oil prices fell for the 3rd week in four this week, despite an attack on oil product tankers near the Strait of Hormuz that had all the earmarks of a false flag operation by one of the US allies in the region...after rising nearly 1% to $53.99 a barrel last week on hopes for a resolution of a dispute with Mexico, US crude prices for July delivery opened higher and rose to $54.84 a barrel early Monday on hopes for an extension of the OPEC/Russia supply cut deal, but quickly reversed those gains on word that Russia was still undecided and ended 73 cents lower at $53.26 per barrel, as U.S.-China trade tensions continued to threaten demand for crude....oil prices then opened higher on Tuesday on Saudi assurances that OPEC+ would not let the oil market slide any further, but again faded near the close to end just 1 cent higher at $53.27 a barrel, as traders looked ahead to the American Petroleum Institute’s report scheduled for release after the market close....when that report showed another surprise build of US crude inventories oil prices tumbled in after hours trading and hence opened lower on Wednesday, and then fell steadily throughout the day after the EIA confirmed the surprise rise in US crude stocks, with oil ending down $2.13 at $51.14 per barrel as ongoing trade tensions between the United States and China further dampened the outlook for oil consumption growth...oil prices opened slightly lower Thursday and were falling up until reports of tanker explosions in the Gulf of Oman off Iran coast renewed fears about conflict in the Middle East following the tanker strikes last month and sent prices as much as 4.5% higher before settling $1.14 or 2.2% higher at $52.28 a barrel....oil prices then continued higher on Friday, initially adding 70 cents to Thursday's close, but slid through the afternoon to end just 23 cents, or 0.4% higher at $52.51 a barrel, as slowing economic conditions and an IEA forecast of slower demand growth overshadowed the ongoing tensions in the Middle East...so despite the clear threat to Middle East oil shipments, US oil prices still ended down 2.7% for the week in a continuation of a bearish trend that has seen prices fall 22% over the past 8 weeks...
natural gas prices, meanwhile, eased up from their 3 year lows of last week, with natural gas for July delivery rising first 2 cents on Monday and then 4.2 cents on Tuesday, as hotter weather forecasts helped extend a mild price rally...a 1.3 cent drop on Wednesday and a 6.1 cent drop after the storage report on Thursday were then mostly reversed by a 6.2 cent price jump on Friday to leave natural gas prices 5 cents higher on the week at $2.387 per mmBTU...
the natural gas storage report from the EIA for the week ending June 7th indicated that the quantity of natural gas held in storage in the US increased by 102 billion cubic feet to 2,088 billion cubic feet by the end of the week, which meant our gas supplies were 189 billion cubic feet, or 10.0% more than the 1,899 billion cubic feet that were in storage on June 8th of last year, while still 230 billion cubic feet, or 9.9% below the five-year average of 2,318 billion cubic feet of natural gas that have typically been in storage after the first week of June in recent years....this week's 102 billion cubic feet injection into US natural gas storage was at the low end of expectations, as most analysts had estimated an increase in supplies near 110 billion cubic feet, but was still higher than the average 92 billion cubic feet of natural gas that have been added to gas storage during the first week of June in recent years....the 981 billion cubic feet of natural gas that have been added to storage over the past 11 weeks has been the largest injection of gas into storage on record for any similar period this early in the injection season, probably about double the average 11 week build of the past decade, as the 712 billion cubic feet that were added during the same 11 weeks of 2014 was the only year that even appeared close...
The Latest US Oil Supply and Disposition Data from the EIA
this week's US oil data from the US Energy Information Administration, reporting on the week ending June 7th, showed that a modest decrease in our oil imports and and a modest increase in our oil refining resulted in a smaller increase in our stored crude supplies, but still the ninth increase in 12 weeks...our imports of crude oil fell by an average of 316,000 barrels per day to an average of 7,611,000 barrels per day, after rising by an average of 1,065,000 barrels per day over the prior week, while our exports of crude oil fell by an average of 176,000 barrels per day to 3,122,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,489,000 barrels of per day during the week ending June 7th, 140,000 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 reported to be 100,000 barrels per day lower at 12,300,000 barrels per day, so our daily supply of oil from the net of our trade in oil and from well production totaled an average of 16,789,000 barrels per day during this reporting week...
meanwhile, US oil refineries were reportedly using 17,064,000 barrels of crude per day during the week ending June 7th, 126,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA reported that a net of 316,000 barrels of oil per day were being added to of the oil that's in storage in the US....hence, this week's crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 590,000 barrels per day short of what was added to storage plus what the oil 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 (+590,000) 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 they label in their footnotes as "unaccounted for crude oil"....with that much oil unaccounted for, we have to figure one or more of this week's crude oil metrics are again off by a statistically significant amount...(for more on how this weekly oil data is gathered, and the possible reasons for that "unaccounted for" oil, see this EIA explainer)....
further details from the weekly Petroleum Status Report (pdf) indicated that the 4 week average of our oil imports was unchanged from last week at an average of 7,336,000 barrels per day last week, now 9.0% less than the 8,059,000 barrel per day average that we were importing over the same four-week period last year...the 316,000 barrel per day increase in our total crude inventories was all added to our commercially available stocks of crude oil, as the amount of oil stored in our Strategic Petroleum Reserve was unchanged...this week's crude oil production was reported to be 100,000 barrels per day lower at 12,300,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was 100,000 barrels per day lower at 11,800,000 barrels per day, while a 2,000 barrel per day increase to 480,000 barrels per day in Alaska's oil production was not enough to impact the final rounded national total...last year's US crude oil production for the week ending June 8th was rounded to 10,900,000 barrels per day, so this reporting week's rounded oil production figure was roughly 12.8% above that of a year ago, and 45.9% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016...
