Hilcorp for production wells on an island proposed in 19 feet (5.8 meters) of water about 5.6 miles (9 kilometers) off shore. The site is 15 miles (24 kilometers) east of Prudhoe Bay, North America's largest oil field. Hilcorp plans to extract oil from federal leases sold in the 1990s. BP Exploration Alaska drilled at the site in 1997 and sold 50 percent of the assets to Hilcorp in 2014. The base of the gravel island would cover 24 acres of ocean floor, about the size of 18 football fields, with sloped sides leading to a work surface of 9 acres, the size of nearly seven football fields. To create the island, trucks would travel by ice road to a hole cut in sea ice and deposit 83,000 cubic yards (63,450 million cubic meters) of gravel. The surface would have room for 16 wells. Hilcorp anticipates extracting 80 million to 130 million barrels over 15 to 20 years. Hilcorp proposes to move oil to shore by buried pipe.

GOP Economic Outlook For Arctic Wilderness Drilling Is A ‘Pipe Dream,' Report Finds - If the environmental risks of opening Alaska’s fragile Arctic National Wildlife Refuge to oil and gas development weren’t enough cause for concern, a new analysis has found that the economic benefits the Trump administration and Republican lawmakers have touted to push the plan are unattainable. The report, published Wednesday by conservation nonprofit The Wilderness Society, comes as the Trump administration weighs a proposal to allow seismic surveys in the refuge. The surveys would be a key first step in the administration’s push to approve drilling leases as early as 2019.Late last year, GOP lawmakers passed a wildly unpopular tax bill that included a provision introduced by Sen. Lisa Murkowski (R-Alaska) requiring the Interior Department to approve at least two lease sales ― each consisting of at least 400,000 acres ― in the refuge’s 1.5 million-acre coastal plain, also known as the 1002 Area. The Interior Department, which has prioritized opening the area as part of the administration’s fossil fuel-focused “energy dominance” agenda, has said the leases would generate an estimated $1.8 billion in federal revenue over a decade. The Congressional Budget Office has pegged the figure at closer to $1.1 billion. “It is a pipe dream to say that they’re going to reach those estimates,” Ben Gruel, the Arctic refuge campaign director at The Wilderness Society, told HuffPost by phone Wednesday. CBO’s estimate assumes that all 800,000 acres are leased for $7,500 per acre, according to The Wilderness Society report, which is based on research conducted by Virginia-based Key-Log Economics and funded by The Wilderness Society. But in recent years, the average acre on Alaska’s North Slope has sold for around $41, the analysis found. And oil prices are forecast to fall in 2019, according to the U.S. Energy Information Administration.

ExxonMobil shelves Canada LNG export project (Reuters) – U.S. oil major Exxon Mobil Corp has withdrawn its WCC liquefied natural gas (LNG) export terminal in Canada from the environmental assessment process, it said on Thursday, signaling that the project has been shelved. The decision to pare its LNG project portfolio follows the go-ahead of a giant Royal Dutch Shell-led project in British Columbia, and Exxon’s focus on LNG projects in Asia, the Middle East and the United States. Global LNG demand is expected to double to 550 million tonnes per annum (mtpa) by 2030, as countries like China move away from coal to cleaner fuels. The top import market for LNG is northeast Asia. Exxon’s West Coast Canada (WCC) LNG export project, located in northern British Columbia, was expected to produce around 15 million tonnes per year of LNG to serve Asian buyers, with plans for further expansion up to 30 million tonnes per year. The project was being jointly reviewed by the province and Canadian environmental regulators, an assessment that had been underway since 2015, though no major documents have been filed since 2016. Exxon formally withdrew from the process in a Dec. 5 letter to the British Columbia Environmental Assessment Office, posted on the regulator’s website. “After careful review, ExxonMobil and Imperial (Oil Resources Ltd) have withdrawn the WCC LNG project from the environmental assessment process,” a spokeswoman for ExxonMobil confirmed in an email. Exxon’s decision signaled it is concentrating on LNG projects with Qatar Petroleum [QATPE.UL] and a proposed expansion of its chilled-gas operation in Papua New Guinea, said Jason Feer, head of business intelligence at Poten & Partners, LNG tanker brokers and consultants. “They have got a pretty robust pipeline of liquefaction projects globally. It would be natural to review that and see which would be competitive,” he said. 

Arctic LNG Contract Goes to Saipem - Arctic LNG 2 has awarded a joint venture (JV) of Saipem and the Turkey-based oil and gas services company Renaissance a 2.2 billion-euro onshore engineering and construction contract in Russia, Saipem reported Wednesday. According to Saipem, the 2.2 billion-euro contract calls for the construction of three 6.6-million ton per annum (mtpa) liquefied natural gas (LNG) trains installed on concrete gravity-based structures and LNG storage facilities with 687,000 cubic meters of capacity. Novatek JSPC and Ekropromstroy Ltd. own 60-percent and 40-percent interests, respectively, in the project, which will be built in the western part of Gydan Peninsula in the Tazovsky District in Russia’s Yamal-Nenets autonomous administrative region. The project relies on the hydrocarbon resource of the Utrenneye field, whose reserves (Russian classification) total nearly 2 billion cubic meters of natural gas and 105 million tons of liquids, according to Novatek’s website. Saipem noted that the Arctic LNG 2 contract forms part of a strategic partnership deal that it signed with Novatek in 2016 for LNG-related activities. Each company in the 50/50 Saipem-Renaissance JV will receive approximately 1.1 billion euro for the project.

AMLO Earmarks $23B to Boost National Oil Industry - -- Mexican President Andres Manuel Lopez Obrador is boosting Petroleos Mexicanos’ budget to 464.6 billion pesos ($23 billion) next year to reverse flagging oil production and increase domestic fuel output. Lopez Obrador is proposing that Pemex invest 211 billion pesos in exploration and production ($10.4 billion) in 2019. That’s a 26 percent increase compared to last year, when Pemex planned to invest 168 billion pesos in the unit, according to the finance ministry. Oil production is expected to stabilize at 1.847 million barrels a day in 2019 with Mexico’s oil mix estimated at $55 a barrel, the ministry said. The budget reflects Lopez Obrador’s ambition to wean Mexico from foreign fuel imports, which have been rising due to growing demand and lack of investment in refineries. To do that, the president plans to build a new refinery and refurbish the run-down existing ones, while increasing domestic oil production to feed the plants. Pemex is importing light oil from the U.S. for the first time to make up for the crude shortfall at its refineries. “It’s an embarrassment that we are buying light oil for our refineries. If we don’t have the primary material, we can’t do anything,” Lopez Obrador told a crowd of oil workers on Saturday morning at the port of Ciudad del Carmen, Campeche, an oil hub that the president has promised will be the new Pemex headquarters. “We are going to rescue our dear Mexico and the national oil industry.” Lopez Obrador has shrugged off investor concerns that his government will worsen Pemex’s fiscal situation. The beleaguered Mexican driller is the largest Latin American corporate borrower, with $106 billion in financial debt. “We are going to invest where we know there’s oil and where it costs less to extract it,” he said. “We are going to reduce costs.” Under a new six-year business plan, Pemex’s oil production will rise 52 percent to 2.624 million barrels a day by the end of 2024, up from 1.730 million daily barrels today, the company’s new chief executive officer, Octavio Romero, said at the event in Campeche alongside Lopez Obrador. Pemex’s output has declined every year since 2004, almost halving in that time.

Mexico targets 50 percent jump in oil output under 'Pemex rescue' - (Reuters) - Mexico aims to lift oil and gas production by almost 50 percent in the next six years and in January will award infrastructure and drilling contracts to develop 20 fields, state oil firm Petroleos Mexicanos said on Saturday. Octavio Romero, chief executive officer of the company generally known as Pemex, said the new government would increase exploration investment by around 10 percent annually to reverse dwindling output as he presented a new plan for the industry. President Andres Manuel Lopez Obrador, who took office on Dec. 1, wants to revive Pemex, which has become heavily indebted as crude output fell from a peak of nearly 3.4 million barrels per day (bpd) in 2004 to less than 1.8 million in October. “It’s a new Pemex rescue,” Lopez Obrador said alongside Romero in the port of Ciudad del Carmen in the southern Gulf of Mexico shortly before his government was due to present its first budget with Pemex’s finances under close scrutiny. Under the plan, Mexican crude output is due to climb to some 2.624 million barrels bpd by the end of 2024, while gas production will also rise by about 50 percent. Output will stabilize in the coming months and start to pick up toward the end of next year, the Pemex CEO said. However, projections presented in the government’s first budget later on Saturday suggested output would continue falling until 2020. Mexico’s previous government sought to increase production by opening up production and exploration to private capital. But the decline has yet to bottom out.

Mexico's plan to revive their crude oil refining sector - While U.S. refineries are again running hot and heavy after the end of this year’s seasonal fall maintenance period, Mexico’s refineries have continued to struggle to operate at more than 30% of their capacity, a decline that is exacerbated by that country’s tumbling oil production. In recent years, Mexico’s dismal refinery utilization rate has been a boon for U.S. refiners on the Gulf Coast who can ship, pipe or truck gasoline to America’s southern neighbor in short order. Now, Mexico’s new president, Andrés Manuel López Obrador (AMLO), is pushing to solve Mexico’s refinery problems by building a new one. Today, we discuss Mexico’s growing dependence on U.S. gasoline, and whether building a new refinery south of the border will change things. As we mentioned in our recent blog Going to Mexico, Mexican crude production has fallen sharply in the past 10 years. At 1.76 MMb/d in October 2018, total output is less than half what it was in 2005. [It’s worth noting here that the majority of that crude — nearly 61% of the 1.76 MMb/d total in October — is categorized as “heavy” or low in API gravity, according to Mexico’s state-run oil company, Petróleos Mexicanos (Pemex)]. Much like Pemex’s oil production rates, refining rates have collapsed, too. And to make matters even worse, Mexico’s refineries are relatively simple — that is, not complex — and configured to process lighter, sweeter crudes, the exact quality that’s getting harder and harder to come by in Mexico. AMLO has a plan to revive oil output alongside refinery rates — he presented a national oil production plan in Campeche last week, in which he pledged to boost production to 2.4 MMb/d in the next six years.

Fracking stopped by 'red event' off Preston New Road after seven earthquakes in two hours - Fracking has been halted in Lancashire following a series of seven small earthquakes in less than two hours. The earthquakes all took place close to the Preston New Road site, where oil and gas exploration company Cuadrilla commenced fracking in October. Work has paused and the site will be monitored by Cuadrilla for at least 18 hours in line with rules set out by the Oil and Gas Authority. A Cuadrilla spokesman said: "A series of micro seismic events in Blackpool have been recorded on the British Geological Survey website today. The largest recorded was 0.9ML at about 2pm. This occurred while we were hydraulically fracturing at the Preston New Road exploration site. "Detected by Cuadrilla's sophisticated monitoring system, and verified by BGS, it will be classed as a 'red' event under the traffic light system operated by the Oil and Gas Authority. "Cuadrilla has paused and will continue to monitor micro seismicity for at least 18 hours after the event was recorded, in line with the traffic light system regulations. Well integrity has been checked and verified." The first quake took place at 1.05pm with a magnitude of -0.6. Two earthquakes, with magnitudes of -0.2 and -0.5, took place at 1.06pm. Three minutes later, at 1.09pm, a quake with a magnitude of 0.1 took place. At 1.18pm a tremor with a magnitude of -0.1 occurred. This was followed at 1.41pm by a tremor with a magnitude of 0.9 - the biggest of the day. The last tremor, with a magnitude of 0.1, took place at 2.51pm. 

