US oil production at a record high; rig count drops by most in 35 months...

oil prices rose for a third consecutive week, and while they ended the week more than 20% higher than their December 27th nadir, they still remain almost 30% below their October 3rd closing high...after rising 7.6% to $51.59 a barrel on hopes for a resolution of the US-China trade war last week, US oil prices for February delivery opened this week higher but quickly weakened and ended Monday​ ​$1.08 lower at $50.51 a barrel, pressured by weak Chinese trade data that increased concerns that a global economic slowdown would hurt crude demand...however, oil prices turned around rose with ​global stock markets on Tuesday, propelled by ​a ​Chinese fiscal stimulus intended to reverse their slowing economy, with U.S. crude prices ending $1.60, or 3.2%, higher at $52.11 a barrel...buoyed by a rising stock market, oil prices continued higher early Wednesday, but then fell back over $1 ​at midday ​after the EIA report showed record crude production and much higher refined product inventories, but recovered late in the session to end the day 20 cents higher at $52.31 a barrel...weighed by that surging U.S. crude output and weakening global demand, oil prices turned lower early Thursday, tumbling to as low at $50.98 a barrel, before recovering to close with a loss of just 24 cents at $52.07, on a rebound in U.S. stocks and a report that OPEC had sharply curtailed production in December...after a quiet Friday​ ​morning, oil jumped 3.3% to a 2-month high on news that China had proposed to eliminate its trade surplus by importing more US goods, with oil closing $1.73 higher at $53.80 a barrel...US crude for February thus ended the week 4.3% higher, while the international benchmark Brent crude for March, which had seen a steeper pullback early in the week, ended 3.7% higher at $62.70 a barrel..

meanwhile, natural gas prices spiked nearly 16% higher to $3.591 per mmBTU on Monday, largely on forecasts for a long, severe cold spell, but struggled to maintain that price level the rest of the week and ended Friday at $3.482 per mmBTU, still more than 12% higher than the prior week's close...the natural gas storage report for the week ending January 11th from the EIA indicated that the quantity of natural gas in storage in the US fell by 81 billion cubic feet to 2,533 billion cubic feet over the week, which left our gas supplies 77 billion cubic feet, or just 3.0% below the 2,610 billion cubic feet that were in storage on January 12th of last year, and 464 billion cubic feet, or 11.4% below the five-year average of 2,860 billion cubic feet of natural gas that have typically been in storage as of the 2nd weekend of January....this week's 81 billion cubic feet withdrawal from US natural gas supplies was just about on the consensus estimate for a 82 billion cubic feet withdrawal, but it was considerably less the average of 203 billion cubic feet of natural gas that have been withdrawn from US gas storage during the first full week of January over the last 5 years...since the report now tells us that "At 2,533 Bcf, total working gas is within the five-year historical range" we'll include this week's graph from the natural gas storage report showing natural gas in storage over the past two years, as compared to that 5 year range... 

the above graph comes from this week's Natural Gas Storage Report, and it shows the quantity of natural gas ​in ​billion cubic feet in storage in the lower 48 states over the period from December 2016 up to the week ending January 11th 2019 as a blue line, the average of natural gas in storage over the 5 years preceding the same dates shown as a heavy grey line, while the grey shaded background represents the previous upper and lower range of natural gas in storage for any given time of year for the 5 years prior to the two years that are shown by today's graph…thus the grey area also shows us the normal variation of natural gas storage levels as they fluctuate from season to season, with natural gas in storage underground normally building to a maximum by the first weekend in November, falling through the winter, and usually bottoming out at the end of March or the first week of April, depending of course on the spring heating requirements in any given year...notice how our supplies of natural gas in blue started last year's heating season fairly close to the 5 year average of natural gas in storage shown in dark grey, then diverged over the year, beginning with the colder than normal January, with the gap separating the grey "normal" line and the blue current supply line slowly getting increasingly wider, until it finally fell below the 5 year low, represented by the grey shaded area, in July of this year...from that time until mid November, the gap between our natural gas supplies and the previous 5 year minimum became progressively wider, until a milder than normal December allowed for ​a period of slower than normal depletion...with the exceptional warmth over the 4 most recent weeks (see map below​ for the most recent week​), we have only needed to withdraw 240 billion cubic feet of natural gas from storage to meet our needs; that compares to the 860 billion cubic feet of natural gas that we needed during the same 4 week period a year ago...as a result, we still had 2,533 billion cubic feet remaining in storage as of January 11th, a bit more than the 2,529 billion cubic feet of gas that were in storage on January 10th 2014, and hence we're now "within the five-year historical range"

(source)

The Latest US Supply and Disposition of Oil Data from the EIA

this week's US oil data from the US Energy Information Administration, reporting on the week ending January 11th, indicated a moderate​ly large ​withdrawal of oil from our commercial crude supplies, largely because of a large increase in our oil exports and a modest drop in our oil imports...our imports of crude oil fell by an average of 319,000 barrels per day to an average of 7,527,000 barrels per day, after rising by an average of 454,000 barrels per day the prior week, while our exports of crude oil rose by an average of 901,000 barrels per day to an average of 2,966,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,561,000 barrels of per day during the week ending January 11th, 1,220,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, field production of crude oil from US wells was reportedly 200,000 barrels per day higher at a record 11,900,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from wells totaled an average of 16,461,000 barrels per day during this reporting week...

meanwhile, US oil refineries were using 17,223,000 barrels of crude per day during the week ending January 11th, 343,000 fewer barrels per day than the amount of oil they used during the prior week, while over the same period 383,000 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 379,000 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 disposition of it, the EIA inserted a (+379,000) 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 rose to an average of 7,605,000 barrels per day last week, but was still 3.6% less than the 7,892,000 barrel per day average that we were importing over the same four-week period last year....the 383,000 barrel per day increase in our total crude inventories was due to a 383,000 barrel per day ​withdrawal from our commercially available stocks of crude oil, while the oil stored in our Strategic Petroleum Reserve remained unchanged....this week's crude oil production was reported 200,000 barrels per day higher at 11,900,000 barrels per day because the rounded estimate for output from wells in the lower 48 states increased by 200,000 barrels per day to 11,400,000 barrels per day in light of last week's confirmed monthly figures, while a 2,000 barrel per day increase to 507,000 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 January 12th was at 9,750,000 barrels per day, so this week's rounded oil production figure was 22.1% above that of a year ago, and 41.2% 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 94.6% of their capacity in using those 17,223,000 barrels of crude per day during the week ending January 11th, down from last week's 96.1% of capacity, but still the highest capacity utilization rate for the second week of January since 1999....likewise, the 17,223,000 barrels per day of oil that were refined this week were again at a seasonal high for the date for the 29th time out of the past 33 weeks, and 2.1% higher than the 16,875,000 barrels of crude per day that were being processed during the week ending January 12th, 2017, when US refineries were operating at 93.0% of capacity... 

even with the decrease in the amount of oil being refined, the gasoline output from our refineries was higher, rising by 192,000 barrels per day to 9,584,000 barrels per day during the week ending January 11th, after our refineries' gasoline output had decreased by 752,000 barrels per day to a 50 week low during the prior two weeks...hence, even with the modest increase in this week's gasoline output, our gasoline production was still 1.3% lower than the 9,710,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, refineries' production of distillate fuels (diesel fuel and heat oil) decreased by 151,000 barrels per day to 5,412,000 barrels per day, after that output had decreased by 28,000 barrels per day the prior week....despite that decrease, this week's distillates production was 6.6% higher than the the 5,076,000 barrels of distillates per day that were being produced during the week ending January 12th, 2018.... 

with the increase in our gasoline production, our supply of gasoline in storage at the end of the week jumped by 7,503,000 barrels to 255,565,000 barrels by January 11th, after jumping by a 3 year high of 8,066,000 barrels during the week ending January 4th....our gasoline supplies rose this week as the amount of gasoline supplied to US markets fell by 170,000 barrels per day to 8,565,000 barrels per day, while our imports of gasoline fell by 173,000 barrels per day to 377,000 barrels and our exports of gasoline rose by 103,000 barrels per day to 830,000 barrels per day....with this week's increase, our gasoline inventories are at a seasonal high for the second week of January, 4.5% higher than last January ​12th's level of 237,322,000 barrels, and roughly 5% above the five year average of our gasoline supplies for this time of the year...

even with the decrease in our distillates production, our supplies of distillate fuels increased for the 6th time in seventeen weeks, rising by 2,967,000 barrels to 143,009,000 barrels during the week ending January 11th, after our distillates supplies had increased by a record 20,140,000 barrels over the pr​evious two weeks...our distillates supplies increased this week even though the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 1,494,000 barrels per day to 4,449,000 barrels per day (after falling by 1,911,000 barrels per day over the course of the prior 3 weeks), in part because our imports of distillates rose by 117,000 barrels per day to 378,000 barrels per day, while our exports of distillates fell by 436,000 barrels per day to 917,000 barrels per day....as a result of this week's increase, our distillate supplies were 2.7% above the 143,088,000 barrels that we had stored on January 12th, 2017, even as they remained 3% below the five year average of distillates stocks for this time of the year...

finally, with soaring exports and falling imports, our commercial supplies of crude oil decreased for sixth time in 7 weeks, falling by 2,683,000 barrels over the week, from 439,738,000 barrels on January 4th to 437,055,000 barrels on January 11th...however, with a run of 10 large weekly increases before the recent smaller decreases, our crude oil inventories are still roughly 8% above the five-year average of crude oil supplies for this time of year, and roughly 30% above the 10 year average of crude oil stocks for the second week of January, with the disparity between those figures arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have ​mostly been rising since this Fall, after falling through most of the past year and a half until then, our oil supplies as of January 11th were thus 5.9% above the 412,654,000 barrels of oil we had stored on January 12th of 2017, while remaining nearly 10% below the 485,456,000 barrels of oil that we had in storage on January 13th of 2016, and 3.9% below the 455,169,000 barrels of oil we had in storage on January 8th of 2015..   

OPEC's Monthly Oil Market Report

this week we're also going to review OPEC's January Oil Market Report (covering December OPEC & global oil data), which was released on Thursday of this past week, and which is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 56 of that report (pdf page 66), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate...for all their official production measurements, OPEC uses an average of estimates from six "secondary sources", namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as an impartial adjudicator as to whether their output quotas and production cuts are being met, to thus resolve any potential disputes that could arise if each member reported their own figures...

as we can see on this table of official oil production data, OPEC's oil output dropped by 751,000 barrels per day to 31,578,000 barrels per day in December, from their November production total of 32,328,000 barrels per day....however, in November, Qatar was still a member of OPEC​,​ producing 615,000 barrels per day, and that November figure was originally reported as 32,965,000 barrels per day, so OPEC's November output excluding that of Qatar was at 32,350,000 barrels per day....therefore OPEC's November output excluding Qatar was revised 22,000 barrels per day lower with this report (for your reference, here is the table of the official November OPEC output figures as reported a month ago, before this month's revisions)...

as you can tell from the far right column on the table above, the 468,000 barrels per day drop in the oil output from Saudi Arabia was the major factor in the 751,000 barrel per day OPEC production decrease, with largely involuntary production decreases of 172,000 barrels per day in the oil output from Libya and 159,000 barrels per day in the oil output from Iran accounting for the rest...OPEC's December agreement called for oil producers to cut output by 1.2 million barrels per day beginning in January, so this December production cut was for all practical purposes carried out unilaterally by Saudi Arabia, with the decrease of 65,000 barrels per day in the oil output from the United Arab Emirates, their close ally, also likely intentional.....excluding new OPEC member Congo, the December output of 31,349,000 barrels per day from the remaining 13 OPEC members was 761,000 barrels per day below the 32,110,000 barrels per day revised quota they agreed to at their November 2017 meeting, (excluding the 620,000 bpd quota for Qatar), mostly due to the big drop in Venezuelan output, another OPEC country that has also been impacted by US sanctions...  

the next graphic we'll look at shows us both OPEC and global monthly oil production on the same graph, over the period from January 2017 to December 2018, and it's taken from the page numbered 57 (pdf page 67) of the January OPEC Monthly Oil Market Report...on this graph, the cerulean blue bars represent OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the millions of barrels per day of global output shown on the right scale...      

OPEC's preliminary estimate indicates that total global oil production fell by 350,000 barrels per day to 100.02 million barrels per day in December, after November's total global output figure was revised down by 270,000 barrels per day from the 100.64 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 400,000 barrels per day in December after that revision, with increased US and Canadian output the major contributors to the non-OPEC increase....global oil output during December was also 2.83 million barrels per day, or 2.9% higher than the revised 97.19 million barrels of oil per day that were being produced globally in December a year ago (see the January 2018 OPEC report online (pdf) for the originally reported year ago details)...with the December decrease in OPEC's output following the downward revision to their November output, their November oil production of 31,578,000 barrels per day represented just 31.6% of what was produced globally during the month, down from the 32.8% share they reported for November, when Qatar was still a member....OPEC's December 2017 production was reported at 32,416,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year and new member Congo from this year, are now producing 573,000 fewer barrels per day of oil than they were producing a year ago, during the twelfth month that their production quotas were in effect, with a 597,000 barrel per day decrease in output from Venezuela and a 1,060,000 barrel per day decrease in output from Iran from that time more than offsetting the production increases of 635,000 barrels per day from the Saudis, 340,000 barrels per day from the Emirates, and 309,000 barrels per day from Iraq...   

despite the 350,000 barrel per day decrease in global oil output in December, we still saw a small surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us... 

the table above comes from page 31 of the January OPEC Monthly Oil Market Report (pdf page 41), and it shows regional and total oil demand in millions of barrels per day for 2017 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2018 over the rest of the table...on the "Total world" line in the fifth column, we've circled in blue the figure that's relevant for December, which is their revised estimate of global oil demand during the fourth quarter of 2018...       

OPEC's estimate is that during the 4th quarter of last year, all oil consuming regions of the globe were using 99.94 million barrels of oil per day, which was revised from their estimate of 99.98 million barrels of oil per day of a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, the world's oil producers were producing 100.02 million barrels per day during December, which means that there has been a surplus of around 40,000 barrels per day in global oil production as compared to the demand estimated for the month...     

a month ago we estimated a global surplus of around 660,000 barrels per day in global oil production during November, based on figures published at that time...however, as we ​​saw earlier, November's global output figure was revised down by 270,000 barrels per day from those figures, while global demand was simultaneously revised 40,000 barrels per day lower, so with these revised figures, we now find that global oil production in November was running roughly 430,000 barrels per day greater than demand...also a month ago, we estimated a surplus of 160,000 barrels per day for October; hence, with the downward revision to 4th quarter demand, that October​ oil production​ surplus would now be 200,000 barrels per day...

while 4th quarter demand was revised 40,000 barrels per day lower, 3rd quarter demand was revised 30,000 barrels per day higher at the same time, from 99.32 million barrels of oil per day to 99.35 million barrels of oil per day...that revision now means there were supply shortfalls of 10,000 barrels per day in September, 580,000 barrels per day in August, and 960,000 barrels per day per day in July....

since there are no revisions to supply or demand for the prior months, the surplus or shortfall figures for those months that we had recomputed last month remained unchanged; for the 2nd quarter months, we ​figured there were global oil shortfalls of 170,000 barrels per day in June, 610,000 barrels per day in May, and 400,000 barrels per day in April, while the first quarter of 2018 recorded global​ oil​ surplus​es of 20,000 barrels per day in March, 200,000 barrels per day in February, and 40,000 barrels per day in January...

by totaling up those 12 monthly estimates of surplus or shortfall, we find that for the twelve months of 2018, global oil demand exceeded production by roughly 56,250,000 barrels, actually a comparatively tiny net oil shortfall that is the equivalent of roughly 13.5 hours of global oil production at the December production rate.....however, should the entirely of the 1.2 million barrel per day OPEC production cut come to pass, we would be looking at a much larger shortfall during this coming year, and it does not yet appear that the market is taking the possibility of an oil shortfall of that magnitude into account..  

This Week's Rig Count

US drilling activity, as evidenced by the number of drilling rigs active at the end of the week, fell by the most in 35 months during the week ending January 18th, as drilling for both oil and natural gas decreased, probably due to the recently depressed oil prices for both​,​ and ​due to ​the 6.7 month backlog of uncompleted wells... Baker Hughes reported that the total count of rotary rigs running in the US fell by 25 rigs to 1050 rigs over the week ending January 18th, which was still 114  more rigs than the 936 rigs that were in use as of the January 19th report of 2018, but down from the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, which was the week before OPEC announced their attempt to flood the global oil market...  

the count of rigs drilling for oil fell by 21 rigs to 852 rigs this week, which was the largest oil rig pullback since February 19, 2016...nonetheless, there were still 105 more oil rigs active​ this week​ than were running a year ago, while th​at number was well below the recent high of 1609 rigs that were drilling for oil on October 10, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations decreased by 4 rigs to 198 natural gas rigs, which was still 9 more rigs than the 189 natural gas rigs that were drilling a year ago, but way down from the modern high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...

two platforms that had been drilling in the Gulf of Mexico offshore from Louisiana were shut down this week, which reduced the Gulf of Mexico rig count to 19 rigs for this report, which the same number of rigs that were deployed in the Gulf of Mexico a year ago at this time...since there is still no other offshore drilling off either coast or off Alaska at this time, nor was there during the same week of 2017-18, that Gulf of Mexico total is identical to the US total...

the count of active horizontal drilling rigs decreased by 19 rigs to 929 horizontal rigs this week, the largest horizontal rig pullback since February 26th, 2016...however, it still left 127 more horizontal rigs active than the 802 horizontal rigs that were in use in the US on January 19th of last year, but it was down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014....in addition, the directional rig count decreased by 7 rigs to 55 directional rigs this week, which was also down from the ​77 directional rigs that were in use during the same week of last year, and the lowest directional rig count since December 16, 2016....on the other hand, the vertical rig count increased by 1 rig to 66 vertical rigs this week, which was also up from the 57 vertical rigs that were operating on January 19th of 2018...

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 January 18th, the second column shows the change in the number of working rigs between last week's count (January 11th) and this week's (January 18th) count, the third column shows last week's January 11th active rig count, the 4th column shows the change between the number of rigs running on Friday and those running before 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 1​9th of January, 2018...    

offhand, i can't understand how Oklahoma could be down 10 rigs while the Cana Woodford was up 5 rigs and the Ardmore Woodford also added another one; the Mississippian shale is partly underlying Oklahoma, but it appears the 2 rigs that were shut down in that basin were pulled out of Kansas...while 3 rigs were pulled out of the panhandle region Granite Wash basin, one of those was pulled out in Texas, still leaving a big question mark on Oklahoma activity...meanwhile, the Permian basin saw a seven rig increase, as eight rigs were pulled out of Texas Oil District 8, which is the core Permian Delaware, while a Permian Delaware rig was added on the New Mexico side of the border...note that in addition to the major producing states shown above, Montana also had a Williston basin rig shut down, leaving two active in the state, still up from 1 rig a year ago... this week's natural gas rig situation also looks quite complicated; for starters, a natural gas rig was added in Ohio's Utica, while at the same time one of the two Utica ​gas ​rigs which had been operating in Pennsylvania was shut down, netting zero for the basin...another gas rig was added in the West Virginia portion of the Marcellus, and yet another was added the Haynesville, in northwestern Louisiana...meanwhile, despite the Ardmore Woodford rig increase, that masked an increase of two oil rigs and a reduction of one rig targeting natural gas...similarly, the one rig increase in the Eagle Ford of south Texas included an increase of two rigs​ targeting oil, and a reduction of natural gas rigs from 9 to 8...and in addition, 4 natural gas rigs were pulled out of "other" basins not tracked individually by Baker Hughes, to give us the total that we reported on earlier... 

++++++++++++++++++++++++++++

Utica Shale well activity as of Jan. 12 - Seven horizontal permits were issued during the week that ended Jan. 12, and 18 rigs were operating in the Utica Shale.

• DRILLED: 235 (231 as of last week)
• DRILLING: 142 (143)
• PERMITTED: 471 (470)
• PRODUCING: 2,128 (2,124)
• TOTAL: 2,976 (2,968)

TOP 10 COUNTIES BY NUMBER OF PERMITS:

• 1. BELMONT: 608 (602 as of last week)
• 2. CARROLL: 525 (525)
• 3. HARRISON: 443 (442)
• 4. MONROE: 421 (421)
• 5. GUERNSEY: 251 (251)
• 6. NOBLE: 223 (223)
• 7. JEFFERSON: 210 (209)
• 8. COLUMBIANA: 159 (159)
• 9. MAHONING: 30 (30)
• 10. WASHINGTON: 22 (22)
• 14. STARK: 13 (13)

Seven Permits Issued in Ohio's Utica – The Ohio Department of Natural Resources reports that it awarded seven new permits for horizontal oil and gas wells in the Utica shale region last week. According to ODNR, six permits were issued to Rice Drilling LLC for wells in Belmont County in the southeastern portion of the state. A single permit was awarded to Gulfport Energy Corp. for a new well in Harrison County. As of Jan. 12, ODNR has issued 2,976 permits across the Utica. The agency reports that 2,505 of these wells are drilled and 2,128 were in production. ODNR reported that there were 18 rigs operating in the Utica as of Jan. 12. There were no new permits issued in the northern tier of Ohio’s Utica, which includes Mahoning, Columbiana and Trumbull counties. Nor were there new Utica permits awarded in neighboring Lawrence and Mercer counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.

Ohio's Utica Shale Country May See a Boost from Chesapeake Energy Leaving the Play - WKSU News -- There is a new leading player in the development of Ohio’s oil and natural gas drilling industry. ENCINO Energy just bought all of the Utica shale holdings of Chesapeake Energy and says it plans to invest in those, and to keep the former Chesapeake Utica headquarters in Louisville in Stark County. ENCINO was formed a year ago by long-time Texas-based energy executives and the Canadian Pension Plan Investment Board. It’s paying $2 billion dollars for nearly one million acres of drilling rights held byChesapeake and the five story headquarters in Louisville.   Stark Development Board President Ray Hexamer says ENCINO’s entry into the Utica is encouraging for both Louisville and the region.  “For a community, you’d rather be someone’s first and biggest asset than one of five hundred assets.  And they’re all very skilled in this industry so if they paid the amount money that they did, they see the potential.” Chesapeake sold its Utica assets to help pay down debt it took on while expanding in shale plays across the country.

Ohio Fracking Laws Contested in Sixth Circuit - – Several Ohio landowners argued before a Sixth Circuit panel Thursday that a mining company’s fracking operation under their property is unconstitutional, seeking to revive federal claims against the company and the Buckeye State.  Six people and a trust that collectively own 127 acres in Harrison County, Ohio, filed a federal lawsuit against Chesapeake Exploration LLC and the state’s Division of Oil and Gas Resources Management after Chesapeake was issued a permit to drill three wells beneath the surface of the property. At the time the complaint was filed in February 2018, Chesapeake had drilled one of the wells and pumped “more than 8 million gallons of water, sand and chemicals” into the land as part of its hydraulic fracturing, or fracking, operation. Fracking involves the high-pressure injection of millions of gallons of chemical-laden water deep underground to crack rock and release oil and gas.  The owners claimed the operation constituted an unlawful taking under the 14^th Amendment, and also argued the Ohio law allowing for subsurface mining is unconstitutional.   U.S. District Judge Patricia Gaughan disagreed, however, and granted both the mining company and the state’s motions to dismiss last June.  “Plaintiffs,” she wrote, “do not allege that a well will be erected on their property or that the surface of their property will be impacted in any way by the drilling. Plaintiffs also do not allege any current surface damage.”The judge continued, “Rather, plaintiffs allege that Chesapeake will enter beneath the land, inject water, sand and chemicals beneath the land, and remove oil, gas, and natural gas liquids from beneath the land, pursuant to the unitization procedure set forth under Ohio law.” (Emphasis in original.)Judge Gaughan also determined that Chesapeake’s actions regarding the mining operation, including applying for the permit and drilling the first well, did not render it a state actor for the purposes of the landowners’ civil rights claim. Attorney Phillip Campanella argued on behalf of the landowners Thursday in the Sixth Circuit, saying his clients have “a right to exclude the invasion of the subsurface” portion of their property.

Taking on Climate Change and Petrochemicals in the Ohio River Valley - When it comes to the fossil fuel industry, we've all heard the promises before: new jobs, economic growth and happier communities, all thanks to their generosity and entrepreneurial spirit.   But what they always fail to mention is that their business damages ecosystems, drives climate change, and fills our air and water with dangerous, carcinogenic chemicals.  We know this because we've seen the same tragic story again and again: fossil fuels and petrochemicals causing disastrous health outcomes for normal Americans just trying to live their lives. In particular, in southern Louisiana along an 85-mile corridor of the Mississippi River between Baton Rouge and New Orleans, petrochemical plants are causing some of the nation's highest cancer rates. There are important lessons to be learned from this area, infamously dubbed "Cancer Alley." Especially as the fossil fuel industry plans to invest more than $200 billion in new petrochemical facilities across the U.S. in the coming years.  These plants separate ethane from natural gas through the heat and pressure process described above. Plants then use it to create ethylene, one of the major building blocks used in making plastics. Not only does this process involve burning fossil fuels, but the end result is another kind of pollution. Increasing investment in these facilities will not only deepen our reliance on fossil fuels; it'll also increase the amount of plastics that end up in our oceans—at a time when we should instead be concentrating on alternatives like clean energy. Yet, the petrochemical and fossil fuel industries keep finding ways to lock us into their products and business.  We already know the threats to regional watersheds from hydraulic fracturing (fracking), including soil erosion, groundwater pollution, and drinking water contamination. But we should also recognize that the danger doesn't stop once natural gas leaves the ground. For example, multiple studies have shown that petrochemical facilities that use natural gas expose employees—as well as surrounding communities—to multiple toxins that are incredibly damaging to their health.  The results are clear. Research shows that people living and working in and near petrochemical facilities can have higher rates of cancer, diabetes, various skin conditions, respiratory problems and other life-altering diseases. In some cases, rates of toxic chemicals and carcinogens found among people living by plants have been as high as three times the national average.

Berrien County officials investigating oil spill – Berrien County officials are attempting to get to the bottom of an oil spill in the county. The oil spill was discovered on January 2nd when investigating an unrelated obstruction in a drain. Berrien County Resident Prince Prabhu says he hopes the investigation uncovers why this spill happened. “First figure out why it happened and take precautions to not let it happen again,” Prabhu said. During the discovery and clean-up officials estimate 400 to 500 gallons of oil was spilled. “As soon as we do more investigating hopefully we will learn the source of where this oil is coming from,” Berrien County Sheriff Paul Bailey said. Officials say the oil had a red tint which indicates it could be on a few types of oil such as heating oil. Berrien County Drain Commissioner Christopher Quattrin said his office worked with Michigan’s Department of Environmental Quality during and after the clean-up. The clean-up is estimated to cost approximately $30,000, and officials say they are looking into “revenue streams” so the tax payers won’t be charged for the clean-up. The Berrien County Sheriff’s Department’s investigation is already underway and they hope to have answers as to how the spill happened in the upcoming months. 

Protesters gather at National Fuel headquarters — Almost 100 people came out to the National Fuel headquarters in Williamsville on Saturday to protest the Northern Access Pipeline Project. Members of the Seneca Nation, and representatives from groups such as Earthworks, spent hours marching around the building to bring awareness to the concerns they have about the pipeline. One of the people protesting was Theresa Schueckler. Schueckler has been involved in litigation with National Fuel over her 200-acre property in Allegheny County. the proposed pipeline would run though her land. In December a judge ruled in her favor stating that National Fuel could not use eminent domain as a means to obtain the land for the building of the pipeline. "We have on our 200 acres we have spent our life trying to preserve clean air and clean water," Schueckler said. Schueckler was confident that she no longer needed to worry about her land. Her opinion changed after a different ruling by an Erie County judge in a similar case. Members of the Seneca Nation also participated. Their main concern is the the proposed pipeline's route through the Cattauragus Creek. John Seneca lives near the water and says he would rather the company found an alternative to fossil fuels rather than using the pipeline to transport more of them. 

Legislators, groups concerned about pipeline project planned for Agawam -- Hundreds of individuals and 40 organizations — including newly elected Sen. Jo Comerford, D-Northampton, Rep. Natalie Blais, D-Sunderland, and two newly elected Hampshire County state legislators, along with the Ashfield Affinities Group, Solar Store of Greenfield and StopNED (Northeast Energy Direct) — have signed on to comments submitted to federal regulators as part of an environmental assessment of Tennessee Gas Pipeline Co.’s proposed 261 Upgrade Projects planned for Agawam. The upgrades are part of the Columbia Gas “Reliability Plan,” which includes a new pipeline across West Springfield and other expansions in its Greater Springfield service area. The projects, for which TGP applied last October, would create 72,400 dekatherms per day of additional capacity on the company’s existing system by installing 2.1 miles of 12-inch diameter loop running parallel and adjacent to the pipeline that’s there, according to the company. It also involves removing an inactive 6-inch diameter pipeline and replacing it with 12-inch diameter pipeline loop in some locations, while also replacing two turbine compressors with a single cleaner-burning compressor, and installing of auxiliary facilities at the existing compressor station. TGP had proposed the Northeast Energy Direct Pipeline through Franklin County, but that was halted in 2016 because of insufficient demand. The company hopes to begin construction on the Agawam project in March 2020 and have them operational that November. 