meanwhile, US oil refineries were operating at 93.2% of their capacity in using 17,064,000 barrels of crude per day during the week ending June 7th, up from 91.8% of capacity the prior week, and finally back on par with the historical refinery utilization rate for this time of year....however, the 17,064,000 barrels per day of oil that were refined this week were still 2.5% below the 17,505,000 barrels of crude per day that were being processed during the week ending June 8th, 2018, when US refineries were operating at 95.7% of capacity....note that US refinery throughput had generally been in excess of 17 million barrels per day other than during the spring & fall maintenance seasons through most of the past two years up until the Venezuelan sanctions cut off the supply of heavy sour crude that US Gulf refineries are optimized for, and this week marks the first time refineries have processed over 17 million barrels per day since January 18th, suggesting a stabilization of the heavy crude supplies that those US refineries need...
with the increase in the amount of oil being refined, gasoline output from our refineries was similarly higher, increasing by 227,000 barrels per day to 10,276,000 barrels per day during the week ending June 7th, after our refineries' gasoline output had increased by 186,000 barrels per day the prior week....but even with those big increases in gasoline output, this week's gasoline production was still 1.7% less than the 10,451,000 barrels of gasoline that were being produced daily during the same week last year....meanwhile, our refineries' production of distillate fuels (diesel fuel and heat oil) fell by 165,000 barrels per day to 5,239,000 barrels per day, after our distillates output had increased by 222,000 barrels per day the prior week...but even with this week's decrease, the week's distillates production was still 2.5% more than the 5,111,000 barrels of distillates per day that were being produced during the week ending June 8th, 2018....
with the increase in our gasoline production, our supply of gasoline in storage at the end of the week rose for the fourth week in a row but for just the 5th time in 17 weeks, increasing by 764,000 barrels to 234,913,000 barrels over the week to June 7th, after our gasoline supplies had increased by 3,205,000 barrels over the prior week....the increase in our gasoline supplies was reduced this week because the amount of gasoline supplied to US markets increased by 436,000 barrels per day to 9,877,000 barrels per day and because our imports of gasoline fell by 395,000 barrels per day to 700,000 barrels per day, while our exports of gasoline fell by 148,000 barrels per day to 531,000 barrels per day...after our gasoline supplies had reached an all time record high eighteen weeks ago, and then had fallen by nearly 13% over 10 weeks while US Gulf Coast refineries were crippled by the Venezuelan sanctions, our gasoline supplies have now recovered by more than 4% over the past 4 weeks and now are back to 2% above the five year average of our gasoline supplies at this time of the year, while still fractionally lower than last June 8th's inventory level of 236,763,000 barrels...
meanwhile, with the pullback in our distillates production, our supplies of distillate fuels fell for the 9th time in 13 weeks, decreasing by 1,000,000 barrels to 128,372,000 barrels during the week ending June 7th, after our distillates supplies had increased by 4,572,000 barrels over the prior week....our distillates supplies reversed & fell this week because the amount of distillates supplied to US markets, a proxy for our domestic demand, rose by 981,000 barrels per day to 4,368,000 barrels per day, while our imports of distillates rose by 11,000 barrels per day to 123,000 barrels per day, and while our exports of distillates fell by 339,000 barrels per day to 1,137,000 barrels per day....but even after this week's inventory decrease, our distillate supplies were still 11.9% higher than the 114,693,000 barrels of distillate that we had stored on June 8th, 2018, even as they fell to 4% below the five year average of distillates stocks for this time of the year...
finally, even with lower oil imports and lower oil production, our commercial supplies of crude oil in storage still increased for the fifteenth time in 21 weeks, rising by 2,206,000 barrels, from 483,264,000 barrels on May 31st from 485,470,000 barrels on June 7th...with that increase, our crude oil inventories rose to nearly 8% above the recent five-year average of crude oil supplies for this time of year, and were roughly more than 38.5% higher than the prior 5 year (2009 - 2013) average of crude oil stocks as of the first week of June, with the disparity between those comparisons arising because it wasn't until early 2015 that our oil inventories first rose above 400 million barrels...since our crude oil inventories have generally been rising since this past Fall, after generally falling until then through most of the prior year and a half, our oil supplies as of June 7th were 12.3% above the 432,441,000 barrels of oil we had stored on June 8th, of 2018, but at the same time still 5.1% below the 511,546,000 barrels of oil that we had in storage on June 9th of 2017, and 3.1% below the 500,911,000 barrels of oil we had stored on June 10th of 2016...