Fracking equipment leaves Blackpool site - but it will be back - Shale gas exploration company Cuadrilla has demobilised some equipment from its Lancashire site before Christmas. But the fracking firm is already looking forward to bringing it back in 2019. The team, which is based in Bamber Bridge, near Preston and operates the UK’s first horizontal shale gas exploration wells in Preston New Road, near Blackpool, said 2018 had been a landmark year. Chief Executive Officer Francis Egan provided an update as equipment prepared to demobilise from Preston New Road today.. He revealed that gas had been flowing back to the surface. He said: “It has been an amazing year. We drilled the first two horizontal wells into UK shale, both safely and successfully completed, secured the country’s first ever hydraulic fracture consent and agreed the associated operation plans and then hydraulically fractured our first well. “In recent weeks we have repeatedly seen natural gas flowing back to surface along with the water injected during the fracturing process and this flow of gas is in fact earlier than expected. "Whilst there have been undoubted challenges and restrictions in operating within what is acknowledged to be a very conservative micro-seismic traffic red light threshold (set at just 0.5 on the Richter Scale) this early gas flow is a hugely encouraging signal of the potential locked up in this natural gas resource to heat our homes and businesses for many years to come. “All of the above was achieved with a relentless focus on safety and environmental performance.” Russia's Gazprom Export sells huge volumes in latest natural gas auction - Russia's Gazprom Export sold another huge volume of gas on its Electronic Sales Platform (ESP) on Friday for Q1 2019 delivery, with a total of 123 million cu m sold.   It is the biggest volume sold so far in the second wave of auctions that began on November 26 and the second-biggest sale since the first ESP auction in late September.It brings the sales for Q1 2019 delivery so far to 572 million cu m and total ESP sales to 1.61 Bcm. Auctions for delivery in Q4 ended on November 16, with 1.04 Bcm sold.

Poland's goal of ditching Russian natural gas bolsters American LNG and Trump's energy agenda - Poland took another step towards weening itself off Russian energy supplies on Wednesday by signing a 20-year agreement with San Diego-based Sempra Energy to import U.S. liquefied natural gas. The signing marks the third long-term contract the state-controlled Polish Oil and Gas Company, or PGNiG, has inked with an American LNG company this year. In the coming years, Warsaw plans to replace Russian gas with pipeline supplies from Norway and shipments of LNG, or gas super-chilled to liquid from for transport by sea. That is opening an opportunity for the U.S. energy industry, which is on the cusp of a opening a second wave of LNG export terminals. The Trump administration, eager to dominate the global energy market, has been pitching the supplies in trade talks from Beijing to Warsaw. Eastern and Central European nations, which have a complicated and frequently antagonistic relationship with Moscow, have been a receptive audience. Assistant Secretary Francis Fannon and other Department officials were on hand on in Warsaw when Poland's PGNiG signed the deal with Sempra on Wednesday. The agreement commits PGNiG to buy 2 million tons per year from Sempra's Port Arthur Texas terminal, which is slated to enter commercial operation in 2023. That is enough LNG to cover about 15 percent of Poland's yearly natural gas consumption, according to PGNiG. It also moves Sempra closer to making a final decision to finance the Port Arthur facility. In October, PGNiG signed another 20-year agreement to buy 2 million tons a year from Venture Global's planned LNG export facility in Plaquemines Parish, Louisiana. In August, the Polish firm signed on for 1.45 million tons a year for two decades from Cheniere Energy, with smaller shipments starting next year. Poland is preparing for a major shift in its energy imports after 2022, when Warsaw says it will allow a contract with Russia's Gazprom to expire. That plan also includes boosting imports from top LNG exporter Qatar and building a pipeline link with Norway. Polish President Andrzej Duda does not hide his disdain for Poland's reliance on Russian natural gas. In a press conference with President Donald Trump in September, he said Moscow uses its grip over the European gas market for "political blackmail."

Indigenous Group Sues Exxon, Energy Majors Over Fracking Waste Contamination in Patagonia - A major indigenous group in the Argentine Patagonia is suing some of world's biggest oil and gas companies over illegal fracking waste dumps that put the "sensitive Patagonian environment," local wildlife and communities at risk, according to Greenpeace.The Mapuche Confederation of Neuquén filed a lawsuit against Exxon, French company Total and the Argentina-based Pan American Energy (which is partially owned by BP), AFP reported. Provincial authorities and a local fracking waste treatment company called Treater Neuquén S.A. were also named in the suit.The Mapuche accused the companies of contaminating the environment with "dangerous waste" due to "deficient treatment" close to the town of Añelo, according to AFP.The waste comes from operations in the Vaca Muerta field, one of the largest deposits of shale oil and gas in the world that lies in the Neuquén province."We denounce the company Treater Neuquén S.A., responsible for environmental contamination with hazardous waste, for deficient treatment and disposal of the oil industry's waste," said Héctor Jorge Nawel, coordinator for the Xawvn Ko area of the Mapuche Confederation of Neuquén, in a press release. "It is critical that the state authorities and oil company executives who allowed this happen be held accountable, and that our right to a healthy environment be respected."On Monday, Greenpeace claimed Total and Royal Dutch Shell (which was not named in the lawsuit) are "dumping thousands of tonnes of toxic oil and industrial waste" from their fracking operations into illegal open waste ponds in Patagonia. "The Vaca Muerta reserves house approximately 830 fracking wells, each one generating between 600 to 850 cubic meters of waste in a month of operation. To be transported to treatment plants, much of that waste must pass through cities, communities, drinking water sources, and agricultural fields," Greenpeace said.

Outlook 2019: Venezuela's oil minister, a general with no industry experience, is now OPEC's president --OPEC enters a pivotal third year of production cuts in a volatile oil market with its least experienced minister at the helm. Venezuela's Manuel Quevedo, a former brigadier general in the country's National Guard, will take over the group's rotating presidency in 2019. The timing of his ascendency could not be worse.  Brent crude has plummeted 40% since reaching $86/b in October, despite OPEC and its allies agreeing in December to 1.2 million b/d of cuts. As concerns grow over the strength of global demand, Quevedo will be responsible for keeping the peace within OPEC and ensuring its members keep their promises. His task is complicated by Venezuela's own collapse as a major force in the oil industry. The crisis-wracked country -- with its crumbling oil production, runaway inflation and crushing debt -- is in a weak position at the head of OPEC's top table. Quevedo, a fervent Marxist, may struggle to be heard as the group's main ministerial mouthpiece.OPEC watchers say the rhetoric coming from Venezuela -- often anti-US and out of touch with the real challenges facing the country -- may present a challenge for the organization, as it tries to keep US President Donald Trump at bay and maintain vital ties with Russia to shore up oil prices."Today Venezuela needs some soft-spoken person to improve their image rather than an aggressive approach," said Kamil al-Harami, an independent oil analyst based in Kuwait. Quevedo, who also heads state energy company PDVSA, is loyal to President Nicolas Maduro, who appointed him in late 2017. The government in Caracas has emerged as a geopolitical focus for the Trump administration alongside Iran, which has also been targeted with sanctions. Despite concerns, Quevedo insists his main focus as OPEC president will be to maintain the bloc's tenuous solidarity. "We are looking to maintain the unity between OPEC and non-OPEC countries, to continue with the cooperation we already have and to have sustainable prices for crude oil," Quevedo said in an interview with S&P Global Platts on the sidelines of this month's fraught meeting in Vienna. "This cooperation has been successful."

OPEC's Sequel to Oil Deal Faces Struggle - OPEC’s bold strategy to revive oil markets proved a surprise success last year, but the sequel they’ve unveiled for 2019 is getting a cooler reception. Oil prices have slumped in the two weeks since the cartel and its allies announced they will cut production to prevent a surplus, in contrast to the rally that greeted their previous intervention. From Wall Street oil-watchers to Russia’s central bank, speculation is growing that booming U.S. shale output and shaky fuel demand may thwart the coalition’s efforts. Saudi Arabia’s assurance on Wednesday that the agreed six months of cuts will probably be extended -- a pledge that comes before the deal has even started -- only underscored the prevailing anxiety. “The concern is that even if OPEC+ faithfully implement those cuts, it still might not be enough,” said Mike Wittner, head of oil market research at Societe Generale SA in New York. Oil is trading at the lowest in a year despite the pledge from the Organization of Petroleum Exporting Countries and its allies to remove 1.2 million barrels a day of crude from the market for six months starting in January. The group’s own data gives an indication why this hasn’t halted the price slump. While their cut should roughly balance supply and demand in the first half of 2019, less crude will be needed from the group in the second as a slowing global economy reins in demand and U.S. shale producers keep breaking records. By the fourth quarter, the coalition may need to almost double their planned cutback just to keep markets in equilibrium. Brent crude futures have slipped about 10 percent since OPEC and its partners met on Dec. 7, trading for $55.44 a barrel as of 8:56 a.m. London time. In contrast, in the two weeks after the group first agreed joint cuts in November 2016 prices jumped about 20 percent. This is a relief for consumers, in particular U.S. President Donald Trump, who urged OPEC to keep the taps open and cheered the recent price drop as a “big tax cut” for consumers. But it’s a gloomy situation for Saudi Arabia and other major exporters, whose 2019 budgets would be strained at current prices.

Iraq gets 90-day Iran sanctions waiver from Washington — Iraq can continue electricity and gas imports from Iran without violating US sanctions under an extension granted Wednesday, senior officials close to negotiations told S&P Global Platts. Washington appears satisfied with Baghdad's intention to reduce electricity and gas imports, among other actions, and gave a 90-day waiver just as the previous 45-day waiver expired. This provides additional time for Iraq to determine ways to pay Iran for the imports in non-dollar denominations and avoiding Iranian banks. The financial transactions technically violate sanctions, not power or gas purchases. Iraq stopped trading in crude with Iran prior to the November 5 snapback of American sanctions, which otherwise would have violated sanctions. Iraq does not produce enough power itself or have enough feedstock for existing power plants. Imports from Iran account for nearly 30% of Iraq's 14,000 MW of daily electricity consumption. Cutting that supply would be devastating for Iraq's economy and, considering the ferocity of summer power protests, would likely destabilize an already fragile political balance. Around 1.25 Bcf/d is imported by pipeline feeding three power plants in Diyala and Baghdad provinces. Another 350 Mcf/d is sent by pipeline to a power plant in Basra. Hayan Abdulghani, the director general of the South Gas Company, told S&P Global Platts last week that he's overseeing projects that replace that line in two years. Iraq also is fed a total of 1,000 MW of electricity via power lines from Iran. Negotiations began after the Trump administration made clear it would re-impose sanctions. While the specific violations were of primary concern, American officials alluded to additional requirements, multiple officials confirmed to S&P Global Platts. Washington wanted to see a plan by Iraq to eventually become self-sustaining in power and gas, thereby reducing the need for Iranian imports. Iraqi and Kurdistan region officials were also pressed to strike a deal to restart oil exports from federally controlled Kirkuk fields through the Kurdistan-controlled pipeline to Turkey, which began at nearly 100,000 b/d in mid November. It's unclear what specifically will be required of Iraq when the 90-day waiver expires.

Oil Bulls Cut Bets to Lowest Since 2016 - -- Hedge funds aren’t buying into OPEC’s oil-production cuts just yet. They slashed net wagers on a rally of West Texas Intermediate crude to the lowest in more than two years, while short-selling of Brent oil climbed for a record 11th week. Both benchmarks ended the week lower as the cartel’s efforts were overshadowed by concern about booming shale production and waning global demand. It’s mostly up to Saudi Arabia now to try to win investors over. “Demand is now decreasing and you have a problem with Chinese growth,” said Tariq Zahir, a commodity fund manager at Tyche Capital Advisors LLC. “Right now, everything is dependent on what Saudi Arabia does.” Saudi Arabia clearly knows that. The oil-rich kingdom has plans to slash exports to the U.S. in coming weeks in an effort to dampen visible build-ups in crude supplies, telling local refiners to expect much lower shipments in January, according to people briefed on the plans. That could bolster confidence among traders that OPEC’s de facto leader is serious about rebalancing supply and demand. “We should be at just about the end of the cycle where longs have gotten wiped out,” said John Kilduff, a partner at New York-hedge fund Again Capital LLC “In the medium term, the Saudis exporting less to the U.S. should help us head higher.” The biggest challenge for the Saudis is the concern that growth in prolific U.S. fields could surpass supply curbs by OPEC and its allies. North Dakota’s Bakken shale play produced a record 1.4 million barrels a day in October, while the Permian Basin of West Texas and New Mexico is forecast to surpass 4 million next month. On Friday, traders continued to sell off oil, as Brent futures for February delivery fell 1.9 percent to settle at $60.28 a barrel in London, putting it down 2.3 percent on the week. WTI for January closed down 2.6 percent on the day, closing out the week down 2.7 percent. Hedge funds’ net-long position on WTI -- the difference between bets on higher prices and wagers on a drop -- slid 6.7 percent to 119,675 in the week ended Dec 11, the U.S. Commodity Futures Trading Commission said Friday. That was the least bullish since August 2016. Longs-only fell 0.8 percent to the lowest since March 2013, while shorts rose 7.8 percent. Brent net-longs edged up from a three-year low over the same period, rising by 2.3 percent to 139,597 contracts, ICE Futures Europe data showed. Longs rose 3.1 percent, while shorts rose 3.9 percent to the highest since July 2017.