Baker approves air permits for natural gas project in Weymouth - In a decision blasted by South Shore lawmakers as reckless, irresponsible, and dangerous, Governor Charlie Baker’s administration on Friday approved air quality permits for a natural gas compressor station in Weymouth, with state environmental regulators concluding the Enbridge Energy project conforms with air pollution regulations. The project will support natural gas capacity upgrades and the expansion of a gas transmission pipeline system that runs from Mahwah, N.J., to Beverly, for transportation and deliveries on the Maritimes & Northeast Pipeline system. Collectively, it’s referred to as the Atlantic Bridge Project, which includes the siting of the compressor station, and which received federal approval in January 2017. “This reckless and irresponsible decision is harmful to the health, safety and wellbeing of residents of Weymouth and the entire South Shore,” Representative James Murphy, Democrat of Weymouth, said in a statement released after state energy officials disclosed their decision just before 5 p.m. Friday.

Tioga County fracking group sues DEC for answer on propane alternative - A Tioga County landowners group is pressing ahead with its fight to maneuver around New York's hydrofracking ban.Fed up with state Department of Environmental Conservation delays on its application to drill for natural gas with propane instead of water, the group has sued the agency in State Supreme Court in Albany asking for a final determination on the proposal."Having no response from the DEC for over eight months, Tioga Energy Partners has had enough," said James Leonard, president of the New York chapter of the National Association of Royalty Owners.Tioga Energy Partners have been trying to push the alternative natural gas drilling method since 2015, months after the state banned hydrofracking, citing health and environmental concerns.Leonard said the DEC has been purposely dragging its feet on the the group's liquefied propane fracking proposal, and the lawsuit was the only option to prompt a final determination from the state. In almost a year, Leonard said, the "DEC has not provided any substantive response" to its application to drill for natural gas using liquefied propane. The DEC has been unresponsive in Tioga Energy Partner's attempt to get updates on the application review, he alleged.

New Jersey AG appeals PennEast pipeline eminent domain ruling -- The New Jersey attorney general is taking further steps to try to block a controversial natural gas pipeline. The state filed an appeal Friday challenging a federal judge's December ruling that PennEast could begin taking property by eminent domain. State Attorney General Gurbir Grewal initially challenged the ruling in early January with a motion for reconsideration and motion for stay. Grewal argues the state has "sovereign immunity" from eminent domain under the 11th Amendment. He has requested a hearing on the matter for later this month. Homeowners who live in areas where the $1.1 billion pipeline would go have opposed the project. PennEast says the pipeline will save natural gas consumers millions of dollars per year. The company still needs to secure various permits to move forward with the project. 

Mariner East pipelines can keep flowing as PUC rejects shutdown request - The Pennsylvania Public Utility Commission on Thursday upheld a judge’s decision not to block operations of the controversial Mariner East pipelines after southeastern Pennsylvania residents contended they were unsafe. Administrative Law Judge Elizabeth Barnes denied an emergency request by seven Delaware and Chester county residents on Dec. 11 to block the startup of Sunoco Pipeline’s Mariner East 2 pipelines and to shut down the older Mariner East 1. The five-member Public Utility Commission unanimously affirmed the judge’s ruling. Commissioner David Sweet called it “thorough and well-reasoned” and said there was not sufficient evidence to reverse it. Mariner East 2 started service on Dec. 29. Sunoco used a 12-inch, 1930s-era pipeline that previously carried petroleum products as a link around unfinished sections of the new pipeline where regulators shut down construction after the project caused sinkholes and disrupted drinking water supplies. The $5 billion cross-state pipeline project is designed to move natural gas liquids, like ethane, propane and butane, from southwestern Pennsylvania’s shale gas wells to the Marcus Hook industrial complex and port near Philadelphia. The residents argued that the new and existing pipelines carrying highly volatile liquids through densely populated southeastern Pennsylvania are inherently dangerous, too shallow and close to homes, and that the company has not developed proper emergency management plans in case of a failure.

More, deeper wells planned for existing Marcellus site in Washington Township - CNX has applied to the state Department of Environmental Protection for a permit to drill four new wells to tap natural gas from Utica shale at an existing Marcellus shale well pad in Washington Township. The site is known as the Mamont South 1 Pad. It’s located near Evans Road, off of Route 286, in Washington Township on property owned by the Municipal Authority of Westmoreland County. The twist for the new application is that CNX is tapping both shale formations from the same well pad, which first was developed with five wells for Marcellus shale in 2014, according to Brian D. Aiello, a CNX spokesman. CNX applied to DEP in December to drill four new Utica shale wells on the same pad, he said. It’s unclear if any approval is needed by Washington Township since the proposed wells are on approved pad sites, according to township Supervisor Joseph Olszewski. Evans Road already is bonded by CNX and is in good condition, he said. “CNX can use it for overweight equipment and, if there is damage, we will assess any damages and they will pay for any damages,” Olszewski. CNX has been maintaining that section of road and it’s “been working out well,” he said. The Utica shale gas reserves reside deeper than Marcellus and, in Pennsylvania, sometimes they overlap, such as at the Mamont site in Washington Township. “We believe that area of Westmoreland County has significant potential in terms of what we call our “stacked pay” strategy, basically drilling multiple shale plays from the same pad,” Aiello said. “Stacked pay has many benefits including a reduced environmental footprint and improved operational efficiencies,” Aiello said. Other operators see value in such a strategy as well, according to the Marcellus Shale Coalition.

W.Va. Supreme Court To Hear Natural Gas Nuisance Case - The West Virginia Supreme Court is scheduled to hear arguments in an appeals case Tuesday that could have major implications for residents living near oil and gas operations.A group of Harrison County landowners who live near oil and gas sites operated by natural gas companies Antero Resources and Hall Drilling are asking the Supreme Court to require the companies to alter how they drill. They want relief from what they describe as near-constant loud noises, truck traffic and odors.  The companies argue state law allows them to do whatever is "reasonably necessary" to extract mineral resources when they own or lease natural gas rights and requiring additional drilling stipulations would be burdensome.  In October 2016, the West Virginia Mass Litigation Panel, which consists of seven circuit court judges that are appointed by the Chief Justice to resolve cases where many plaintiffs sue one defendant, ruled in favor of Antero and Hall Drilling.  The landowners are appealing. The eventual ruling by the Supreme Court could have widespread impacts -- hundreds of similar cases are pending in courts across the state.  The case was slated to be heard last fall, but was delayed after attorneys representing the landowners asked Justice Evan Jenkins to recuse himself because of a potential conflict of interest. In the petition, the landowners’ legal team argued the "counsel of record" for defendant Antero Resources, Ancil Ramey, also recently represented Jenkins in a lawsuit that sought to invalidate his interim appointment to the Supreme Court.Ramey said his role in Antero case is "minor." Jenkins ultimately declined to recuse himself.  Two other justices, Tim Armstead and John Hutchison, have recused themselves.

Mountain Valley Pipeline starts the new year with new complications- When work began last February with tree-cutting, the plan was to have the Mountain Valley Pipeline completed by now. Instead, developers of the natural gas pipeline are facing what could be another setback for the project, which has already seen construction delays and cost overruns caused by legal challenges from opponents. The latest twist came last week, when the West Virginia Department of Environmental Protection reopened a public comment period for modifications to a combined state and federal permitting process that Mountain Valley must complete before it can dig trenches through streams and wetlands for its buried pipeline. With written comments now being taken through March 4, it appears that Mountain Valley will have to wait longer than expected before seeking what’s called a Nationwide Permit 12 from the U.S. Army Corps of Engineers. Such a permit — which clears the way for the 42-inch diameter steel pipe to cross through more than 1,000 waterbodies on its 303-mile route through West Virginia and Southwest Virginia — was issued by the Army Corps in December 2017. But the permit was struck down last year by the 4th U.S. Circuit Court of Appeals. Siding with the Sierra Club and other environmental groups, the court ruled that the Army Corps lacked the authority to bypass a requirement by West Virginia regulators that pipeline stream crossings must be completed within 72 hours to limit environmental harm. Admitting that it would take more than a month to burrow through four major rivers in West Virginia, Mountain Valley was forced to suspend work on all stream crossings until it could obtain a new permit.That process appeared to be simplified after West Virginia’s DEP suggested changes to its regulations that removed the 72-hour requirement for pipeline developers, as long as they used a more environmentally friendly method of stream crossings. After taking public comments, the agency said in November that it was preparing to send the proposed modifications to the Army Corps and the U.S. Environmental Protection Agency for review.

Mountain Valley Pipeline files response to state's lawsuit - Widespread erosion during construction of the Mountain Valley Pipeline was caused by “extraordinary” rainfall and other uncontrollable forces of nature, attorneys for the company said Friday in response to a lawsuit filed by environmental regulators. In its first detailed reply to a legal enforcement action brought by the Virginia Department of Environmental Quality and the State Water Control Board, the company asked a judge to dismiss some of the claims. But the 28-page filing in Henrico County Circuit Court also indicated that Mountain Valley is interested in a “potential negotiated resolution” of a lawsuit that accuses it of violating environmental regulations more than 300 times. It was unclear to what degree a settlement has been discussed. A Mountain Valley spokeswoman did not immediately respond to questions. A spokeswoman for state Attorney General Mark Herring, who filed the lawsuit in December, said the office will answer the company’s filing in court. Long before construction of the massive buried pipeline began last spring, opponents argued that digging trenches for the 42-inch diameter steel pipe across rugged mountain terrain and through pristine steams was asking for environmental trouble. Inspections by DEQ have found that construction crews failed to prevent muddy water from flowing off pipeline construction easements, often leaving harmful sediment in nearby streams and properties.

Court filing asks judge to deny Mountain Valley's request for injunction against tree-sitters --  A federal judge should not act as an “enforcer” for the Mountain Valley Pipeline by using her power to remove two protesters from trees blocking the path of the controversial pipeline, supporters are arguing in court.U.S. District Court Judge Elizabeth Dillon was asked in a brief filed Wednesday to deny Mountain Valley’s request for a preliminary injunction, which the company says it needs to evict two people identified in court records only as “Tree-sitter 1” and “Tree-sitter 2.”Since early September, two protesters have been living in tree stands about 50 feet above the forest floor on a steep mountainside in eastern Montgomery County, frustrating Mountain Valley’s efforts to complete tree-cutting.But Mountain Valley is “improperly seeking to enlist this Court to act as its enforcer in its dealings with persons opposing pipeline activities and construction,” Roanoke attorney John Fishwick wrote in a friend-of-the-court brief in support of the tree-sitters.Fishwick does not represent the actual protesters, who have kept to their perches rather than attend court proceedings and defend themselves against Mountain Valley’s civil action.As the attorney for two supporters of the tree-sitters — Floyd County attorney Tammy Belinsky and Virginia Tech professor Daniel Breslau — Fishwick was allowed to make arguments on their behalf.

Drilling in Harrison County is a nuisance for residents, lawyer says -- Four families that live near gas drilling operations are disproportionately burdened by Marcellus Shale drilling, a lawyer for the families told West Virginia Supreme Court justices Tuesday morning. The Harrison County families have to deal with constant noise and traffic, Anthony Majestro, an attorney for them, told the Supreme Court. They can’t sleep because of Antero Resource Corp.’s bright lights, and they can’t sit on their porches because of the dust, he said. One resident said the bright lights make him feel like he’s living next to WVU’s Mountaineer Field, Majestro said. The question isn’t whether drilling is OK or not, Majestro said. “It’s not about whether the respondent should be allowed to do Marcellus Shale drilling. We don’t contend that our claims are the kinds of claims that would stop their drilling,” he said. Instead, he said, it’s about whether those landowners should have to bear costs and burdens without compensation perpetuated by Antero Resources, the state’s largest gas producer. “It’s the classic common-law nuisance that goes back four, five hundred years, back all the way to England,” Majestro said. The Supreme Court should affirm the lower court’s ruling that said Antero obtained property rights that were sufficient to allow these kinds of operations, said W. Henry Lawrence, who argued Tuesday on behalf of Antero.

US appeals court will not ease stay for 1.5 Bcf/d ACP natural gas pipeline - A federal appeals court said Friday it will not scale back a stay on a permit for the Atlantic Coast Pipeline, increasing prospects for delay of the 600-mile, 1.5 Bcf/d project, designed to move Appalachian gas to Mid-Atlantic markets. Setbacks to ACP's construction timeline would likely delay pressure on Transcontinental Pipe Line Zone 5 prices. Company officials did not comment on the schedule Sunday, but Dominion Energy said it remained confident in the full completion of the pipeline given the "critical customer need and a route that has been exhaustively studied and permitted." ACP in early December suspended most construction after the 4th US Circuit Court of Appeals stayed the US Fish and Wildlife Service's biological opinion as well as the incidental take statement setting limits on harm to protected species. To soften the blow, the pipeline company sought emergency clarification December 7 that the stay's application was narrower than it appeared. The court on Friday rejected that request. The decision added to the late-December rejection of another ACP attempt to put the project back on pace - a request to expedite briefing and oral argument in the case. Amid regulatory challenges, Dominion previously postponed its in-service target from mid-2019 to mid-2020 for portions of the project, while a late-2019 target remained for some segments. In a December 14 motion, the company said delay of up to a year was "all but certain" under the current oral argument schedule and "would exponentially increase" project costs. Oral argument is tentatively scheduled for the court's March 19-21 session, and the stay is in effect pending the litigation. If it was unable to complete tree felling by mid-March, ACP had told the court that time-of-year environmental restrictions on tree felling could make the additional delay inevitable. In its December 7 motion for clarification, ACP requested that the stay be limited to four species in contention. By staying the entire biological opinion and incidental take statement, "the court effectively stays work on the entire project, well beyond construction in areas with any potential to affect these species," ACP argued in the motion.

FERC opens 3 pipeline rate probes as Chatterjee tables PJM political spending complaint - Dive Brief:

• The Federal Energy Regulatory Commission opened investigations into the rates charged by three interstate natural gas pipelines on Wednesday to determine if they are "substantially over-recovering their costs of service."
• FERC opened the inquiries after asking pipelines in July 2018 to detail their rates of return following the passage of federal tax cuts in 2017 and changes to FERC's tax allowance policies. FERC also found nine gas companies had complied with the agency's request and terminated those inquiries without investigation.
• FERC on Thursday canceled a planned vote at its monthly open meeting on a political spending complaint lodged against grid operator PJM, and also declined to vote on a liquefied natural gas facility it tabled last month. The delays likely indicate a deadlock among sitting regulators on the issues, but Chairman Neil Chatterjee declined to comment on internal deliberations.

Offshore Service Spending to Outpace Onshore Shale - Spending on the offshore service sector will outpace spending on the onshore shale sector this year, according to Rystad Energy. One reason for this – while onshore shale spending is likely to remain flat this year due to current oil prices, the offshore service sector is expected to grow by four percent this year. “Many would expect offshore spending to be cut as drastically as shale, but offshore budgets were at a 10-year low last year, after four years of intense cost focus, and from that level you don’t need much additional activity or inflation to drive up the market,” Audun Martinsen, Rystad Energy head of oilfield services research, said in an email to Rigzone. With the decline of oil prices in fourth quarter of 2018 and a more bearish outlook for 2019, companies have drastically cut shale budgets to compensate the anticipated revenue loss. Martinsen pointed to the fact that the number of fracked wells per day dropped from average 50 to 44 while frack service pricing continued to decline in 4Q 2018. He expects the same – more or less – in 2019. Offshore spending will see an increase, fueled by exploration and greenfield projects, Rystad Energy forecasts. Additionally, operational expenses (OPEX) budgets will increase due to cost inflation, more fields coming on stream and a backlog of work that needs completion. Rystad Energy research finds that if the price of Brent crude were to reach $70 per barrel, the shale industry could have 14 percent growth. “It seems that the names that will be able to deliver the best revenue growth are the service companies exposed to the offshore subsea market and MMO,” Martinen said. “This is a clear switch from 2018, when it was the shale names that were market share winners in the global service market.”

Trump plans to relax Obama rules for oil companies put in place after BP disaster -  The Trump administration is expected to give BP and other big oil companies more power to self-regulate their offshore drilling operations, years after investigators found that lax regulatory oversight was one of the leading culprits behind the BP Deepwater Horizon disaster, the worst environmental catastrophe in US history. The move to relax new rules that were put in place by the Obama administration after the BP disaster, which killed 11 workers, spewed 4m barrels of oil into the Gulf of Mexico, and cost BP $65bn, comes as the White House is seeking to open offshore oil and gas drilling to the vast majority of US coastal waters, including in the Arctic. The proposed revised rules, which most experts believe will be finalised despite heavy opposition from environmental groups, include a change that would allow oil companies to select third-party companies to evaluate the safety of their equipment. Under previous rules, those entities had to be approved by the government agency that oversees offshore drilling, without any input from industry.  A separate rule on oil production safety systems that has already been finalized would also strike requirements that were put in place after the BP disaster that forced companies to get independent verification of the safety measures and equipment they use on offshore platforms, as well as a rule that required professional engineers to certify the safety of drilling equipment for new wells.

Delayed by shutdown, US offshore drilling rule changes likely to be challenged by states  — Work on controversial revisions to a US offshore drilling safety rule is currently being held up by the ongoing partial government shutdown, but when ultimately finalized, the changes will be challenged in court by multiple states, sources said. The revisions, which make changes to the Blowout Preventer Systems and Well Control rule finalized in 2016 in response to the Deepwater Horizon explosion and spill, were initially proposed by the Department of the Interior's Bureau of Safety and Environmental Enforcement in April.The proposed revisions have been under review at the White House since December 13, but sources said the officials in the White House's Office of Information and Regulatory Affairs in charge of that review have been furloughed by the shutdown, which entered its 25th day Tuesday. Sources said, depending on when the shutdown ends, it could take weeks for that review to be completed and then some weeks more if Interior needs to make additional changes.The proposed revisions to the offshore safety rule come as the Trump administration is working on expanding oil and natural gas drilling into federal Atlantic, Arctic and Eastern Gulf of Mexico waters. Interior was expected to release its proposed five-year offshore leasing plan for 2019 through 2024 by mid-January, but these plans have also been delayed indefinitely by the government shutdown, sources say.Opponents of the well control rule revisions have criticized the administration for weakening offshore safety regulations as it looks to expand offshore drilling operations. "It's almost like a never mind rule," said David Hayes, who helped write the original rule as deputy Interior secretary during the Obama administration, in an interview with the Platts Capitol Crude podcast. "We're going to go back to the way it was and not require better performance from the blowout preventers that everyone agrees are the last line of defense from an out-of-control well in the offshore" environment.

US recalls workers from furlough for oil, gas work (Argus) — President Donald Trump's administration is bringing employees it sent home for the government shutdown back to work to prepare for offshore lease sales and to open new waters to drilling. The US Bureau of Ocean Energy Management (BOEM), in an revised contingency plan, says it is taking 40 workers off furlough to conduct lease sales, issue permits for seismic surveys and take the next step toward finishing a plan that would open more than 90pc of federal waters to oil and gas development. The decision represents the latest effort by the Trump administration to avoid slowing down its energy agenda during a partial government shutdown in its 24th day. The US Bureau of Land Management has continued to process oil and gas drilling permits and hold meetings to open land in Alaska to oil and gas development. That approach has raised red flags for environmentalists who say the administration is crossing the line on what activities can continue without appropriations from the US Congress. But it has softened the shutdown's effect on oil and gas companies hoping to gain a foothold in new federal areas before the end of the first term of the Trump administration. BOEM in its contingency plan cited the need to achieve the administration's "America First energy strategy" to justify why it has exempted staff to work on offshore leasing plan that would open nearly all federal waters to drilling. It says 10 employees will work on the next step in that plan, which was expected in mid-January. BOEM said it would designate more workers as exempt after today to complete work for an oil and gas lease sale in the US Gulf of Mexico scheduled in March. The agency said failure to hold that sale, and to prepare for another lease sale later this year, would have a "negative impact" on government revenues and negatively affect investment in the Gulf. BOEM is also exempting staff to process permits required to conduct seismic oil and gas surveys in the US Atlantic.

Despite Shutdown, BOEM Resumes Work on Offshore Drilling Plan - The Bureau of Ocean Energy Management (BOEM), the permitting agency for offshore development in federal waters, has recalled 40 furloughed employees to work on the Trump administration's proposed offshore oil and gas leasing plan. The majority of the agency - including the departments that handle offshore wind development - will remain shut. The closure of BOEM has significant implications for the wind industry, according to trade group Business Network for Offshore Wind. “There are a number of big, important offshore wind projects moving through the BOEM approval process, and we can’t afford to have them disrupted in terms of their coordination and timing,” said Liz Burdock, the group's CEO and president, speaking to Bloomberg. “We are not able to hold meetings with BOEM because they’re not able to work."Six public hearings scheduled for the $2 billion Vineyard Wind project off Martha's Vineyard have already been pushed back due to the shutdown, and the timeline for rescheduling them is uncertain. Federal tax credits for wind developments will expire this year, so a lengthy delay could impose a large financial penalty on wind farm operators, according to Business Network for Offshore Wind. Separately, BOEM has redesignated 40 of its furloughed employees as exempt from the shutdown's closure requirements, which will allow them to return to work on the National Outer Continental Shelf Program - the master five-year policy plan for oil and gas drilling in federal waters.  The first draft of this plan, which was released in January 2018, drew controversy over proposed leasing activity off the Atlantic and Pacific coasts.

US Interior's offshore work may violate law: House chairman — The US Interior Department's decision to have roughly 40 federal employees work during the partial government shutdown on plans to expand oil and natural gas production in federal waters is likely a violation of US law, the chairman of the House Natural Resources Committee said Wednesday. While the Department of Justice is unlikely to prosecute a case against Interior, such a violation could be tested if Interior's offshore lease sales or seismic permitting are challenged in court. US Representative Raul Grijalva, a New Mexico Democrat, said that this work may violate the Antideficiency Act, a statute which prohibits agencies from expending federal funding without congressional approval. No one has ever been prosecuted in violation of this law, which dates back to the 19th century. According to a January 8 update of shutdown plans at Interior's Bureau of Offshore Energy Management, the agency said it was recalling about 40 employees to work on a decision allowing seismic testing in the Atlantic, development of the agency's offshore lease sale plan for 2019 through 2024, and work on two upcoming sales in the Gulf of Mexico. "Failure to hold these sales would have a negative impact to the Treasury and negatively impact investment in the US Offshore Gulf of Mexico," BOEM said in the update. Grijalva said the push to finish this offshore work during the partial government shutdown shows the administration's focus on oil and gas development over all other work. "It's continued unabated regardless of whatever condition the parks might be in, who's furloughed, who's not being paid," Grijalva said in an interview. "It just strikes me as ironic and glaring that this one function continues."

Court blocks offshore oil testing permits during shutdown - A federal court on Friday blocked the Trump administration from issuing any permits to conduct seismic testing for offshore oil and natural gas drilling during the partial government shutdown. Judge Richard Gergel of the District Court for South Carolina issued the order as part of an ongoing challenge by environmental groups and Democratic states to the administration’s November move toward allowing the testing. Justice Department attorneys representing the Interior Department’s Bureau of Ocean Energy Management (BOEM) had asked Gergel to pause the case during the shutdown because they could not write filings. Gergel granted that pause, but said that the same logic means BOEM should be prohibited from granting any permits until the government reopens. He noted that last week, Interior asked furloughed employees to return to work in order to process the seismic testing applications. “It requires little imagination to realize that the returning BOEM employees could act on the pending applications and seismic testing could commence during the pendency of the stay,” he wrote in his order. He ruled that all federal agencies are prohibited from taking action to promulgate permits, otherwise approve, or take any other official action” on the applications at issue. The November action gave five companies permission to potentially harm or harass marine species when they do their testing. It is a necessary step before the BOEM can issue testing permits. Federal attorneys had told the judge previously that the BOEM would not issue testing permits during the shutdown. But the agency later updated its shutdown plan to bring in employees to work on the permits, and attorneys told the court that the permits might be issued as early as March 1. Companies want to test the ocean floor in the Atlantic to see how much oil or natural gas is underneath. The Trump administration has proposed allowing drilling in the Atlantic for the first time since the 1980s, but hasn’t allowed any drilling yet.

Feds seek penalties against Shell Offshore over 2016 oil spill  – The federal government has filed a suit against Shell Offshore Inc. over a May 2016 oil spill in the Gulf of Mexico. The United States of America filed a complaint on Jan. 8 in the U.S. District Court for the Eastern District of Louisiana against Shell Offshore Inc. citing the Clean Water Act. According to the complaint, the U.S. Coast Guard and the Louisiana responded to an oil spill that started May 11, 2016. The suit states the defendant spilled more than 1,900 barrels of crude oil into the waters of the Gulf of Mexico from a transfer pipeline at Shell’s Green Canyon Block 248 offshore system. The response efforts ended on May 16, 2016, the suit states. "Despite the alarms and sustained pressure loss, Shell continued to actively pump oil through the cracked pipeline for at least another seven and a half hours. This was due in substantial part to Shell’s failure to provide adequate training for its control room operators," the suit states. The plaintiff seeks civil penalties of up to $1,848 per barrel of oil discharged, or if the violation resulted from gross negligence or willful misconduct, up to $5,432 per barrel discharged; injunctive relief; costs; such other and further relief as the court deems just and proper. It is represented by the U.S. Department of Justice in Washington, D.C. and the United States Attorney for the Eastern District of Louisiana in New Orleans. 

With support from DeSantis, Florida lawmaker files fracking ban in House - With the idea getting support from Gov. Ron DeSantis, a House Republican has filed a proposal to ban the oil- and gas-drilling process known as “fracking” in Florida. Rep. Heather Fitzenhagen, R-Fort Myers, filed the bill (HB 239) on Thursday, the same day DeSantis released a series of environmental proposals that included opposition to fracking. Sen. Linda Stewart, D-Orlando, filed a similar proposal (SB 146) last month to try to ban fracking. The bills are filed for consideration during the legislative session that starts March 5. Environmental groups and some lawmakers have long wanted to block potential fracking in Florida, but legislation has not passed. 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.

Oil, Gas Drilling Method 'Fracking' Faces Ban Under Proposed Florida Bill - The drilling procedure commonly known as "fracking" could be banned in Florida under a proposed bill. The general bill was filed Thursday by Republican Rep. Heather Fitzenhagen, who represents Fort Myers. The measure is supported by Republican Florida Gov. Ron DeSantis, who was inaugurated on Tuesday. DeSantis on Thursday signed an order seeking to fulfill his campaign promise tomake the environment a priority by confronting Florida's blue-green algae and red tide crisis, among other issues. DeSantis also announced he would take "necessary actions" to oppose all off-shore oil and gas activities in Florida. The practice of fracking has long been criticized by environmental activists as a dangerous method to extract fossil fuels. Organizations warn of the release of toxic chemicals possibly poisoning the land and groundwater. Fracking has been linked to generating tremors and earthquakes, as well. House Bill 239 would ban "advanced well stimulation treatment" – meaning all methods of injecting fluids into a rock formation.

Walz: Decision on proceeding with Line 3 lawsuit will be his (AP) — Gov. Tim Walz said Friday that he and his new administration will be “actively engaged” on contentious natural resources issues, including Enbridge Energy’s plan to replace its aging Line 3 oil pipeline across northern Minnesota. Speaking to reporters at an annual Department of Natural Resources conference, Walz said he has asked his team to review the lawsuit that was filed by the outgoing administration of Gov. Mark Dayton that challenges the decision by the independent Public Utilities Commission to approve the project. Walz said he wants to understand why the Commerce Department felt the process was insufficient and that it needed to turn to the courts. “The decision will stop with me, but it will be informed by all of the stakeholders involved,” the governor said. Commerce said in its appeal that Enbridge did not introduce, and the commission did not properly evaluate, the kind of long-range oil demand forecast required by law. The PUC stood by its decision, saying its approval was supported by the law and a vigorous public review process. Walz said he’s grateful for Dayton’s work as governor, but he’ll bring a new leadership style, pattered on the style Walz used when he was in Congress, building coalitions from the beginning. He acknowledged he’s inheriting some “pretty touchy issues,” but pointed out that he has a new DNR commissioner in Sarah Strommen, a new head of the Minnesota Pollution Control Agency and that he’ll get to appoint a new PUC commissioner. “You can expect to see us actively engaged, not turning away from these,” he said.

Can U.S. LPG Export Terminals Keep Up? - U.S. production of natural gas liquids is projected to increase by 17% this year, and by another 10% in 2020, according to RBN’s forecast. These gains will result in similar increases in the output of propane and normal butane — two NGL purity products generally referred to as LPG — and, with U.S. demand for LPG expected to stay relatively flat, most of the incremental volumes will be sent to export terminals for shipment to foreign buyers. The question is, will the nine U.S. marine terminals that are equipped to send out LPG have enough capacity to handle the much-higher flows? Today, we continue our series with a review of four smaller export terminals along the Gulf and East coasts. This is the third and penultimate episode in our series in which we’ve been discussing the U.S.’s flip from net LPG importer to net exporter seven years ago and the challenges presented by fast-growing propane/butane export volumes. As we said in Part 1, waterborne LPG exports soared to an average of more than 1.1 MMb/d in 2018, with about 92% of those volumes being sent out of the half-dozen LPG terminals in coastal Texas and Louisiana. The rest of the exports-by-ship are flowing through a total of three smaller terminals in the Mid-Atlantic region and Pacific Northwest. We concluded Part 1 with a review of the Gulf Coast’s — and the U.S.’s — largest LPG export facility: the Enterprise Hydrocarbon Terminal (EHT; dark blue dot and lettering in Figure 1), which is located on the Houston Ship Channel and whose capacity is in the midst of being expanded to 720 Mb/d from the current 545 Mb/d. According to our NGL Voyager report, EHT sent out an average of 447 Mb/d of LPG last year, or about 40% of total U.S. LPG exports by ship.