OPEC's Monthly Oil Market Report
next we're going to review OPEC's June Oil Market Report (covering May OPEC & global oil data), which was released on Thursday of this past week and is available as a free download, and hence it's the report we check for monthly global oil supply and demand data...the first table from this monthly report that we'll look at is from the page numbered 61 of that report (pdf page 71), 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 avert any potential disputes that could arise if each member reported their own figures...
so, as we can see from this table of official oil production data, OPEC's oil output fell by 236,000 barrels per day to 29,876,000 barrels per day in May, from their revised April production total of 30,111,000 barrels per day...however that April figure was originally reported as 30,031,000 barrels per day, so that means their production for May was really just a 155,000 barrel per day decrease from the previously reported figures (for your reference, here is the table of the official April OPEC output figures as reported a month ago, before this month's revisions)...
the largely involuntary Iranian output cuts of 227,000 barrels per day due to US sanctions on their exports was the primary reason for the cartel's output cut in May, as production cuts by the Saudis, by Nigeria, and by Venezuela were almost entirely offset by increases in output from Iraq, Angola and Gabon...that 94,000 barrels per day increase in the output from Iraq, however, now puts them well over the output allocations assigned to each member after their December 7th meeting, when OPEC agreed to cut 800,000 barrels per day as part of a 1.2 million barrel per day cut agreed to with Russia and other oil producers, while the output from Nigeria also remains slightly above quota despite their May decrease, as can be seen in the table of as can be seen in the table of OPEC production allocations we've included below:
the above table came from a February 6th post on Saudi cuts and OPEC allocations at S&P Global Platts, and shows average daily production quota in millions of barrels of oil per day for each of the OPEC members for the first 6 months of this year, as was agreed to at their December 2018 meeting...note that Venezuela and Iran, whose oil exports are being sanctioned by the Trump administration, and Libya, which has been beset by a civil war, are exempt from any production quotas, and that only Libya has been producing more than they did in the 4th quarter of 2018, as can be seen in the fifth column of the OPEC production table above...
the next graphic from the report that we'll include shows us both OPEC and world oil production monthly on the same graph, over the period from June 2017 to May 2019, and it comes from page 62 (pdf page 72) of the June 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 metrics for global output shown on the right scale...
despite the sizable decrease in OPEC's production from what they reported a month ago, their preliminary estimate indicates that total global oil production still rose by 0.04 million barrels per day to 98.26 million barrels per day in May, but that came after April's total global output figure was revised down by 600,000 barrels per day from the 98.82 million barrels per day global oil output that was reported a month ago, as non-OPEC oil production rose by a rounded 270,000 barrels per day in May after that revision, with higher oil output from US, Kazakhstan, Azerbaijan, Canada and the UK the major reasons for the non-OPEC production increase.... the 98.26 million barrels per day produced globally in May was still 0.44 million barrels per day, or 0.4% higher than the revised 97.82 million barrels of oil per day that were being produced globally in May a year ago (see the June 2018 OPEC report (online pdf) for the originally reported May 2018 details)...with the decrease in OPEC's output, their May oil production of 29,876,000 barrels per day represented 30.4% of what was produced globally during the month, down from the revised 30.7% share they contributed in April....OPEC's May 2018 production was reported at 31,869,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year, excluding Qatar from last year's total and new member Congo from this year's, are now producing 1,728,000 fewer barrels per day of oil than they were producing a year ago, when they accounted for 32.6% of global output, with a 1,459,000 barrel per day drop in output from Iran and a 651,000 barrel per day decrease in the output from Venezuela from that time more than offsetting the year over year production increases of 269,000 barrels per day from Iraq, 219,000 barrels per day from Libya, and 196,000 barrels per day from the Emirates...
despite the 40,000 barrels per day increase in global oil output that was seen during May, the 600,000 barrels per day downward revision to April's global output meant there was a large deficit in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us...
global oil demand:
the table above came from page 36 of the May OPEC Monthly Oil Market Report (pdf page 46), and it shows regional and total oil demand in millions of barrels per day for 2018 in the first column, and OPEC's estimate of oil demand by region and globally quarterly over 2019 over the rest of the table...on the "Total world" line in the third column, we've circled in blue the figure that's relevant for May, which is their revised estimate of global oil demand during the second quarter of 2019...
OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will use 99.24 million barrels of oil per day, which was revised 0.04 million barrels of oil per day higher than their estimate for the 2nd quarter a month ago....meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world's oil producers were only producing 98.26 million barrels per day during May, which means that there was a shortfall of around 980,000 barrels per day in global oil production when compared to the demand estimated for the month...
in addition, the downward revision of 600,000 barrels per day to April's global output that's implied in this report, combined with the 40,000 barrels per day upward revision to 2nd quarter demand, means that the 380,000 barrels per day shortfall that we had figured for April based on last month's figures would now be revised to a deficit of 1,020,000 barrels per day....combined with deficit of 980,000 barrels per day in May, that means that for the 2nd quarter to date, global oil production has been running a million barrels per day short of what's need to cover demand...
note that in green we've also circled a downward revision of 290,000 barrels per day to first quarter demand...that means that the global deficit of 100,000 barrels per day we had previously figured for March would have to be revised to a global oil surplus of 190,000 barrels per day...similarly, the 350,000 barrel per day global oil output surplus we had for February would now be a 640,000 barrel per day global oil output surplus, and the 260,000 barrel per day global oil output surplus we has for January would be revised to a 550,000 barrel per day oil output surplus...still, despite those first quarter surpluses, it's evident that with the large deficits in April and May, oil producers are now running a sizable shortfall vis a vis global demand..