Oil Prices Tick Higher to Start the Week -- Oil prices ticked higher on Monday, staging a modest rebound after falling by more than 2% in the prior session amid indications that U.S. drilling activity fell to its lowest level in about two months. Offering a hint on U.S. production activity, Baker Hughes on Friday reported that the number of active domestic rigs drilling for oil fell by four to 873, the lowest since mid-October. That helped ease worries about oversupply in the market. U.S. West Texas Intermediate crude futures tacked on 16 cents, or roughly 0.3%, to $51.63 a barrel by 9:00 AM ET (14:00 GMT). International Brent crude oil futures were at $60.58 per barrel, up 30 cents, or about 0.5%. Oil prices sank on Friday as weak data from China and Europe stoked fears of a global economic slowdown. With just about two weeks to the end of 2018, WTI remains down about 15% on the year and some 32% lower from four-year highs of nearly $77 per barrel hit in early October. Brent is down about 10% on the year and nearly 32% lower from four-year highs of nearly $87 per barrel hit two months ago. In other energy trading, gasoline futures rose 0.1% to $1.443 a gallon, while heating oil added 0.3% to $1.850 a gallon. Natural gas futures plunged 3.4% to $3.697 per million British thermal units as forecasts for warmer-than-normal temperatures to the end of the month weighed.

US crude drops 2.6% to 14-month low, settling at $49.88, on oversupply concerns - Oil prices fell to a 14-month low on Monday on signs of oversupply in the United States and as investor sentiment remained under pressure from concern over the prospects for global economic growth and fuel demand.U.S. light crude ended Monday's session down $1.32, or 2.6 percent, to $49.88, settling below $50 for the first time since October 2017. The contract fell 4 percent towards $49 a barrel after the settlement, hitting the lowest level on an intraday basis since Sep. 13, 2017.Brent crude oil fell 67 cents, or 1.1 percent, at $59.61 per barrel.U.S. crude futures fell after inventories at the storage hub of Cushing, Oklahoma rose by more than 1 million barrels between Dec. 11 and Dec. 14, traders said, citing data from market intelligence firm Genscape.Traders and market participants closely watch supplies at the hub because it is the delivery point for the futures contract and underpins nearly all other regional crude grades."The Cushing number came in higher than anticipated ... it's definitely pointing to the concern that there's more supply and demand is weakening," said Phil Flynn, analyst at Price Futures Group in Chicago."The market is still very nervous about that."Both benchmarks fell by about 30 percent through October and November as a supply glut inflated global inventories but have stabilized over the last three weeks, trading within fairly narrow ranges as oil producers have promised to cut production.Some investors doubt planned supply cuts by OPEC and other producers such as Russia will be enough to rebalance markets.OPEC and its allies have agreed to reduce output by 1.2 million barrels per day (bpd) from January, in a move to be reviewed at a meeting in April.UAE energy minister Suhail al-Mazrouei told reporters in Dubai on Monday that the global oil market was "correcting" and he expected "everyone" to cut oil supply under the agreement reached earlier this month in Vienna. But OPEC and its allies have an uphill task. U.S. shale output is growing steadily, taking market share from the big Middle East oil producers in OPEC and making it harder for them to balance their budgets.

Oil falls, U.S. crude dips below $50 on oversupply fears (Reuters) - Oil prices fell more than 2 percent on Monday, with U.S. crude tumbling below $50 a barrel, on signs of oversupply in the United States and as investor concern over global economic growth and fuel demand grows. A gas station worker pumps fuel into a motorbike at a gas station of the Venezuelan state-owned oil company PDVSA in Caracas, Venezuela November 2, 2018. REUTERS/Marco Bello Brent crude oil LCOc1 fell 67 cents, or 1.11 percent, to settle at $59.61 a barrel after dropping to a session low of $58.83 a barrel. U.S. crude CLc1 dropped $1.32, or 2.58 percent, to end the session at $49.88 a barrel and tumbled to a low of $49.09 a barrel. Benchmark U.S. crude futures settled below $50 for the first time since October 2017. U.S. crude futures fell after inventories at the storage hub of Cushing, Oklahoma, rose by more than 1 million barrels from Dec. 11 to 14, traders said, citing data from market intelligence firm Genscape. Traders and market participants closely watch supplies at the hub because it is the delivery point for the futures contract and underpins nearly all other regional crude grades. “The Cushing number came in higher than anticipated. ... It’s definitely pointing to the concern that there’s more supply and demand is weakening,” said Phil Flynn, analyst at Price Futures Group in Chicago. “A lot of the shale producers can’t make money where prices are right now, let alone below $50, so we’re going to see a cutback in some of the production estimates, but it takes time for that to happen .... right now we’re definitely following the continued weakness in momentum.” Increasing concerns about weakening growth in major markets such as China and Europe have also dampened the mood in oil and other asset classes. 

Oil Prices Fall Below Key Thresholds - West Texas Intermediate (WTI) and Brent crude oil futures on Monday settled below the psychologically significant $50 and $60 marks, respectively. WTI crude oil for January delivery fell by $1.32 to settle at $49.88 a barrel. The U.S. benchmark peaked at $51.87 and bottomed out at $49.09. The February Brent crude oil futures prices moved in the same direction as the WTI but at a more modest rate. The Brent settled at $59.61 a barrel, losing 67 cents overall during the early-week session. “Oil prices stayed down Monday, following last week’s losses that saw the Brent contract fall 2.3 percent week-over-week and WTI slip 2.7 percent,” said Delia Morris, Houston-based commodity pricing analyst. “Along with equity markets, the front-month contracts for both Brent and WTI were weighted down by global growth fears and uncertainty around the upcoming Fed policy meeting, which will outline economic expectations for 2019.” The U.S. Federal Reserve will hold its Federal Open Market Committee (FOMC) meeting Tuesday and Wednesday of this week. “With bearish sentiment lingering in the market – net long positions are at their lowest levels since 2016, according to the Commodity Futures Trading Commission (CFTC) – much of this can be ascribed to doubts around the efficacy of OPEC+’s commitment to cut 1.2 million barrels per day of crude production in order to balance global oil markets,” continued Morris. “The specter of an upsurge in U.S. production in the back half of 2019, when additional oil pipeline capacity will come onstream, presents another negative catalyst for oil.” The price of a gallon of reformulated gasoline (RBOB) also ended the day lower. The January RBOB contract price declined by more than two cents to settle at $1.41. 

Libya's biggest oil field is being held hostage, but even that won't boost prices -- Libya's state-owned National Oil Corporation (NOC) declared force majeure on operations at its biggest oilfield late Monday night amid a stand-off with armed protesters, expecting a loss of 315,000 barrels per day (bpd) for the OPEC member. The protest group, known as the Fezzan Rage Movement, shut down the El Sharara oil field in Libya's impoverished southwest earlier this month with the help of security personnel the Petroleum Facilities Guard, a militia known for its clashes with the Islamic State. The movement of tribesmen is demanding better services, health sector support, monetary stimulus for the southern region and better protection from the government, which it claims has marginalized those living in Libya's south. But while oil prices saw a slight rebound of about 2 percent one week ago on news of the shutdown, crude output from the U.S. is so high it's practically drowned out what would otherwise be a notable disruption in the oil market. Brent crude was trading at 58.54 at 2 p.m. London time on Tuesday, down 1.8 percent on the previous day."In terms of the impact on prices, at present it is struggling to overturn the prevailing bearish bias," Stephen Brennock of PVM Oil Associates told CNBC on Tuesday. However, he noted, "any further unexpected outages could inject some much needed bullish impetus into the oil complex." Oil prices have fallen some 30 percent since hitting year-highs in October on concerns of global oversupply and slowing demand growth. The Energy Information Agency (EIA) projects U.S. shale oil output to top 8 million bpd by the year's end and average a record 12.06 million bpd in 2019. While the crisis does heighten geopolitical risk, said Ehsan Khoman, head of Middle East and North Africa research at MUFG, "markets remained focused on the more structural concerns that U.S. oil production growth is well north of, and expected to stay, above global demand growth heading into 2019."  Libya's NOC said that production at El Sharara will only restart after "alternative security arrangements," the Monday statement said, without elaborating.

Shale Under Pressure As WTI Flash-Crashes Below $50 For 2nd Time Today - Xi's speech did not help (with no growth measures revealed) but oil markets seem extremely fragile this morning having broken below $50 and flash-crashed for the second time in a few hours.  WTI is trading extremely ugly this morning... And as, OilPrice.com's Nick Cunningham notes, the OPEC+ cuts still are not doing very much to boost oil prices, dashing hopes for many U.S. shale producers. With companies in the process of formulating their budgets for 2019, the prospect of $50 oil sticking around raises questions about the heady production figures expected from the shale patch.The IEA expects U.S. oil production to grow by 1.3 million barrels per day (mb/d) in 2019. But oil prices could significantly impact those projections.“Total U.S. shale oil growth is highly sensitive to WTI prices in the $40-60 range,” Morgan Stanley wrote in a December 13 note. The investment bank said that shale producers are growing more sensitive to prices below $60 but less sensitive to price spikes above $60. “If WTI remains around current levels (~$50/bbl), US growth should start to slow.”The investment bank said that larger companies, such as ConocoPhillips or Occidental Petroleum, are less sensitive to price swings than smaller E&Ps. On the other hand, some companies could begin to slow production if prices linger at low levels. Morgan Stanley pointed to Apache Corp., Murphy Oil, Newfield Exploration, Oasis Petroleum, Whiting Petroleum and Chesapeake Energy. “With low oil prices, we see these companies slowing production growth in 2019 to spend within cash flow (or minimize outspend), [free cash flow] levels fall or turn negative, and leverage metrics move higher.”Other analysts also see price sensitivity from the shale sector. “We expect 5-10% capex growth on average at $59 WTI, which should yield production growth of nearly 1.3mn b/d,” Bank of America Merrill Lynch wrote in a note. “However producers may budget for lower oil prices given the recent decline in prices and increase in uncertainty.”

US crude plunges 7.3% to $46.24, lowest settle since August 2017, on oversupply concerns - Oil prices plunged about 7 percent to a more than 15-month low on Tuesday as the United States and Russia continue to pump at record levels even as analysts warn that signs of faltering demand are emerging.  U.S. West Texas Intermediate crude fell below $47 a barrel to its lowest since August 2017, after settling under $50 for the first time in over a year in the previous session. WTI was last down $3.66, or 7.3 percent, at $46.22 a barrel.Brent crude, the international benchmark for oil prices, tumbled to a 14-month low below $57 a barrel. It was trading $3.33 or 5.6 percent, lower at $56.28 a barrel around 2:29 p.m. ET.Oil prices are now trading in a zone that could trigger a plunge towards U.S. crude's 2017 low near $42 a barrel, according to John Kilduff, founding partner at energy hedge fund Again Capital. From peak to trough, WTI has lost about 39 percent of its value since hitting a roughly four-year high in early October. The slump has brought WTI's year-to-date losses to nearly 22 percent. Brent has fallen as much as 34 percent since its October high and is down about 14 percent in 2018. This month, oil output from U.S. shale fields is set to rise above 8 million barrels per day for the first time ever, the U.S. Energy Information Administration reported on Monday. Production from the seven key regions is forecast to rise by nearly 134,000 bpd in January, the biggest increase since September. U.S. crude futures fell sharply lower on Monday after energy data firm Genscape reported that crude stockpiles at a closely watched storage hub in the Cushing, Oklahoma rose by more than 1 million barrels. Meanwhile, sources tell Reuters Russia is pumping at 11.42 million bpd this month, a level that would mark an all-time high if confirmed.