Saudi Arabia Eyes Investment Into U.S. Gas— Saudi Arabia is nearing a deal to invest in U.S. liquefied natural gas, write the Journal’s Sarah McFarlane and Summer Said. Saudi Arabian Oil Co., known as Aramco, has narrowed its focus to a shortlist of at least four U.S. LNG projects and intends to announce a deal in the first half of this year, people familiar with the matter said. Companies with projects being considered include Tellurian Inc., a Houston-based LNG developer known for its intention to ship gas from its planned Driftwood terminal in Louisiana, said sources. In addition, San Diego-based Sempra Energy, which is developing five LNG projects between the U.S. and Mexico, has had discussions with Aramco concerning its Port Arthur project in Texas, according to sources.  Any such investment would mark a sea change in the energy flows between the U.S. and Saudi Arabia.  America’s shale revolution has broken years of dependence on Middle Eastern oil, to the extent that the International Energy Agency expects the U.S. to become a net energy exporter by 2023.  

Here's why Abu Dhabi petrochemicals chief has his eye on North American shale -  While North American shale may be competition for OPEC members, some crude-exporting countries in the Arabian Gulf are simultaneously taking advantage of the commodity's ability to fuel lucrative investments beyond oil. For the United Arab Emirates' Musabbeh al-Kaabi, chief executive of Abu Dhabi's Mubadala Petroleum and Petrochemicals, the shale revolution has the made North American gas and petrochemicals industry very attractive, bringing competitively-priced gas feedstock to the market. The petrochemicals firm is a major component of Mubadala Investment Company, Abu Dhabi's state-owned holding company. It operates as a sovereign wealth fund with assets of more than $226 billion, and is aimed at diversifying the emirate's economy."We as an investor made big investments in the last 18 months, north of $12 billion dollars, and some of these big investments are happening in North America," al-Kaabi told CNBC's Hadley Gamble during the Atlantic Council Energy Forum in Abu Dhabi.This was for two simple reasons, the CEO said. "It is a big market and it is enjoying a highly competitive feedstock. So we like the business in that part of the world because of these two reasons." Feedstock refers to raw material, such as natural gas, used in petrochemical production. Gas dominate's the company's business, and al-Kaabi has previously highlighted North America as the focus of a strategic shift when it comes to petrochemicals thanks to the shale revolution. "Other parts of global energy I would say, the energy industry, the price would be set by the high cost producers going forward," al-Kaabi added. "And who are the high cost producers nowadays? The shale producers. And we will keep monitoring what is happening in that part of the world."

Market Edges Higher As Winter Is Forecast To Return - Highlights of the Natural Gas Summary and Outlook for the week ending January 11, 2019 follow. The full report is available at the link below.

• Price Action: The February contract rose 5.5 cents (1.8%) to $3.099 on a 25.6 cent range ($3.166/$2.910).
• Price Outlook: The market ended the streak of new weekly lows as weather forecasts not only became less bullish but turned bullish with below normal temperatures now forecast. While winter is now half over, demand can still be impressive and as a reminder, on January 10, 2014 prices traded to $3.953 before soaring to $6.493 on February 24, 2014. While we do not expect that type of price action, higher prices may be in store if temperatures remain below normal through February. For daily updated storage projections, subscribe to our joint publication with RBN Energy. CFTC data has not been updated due to the US government shutdown. Aggregated CME futures open interest rose to 1.301 million as of January 11. The current weather forecast is now cooler than 7 of the last 10 years. Pipeline data indicates total flows to Cheniere’s Sabine Pass export facility were at 3.3 bcf. Cove Point is net exporting 0.8 bcf. Corpus Christi is exporting 0.001 bcf. Cameron is exporting 0.000 bcf.
• Weekly Storage: US working gas storage for the week ending January 4 indicated a withdrawal of (87) bcf. Working gas inventories fell to 2,614 bcf. Current inventories fall (153) bcf (-5.5%) below last year and fall (481) bcf (-15.6%) below the 5-year average. The report was accompanied by a 4 bcf reclassification in the Mountain region that resulted in a total withdrawal of (91) bcf.
• Storage Outlook: The EIA weekly implied flow was (1) bcf from our EIA storage estimate. This week’s storage miss is back within our tolerance. Over the last 5 weeks, the EIA has reported a total withdrawal of (373) bcf compared to our (374) bcf estimate. The forecasts use a 10-year rolling temperature profile past the 15-day forecast. Our joint publication with RBN updates storage projections daily.
• Supply Trends: Total supply fell (0.8)bcf/d to 81.6 bcf/d. US production fell. Canadian imports rose. LNG imports rose. LNG exports fell. Mexican exports fell. The US Baker Hughes rig count was unchanged +0. Oil activity decreased (4). Natural gas activity increased +4. The total US rig count now stands at 1,075 .The Canadian rig count rose +108 to 184. Thus, the total North American rig count rose +108 to 1,259 and now exceeds last year by +44. The higher efficiency US horizontal rig count rose +3 to 948 and rises +143 above last year.
• Demand Trends: Total demand rose +7.4 bcf/d to +94.2 bcf/d. Power demand rose. Industrial demand rose. Res/Comm demand rose. Electricity demand rose +955 gigawatt-hrs to 74,073 which trails last year by (19,258) (-20.6%) and trails the 5-year average by (8,088)(-9.8%%).
• Nuclear Generation: Nuclear generation fell (544)MW in the reference week to 93,431 MW. This is (2,016) MW lower than last year and (1,370) MW lower than the 5-year average. Recent output was at 93,019 MW.

The heating season has begun. With a forecast through January 25 the 2018/19 total cooling index is at (1,677) compared to (1,506) for 2017/18, (1,308) for 2016/17, (1,320) for 2015/16, (1,621) for 2014/15, (1,836) for 2013/14, (1,572) for 2012/13 and (1,553) for 2011/12.

Natural gas prices spike 13 percent on forecasts for long, severe cold - Natural gas prices spiked on Monday as the market gained confidence that the severe cold gripping the United States will persist longer than previously thought, driving up heating demand and taxing gas stockpiles.Front-month Henry Hub natural gas futures for February rose more than 13 percent on Monday. The contract hit a session peak at $3.539 per million British thermal units, its highest level since Dec. 27.The contract was last up 12.7 percent at $3.493 per mmBtu. Updated forecasts show below-average temperatures persisting over the next two weeks, with the cold snap drifting eastward from the Midwest toward the East Coast. Traders were anticipating the cold would linger, but weather models available last week didn't give them the confidence to take long positions in natural gas futures heading into the weekend, according to Jacob Meisel, chief weather analyst at Bespoke Weather Services. "The forecast has turned significantly colder," he said. "It's really the magnitude of the cold and the confidence in severity longer term that's changed over the weekend." "There is surprisingly strong agreement even late in the week two forecast."  Natural gas prices have been falling since the middle of December, following a spike above $4 per mmBtu in the fall. Hotter-than-usual late summer temperatures and a surprisingly cold fall increased demand for cooling and heating last year, causing natural gas stockpiles to fall to their lowest level in over a decade.

US EIA lowers spot gas forecasts for 2019 on robust production, injections - — The Energy Information Administration Tuesday lowered its spot natural gas price forecasts in 2019, predicting that production growth will keep pace with demand and export growth, and that inventory builds will outpace the five-year average. The agency, in its January Short-Term Energy Outlook, lowered its forecast for Q1 Henry Hub natural gas spot prices by 57 cents to $3.03/MMBtu, while the Q2 forecast was trimmed 13 cents to $2.73/MMBtu. The full-year 2019 price estimate also fell 22 cents to $2.89/MMBtu, while the new 2020 estimate sees spot prices averaging $2.92/MMBtu. The agency bumped up its natural gas consumption estimates in the US by 1.46 Bcf/d to 99.4 Bcf/d for the first quarter of 2019, and by 0.76 Bcf/d to 71.44 Bcf/d for Q2. "EIA forecasts power sector consumption of natural gas to remain largely unchanged in 2019 and then rise by 3.3% in 2020 because of continuing increases in natural gas-fired electric generation capacity," the agency said. It also raised the consumption estimate for the full year 2019 by 1.08 Bcf/d to 82.65 Bcf/d, and forecast consumption will average 83.55 Bcf/d in 2020. Production is expected to build on the records set in 2018. "[P]ermian and Appalachian regions will drive record US production over the next 24 months," EIA Administrator Linda Capuano said. The agency raised by 0.05 Bcf/d to 96.33 Bcf/d its natural gas marketed production estimate for the US in Q1 and by 0.08 Bcf/d to 97.23 Bcf/d for Q2. The full-year 2019 estimate rose by 0.19 Bcf/d to 97.28 Bcf/d, and 2020 levels were put at 99.68 Bcf/d. While inventories were forecast to reach 1.405 Tcf at the end of March 2019, 15% below the five-year average for that time, EIA expected injections would exceed the average rate, as production outpaces consumption in late March through October. That would bring inventories to 3.758 Tcf at the end of October 2019, just above the five-year average.

How fears of a US recession could impact spending in the US natural gas midstream sector - (Platts podcast) S&P Global Platts senior natural gas writer Harry Weber and Americas natural gas managing editor Joe Fisher discuss the outlook for the US midstream sector as fourth-quarter 2018 earnings reporting season begins, from the appetite for further major pipeline projects to the markets that will be served by increasing gas production to the impact LNG export growth will have on the industry.

Weekly Natural Gas Storage Report - Storage Deficit Widens Going Into February - EIA reported a storage draw of 81 Bcf for the week ending Jan 11. This compares to the -90 Bcf we projected and consensus average of -82 Bcf. The -81 Bcf was considerably smaller than the five-year average of -203 Bcf and last year's -183 Bcf. As you can see, this week's EIA natural gas storage report was a hideous one, especially when you compare it to the average and last year. The weather set-up for the report was a very bearish one as you can see below: As you can see, natural gas storage deficit to the 5-year average is expected to decline back to -600+ Bcf by the start of February, thanks to a much more bullish second-half January outlook. Heating demand is expected to increase to the highest level this winter and the colder-than-normal weather looks to last into February. Based on our estimates, EOS has now been revised down to 1.2 Tcf again with the bullish weather backdrop. A sustained cold in February would see EOS revise lower, which would push natural gas prices even higher. Our fundamental models show February contracts to trade up to $3.8 and March to trade up to $3.50, based on the current projection and outlook. We remain long UGAZ and believe that natural gas prices today are discounting the bullish weather too much as the market continues to question the 1) duration of the bullish weather and 2) overly sensitive to HDD changes for January. In our view, we believe the bullish weather is sustainable given the weather "set-up" is especially favorable for the bulls. The Alaska and Greenland ridging pattern remains in place allowing for a more durable bullish weather outlook into February. We think this set-up presents a good opportunity to remain long natural gas.

US to add 216.5 Bcf of working gas storage capacity by 2022: report — Various midstream companies plan to add more than 200 Bcf of working natural gas storage capacity at 17 sites in the US over the next four years due to the rise of LNG export terminals and gas-fired power generation, according to a report released Monday. The US is slated to add 216.5 Bcf of working gas storage through 2022 at a cost of $1.2 billion, according to a report released Monday by the UK firm GlobalData.   "The ever growing demand for natural gas in the US is driving the growth of the underground gas storage industry in the country,". "The proposed natural gas-fired power plants and the LNG liquefaction terminals are also aiding the underground gas storage industry growth." If the projects do manage to come online, it would increase total working gas capacity in the US to about 4.9 Tcf. The US Energy Information Administration currently estimates 4.7 Tcf of working gas capacity. No new significant storage fields have entered service over the past five years. However, many of these planned projects have already faced substantial delays, so it is possible much of this additional storage capacity may not come online by 2022. The proposed projects are scattered geographically, but the majority would involve salt-dome formations. Unlike depleted oil and gas fields or aquifers, salt-dome facilities allow for greater flexibility in switching from injections to withdrawals. This allows players to meet peak demand periods for power generation or for delivery to LNG export terminals more easily. About 12% of all current US storage capacity is contained in salt caverns. The largest proposed storage facilities include the Magnum Gas Storage Project in Utah, Falcon Gas Storage's MoBay Storage Hub in Alabama and Chestnut Ridge Storage's Junction Natural Gas Storage facility in Pennsylvania.

Open season gauges interest in improved access to US, Canadian barrels in Louisiana — Phillips 66 Partners, Harvest Midstream and PBF Logistics plan to develop a pipeline they expect to provide three Louisiana refineries with improved access to price-advantaged domestic crudes, they said. The companies on Monday launched an open season for the ACE pipeline system, serving intrastate Louisiana. With completion and startup expected by late 2020, the 400,000 b/d pipeline would transport crude from the St. James storage hub to refineries in Belle Chasse, Meraux, and Chalmette, the companies said. An option exists to add a delivery destination in Clovelly, Louisiana, the storage hub for the Louisiana Offshore Oil Port, they added. The pipeline system will include a newbuild segment to connect the St. James hub to the CAM pipeline, which currently transports crude from the Louisiana Offshore Oil Port to all three refineries. Harvest Midstream plans to contribute its existing CAM pipeline to the ACE system. Refineries potentially benefiting from increased access to both light sweet and medium to heavy sour crude as a result of the new line include Phillips 66's 247,000 b/d Alliance refinery in Belle Chasse, Valero's 135,000 b/d Meraux refinery and PBF's 189,000 b/d Chalmette Refining. The ACE line would mean improved access to light sweet barrels drawn from St. James for all three regional refineries. Valero Meraux and PBF Chalmette mainly process medium to heavy sour barrels, with light sweet domestic barrels making up the balance of the crude slate. Phillips 66's Alliance, in contrast, mainly runs light sweet crude with offshore medium sour grades and some imported heavy sour grades making up the remainder of the crude slate.Permian Basin crudes are priced at a wide discount to Louisiana Light Sweet crude. Midland WTI has averaged at an $11.96/b discount to LLS so far in January, S&P Global Platts data shows. Pipeline constraints are likely still keeping Midland WTI prices under pressure, but the discount to LLS has narrowed from $20.75/b in August as more capacity has come online.

US Crude Oil Exports Continue to Grow - U.S. crude oil exports have soared due to a combination of:

• rising domestic crude oil production
• high but flat domestic demand
• a law change in December 2015 that allowed sales beyond just neighbor Canada

Since the shale revolution started in 2008, U.S. crude production has increased almost 125 percent to around 11.2 million barrels per day (MMbpd). Yet, this light, tight oil boom has not been a great match for the massive 18.6 MMbpd U.S. refining system. U.S. refineries are generally configured to process the heavier crudes imported from longtime suppliers Canada, Mexico and Venezuela. So today, 65 percent of U.S. crude oil production has a very high 40 degree API gravity or above. This has left huge amounts of surplus shale oil available for export. This mismatch between what the U.S. is producing and what it is typically built to process also explains why the country still imports a significant amount of oil, taking in an average of 8 MMbpd in late 2018. Since January 2018, higher prices have helped increase U.S. crude production nearly 20 percent. U.S. crude exports therefore more than doubled year-over-year to average 1.9 MMbpd in 2018. The rise in production, augmented by takeaway constraints in West Texas that have depressed local prices, has offered a key advantage for U.S. exporters by keeping WTI prices in check. In contrast, mounting global demand and geopolitical concerns (e.g., U.S. sanctions returning to Iran) have pressured Brent, the international benchmark, to the upside. Rising from nothing prior to 2016 to 510,000 bpd in June 2018, China has accounted for 20 percent of U.S. crude exports in recent years. But a U.S-China trade war that officially kicked off that very month has China implementing a 25 percent tariff on U.S. crude. By August, purchases from the U.S. had dropped to zero. For China, similar quality West African oil is a practical replacement for American crude. But for the United States, an alternative market for China is a much harder find. India could help but its oil market is just a third the size of China’s, and India has bought just 10 percent of the U.S. crude that China has.

First U.S. crude cargoes head to China since trade breakthrough: sources (Reuters) - Three cargoes of U.S. crude are heading to China from the U.S. Gulf Coast, trade sources said on Monday, the first departures since late September and a 90-day pause in the two countries’ trade war that began last month. The vessels left Galveston, Texas, last month and are scheduled to arrive at Chinese ports between late January and early March, according to shipbrokers and vessel tracking data. The shipments mark a change since Chinese buyers largely began avoiding U.S. oil during the trade dispute that flared last summer. “It looks like China has resumed purchasing U.S. crude,” one U.S.-based shipbroking source said. The person, who declined to be identified because he was not authorized to speak publicly about the matter, said the destination data could yet change. China is the world’s biggest crude importer and became a top buyer of U.S. crude after Washington lifted a 40-year ban on shipments in late 2015. It imported 325,000 barrels per day (bpd) of U.S. crude in the first nine months of 2018, customs data showed. Beijing has also resumed purchases of some U.S. soybeans for delivery this year. But China’s 25 percent tariff on U.S. soybean cargoes remains in place. The supertanker Alboran carrying about 2 million barrels of oil recently rounded South Africa’s Cape of Good Hope and is due to arrive in China late this month, said brokers, citing fixture data. The Almi Atlas and the Manifa, two other vessels carrying 2 million barrels of crude, are expected to reach China in late February or early March. The two ships are currently located off Brazil, according to Refinitiv Eikon vessel tracking data. The cargoes mark the first shipments of U.S. crude to China since U.S. President Donald Trump in December said China would begin taking more American products.

U.S. refiners scramble as White House eyes Venezuela sanctions (Reuters) - U.S. refiners are bidding up prices for scarce types of crude oil needed for their most sophisticated plants as the United States reconsiders harsher sanctions on Venezuela that could further reduce imports of the country's oil. Trump administration officials in recent days met with U.S. oil company executives to lay out potential actions in response to the Jan. 10 inauguration of Venezuelan President Nicolas Maduro in an election it considered illegitimate. Among other steps, U.S. officials have recognized the opposition-run Venezuelan congress as the only legitimately elected authority. But the proposals that would most affect the energy industry involve banning U.S. exports of refined products or limiting oil imports - a move that, until now, the White House has not taken even after sanctioning individuals and barring access to U.S. banks. "It's more serious than I've heard before," said a refining industry executive familiar with the White House discussions. "They are setting the table to pull the trigger if they have to." U.S. refiners have few supply alternatives if the Trump administration were to cut off crude imports from that country. Supplies of the heavy oils preferred by Gulf Coast refiners have been harder to secure in recent months because of cutbacks and production curbs in Western Canada, Mexico and Venezuela. One type of U.S. heavy oil, called Mars, traded at a $6.80 per barrel premium to U.S. crude futures on Thursday, the strongest in nearly five years and up from a $4.50 per barrel premium on Tuesday, a U.S. oil broker said. U.S. oil companies that depend on Venezuelan oil have opposed past proposals that would halt imports and did so again this week, said several people close to the talks. Two big refiners, Phillips 66 and PBF Energy, cut their dependence on the South American country last year, according to U.S. Energy Information Administration data. Latin American advisors have warned the administration that oil sanctions could backfire by making the United States appear too involved in the Venezuelan political crisis, said a person familiar with talks among the White House, the National Security Council and oil firms. 

It May Not Be Just OPEC And Russia That Is Cutting Production -  January 1st of 2019 marks the start of another crude oil production cut by OPEC and non-OPEC oil producing nations. An agreement was made and announced in Early December to reduce production by 1.2 million barrels per day (bpd) in order to “stabilize” rapidly falling crude prices. WTI crude futures fell almost 45% from early October to their recent lows on December 24th and OPEC and its allies were determined to stop the selloff. It’s interesting to note that 11% of the fall in the price mentioned above happened after the production cut announcement on December 7th. Clearly, the cut wasn’t going to be enough short-term. Since the lows on Christmas Eve, however, WTI crude has rallied over 10%. Part of that rally has to do with a WSJ article revealing that Saudi Arabia is looking to drive Brent Crude prices back up to the mid-$80 range. According to the article they intend to make a big splash in January, preparing deeper production cuts than required as part of the OPEC+ agreement. People forget that compliance during the last production cut averaged 116% of promised cuts and most of that was done by the Saudi’s. There is also evidence of a potential slowdown in U.S. shale production. The rate of hydraulic fracturing began to decline in the last four months of 2018. According to Rystad Energy, the average number of fracking jobs declined to 44 per day in November 2018, down from an average of between 48 and 50 for the five-month period between April and August 2018. Rystad Energy’s research fit well with that of the Dallas Fed, which reported last week that drilling activity began to slow in the Permian Basin in Texas in the fourth quarter. Shale tends to slow with falling prices, so this is not a surprise, but if demand picks up at all, prices may spike and more quickly than the market is expecting. Maybe not a rush to $80, but high $60’s/low $70s could be in the cards by late February.

Chesapeake to cuts rigs from 18 to 14 in 2019 - Chesapeake Energy has reported estimated average fourth-quarter 2018 production will be between 462,000 and 464,000 barrels of oil-equivalent per day (Boe/d), Kallanish Energy reports. It also said Q4 2018 estimated average oil production was between 86,000 and 87,000 barrels per day (Bpd). The company said it intends to cut capital spending in 2019, but expects to grow production due to improved efficiencies and its focus on high-margin oil assets expected to provide financial benefits. It will reduce the number of drilling rigs by 22% in 2019, to 14 from the 18 rigs now under contract. Rig costs have been reduced, Chesapeake said. Chesapeake said it has reduced its debt by $1.8 billion from year-end 2017, to roughly $8.2 billion at year-end 2018. Chesapeake is improving its margins while reducing debt and improving its sustainable cash flow, CEO Doug Lawler said, in a statement. He noted the company generated more than $2 billion in net proceeds through its divestment of its Utica Shale assets in Ohio. The company lost production with the Utica sale to Encino Acquisitions Partners, but that was replaced by growing production in late 2018 from the company’s assets in the Eagle Ford Shale in South Texas and the Powder River Basin in Wyoming. The Utica produced 10% of the company’s oil production in 3Q 2018. Chesapeake is also proceeding with its proposed $4 billion merger with WildHorse Resources. Shareholders of both firms will vote on the merger Jan. 31. Chesapeake said it intends to operate four rigs in the WildHorse acreage in 2019. It is also proceeding with its Austin Chalk and Upper Eagle Ford appraisal programs, with results likely released by April 1.

WildHorse to Lay Off Staff After Chesapeake Acquisition -  WildHorse Resources Management Company, which is being acquired by Chesapeake Energy Corporation, is laying off all employees at its Houston headquarters, according to a letter dated Dec. 13, 2018 sent to the Texas Workforce Commission (TWC). According to the TWC, 94 employees will lose their jobs on the date of the closing of the Chesapeake deal, expected to happen between Feb. 1 and Feb. 14. If the closing date is prior to the date that is 60 days after Dec. 13, 2018, (or prior to Feb. 11), then affected employees that have remained through the closing date will be provided supplemental payment and benefits during the period beginning on the date that immediately follows the closing date and Feb. 11, the letter states. The Houston office of WildHorse will be closed and all layoffs will be permanent. Affected employees will not be able to retain their jobs by displacing or bumping another employee. 

Chevron Capex Highlights Permian -- Chevron Corp. will spend about half its capital budget on projects that yield quick returns over the next three years, underscoring the importance of shale as it prepares for growing uncertainty in how the world consumes energy. The U.S. oil giant will spend about $9 billion to $10 billion a year on “short-cycle investments” through 2022, primarily focused on the Permian Basin, the world’s biggest shale oil region, the San Ramon-based company said in a presentation on its website Friday. The Permian is on course to make up about one in five barrels the super major pumps worldwide. Big Oil was slow to join the U.S. shale boom, focusing on mega offshore projects while watching independent wildcatters work out the technology before dipping their toes in. But now they’re investing heavily, attracted by the ability to ramp up production quickly and potentially reduce it if oil prices crash. That’s a particularly useful trait when the future of oil and gas consumption is unclear, with electric vehicle usage growing and governments clamping down on greenhouse gas emissions. “Most of our assets are competitive when tested against aggressive scenarios” such as the International Energy Agency’s sustainable development model, Chevron said. “Our portfolio is resilient and flexible.” Oil and natural gas production increased by about 7 percent last year compared with a year earlier, Chevron said, in line with analysts’ expectations. The company also said “organic” capital-projects spending exceeded its target by 5 percent in 2018. 

US oil and gas rig count drops 11 to 1127, ninth consecutive week of drops — The US oil and rig count dropped by 11 to 1,127, the ninth consecutive week of decreases as oil prices continued to hover in the low $50s/b, S&P Global Platts Analytics said Thursday.  The losses all came from oil-directed rigs, which fell 11 to 886, while gas-oriented rigs were unchanged at 220, Platts data for the week ended January 16 showed. The typical two- to three-month lag between oil prices and rig activity may have now caught up with the domestic rig count, as oil prices began falling from levels in the mid-$70s/b in October.  Rig counts also fell in most of the eight large domestic marquee plays, although the Permian appeared to be the featured exception in gaining three rigs to 481. The Permian in now down 18 rigs since its recent peak of 499 in mid-November. The Haynesville Shale, chiefly a dry gas play in East Texas and Northwest Louisiana, was up one rig to 63. But the DJ Basin in Colorado was down four rigs to 32, while the Eagle Ford Shale in South Texas and the SCOOP/STACK play in Oklahoma were each down three rigs in the past week to 88 and 103, respectively. The Marcellus Shale, mostly sited in Pennsylvania, was down two rigs to 60, while the Utica Shale largely in Ohio was down one rig to 16. The Eagle Ford has showed the longest streak of rig declines in the last several weeks - a total of 13 from 101 rigs in the first week of December, Cavey said. Prior to October of 2018, all signs pointed towards production growth in the Eagle Ford as WTI crude prices reached their highest since late 2014 at roughly $75/b, he said in a written analysis in Platts' January Southeast/Gulf Oil and Gas Production Monitor. At the same time, shale production in that basin managed to grow a bit, reaching 1.37 million b/d in December 2018, 100,000 b/d higher than the prior year's exit rate. "The half-cycle internal rate of return for a typical well in the Eagle Ford is currently 27%." That means the average producer is making money, but their margins have become increasingly slim with IRRs dropping nearly 33 percentage points since October of last year, he added. "As a result, shale oil production in the Eagle Ford is forecast to remain largely flat and grow merely 32,000 b/d exit-to-exit in 2019,"

US Drops 25 Oil and Gas Rigs This Week - The United States dropped a whopping 21 oil rigs this week, marking the third consecutive week of declines and the biggest drop since early 2016, according to data compiled by Baker Hughes, a GE Company. In addition to the oil rig decline, gas rigs dipped by four. The states who saw the bulk of the declines were Texas and Oklahoma, who lost 11 and 10 rigs, respectively. California lost three rigs, Kansas and Louisiana each lost two and Colorado and Pennsylvania each lost one. The following states all added one rig: Alaska, New Mexico, North Dakota, Ohio, West Virginia and Wyoming. In regard to basins, the Permian saw the deepest declines this week, dropping seven rigs. The Granite Wash dropped three rigs, while the Mississippian lost one. Rig gains included Cana Woodford (five) and the Ardmore Woodford, Eagle Ford, Haynesville and Marcellus all added one rig. This week’s total rig count is 1,050. It’s still 114 higher than the rig count one year ago, which was 936.

US Oil Rig Count Plummets Most In 3 Years After Production Hits Record High - After surging 200k b/d in the last week to a new record for US crude production, Baker Hughes reports that the US oil rig count has plunged by 21 in the last week - the biggest drop since Feb 2016. Is this the turn for the Permian? Perhaps, but, as OilPrice.com's Nick Cuningham notes, while low oil prices are beginning to slow the growth of U.S. shale, in the years ahead oil and gas drilling could be curtailed by a different problem: a shortage of water. Water is a crucial ingredient in the fracking process, and drillers use copious volumes of it. The problem for the U.S. oil industry is that so much of the output growth expected over the next half-decade or so depends very heavily on the Permian basin, where water is increasingly scarce. Water already accounts for about 15 percent of the cost of a shale well, according to analysts at Morgan Stanley. “In the Permian, total spending on water is expected to double over the next 5 years, to $22B, with E&Ps on avg using 50 barrels (bbls) of water for each lateral foot completed,” the investment bank wrote in a new report. “Assuming 10k lateral feet per well, this implies that the ~5,500 existing Permian well permits will require ~2.75 billion bbls of water to complete.”That’s a lot of water in an area that doesn’t have a lot of it. “Given the sizeable water need, we believe drought and water scarcity present long-term risks to shale economics, particularly in the Permian, a core area of growth in a drought-prone region,” Morgan Stanley warned.It’s worth pausing and noting that the warning is not coming from an environmental group, or even a local community organization opposed to a drilling presence. It’s coming from a major Wall Street investment bank, which says that drilling economics in the world’s hottest shale basin could be upended because of water scarcity.It’s a rather ironic development. Greenhouse gas emissions from oil and gas drilling are fueling climate change, which in turn could make the most desirable oil and gas play increasingly costly due to growing water problems.

New U.S. Oil And Gas Drilling To Unleash 1,000 Coal Plants’ Worth Of Pollution By 2050 - HuffPost - Amid mounting calls to phase out fossil fuels in the face of rapidly worsening climate change, the United States is ramping up oil and gas drilling faster than any other country, threatening to add 1,000 coal plants’ worth of planet-warming gases by the middle of the century, according to a report released Wednesday. By 2030, the U.S. is on track to produce 60 percent of the world’s new oil and gas supply, an expansion at least four times larger than in any other country. By 2050, the country’s newly tapped reserves are projected to spew 120 billion metric tons of carbon dioxide emissions into the atmosphere. That would make it nearly impossible to keep global warming within the 2.7 degrees Fahrenheit above pre-industrial averages, beyond which United Nations scientists forecast climate change to be catastrophic, with upward of $54 trillion in damages. The findings ― from a report authored by the nonprofit Oil Change International and endorsed by researchers at more than a dozen environmental groups ― are based on industry projections collected by the data service Rystad Energy and compared with climate models used by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), the world’s leading climate research body. The report casts a new light on the impact of the U.S. fracking boom and calls into question the Trump administration’s stance that China, which surpassed the U.S. as the world’s largest emitter of carbon dioxide in 2007, remains the biggest impediment to halting warming.  Nearly 90 percent of new U.S. oil and gas drilling through 2050 is expected to depend on hydraulic fracturing, or fracking, the controversial technique that blasts bedrock with chemical- and sand-laced water, creating cracks that release previously inaccessible fuels. Upward of 60 percent of the emissions enabled by new U.S. drilling would come from two major fracking hot spots ― the Permian Basin, a massive field stretching from Texas to New Mexico; and the Appalachian Basin, encompassing most of Pennsylvania, West Virginia and Ohio. Continued extraction in the Permian Basin alone would use up 10 percent of the emissions that remain in the entire world’s carbon budget to keep warming within 2.7 degrees Fahrenheit.