This Week's Rig Count
the US rig count fell for the 15th time in seventeen weeks over the week ending June 14th and was thus at another 16 month low, with the least drilling activity since February 2nd 2018....Baker Hughes reported that the total count of rotary rigs running in the US decreased by 6 rigs to 969 rigs this past week, which was also down by 90 rigs from the 1059 rigs that were in use as of the June 15th report of 2018, and quite a bit below the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...
the count of rigs drilling for oil fell by 1 rig to 788 rigs this week, which was also a new 16 month low, 75 fewer oil rigs than were running a year ago, and less than half of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014...at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 5 rigs to 181 natural gas rigs, which was also down by 13 rigs from the 194 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 natural gas targeting rigs that were deployed on August 29th, 2008...
with the addition of a rig offshore from Louisiana, the rig count in the Gulf of Mexico increased by 1 rig to 24 rigs this week, ending with a net of 22 rigs running offshore from Louisiana and 2 rigs deployed offshore from Texas....those totals are a 5 rig increase from the 19 rigs that were deployed in the Gulf in the same week a year ago, when 18 rigs were drilling in Louisiana waters and one was deployed offshore from Texas, and a 4 rig increase from the national total of 20 offshore rigs a year ago, when there was also a rig deployed in the waters offshore from Alaska at the time...
the count of active horizontal drilling rigs was down by 3 to 852 horizontal rigs this week, which was a new 15 month low for horizontal drilling and 80 fewer horizontal rigs than the 932 horizontal rigs that were in use in the US on June 15th of last year, and also well down from the record of 1372 horizontal rigs that were deployed on November 21st of 2014...at the same time, the directional rig count was down by 6 rigs to 68 directional rigs this week, but that was up by 1 rig from the 67 directional rigs that were operating during the same week of last year..... on the other hand, the vertical rig count was up by 3 rigs to 49 vertical rigs this week, but those were down from the 60 vertical rigs that that were in use on June 15th 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 oil & gas 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 June 14th, the second column shows the change in the number of working rigs between last week's count (June 7th) and this week's (June 14th) count, the third column shows last week's June 7th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number 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 15th of June, 2018...
as you can see from the above, drilling activity in most of the country was little changed except for in Texas, which saw one oil rig pulled out of the Eagle Ford in the south and 5 oil rigs pulled out of the Permian basin in the western part of the state...since six rigs were shut down in Texas Oil District 8, which would be the core Permian Delaware, while two rigs were started up in Texas Oil District 7C, or the southern Permian Midland basin, we have to assume that one of those start-ups was of a conventional well, not targeting the Permian itself...meanwhile, all 5 of the natural gas rigs that were idled this week came out of basins not tracked separately by Baker Hughes, and with no changes shown above other than In Wyoming and Alaska, we'd be hard pressed to speculate where those might have been...for those natural gas rigs not to show up as a change in the state totals, what had to have happened would be the startup of an oil rig and an offsetting natural gas rig at the same time in the same state....states with both kinds of wells, such as Texas, Oklahoma, and Louisiana, are the most likely places for that kind of switch to have occurred...if you're really interested, the Baker Hughes North America Rotary Rig Count Pivot Table (xls) has the individual well records over the last 8 years, but unless you know what you're looking for, you'd have to plan on spending quite some time with that file to find what you'd want to know...
ODNR Approves 11 Permits in Utica Shale – The Ohio Department of Natural Resources approved 11 new permits for horizontal wells in the Utica shale during the week ended June 8, according to the latest data provided by the agency. Rice Drilling LLC secured six new permits to drill in Belmont County, while Ascent Resources Utica LLC was awarded five new permits: two in Belmont and three in Guernsey counties. The number of rigs operating during the week stood at 19, according to ODNR. As of June 8, ODNR has issued 3,106 permits for horizontal wells across the Utica, the majority of which are in the southeastern part of the state. The agency reported that 2,613 of those wells are drilled and 2,222 are in production. There were no new permits issued for the northern Utica – which includes Columbiana, Mahoning and Trumbull counties. Also, no new permits were issued in neighboring Mercer and Lawrence counties in western Pennsylvania, according to the Pennsylvania Department of Environmental Protection.
Shale deposits drawing plastics attention to Ohio Valley - Plastics News -- The shale-rich Ohio Valley region continues to draw interest from materials firms because of its abundant supplies of natural gas.The region now produces 50 percent more oil and gas than it did during its previous peak in the 1970s, Greg Kozera said June 5 at Global Plastics Summit 2019 in Houston. Kozera is marketing director for Shale Crescent USA, a trade group that promotes the Ohio Valley region of Ohio, Pennsylvania and West Virginia to potential investors.Shell Chemical is making the region's potential a reality with a massive petrochemicals project near Pittsburgh that's set to open in the early 2020s. That project will include around 3.5 billion pounds of annual production capacity for polyethylene resin.Shell, which is based in Houston and London, chose the western Pennsylvania site because of the availability of natural gas via hydraulic fracturing (fracking) from the Marcellus and Utica shale deposits. Shell officials also have touted the proximity of the region to a large number of American consumers and end markets.A similar resin and feedstocks joint venture in Dilles Bottom, Ohio, is being analyzed by PTT Global Chemical of Thailand and Daelim Industrial Co. of South Korea. At GPS 2019, Shale Crescent USA business manager Nathan Lord said that 85 percent of U.S. natural gas production growth from 2008-18 took place in the Ohio Valley. The region "produces more natural gas than Texas with half of the land mass," he added.