'The only way is down': Oil's slump could get much worse amid oversupply concerns, analysts say - Oil prices are likely to fall even further over the coming weeks, analysts told CNBC Tuesday, as a sharp sell-off in global equities combines with intensifying fears about a market that could soon to be awash with crude.The latest wave of energy market selling comes amid reports of swelling inventories and forecasts of record U.S. and Russian output. Heightened worries of a possible economic slowdown in 2019 have also added downward pressure to the value of a barrel of oil."The only way is down," Tamas Varga, senior analyst at PVM Oil Associates, said in a research note published Tuesday."There are lots of variables regarding next year's oil balance but based on available data, information and sentiment, it is fair to say that any price rally will be met by fierce resistance from the sellers' side," Varga said.Brent crude fell as much as 4 percent to as low as $57.20 a barrel on Tuesday, on track to register its third consecutive session of declines. The international benchmark has since trimmed some of its losses to trade down 2.7 percent.Meanwhile, U.S. West Texas Intermediate (WTI) dipped further below $50 a barrel on Tuesday, after settling below the psychologically important level for the first time in more than a year in the previous session. U.S. crude stood at $47.94 at around 11:00 a.m. ET, trading 4 percent lower. Both oil benchmarks have crashed more than 30 percent since reaching a peak in early October, largely because of swelling global inventories.

WTI Extends Losses After Surprise Crude Build - After a bloodbath in the energy markets (as economic jitters and surging supplies from the US to Russia dragged benchmark crude prices to their lowest levels in 15 months) traders held WTI around $46.50 ahead of the API inventories data. API:

• Crude +3.45mm (-3.25mm exp)
• Cushing +1.063mm (+1.3mm exp)
• Gasoline +1.76mm
• Distillates -3.442mm

After two weeks of draws, API reports a surprise crude build (expectations were for a 3.25mm draw), sending WTI Crude lower... WTI hovered around $46.50 ahead of the print and dropped modestly on the surprised crude build... “This is all about fears of a recession,” said Bill O’Grady, chief market strategist at Confluence Investment Management LLC in St. Louis. “It’s risk-off everywhere.”

US oil prices climb after tumble, but oversupply worries drag -Oil bounced on Wednesday after one of its biggest falls for years, but remained under pressure from oversupply and concern that a slowing global economy would depress demand for fuel.Benchmark Brent crude oil was up 54 cents, or 1 percent, at $56.80 a barrel by 9:35 a.m. ET (1435 GMT), after dropping 5.6 percent on Tuesday and at one point hitting a 14-month low.U.S. light crude was up 58 cents, or 1.3 percent, at $46.82, after plunging 7.3 percent in the previous session when it touched its lowest since August 2017.   Both benchmarks have fallen more than 30 percent since the beginning of October as crude supply from the Middle East, Russia and the United States has outstripped demand, filling oil tanks.Tuesday's sell-off was encouraged by a sharp fall in world stock markets after signs that economic growth, and hence demand for energy, was slowing.There were also worries that higher U.S. interest rates could slow U.S. growth. The U.S. Federal Reserve is expected to raise interest rates on Wednesday. The central bank is due to announce its decision at 2 p.m. EST (1900 GMT).Adding to worries about oversupply, the American Petroleum Institute said on Tuesday that U.S. crude stocks rose unexpectedly last week, while gasoline inventories increased.If the build in U.S. crude stockpiles is confirmed by U.S. government data on Wednesday, it will be the first increase in three weeks.OPEC and other oil producers including Russia agreed this month to curb output by 1.2 million bpd, equivalent to more than 1 percent of global demand, in an attempt to drain tanks and boost prices. But the cuts will not happen until next month and production has been at or near record highs in the United States, Russia and Saudi Arabia.

Saudi Arabia is reportedly cutting oil output by more than expected - OPEC is reportedly planning to release a table detailing voluntary supply cut quotas among its members and allies, Reuters reported Thursday, as the influential oil cartel steps up its efforts to put a halt to one of the biggest oil price falls in years. OPEC Secretary General Mohammad Barkindo said to reach the proposed cut of 1.2 million barrels per day (bpd), the effective reduction for member countries would need to be 3.02 percent. That is higher than the initially discussed 2.5 percent discussed earlier this month."In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,"  This is also vital to underpin trust in our decisions and to buttress ourselves from any naysayers who may doubt our commitment." Since climbing to four-year highs in early October, crude futures have crashed by more than a third. The latest wave of heavy selling comes at a time when the energy market as well as the global economy is gripped by a flurry of bearish factors.Heightened concerns of oversupply, reports of swelling inventories, forecasts of record U.S. and Russian output and intensifying concerns about an economic slowdown have all placed downward pressure on the value of a barrel of oil.  OPEC and allied non-OPEC oil producers including Russia agreed at the start of December to curb output by 1.2 million bpd. That's equivalent to more than 1 percent of global demand, in a bid to drain tanks and boost prices.The 15-member organization said it would reduce its output by 800,000 bpd, while Russia and the allied non-OPEC producers will contribute a 400,000 bpd reduction.However, the cutbacks — which are not scheduled to go into effect until January — have failed to put a halt to tumbling oil prices. The table of voluntary supply cuts shows Saudi Arabia taking 322,000 bpd off the market effective from January 2019 — that's compared to reference production levels of 10.6 million bpd from October 2018.Meanwhile, non-OPEC heavyweight Russia is seen cutting 230,000 bpd next year.OPEC production cuts were seen at 812,000 bpd, while 383,000 bpd worth of voluntary adjustments from non-OPEC partners bring the combined total of cutbacks to 1.2 million bpd. OPEC is expected to publish the full list of voluntary supply cuts by the end of the week.

WTI Bounces Above $48 After 3rd Weekly Crude Draw In A Row -A surprise crude build from API sent WTI briefly lower but as the dollar has tumbled this morning, crude prices have rallied back above $47.50, helped by optimistic jawboning from Saudi Arabian Energy Minister Khalid Al-Falih.“We will meet in April and I’m certain that we will extend it,” Al-Falih told reporters in Riyadh, referring to the next meeting of OPEC+ members to discuss whether to extend the December agreement to reduce output. “We need more time to achieve the result.”Additionally, Al-Falih said the current price dip isn’t based on supply and demand of oil, and has plenty of blame to go around:“What has happened in my opinion recently is a confluence of many non-oil fundamental issues including the geopolitical issues, especially around the sanctions and the waivers that were granted by the United States,” Al-Falih said.“It also includes the trade tension between the U.S. and China.”But for now inventories are what is driving price action. DOE:

• Crude -497k (-3.25mm exp)
• Cushing +1.091mm (+1.3mm exp)
• Gasoline +1.766mm
• Distillates -4.237mm - biggest draw since March

After two weekly draws, last night's build from API surprised traders, and DOE reported only a small crude draw of 497k (well below the 3.25mm draw expected). Distillates saw the biggest draw since March.

Oil prices finish higher as U.S. supplies fall a third straight week - Oil futures finished higher Wednesday, buoyed by a third straight weekly decline in U.S. crude supplies and a drop in distillate stocks, after a price plunge a day earlier pushed the U.S. benchmark down to its lowest finish in nearly 16 months.January West Texas Intermediate crude rose 96 cents, or 2.1%, to settle at $47.20 a barrel on the New York Mercantile Exchange after a high of $48, with the contract paring some of its earlier gains after the Federal Reserve announced its decision Wednesday to raise a key interest rate, as expected. The contract settled at $46.24 a barrel on Tuesday, the lowest finish for a front-month contract since Aug. 30, 2017, according to Dow Jones Market Data. The January futures contract expired at the day’s settlement. February WTI crude which is now the front-month contract, settled at $48.17, up $1.57, or 3.4%.  Meanwhile, February Brent, the global benchmark, added 98 cents, or 1.7%, to $57.42 a barrel on ICE Futures Europe. It tumbled 5.6% to $56.26 Tuesday, for the lowest finish since October 12, 2017. The Energy Information Administration reported Wednesday that domestic crude supplies fell by 500,000 barrels for the week ended Dec. 14. Analysts polled by S&P Global Platts expected a larger decline of 3 million barrels in crude supplies, but the American Petroleum Institute on Tuesday reported a climb of 3.5 million barrels. Gasoline stockpiles rose by 1.8 million barrels last week, while distillate stockpiles, which include heating oil, dropped 4.2 million barrels, according to the EIA. The S&P Global Platts survey had shown expectations for supply increase of 2.6 million barrels for gasoline and a fall of 900,000 barrels for distillate inventories. “The draw to distillate inventories means they are now more than 14% lower since mid-September, providing the biggest bullish element” of the report,

Oil prices resume drop, shed most of last session's gains - Brent crude oil fell more than 4 percent on Thursday, hitting its lowest in more than a year on worries about oversupply and the outlook for energy demand as a U.S. interest rate rise knocked stock markets. Stock markets dropped worldwide after the U.S. Federal Reserve raised rates and maintained most of its guidance for additional hikes over the next two years, dashing investor hopes for a more dovish policy outlook.North Sea Brent dropped by 4.5 percent to $54.64 a barrel, its lowest since September 2017. Brent last traded at $55.50, down $1.74, for a loss of 3 percent. U.S. light crude oil fell by $2.35 a barrel, or 4.9 percent, to a low of $45.82 overnight. It recovered some ground to trade down $1.67, or 3.5 percent, at $46.50 by 11:09 a.m. ET (1609 GMT).Both major oil futures contracts rallied sharply on Wednesday but are now at or close to their lowest levels for over 15 months, more than 35 percent below multi-year highs reached at the beginning of October. "Wednesday's recovery was short-covering," said Xi Jiarui, chief oil analyst at consultancy JLC."Investors quickly moved their attention to deteriorating fundamentals in the oil markets, including more signs of slowing economic growth next year, record production and the lack of confidence with OPEC's pledge to curb production."OPEC and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices. But the cuts will not happen until next month, and production has been at or near record highs in the United States, Russia and Saudi Arabia. Saudi Energy Minister Khalid al-Falih said he expected global oil stocks to fall by the end of the first quarter, but added that the market remained vulnerable to political and economic factors as well as speculation.OPEC plans to release a table detailing voluntary output cut quotas for its members and allies such as Russia in an effort to shore up prices, OPEC Secretary-General Mohammad Barkindo said in a letter seen by Reuters on Thursday. U.S. inventory data offered some support. U.S. crude inventories fell by 497,000 barrels in the week to Dec. 14, the U.S. Energy Information Administration said, smaller than the decrease of 2.4 million barrels analysts had expected. Distillate stockpiles, which include diesel and heating oil, dropped by 4.2 million barrels, the EIA said, versus expectations of a 573,000-barrel increase. Distillate demand rose to the highest since January 2003, which bolstered buying, particularly in heating oil futures, the market's proxy for diesel.

Oil prices tumble to lowest in more than a year as equities sell off (Reuters) - Oil prices fell about 5 percent on Thursday, hitting their lowest level in more than a year on worries about oversupply and the outlook for energy demand as a U.S. interest rate rise knocked stock markets. Brent crude futures fell $2.89, or 5.05 percent, to settle at $54.35 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $2.29, or 4.75 percent, to settle at $45.88 a barrel. Brent hit a session low of $54.28 a barrel, its lowest price since mid-September 2017, while WTI sank to $45.67, its lowest price since late August 2017. Global stock markets dropped after the U.S. Federal Reserve raised rates on Wednesday and maintained most of its guidance for additional hikes over the next two years, dashing investor hopes for a more dovish policy outlook. U.S. stock markets continued their decline on Thursday, dragging oil prices lower.   Both major oil futures contracts have fallen more than 35 percent from multi-year highs reached at the beginning of October. Fatih Birol, head of the International Energy Agency, said on Thursday he does not expect a sharp increase in oil prices in the short term, unless there are geopolitical problems. The Organization of the Petroleum Exporting Countries and other oil producers including Russia agreed this month to curb output by 1.2 million barrels per day (bpd) in an attempt to drain tanks and boost prices. But the cuts will not happen until next month, and production has been at or near record highs in the United States, Russia and Saudi Arabia. "The market remains skeptical of the ability of OPEC and Russian oil producers to rein in runaway output," "This has become a 'show-me' market - assertions or commitments to cut are not enough right now." OPEC plans to release a table detailing voluntary output cut quotas for its members and allies such as Russia in an effort to shore up prices, OPEC Secretary-General Mohammad Barkindo said in a letter seen by Reuters on Thursday.