Big win for oil and gas industry: Colorado Supreme Court reverses Appeals Court ruling in Martinez case - In a win for the oil and gas industry, the Colorado Supreme Court on Monday reversed a lower court ruling that said the Colorado Oil and Gas Conservation Commission should give more weight to the public health, safety and the environment when considering new drilling. However, the win could turn out to be a lull before the next political face-off that has become more common as drilling has ramped up in the state’s more populous areas. As industry representatives welcomed the court’s decision, saying it upholds the law’s recognition of multiple interests, legislators and Gov. Jared Polis said the ruling highlights the need for changes to better protect the public. “The bottom line is we need to make sure that health and safety are a priority and reform of the (Colorado Oil and Gas Conservation Commission) is a beginning,” said Sen. Mike Foote, D-Lafayette. “We are working on a bill to make sure health and safety are prioritized.” Last week, newly inaugurated Gov. Jared Polis said in his first State of the State address that he would work to give communities more say in how oil and natural gas are developed. Polis has set a goal of moving Colorado’s electric grid to entirely renewable sources by 2040, although he concedes it’s more of an aspirational goal. “While I’m disappointed by today’s ruling, it only highlights the need to work with the legislature and the Colorado Oil & Gas Conservation Commission to more safely develop our state’s natural resources and protect our citizens from harm,” Polis said in a statement.

'Shameful': Colorado Supreme Court Denounced for Siding With Big Oil Profits Over Public Health in Youth-Led Suit -  In a move green groups and youth climate leaders denounced as a gift to the fossil fuel industry at the expense of public health, the Colorado Supreme Court on Monday reversed a lower court decision and ruled that the state's regulators do not have to consider environmental and health impacts before approving new oil and gas projects."We will continue the fight for our Earth and our future, despite the mountains we need to climb and the setbacks that we will overcome. Regardless of the court's decision in our case, the fight will continue." —Emma Bray"It is so disappointing for the youth and the people of Colorado to hear the decision from the Colorado Supreme Court today," said Xiuhtezcatl Martinez, an 18-year-old plaintiff in the youth-led suit against the Colorado Oil and Gas Conservation Commission (COGCC)."To know that the judges in the highest court of my state believe that the interests of the oil and gas industry come before the public health, safety, and welfare of my fellow Coloradans is shameful," Martinez added. "But I want you all to know that this fight for climate justice is far from over. My fellow plaintiffs, youth around the world, and I will continue to stand up for our right to a healthy future." Emma Bray, a 19-year-old plaintiff from Denver, said in a statement the ruling will not stop the growing youth movement for bold climate solutions. "Not a single person, company, or corporation can silence the young generation's voices," Bray declared. "We will continue the fight for our Earth and our future, despite the mountains we need to climb and the setbacks that we will overcome. Regardless of the court's decision in our case, the fight will continue."

With Colorado High Court Setback, Fracking Activists Look To Continue Statehouse Fight - Environmental activists here were dealt a blow Monday when the Colorado Supreme Court ruled against a closely watched case that would have required the state to prioritize health and environmental concerns in oil and gas permitting. But with a newly Democratic legislature and governor in the state promising to take another look at the fracking debate, environmentalists are optimistic that they can pursue a successful strategy in the statehouse. “This decision really validates everything that we’ve been saying, that this state is not prioritizing public health and safety, and that regulations are not sufficient,” said Anne Lee Foster of Colorado Rising, a group opposed to the hydraulic fracturing drilling technique known as fracking. “We’ve shown that this is a real issue impacting Coloradans every day, and we’re going to keep fighting until the end.” “It’s in the hands of the legislators now,” she added. Monday’s decision caps a five-year legal fight brought by six youth activists from Boulder County. The activists, led by Xiuhtezcatl Martinez, filed a petition with the state’s oil and gas regulatory body in 2013 asking that new permits be suspended until a comprehensive scientific study could show that new activity would be safe. When the petition was denied, the activists sued and ultimately won a favorable decision in the Martinez case in the state’s Appeals Court last spring. But Monday’s Supreme Court ruling overturns that interpretation, leaving existing policy in place. The state, the court found, was right to continue to interpret permits by weighing “cost-effectiveness and technical feasibility” against adverse effects on health and the environmental. The case was closely watched along Colorado’s Front Range, where the fracking boom has put wells near playgrounds, parks and schools (Extraction Oil and Gas infamously installed a fracking site just 1,360 feet from the largely minority Bella Romero Academy in Greeley.) Concerns about worsening air quality and health effects, such as increased cancer risks, have led to lawsuits and community actions, including an unsuccessful ballot measure in November to increase well setbacks, requiring that they be located at least 2,500 feet from occupied buildings.

Weld County oil and gas spill report for Jan. 13 - The following spills were reported to the Colorado Oil and Gas Conservation Commission in the past two weeks.  Information is based on Form 19, which operators must fill out detailing the leakage/spill events. Any spill release that may impact waters of the state must be reported as soon as practical.   Spills and leaks typically are found during routine maintenance on existing wells, though some actual “spills” do occur among the 23,000-plus wells in the county.

• • KP KAUFFMAN COMPANY INC, reported Jan. 8 a historical flowline spill in Frederick, near Weld County roads 16 and 15. Less than a barrel each of oil and produced water spilled. Crews found the spill while cleaning a non-reportable release caused by high line pressure in a flowline. Historical contamination is being excavated and disposed of at a landfill.
• • AKA ENERGY GROUP LLC, reported Jan. 7 a gas compressor station spill about 1 mile west of Gilcrest, near Weld roads 42 and 27. Between one and five barrels of condensate and less than a barrel of produced water spilled. A third-party truck driver transferred condensate to the incorrect tank battery, which was already full.  Impacted soil will be disposed of at a landfill.
• • DCP OPERATING COMPANY LP, reported Jan. 7 a pipeline spill about 2 miles north of Fort Lupton, near Weld 20 and U.S. 85. Between one and five barrels of condensate spilled. A six-inch gas gathering pipeline developed a leak.
• • BONANZA CREEK ENERGY OPERATING COMPANY LLC, reported Jan. 4 a historical tank battery spill about 4 miles southeast of Kersey, near Weld roads 44 and 46. More than five barrels of oil spilled. The release was initially reported in 2009, but was never closed. A loadline froze overnight and failed at the production tank, releasing oil into the earthen containment berm. The oil was vacuumed up and the impacted soil was disposed of at a landfill.
• • HIGHPOINT OPERATING CORPORATION,reported Jan. 4 a well spill about 2 miles west of Hereford, near Weld roads 136 and 77. About four and a half barrels of produced water spilled. The liner came loose from the polish rod, spilling produced water to the pad surface..
• • CONFLUENCE DJ LLC, reported Jan. 2 a tank battery spill about 2 miles south of Hudson, near Weld roads 8 and 45. About 260 barrels of oil spilled inside containment. A drain line valve on the back of the oil tank blew out.
• • WHITING OIL & GAS CORPORATION, reported Jan. 2 a tank battery spill about 8 miles northeast of Keota, near Weld roads 110 and 127. About 30 barrels of produced water spilled into lined containment. The cause is being investigated and has been associated with a 4-inch tee on the produced water loadout line.
• • PDC ENERGY INC, reported Dec. 31 a tank battery spill about 6 miles northeast of Kersey, near Weld roads 64 and 61. An unknown amount of oil and between five and 100 barrels of produced water spilled. A water vault valve failure released the produced water and oil inside containment.

Democrat: Keystone XL developer should pay into cleanup fund (AP) — South Dakota lawmakers should require the Keystone XL pipeline’s developer to pay into a state oil spill cleanup fund and impose more regulations on so-called man camps, the state Senate Democratic leader said Friday. Sen. Troy Heinert, a member of the Rosebud Sioux Tribe, said that the state and legislators should sit down with the tribes to hear their concerns. The proposals come a day after Rosebud President Rodney Bordeaux addressed the Legislature, saying the pipeline gives his people great anxiety. “We know that a lot of the resistance is going to come near tribal land,” Heinert said of the pipeline that would go through South Dakota. “Nobody wants violence ... on any side, but nobody wants to be, you know, run over by private security forces either.” The project is being delayed by a federal court that found the Trump Administration didn’t fully consider the environmental effects when it approved the permit for the 1,184-mile (1,900 kilometer) pipeline, intended to ship up to 830,000 barrels a day of Canadian crude through Montana and South Dakota to Nebraska, where it would connect with lines to carry oil to Gulf Coast refineries. A hearing on the proposed pipeline is scheduled for Monday in Montana. Heinert said he would “just as soon see it not built.”

Jury awards Boone County landowner $250,000 in Dakota Access pipeline lawsuit -- A Boone County jury this week awarded a property owner who sued over the construction of an oil pipeline through her property $250,000 following a nearly weeklong trial in which she challenged the pipeline’s use of eminent domain. The jury returned its judgment in the case against Dakota Access on Wednesday, saying the $250,000 was the difference in the “fair and reasonable value of the property,” before it was taken through eminent domain in July 2016, and the value of the property after it was taken. Judith Anne Lamb, as trustee of the Judith Anne Lamb Revocable Trust, filed the lawsuit in 2016 as construction on the pipeline was beginning. Its construction, which was completed in 2017, was the focus of protests from activists across Iowa, including Boone and Story counties. Lamb and her husband, Richard, live in the Iowa City area but own about 150 acres in Boone County, just west of Ames. Telephone messages left for attorneys for Lamb and Dakota Access were not returned. Lamb claimed the construction of the pipeline damaged the land and decreased its value. In court documents, Lamb said that because of a multitude of opportunity for commercial use for the land, an initial evaluation in July 2016 showing the land’s value at just over $90,000, was just a fraction of its actual value. She said the land had a value of about $950,000. At the center of the debate leading up to and during its construction was the use of eminent domain to take land needed to bury the pipeline, with opponents arguing the project didn’t meet the requirement of public benefit to use eminent domain. Opponents also argued the environmental risks associated with its construction and eventual operation were too great, and that the construction of the pipeline would cause long-term damage to valuable farmland.

Permits revoked for 40 idled natural gas wells near Buffalo -- A state regulatory board revoked a company’s permits Thursday for 40 natural gas wells near Buffalo that have been idle for the past seven years while the company has struggled financially. The state Board of Minerals and Environment, a nine-member citizen panel appointed by the governor, took the action during a meeting in Pierre. The board also directed the state Department of Environment and Natural Resources to calculate and make a report at the board’s next meeting on Feb. 21 on the maximum civil penalty that may be assessed against the company, Spyglass Cedar Creek LP, of Houston, Texas. The maximum penalty could be in the millions of dollars. Discussion at the meeting indicated that the board may legally assess penalties of up to $500 per day, starting from the issuance of a notice of violation on July 10, for each regulatory violation at every one of the 40 wells. The violations include unproductive and unplugged wells, inadequate signage, missing reports and logs, missing or inadequate well gauges, and insufficient reclamation at well sites. Board Chairman Rex Hagg, of Rapid City, expressed preliminary support for a maximum penalty. “I think when you look at the record in its entirety on this matter, I don’t think it gets much more egregious, absent some major environmental leak or problem,” Hagg said.

Explosion reported at Watford City salt water disposal site -- Emergency personnel responded to an explosion at an oil field salt water disposal site southeast of Watford City on Thursday. Karolin Jappe, McKenzie County's emergency manager, said there was one man on site at the time of the incident. The man was not injured. The incident, which took place at a White Owl Energy Services site, was reported at 12:15 p.m. Jappe said the cause of the explosion and fire is unknown. "It's unusual to have (fires) at a salt water disposal in the winter," she said. "Usually it's in the summer when lightning hits it. We can have four to five per summer."

North Dakota seeing seasonal dip in oil production - Oil and gas production in North Dakota retreated a bit in November after hitting all-time highs during the previous month. North Dakota, the nation's second-largest oil producing state after Texas, pumped out 1.38 million barrels per day in November, down 1.2 percent from October. Natural gas production fell 1.5 percent in November to 2.52 million MCFs per day. (An MCF is 1,000 cubic feet of gas.) "This is the marginal drop in production I warned people about with winter coming on and lower oil prices," said Lynn Helms, director of North Dakota's Department of Mineral Resources. Oil prices dropped rapidly in November, while the state experienced about 15 days of below-average temperatures and above-average precipitation. Oil production in North Dakota tends to slow somewhat as winter weather sets in. Despite falling oil prices, "the industry remains cautiously optimistic," Helms said. "They have not backed down on the rig count." The number of oil rigs currently operating in North Dakota is 68, up from 67 in December and 64 in November. A rising rig count indicates operators are drilling more new wells. West Texas Intermediate (WTI), the benchmark U.S. crude oil price, hit a nearly four-year high of $76 in October. But oil production rose while fear spread about a weakening global economy, sending WTI below $50 per barrel by the last half of December and into early January. The price has since rallied to $52. North Dakota oil trades at a discount price to WTI and is currently at about $37 a barrel.

Boom Ahead For Pacific Northwest LPG Exports? - LPG export terminals along the Gulf Coast account for more than nine of every 10 barrels of propane and normal butane that are shipped from the U.S. to foreign buyers. That makes perfect sense, given the terminals’ proximity to major NGL production areas like the Permian, the Eagle Ford and SCOOP/STACK, and to the world-class fractionation hub in Mont Belvieu, TX. But, increasingly, LPG terminals on the East and West coasts, are growing in significance. On the Atlantic side, Marcus Hook, near Philadelphia, is enabling more and more volumes of Marcellus/Utica-sourced propane and butane to reach overseas markets. And, as we discuss in today’s blog, West Coast exports are on the rise as well, with Petrogas’s Ferndale terminal in Washington state providing a straight shot across the Pacific to Asia for propane and butane fractionated in Western Canada, plus a good bit more LPG export capacity under development in British Columbia. This is the fourth and final episode in this series on rising LPG export volumes and the race to develop new export terminal capacity to handle still-higher volumes of propane and normal butane — two NGL purity products generally referred to as LPG — into the early 2020s. We set the stage in Part 1, where we noted that the U.S. flipped from being a net importer to a net exporter of LPG in 2012, and that waterborne LPG exports subsequently soared to more than 1.1 MMb/d (in 2018). The vast majority of those volumes — about 92% of last year’s total — are being sent out of the half-dozen LPG terminals in coastal Texas and Louisiana. The rest of the exports-by-ship are flowing through a total of three smaller terminals in the Mid-Atlantic region and Pacific Northwest. We concluded Part 1 with a review of the Gulf Coast’s — and the U.S.’s — largest LPG export facility: the Enterprise Hydrocarbon Terminal (EHT), which is located on the Houston Ship Channel and whose capacity is in the midst of being expanded to 720 Mb/d from the current 545 Mb/d. According to our NGL Voyager report, EHT sent out an average of 447 Mb/d of LPG last year, or about 40% of total U.S. LPG exports by ship.

Art Berman- Exposing The False Promise Of Shale Oil -  (podcast & transcript) Art Berman, geological consultant with over 37 years experience in petroleum exploration and production, returns to the podcast this week to debunk much of the hopium currently surrounding America's shale oil output. Because the US is pinning huge hopes on its shale oil "revolution", so much depends on that story being right. Here’s the narrative right now:

• The US, is the new Saudi Arabia
• It's the swing producer when it comes to influencing the price of oil
• The US will be able to increase oil production for decades to come
• New technology is unlocking more oil shale supply all the time

But what if there’s evidence that runs counter to all of that? We’re going to be taking a little victory lap on this week's podcast because The Wall Street Journal has finally admitted that shale oil wells are not producing as much as the companies operating them touted they would produce -- which is what we’ve been saying for years here at PeakProsperity.com, largely because we closely follow Art's work:The Wall Street Journal did some research and they got the general point that the wells are not as good as advertised.But what they missed is just how much farther off many of these reserves are than even the discounted reserves that they've reported.Bottom line: if the understatement is only 10%, that’s a rounding error and it’s not that much of an issue to the average person. But I've been trying for a decade to get the number that I independently develop to get anywhere close to the published numbers. In most cases, I can only get near 60% or 70% of them. So, the gap, I think is much more substantial.The reason that The Wall Street Journal didn’t get it more right is because they don’t do any independent research and of course they didn’t talk to me, they didn’t talk to Dave Hughes, they didn’t talk to people who actually do the work, and so they’re getting one side of the story.  Click the play button below to listen to Chris' interview with Art Berman (52m:56s).

'Realistic' new model points the way to more efficient and profitable fracking - A new computational model could potentially boost efficiencies and profits in natural gas production by better predicting previously hidden fracture mechanics. It also accurately accounts for the known amounts of gas released during the process. “Our model is far more realistic than current models and software used in the industry,” said Zdeněk Bažant, Professor of Civil and Environmental Engineering, Mechanical Engineering, and Materials Science and Engineering at Northwestern’s McCormick School of Engineering. “This model could help the industry increase efficiency, decrease cost, and become more profitable.”  Despite the industry’s growth, much of the fracking process remains mysterious. Because fracking happens deep underground, researchers cannot observe the fracture mechanism of how the gas is released from the shale. “This work offers improved predictive capability that enables better control of production while reducing the environmental footprint by using less fracturing fluid,” said Hari Viswanathan, computational geoscientist at Los Alamos National Laboratory. “It should make it possible to optimize various parameters such as pumping rates and cycles, changes of fracturing fluid properties such as viscosity, etc. This could lead to a greater percentage of gas extraction from the deep shale strata, which currently stands at about 5 percent and rarely exceeds 15 percent.”

US oil output to average 12 million bopd in 2019 - U.S. crude oil production will average 12.1 million barrels per day (MMbpd) in 2019 and 12.9 MMbpd in 2020, with most of the growth coming from the Permian region of Texas and New Mexico. That’s according to the U.S. Energy Information Administration’s (EIA) latest short-term energy outlook, which estimates that U.S. crude oil production averaged 10.9 MMbpd in 2018. The EIA’s latest outlook forecasts that U.S. dry natural gas production will average 90.2 billion cubic feet per day (Bcf/d) this year and 92.2 Bcf/d in 2020, with increases in the Appalachia and Permian regions “driv[ing] the forecast growth”. U.S. dry natural gas production averaged 83.3 Bcf/d in 2018, the EIA highlighted.  U.S. crude oil and petroleum product net imports are estimated to have fallen from an average of 3.8 MMbpd in 2017 to an average of 2.4 MMbpd in 2018, according to the EIA’s January outlook. The organization forecasts that net imports will continue to fall to an average of 1.1 MMbpd in 2019 and to less than 0.1 MMbpd in 2020. In the fourth quarter of 2020, the EIA forecasts the United States will be a net exporter of crude oil and petroleum products, by about 0.9 MMbpd.

Surging oil output will push US towards energy independence in 2020, Dept of Energy says - The U.S. will make major strides towards energy independence in the next two years as oil production and exports hit new highs, according to the Department of Energy. U.S. oil production, already at an all-time high this year, will increase by another 2 million barrels per day by 2020, the agency's statistics bureau projects. The same year, the nation will start exporting more crude oil and fuel than it imports, the Energy Information Administration said in in its latest forecast. American drillers pumped an average 10.9 million bpd in 2018, breaking the record going back to 1970. EIA sees U.S. output averaging 12.1 million bpd this year and 12.9 million bpd in 2020. "According to the January outlook, the Permian region of Texas and New Mexico will continue to push U.S. production into record territory over the next 24 months, approaching 13 million barrels per day some time in 2020," EIA Administrator Linda Capuano said in a statement. Most of the growth is coming from shale fields like the Permian, where frackers use advanced drilling methods known as hydraulic fracturing to free oil and natural gas from rock formations. The surge in U.S. production is making the country less reliant on foreign oil. In 2018, net imports of oil and petroleum products fell from 3.8 million bpd to 2.4 million bpd. EIA forecasts net imports will dwindle to 1.1 million bpd next year and just 100,000 bpd in 2020. In the final three months of 2020, EIA thinks the U.S. will become a net exporter by about 900,000 bpd. The U.S. already ships out more natural gas than it imports. Next year, gas production will jump another 8 percent to a new all-time high at 90.2 billion cubic feet per day, EIA projects. Growth in 2020 is seen slowing, with gas output hitting 92.2 Bcf per day. By 2020, EIA thinks natural gas will generate 37 percent of the country's electric power, up from 35 percent last year. Meanwhile, coal's share of electric power generation will slip from 28 percent to 24 percent during the same period. That will help contribute to a further drop in U.S. coal production.

STEO highlights: US oil output to hit 13 million b/d in 2020 despite slower growth - — US oil production is on track to hit 12 million b/d in March and 13 million b/d in October 2020, but the growth rate will slow considerably from recent levels in response to lower forecast WTI prices and ongoing Permian pipeline constraints, the Energy Information Administration said Tuesday. EIA expects the spread between WTI-Cushing and Midland wellhead prices to widen this year, which will slow drilling activity growth in Texas and New Mexico, but that growth will start to accelerate on a monthly basis into 2020 after new pipeline capacity comes online later this year. US oil production is forecast to average 12.07 million b/d in 2019 and 12.86 million b/d in 2020, EIA said in its monthly Short-Term Energy Outlook, which included 2020 projections for the first time. EIA said the US produced 11.8 million b/d in December, a staggering 1.76 million b/d increase from December 2017. US output averaged 10.93 million b/d in 2018.The US will become a net oil exporter in Q4 2020, EIA said, with total exports of crude and refined products exceeding total imports by 870,000 b/d.Other highlights of the Short-Term Energy Outlook:

• ** EIA forecast Brent crude prices to average $60.52/b in 2019 and $64.76/b in 2020, down from the 2018 average of $71.19/b.
• ** WTI crude is forecast to average $54.19/b this year and $60.76/b in 2020, down from $65.06/b in 2018.
• ** Global oil markets will be relatively balanced in 2019-20 as US output growth more than offsets declines from the OPEC-led output cuts, EIA said.
• ** Permian production will account for 600,000 b/d of total US growth in 2019 and 500,000 b/d in 2020, EIA said. It sees Permian output hitting 4.8 million b/d by end-2020, about 1 million b/d higher than in December 2018.
• ** EIA expects Bakken output to rise to 1.4 million b/d in 2019 and 1.5 million b/d in 2020, as growing natural gas takeaway constraints slow growth. The Bakken produced about 1.3 million b/d in 2018.
• ** Eagle Ford output is forecast to rise by 90,000 b/d to 1.4 million b/d in 2019 and then fall slightly in 2020.
• ** US offshore oil production is expected to average 1.9 million b/d in 2019 and 2.2 million b/d in 2020, up from 1.7 million b/d in 2018, when 11 new projects came online. This year, EIA expects six new projects to start, followed by another 12 in 2020.
• ** Alaska's production is expected to remain flat at 490,000 b/d in 2019 and 2020.

US will 'reinforce its leadership' as the world's top crude producer in 2019, IEA says - The level of crude output from the U.S. will once again be a major factor this year, the International Energy Agency (IEA) said its closely-watched report on Friday, with the energy giant on track to reaffirm its position as the world's leading crude producer. The IEA report comes shortly after OPEC and non-OPEC producers officially implemented a fresh round of supply cuts. Alongside Russia and nine other nations, top oil exporter Saudi Arabia struck a deal with the rest of OPEC in December to keep 1.2 million barrels per day (b/d) off the market from the start of January. "While the other two giants voluntarily cut output, the U.S., already the biggest liquids supplier, will reinforce its leadership as the world's number one crude producer," the Paris-based IEA said Friday. "By the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia." International benchmark Brent crude traded at around $61.69 Friday morning, up 0.8 percent, while U.S. West Texas Intermediate (WTI) stood at $52.56, almost 1 percent higher. Brent crude has fallen almost 30 percent since climbing to a peak of $86.29 in early October last year, while WTI is down more than 31 percent over the same period. The collapse in oil prices was exacerbated by concerns about oversupply, as well as a stock market slump amid worries over rising U.S. interest rates. That prompted OPEC and non-OPEC producers to throttle back output at the start of 2019, in an effort to try to put a floor under falling oil prices. The IEA has previously touted the "growing influence" of the U.S. in global oil markets, saying such a dramatic rise in crude output could soon challenge the market share of OPEC kingpin Saudi Arabia and non-OPEC heavyweight Russia. U.S. crude production has soared in recent months, rising by more than 2 million b/d to an unprecedented 11.9 million b/d. The IEA said Friday that its estimates for global oil demand growth in 2018 and 2019 remained unchanged at 1.3 million b/d and 1.4 million b/d, respectively. The group said the impact of higher oil prices in 2018 was "fading," which should help to offset cooling economic growth over the coming months.

The US oil boom is only getting started - Remember that brief moment in late 2018 when the U.S. became a net exporter of crude oil and petroleum products combined? It was just a preview of what's to come late next year, according to the Energy Information Administration'sfirst detailed 2020 market forecast. "EIA forecasts that net imports will continue to fall to an average of 1.1 million [barrels per day] in 2019, and to less than 0.1 million b/d in 2020," per EIA's outlook published Tuesday.  "In the fourth quarter of 2020, EIA forecasts the United States will be a net exporter of crude oil and petroleum products, by about 0.9 million b/d," they found.   That factoid is a sign of the country's re-emergence as a global oil powerhouse and increasingly prominent exporter as domestic production has surged. Crude oil production is already at record levels of roughly 11.5 million barrels per day and climbing. EIA sees U.S. crude output averaging 12.1 million daily barrels this year and 12.9million in 2020, cracking the 13 million mark late in the year.  "Steady growth from non-OPEC countries, including the United States, headlines the forecast for global crude oil production through 2020. We expect the United States to remain the world’s largest producer," EIA administrator Linda Capuano said in a statement alongside the the report.   Here is where I'm contractually obligated to note that the U.S. will still remain very tethered to the whims of global markets, and net exports doesn't — and, logistically, shouldn't — mean the country won't still import lots of crude.

Feature: Europe to see big rise in US crude oil imports in Feb — The volume of US crude oil arriving into Europe, which has been rising of late, will pick up sharply in February, pressuring values for North Sea and Mediterranean grades. "There are a lot of US barrels coming over and landing in February, more than [has been seen in the past couple of months] due to Asia not pulling as much in the near future due to turnarounds," a crude trader said. "It is going to massively affect the balance of crude and affect North Sea and Urals." Trading and shipping sources estimated that 800,000-850,000 b/d of US crude will arrive into Europe in February, with the majority headed to Northwest European refineries, although a sizeable volume will go to Mediterranean destinations. While the main crude grade continued to be light, sweet WTI Midland, sources said naphtha-rich Eagle Ford and medium sour Mars have also been offered to refineries. Earlier this month, three VLCCs were said by sources to have been placed on subjects to ship US crude to Europe. US crude rarely moves to Europe in VLCCs, and the trend only started on December 24 when the VLCC Olympic Lady left Corpus Christi Lightering for Rotterdam. Indeed, European refiners typically prefer Aframax-size cargoes and, to a certain extent, Suezmaxes which offer more flexibility than the larger VLCCs. The Brent-WTI spread -- assessed at $8.55/b at the London close Wednesday-- has been less of a factor as it has largely remained within an $8.00-$10.50/b range since early September, S&P Global Platts data showed.   Platts assessed the route at Worldscale 115 Wednesday, down from a peak at w192.50 late last year. The arrival of US crude has affected Kazakhstan's CPC Blend and Russia's Urals crude, which have started to see an impact on demand for February cargoes, trading sources said. In Northwest Europe, medium sour Urals -- which differs in quality from most of the US grades, with WTI Midland not considered as a direct competitor -- has remained near multi-year highs even as the fuel oil crack has lost some of its previous strength, leading some refineries to consider running a sweeter crude slate. Meanwhile, CPC Blend in the Mediterranean has been facing headwinds from the Turkish straits delays, traders said. With US cargoes not facing those issues, some buyers have increased their US crude intake in February. As a result, CPC Blend will likely command lower prices in February. Urals in Northwest Europe was assessed at a 15.5 cents/b premium to the Mediterranean Dated strip Wednesday, while CPC Blend was assessed at a 70 cents/b discount to the Mediterranean Dated strip. In the North Sea, barrels clearing to the East were helping make space for US barrels, traders said. "It seems an armada of crude is coming in in February and March from the US," a source said.