Air pollution ‘alert’ presented at board of health meeting — Manufacturing in the planned Appalachian Storage and Trade Hub could impact Garrett County’s air quality, Ann Bristow said during the county commissioners’ recent board of health meeting in Oakland. “I’m alerting you to this,” she told the commissioners and Garrett County Health Planning Council members. A local resident and Frostburg State University professor emeritus, Bristow was a member of Gov. Martin O’Malley’s Marcellus shale advisory commission. She handed out a map showing existing and planned natural gas liquids infrastructure in the petrochemical “hub,” including refineries, processing facilities and pipelines. “It’s a small area of Kentucky, a large area of West Virginia, a little bit of Western Pennsylvania just over the Ohio River, and then Ohio,” Bristow said, pointing to various sites throughout the Ohio Valley region. Currently, the country’s petrochemical activity is mainly centered in Texas and Louisiana. “[But] the Houston area and the Gulf port area experience a lot of hurricanes and flooding events,” Bristow said. “And that’s one motivation for developing a natural gas liquids storage and trading hub in the Ohio Valley.” In addition to natural gas, hydraulic fracturing also produces natural gas liquids, including ethane. . “The first ethane cracker plant is being constructed in Beaver County, Pennsylvania,” Bristow said. “I think there are four or five others proposed. The other thing proposed is huge underground storage complexes for ethanes.” She noted Garrett County has “geological characteristics” for ethane storage, but none are planned for the ASTH project. “Here’s Garrett County,” Bristow said, pointing to the map, “and you can see how close we are to all of this proposed manufacturing, in terms of being down wind.” She handed out a graphic from a report titled “Plastic & Health: The Hidden Costs of a Plastic Planet,” illustrating direct and environmental exposure from plastics on humans. It notes that health impacts from refining and manufacturing plastics “can include cancers, neurotoxicity, reproductive toxicity, low-birth weight and eye and skin irritation.”
Fracking becomes personal suffering | National Catholic Reporter - Fracking seemed like just the medicine that Washington County residents needed to revive their ailing economy. Drillers offered cash for mineral rights and the promise of a percentage of the profits from the gas taken from the land. It seemed like an economic godsend.The region's experience with coal provided lessons that less economically distressed communities might have taken more seriously. Coal mining companies practiced a ruthless efficiency that offloaded many costs onto local communities and left a legacy of environmental degradation. Local streams run orange today with sulfur and iron from abandoned mine drainage that render them inhospitable to fish and animals. That same drainage threatened drinking water sources for many in western Pennsylvania. Haney soon found this to be the case for her and her immediate neighbors, even as gas royalty payments enriched others in and around the two towns of Amity and Prosperity. Griswold chronicles Haney's dawning understanding that any short-term wealth that fracking generated for some landowners and corporate shareholders must be weighed against the human and environmental costs.That realization came only after much suffering. Haney's son, Harley, started to develop serious and mysterious health concerns that forced him to miss extensive stretches of school, lose weight and fall into depression. But staying home exposed Harley to the contamination even more intensely and exacerbated his illnesses, keeping him home from school still longer.It took Haney months to recognize the link between the fracking and her son's debilitation. Fracking turned the Earth's suffering into Harley's personal struggle. Just up the hill from Haney, her neighbors' prize horses began to fall ill as well. Some died. Later, after she finally connected the illnesses to contamination in her well water and moved out, another neighbor discovered that his water too had gone bad. The suffering spread. Poor design and inattentive monitoring allowed wastewater to escape and migrate into the wells from which Haney and her neighbors drew their drinking water. Some also contaminated ground water that animals consumed. The result was a surfeit of suffering.
2 companies cited for deadly fire at local plant - The U.S. Department of Labor is citing two companies after a deadly fire at a natural gas processing plant in Washington County. OSHA, or the Occupational Safety and Health Administration, has cited Energy Transportation LLC and MW Logistics Services LLC for serious safety violations after a deadly fire at MarkWest in Houston in December. Four employees were hospitalized and one of them, Jeffery Fisher, 61, of Salem, West Virginia who was badly burned in the explosion, died a few days later. The company is being cited for violations of the pricess safety management standard and exposing employees to flammable vapor and liquid while they offloaded waste material into a mobile tank. “Providing workers with a safe and healthful workplace is required of every employer,” said OSHA Area Director Christopher Robinson, in Pittsburgh, Pennsylvania. “This tragedy could have been prevented if the employer had followed safety processes to control the release of gases from highly hazardous chemicals.” Energy Transportation LLC faces penalties totaling $51,148 and MW Logistics Services LLC faces $47,360 in penalties.
Bill would provide tax credit for energy, fertilizer manufacturing - The state House Finance Committee voted Tuesday to advance the Energy and Fertilizer Manufacturing Tax Credit, which seeks to encourage manufacturing companies to invest in Pennsylvania. The bill amends the Tax Reform Code of 1971 and mirrors the Pennsylvania Resource Manufacturing tax credit. The credit is attributed with the Shell Cracker Plant’s investment in western Pennsylvania. “This legislation would provide our region with ample investment, workforce, and economic growth opportunities,” Rep. Aaron Kaufer (R-Luzerne), who introduced the energy and fertilizer credit, said. “We are talking about over a billion-dollar investment and over a thousand permanent jobs along with thousands of construction jobs. This is truly a once in a generation investment and will be a game-changer for the economy in northeast Pennsylvania.” The energy and fertilizer credit focuses on manufacturers using methane to produce ammonia, urea, and methanol. Manufacturers must meet three requirements to qualify for the credit. They must purchase and use methane in the manufacture of petrochemicals or fertilizers at a facility in Pennsylvania, must make a capital investment of at least $1 billion in construction of the facility, must create at least 1,000 full-time jobs during the construction phase.