US crude tumbles 4.8% to 17-month low, settling at $45.88, as stock market slides -- Oil prices plunged to their lowest levels in over a year on Thursday, deepening a sell-off fueled by concerns about oversupply as stock markets slumped on rising U.S. interest rates. U.S. West Texas Intermediate crude ended Thursday's session down $2.29, or 4.8 percent, at $45.88, the lowest closing price since July 2017. WTI is now down about 24 percent this year. Brent crude, the international benchmark for oil prices, fell $2.89, or about 5 percent, to $54.35, its weakest settle since mid-September 2017. Brent has shed nearly 19 percent in 2019. Crude futures staged a rally in the previous session on signs of strong fuel demand in the United States. However, bearish reports out of Asia overnight added to worries on both the supply and demand sides of the oil market ledger. "There's just a really negative narrative out there," said John Kilduff, founding partner at energy hedge fund Again Capital. "The stars are just aligned right now in a bearish way."  In India, crude oil imports in November registered their biggest year-over-year decline in almost four years, Reuters reported. Meanwhile, Asian oil buyers reported robust purchases of Saudi crude in January after the kingdom cut prices into the region, according to S&P Global Platts.Oil recouped some of the losses through the morning, but dropped sharply around noon, mirroring a pullback in the stock market. TheDow Jones Industrial Average dropped more than 450 points as equities were buffeted by the U.S. Federal Reserve's decision to raise its benchmark interest rate on Wednesday.Crude futures have now fallen more than 35 percent from their 52-week highs in early October. The market is grappling with surging supply from the world's top three producers — the United States, Russia and Saudi Arabia — at a time when demand for oil is expected to grow less than previously expected. To prevent a price-crushing glut, OPEC and 10 other producers including Russia agreed earlier this month to remove 1.2 million barrels per day from the market. But the production cuts do not take effect until January, and the announcement has so far done little to stop the collapse in crude prices.

OPEC+ Battles To Halt Oil Price Slide - Stocks fell yet again on Thursday, following the Federal Reserve’s decision to hike interest rates and maintain a rate tightening course in 2019. The S&P 500 fell 1.6 percent and the Dow Jones Industrial Average was off 2 percent. The Euro Stoxx 50 fell by 1.4 percent on Friday, and the index is set to enter a bear market after falling 20 percent from its November 2017 peak. The global financial upheaval, which could presage a growing economic slowdown, presents a major threat to oil prices.  At the time of this writing, the U.S. was hurtling towards a government shutdown over budget disagreements, with a midnight deadline Friday. An agreement is still possible, but the potential shutdown was seen as another contributor to financial turmoil this week.  Saudi Arabia could increase the size of its production cut after watching oil prices spiral downwards. According to the Wall Street Journal, Saudi Arabia will cut by 322,000 bpd from October levels, rather than 250,000 bpd. That would limit output to 10.311 mb/d for six months. The report offers a mixed message, however, since Saudi Arabia has already signaled that it could lower output to 10.2 mb/d in January.  OPEC+ is set to release country-specific production quotas, recognizing that the lack of detail in Vienna earlier this month has hurt its efforts to convince the market. “In the interests of openness and transparency, and to support market sentiment and confidence, it is vital to make these production adjustments publicly available,” OPEC Secretary-General Mohammad Barkindo told OPEC members in a letter.The Wall Street Journal reported that the Trump administration has granted Iraq a waiver extension, allowing it to continue to import natural gas from Iran for another three months. In return, Iraq has seemingly pledged to allow American energy companies greater access in the country. With Brent in the mid-$50s, the budgets for OPEC members will come under strain, and perhaps only Kuwait can see its budget breakeven. Low prices could sow unrest in several OPEC member states. “At current prices, too much attention on shale, not enough on OPEC,”   Libya and Algeria, for instance, need oil prices above $100 per barrel. Even Saudi Arabia needs oil north of $80 per barrel for its budget to breakeven.

Oil hits 17-month low as downbeat mood persists -- Oil struggled to claw back gains after falling to its lowest since the third quarter of 2017 on Friday, as global oversupply kept buyers away from the market ahead of the long festive break. Crude futures briefly ticked higher as U.S. stocks rallied after Federal Reserve Bank of New York President John Williams signaledthe central bank could alter its interest rate policy and balance sheet reduction if economic growth slows. U.S. West Texas Intermediate crude oil was up 7 cents at $45.95, on course for a decline of 10.3 percent for the week. WTI earlier fell to $45.13, its lowest intraday price since mid-July 2017. Brent crude was down 36 cents at $53.99 per barrel by 12:04 p.m. ET, bouncing from the session's 15½-month low at $52.79. Brent is set for a loss of around 10.4 percent this week. Crude has lost ground along with major equity markets as investors fret about the strength of the global economy heading into next year. Further concerns were raised as the United States, the world's biggest oil consumer, may have a government shutdown later on Friday. Falls were exaggerated by thin trade and risk aversion ahead of Christmas and the New Year holidays, traders said. Since reaching multi-year highs at the beginning of October, both crude oil benchmarks have lost more than a third of their value in their steepest collapse for three years. Driving the sell-off has been sustained oversupply as the United States has emerged as the world's biggest crude producer thanks to the success of its shale industry. The United States now pumps 11.6 million barrels per day of crude, putting it ahead of Saudi Arabia and Russia. The big oil producers in OPEC, dominated by Middle East Gulf states which mostly rely on energy exports, have agreed to reduce production to try to push up prices. But those output cuts — a reduction with Russia and other non-OPEC producers of 1.2 million bpd — do not kick in until next month, and meanwhile global inventories are filling up fast.

U.S. drillers add oil rigs for first week in three: Baker Hughes (Reuters) - U.S. energy firms added oil rigs for the first time in the past three weeks despite sharp declines in crude futures prices to their lowest since the summer of 2017. Drillers added 10 oil rigs in the week to Dec. 21, bringing the total count to 883, General Electric Co’s (GE.N) Baker Hughes energy services firm said in its closely followed report on Friday. . This was the biggest weekly gain in rig numbers since early November. More than half the total U.S. oil rigs are in the Permian Basin, the country’s biggest shale oil formation. Active units there held steady this week at 486, the lowest since early October. Drillers added 2 rigs in the Niobrara shale in Colorado and Wyoming, bringing the total there up to 30, the most since Sept. 2017, and three rigs in Williston in North Dakota and Montana, bringing the total up to 56. The U.S. rig count, an early indicator of future output, is higher than a year ago when 747 rigs were active as energy companies have spent more to capture higher prices. U.S. crude futures were trading around $46 a barrel on Friday, down about 10 percent for the week, as global oversupply kept buyers away from the market ahead of the end of year holidays. Earlier Friday, the contract fell to its lowest since July 2017. [O/R] Crude futures were trading around $49 a barrel for calendar 2019 and $50 for calendar 2020. U.S. financial services firm Cowen & Co this week said the exploration and production (E&P) companies it tracks have provided guidance indicating a 23 percent increase this year in planned capital spending. Cowen said the E&Ps it tracks expect to spend a total of $88.9 billion in 2018. That compares with projected spending of $72.2 billion in 2017. Cowen said early 2019 capital spending budgets were mixed. Analysts at Simmons & Co, energy specialists at U.S. investment bank Piper Jaffray, this week forecast the average combined oil and natural gas rig count would rise from 876 in 2017 to 1,031 in 2018, 1,092 in 2019 and 1,227 in 2020. Year-to-date, the total number of oil and gas rigs active in the United States has averaged 1,031. That keeps the total count for 2018 on track for the highest since 2014, which averaged 1,862 rigs. 

US crude ends the week down 11% at $45.59 for worst performance since January 2016 Oil prices extended this week's sell-off on Friday, posting the worst weekly performance in nearly three years, as global oversupply kept buyers away from the market ahead of the long festive break. U.S. West Texas Intermediate crude oil ended Friday's session down 29 cents at $45.59, the lowest closing price since January 2016. WTI earlier fell to $45.13, its lowest intraday price since mid-July 2017. Brent crude was down 40 cents at $53.95 per barrel by 2:30 p.m. ET, bouncing from the session's 15½-month low at $52.79. Brent was on pace for a decline of more than 10 percent for the week. Crude has lost ground along with major equity markets as investors fret about the strength of the global economy heading into next year. Further concerns were raised as the United States, the world's biggest oil consumer, may have a government shutdown later on Friday. Falls were exaggerated by thin trade and risk aversion ahead of Christmas and the New Year holidays, traders said. "To say things are a bit negative (is) a significant understatement," said Stephen Innes, head of trading for Asia-Pacific at OANDA. Since reaching multi-year highs at the beginning of October, both crude oil benchmarks have lost more than a third of their value in their steepest collapse for three years. Driving the sell-off has been sustained oversupply as the United States has emerged as the world's biggest crude producer thanks to the success of its shale industry. The United States now pumps 11.6 million barrels per day of crude, putting it ahead of Saudi Arabia and Russia. The big oil producers in OPEC, dominated by Middle East Gulf states which mostly rely on energy exports, have agreed to reduce production to try to push up prices. But those output cuts — a reduction with Russia and other non-OPEC producers of 1.2 million bpd — do not kick in until next month, and meanwhile global inventories are filling up fast.

Oil Suffers Worst Week in Almost 3 Years Amid Broader Malaise -- Oil capped its biggest weekly decline since 2016 on concerns that weakening economic growth and surging U.S. supply will lead to a surplus next year, overwhelming OPEC's efforts to stabilize the market. Futures sank 11 percent this week in New York, the most since January 2016. Crude joined a sell-off in wider financial markets after an interest rate increase by the Federal Reserve and the threat of a U.S. government shutdown added to economic uncertainty. Meanwhile, investors remain skeptical that cuts agreed by OPEC and its allies are sufficient to avert a looming oil glut. "Traders are still concerned with the global slowdown and assets selling off as well," said Kyle Cooper, a Houston-based consultant at Ion Energy Group LLC. "There's also concern about the government shutdown looming." Crude has slumped on fears the relentless expansion in American shale will undermine efforts by OPEC and its partners to balance the market. Concerns over growth persist even as Fed Chairman Jerome Powell promised to be more cautious on raising rates next year, while a closely watched speech by Chinese President Xi Jinping offered no new reforms to stimulate the world's second-largest economy. West Texas Intermediate for February delivery fell 29 cents to settle $45.59 a barrel on the New York Mercantile Exchange. The U.S. benchmark is down 38 percent this quarter. Brent for February settlement slipped 53 cents to $53.82 a barrel on London's ICE Futures Europe exchange. Prices were down 10.7 percent for the week and have lost 35 percent since September. The global benchmark crude traded at an $8.23 premium to WTI. Oil's slump persisted this week on broader market turmoil spurred by a plunge in global equities after the U.S. central bank lowered the forecast for 2019 economic growth to 2.3 percent from 2.5 percent in September. The S&P 500 Index sank as much as 1.4 percent, reversing an earlier gain fueled by conciliatory comments on interest rates from a Federal Reserve official.