Changes in marine fuel sulfur limits will put temporary upward pressure on diesel margins - The January 2019 Short-Term Energy Outlook (STEO), released at noon today, for the first time includes analysis of the effect that upcoming changes to marine fuel sulfur specifications will have on crude oil and petroleum product markets. Beginning January 1, 2020, the International Maritime Organization’s (IMO) new regulations limit the sulfur content in marine fuels used by ocean-going vessels to 0.5% by volume, a reduction from the previous limit of 3.5%. The change in fuel specification is expected to put upward pressure on diesel margins and modest upward pressure on crude oil prices in late 2019 and early 2020. EIA’s analysis indicates that the price effects that result from implementing this new standard will be most acute in 2020 and will diminish over time.  Residual oil—the long-chain hydrocarbons remaining after lighter and shorter hydrocarbons such as gasoline and diesel have been separated from crude oil—currently comprises the largest component of marine fuels used by large ocean-going vessels, also known as bunker fuel. Marine vessels account for about 4% of global oil demand.  Removing sulfur from residual oils or upgrading them to more valuable lighter products such as diesel and gasoline can be an expensive and capital-intensive process. Refineries have two options with regard to residual oils: invest in more downstream units to upgrade residual oils into more valuable products or process lighter and sweeter crude oils in order to minimize the production of residual oils and the sulfur content therein. EIA forecasts that the implementation of the new IMO fuel specification will widen discounts between light-sweet crude oil and heavy-sour crude oil, while also widening the price spreads between high- and low-sulfur petroleum products. In the January STEO forecast, Brent crude oil spot prices increase from an average of $61 per barrel (b) in 2019 to $65/b in 2020 with about $2.50/b of this increase being attributable to higher demand for light-sweet crude oils priced off of Brent.  The expected increased premium on low sulfur fuels will likely mean higher diesel fuel refining margins, which EIA forecasts will increase from an average of 43 cents per gallon (gal) in 2018 to 48 cents/gal in 2019 and 65 cents/gal in 2020. Motor gasoline margins averaged 28 cents/gal in 2018 and are expected to increase slightly to an average of 29 cents/gal in 2019 and 33 cents/gal in 2020.

The Shale Oil Revolution Actually Reflects A Nation In Decline – Chris Martenson - Here in the opening month of 2019, as the US consumes itself with hot debate over a border wall, far more important topics are being ignored completely.Take US energy policy. In the US press and political circles, there’s nothing but crickets sounding when it comes to serious analysis or any sort of sustainable long-term plan.Once you understand the role of energy in everything, you can begin to appreciate why there's simply nothing more important to get right.Energy is at the root of everything. If you have sufficient energy, anything is possible. But without it, everything grinds to a halt.For several decades now the US has been getting its energy policy very badly wrong.  It's so short-sighted, and rely so heavily on techno-optimism, that it barely deserves to be called a 'policy' at all. Which is why we predict that in the not-too-distant future, this failure to plan will attack like a hungry wolfpack to bite down hard on the US economy’s hamstrings and drag it to the ground. America's energy policy blunders are nowhere more obvious than in the shale oil space, where it's finally dawning on folks that these wells are going to produce a lot less than advertised.Vindicating our own reports -- which drew from the excellent work of Art Berman, David Hughes and Enno Peters’ excellent website -- the WSJ finally ran the numbers and discovered that shale wells are not producing nearly as much oil as the operators had claimed they were going to produce:Fracking’s Secret Problem—Oil Wells Aren’t Producing as Much as Forecast: Thousands of shale wells drilled in the last five years are pumping less oil and gas than their owners forecast to investors, raising questions about the strength and profitability of the fracking boom that turned the U.S. into an oil superpower.(Source) The main conclusion of this analysis is that US shale producers have overstated their well output by 10% collectively. And as much as 50% for certain individual companies. These numbers are easy to collect and analyze. While it’s a great thing to finally have the WSJ show up here, many years later than the independent analysts cited above, they still didn't get close to the actual truth. In actuality, the shale plays are going to produce roughly half of what is currently claimed by shale operators.  Instead of a -10% collective hit to production, we should be ready for something closer to -50%. Not only does that “raise questions” about the role of the U.S. as an oil superpower, it ought to raise alarm bells about its entire energy strategy.

Trump administration expands oil drilling despite shutdown - Three weeks into the longest US government shutdown in history, many important government services have been paused – but the Trump administration has continued efforts to expand oil drilling. Despite the shutdown directive, which has seen national park staff furloughed and the parks suffering from neglect, the interior department has continued processing oil drilling permits and applications. It has also moved forward with a controversial plan to increase drilling in the Arctic National Wildlife Refuge and the National Petroleum Reserve-Alaska (NPR-A).  According to a “contingency plan” for an interior department agency, the Bureau of Land Management, approved last year, employees exempt from furloughs include those “working on selected energy, minerals and other associated permit activities for which the bureau charges a processing fee”.As a result, workers in New Mexico and Wyoming have continued to process oil and gas drilling applications.In Alaska, the Trump administration is rolling out a contentious plan to overwrite Obama-era protections and expand the oil and gas leasing in two controversial areas, the wildlife refuge and the NPR-A. Since the shutdown began, the interior department moved forward with previously scheduled public meetings to educate stakeholders and provide opportunities for comment and discussion.  Conversely, the same type of meetings scheduled by the department for an 800-megawatt wind farm project being built off the coast of Massachusetts, were canceled. Oversight officials have begun to investigate the agency. “Asking people to comment on two major development processes in the Arctic with huge potential environmental and human consequences without anyone in the agency able to answer questions defeats the purpose of the public participation process,” chairman of the House Committee on Natural Resources, Raúl M Grijalva wrote in a letter to the acting secretary of the interior, David Benhardt on 7 January. He added that the move gave “the strong impression that BLM is simply trying to check the boxes and end the comment periods as soon as possible, not engage in a meaningful dialogue with impacted communities or stakeholders”.

Alaska regulators review BP wells after oil, gas leak — State oil and gas regulators are reviewing the mechanical integrity of BP wells in northern Alaska after a well released gas and a small amount of oil in a manner that appears similar to a 2017 leak, officials said. The leak at the well on the North Slope began Dec. 6 and was stopped after two full days, BP in Alaska spokeswoman Megan Baldino told the Anchorage Daily News. "BP immediately reported the incident in accordance with state and federal laws," Baldino said. No one was injured, and BP is investigating the spill, Baldino said. The spilled oil was confined to the immediate well-house area and did not impact tundra, she said.  The well apparently rose suddenly, or "jacked up," said Tom DeRuyter, on-scene coordinator for the state Department of Environmental Conservation. Equipment on top of the wellhead hit the top of the well house, damaging a valve seal and causing the leak, he said. The oil and gas release last month appears to be a "failure event" similar to the uncontrolled release of well fluids in 2017, said Hollis French, chair of the Alaska Oil and Gas Conservation Commission, in a letter to Janet Weiss, head of BP in Alaska. In April 2017, a wellhead and valve assembly jacked up, striking the roof of the well house and causing an oil and gas release, DeRuyter said.

Alaska officials probing BP oil, gas wells at Prudhoe Bay after spill (Reuters) - Regulators in the U.S. state of Alaska will investigate all of the oil and natural gas wells operated by BP Plc at its Prudhoe Bay oil field after the release of a small amount of crude oil and gas from a well that had earlier been shut. The Alaska Oil and Gas Conservation Commission (AOGCC) has scheduled a Feb. 7 hearing “to assess the mechanical integrity of Prudhoe Bay wells operated by BP Exploration (Alaska), Inc.,” the agency said in a notice issued on Friday. Last month’s leak occurred at one of 14 wells that BP had shut in 2017 following a much bigger release oil and gas then. The most recent failure, detected on Dec. 7, released natural gas and about two gallons of crude oil, said Megan Baldino, spokeswoman for BP Exploration (Alaska) Inc. The gas release was brought under control two days later, she said. There was no oil released to the tundra and no one was injured, she said. There are 1,780 Prudhoe Bay wells, said Baldino, adding that the company is cooperating with the AOGCC’s investigation. “BP is investigating the incident to determine the cause. We are cooperating with AOGCC’s request for more information,” she said in an email on Monday. The earlier failure, in April 2017, caused crude oil to spray over a roughly 1 acre (0.4 hectare) area and caused natural gas to vent for days before it was brought under control. That well failure was linked to permafrost thaw. The normally frozen soil thawed, triggering movement that pushed the well up 3 to 4 feet (1.2 meters), breaking a pressure gauge that previously regulated the site, according to regulators. That sparked a North Slope-wide well review ordered by the AOGCC. In the end, BP identified and shut the 14 wells that because of an outdated and flawed design. In the aftermath of that incident, AOGCC officials concluded that the permafrost thaw was the result of the wells’ design flaw, not to climate change.

Snow removal equipment strikes pipe, causes spill in village (AP) — A heavy equipment operator plowing snow in a Yukon River village struck a fuel pipe that spilled diesel. The Fairbanks Daily News-Miner reports an estimated 3,000 gallons (11,356 liters) of diesel hit the ground in the village of Beaver. The spill is about the volume of 10 pickup truck bed tanks. The Alaska Department of Environmental Conservation says the village drinking water well and the Yukon River are about 600 feet (183 meters) from the spill area. The spill was discovered Tuesday at the Beaver Cruikshank School tank farm, a fuel oil storage facility. The Yukon Flats School District is listed as the party responsible for the spill. State environmental staff made plans to travel to the site Friday. Beaver is 110 miles (177 kilometers) north of Fairbanks.

Woman in iconic anti-fracking photo calls it a 'middle finger' to the industry -  When Amanda Polchies decided to go to an anti-fracking protest near Rexton, N.B., in 2013, she didn't expect to become the subject of an image that would be seen around the world. Polchies said when she arrived, she saw elders being pepper-sprayed and handcuffed. She rushed to the front of the protest lines, standing beside a line of women just a few feet away from a line of police officers. "None of these people had weapons and they were treated like criminals," Polchies said. At the time, RCMP spokeswoman Const. Jullie Rogers-Marsh said that no rubber bullets were used but that RCMP members used "sock rounds" — also known as bean bag rounds, which are a type of non-lethal ammunition — on two occasions during the clash in an attempt to defuse the situation. As the line of RCMP officers advanced, Polchies got to her knees and prayed, holding up a single eagle feather. "I was scared," Polchies said. She recalled being worried she would get hurt, but also remembered feeling bold and defiant. "Holding that feather was kind of like a middle finger, really," she said. "It made me feel good and proud … and that there was nothing they could do about it." A photo of that moment, taken by Inuk journalist Ossie Michelin, was part of a national exhibit at the Canadian Museum for Human Rights in Winnipeg. Polchies said as she closed her eyes and prayed, she couldn't see what was happening She was joined on the ground by a group of women who sat next to her and prayed. As police drew closer, they ordered the women to move back. Some got up, but Polchies and one other woman stayed. After some time passed, Polchies opened her eyes to see no police in front of her, but moments later a couple of police officers rushed to arrest Polchies and the other woman beside her. "I got pushed on the ground and my head shoved into the cement," she said. "He just pushed me over and left me there and zip-tied my hands behind my back." She didn't know anyone took any photos until the next day — but even then, it wasn't clear the photo would become so symbolic of the struggle between Indigenous sovereignty and natural resource development.

Another Crucial Canadian Pipeline Runs Into Trouble - Late last year, Royal Dutch Shell gave the greenlight to a massive LNG export terminal on Canada’s Pacific Coast, one of the largest investments in LNG in years. But like other fossil fuel projects in Canada, the plans have run into some trouble.  Shell’s LNG Canada project hinges on a crucial pipeline that will connect gas fields along the border of British Columbia and Alberta to the Pacific coast at Kitimat. The Coastal GasLink pipeline is to be constructed by TransCanada (or, rather TC Energy, as the company now wants to be known). The Coastal GasLink pipeline was supposed to mark a departure from previous long distance pipelines in Canada – a project that would, from the start, adequately consult with First Nations. Prior pipeline projects – Enbridge’s Northern Gateway and Line 3; TransCanada’s Energy East; as well as Kinder Morgan’s Trans Mountain Expansion – ran into stiff resistance from various First Nations. TransCanada hoped that Coastal GasLink would be different. But, it too is now meeting resistance. Members of the Wet’suwet’en nation threw up makeshift barricades to stop construction on their land in recent weeks. On January 7, the Royal Canadian Mounted Police broke through those barricades and arrested at least 14 people. RCMP said it was enforcing a court order, but the clash made national and international headlines.   The situation is complex because the Wet’suwet’en nation never signed a treaty with Canada, so their territory is neither ceded nor even formally acknowledged by Canada. “What I see is a long history of the Canadian government doing its best to avoid acknowledging the existence of other systems of government,” Gordon Christie, a scholar of indigenous law at the University of British Columbia, told The Guardian. TransCanada inked agreements with elected officials from First Nations tribes along the route, the company maintains that it has conducted extensive consultation with First Nations. But at least five Wet’suwet’en chiefs oppose the project.

9 Things You Need to Know About the Pipeline Blockade in B.C.- The Unist'ot'en blockade is on a forest service road about 120 kilometers southwest of Smithers in Unist'ot'en territory at the Morice River Bridge. Two natural gas pipelines are to cross the bridge to serve LNG terminals in Kitimat. Unist'ot'en is a clan within the Wet'suwet'en Nation.  Wet'suwet'en hereditary chiefs claim title to the land, based on their pre-Confederation occupation and the fact that they've never signed a treaty. Their claim has not been proven in court.  The gated checkpoint is meant to control access to their traditional territory. A protocol for entry, based on principles of free, prior and informed consent, is publicly available. While the first checkpoint was built by the Unist'ot'en clan, all the hereditary chiefs of the Wet'suwet'en Nation have affirmed that their consent is required prior to any development.  TransCanada's Coastal GasLink pipeline will carry natural gas from Dawson Creek to Kitimat. It's in the early construction phase. The proposed Pacific Trail pipeline, run by Chevron, proposes to transport natural gas from Summit Lake to Kitimat for conversion to LNG. This pipeline received an environmental assessment certificate, but the investment agreement has yet to be finalized. The Unist'ot'en Camp was established on April 1, 2009. Since then, annual work camps have added a cabin, healing lodge, pit house and bunkhouse for visitors. The camp is used year-round for healing retreats, culture camps and living. Coastal GasLink applied for an injunction in November 2018 because workers have been unable to cross the checkpoint to start clearing the pipeline route. The B.C. Supreme Court issued a temporary injunction in December, prohibiting anyone from blocking the bridge.  It's in the news now because not only did Unist'ot'en camp refuse to take down the checkpoint, but their neighboring clan, Gidimt'en, established a second checkpoint. (The injunction was expanded on Jan. 4 to include that checkpoint.) Throngs of people are traveling to join the camp in solidarity, and on Jan. 7 the Royal Canadian Mounted Police mobilized to enforce the injunction. Rallies were planned in more than 30 cities around the world.. On Jan. 7, RCMP tactical teams began to dismantle the Gidimt'en checkpoint. On the evening of Jan. 9, RCMP reported 14 arrests of people who refused to comply with the court order. The individuals were taken to Houston, B.C.  By the night of Jan. 7 the RCMP had breached the Gidimt'en blockade but had not reached the Unist'ot'en blockade or camp.

Canada's Crude Oil Production Cuts Are Unsustainable - In an attempt to combat a ballooning oil glut and dramatically plummeting prices, the premier of Alberta Rachel Notley introduced an unprecedented measure at the beginning of December when she is mandating that oil companies in her province cut production. This directive was particularly surprising in the context of Canada’s free market economy, where oil production is rarely so directly regulated. Canada’s recent oil glut woes are not due to a lack of demand, but rather a severe lack of pipeline infrastructure. There is plenty of demand, and more than enough supply, but no way to get the oil flowing where it needs to go. Canada’s pipelines are running at maximum capacity, storage facilities are filled to bursting, and the pipeline bottleneck has only continued to worsen. Now, in an effort to alleviate the struggling industry, Alberta’s oil production has been cut 8.7 percent according to the mandate set by the province’s government under Rachel Notley with the objective of cutting out around 325,000 barrels per day from the Canadian market.Even before the government stepped in, some private oil companies had already self-imposed production caps in order to combat the ever-expanding glut and bottomed-out oil prices. Cenovus Energy, Canadian Natural Resource, Devon Energy, Athabasca Oil, and others announced curtailments that totaled around 140,000 barrels a day and Cenovus Energy, one of Canada’s major producers, even went so far as to plead with the government to impose production caps late last year. So far, the government-imposed productive caps have been extremely successful. In October Canadian oil prices were so depressed that the Canadian benchmark oil Western Canadian Select (WCS) was trading at a whopping $50 per barrel less than United States benchmark oil West Texas Intermediate (WTI). now, in the wake of production cuts, the price gap between WCS and WTI has diminished by a dramatic margin to a difference of just under $13 per barrel.

Heavy Crude: From Glut To Shortage -Just a few months ago Canadian heavy crude oil producers were sending their product to storage amid a painfully deep price discount to West Texas Intermediate that ate into their margins. Chinese refiners took advantage of the cheap Canadian crude and stocked up as well while it was cheap. Now, some are worrying about a shortage of heavy crude that would interfere with the operations of Gulf Coast refineries that process more than 50 percent of the world’s heavy crude oil.Bloomberg reports some heavy crude grades such as Heavy Louisiana Sweet are already trading at a premium to lighter and typically more expensive grades because of this concern, which seems like it has further to grow. Others are shrinking their discount to Brent and WTI.In December, Alberta’s Premier Rachel Notley ordered a crude oil production cut in the province of 325,000 bpd to clear up stockpiles and prop up the price of the local benchmark. This worked even before the cuts entered into effect, which was at the beginning of this month, but it also coincided with OPEC’s latest production cut agreement. More notably, it coincided with Saudi Arabia’s early production cut start. “Historically, when the Saudis have cut output, it’s heavy and medium crude,” a senior analyst from consultancy Turner Mason & Co. told Bloomberg’s Robert Tuttle and Sheela Toben. This means lower heavy crude production in Canada has combined with the consistent decline in Venezuelan oil output, unlikely to be reversed in the observable future, and now with expected lower heavy and medium crude production from Saudi Arabia. No wonder prices are spiking.

Canadian Oil Grades Weaken-- Prices for Canadian oil fell relative to U.S. futures as Alberta Premier Rachel Notley expressed hope her government would be able to back off mandatory production curtailments in April. Heavy Western Canadian Select’s discount to West Texas Intermediate futures grew for a second day, widening 35 cents to $7.85 a barrel, according to data compiled by Bloomberg. Edmonton Mixed Sweet’s discount widened 75 cents to $3.25 a barrel and synthetic crude, a light oil produced in an upgrader from oil sands bitumen, traded at a 15 cent discount to futures versus a 60 cent premium Monday. The original plan was to "take the foot off the gas, as it were, on the curtailment as we move out of winter production into April," Notley told reporters in Calgary Tuesday. "We are still hopeful" that plan can be followed, she said. Prices surged in December after the Alberta government announced that oil producers in the province would together have to cut output by 325,000 barrels a day starting this month and then extending the same volume of cuts into February. The curtailments were announced to alleviate a local glut caused by rising production meeting a shortage of export pipelines. Western Canadian Select’s discount to futures shrank to $6.95 a barrel last Friday, the narrowest in almost 10 years, from as wide as $50 a barrel in October, the widest in at least 10 years.

Mexico City pipeline hit by 'sabotage' amid crackdown on fuel theft  (Reuters) - A major fuel pipeline that supplies Mexico City remained closed after two ruptures in a single day, the president said on Friday, as the government works to stem shortages that have frustrated motorists and triggered economic risks.  President Andres Manuel Lopez Obrador’s offensive against fuel robbers marks the leftist’s first attempt to tackle entrenched corruption since taking office on Dec. 1. Criminal groups have tapped pipelines and stolen tanker trucks carrying diesel and gasoline in the oil-producing country for years, costing the government billions of dollars. The government will assign 8,300 police and 1,400 security vehicles over the next 48 hours to safeguard fuel trucks so they can deliver to gas stations, said Mexico’s National Chamber of Freight Transport (CANACAR). A key pipeline running from the port of Tuxpan in the Gulf coast state of Veracruz to Mexico City was shut down on Thursday night and repairs were underway, Lopez Obrador said on Friday. The pipeline was hit at daybreak on Thursday and repaired, only to suffer another rupture at 11 p.m., he said. “There’s sabotage,” he said. “Let’s see who gets tired first.” The series of disruptions to the pipeline in recent days had caused shortfalls in supply for Mexico City and surrounding states. Cars lined up by the dozen at stations throughout the capital on Friday, many before dawn, fearing that the shortages that fanned into the megacity this week from nearby states could persist. Local television showed angry protesters blocking a major roadway in Mexico City’s Iztapalapa neighborhood. The head of Mexico’s central bank said on Thursday that the economy and inflation rate could be negatively affected if fuel distribution problems persist.

'Zero coordination': Mexico's war on fuel theft risks economic chaos (Reuters) - Conceived as a bold plan to attack corruption, a crackdown by Mexico’s new president on rampant fuel theft has turned into a battle to prevent economic chaos after state governments, businesses and consumers were caught out by the decision. Eager to purge a prominent stain on Mexico’s reputation, President Andres Manuel Lopez Obrador on Dec. 27 unveiled a plan to increase military protection of oil installations and began cutting supply from pipelines that have been bled for years by thieves. So far, the result has been more than a week of severe fuel shortages, shuttered gas stations and lines of motorists snaking around city blocks waiting hours to fill their tanks. The 65-year-old leftist, who took office on Dec. 1, will score a major victory if he can eradicate the parallel fuel distribution network which the government says has been run largely with the connivance of corrupt employees inside state oil firm Pemex [PEMX.UL]. Last year alone, the theft was worth $3 billion, according to government figures. But the pipeline shutdowns, which Lopez Obrador says were drawn up in his early morning security cabinet meetings during December, blindsided Mexicans when gas stations started to run dry in some of the country’s largest cities. Officials in three affected states told Reuters they were not warned in advance about the supply cuts. “There was zero coordination,” said Alejandro Guzman, head of economic development in the government of Jalisco, home to the country’s second-biggest city, Guadalajara. “We started to notice when the gas stations began closing.” He estimated only a quarter of gas stations in the western half of Guadalajara had fuel during the past week. Still, once the shortages became apparent, Pemex’s new management started to work well with the state to try to address the problem, he said.

Mexican pipeline explosion kills at least 20- At least 20 people were killed and 54 were injured on Friday when a pipeline ruptured by suspected fuel thieves exploded in central Mexico as dozens of people tried to fill up containers, state and federal authorities said. Mexican television footage showed flames leaping into the night sky in the municipality of Tlahuelilpan, in Hidalgo state north of Mexico City, as people shouted and cried for help. “The preliminary report I’ve been passed is very serious, they’re telling me 20 people have died, charred,” Hidalgo’s Governor Omar Fayad told Mexican television. Images published on broadcaster Televisa showed people with severe burns from the blast as the government sent in ambulances and doctors to treat the victims. Mexican President Andres Manuel Lopez Obrador has launched a major crackdown on rampant fuel theft, which the government said cost the country more than $3 billion last year. Governor Fayad said there were 71 people injured in the blast, one of the worst in recent history in a country that has suffered hundreds of illegal ruptures to its network of oil and gas pipelines. “I urge the entire population not to be complicit in fuel theft,” Fayad said on Twitter. “Apart from being illegal, it puts your life and those of your families at risk.” The fire had yet to be extinguished, he said. The ruptured pipeline was near the Tula refinery of state oil firm Petroleos Mexicanos (Pemex), which in a statement blamed the incident on an illegal tap. Separate television footage showed the pipeline gushing a fountain of fuel earlier in the day and dozens of people at the site trying to fill buckets and plastic containers. 

At least 66 people killed, dozens injured in Mexico gasoline pipeline explosion – At least 66 people were killed in central Mexico after a ruptured gasoline pipeline blew up Friday evening, the governor of the state of Hidalgo told reporters Saturday. Gov. Omar Fayad said at least 76 others were injured after an explosion in Tlahuelilpan, a town more 120 kilometers (about 80 miles) north of Mexico City. State oil company Pemex said an investigation into the cause of the blast was under way. The company initially had said the explosion was caused by illegal taps in the pipeline, and Fayad called on the community not to steal gasoline. Residents who live in the immediate vicinity of the pipeline, which runs from the cities of Tuxpan to Tula, have been evacuated, Pemex said. The fire resulting from the pipeline explosion has been extinguished, Mexican Secretary of Public Security Alfonso Durazo said on Twitter, and rescue teams have begun to recover bodies. Mexican President Andrés Manuel López Obrador visited Tlahuelilpan and met with officials at a command center. Pemex said the explosion would not affect gasoline distribution in Mexico City. The explosion comes as gas stations in several Mexican states and the country’s capital have been running dry for nearly two weeks. The López Obrador administration closed key pipelines in an effort to crack down on fuel theft, which the Mexican leader said cost the country an estimated $3 billion last year. Drivers in Mexico have grown desperate. Family members take turns waiting in long lines for gas. Some comb social media for clues about which stations are open. Others have simply decided to leave their cars at home.

Earthquake limit at Cuadrilla's Lancashire fracking site will not be relaxed, government letter reveals - Ministers have “no intention of altering” regulations on tremors caused by fracking which have repeatedly halted work in Lancashire. Shale firm Cuadrilla has called for the relaxation of the rules, which have forced the company to pause fracking in Lancashire on a number of occasions when seismic activity above thresholds in the “traffic light system” have occurred. But a letter from Energy and Clean Growth Minister Claire Perry indicates the Government is standing firm on the regulations. Writing to Cuadrilla boss Francis Egan after he called for an urgent review of the system which halts work when tremors above 0.5 local magnitude are detected, Ms Perry reiterated her backing for shale gas. But she wrote: “While I hope the industry can thrive in the years ahead, I have always been clear that any shale developments must be safe and environmentally sound.” She said the company’s fracking plan was developed and reviewed over several months with reference to existing regulations “and at no point did you communicate that it would not be possible to proceed without a change in regulations”. She concluded: “The Government believes the current system is fit for purpose and has no intention of altering it.” A number of tremors have been detected that breach the threshold since the controversial process began at Preston New Road, Little Plumpton, on October 15. In December, a 1.5 local magnitude quake was recorded which was reportedly felt in Blackpool. Dr Doug Parr, chief scientist for Greenpeace UK, said: “Despite the minister’s warm words about fracking’s potential, the message this letter delivers is that there’s a limit to the unpopularity the Government is willing to court to sort out Cuadrilla’s problems.” He called for ministers to reverse their support for shale and speed up a clean energy infrastructure programme for the UK.

Pro-fracking roadshow announces Lancashire dates –  Lancashire For Shale is to host a series of monthly roadshow events across the county this year.The events will inform businesses about the opportunities, jobs, and investments that a successful shale gas industry can bring.Delegates who attend the two-hour long breakfast 'Exploring Shale' seminars will hear about:

• • the significance of a new UK source of gas as an alternative to increasing import dependency
• • the role gas plays in electricity generation alongside renewables, home and industry heating, and as a feedstock in chemicals manufacturing
• • the local supply chain roles that exist throughout the various stages of shale gas exploration, appraisal, development, production and, eventually, decommissioning and restoration

Lee Petts, Lancashire For Shale chairman, said the events were being produced in response to growing demand within the Lancashire business community: He said: "During the course of the last year, we have seen a significant increase in the number and types of local businesses showing an interest in the benefits that shale could bring to the area, with others wanting to know more about how they can play a role in the emerging supply chain.  "We are determined to ensure that local people and businesses benefit the most from this industry as it grows here, and our roadshow events are part of our efforts to do just that.

Campaigners' scorn for patio gas footage at Lancashire fracking site - Anti-fracking campaigners have poured scorn on shale gas firm Cuadrilla after a report revealed a video of fracked gas being burned off at its drill site included added “patio” gas. The drone video footage of flames in a flare stack was released early in November to show gas was flowing to the surface from a well drilled deep into shale rock below the Preston New Road drill site. A still from the video taken by a Cuadrilla drone looking down into the flare stack where gas is being burned But now the Environment Agency has said the volume of methane gas rising to the surface was “low” and that “a support fuel (propane) was used to assist combustion”. Frack Free Lancashire said the revelation showed they had been right to be sceptical of the video, which had come after a fortnight of minor earth tremors caused by the fracking process. But Cuadrilla said it was simply part of the process and that the initial flow tests were still being analysed. A Frack Free Lancashire spokesman said: “It would seem that Cuadrilla’s woeful PR campaign has fallen flat on its face yet again. “In November, desperate for some good news after provoking a series of earthquakes they published a video showing the flaring of gas from their first well. “Widely ridiculed at the time as it only lasted a few seconds before being seen to have petered out, we now learn from the Environment Agency that, far from being a ‘significant’ find, this gas flow was so weak that they had to add patio gas to it to make it burn. "What is clear is that things have not gone to plan for Cuadrilla who were to have been flow testing two wells in early 2019. Their investors’ lack of confidence in their statements can be seen in the slide of their parent company, AJ Lucas’s share price, which was today at a 52 week low.” 

U.S. warns German companies of possible sanctions over Russian pipeline - (Reuters) - The United States has warned German companies involved in the Russian-led Nord Stream 2 gas pipeline that they could face sanctions if they stick with the project. U.S. President Donald Trump has accused Germany of being a “captive” of Moscow because of its reliance on Russian energy and urged it to halt work on the $11 billion gas pipeline. The pipeline, which would carry gas straight to Germany under the Baltic Sea, has also been criticized in some quarters because it would deprive Ukraine of lucrative gas transit fees, potentially making Kiev more vulnerable in the future. U.S. Ambassador Richard Grenell addressed the issue in a letter sent to several companies, the U.S. Embassy said on Sunday. “The letter reminds that any company operating in the Russian energy export pipeline sector is in danger under CAATSA of U.S. sanctions,” the embassy spokesman said, adding that other European states also opposed the planned pipeline. Germany and European allies accuse Washington of using its Countering America’s Adversaries Through Sanctions Act (CAATSA) to meddle in their foreign and energy policies. Russian gas giant Gazprom (GAZP.MM) is implementing the project jointly with Western partners Uniper, Wintershall, Engie, OMV and Shell. The letter raised eyebrows within Chancellor Angela Merkel’s government. One German diplomat said the ambassador’s approach did not follow common diplomatic practice and that Berlin would address the issue in direct talks with officials in Washington. 