Philadelphia City Council approves PGW’s new LNG plant - In a 13-4 vote, Philadelphia City Council approved a plan to build a $60 million liquefied natural gas facility in Southwest Philadelphia. Passyunk Energy Center will be a public-private partnership between city-owned Philadelphia Gas Works and Conshohocken-based Liberty Energy Trust. PGW will approve design plans and run the facility, but Liberty Energy Trust will finance the construction.The plan is projected to bring in anywhere from $1.35 million to $4 million in revenue for PGW each year.City Councilman and Gas Commission Chair Derek Green said that extra revenue will prevent the utility from having to raise rates on customers.“This gives us an opportunity to bring in revenue that’s not tied to ratepayers that allows us to do some additional creative ideas,” Green said.The plan, first proposed last September, has drawn protests from environmentalists, who argue that it further tethers the city to fossil fuels, flying in the face of the city’s plan to reduce its emissions by 80 percent by 2050.“Philadelphia should not be expanding its fossil fuel infrastructure,” said Audra Wolfe, a member of POWER, an interfaith social justice organization. “It’s not right for the future, it’s not right for the people of Philadelphia, and it’s not right for the climate.”Councilwoman Helen Gym, one of the four “no” votes, echoed that sentiment, saying the project was the wrong direction for the city.“I think it’s clear the city needs to move away from fossil fuels,” Gym said, adding that council should be devoting its time to developing clean energy solutions. “We need to move, and we need to move quickly.”
Pipeline update: Where these 2 projects through the Lehigh Valley stand, amid continuing Pa. natural gas boom - Pennsylvania’s natural gas production in 2018 was nearly four times greater than that of 2011, when hydraulic fracturing operations began to ramp up in the state’s Marcellus Shale region. To help get that gas to homes, schools, businesses and industries, two pipeline projects are continuing their march toward construction through the Lehigh Valley. PennEast Pipeline is a roughly $1.2 billion new pipeline from the Pennsylvania’s Marcellus Shale region in Luzerne County to Mercer County in New Jersey. Its constituent companies say the new line, reviled by environmentalists, is vital to safely and affordably meeting the region’s natural gas and electricity needs. Adelphia Gateway is an estimated $339 million retrofit of an existing line originally built in the 1970s to transport oil from Marcus Hook outside Philadelphia for electricity generation at Martins Creek in Lower Mount Bethel Township. The line will transport both Marcellus and Utica shale gas to the Philadelphia region. The Utica geologic formation lies beneath portions of eight states, including Pennsylvania, from Tennessee through New York and into Canada. The Marcellus formation is more central to Pennsylvania’s natural gas boom, extending under 60% of the state, along with parts of West Virginia, New York, Ohio and Maryland, according to the U.S. Energy Information Administration; it has the largest estimated proved reserves of any natural gas field in the United States. PennEast, which is a consortium of five energy companies, and Adelphia Gateway, a project of New Jersey Resources Corp., are far from the only companies looking to cash in on Pennsylvania's natural gas boom. The Tulsa, Oklahoma-based Williams Companies said Thursday it will reapply for key environmental permits, rejected Wednesday by New Jersey regulators, to to build a hotly contested $926 million pipeline that would carry natural gas from Pennsylvania through New Jersey, and under Raritan Bay and the Atlantic Ocean to New York. The New York City skyline is seen June 3, 2019, from Middletown, New Jersey, across Raritan Bay, where a natural gas pipeline is proposed from Pennsylvania to serve New York City and Long Island. On March 1, 2018, the Dominion Energy Cove Point liquefied natural gas facility exported its first LNG cargo. Cove Point is the only LNG export facility on the East Coast of the United States, and the second export facility operating in the Lower 48 states after Sabine Pass in Louisiana, which began commercial operations in 2016, according to the EIA.
Court Signals Approval for State Defying PennEast Pipeline - Critics of a natural-gas pipeline that would cut through nearly 150 private properties in Pennsylvania and New Jersey pushed the Third Circuit on Monday to reverse an order condemning the lands. Though the Federal Energy Regulatory Commission gave the PennEast Pipeline Co. permission to seize lands in Hunterdon County that are held in a public trust, construction of the $1 billion pipeline has been held up by the New Jersey’s refusal to issue a construction permit. New Jersey’s Assistant Attorney General Jeremy Feigenbaum argued before the Third Circuit this afternoon that nothing in the Natural Gas Act says allows a private company to take land by eminent domain. “This is about whether states maintain a certain right,” Feigenbaum said. Feigenbaum faced stern questioning, with U.S. Circuit Judge Kent Jordan saying his proposition would “allow states to aggressively claim land,” but the panel proved even tougher on PennEast’s attorney. U.S. Circuit Judge Stephanos Bibas pushed back specifically when James Graziano with Archer Law made the case that the Natural Gas Act gives PennEast the power to claim all properties necessary for the project. “It doesn’t say state property,” said Bibas, referring to the law. “It says nothing about state owners.” Restore PA requires 20 years of natural gas production. Some progressive legislators aren’t ready to sign on - A handful of state House progressives are standing strong against Gov. Tom Wolf’s signature infrastructure plan, seeing in the $4.5 billion investment spree an over-reliance on the state’s natural gas industry at a time when Pennsylvania should be moving away from fossil fuels.The administration’s proposal, known as Restore PA, “locks us into the extraction of natural gas for decades … and that, to me, is troubling,” first-year Rep. Elizabeth Fiedler, of Philadelphia, told the Capital-Star this week.Restore PA calls for the state to take out 20-year bonds, backed by the future revenue of a severance tax on natural gas production. Pennsylvania is the second-largest gas producing state in the U.S., according to federal data, and despite a decade of development, still has considerable gas reserves underneath its soil.That also leaves the state among the top carbon polluters in the country. In 2016, Pennsylvania ranked fourth in nation for carbon emissions with 218 million metric tons released into the atmosphere. If the commonwealth was ranked among countries, its carbon output would be tied with Vietnam as the 27th largest emitter. Fiedler said her concerns with Wolf’s plan are made more acute by “the absence of a larger plan to transition into a larger renewable economy” including wind and solar. More broadly, the lawmaker said she is unwilling to “double down on fossil fuels.” The reticence from Fiedler and other primarily first-year progressive lawmakers comes after months of hard salesmanship from Wolf that saw the governor crisscross the state, touring struggling downtowns and flood ravaged communities to build support for his multi-billion dollar plan. The administration finally rolled out the fine print of the legislation Wednesday night, revealing at the same time that it had secured the support ofbipartisan near majorities in the Republican-controlled House and Senate. All but 10 of the House’s 93 Democrats are listed as sponsors of the bill.