Outlook 2019: Russian oil output poised to jump post-OPEC cut deal — Russia's crude production is poised to increase quickly once restrictions imposed by the OPEC-led oil output cut deal are lifted. Before energy minister Alexander Novak signed up to cutting production along with the 24-member alliance, output increased by 445,000 b/d to a record high of 11.418 million b/d in October from May. The surge in output gave a glimpse of Russia's potential to boost output rapidly. "Russia's rapid production growth from May through October demonstrated its ability to be a key swing producer, at a level below that of Saudi Arabia but as high as any other country in the world," Although it is unclear how long the production cap last, Russia's potential to increase output may continue to surprise on the upside, at least in the near future. Oil producers had plans to launch full-scale production at a whole string of greenfield projects in 2019 before the OPEC deal required Russia to gradually cut up to 228,000 b/d in the first quarter. For example, four of Rosneft's fields were set to increase production by nearly 200,000 b/d by the end of the year. Other companies such as Gazprom Neft, Lukoil and Tatneft, also saw potential to boost liquids production from their high-margin fields. Those plans may now be delayed to 2020, also pushing back a projected peak in the country's oil output. Russia's energy ministry forecasts output will peak at around 11.445 million b/d in 2021, before falling to possibly as low as 6.2 million b/d by 2035. The decline is expected due to the depletion of existing fields and a significant drop in the quality of newly discovered reserves. The International Energy Agency noted a risk of decline after 2020 "if Russian companies are unable to secure the technology and financing necessary for the next generation of projects and the government fails to offer more extensive tax breaks to encourage investment." In contrast, Platts Analytics argues Russia will beat expectations. "We take any doomsday scenarios with a grain of salt. Betting on any decline in Russian production has been a losing proposition since 1999,"

Middle East Leads Global Supply of Conventional Oil -Conventional oil makes up around two-thirds of the world’s recoverable oil resources and accounts for 93 percent of today’s oil mix. More than half of this oil comes from oil fields that are past their peak and declining, revealed by a loss of about 3 million barrels of output last year. To accommodate this yearly natural decline from old wells and to satisfy rising demand, the world needs a fresh supply of 5.7 million barrels each year according to the International Energy Agency (IEA).  Rystad Energy analysts expect Middle Eastern oil production to grow by 2.7 MMbpd by 2025, driven largely by supply additions of 1.5 MMbpd from Iraq and another 1.2 MMbpd from the re-opened Neutral Zone—the area between Saudi Arabia and Kuwait—as well as the UAE and Iran. OPEC countries hold nearly 82 percent of the world’s crude oil reserves of which the bulk 65 percent are in the Middle East, led by Saudi Arabia, Iran, Iraq, Kuwait and the UAE. The world’s cheapest oil producers, with costs between $9 and $10 a barrel in 2016, were respectively Saudi Arabia, Iran and Iraq because their oil lies close to the surface and is pooled in mega fields. Moreover, the Middle East's producing countries have some of the lowest oil decline rates in the world, which matters greatly since, as one estimate suggests, the difference between a 5.7 percent (2017) and a 7.5 percent (2016) decline rate yields another 900,000 barrels online. Rystad Energy notes that output from conventional fields beyond the Middle East peaked in 2010 and they expect it to continue falling to 45.6 million barrels a day, a 2.3 million barrel decline from current levels. This is largely due to the oil price collapse in 2014, which triggered fierce cuts to exploration budgets in 2015 and 2016, flat investment during 2017, and only a slight uptick this year. In essence, capital investment fell from $750 billion to $460 billion in 2016 and has yet to recover, says the IEA. The impact is seen in discoveries of new oil, which fell to a record low in 2017 with less than 4 billion barrels of crude, condensate and NGLs. Discoveries in 2018 are led by offshore Guyana with an estimated 4 billion barrels of oil equivalent, the Barents Sea, the north slope of Alaska, the Dorado field offshore Australia and new finds in Oman and by Norway. However, unlike oil fields in the Middle East and U.S. tight oil for that matter, conventional offshore oil fields are huge, complex and expensive projects that take years to come to fruition. This has encouraged big energy companies in recent times to invest in acreage, drilling wells and hydraulic fracturing in U.S. shale, especially in the premier Permian Basin stretching from Texas to New Mexico. Drilling a tight oil well costs between $5 and $10 million, is fast—measured in days rather than years—and brings a return on investment within months.

Saudi Arabia's new budget will boost spending and continue royal handouts — even as oil prices drop - Despite falling oil prices, Saudi Arabia will continue paying its citizens cost-of-living allowances, the country's King Salman announced during the unveiling of its 2019 budget on Tuesday.The budget will boost spending even as Saudi Arabia endeavors to close its budget deficit, indicating Riyadh's priority to spur growth in an economy hurt by lower oil prices. State spending will increase by more than 7 percent next year to 1.106 trillion riyals ($295 billion) from 1.030 trillion riyals, in line with a September pre-budget statement, according to the country's finance ministry.Analysts believe the continued cost-of-living allowances, first established in January 2018 and estimated by officials to cost more than $13 billion, are intended to stimulate sluggish growth and shore up support for the royal family and Crown Prince Mohammed bin Salman after a controversy-ridden few months.The royal allowances of 1,000 riyals a month ($266) are paid to civil servants and military personnel, and other allowances will continue for pensioners and those living on social security. Riyadh will also increase student benefits by 10 percent for the next fiscal year, the king announced.The International Monetary Fund previously forecast the country's budget deficit to shrink to less than 2 percent of gross domestic product (GDP) next year in the event that the allowances were scrapped. The budget deficit for 2019 will now be 4.2 percent of GDP, according to the government's statement Tuesday.Saudi Arabia's economy shrank for the first time in nearly a decade last year as headwinds batter its private sector. Businesses have struggled to deal with higher electricity and fuel prices and a 5 percent value-added tax (VAT) introduced at the start of the year. Unemployment, hovering just over 12 percent as of last summer, is at its highest level in a decade.And new quotas and fees on foreign workers have triggered an exodus of more than 900,000 expatriates from the country in the last two years. This caused the labor market to contract, leaving gaps that the local population, lacking vital skills and training, cannot yet fill, analysts and executives say.  Saudi officials have said they are now reconsidering the fees on foreign labor, which charge private businesses between $80 and $107 monthly for each foreign worker they hire.

Saudi Arabia Is Going Bankrupt Taleb Exclaims After Seeing Kingdom's Latest Budget - In all the noise surrounding the latest market moves, political news and frenzy over the Fed's rate hike (or pause), an important development was missed by many when Saudi Arabia released its budget for 2019 on Tuesday, which at 1.106 trillion riyals, or $295 billion - the largest in the kingdom's on record - represents a 7% increase from 1.030 trillion in 2018. During the unveiling of the budget, Saudi King Salman said his country will continue paying public sector cost-of-living allowances for citizens and will boost spending to stimulate growth even as Saudi Arabia toils to close its deficit, which it won't do yet again as the kingdom forecasts a 6th consecutive budget deficit in a row, estimated to hit $35 billion in 2019. "We are determined to go ahead with economic reform, achieving fiscal discipline, improving transparency and empowering private sector," the King said. While state-funded Saudi "generosity" to keep its citizens happy - and not, say, thinking radical, revolutionary thoughts - is well known, analysts believe the continued cost-of-living allowances, first established in January 2018 and estimated by officials to cost more than $13 billion, are intended to stimulate sluggish growth but mostly shore up support for the royal family and Crown Prince Mohammed bin Salman after a controversy-ridden few months. The royal allowances of 1,000 riyals a month ($266) are paid to civil servants and military personnel, and other allowances will continue for pensioners and those living on social security. Riyadh will also increase student benefits by 10 percent for the next fiscal year, the king announced. There is just one problem: for Saudi Arabia to be able to meet its projected revenue and fund these generous payments it will need oil prices to rise higher. Much higher. To hit 662 billion riyals in oil revenue, or $177 billion, up from $162 billion in 2018, Saudi Arabia expects near record oil output of 10.2 mmb/d sold at a price of $80/barrel, while Saudi Aramco won’t increase its allocations to the government. For reference, Brent settled just above $56 today, which means that oil has to rise at least 40% for the Saudi budget revenue assumption to be hit. Brent would have to rise an additional $15 to $95 a barrel for the kingdom to balance its budget deficit according to Bloomberg chief Middle East economist Ziad Daoud.

Qatar foreign minister: No progress has been made on solving the Saudi-led Gulf blockade yet - Qatar's foreign minister expressed a host of grievances over his Gulf counterparts' regional activities on Sunday, calling out Saudi Arabia and the United Arab Emirates (UAE) in particular — and not just for their blockade of his country. "We cannot blame one country on the destabilization of the region right now because the situation which we are suffering from is the result of a series of policies of different countries," Sheikh Mohammed bin Abdulrahman al Thani told CNBC's Hadley Gamble in Doha, when asked if Riyadh were to blame for increased turbulence in the Middle East."We are disagreeing with [Saudi Arabia] currently when they are blockading Qatar, when they continue the war on Yemen without reason, the way they kidnapped the Lebanese prime minister," the foreign minister said. But he did not limit his criticism to Saudi Arabia, which in 2017 spearheaded an economic and diplomatic blockade against Qatar over accusations Doha supports terrorism, something the Qataris deny."We disagree also with the Emiratis' policy when they go and supported brutal regimes, supported military coup in Libya, supported a destabilization in Somalia, supported the separation and division of Yemen. And it's just these policies which are destabilization."Under the shadow of a more aggressive Saudi Arabia, the UAE has been active in a number of African and Middle Eastern conflicts, often pursuing its own agenda independent of its Saudi and American allies. It wields a significant military presence on the ground in Yemen, where it's trained and supported southern separatist groups in the war-ravaged country as a fighting force against al-Qaeda in the Arabian Peninsula (AQAP) and Yemen's Houthi rebels. "Most countries are supporting terrorism in other places, where they see it is fine for them to justify their means," al Thani said, lamenting what he described as a double standard and blasting Saudi and Emirati accusations that Qatar supports terrorism. "In Yemen, when al-Qaeda had been paid to leave the place for them and have claimed a victory, this is not a support for terrorism? It is a support for terrorism." The minister was referring to reports alleging UAE forces paid off al-Qaeda militants to leave certain areas of Yemen, often letting them depart with weapons, munitions and wads of cash. The reports also alleged that the Saudi-led coalition recruited hundreds of members of the terrorist group as foot soldiers to fight the Iranian-backed Houthi rebels, who seized the capital Sanaa in late 2014. The war has become what the UN calls the world's worst humanitarian crisis.

Qatar is 'counting on' Kuwait and other allies to resolve Gulf crisis, foreign minister says - Kuwait maintains an important role in reuniting the Gulf Cooperation Council (GCC) countries amid the ongoing blockade of Qatar, Qatari foreign minister Sheikh Mohammed bin Abdulrahman al Thani said Saturday. "The (Kuwait) Emir has had a big leadership role in calming the situation which is highly appreciated by Qatar. We continue to count on the role of Kuwait and on the countries in the region to bring it back together," the minister told attendees at the annual Doha Forum. Relations between the oil-rich states of the GCC have been fraught since Saudi Arabia, joined by Egypt, Bahrain and the United Arab Emirates, imposed an economic and diplomatic blockade on Qatar in 2017. Riyadh and its allies accuse Qatar of supporting terrorism, which Doha consistently denies. Kuwait, however, did not take part in the blockade. Its government maintains smooth relations with Doha and has made several attempts to mediate between Qatar and its Gulf neighbors to help quell the conflict — thus far to no avail. "Kuwait has shown willingness to play a diplomatic role in some of the most complex contexts in the region including Qatar and Yemen," Cinzia Bianco, GCC analyst at London-based Gulf State Analytics, told CNBC earlier this month. On December 3, Qatar announced its planned departure from OPEC, the 15-member cartel of oil-exporting countries whose largest producer is Saudi Arabia. Qatar and the Saudi-led bloc both blame one another for preventing a solution from being reached. "We believe that we are more relevant as a bloc for those countries than we are separate and fragmented," the minister added. Qatar saw foreign deposits in its commercial banks drop by $13 billion in the six months following the blockade; it's now regained about $9 billion of that, according to Fitch ratings. Analysts at the ratings agency say the blockade forced Qatar to diversify its revenue sources, ultimately making it more self-sufficient.

The $13 Billion Saudi Purge - The Numbers Are In From Last Year's Riyadh Ritz Arrests - How much did Saudi crown prince MbS line his pockets state coffers with following the so-called "corruption crackdown" which involved scores of top officials and rival princes held prisoners in Riyadh's Ritz-Carlton Hotel through and after November of last year? The official figures are in: the "purge" was a shakedown to the tune of more than $13 billion.And now the Saudis are positively bragging about it (perhaps shielding the disappointment of not grabbing the full hoped-for $100bn), with Finance Minister Mohammed al-Jadaan announcing Tuesday that his government "collected more than 50 billion riyal ($13.33 billion) so far this year from settlements reached with detainees in a crackdown on corruption launched at the end of last year," according to Reuters.Saudi authorities stated previously this year that their goal was to seize some $100bn overall, thus it appears MbS' ambitions fell far short. At the time 381 Saudis were hauled in and locked up a span of 3 months at the Ritz-Carlton super-luxury hotel which boasts nearly 500 rooms and 52 acres of land, with 62,000 feet of conference space, and a 4,575-square-foot royal suite to boot which held one of the world's richest men for the longest detention, Prince Alwaleed bin Talal.Though Prince Alwaleed was among the "big fish" held the longest at 83 days, his story was representative of many who cut "secret deals" to fork over untold hundreds of millions each in order to obtain freedom.