German Businesses Blast Trump's NordStream 2 Sanctions As Attack On EU Sovereignty - A German business group said on Friday that any attempts by the United States to stop Europe from buying Russian gas in the form of additional sanctions against Moscow would be an attack on European sovereignty, reports Reuters.  "If the U.S. decided to sanction the use of Russian gas, that would be an attack on German and European sovereignty," said Wolfgang Buechele, chairman of the German Committee on East European Economic Relations (GCEEER?) at a new year news conference. The United States has threatened sanctions against European firms involved with the Nord Stream 2 pipeline which would carry gas straight to Germany under the Baltic Sea. The project is being spearheaded by Russian state gas giant Gazprom, and has been driving a wedge between Germany and its allies over economic harm to Ukraine, which would be deprived of lucrative gas transit fees it currently charges. "I believe the Nord Stream 2 project is in the pure interests of not just Germany but also of Europe," said Buechele of the pipeline, which would branch off into Europe-wide gas transmission networks. In July, President Trump slammed Germany at a bilateral breakfast in Brussels for being a "captive of Russia because it is getting so much of its energy from Russia." "The former Chancellor of Germany is the head of the pipeline company that is supplying the gas," Trump continued. "Ultimately Germany will have almost 70 percent of their country controlled by Russia with natural gas. So you tell me, is that appropriate?" Trump asked. "It should have never been allowed to happen. So Germany is totally controlled by Russia."

It's A Gas... Germany Outraged By US Colonial Arrogance - This time the outspoken US ambassador in Berlin may have gone too far to be ignored. The German government has denounced as a “provocation” letters that the American envoy sent to companies involved in the Nord Stream 2 project warning them of possible US sanctions. The German government reportedly told the project companies to “ignore” the missives dispatched by Ambassador Richard Grenell. Nord Stream 2 is the 1,222-kilometer pipeline being laid in the Baltic seabed which will greatly increase delivery of natural gas from Russia to Germany. It will double Germany’s import of Russian gas when complete. But the Trump administration has repeatedly voiced its objection to the project, claiming that it will give Moscow undue political leverage over Europe. Trump has warned of sanctions on participating companies, which include German and Austrian firms. The flagrant ulterior agenda is seen as the US trying to undermine German-Russian energy trade, for the purpose of selling more expensive American liquefied natural gas to Europe. So much for American free-market capitalism! Grenell’s letters to the German firms – received at the weekend – are viewed as an unprecedented threat to the nation’s conduct of private business. The US embassy denied it was a threat, saying the letters were merely stating Washington’s policy of imposing sanctions. It is but the latest furore involving the maverick envoy who has been accused in the past of violating diplomatic protocol by meddling in Germany’s domestic affairs. German media have previously blasted Grenell for seeking “regime change” in Berlin because of his open support for the anti-immigration party, Alternative for Germany (AfD). Martin Schulz, the former leader of the Social Democratic Party, was among several political figures who then demanded Grenell’s dismissal.“What this man is doing is unheard of in international diplomacy… he’s behaving like a colonial officer of the far-right,” said Schulz. He added a fair point by noting: “If a German ambassador were to say in Washington that he was there to boost the Democrats, he would have been kicked out immediately.”

Worries for LNG as prices slip amid record North Asia imports: Clyde Russell (Reuters) - The spot price of liquefied natural gas (LNG) in Asia has completely missed its usual winter peak, with much of the blame being laid at the door of milder-than-usual temperatures trimming demand. That sounds perfectly plausible, but doesn’t quite tally with the fact that delivered volumes into the major consuming region of Northeast Asia hit a record-high in December. A total of 20.25 million tonnes of the super-chilled fuel were delivered in December to the region, which includes the top three consumers of Japan, China and South Korea, according to vessel-tracking and port data compiled by Refinitiv. This was up 12.4 percent from the same month in 2017, adding to a 14-percent gain in shipments in November, 2018, from the same month a year earlier. It was also the most on record, eclipsing the 19.46 million tonnes from January, 2018. China was the main driver of the jump in imports, with 6.42 million tonnes arriving in December, up 27 percent from the same month in 2017. Top consumer Japan saw imports weaken, dropping by 9 percent to 7.72 million tonnes in December, whilst No.3 South Korea recorded an 11-percent increase to 4.81 million tonnes. The shipping data does show that LNG demand was strong for the first part of the northern winter, but it doesn’t yet give a picture of how the rest of the cold season will play out. It’s here that the spot pricing comes into play, and this is pointing to a weak back-end of winter. The spot price for cargoes delivered to Asia LNG-AS was $8.50 per million British thermal units (mmBtu) in the week ended Jan. 11. It has been trending down since a minor early winter peak of $10.90 per mmBtu in the week to Nov. 16, and is well below the summer-high of $11.60, reached in the week to June 15. The spot price is usually for deliveries of around four to eight weeks in advance, so the current price reflects cargoes that will arrive in February. It’s worth noting that the $10.90 reached in mid-November reflected cargoes delivered in December, when demand reached an all-time high in Northeast Asia. 

In Papua New Guinea, Exxon's giant LNG project fuels frustration (Reuters) - From her red-roofed home near Papua New Guinea’s capital of Port Moresby, Isabelle Dikana Iveiri overlooks a giant plant used by Exxon Mobil Corp to liquefy billions of dollars’ worth of natural gas before it is shipped to Asian buyers. Dikana Iveiri can also see swaths of muddy shoreline, where mangroves have been felled for firewood by locals who don’t have electricity, gas, or money to buy either. The $19 billion Exxon-led PNG LNG project was supposed to be a game-changer for PNG, a vast South Pacific archipelago beset by poverty despite its wealth of natural resources. But much of the promised riches, through taxes to the government, royalties to landowners and development levies to communities, have arrived well below Exxon’s own commissioned forecasts, if at all, according to landowners, the World Bank and the PNG government. “My family has been here a long time,” said Dikana Iveiri, one of several landowners interviewed by Reuters near the PNG LNG plant. “Our royalties are not going well; they are using our land but not paying us properly,” she said referring to both Exxon, which pays the royalties and the government, which distributes them. Since gas exports began more than four years ago, Dikana Iveiri said she had received just one royalty payment in 2017. She was expecting about 10,000 kina ($2,885) based on information given to her by the government and community leaders. She said she received 600 kina. Exxon said distribution of royalties and benefits to the LNG plant site landowners started in 2017. Cash payments to individual landowners would depend on how many landowners were in a precinct and were just one of the benefits communities received, Exxon said. The project employs nearly 2,600 workers, 82 percent of whom are Papua New Guinean and Exxon said it has invested $360 million to build infrastructure and pay for training and social programs. 

Seismic Blasting Approved in the Great Australian Bight, Posing 'Lethal Threat' to Marine Life - Australia's petroleum regulator granted permission for seismic blasting in the Great Australian Bight, sparking fierce outcry from environmentalists over its threat to the area's marine life, whihc include endangered blue and southern right whales.  On Monday, the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) gave the green light to oil and gas exploration services company PGS Australia's application for seismic surveys off the coast of South Australia's Kangaroo Island and Eyre Peninsula between Sept. 1 and Nov. 30 this year. During the survey process, loud, continuous and far-reaching soundwaves are blasted onto the bottom in search of oil or gas reserves.This noise can damage the hearing and potentially disorientate and kill marine life, displace fish, devastate zooplankton and cause whales to beach. Blasting can also impact commercial and recreational fishing by decreasing catch rates."Seismic blasting has a devastating impact on marine life. It has been likened to being next to an exploding grenade and these deafening blasts will detonate every ten seconds, 24 hours a day, for more than 90 days,"Greenpeace Australia Pacific senior campaigner Nathaniel Pelle said in an online statement.Seismic testing is the first step to offshore oil and gas exploration and development. "The only reason to conduct seismic survey is to find locations to drill for oil, putting coastlines at further risk from an oil spill," Pelle said.

Locals say ‘frack off’ -The application by Rhino Oil and Gas Exploration South Africa received a “resounding no” from residents, farmers and business owners for its application to deploy an aircraft to survey a stretch of land across the KwaZulu-Natal midlands and the Free State. That is according to a scoping report by SLR Consulting for the Rhino Oil and Gas application. Rhino Oil and Gas, according to the scoping report, is searching for oil, gas, condensate, coal bed methane, helium and biogenic gas. The scenic beauty of the Drakensberg could be destroyed if the international minerals exploration company is given the green light to survey some one million hectares of land with a view to extracting resources. The proposal has received about 400 written submissions from concerned members of the public, who believe granting this application would give Rhino Oil and Gas “blanket authorisation” for future hydraulic fracturing — or fracking — which is harmful to the environment. The scoping report noted that Rhino Oil and Gas applied to fly the aircraft over 1 006 698 hectares of land, which covers some 6 000 properties. The report describes the area as having “strategic water source areas” for catchment areas that supply water to Gauteng. The report also said the Drakensberg area was “known for its scenic beauty” and the overall area was “highly diverse” and attracted tourism which drove the local economy. SLR Consulting and Rhino Oil and Gas held community meetings across the Midlands last year to air concerns by interested parties.

South Sudan pipeline leaking two barrels an hour - Corroded pipeline infrastructure has contributed to a crude oil leak in South Sudan’s Houdi area, in the Nile River state.In a statement released on Saturday, Sudan’s oil and gas Ministry said the leak is estimated at around two barrels per hour, noting that the affected area did not exceed 200m.The statement pointed out that technical teams are working to repair the oil pipeline, which transports South Sudanese oil to Port Sudan, in the east of the country.The Ministry said the situation is under control, adding that “the oil leak has already been contained by reducing the pressure until the urgent maintenance is completed.” The 1,600 km pipeline, which pumps 150,000 barrels per day (bpd), has a total pumping capacity of 450,000 bpd.

Tanker oil spill frequency in decline despite spikes in volume - The average number of tanker oil spills continues to decline despite some individual incidents increasing the volume of spilled oil. The frequency of oil spills from tankers continued to decline in 2018 according to statistics released by the International Tanker Owners' Pollution Federation (ITOPF).The oil spills recorded by ITOPF include those from tankers -- including combined carriers, FPSOs and barges -- but it did not include oil spills caused by acts of war. Spills are recorded as small (< 7 tonnes), medium (7 to 700 tonnes), and large (>700 tonnes).In the ITOPF analysis, the average number of oil spills recorded as seven tonnes or greater has steadily been declining over the last 50 years to around six per year, but one-off incidents like Sanchi in 2018 can create a spike in the statistics (see chart).According to ITOPF, the estimated total amount of oil lost to the environment through tanker incidents in 2018 was approximately 116,000 tonnes, the majority of which can be attributed to the Sanchi incident, a spill of non-persistent oil with what some experts say is a significantly lower environmental impacts compared to crude oil. In 2018, three spills of more than 700 tonnes were reported. ITOPF attended two of these incidents to provide technical advice, both in East Asia.

China's 2018 crude oil imports rise 10% to 9.28 mil b/d - — China's crude imports in December rose 29.9% year on year to an average 10.35 million b/d as independent refiners rushed to use their import quotas, lifting imports by Asia's biggest oil consumer in 2018 to 9.28 million b/d, up 10.1%. December and November were the only two months when import volumes topped 10 million b/d mark, with December down 1.2% lower than the record high of 10.48 million b/d in November, General Administration of Customs data showed. Analysts said imports in 2019 were likely to rise but the rate would slow because of a high base in 2018. "For the year as a whole, China's crude oil imports are set to rise from 2018 levels to accommodate the incoming new refineries while meeting the continuously rising oil demand, albeit at a lower rate than before," Kang Wu, head of S&P Global Analytics Asia, said. "We think Hengli Petrochemical, Zhejiang Petrochemical and Fuhaichuang Petroleum and Petrochemical will contribute a total of 400,000 b/d to the incremental growth," a Beijing-based trader said. "Also, while new independent quota holders for crude imports and PetroChina's newly upgraded Huabei Petrochemical and Liaoyang Petrochemical will make up most of the rest of the import growth," the trader said, adding stockpiling was also a factor that pushed up inflows. Hengli Petrochemical started one of the CDUs in the 400,000 b/d new refinery for a trial run on December 15, while the 100,000 b/d Fuhaichuang started operations on December 10. The 400,000 b/d Zhejiang Petrochemical was expected to start mid-2019. In addition, PetroChina has doubled its capacity at Huabei Petrochemical to 200,000 b/d. It also lifted Liaoyang Petrochemical's capacity 64% to 180,000 b/d last July. The independent Hualian Petrochemical was expected to be allocated about 56,000 b/d of crude oil import quotas in 2019, a market source said. Hou Rui, a consultant with Wood Mackenzie, said stockpiling had helped to boost crude oil import growth, and that both Hengli and Zhejiang were unlikely to start commercial operations until 2020. "The import growth in 2019 will be much slower than 2018 given the flat refinery run. It is up by only 1.1% year on year," Hou said. Wood Mackenzie was expecting one new SPR storage to come on stream in 2019, which would further boosting stock-building activity, Hou said. "We expect the crude imports as part of the overall supplies to increase by around 1% in 2019 due to a decline in domestic crude production," he said.

OPEC secretary general worried about trade war effect on China, India, oil demand's 'bright spots' - OPEC Secretary General Mohammed Barkindo is largely optimistic over prospects of achieving a balanced oil market in 2019. But if one thing keeps him awake at night, it's the U.S.-China trade war's potential to disrupt growth in major Asian markets that import the highest proportion of the world's crude. "We are concerned with the lingering trade disputes," Barkindo told CNBC's Hadley Gamble while at the Atlantic Council Global Energy Forum in Abu Dhabi Sunday. "The synchronized growth that we have witnessed since the last global financial crisis that has taken this long was also due largely to the growth in international trade.""Any measures that may impact or constrain trade may likely impact on growth and by extension on demand for energy. At the moment, outside the U.S., China and India remain the brightest spots in terms of demand for energy. So you can imagine our concern of the lingering negotiations."  China is the world's largest importer of crude, and its purchases constituted 18.6 percent of total crude imports in 2017. India's booming growth is set to see it overtake China as the country with the world's largest demand for oil by 2024, according to a recent report by energy consultancy Wood Mackenzie. But if a trade war severely hit China's growth, it would send shockwaves through the rest of Asia and threaten crucial sources of income for OPEC's producers. Already, U.S. tariff pressure and dampened domestic demand have started to manifest themselves in China's economic forecasts. Reuters reported last week, citing sources with knowledge of China's economic policy, that the country is planning to set a lower growth target of 6 percent to 6.5 percent in 2019, compared with last year's target of "around" 6.5 percent.

China's Surging Gasoline Exports Hurting Regional Refiners -Exports of gasoline from China are set to surge, predicts Fitch Solutions Macro Research.According to a commentary that the unit of Fitch Group emailed to Rigzone, several factors are driving the pending increase in Chinese gasoline exports in the coming quarters. The research firm attributes the anticipated growth to:

• The Chinese government’s issuance of new oil product export quotas to the state-owned firms PetroChina Co. Ltd., China Petroleum & Chemical Corporation (Sinopec), China National Offshore Oil Corporation (CNOOC) and Sinochem Corp.
• New domestic refining capacity, with 890,000 barrels per day set to go online in 2019 alone
• An ongoing slowdown in domestic demand stemming from a slump in sales of gasoline-powered vehicles and stricter fuel efficiency measures.

“The prospect of increased gasoline exports out of China poses downside risk to regional gasoline margins and the profitability of refiners, which have fared poorly particularly towards the end of 2018,” Fitch Solutions Macro Research states in its commentary.Singapore and South Korea, whose gasoline export destinations overlap with those targeted by Chinese refiners, will be among the hardest hit by the trend, the analysis notes. To illustrate, the report indicates that the gasoline crack spread – the difference between the price of a barrel (bbl) of crude oil and that of the finished product – in Singapore has shrunk dramatically within the past year. “Gasoline cracks in Singapore slumped to an all-time low of USD1.3/bbl in December, from a peak of USD10.7/bbl in February, and are forecast to remain subdued for longer amid ample supply and persistent demand uncertainty brought on by broader global macro and financial concerns,” according to the commentary.

Iran, India Ditch Dollar In Oil Trading To Counter 'Bullying' US Sanctions - In an effort to circumvent US-imposed sanctions, India and Iran have reportedly ditched the US dollar and are trading oil in rupees. The reason becomes clear after considering the dynamics at play in the region. In mid-February last year, Iranian President Hassan Rouhani visited India, and the two countries signed nine agreements signalling a strengthening of ties. Indian Prime Minister Narendra Modi appeared to celebrate the growing relationship, stating that it was “a matter of great pleasure” for India that an Iranian president came to India “after a gap of 10 years.”Fast-forward a few months later, and then-UN ambassador Nikki Haley was bluntly telling India that they should rethink their relationship with Tehran.Donald Trump’s decision to rip up the Joint Comprehensive Plan of Action (JCPOA) last year, also known as the Iranian nuclear accord, was a particularly significant blow to Iran-India relations. At the time the JCPOA was formulated, Indian officials believed the deal to be the “best deal available.” After the JCPOA’s implementation in 2016, exports of Iranian oil to India increased by more than 110 percent.Maybe the issue isn’t always that Washington wants to contain its rivals in the Middle East and Asia, but perhaps there is a chance that it also wants to keep a lid on its so-called allies as well. Right now, India is the third largest oil consumer in the world, and is expected to become the largest by the year 2040. As its domestic reserves are not meeting the needs of its rapidly expanding economy, India has been importing 80 percent of its oil supply from overseas, including and especially Iran.Prior to Washington’s Iran-sanctions regime, Iran was India’s third largest supplier of crude oil (it is now about sixth place). It is no surprise therefore, that India’s Foreign Ministry spokesperson responded by saying that Haley had “her views, and our views on Iran are very clear.”He also warned that India would “take all necessary steps, including engagement with relevant stakeholders to ensure our energy security.” It does seem like the days of foreign states being bullied into adopting a dangerous foreign policy are over. If Washington has any doubt about this, they need only turn to this exclusive Reuters report which revealed that India had begun paying Iran for its oil in rupees, according to a senior bank official, under the guise of a six-month waiver which was given to seven other countries (including China). According to the report, in a previous round of US-imposed sanctions, India settled approximately half of oil payments in rupees and the remainder in euros. However, this time around, all payments are to be made in rupees.

Saudi Arabia to set up $10 billion oil refinery in Pakistan (Reuters) - Saudi Arabia plans to set up a $10 billion oil refinery in Pakistan’s deepwater port of Gwadar, the Saudi energy minister said on Saturday, speaking at the Indian Ocean port that is being developed with the help of China. Pakistan wants to attract investment and other financial support to tackle a soaring current account deficit caused partly by rising oil prices. Last year, Saudi Arabia offered Pakistan a $6 billion package that included help to finance crude imports. “Saudi Arabia wants to make Pakistan’s economic development stable through establishing an oil refinery and partnership with Pakistan in the China Pakistan Economic Corridor,” Saudi Energy Khalid al-Falih told reporters in Gwadar. He said Crown Prince Mohammad bin Salman would visit Pakistan in February to sign the agreement. The minister added that Saudi Arabia would also invest in other sectors. Beijing has pledged $60 billion as part of the China Pakistan Economic Corridor (CPEC) that involves building power stations, major highways, new and upgraded railways and higher capacity ports, to help turn Pakistan into a major overland route linking western China to the world. “With setting up of an oil refinery in Gwadar, Saudi Arabia will become an important partner in CPEC,” Pakistan Petroleum Minister Ghulam Sarwar Khan said. The Saudi news agency SPA earlier reported that Falih met Pakistan’s petroleum minister and Maritime Affairs Minister Ali Zaidi in Gwadar to discuss cooperation in refining, petrochemicals, mining and renewable energy. It said Falih would finalize arrangements ahead of signing memorandums of understanding.

Analysis: Pakistan, Saudi Arabia in talks to develop $10 bil oil refinery in Gwadar— Pakistan and Saudi Arabia are in talks to develop a 200,000-300,000 b/d oil refinery in Balochistan's Gwadar district for $10 billion -- a move that will help alleviate Pakistan's trade deficit, mounting foreign debt, and depleting foreign exchange reserves. The agreement is due to be signed in February, coinciding with an official visit by crown prince of Saudi Arabia Mohammad Bin Salman to Pakistan, and construction is set to commence by year end, said officials with the ministry of petroleum this week. The project, led by state-owned Saudi Aramco, will be Saudi Arabia's biggest investment in the south Asian country, Pakistani Petroleum Minister Ghulam Sarwar Khan said, and will add to an investment boom in Pakistan's energy sector, particularly from China and Saudi Arabia. Saudi Arabian companies have been looking to expand trade with their Pakistani counterparts, and invest in the country's mining, refining, petrochemicals and renewables such as solar and wind power generation, officials said. Several agreements will be signed within weeks, including power and petrochemical projects, said Haroon Sharif, Chairman with Pakistan's Board of Investment. Saudi Arabia has also approved financial assistance to Pakistan worth $3 billion, of which $2 billion have been paid to help Pakistan shore up its foreign exchange reserves, Pakistan Finance Minister Asad Umar had said in October 2018. It has also approved the establishment of an oil credit system to facilitate the deferral of oil payments worth $3 billion, an official of the ministry of finance from Islamabad said January 14. "Saudi Arabia wants to stabilize Pakistan's economic development through an oil refinery and partner with Pakistan as it gears up for the China Pakistan Economic Corridor," Saudi Arabia's Minister of Energy and the Chairman of the Board of Saudi Aramco Eng. Khalid A Al-Falih told reporters in Gwadar January 12, during a visit to the area allocated for the refinery. Beijing has pledged $60 billion as part of the CPEC, which involves a collection of infrastructure projects, including power stations, highways, railways and ports, to help turn Pakistan into a major overland route linking western China to the international markets. Around 85% of Pakistan's petroleum consumption of 22 million mt/year is currently being met via imports. Since 2015, an increasing share of Pakistan's gas consumption is also being met via LNG imports, which are set to hit nearly 16 million mt/year by 2024, according to S&P Global Platts Analytics. .

Saudi energy minister: We'd work with anyone interested in balancing the oil market -- Saudi Arabia's energy minister said Sunday he's positive OPEC and partnered nations will meet their production cut commitments to balance oil markets in 2019, despite what he described as a slower than anticipated pace by some. "We've already done it, we've done enough," Saudi Energy Minister Khalid al-Falih told CNBC on Sunday inAbu Dhabi, when asked what OPEC's largest producer would do to balance markets this year. "Not only the kingdom but other countries, we've heard from the Emirates, I've talked repeatedly to my colleagues in Iraq, they've already taken action," he told CNBC's Hadley Gamble. He then mentioned the performance of the largest non-OPEC producer that's partnered with the cartel on cuts: "Russia has started, slower than I'd like, but they've started, and I am sure as they did as in 2017 they'll catch up and be a positive contributor to re-balancing the market." OPEC members, along with several other countries, in December agreed on output cuts totaling 1.2 million barrels per day in order to stem a sinking market and support their own export-dependent economies. "OPEC plus" refers to the group's cooperation with the non-OPEC producers like Russia and other former Soviet states, as well as Mexico. Russia was more reluctant to cut its output, as its growth is heavily dependent on robust crude exports.  Moscow in December said it would cut production by 50,000 to 60,000 barrels a day in January, while Saudi pledged a cut of 900,000 barrels. Earlier Sunday, al-Falih told CNBC that his country is willing to work with all parties to balance the crude market in 2019, and that could include coordinating with U.S. President Donald Trump. Asked if he would work with Trump, al-Falih replied, "We will work with all interested producers who want to bring stability to the market ... OPEC plus and anybody else who would like to do it with us."

Fund managers neutral on crude and fuel outlook: Kemp (Reuters) - Hedge fund managers show signs of having completed their recent sale of crude and refined fuels, with positions edging up slightly in the first week of the new year, amid hopes a recession can be averted. Oil prices have bounced off their recent lows, the U.S. dollar has weakened against most other major currencies and expectations of a trade deal between the United States and China are rising. Portfolio managers raised their net long position in ICE Brent crude futures and options by 6 million barrels to 158 million barrels in the week to Jan. 8. Funds also boosted their net long position in European gasoil by 3 million barrels to a total of 5 million barrels, according to exchange data. Net long positions in Brent and gasoil remain close to multi-year lows and increases since the start of the year have been very small. But the heavy fund selling in crude and refined fuels reported during the fourth quarter appears to have ended, at least for now (https://tmsnrt.rs/2HcppoW ). The completion of fund sales has been enough to help oil prices bounce off their recent lows as at least a few short positions have been covered. Fund managers have essentially squared their positions in crude and fuels and are remaining on the sidelines until the economic outlook becomes clearer. 

Oil prices expected to stay anchored around $65-70 through 2023: Kemp (Reuters) - Oil prices are expected to oscillate close to current levels well into the next decade, averaging around $65-70 per barrel through 2023, according to an annual survey of energy professionals conducted by Reuters. Despite the recent slump in oil prices, forecasts have edged down by less than $5 per barrel compared with the last annual survey conducted at the start of 2018 and have changed little over the last three years. Long-term expectations for the average price of Brent crude remain anchored around $70 per barrel, close to the $72 average realised in 2018 (https://tmsnrt.rs/2HebsXA ). The results are based on the responses from just over 1,000 energy market professionals to a poll conducted between Jan. 8 and Jan. 11. Brent prices in 2019 are expected to average $65 per barrel, unchanged from surveys in 2016, 2017 and 2018. In 2020, Brent is also expected to average $65 per barrel, revised down by $5 or less compared with prior surveys. Far fewer respondents now see any risk of prices spiking to $100 or more by the end of the decade as a surge in U.S. shale output has eased fears of supply shortages. The proportion of respondents expecting prices to average more than $90 in 2020 has fallen to just 3 percent this year, from 13 percent at the time of the 2016 survey. By 2023, prices are still expected to average $70, with most forecasts between $60 and $80, which suggests most energy professionals think there will be enough production developed at this level to meet consumption growth. Among survey respondents, 26 percent are involved directly in oil and gas production (exploration, drilling, production, refining, marketing and field services). Most of the rest work in banking and finance (18 percent), research (9 percent), professional services (9 percent), hedge funds (8 percent) and physical commodity trading (6 percent). The results from respondents involved directly in the oil and gas industry were similar to those in other sectors. 

Trump administration still might let Iran export oil, and that could lower prices -- The Trump administration is leaving itself wiggle room to continue allowing Iran to export oil, potentially setting up another catalyst for lower crude prices later this year.The administration's special representative for Iran, Brian Hook, last weekend refused to say with certainty whether the White House will enforce sanctions more strictly on the Islamic Republic's oil exports. Instead, he left the door open to extending exemptions that have allowed some of Iran's biggest customers to continue importing its crude.The administration's decision in November to grant sanctions waivers to eight countries, including China and India, surprised the market and contributed to a three-month collapse in crude oil prices. Donald Trump withdrew from a nuclear accord with Iran in May and restored sanctions on the country's energy industry in November. The administration wants Iran to stop testing ballistic missiles, end its support for militant groups and accept tougher limits on its nuclear program.To be sure, Hook is maintaining the administration's message of "maximum pressure" on Iran and reiterating its goal of driving Iran's oil exports down to zero."We are not looking to grant any waivers or exceptions to the import of Iranian crude," Hook said during a panel at the Atlantic Council's 2019 Global Energy Forum in Abu Dhabi last weekend.However, pressed by CNBC's Hadley Gamble on whether the administration would extend the waivers, Hook said he could not answer that question yet."All I can say is that we believe that ... when we have a better-supplied oil market, then that puts us in a much better climate to accelerate the path to zero," he said.Hook's remarks suggest that the administration's decision will in part depend on the cost of crude when the six-month waivers expire around the start of May."I think that this administration made clear what some of us have said for some time, namely, that there is a relationship between the oil price level and the implementation of sanctions," said Michael Cohen, head of energy markets research at Barclays. Cohen has previously written that Brent crude prices below $60 a barrel will embolden the Trump administration to apply sanctions more strictly, putting pressure on buyers to cut off imports from Iran. On the other hand, a spike back above $80 likely would force the administration to allow significant volumes of Iranian crude to hit the market.

Oil prices pressured by concerns about China slowdown  - Oil prices pared early losses on Monday, but remained under pressure after data showed weakening imports and exports in China, the world's second-largest oil consumer, raising the prospect of a slowdown in fuel demand. China's exports fell by the most in two years in December while imports contracted, official figures showed, pointing to further weakness in what is also the world's second-largest economy.Brent crude, the international benchmark, fell 10 cents to $60.28 a barrel by 10:34 a.m. ET (1534 GMT), trading as low as $59.37 intraday. U.S. crude rose 6 cents to $51.65."Both imports and exports disappointed expectations and are set to revive fears about a global growth slowdown," said Norbert Ruecker, head of macro and commodity research at Swiss bank Julius Baer.Crude gave up an earlier gain following the release on Monday of the Chinese figures, the latest to point to an economic slowdown since the second half of 2018. Asian stock markets also slipped and European equities fell in early trade."Oil prices are getting weighted down by the prospects of weaker economic growth in China," Stephen Innes of futures brokerage Oanda said in a report."This data drives home just how negative of an impact trade war is having on the Chinese and perhaps global economy."Despite concern about the outlook, there is little sign that Chinese oil demand has weakened yet. China's crude imports in December surged nearly 30 percent from a year earlier, Reuters calculations of customs data showed. Oil is drawing support from supply cuts led by the Organization of the Petroleum Exporting Countries and non-OPEC allies, including Russia.