Delco OKs resolution to seek moratorium on Mariner East 2 operation - Delaware County Council joined those in calling for a moratorium on the operation and transmission of all Sunoco current and proposed highly volatile liquid pipelines in light of issues arising surrounding the Mariner East projects and the lack of a emergency response plan for these liquids. On Wednesday, council voted 3-0 on a resolution calling for the moratorium. Council members Colleen Morrone, Michael Culp and Kevin Madden voted for the resolution. Council Chairman John McBlain abstained as the law firm where he works has done work for Sunoco although he himself has not. Councilman Brian Zidek was absent from the meeting. Part of the resolution reads, "Delaware County Council hereby calls on Gov. Wolf to institute an immediate moratorium on the operation and transmission of all Sunoco current and proposed HVL pipelines in Delaware County, continuing until there is a credible and practicable public response program and emergency response plan that accounts for the unique hazards of these HVL's and the density and immobility of vulnerable populations within the impact radius." This is not the first action council has taken in regards to the pipeline.
Enviros call for full fracking ban in the Delaware River watershed – A coalition of environmental groups is calling on the multistate agency that oversees the Delaware River watershed to ban fracking and related activities in the area.The activists hope it would codify a de facto moratorium that has been in place for nearly a decade that prohibits fracking, the treatment and disposal of fracking waste, and the transfer of water for fracking operations elsewhere.“The public has spoken over and over again that we do not want fracking within the Delaware River watershed,” said Tracy Carluccio, deputy director of the Delaware Riverkeeper Network.The groups rallied Wednesday outside a meeting of the Delaware River Basin Commission, the agency that oversees the watershed.Although the DRBC has a de facto ban on fracking in place, the commission is considering new rules that would ban fracking, but also authorize the storage, treatment, and disposal of fracking waste and the removal of water for fracking in other places. “There should not be any further delay to end the suspense, to clearly say that fracking and its activities deserve no place in the Delaware River watershed,” said Doug O’Malley, director of Environment New Jersey. “That’s why the DRBC needs to act, and they need to act now.”
Counting the Costs of Pipeline Projects for Delaware River Basin - A new study suggests the expansion of the natural gas infrastructure in the Delaware River Basin is resulting in significant disruption and stresses to the environment and communities within the region. The analysis, conducted by the New Jersey Conservation Foundation, which is focused on two contested pipeline projects in New Jersey and Pennsylvania, found the 120-mile PennEast pipeline and the Mariner East 2 pipeline across the width of the latter state will add to the environmental degradation, habitat fragmentation and pollution throughout the DRB. “The results of the study suggest that the present value of lifetime environmental and social costs associated with the proposed PennEast pipeline and existing Mariner East 2 pipelines in the DRB range from approximately $758 million to $2.4 billion,’’ according to the report. Those costs include losses associated with ecosystem disruptions, greenhouse-gas emissions and loss of preserved land. One-quarter of the land where the PennEast pipeline is proposed to pass through is protected land or under conservation easements, the analysis found. Other costs could not be quantified, but involve water quality degradation, loss of property value, and increased treatment of surface water due to additional sedimentation in streams and rivers. “Such costs should not be overlooked when making decisions about pipeline development in the region,’’ the report said. The DRB spans parts of four states — New Jersey, Pennsylvania, New York and Delaware — and provides drinking water to more than 15 million people. Since 2016, at least eight major pipelines have been proposed in the basin, encompassing 322 miles. Between 2011 and 2018, pipeline capacity in New Jersey increased 52 percent even as some studies concluded the added capacity is unnecessary.