Jailed Saudi Women Activists Tell Of Waterboarding, Electrocution, And Rape During MbS Reforms - For critics of the mainstream media's prior fawning over MbS' supposed "reform-minded" agenda involving everything from opening the kingdom up to women driving to co-ed cinemas to late-night pop concerts, this week's bombshell human rights report in the Wall Street Journal will come as no surprise. Men surrounding bin Salman, who prior to Jamal Khashoggi's murder was dubbed "Crown Prince charming" and Saudi Arabia's "reform-minded royal" by Western press, are now being investigated for torturing and threatening to rape prominent Saudi women's rights activists who've been detained for months.  Perhaps to be expected, the prime MbS top aide under investigation by a human rights committee is none other than Saud al-Qahtani — already the chief fall guy for Khashoggi’s death as Riyadh tries to stem international outrage — accused of a stomach churning litany of abuses against women driving activists who were detained last Spring and early summer.Notably, the commission reports directly to King Salman, which no doubt suggests MbS will be carefully shielded from any wrongdoing in the inquiry.According to the WSJ:A human-rights commission reporting to Saudi King Salman is investigating the alleged torture of detained women’s rights activists, including accusations of waterboarding and electrocution, according to government officials and other people familiar with the activists’ situation.Victims describe threats of rape and death while tortured by electrocution and beating to the point that - according to one testimony featured by the WSJ - a detainee's "fingers resembled barbecued meat, swollen and blue." The treatment further included "lashing and sexual harassment" according to the testimony of one of more prominent detainees, 29-year old women's rights activist Loujain al-Hathloul, who was locked up in Jeddah’s Dabhan prison. “Saud al-Qahtani threatened to rape her, kill her and to throw her into the sewage,” an eyewitness interviewed by the Saudi commission said.

Saudi Crown Prince Mohammed Bin Salman’s Time May Finally Be Running Out  — Neither Saudi Crown Prince Mohammed bin Salman nor his foreign minister, Adel al-Jubeir, take kindly to criticism of any kind. So it was unsurprising when on 16 December, Jubeir’s ministry released a lengthy statement attacking twin US Senate votes that had passed the previous week.The first called for an end to US participation in the Yemen war, and the second, unanimously accepted, held that Mohammed bin Salman was responsible for the murder of journalist Jamal Khashoggi in the Saudi consulate in Istanbul on 2 October.The statement rejects the Senate votes, saying they were based on “unsubstantiated claims and allegations, and contained blatant interferences in the kingdom’s internal affairs.”On the matter of unsubstantiated allegations, the CIA, Turkish authorities and just about anybody not connected to or controlled by Mohammed bin Salman begs to differ. Or, as Bob Corker, the Republican chair of the Senate Foreign Relations Committee, succinctly put it: “If the crown prince went in front of a jury, he would be convicted in 30 minutes.” That’s because Corker and a select group of senators heard the evidence provided by CIA boss Gina Haspel that Mohammed bin Salman was guilty beyond a reasonable doubt of Khashoggi’s murder.

Saudis Killing Civilians During Yemen Peace Talks - (GPA) — A statement from the spokesman of Yemen’s Armed Forces reported that the US-backed Saudi coalition dropped 38 airstrikes just over the course of Saturday. At least 12 of which targeted various areas of Hodeidah which constitutes a direct violation of the peace negotiations calling for a ceasefire. Airstrikes killed at least 15 civilians since the peace negotiations began last week — including seven women and three children. Meanwhile, 28 sustained injuries, eight of whom were children as well as five women. Yemen’s Ministry of Health pointed out that this displays the Saudi coalition’s unwillingness to engage in a peace process. “This expresses the unwillingness of these countries to stop the bloodshed and alleviate the suffering of the people of Yemen, which exposes the reality of these countries’ goals in their aggression against Yemen,” a statement from the MoH reads.

Yemeni Mothers Forced to Choose Which of Their Children Starve to Death -- (MEMO) — Mothers are being forced to leave their children to starve as they face a “catastrophic” shortage of food in war-torn Yemen, a humanitarian group said on Thursday, reports Reuters. As the warring parties pledged a ceasefire over a key entry port for supplies, Action Against Hunger said many civilians were struggling to survive in a conflict often described as the world’s worst humanitarian crisis.“We are very much aware that the situation right now is catastrophic,” Valentina Ferrante, the group’s country director for Yemen, told the Thomson Reuters Foundation.“If a family does not have the necessary economic resources to feed the entire family then they will select who to feed. Sometimes you get up to a point where a mother is literally forced not to feed certain members of the family, most probably the youngest one.”  Yemen, one of the poorest Arab countries, is locked in a war that pits Iran-aligned Houthi rebels against the government backed by Saudi Arabia, the United Arab Emirates, and the West. The conflict and ensuing economic collapse have left nearly 16 million people, 53 percent of the population, in urgent need of food aid and famine was a danger if immediate action was not taken, the United Nations said this month. The warring parties on Thursday agreed to cease fighting for the Houthi-held port city of Hodeidah, which is the main entry point for both commercial imports and aid supplies.

US Airstrikes Kill 62 People in Coastal Somali Town — Over the weekend, US warplanes carried out at least six airstrikes against the coastal town of Gandarsh, Somalia. US African Command (Africom) says 62 people were killed in the strikes, and all were “terrorists” from al-Shabaab.34 people were killed on Saturday, and 28 more on Sunday. The identities of the slain are not clear, and there is no way to verify Africom’s claims. This is, however, standard operating procedure for them, to both label all slain as militants, and to say they don’t think any civilians were killed or wounded.This often doesn’t remain the case, however. When the US is striking a large number of people inside a populated area, it’s very unusual not to have some civilians killed along the way. Yet in remote places like Somalia, it often takes days to find that out.In the meantime, the Pentagon has virtually total control over the narrative, and sticks to formulaic releases meant to spin the strikes as legal, claiming they preempted a plot, without providing any evidence of such a plot.

Brutal crackdown on West Bank as Netanyahu pledges stepped-up land grab - Prime Minister Benjamin Netanyahu authorized a military crackdown on the Palestinian West Bank. The assault was calculated to appeal to Israel’s ultra-nationalist forces at the expense of his fascistic coalition partners, which are vying over who has a tougher policy against the Palestinians. In the days that followed, the Israel Defense Forces (IDF) carried out a series of military operations, killing six and arresting at least 100 more in protests that erupted over Israeli brutality in Nablus, Tulkarem, Ramallah, Hebron and al-Bireh. One of those arrested in the Hebron area was the Palestinian legislator Mohammed Ismail Al-Tal. The assault started after a drive-by shooting on December 9 near the West Bank city of Ofra that injured seven Israelis, including a pregnant woman whose baby was subsequently delivered by Caesarian section but later died. Settler leaders demanded to “see the blood of the terrorists.” Netanyahu’s son Yair joined the calls for revenge, following a series of posts on social media calling for the expulsion of the Palestinians and writing that he would prefer all Muslims to leave Israel. Facebook’s temporary ban on him for breaking its rule on hate speech only served to make him a martyr among Israel’s fascists. On Wednesday, Israeli security forces gave chase to 29-year-old Salah Barghouti, who lived near Ramallah, opening fire on his car before arresting and killing him. His family denied that he had any involvement in the shooting, pointing out that he had not gone into hiding. The next day, the conflict escalated after Palestinians shot and killed two Israeli soldiers and injured two others in a drive-by shooting at a bus stop near the illegal settlement of Ofra. Amid another media uproar, there were calls from several far-right figures for Israel to legalise the entire settlement in retaliation for the attack. . The IDF blockaded the city of Ramallah, the seat of the Palestinian Authority (PA), for two days, escalating tensions throughout the West Bank. They carried out a mass round-up, arresting 40 Palestinians, mostly members of Hamas, the bourgeois Islamist group that controls Gaza. The same day, Israeli security forces killed 23-year-old Ashraf Naalwa, whom they suspected of shooting and two killing Israelis in the Barkan settlement industrial plant last October. They had forced their way into a home in Askar al-Jadid refugee camp, near the northern city of Nablus, sparking a lengthy gun battle. Troops used live rounds or rubber-coated steel bullets on crowds of angry Palestinians protesting Naalwa’s murder, injuring at least 11. Soldiers shot Hamdan al-Arda, a 58-year-old resident of the northern town of Arrabeh, near his aluminum plant in al-Bireh, claiming that he had tried to ram soldiers with his car. Al-Arda died after soldiers refused to allow Palestinian medics to attend to him.  On Friday, the IDF shot and killed 18-year-old Mahmoud Yousef Nakhla in the Jalazone refugee camp near Ramallah.  . Meanwhile in Gaza, the IDF shot and wounded 75 Palestinians, including five paramedics and two photojournalists, during the weekly Friday protests—held last week under the banner of the “legitimate right of resistance”—ongoing since the end of March against the Israeli blockade. Since then, Israeli forces have killed 235 Palestinians and injured 7,000 more with live fire, at least 1,000 of whom face permanent disabilities.

Trump Publicly Admits His Middle East Policy Puts Israel First — Not America — In a recent interview with the Washington Post, U.S. President Donald Trump publicly stated that his administration’s Middle East policy – including the illegal U.S. military occupation of nearly a third of Syria, the administration’s adoption of aggressive Iranian sanctions, and Trump’s response to murder of Saudi journalist Jamal Khashoggi —  is not driven by his country’s interest in oil but instead to benefit the interests of the state of Israel.Trump made the comment when asked by Post reporter Josh Dawsey about whether or not he supports tougher sanctions against the Saudi government for allegedly being responsible for the death of Khashoggi in early October. Trump responded by stating that he would “listen” to those calling for increased sanctions and then adding that the Middle East is a “dangerous, rough part of the world.” Trump continued, stating that Saudi Arabia has been a “great ally,” adding that “without them, Israel would be in a lot more trouble. We need to have a counterbalance to Iran.”Trump’s statements here seem to support the claims made in recent reports that Israeli Prime Minister Benjamin Netanyahu was responsible for Trump’s decision to stand by Saudi Crown Prince Mohammed bin Salman (MBS) during the fall-out from Khashoggi’s death, which several governments and U.S. intelligence have claimed was planned in advance with MBS’ approval. Netanyahu told the White House that MBS was a “strategic ally” and should be supported regardless of his alleged involvement in the death of the former Post columnist at the Saudi consulate in Istanbul.However, as Trump continued to discuss the region, he revealed that Israel is not just the reason for his continued support for the Saudi government despite the fallout from Khashoggi’s death but also the reason why the U.S. continues to be so heavily involved in the region. He stated: “It’s very important to have Saudi Arabia as an ally, if we’re going to stay in that part of the world. Now, are we going to stay in that part of the world? One reason to is Israel. Oil is becoming less and less of a reason because we’re producing more oil now than we’ve ever produced. So, you know, all of a sudden it gets to a point where you don’t have to stay there.”

America’s hidden war in Syria - WaPo -Raqqa, Syria — This ruined, fearful city was once the Islamic State’s capital, the showcase of its caliphate and a magnet for foreign fighters from around the globe. Now it lies at the heart of the United States’ newest commitment to a Middle East war. The commitment is small, a few thousand troops who were first sent to Syria three years ago to help the Syrian Kurds fight the Islamic State. President Trump indicated in March that the troops would be brought home once the battle is won, and the latest military push to eject the group from its final pocket of territory recently got underway. In September, however, the administration switched course, saying the troops will stay in Syria pending an overall settlement to the Syrian war and with a new mission: to act as a bulwark against Iran’s expanding influence. That decision puts U.S. troops in overall control, perhaps indefinitely, of an area comprising nearly a third of Syria, a vast expanse of mostly desert terrain roughly the size of Louisiana. The Pentagon does not say how many troops are there. Officially, they number 503, but earlier this year an official let slip that the true number may be closer to 4,000. Most are Special Operations forces, and their footprint is light. Their vehicles and convoys rumble by from time to time along the empty desert roads, but it is rare to see U.S. soldiers in towns and cities. The new mission raises new questions, about the role they will play and whether their presence will risk becoming a magnet for regional conflict and insurgency.