Oil falls 1 percent on concerns about China slowdown (Reuters) - Oil prices fell about 1 percent on Monday, pressured by data showing weakening imports and exports in China that raised new worries about a global economic slowdown hurting crude demand. Brent crude futures fell 61 cents to $59.87 a barrel by 12:54 p.m. EST (1754 GMT), trading as low as $59.27 intraday. U.S. West Texas Intermediate (WTI) crude futures fell 36 cents to $51.23 a barrel, after sinking to a session low earlier of $50.43. Data out of China spurred fresh concerns about weakness in the global economy. China’s exports fell by the most in two years in December while imports contracted, official figures showed. “Oil prices are getting weighted down by the prospects of weaker economic growth in China,” Stephen Innes of futures brokerage Oanda said in a report. “This data drives home just how negative of an impact trade war is having on the Chinese and perhaps global economy.” Despite concern about the outlook, there is little sign that Chinese oil demand has weakened yet. China’s crude imports in December surged nearly 30 percent from a year earlier, Reuters calculations of customs data showed. Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday that he is not worried about a global slowdown hurting oil demand as of yet. “The global economy is strong enough, I’m not too concerned. If a slowdown happens, it will be mild, shallow and short,” he told reporters in Abu Dhabi. Crude futures have rallied recently after sinking to one-and-a-half year lows reached in late December. “There’s a close proximity to $50 (for WTI),” https://www.reuters.com/article/us-global-oil/brent-crude-oil-prices-fall-below-60-on-weak-china-trade-data-idUSKCN1P801P?il=0 “There’s a significant amount of new length in the market in crude oil and interest in keeping the market above that number.” 

Oil falls 2 pct on concerns about weakening global economy - (Reuters) - Oil prices fell more than 2 percent on Monday, taking a pause after a recent rally, pressured by data showing weakening imports and exports in China that raised new worries about a global economic slowdown hurting crude demand. Brent crude futures lost $1.49, or 2.5 percent, to settle at $58.99 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell $1.08 to settle at $50.51 a barrel, a 2.1 percent loss. Prices have gained more than 18 percent since sinking to one-and-a-half year lows in late December. “We are thus far viewing today’s price pullback as a deserved correction,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. “Some of the weakness appeared to develop in concert with a selloff in the equities while some profit-taking was also apparent given the fact that domestic fundamentals have yet to post improvement this year.” Technology shares pulled Wall Street lower, after an unexpected drop in China’s exports in December re-ignited worries over an global economic slowdown. The data out of China also weighed on oil prices. China’s exports fell by the most in two years in December while imports contracted, official figures showed. “Oil prices are getting weighted down by the prospects of weaker economic growth in China,” Stephen Innes of futures brokerage Oanda said in a report. “This data drives home just how negative of an impact trade war is having on the Chinese and perhaps global economy.” Despite concern about the outlook, there is little sign that Chinese oil demand has weakened yet. China’s crude imports in December surged nearly 30 percent from a year earlier, Reuters calculations of customs data showed. Saudi Arabia’s Energy Minister Khalid al-Falih said on Monday that he is not worried about a global slowdown hurting oil demand as of yet. “The global economy is strong enough, I’m not too concerned. If a slowdown happens, it will be mild, shallow and short,” he told reporters in Abu Dhabi.

Oil Halts Drop Near $51 -- Oil halted its retreat near $51 a barrel on forecasts for a drop in U.S. inventories and as a rebound in equities signaled investor interest in risk assets was improving. Futures in New York climbed as much as 1.6 percent after dropping 4 percent over the past two sessions. American crude stockpiles probably fell for the sixth time in seven weeks, according to a Bloomberg survey of analysts before Energy Information Administration data due Wednesday. Stocks across Asia climbed and U.S. index futures rebounded as markets recovered from the impact of weak economic data in Europe and China Monday. While oil is resuming an advance that took it into a bull market last week, it’s still over 30 percent below a four-year high in October. China’s weakest trade data since 2016 stoked concerns over the impact of an ongoing trade war with the U.S. Saudi Energy Minister Khalid Al-Falih sought to reassure investors in recent days, saying the OPEC+ coalition that’s pursuing output cuts to balance the market will do more if it needs to. “Oil will likely to stay within a range of $49 to $55 a barrel as long as there are fresh elements that will either drive prices up or down,” Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp., said by phone. “Investors are now less worried about dwindling demand and negative economic data, spurred by the U.S.-China trade spat because they’ve largely been reflected in crude prices already.” West Texas Intermediate for February delivery climbed as much as 81 cents to $51.32 a barrel on the New York Mercantile Exchange, and traded at $51.15 at 7:32 a.m. in London. It dropped 2.1 percent on Monday, falling for a second straight session. Brent for March settlement gained 67 cents to $59.66 a barrel on the London-based ICE Futures Europe exchange. The contract closed 2.5 percent lower on Monday. The global benchmark traded at a premium of $8.22 a barrel to WTI for the same month. In the U.S., nationwide stockpiles probably declined 2.5 million barrels last week, according to a median estimate in a Bloomberg survey. If confirmed by government data on Wednesday, that will mean inventory levels are staying near their lowest since early November. 

Oil Rises As OPEC Cuts Take Effect - Despite troubling economic data from China which weighed on oil on Monday, improving fundamentals are beginning to push crude prices upward. Saudi oil minister Khalid al-Falih told CNBC on Sunday that Russia’s oil production cuts are “slower than I’d like,” although he added that the OPEC+ coalition would succeed in balancing the oil market this year. “Russia has started, slower than I'd like, but they've started, and I am sure as they did as in 2017 they'll catch up and be a positive contributor to re-balancing the market,” al-Falih said. Al-Falih added that the OPEC+ cuts are on track to balance the market this year.  Oman’s oil minister Mohammed Al Rumhi told Bloomberg that the OPEC+ deal would likely eliminate the oil market supply surplus this year. “I think 1.2 million [barrels per day] would go a long way” to eliminating the inventory glut. “The real test will come in the second quarter” when seasonal demand picks up, he said. He added that the OPEC+ cuts could likely sustain $60 per barrel.  Natural gas production in the Haynesville shale in Louisiana could soon break new production records. The Haynesville added 1.3 billion cubic feet per day (bcf/d) of output in 201, and could rise by an additional 0.7 bcf/d this year, according to Rystad Energy. The increases come after years of stagnation. “We conclude that Haynesville Shale’s revival, for the second year in a row, looks sustainable. Supported by its proximity to a new LNG export terminal, gas production will continue to grow, and achieving new all-time high gas production levels should happen within a matter of months,” Rystad Energy partner Artem Abramov said.  Brian Hook, the U.S. State Department’s special representative for Iran, indicated in a Bloomberginterview that the American government would be much less accommodative with sanctions waivers when they expire in May. Hook said the U.S. had already successfully cut Iran’s oil exports from 2.7 mb/d to just 1 mb/d. “We are going to continue our path to get to zero [oil exports from Iran].” However, he hedged on when they might happen, stating that the effort to zero out Iran’s oil exports needs to be balanced against national security and economic interests.

Oil prices rise 2 percent as China signals possible fiscal stimulus - Oil prices rose more than 1 percent on Tuesday after tumbling the previous session, although a darkening economic outlook may soon weigh on growth in fuel demand. Prices fell on Monday after data showed weakening imports and exports in China, raising new worries about a global slowdown. But China's National Development and Reform Commission offered some support on Tuesday, signaling it might roll out more fiscal stimulus. Brent crude oil was up $1.14, or 1.9 percent, at $60.13 per barrel by 9:13 a.m. ET (1413 GMT), after briefly climbing above $60. The benchmark crude had fallen more than 2 percent on Monday. U.S. West Texas Intermediate rose $1.08, or 2.1 percent, to $51.59. But analysts said a price recovery may prove short-lived. "Any price rally is unlikely to be sustainable in the first half of the year simply because the demand for OPEC's oil is expected to be lower than the projected output from the organization," PVM Oil Associates strategist Tamas Varga said. The Middle East-dominated OPEC and allies including Russia agreed in late 2018 to cut supply to rein in a global glut. The cuts were effective from January. Further help has come from Friday's data showing the number of U.S. rigs looking for new oil production dipped to 873 in early 2019. The rig data, released on Friday, pointed to a potential dent in production growth which was at more than 2 million barrels per day last year, making the United States the world's top oil producer. This could rein in the swift rise in output from the United States, which became the world's top oil producer in 2018.

Oil rises two percent on hopes for China economic stimulus (Reuters) - Oil prices rose about 2 percent on Tuesday, along with world stock markets, supported by China's plan to introduce policies to stabilise a slowing economy, reversing the previous session's losses due to grim data in the world's second-largest economy. Brent crude was up $1.04, or 1.7 percent, at $60.03 per barrel by 12:02 p.m. EDT (1702 GMT). U.S. crude futures rose $1.23, or 2.4 percent, to $51.74 a barrel. Earlier in the session, the contract touched a session high of $52.18 a barrel. "Some of the fears about the economic slowdown in 2019 seem to have ebbed away," said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. "The market is latching on to news that suggests that the economy may be better than thought." China's National Development and Reform Commission offered some support on Tuesday, signalling it might roll out more fiscal stimulus. This countered negative sentiment from Monday when crude prices fell more than 2 percent after data showed weakening imports and exports in China. Output cuts from the Organization of the Petroleum Exporting Countries and other producers, including Russia, also have begun to reduce fears of oversupply. The group known as OPEC+ agreed in late 2018 to cut supply starting this month, seeking to rein in a global glut. The bloc and its allies set a meeting for March 17 to 18 to monitor implementation of their pact, sources told Reuters, and another on April 17 to 18 on whether to extend cuts beyond the agreed six months.

Oil rises about 3 pct on economic stability hopes - (Reuters) - Oil prices rose about 3 percent on Tuesday, along with world stock markets, supported by China's plan to introduce policies to stabilize a slowing economy, reversing the previous session's losses due to grim data in the world's second-largest economy. Brent crude rose $1.65, or 2.8 percent, to settle at $60.64 a barrel. U.S. crude futures ended $1.60, or 3.2 percent, higher at $52.11 a barrel. "Some of the fears about the economic slowdown in 2019 seem to have ebbed away," said Gene McGillian, director of market research at Tradition Energy in Stamford, Connecticut. "The market is latching on to news that suggests that the economy may be better than thought." China's National Development and Reform Commission offered some support on Tuesday, signaling it might roll out more fiscal stimulus. This countered negative sentiment from Monday when crude prices fell more than 2 percent after data showed weakening imports and exports in China. However, both oil benchmarks pared gains slightly in post-settlement trade after British lawmakers defeated Prime Minister Theresa May's Brexit divorce deal by a crushing margin, triggering political upheaval that could lead to a disorderly exit from the European Union or even to a reversal of the 2016 decision to leave. Parliament voted 432-202 against her deal, raising economic uncertainty that weighed on markets. Fundamentally, output cuts from the Organization of the Petroleum Exporting Countries and other producers, including Russia, have begun to reduce fears of oversupply. The group, known as OPEC+, agreed in late 2018 to cut supply starting this month, seeking to rein in a global glut. OPEC+ have set a meeting for March 17 to 18 to monitor implementation of their pact, sources told Reuters, and another meeting on April 17 to 18 to decide on whether to extend cuts beyond the agreed six months. Further support has come from data showing the number of U.S. rigs drilling for new oil dipped slightly so far this year. Also, analysts in a Reuters poll, ahead of weekly industry data on Tuesday and a government report on Wednesday, expected U.S. crude stockpiles to have fallen for a second straight week.

Oil Demand to Grow Steadily in 2020s  -  Oil demand will grow steadily in the 2020s and peak in the late 2030s, according to Rystad Energy’s current long-term outlook. “In our long-term outlook we currently see oil demand growing steadily in the 2020s and peaking in the late-2030s, as we incorporate moderate technological shifts and accelerated efficiency gains that will flatten on-road transportation demand and petrochemical feedstock demand growth towards 2040,” Rystad Energy’s Chief Oil Analyst Bjornar Tonhaugen said in a statement sent to Rigzone recently. Tonhaugen warned however that in the company’s “low case”, oil demand could potentially peak ten years earlier, in 2027, “given additional demand displacement by a more rapid transportation electrification, oil-to-gas and oil-to-renewables power switching, and the integration of biofuels and bioplastics”. The Rystad Energy representative added that “even in a scenario with more rapid transportation electrification, the E&P industry still needs to make new discoveries and/or find ways to extract more oil out of existing fields to satisfy oil demand to 2040”. In the statement sent to Rigzone, Tonhaugen highlighted that Rystad Energy recently revised down its Brent estimate for 2019, 2020 and 2021 and said the company continues to “see a need for production management by OPEC+ again to balance the market in 2021”. Demand is the biggest psychological headwind for oil right now, according to Helima Croft, head of commodity strategy at RBC Capital Markets, who expressed the view in a television interview with CNBC on Monday. “I think demand right now is the biggest psychological headwind for oil. People are very concerned about the [U.S.-China] trade war. There’s still this sort of corner of the market that’s concerned about a global recession and so I think that is the biggest headwind that OPEC has to overcome in trying to stabilize the price environment,” Croft said in the interview. 

Weekly Petroleum Report -- US -- EIA -- January 16, 2019 - The EIA weekly petroleum report is scheduled to be released today. Earlier, the EIA said their reports would not be delayed due to the partial government shutdown. Link here. Weekly US petroleum report, EIA:

• US crude oil inventories decreased by 2.7 million bbls
• WTI upon the news: up 9 cents, at $52.20 
• US crude oil inventories: now at 437.1 million bbls
• US crude oil inventories: now 8% above the 5-year average -- and remember, the 5-year average continues to increase; the Saudi surge, 2014 - 2016 certainly re-set the numbers
• refiners are operating at a 94.6% capacity; trending lower
• motor gasoline inventories about 6% above the 5-year average
• distillate fuel product supplied was down almost 9% from the same period last year
• jet fuel supplied was down almost 6% compared with same four-week period last year

Now, five minutes later, the price of WTI has turned red, down four cents. Movers and shakers apparently anticipated the report. Regardless of the draw (almost 3 million bbls) the fact that crude oil in storage, on a percentage basis, has actually increased over the past few weeks, is certainly disturbing for those hoping for a bull market in oil.

WTI Dips After Huge Gasoline Build, Surge In US Production - WTI Dips After Huge Gasoline Build, Surge In US Production - WTI has dropped, popped, dumped, and jumped since last night's surprisingly small crude draw and major product builds from API, but remains around the $52 level ahead of DOE data this morning.“The Chinese are throwing everything they can" at their economy, said John Kilduff, founding partner at hedge fund Again Capital LLC.“That’s the big key to oil markets, especially when you have OPEC and Russia starting to rein in production." Saudi Arabia’s energy minister said he was sure inventories will start to “return to normal averages and this will increase confidence” in the market. DOE:

• Crude -2.683mm (-2.5mm exp)
• Cushing -743k - biggest draw since Sept 2018
• Gasoline +7.503mm
• Distillates +2.967mm

For the 3rd week in a row, gasoline (and distillates) inventories soared. However, crude stockpiles slipped slightly more than expected and Cushing inventories dipped most since Sept 2018.

Oil torn between economic slowdown concerns, OPEC-led supply cuts - Oil prices struggled for direction in choppy trade on Wednesday, under pressure from data showing growing U.S. refined product inventories and record crude production, which could undermine global efforts to support prices.Brent crude oil futures rose 38 cents to $61.02 per barrel at 11:47 a.m. ET (1647 GMT). U.S. West Texas Intermediate crude futures were down 2 cents at $52.09 a barrel.U.S. fuel stockpiles last week rose more than forecast and for the fourth straight week, the Energy Information Administration said, outweighing a bigger-than-expected crude drawdown.Gasoline stockpiles rose 7.5 million barrels, compared with analysts' expectations in a Reuters poll for a 2.8 million-barrel gain. At 255.6 million barrels, gasoline stocks at the highest weekly level since February of 2017.Distillate stockpiles, which include diesel and heating oil, increased 3 million barrels, versus expectations for a 1.6 million-barrel rise, the data showed.Crude inventories fell 2.7 million barrels, more than double forecasts."The continued strong rise in oil product stocks is bearish and overshadows the draw in crude oil stocks," said Carsten Fritsch, senior commodities analyst at Commerzbank.The EIA also said U.S. crude production rose to a record high of 11.9 million barrels per day last week, as crude exports jumped close to record highs near 3 million bpd.  Growing U.S production and exports have weighed on oil prices. Output is expected to grow to a new recordof more than 12 million bpd this year, with U.S. turning into a net  crude exporter in late 2020, the EIA said on Tuesday.The rising output could undermine oil markets which have been receiving support from supply cuts by the Organization of the Petroleum Exporting Countries, including top exporter Saudi Arabia, and major non-OPEC producer Russia. Mounting signs of an economic slowdown across the world may also keep oil prices in check.

WTI Dips After Smaller Than Expected Crude Draw -  Oil prices rebounded from yesterday's drop (after China stimulus chatter) despite the U.S. Energy Information Administration trimming its forecast for 2019 petroleum demand slightly in a monthly report released today. “The Chinese are throwing everything they can" at their economy, “That’s the big key to oil markets, especially when you have OPEC and Russia starting to rein in production."  API:

• Crude -560k (-2.5mm exp)
• Cushing -796k - biggest draw since Sept 2018
• Gasoline +5.99mm
• Distillates +3.214mm

After massive product builds in the last two weeks, API shocked with yet another huge build in Gasoline and Distillates but a rather disappointing (for oil bulls) smaller than expected draw in crude... Overall inventories remain near November lows. WTI was hovering just above $52 ahead of the API print, but kneejerked lower on the smaller than expected crude draw

Oil Ends Up Slightly as Record U.S. Production Offsets Crude Draws - The EIA has been forecasting 12 million barrels per day or more in U.S. production in 2019, although it hasn't said when exactly that might happen. Its latest weekly dataset shows that day might arrive faster than oil bulls feared. New York-traded West Texas Intermediate crude settled up slightly on Wednesday after the U.S. Energy Information Administration's report of a record high of 11.9 million bpd in production offset what should have been a larger rally based on an outsize weekly drop in crude stockpiles. London-traded Brent crude, the global benchmark for oil, also saw choppy trading. WTI settled up 20 cents, or 0.4%, at $52.31 per barrel after falling as much as 1.6% earlier in the session. On Tuesday, it rose 3.2%. Brent, the global oil benchmark, gained 70 cents, or 1.2%, to trade at $61.45 by 2:40 PM ET (19:40 GMT) after sliding about 1% earlier. On Tuesday, Brent settled up 2.8%. The EIA reported that crude oil inventories fell by 2.68 million barrels in the week to Jan. 11 versus forecasts for a drawdown of 1.32 million barrels. In the previous week the decline was 1.7 million. Gasoline inventories rose by 7.5 million barrels, compared to expectations for a build of 2.77 million barrels, while distillate stockpiles increased by 2.97 million barrels, compared to forecasts for a gain of 1.57 million. But more than those numbers, what grabbed traders were the production figures, which grew by 200,000 bpd from the previous week to reach 11.9 million bpd last week. The weekly data set came just a day after a separate EIA Short-Term Energy Outlook that reiterated expectations for record high of more than 12 million bpd in 2019 and possibly around 13 million bpd by 2020.

Record U.S. crude production weighs on oil prices - Oil prices fell on Thursday after U.S. crude production neared an unprecedented 12 million barrels per day and concern grew over weakening demand, particularly in light of the trade dispute between the United States and China.  International Brent crude oil futures were down 52 cents, or nearly 1 percent, at $60.80 per barrel around 10:36 a.m. ET (1536 GMT).  U.S. West Texas Intermediate crude futures fell 86 cents, or 1.6 percent, to $51.45 per barrel.The price of oil has risen about 20 percent from the 18-month low registered in late December, but investors appear loath to push crude much higher without evidence that relations between Washington and Beijing are improving, analysts said."Brent needs to move past $62 before we can talk about $65," BNP Paribas head of commodities Harry Tchilingurian told the Reuters Global Oil Forum."From there, the door will be open to target $70, (if) we do not have negative news emerging around U.S.-China trade talks that caused high levels of angst and de-risking last December."Soaring U.S. crude output, which neared a record 12 million bpd in early January, is fueling some of the concern among traders and investors that growth in global supply this year will outpace demand.Along with the surge in U.S. crude output, exports from the United States are also rising, hitting a record 3.2 million bpd by the end of last year. "Crude oil exports from the U.S. have strongly increased during the last few years and the trend is expected to remain positive," shipping brokerage Banchero Costa said in a note.

Oil slides on increased U.S. output and U.S.-China trade fears (Reuters) - Oil prices fell about 2 percent on Thursday, extending recent weakness on concerns over surging U.S. crude production and slack global demand, particularly in light of the ongoing trade dispute between the United States and China. Brent crude oil futures LCOc1 were down $1.06, or 1.7 percent, to $60.26 a barrel by 11:03 a.m. EST (1603 GMT). U.S. crude futures CLc1 fell $1.00 to $51.31 a barrel, off 1.9 percent. The Organization of the Petroleum Exporting Countries (OPEC) in its monthly market report cut its forecast for the average demand for its crude in 2019 to 30.83 million bpd, down 910,000 bpd from the 2018 average. [OPEC/M] OPEC said its output fell 751,000 barrels per day in December, suggesting it was on its way to fulfilling terms of a pact to cut production between those nations and other producers, including Russia. Even as OPEC and allied exporters cut production, however, U.S. output has surged close to 12 million bpd in the latest week, and some traders and investors are concerned that growth in global supply this year will outpace demand. “That’s going to weigh on the market at least until we get some new information,” including from OPEC, said Thomas Saal, senior vice president of INTL Hencorp Futures in Miami. Still, Saal said, investors had already expected increasing U.S. production and priced it into the market, “so that’s why prices are down a little bit and not down a lot.” U.S. output has climbed by 2.4 million bpd since January 2018 and stockpiles of crude and refined products have risen sharply, U.S. Energy Information Administration data showed. In response to the drop in price in the second half of last year, OPEC and non-members plan to cut production by a joint 1.2 million bpd this year. Oil is still about 20 percent above the lows reached in late December, but analysts said Brent has been trading in the low $60s and U.S. crude in the low $50s due to ongoing nervousness about relations between Washington and Beijing and China’s economic outlook. 

Crude Oil Settles Lower - West Texas Intermediate (WTI) crude oil for February delivery lost some of its recent momentum Thursday. The front-month WTI declined 24 cents to end the day at $52.07 per barrel. The March Brent futures price also edged downward Thursday, falling 14 cents to settle at $61.18 per barrel.As Bloomberg reported earlier Thursday, investors have been weighing “surging U.S. production against output curbs pledged by some of the world’s top suppliers.” On Wednesday, the U.S. Energy Information Administration (EIA) reported that domestic crude oil production was 11.9 million barrels per day (MMbpd) last week – a 200,000-bpd increase from the previous week and approximately 2.2 MMbpd higher than this time last year.EIA also stated that U.S. crude oil inventories were 437.1 million barrels at the end of last week – down 2.6 million barrels from the previous week but up 6 percent year-on-year.The price of a gallon of reformulated gasoline (RBOB) moved in the opposite direction of crude oil Thursday. The February RBOB contract gained a penny, settling at $1.43.Henry Hub natural gas futures also settled higher Thursday. The February contract rose 3 cents to end the day at $3.41. Also on Thursday, the American Petroleum Institute (API) announced that total U.S. exploratory oil and natural gas well completions were up 23 percent during the fourth quarter of 2018 compared to the corresponding period the previous year. The figure comes from API’s 2018 Quarterly Well Completion Report, Fourth Quarter.

Oil rises on OPEC output cuts, hopes of easing in US-China trade tensions - Oil prices sharply extended gains, rising with the stock market, on news that Beijing has put forward a plan to eliminate its trade surplus with the United States.The plan would see China ramp up purchases of U.S. goods over the next six years with the goal of reducing its $323 billion trade surplus last year to zero by 2024. President Donald Trump has highlighted the U.S. trade deficit with foreign countries, and the offer could appeal to the protectionist commander-in-chief.However, U.S. trade negotiators — who aim to address issues like barriers to accessing the Chinese markets and China's alleged theft of intellectual property — are skeptical of Beijing's offer, according to Bloomberg, which first reported the news.Nevertheless, international Brent crude oil futures were up $1.67, or nearly 2.7 percent, at $62.85 per barrel at 11:10 a.m. ET (1610 GMT). U.S. West Texas Intermediate (WTI) crude futures rose $1.68, or 3.2 percent, $53.75 per barrel. Both benchmarks are up about 4 percent this week, putting them on pace for a third consecutive week of gains following a three-month collapse in oil prices. Earlier on Monday, markets got a boost from a Wall Street Journal report that Washington is considering removing tariffs on Chinese goods to calm markets and advance trade talks.However, markets gave backs gains after the U.S. Treasury Department and United States Trade Representative denied that either agency has recommended the tactic.The ongoing trade dispute between the world's two biggest economies has raised concerns about slower global growth and weaker demand for fuel. "The most unknown question for the oil markets for 2019 is the level of demand, so oil interestingly is acting more like an equity market in the sense that it's pricing in concerns about future demand," said Tamar Essner, director of energy and utilities at Nasdaq Corporate solutions.

Oil Rises On Trade Deal Hopes - Oil prices were relatively quiet this week, bouncing around, but closed out the week on a positive note.  The IEA said in its latest Oil Market Report that “the journey to a balanced market will take time, and is more likely to be a marathon than a sprint.” The agency noted that while Saudi Arabia seems determined to follow through, there is “less clarity” on Russia. The agency left its demand growth forecast unchanged, arguing that while the global economy is starting to show some worrying signs, lower oil prices will also help keep demand aloft.   OPEC released its monthly Oil Market Report on Thursday, revealing a roughly 751,000 bpd decline, according to secondary sources. Saudi Arabia slashed output by 468,000 bpd, Iran lost 159,000 bpd, and Libya lost 172,000 bpd. Smaller cuts came from the UAE (-65,000 bpd) and involuntary losses from Venezuela (-33,000 bpd). The largest gain come from Iraq, which added 88,000 bpd. The monthly totals occurred before implementation of the OPEC+ agreement, which calls for cuts of 1.2 mb/d from October’s baseline.  The EIA forecasts a $61-per-barrel price for Brent for 2019, with WTI averaging $8 below Brent in the first quarter, a discount that will narrow to a smaller $4-per-barrel markdown by the fourth quarter. The agency maintained a forecast for U.S. oil production at 12.1 mb/d this year, unchanged from prior estimates even though it has lowered its pricing forecast. U.S. Trade Representative Robert Lighthizer did not see any progress on the structural trade issues during negotiations earlier this month. The two sides will resume negotiations at the end of January.

Oil Market Report: A marathon, not a sprint - IEA - Last month, we asked if there was a floor under prices following the signing of a new Vienna Agreement that aims to re-balance the oil market. Following an initial burst of enthusiasm for the deal, scepticism set in, alongside worries about the global economic background. Prices fell by $10/bbl with Brent crude oil bottoming out on 24 December at just above $50/bbl. For the producers, this was unwelcome, but for consumers it provided a nice present for the holidays. In the US Gulf Coast, gasoline prices in early January averaged $1.89/gal versus the summer peak of $2.79/gal and in India, prices are about 14% below the early October peak. Recently, leading producers have restated their commitment to cut output and data show that words were transformed into actions. In December, OPEC production fell by almost 600 kb/d and Saudi Arabia has signalled that, for its part, further significant cutbacks will take place in January and beyond.  The Brent price has moved back above $60/bbl, so the answer to our question posed last month seems to be a qualified yes, at least for now. However, the journey to a balanced market will take time, and is more likely to be a marathon than a sprint. While Saudi Arabia is determined to protect its price aspirations by delivering substantial production cuts, there is less clarity with regard to its Russian partner. Data show that Russia increased crude oil production in December to a new record near 11.5 mb/d and it is unclear when it will cut and by how much. Other non-OPEC countries joining in the output deal saw higher output, including Mexico.

OPEC oil production sinks in December as Saudis cut output more than expected - Last month, OPEC struck a deal with Russia and nine other nations to keep 1.2 million barrels per day off the market starting in January. The so-called OPEC+ alliance is trying to prevent another price-crushing oil glut. The cost of crude collapsed in the final quarter of 2018, stirring memories of the punishing 2014-2016 downturn.The 14-nation OPEC got a jump on the agreement in December. Oil supplies from OPEC nations plunged by 751,000 barrels per day to nearly 31.6 million bpd, according to independent figures cited by OPEC in its monthly report.Top oil exporter Saudi Arabia was the driving force behind the headline decline. The kingdom's output plunged by 468,000 bpd to just over 10.5 million bpd last month, independent figures show. Data supplied directly by Riyadh show a 450,000 bpd drop to slightly more than 10.6 million bpd.When OPEC announced the deal, Saudi Energy Minister Khalid al Falih initially said his country's output would fall to 10.7 million bpd in December from a record high 11.1 million bpd in November. The Saudis are targeting another drop to 10.2 million bpd this month, Falih has said.The pullback in OPEC production was deepened by supply disruptions in Libya and Iran.Output in Libya fell by 172,000 bpd to 928,000 bpd in December, after a group of armed protesters and aggrieved workers took over the country's largest oil field.In Iran, production dropped by another 159,000 bpd to just under 2.8 million bpd, as the nation enters a second month under wide-ranging U.S. sanctions. The Islamic Republic has gone from being OPEC's third biggest producer to its fifth largest, falling behind the United Arab Emirates and Kuwait in December.Iraq saw the biggest jump in production in the final month of the year. It's output rose 88,000 bpd to just over 4.7 million bpd. At that level, Baghdad would need to cut about 200,000 bpd in January to meet its q uota under the supply cut agreement. Iraq, OPEC's second largest producer, regularly pumped above its quota throughout the group's last round of supply cuts.