US Commits To Indefinite Occupation Of Syria; Controls Region The Size Of Croatia -- "We don't want the Americans. It's occupation" — a Syrian resident in US-controlled Raqqa told Stars and Stripes military newspaper. This as the Washington Post noted this week that "U.S. troops will now stay in Syria indefinitely, controlling a third of the country and facing peril on many fronts." Like the "forever war" in Afghanistan, will we be having the same discussion over the indefinite occupation of Syria stretching two decades from now? A new unusually frank assessment in Stars and Stripes bluntly lays out the basic facts concerning the White House decision to "stay the course" until the war's close:That decision puts U.S. troops in overall control, perhaps indefinitely, of an area comprising nearly a third of Syria, a vast expanse of mostly desert terrain roughly the size of Louisiana.The Pentagon does not say how many troops are there. Officially, they number 503, but earlier this year an official let slip that the true number may be closer to 4,000.A prior New Yorker piece described the US-occupied area east of the Euphrates as "an area about the size of Croatia." With no Congressional vote, no public debate, and not even so much as an official presidential address to the nation, the United States is settling in for another endless occupation of sovereign foreign soil while relying on the now very familiar post-911 AUMF fig leaf of "legality".Like the American public and even some Pentagon officials of late have been pointing out for years regarding Afghanistan, do US forces on the ground even know what the mission is? The mission may be undefined and remain ambiguously to "counter Iran", yet the dangers and potential for major loss in blood and treasure loom larger than ever. According to Stars and Stripes the dangerous cross-section of powder keg conflicts and geopolitical players means "a new war" is on the horizon: The new mission raises new questions, about the role they will play and whether their presence will risk becoming a magnet for regional conflict and insurgency.

Turkey threatens to invade Syria amid tensions with Washington -- On December 12, at the Turkish Defense Industry Summit, President Recep Tayyip Erdogan vowed to launch a new military operation east of the Euphrates River in northern Syria in coming days, targeting the Kurdish nationalist groups.He dismissed arguments that US support for Kurdish nationalists was necessary to fight the terrorist threat from ISIS: “There is no ISIS threat in Syria any longer. This is only a tale. We said before and we are saying now that we will start the operation in east of the Euphrates in a few days to save it from the separatist terrorist organization. It is clear that the purpose of US observation points in Syria is not to protect our country from terrorists, but to protect terrorists from Turkey.”This reflected longstanding concerns in Ankara over US support for the Kurdish nationalist People’s Protection Units (YPG) in Syria, an affiliate of the Kurdistan Workers’ Party (PKK), the Kurdish separatist movement against which Ankara has waged a bloody counter-insurgency for more than 30 years in Turkey. Ankara opposes Kurdish autonomy in Syria, fearing that it will provoke demands for Kurdish autonomy in eastern Turkey.To crush the Kurdish nationalist forces, Erdogan has twice ordered the Turkish army to launch its own bloody invasions of Syria: “Operation Euphrates Shield” (in August 2016) and “Operation Olive Branch” (in January 2018), directed against the US-backed YPG.Erdogan’s December 12 speech was a direct response to the announcement made by Department of Defense spokesman Rob Manning on December 11. “At the direction of Secretary (James) Mattis, the US established observation posts in the northeast Syria border region to address the security concerns of our NATO ally Turkey,” Manning said.Mattis had announced that Washington would establish observation posts in northern Syria near the Turkish border in order to share military intelligence on Kurdish movements into Turkey. Mattis’ remarks were framed as an attempt to reassure Turkey that US support for the Syrian Democratic Forces (SDF), which is comprised largely of YPG troops, would not harm Ankara’s interests. Ankara rejected this, however, seeing it as an unacceptable proposal to place US troops athwart a Turkish attack on Kurdish forces in Syria. As high-level talks continued, US-Turkish relations were nearing the breaking point. While Washington and its European imperialist allies had initially launched the Syrian war in 2011 using Turkey as a base to resupply Islamist militias fighting the Syrian regime, Turkey’s planned invasion threatened to provoke a direct clash with US troops in Syria.

Trump Supports Turkey’s Plan to Invade Northeast Syria, Erdogan Says  — Turkey may start a new military operation in Syria at any moment, President Tayyip Erdogan said on Monday according to a report by Reuters, touting support from US President Donald Trump even though the Pentagon has issued a stern warning to Ankara.

Syria conflict: US withdraws troops after IS ‘defeat’ - The Trump administration says US troops are being withdrawn from Syria, after the president said the Islamic State (IS) group had been "defeated". The Pentagon said it was transitioning to the "next phase of the campaign" but did not give details. Some 2,000 troops have helped rid much of north-eastern Syria of IS, but pockets of fighters remain. It had been thought defence officials wanted to maintain a US presence to ensure IS did not rebuild. There are also fears a US withdrawal will cede influence in Syria and the wider region to Russia and Iran. Both the Pentagon and the White House statement said the US had started "returning United States troops home as we transition to the next phase of this campaign". The Pentagon said it would not provide further details of what that next phase is "for force protection and operational security reasons".  

Report: U.S. To Leave Syria Immediately – Updated -- The Wall Street Journal just reported that U.S. troops prepare to leave northeast Syria:—In an abrupt reversal, the U.S. military is preparing to withdraw its forces from northeastern Syria, people familiar with the matter said Wednesday, a move that throws the American strategy in the Middle East into turmoil. The move follows a call last week between President Trump and Turkish President Recep Tayyip Erdogan, who has threatened to launch an assault on America’s Kurdish partners in Syria.  Turkey had threatened over several week to invade and occupy an at least 10 miles deep strip of northeast Syria. The Turkish army brought heavy weapons to its adjacent borders areas. Some 15,000 foreign and Syrian 'rebels', paid by Turkey, are supposed to be on the forefront of the invasion. These were over the last month transferred from Idleb and other Turkish controlled areas of northwest Syria to the Turkish side of the eastern border.The U.S. military and the neoconservatives elements in Trump's administration wanted to hold onto the northeast of Syria for an unlimited time. They planned to establish a Kurdish entity and finance it with the Syrian oil fields they occupied. They had plans to arm and train some 40,000 Kurdish troops. For Turkey the perspective of 40,000 armed and U.S. protected YPK Kurds on its border, while the YPG's sister organization PKK is fighting a separatist guerilla war against the Turkish army north of it, was a real and existential threat. It seems that Erdogan made a deal with Trump, which is now turned into practical moves. Yesterday Turkey was suddenly offered to buy advanced Patriot missile defense systems. It had earlier decided to buy the Russian S-400 system. Now we learn the U.S. troops move out. What other surprises are in this deal? What does Trump get out of it? How does this change Turkey's relation with Russia?

US Syria pullout draws Kurdish condemnation and Putin’s praise --The Kurdish force that has led the ground war against Islamic State in Syria has condemned the White House’s surprise decision to withdraw US troops from the country and claimed it will spark a revival of the terror group. The Syrian Democratic Forces, a group of Kurdish and Arab units raised by Washington specifically to fight Isis, said the US’s move would have “dangerous implications for international stability”.Donald Trump has told the Pentagon to extricate its estimated 2,000 troops as soon as possible, with a target of accomplishing the task in less than a 100 days, according to officials in Washington, but defence staff are trying to make the argument for more time and leaving a residual counter-terrorist force of a few hundred.Reuters reported on Thursday that the Trump administration was also planning to cut short the air war against Isis in Syria. An official told the news agency that a final decision had not been made.Trump stuck to his decision in the face of fierce criticism from within his own party on Thursday, but changed his justification. On Wednesday, he had argued that Isis was defeated. But 24 hours later, the US president said the withdrawal was to save US soldiers’ lives and dollars. “Why are we fighting for our enemy, Syria, by staying & killing ISIS for them, Russia, Iran & other locals?,” Trump asked on Twitter. “Time to focus on our Country & bring our youth back home where they belong!”  The SDF and the YPG, a partner Kurdish militia, described the move as a “blatant betrayal”. One Kurdish leader contacted by the Guardian said the fight against Isis in Syria’s far east would be abandoned immediately, and all SDF units on that front would redeploy closer to the Turkish border.  The SDF responded to the announcement with a blunt statement. “The war against Islamic State has not ended and Islamic State has not been defeated,” it said. Any withdrawal would “create a political and military vacuum in the area, leaving its people between the claws of hostile parties”.

Russia, Turkey, Iran fail in push for new Syrian constitution - Russia, Iran and Turkey, supporters of the main sides in Syria's complex civil war, on Tuesday failed to agree on the makeup of a United Nations-sponsored Syrian constitutional committee but called for it to convene early next year to kick off a viable peace process. In a joint statement read out by Russian Foreign Minister Sergey Lavrov after the trio met the UN Syria peace envoy, Staffan de Mistura, in Geneva, they said the new initiative should be guided "by a sense of compromise and constructive engagement". The foreign ministers of the three nations had hoped to seal their joint proposal on a committee - which could usher in elections - and win UN blessing for it. But the statement by the three made no mention of the composition of the panel, pointing to lingering disagreement over lists of candidates submitted by Syrian President Bashar al-Assad and his rebel adversaries. The Syrian government, which is backed by Moscow and Tehran, has not yet agreed to the committee, saying it will only support a process that alters Syria's existing constitution. De Mistura, addressing a separate news conference, made clear the three powers had not nailed down a workable political forum yet, after years of abortive attempts at ending the bloody seven-year war. 

Erdogan sees China as a partner for the future  - "We are facing an economic war. Do not worry, we will win it,” Turkish President Recep Tayyip Erdogan said during the presentation of his 100-day action plan in August, as a currency crisis and economic showdown with the United States reached its height. Erdogan declared that China was the country’s economic partner of the future. That call resounded with Ismet Oztanık, the chairman of Asiability-Turkey, which seeks to capitalize on China’s Belt and Road Initiative and build new bridges linking the republic on the Bosphorus to the South China Sea. “The Turkish embassy in Beijing is finalizing the launch of a working platform to bring business people in the private sector from China and Turkey together,” Oztanık told Asia Times. The platform, which will soon be publicized, is expected to enhance mutual investments. In August, Oztanık announced that the China Entrepreneur Club – led by Jack Ma, the chairman of Alibaba – was considering a visit to Turkey to check out investment opportunities. It now rests on the Turkish private sector and quasi-government bodies to assemble the relevant counterparts and pave the way for a delegation of billionaires. A lender and investor The position of Turkey on the global stage has improved since Erdogan announced he would seek other partners over the summer. The murder of Washington Post columnist Jamal Khashoggi by Saudi operatives in Istanbul has put Turkey in a renewed position of influence, namely with the United States. But the appeal of China has not subsided – it is gaining influence as a lender and as an investor. In July, Turkey borrowed US$3.6 billion from the Industrial and Commercial Bank of China for investments in the energy and transport sectors. A debt-driven approach is bringing the two countries closer, with Chinese investments in Turkey on the rise. Between 2011 and 2016, the Bank of China provided $2.5 billion in financing for local projects and institutional companies in Turkey and more is expected to come.

North Korean Oil Smugglers Elude U.S. Military -  North Korea is still receiving crude oil shipments despite the military presence of a U.S.-led coalition deployed to ensure UN sanctions against Pyongyang are being enforced. This was revealed in a top secret report, NBC News reports, citing U.S. government officials familiar with the document. Under the latest United Nations Security Council sanctions regarding oil sales to North Korea from December 2017, North Korea is allowed to import a maximum aggregate amount of 500,000 barrels of all refined oil products for 12 months beginning on January 1, 2018. The sanctions also introduced a limit of 4 million barrels—or 525,000 tons—per a twelve-month period as of 22 December 2017 for the supply, sale, or transfer of crude oil to North Korea. However, according to the report, more oil is going into the country after ship-to-ship transfers at sea. After the deployment of the military vessels in the area, however, the North Koreans have changed tactics, conducting the transfers further out at sea, sometimes in foreign territorial waters. Warships and surveillance aircraft were deployed near the Korean Peninsula in September, but since the aircraft has a certain range it can’t exceed, moving the tankers further into the sea has worked to avoid detection. Another tactic employed by the North Koreans is using small boats to transfer oil from vessel to vessel. Smaller boats, NBC News notes, are harder to detect by the surveillance gear. In other words, despite the military efforts of the United States and its partners in the coalition, it seems that the Pyongyang regime is still getting more oil than the limit agreed under the UN sanctions. Earlier this year, in a report to the UN, Washington said North Korea received at least 759,793 barrels of oil products between January 1 and May 30, well above the 500,000-barrel annual quota. The supplies were being made via ship-to-ship transfers with North Korean tankers that have called in port at least 89 times, the United States said in July. The United States also accused China and Russia of continuing to sell oil to North Korea.