OPEC analysis shows major oil output cuts still needed to prevent stock build — OPEC said Thursday it had already slashed its crude oil output by some 750,000 b/d month on month in December, but that is only about halfway to the level of cuts needed to avoid a supply glut. OPEC's 14 members -- which no longer include Qatar, as it terminated its membership at the end of 2018-- pumped 31.58 million b/d in December, down from 32.33 million b/d in November, according to the organization's closely watched Monthly Oil Market Report. But OPEC has estimated that global demand for its crude will average 30.88 million b/d in the first half of 2019, meaning the bloc will need to cut some 700,000 b/d more if it wants to avoid a build-up of oil inventories. OPEC and its allies, including top global oil producer Russia, have aggressively targeted OECD global inventories over the last two years, instituting output quotas to bring stocks down to the five-year average. But a production surge in Saudi Arabia, Russia and other countries in the second half of 2018 has caused inventories to rise above that benchmark, prompting the 24-country OPEC/non-OPEC coalition to agree on another round of output cuts that is to last the first six months of 2019. Under the deal, OPEC agreed to shoulder some 800,000 b/d of the cuts, while Russia and the nine other non-OPEC partners committed to cut 400,000 b/d. But OPEC's analysis shows those cuts may not be enough. Refinery turnarounds in the winter will add to the challenge. However, Saudi energy minister Khalid al-Falih earlier this week said he was confident inventories would return to the five-year average -- which he called "the key metric for all of us to watch" -- within the six-month cut agreement. OECD inventories were 23 million barrels above the five-year average, according to OPEC's report. Saudi Arabia's crude output fell 470,000 b/d in December to average 10.55 million b/d, according to an average of the six secondary sources that OPEC uses to gage production. The kingdom, however, self-reported production of 10.64 million b/d, down 450,000 b/d month on month. That is above its quota of 10.31 million b/d under the cut agreement, but Falih has said Saudi production would come in at around 10.2 million b/d in January. Iraq's production surged to 4.71 million b/d in December, up 90,000 b/d from November, according to secondary sources. Its quota under the deal is 4.51 million b/d. The UAE, OPEC's third largest producer, pumped 3.22 million in December, down 70,000 b/d from November, but still above its quota of 3.07 million b/d. In Iran, hit by US sanctions, output plummeted 160,000 b/d month on month to 2.77 million b/d. Iran is exempt from the production-cut deal. Fellow exempt member Libya pumped 930,000 b/d, down 170,000 b/d from November, while Venezuela, also exempt, produced 1.15 million b/d, a 30,000 b/d drop, according to the report.

Here's exactly how much oil OPEC members and allied nations intend to cut in 2019 - Six weeks after agreeing to slash production, major oil producers are finally giving investors some clarity on exactly how much crude they'll take off the market.OPEC on Friday released a table laying out production quotas for each of its 14 members and the 10 allied countries participating in the deal. The two dozen nations agreed last month to slash a combined 1.2 million barrels per day in order to prevent a repeat of the oil glut that caused crude prices to tank from 2014 to 2016.However, over the following weeks, international benchmark Brent crude prices fell another 18 percent. The continued slide reportedly prompted OPEC to urge oil producers to publicly release their production quotas to boost the market's confidence in the cuts.While oil prices have risen for the last three weeks, OPEC has nevertheless decided to publish the output levels under the deal, which runs through the first six months of 2019. The so-called OPEC+ alliance meets April 17-18 to assess the impact of the cuts. Here's how much each of the countries in the deal will endeavor to keep off the market:

US Military Caught Teaching Saudi Coalition Troops How to Drop Bombs on Yemen  — Newly obtained documents revealed that the United States, despite past denials, was involved in training United Arab Emirates troops for combat in Yemen, where the UAE is fighting as part of a Saudi-led coalition, Yahoo News reported. The US Air Forces Central Command documents specifically state that units at the US’s Air Warfare Center in Al Dhafra, about 30km south of UAE capital Abu Dhabi, “advanced the UAE’s F-16 pilot training program”, Yahoo News reported late Wednesday. Those trainees were then “immediately deployed for combat operations in Yemen” between 1 January 2016 and 31 December 2017, the news outlet said. Additionally, the documents state that the US was involved in an advanced aerial combat training exercise in which American and allied pilots assisted “150 airmen … to prepare for combat ops in Yemen”, Yahoo News said. The news outlet said it obtained the documents through the Freedom of Information Act.Still, a US Central Command (CENTCOM) spokesperson, as well as a second CENTCOM official, told Yahoo News that the US does not “conduct exercises with members of the [Saudi-led coalition] to prepare for combat operations in Yemen”.The denials echoed statements made last month by General Joseph Dunford, chairman of the US Joint Chiefs of Staff, who stressed that the US is “not a participant in the civil war in Yemen nor are we supporting one side or the other”, as reported at the time by US media.Still, the Yahoo News report comes amid heightened pressure on President Donald Trump’s administration to end US involvement in the war in Yemen, which has left thousands on the brink of starvation and caused a cholera outbreak.Saudi Arabia launched its military campaign in Yemen in 2015 to root out the country’s Houthi rebels, who had taken over the capital, Sanaa, and ousted the internationally recognised and Saudi-backed government of President Abd Rabbuh Mansour Hadi.  The US military has since provided intelligence sharing and training to the Saudi-led coalition, which includes the UAE.

Yemen’s Houthis Are Doxxing the US Troops Working With the Saudis -- In efforts to expose the criminals responsible for the ongoing genocide against Yemeni civilians, Yemeni Intelligence has started publishing the names and personal information of the US troops in charge of the Saudi command centers where airstrikes are ordered.Washington tries to keep a tight lid on the extent of its involvement in Yemen. However, US troops are actually much more active in the conflict than most Americans would expect. In fact, the United States provides intelligence and logistical support for selecting airstrikes in addition to endless weapons and bombs.New information from Yemeni Intelligence sheds light on the US troops manning the Saudi command centers where airstrikes and military operations are carried out. As part of a broader campaign to expose the people carrying out war crimes against civilians, Yemen has started exposing the personal information of these criminals.The first target is Alexander R. Fhlug from Madison, Wisconsin. Yemeni Intelligence released a broad range of photos and personal information about Fhlug including where he lives, which barber he frequents, his favorite brands and shopping habits, and his other interests. Over 39,000 people have died or sustained injuries from US-backed Saudi airstrikes and military operations — a third of which are women and children. The United States provides the bulk of precision-guided smart missiles, aircraft, training for ground troops, and intelligence support.

Iran protests to Poland over Iran-focused summit (Reuters) - Iran’s foreign ministry summoned a senior Polish diplomat to protest at Poland jointly hosting a global summit with the United States focused on the Middle East, particularly Iran, state news agency IRNA reported on Sunday. U.S. Secretary of State Mike Pompeo on Friday said the summit — to be held in Warsaw over Feb. 13-14 - would focus on stability and security in the Middle East, including the “important element of making sure that Iran is not a destabilizing influence”. An Iranian foreign ministry official told Poland’s charge d’affaires in Tehran that Iran saw the decision to host the meeting as a “hostile act against Iran” and warned that Tehran could reciprocate, IRNA added. “Poland’s charge d’affaires provided explanations about the conference and said it was not anti-Iran,” the agency added. “The international community has the right to discuss various regional and global problems,” it said in a statement on Sunday, adding that Poland has the right to co-host a conference that aims to develop a platform for action for the stability and prosperity of the Middle East. Relations between Tehran and Washington are highly fraught after the decision in May by U.S. President Donald Trump to withdraw from a 2015 nuclear deal between Iran and world powers and to reimpose sanctions, including on Iran’s oil sector. Speaking in Qatar on Sunday, Pompeo said the aims of the summit will include changing the “behavior” of Iran, which Washington accuses of destabilizing the region and supporting terrorism. Tehran denies the accusations and says U.S. military presence in the Middle East causes tensions and instability. 

Iran’s Press TV Reporter Arrested in US for No Specific Reason — US officials have arrested a journalist who works for the Iranian government-backed English-language channel Press TV. She is being held without charge, the broadcaster said on Wednesday. No formal charges have been brought against her. Marzieh Hashemi, described by Press TV as “US-born”, has been living in Iran for years and is a Muslim convert, according to the broadcaster. Formerly known as Melanie Franklin, she appears regularly on the channel as an anchor and documentary filmmaker. Press TV reported that Hashemi was arrested at St Louis Lambert International Airport on Sunday, and was only allowed to call her family two days after being detained. “Her relatives were unable to contact her, and she was allowed to contact her daughter only two days after her arrest,” Press TV reported. “[Hashemi] told her daughter that she was handcuffed and shackled and was being treated like a criminal.” Press TV said that Hashemi had gone to America to visit her terminally ill brother and also claimed that US officials had prevented her from wearing her hijab and had offered only pork, prohibited in Islam, as a meal.

Israel may need to invade Iran, concludes Tel Aviv think tank – Israel may need to invade Iran to stop its entrenchment in Syria, an assessment by the Institute for National Security (INSS) in Tel Aviv has concluded. The independent think tank affiliated with Tel Aviv University looked at a range of scenarios in a report in which it concluded that the most serious threat facing Israel in 2019 would be an all-out war in the north.The report was launched today at a ceremony at the official residence of the President of Israel. It lists threats to Israel in order of severity and makes recommendations on how best to challenge Iran, Hezbollah and Hamas.Details of the assessment reported by the Jerusalem Post show that the most serious threat facing Israel in 2019 would be an all-out war in the north involving Iran, Hezbollah and Syria. Such a confrontation, it says, is likely to spill over to the south, and Israel would additionally find itself battling Hamas in the Gaza Strip. Hence, says the think tank, Israel must be prepared for a war on all fronts, described in the report as the “whole case” scenario, which is also the “worst case” scenario. Included in the list of threats is, predictably, Iran’s nuclear programme.Despite ranking the situation in Gaza as the least threatening to Israel, the report found that there was greater urgency to address the situation in the enclave because it was liable to escalate in the immediate future, more than any of the other arenas. While noting US President Donald Trump’s change of policy towards Iran’s nuclear programme and his decision to take a much harder line than his predecessor Barack Obama, the institute said that Washington is not prepared to enter into a military confrontation with Tehran. It cited Trump’s recent decision to withdraw troops from Syria to emphasise that Israel may need to go it alone and invade Iran.

Israeli Army Chief Admits to Waging a Secret War in Syria  — For years Israel denied allegations that it had a role in funding and weaponizing the anti-Assad insurgency in Syria, and in recent years military officials responded “no comment” even when confronted with overwhelming evidence of Israeli weapons documented in al-Qaeda linked insurgents’ hands, but this all changed in a new British Sunday Times interview with outgoing Israeli army commander Gadi Eisenkot, who has finally confirmed the Israeli Defense Forces (IDF) supplied weapons to rebels across the border “for self-defense,” and further perhaps more stunningly, has admitted to long waging an “invisible war in Syria” that involved “thousands of attacks.”The interview constitutes the first time that any current top Israeli military or government official has fully acknowledged sending anything beyond “humanitarian supplies,” such as medical aid to Syrian militants seeking to topple the Assad government; and yet it still appears the country’s military chief is slow playing the confirmation, only acknowledging the IDF provided “light weapons” — even after years of reporting has definitively uncovered an expansive Israeli program to arm dozens of insurgent groups and pay their salaries, including known affiliates of al-Qaeda in Syria.This comes after the Syrian government has for years accused Israel of partnering with the west and gulf countries, such as the US, UK, Saudi Arabia, Qatar, and Turkey of funding and weaponizing an al-Qaeda/ISIS insurgency as part of covert regime change operations aimed at Damascus and its allies Iran and Hezbollah. Since then, countries like Qatar have come forward to reveal just how vast their covert role in fueling the Syrian war really was, which we covered in our story, In Shocking, Viral Interview, Qatar Confesses Secrets Behind Syrian War. The Sunday Times relates a key confession that comes out of Lt.-Gen Gadi Eisenkot’s explosive interview as follows: Eisenkot acknowledged for the first time, however, that Israel had supplied rebel groups in the border area with light weapons “for self-defence”.   Israel was a hidden player on a crowded Syrian battlefield. Eisenkot positively boasted in the interview that “We operated in an area controlled by the Russians, sometimes attacking targets a kilometre or two from Russian positions,” in order to strike at Iranian assets in Syria. The rare “confession” of sorts comes at a moment the White House says it’s moving forward on President Trump’s previously announced US troop pullout from Syria, something which has rattled Israel’s leadership, which has argued that Iran will become entrenched near Israel’s border as a result. Eisenkot’s words appear a warning to Iran that Tel Aviv aims to maintain operational capability inside Syria.

Israeli Army Chief Finally Admits to Arming Syrian Rebels — While reports to that effect have been around for months, over the weekend, Israeli Army Chief of Staff Gadi Eisenkot finally confirmed that the Israeli military indeed provided weapons to Syrian rebels operating in Golan during the Syrian War.This was the first official confirmation from the army chief, but back in September Israeli media were reporting that Israel has armed as many as 12 rebel factions. Those reports were quickly censored by the Israeli military, however.The rebel factions have been confirming such support for awhile as well, saying they were given large amounts of money and aid as well. Syria confirmed capturing arms and munitions with Hebrew writing on them held by the rebels.By late 2018, however, Syria was making major gains in this part of the country, ultimately forcing the Israeli-backed rebels to surrender, with some negotiating relocation to Idlib.Eisenkot insisted the arms were provided to the rebellion purely for “self-defense.” This is likely an attempt to justify the legality of this intervention in the Syrian War, in which Israel has long claimed neutrality. In reality, Israel’s claims of neutrality were always only superficial, with officials having repeatedly expressed a preference that ISIS or other Islamist rebel groups impose regime change rather than the Assad government surviving.

US takes Israel’s advice for unified ‘Syraq’ strategy -The Syrian war is morphing with the US drawing Iraq into it and bringing the western alliance system into the enterprise. Reports suggest that the US is quietly stepping up deployments to Iraq. The US Secretary of State Mike Pompeo just made “surprise visits” to Erbil and Baghdad. He was plainly dismissive that “there’s no contradiction whatsoever” in the shifting US strategy on Syria. The “Syraq” strategy is going to put Russia, Turkey and Iran in a quandary. They have to adapt quickly because their divergent interests in the conflict and the underlying contradictions in their axis will soon begin to surge. This ‘big picture’ remains elusive unless the NATO Mission in Iraq that appeared on the horizon is co-related with the US’s withdrawal plan in Syria. At the end of last year, on December 5, Baghdad was the venue of an intriguing conference when the recently established NATO Mission in Iraq (NMI) conducted an “introduction Event” at the Iraqi Ministry of Defence. According to the press release issued by NATO’s Allied Joint Force Command in Naples, the conference was attended by “key leaders from across the Iraqi Security and Defence sector.. The NMI Commander, Canadian general Dany Fortin, introduced the mission’s mandate, vision and aim as a “new iteration of a long-standing relationship” between NATO and Iraq, one that will bring together “expertise and best practice in security/defence sector reform, institution building and training and education from the entire Alliance and its partners.” 

A Turkish ‘Security Zone’ In Northeast Syria Is A Bad Idea - U.S. President Trump wants U.S. troops to leave northeast Syria. His National Security Advisor John Bolton and Secretary of State Mike Pompeo tried to sabotage that move. Trump came up with idea to hand northeast Syria to Turkey, but soon was told that Turkey would fight the Kurdish YPK/PKK who the U.S. armed and used as proxy force against the Islamic State.Turkey has no interest in fighting the Islamic State or in occupying Raqqa and other Arabic ethnic cities along the Euphrates. Its only interest is to prevent the formation of an armed Kurdish entity that could threaten its soft southern underbelly. It thus came up with the idea of a "security zone" in Syria that it would occupy to keep the Kurds away from its borders. But that border strip is exactly where the major Kurdish settlements are. Ayn al-Arab, in Kurdish 'Kobane', and many other cities along the border all have largely Kurdish populations. These would certainly fight against a Turkish occupation. Turkey also wants to control the Manbij area west of the Euphrates. Russia will not allow Turkish control of more Syrian land:Russian Foreign Minister Sergei Lavrov said Wednesday the Syrian regime must take control of the country's north, after calls from the United States to set up a Turkish-controlled "security zone" in the area.  The Kurdish organizations and the Syrian government also also reject the Turkish plan:“Syria affirms that any attempt to target its unity will be considered as a clear aggression and an occupation of its territories as well as a support and protection for the international terrorism by Turkey,” [an official source at Foreign and Expatriates Ministry] said. Turkey moved enough troops to its border to launch an invasion but the risk for its economy is high. There are local elections in March and the Turkish President Erdogan does not want to upset them by jumping into a quagmire. Erdogan will soon visit Russia again and discuss the issue with President Putin. Most likely Erdogan will be convinced that Syrian government control over the Kurdish areas, and Russian guarantees for a mostly quiet border, are a better solution than a costly Turkish occupation of a hostile population.

US Willing To Work With Russia To Protect Kurds In Syria- Bolton -- Bolton has signaled the US could work with Russia to ensure the enduring protection US-backed Kurds once American forces exit.  Bolton said during an interview with the Hugh Hewitt radio show on Friday that the US remains open to dialogue with Russia over how best to protect the Kurds amidst the troops draw down, which appears to finally be underway in its early phase. “The Kurds are in a very difficult position, and the President [Donald Trump], as he spoke with President Erdogan, thinks that we, they were loyal to us, and we must make sure that they’re not harmed,” Bolton told the Hugh Hewitt radio show. “We’d talk to the Russians about it, too, if need be.” Referencing the Dec. 14th call that appears the catalyst for Trump's full US troop draw down in Syria, Bolton described that Trump elicited a guarantee from Erdogan to not attack those particular Kurdish militias that have assisted the US in the anti-ISIS campaign. Bolton explained that Erdogan agreed; however, it could come down to definitions and labels as the Kurdish core of the US-armed and trained Syrian Democratic Forces (SDF) — the YPG —is officially designated by Turkey a terrorist extension of the outlawed PKK. Though Bolton brushed off a question related to the humiliating snub by Erdogan, dismissing it as "political" and a bit of domestic grandstanding prior to the upcoming March 31st nationwide elections, he did answer the following million dollar question: as Turkey has again declared readiness for an impending attack on Syrian Kurdish enclaves east of the Euphrates, where American troops are still stationed, how will the US respond if Erdogan gives the order while US forces are still present?  Bolton answered, "It’s exactly this concern that American service members not be put in jeopardy, especially by a NATO ally, that was principally on President Trump’s mind," and affirmed that American officials while in Ankara this week made it clear to their counterparts that "the Turks should not take any military action that’s not fully coordinated through military to military channels with us." Military to military coordination has continued, according to Bolton, even as US-Turkish diplomatic tensions have been severely strained.

Blackwater Founder: Private Contractors Could Replace US Troops in Syria  — Controversial founder and ex-CEO of the private security firm Blackwater, Erik Prince told Fox Business this week that private military contractors could replace the U.S. troops that are withdrawing from Syria. Following a similar failed proposal Prince reportedly made through White House channels in 2017 to privatize the fight against the Taliban in Afghanistan — which some contractor industry analysts have suggested Trump was “sympathetic” to— it appeared Prince was attempting to pitch both Washington and the American public in the Fox interview on the “alternate” plan. “The United States doesn’t have a long-term strategic obligation to stay in Syria. But, I also think it’s not a good idea to abandon our allies,” he told Fox Business. Prince offered the plan as a solution to the administration’s current stated dilemma of withdrawing troops in such a way that both protects the US-backed Kurdish SDF and prevents Iran from becoming more entrenched in the region. This way, according to Prince, private contractors could fill the void while allowing Trump to stand behind his repeat promises to end “forever wars”.  Prince — the brother of billionaire Education Secretary Betsy DeVos — has over the past years since selling his mired-in-controversy Blackwater group (now Academi) begun a new mercenary empire in China called Frontier Services Group (FSG), in a market where Western firms of necessity find themselves working closely with Chinese state authorities. He’s reportedly had success in securing security and logistics contracts in Africa and China, and has since at least 2017 lobbied both top US generals and Congressional leaders to consider massive privatization of the now fast approaching two decade long quagmire in Afghanistan, from which Trump has recently vowed to extricate the United States.  Prince’s prior headline grabbing Afghan plan involved some 6,000+ mercenaries overseen by a “viceroy” reporting directly to the White House, and with a private air force to boot.

Entering A Major Regional Reset: The Syria Outcome Will Haunt Those Who Started This War - The Middle East is metamorphosing. New fault-lines are emerging, yet Trump’s foreign policy ‘hawks’ still try to stage ‘old movies’ in a new ‘theatre’. The ‘old movie’ is for the US to ‘stand up’ Sunni, Arab states, and lead them towards confronting ‘bad actor’ Iran. ‘Team Bolton’ is reverting back to the old 1996 Clean Break script – as if nothing has changed. State Department officials have been briefing that Secretary Pompeo’s address in Cairo on Thursday was “slated to tell his audience (although he may not name the former president), that Obama misled the people of the Middle East about the true source of terrorism, including what contributed to the rise of the Islamic State. Pompeo will insist that Iran, a country Obama tried to engage, is the real terrorist culprit. The speech’s drafts also have Pompeo suggesting that Iran could learn from the Saudis about human rights, and the rule of law.”Well, at least that speech should raise a chuckle around the region. In practice however, the regional fault-line has moved on: It is no longer so much Iran. GCC States have a new agenda, and are now far more concerned to contain Turkey, and to put a halt to Turkish influence spreading throughout the Levant. GCC states fear that President Erdogan, given the emotional and psychological wave of antipathy unleashed by the Khashoggi murder, may be mobilising newly re-energised Muslim Brotherhood, Gulf networks. The aim being to leverage present Gulf economic woes, and the general hollowing out of any broader GCC ‘vision’, in order to undercut the rigid Gulf ‘Arab system’ (tribal monarchy). The Brotherhood favours a soft Islamist reform of the Gulf monarchies – along lines, such as that once advocated by Jamal Khashoggi .Turkey’s leadership in any case is convinced that it was the UAE (MbZ specifically) that was the author behind the Kurdish buffer being constructed, and mini-state ‘plot’ against Turkey – in conjunction with Israel and the US. Understandably, Gulf states now fear possible Turkish retribution for their weaponising of Kurdish aspirations in this way.And Turkey is seen (by GCC States) as already working in close co-ordination with fellow Muslim Brotherhood patron and GCC member, Qatar, to divide the collapsing Council. This prefigures a new round to the MB versus Saudi Wahhabism spat for the soul of Sunni Islam. GGC states therefore, are hoping to stand-up a ‘front’ to balance Turkey in the Levant. And to this end, they are trying to recruit President Assad back into the Arab fold (which is to say, into the Arab League), and to have him act, jointly with them, as an Arab counter to Turkey. 

New Jerusalem ‘Apartheid Road’ opens, separating Palestinians and Jewish settlers - Haaretz  -After a delay of years, Route 4370 in the Jerusalemarea has opened. This road connects the settlement of Geva Binyamin to Route 1, the Jerusalem-Tel Aviv highway, between French Hill and the Naomi Shemer Tunnel, which leads to Mount Scopus. The highway, which has been called the “Apartheid Road,” is divided in the middle by an eight-meter high wall. Its western side serves Palestinians, who cannot enter Jerusalem, whereas the road’s eastern side serves settlers, who can now reach French Hill and Mount Scopus more easily from Anatot, Geva Binyamin and Route 60, north of the city.The West Bank has many segregated roads, but none of them is divided along its entire length by a wall. The road was built over a decade ago but remained closed due to a dispute between the army and the police over the staffing of a new checkpoint, opened because of the road. The road has recently been renovated by Moriah, the city of Jerusalem’s infrastructure company, even though the road lies outside the city’s jurisdiction and will not serve its residents. The budget for the highway came from the Ministry of Transportation. Most of its users are expected to be settlers living north of the city, who come to the city daily to work and study. In recent years, congestion has greatly increased at the Hizma checkpoint, which the settlers go through. For now, the new road will open only between 5 A.M. and noon, when traffic is heaviest. The head of the Binyamin Regional Council, Yisrael Gantz, who took part in the opening ceremony, called the road “no less than an oxygen line for the region’s residents, who work, study and go out for entertainment in the city. In a successful cooperation venture between the regional council, the Jerusalem municipality and the Ministry of Transportation, access to the capital has been revolutionized,” he said. Part of the work included the erection of a new checkpoint, which will be closed to West Bank Palestinians. Drivers on the Palestinian side will be able to go around Jerusalem without having to enter the city.

Massive campaign to defend Israeli religious students accused of killing Palestinian mother of nine - Far-right and ultra-Orthodox groups have created a media storm over the arrest of five Jewish youths on suspicion of carrying out “serious terror offenses,” including the killing of a Palestinian woman last October.The defence of the accused is being used to stoke nationalist tensions in the run-up to the general election on April 9, and to shift Israeli politics further to the right. All the mainstream parties are complicit.The five boys, students at the Pri Ha’aretz yeshiva (religious seminary) in the Rehelim settlement in the occupied West Bank, are accused of the stone-throwing attack on a Palestinian car October 12 that killed Aisha Mohammed Rabi, 47, a mother of nine, and injured her husband, Yacoub.The past year saw a threefold increase in racist attacks on Palestinians over 2017, with 482 politically motivated crimes by Jews reported in the West Bank. These included beating and throwing stones at Palestinians, painting nationalist, anti-Arab or anti-Muslim slogans, damaging h omes and cars, and cutting down trees belonging to Palestinian farmers.The murder and its aftermath highlight the utter lawlessness and racism inherent in the Greater Israel project from which the settler movement stems. Speaking to Ha’aretz after the attack, Yacoub Rabi said, “I don’t have any doubt it was the settlers. There were six or seven of them, and it was clear that they were young.”

Israel To Export Gas To Egypt In Bid To Create East Mediterranean Energy Export Hub - Israel has confirmed it is in extensive talks with Egypt to build a new sub-sea natural gas pipeline between the two countries as part of a previously agreed $15 billion deal to export Israeli gas to Egypt over a decade. Most significant is that the new line would hugely expand Israel's export capacity to its southern Arab neighbor, taking it far beyond the maximum 7 billion cubic meters per year currently able to flow through the existing EMG pipeline to Sinai. Israeli Energy Minister Yuval Steinitz proclaimed the ambitious project under negotiation to be part of broader "efforts to transform the eastern Mediterranean into an energy export hub on the doorstep of Europe," according to Bloomberg. “There’s no final decision yet, but there are talks,” Steinitz told Bloomberg while attending the Cairo-sponsored first East Mediterranean Gas Forum, a cooperative forum aimed at expanding east Mediterranean energy transformation and joint ventures. Notably, oil ministers from Israel, Greece, Egypt, Cyprus, Jordan, Italy, and the Palestinian Authority took part, and are set to participate again at another meeting in April. Reporting from the conference, Bloomberg described a common agreed upon goal "to work together to monetize reserves by using existing infrastructure and adding more capacity." Also significant is that this marks the first time an Israeli energy minister has visited Egypt since 2011, when "Arab Spring" demonstrations eventually brought down Hosni Mubarak, ushering in uncertainty and chaos, including brief Muslim Brotherhood rule, which for the first time brought the future of Egypt's peace treaty with Israel into question. Steinitz described further to Bloomberg that, "Construction could begin as early as next year on the pipeline that would transport gas from Israel’s offshore Leviathan and Tamar fields to Egypt’s existing liquefied natural gas plants for processing and re-export." And separately, concerning the bigger project of the sub-sea East Med pipeline supplying energy-hungry Europe — first proposed by Greek energy minister Yannis Maniatis in 2014 — Steinitz confirmed it is moving forward, touting the ambitious project as "the longest and deepest gas pipeline in the world," and an initial estimated cost of $7 billion, to be financed by "private companies and institutional lenders," according to the Israeli energy minister.

Saudi Teenager Rahaf al-Qunun Lands in Canada After Offer of Asylum  — Teenage Saudi asylum-seeker Rahaf Mohammed al-Qunun landed in Canada on Saturday to an official welcome after fleeing her home country last week.Upon her arrival at the Toronto airport, Qunun, wearing a Canada hoodie and a UN High Commission for Refugees cap, posed for photographs with Canadian Minister for Foreign Affairs Chrystia Freeland, but did not make a statement.  Qunun gained international attention earlier this month when she fled her home country to Thailand, saying she feared for her life should she be forcibly returned to her family.  While Australia had initially said it was looking at Qunun’s case to consider granting her asylum, Canada stepped in and offered immediate resettlement after Amnesty International’s Australia director Elaine Pearson said the Australian government was “too slow” and “failed to recognise the urgency of Rahaf’s situation”.The 18-year-old, who was en route to Australia, was stopped by Saudi and Kuwaiti officials when she arrived at Bangkok’s Suvarnabhumi airport last Saturday, and her travel document forcibly taken from her.After being denied entry by Thai immigration officials, Qunun then barricaded herself inside a hotel room, posting live updates on social media. “They will kill me,” she said. “My life is in danger. My family threatens to kill me for the most trivial things.”

Fearing for Her Safety, Canadians Hire Guards to Protect Saudi Teen – Amid threats to the safety of Saudi teenager Rahaf Mohammed, who was granted asylum in Canada, the Toronto agency that is helping her has hired a security guard to ensure “she is never alone” as she starts a normal life, its executive director said on Tuesday.Mohammed, 18, made international headlines after she barricaded herself in an airport hotel room in Thailand’s capital Bangkok to avoid being sent home to her family due to fears of being harmed or killed. The family denies any abuse. The teen has received multiple threats online that have made her fear for her safety, said Mario Calla, executive director of Costi, a refugee agency contracted by the Canadian government to help her settle in Toronto. Costi has hired a security guard and plans to “make sure she is never alone,” Calla told reporters. “It’s hard to say how serious these threats are. We’re taking them seriously.”