Virtual Pipelines: A Dangerous New Way to Transport Fracked Gas by Truck - For several years a mysterious fleet of tractor trailers loaded with natural gas cylinders has been crisscrossing U.S. roads, and in the dark early morning hours on Sunday, March 3, one drove off a highway near Cobleskill, New York, careened down an embankment, and flipped over. The driver had fallen asleep, according to a New York State police accident report, the truck was demolished, and “several tanks ruptured and were leaking” natural gas. Five nearby homes were evacuated.For retired New York Department of Transportation commercial vehicle inspector Ron Barton, an alarm bell he had been ringing for months suddenly grew even more urgent. “This is a catastrophe waiting to happen,” says Barton.The trucks are part of a little-known system of moving natural gas called “virtual pipelines.” The practice involves loading cylinders filled with compressed natural gas (CNG) onto specially designed trucks and hauling the gas between existing pipelines or to areas not connected to a natural gas distribution system, such as rural towns, and remote factories, universities and hospitals.Many environmental groups appear unaware of the topic, virtual pipelines have received virtually no national media attention, and some regulatory agencies seem unsure how to handle them.“The concept,” wrote Pennsylvania energy expert John Siggins in a 2016 report, “was born out of the lack of pipeline infrastructure in the New England area,” and a natural gas boom in nearby Pennsylvania’s Marcellus shale play that lowered gas prices. “As the shale energy revolution took off,” wrote Siggins, “a system for off-pipeline natural gas deliveries became of interest.”
The ‘hidden’ plan to remake an old dynamite factory near Philly into a major gas export terminal -- A New York investment firm is quietly laying the groundwork to build a major storage terminal at a former explosives factory near Philadelphia for exporting liquid fuels from Pennsylvania’s rich natural gas fields in Marcellus Shale to foreign markets.The plan to revive DuPont’s former Repauno Works in Greenwich Township, a shuttered dynamite factory on the Delaware River that is still contaminated 20 years after it closed, has gathered support from South Jersey elected officials. But environmentalists are mobilizing opposition to the project, alleging it is a stealth effort to export liquefied natural gas (LNG). The Delaware Riverkeeper Network, in a May 28 letterto federal and state regulators, said the private port’s true purpose is to export LNG produced in northern Pennsylvania. “This looks to us like a deliberate cover-up,” Maya van Rossum, the head of the riverkeeper network, said in a statement. The emerging battle over an energy project on a largely industrial stretch of the Delaware River pits local officials who envision an economic development opportunity vs. climate activists who see a risky business that perpetuates the nation’s dependence on fossil fuels. The issue also has national political overtones: The Trump administration has championed LNG exports as a means to influence international policy. “LNG has always ignited the public imagination because it’s so explosive," said Jeff Tittel, director of the New Jersey Sierra Club, which has denounced the Repauno project as a “threat to the environment and public safety.” Efforts to build LNG import terminals along the Delaware stalled in 2006 after public opposition mounted over fears about dangers.
DRBC Confirms Plan to Build LNG Export Terminal at New South Jersey Port - - Agency says it only ‘recently’ learned of plan to load potentially explosive liquids onto tankers in Gloucester County. The Delaware River Basin Commission acknowledged on Tuesday that an energy company plans to ship liquefied natural gas (LNG) and other liquids through a new export terminal on the Delaware River in South Jersey, updating its earlier statement that LNG was not part of the company’s permit application. Environmental activists have accused the DRBC and other regulators of concealing plans by the developer, Delaware River Partners, to add an LNG terminal to a new port that it plans to build on a former DuPont site in Gibbstown, Gloucester County. The DRBC previously said the company did not seek a permit for the LNG terminal in its application but on Tuesday said it “recently” learned of the plan. David Kovach, the agency’s head of permitting, verbally included LNG in a list of proposed uses at a DRBC meeting on June 6, the agency said in a statement on Tuesday. “During his description of the draft docket, Mr. Kovach said that the applicant recently informed us that Dock 2 will support the transloading of a variety of bulk liquid products, including butane, isobutane, propane (collectively liquefied petroleum gas, or LPG), liquefied natural gas (LNG), and ethane,” the statement said. LNG would be shipped to the Gibbstown port via truck from a new liquefaction plant being built in Bradford County, Pennsylvania, amid the abundant natural gas supplies of the Marcellus Shale, according to a Securities and Exchange filing by the plant’s developer, New Fortress Energy. The plant, costing an estimated $750-$850 million, would have a capacity of 3.6 million gallons a day and could serve markets in the Northeast by truck, the company said in a statement.
Contentious plan to remake N.J. dynamite plant into shale-gas export terminal is approved - The Delaware River Basin Commission on Wednesday unanimously approved a plan to build a $96 million 1,600-foot-long pier to load tankers at the former DuPont Repauno Works in New Jersey, where an investment firm proposes to export large volumes of liquid fuels produced from fracking Pennsylvania shale gas wells.The commission rejected pleas from environmentalists to delay the project to study the impact of the terminal, which activists fear will be used primarily as an export terminal for liquefied natural gas (LNG) brought in by road and rail to the port in Greenwich Township. DuPont shut down its Repauno operations about 20 years ago. The commission said its review was confined to the impact of building the wharf and of dredging the Delaware River to 43 feet deep to connect with the main channel. Locator map of former DuPont Repauno Works plant, site of a planned gas terminal on the Delaware RiverThe wharf would be the second new dock built on the site, where the property’s owners, Delaware River Partners LLC, say LNG is only one of several commodities that may be shipped, including other fuels, automobiles, and bulk cargo. An LNG shipper would be required to obtain a U.S. Energy Department permit to export LNG.A coalition of climate activists opposed to new fossil-fuel infrastructure projects raised alarms about the project after connecting the dots between the port expansion and a proposal by an affiliated company to produce LNG at a plant in northern Pennsylvania’s Marcellus Shale gaslands.Local elected officials support the terminal, saying it’s an economic development project that will revive a dormant industrial site with taxable improvements and new jobs. Opponents could challenge the commission’s approval, as well as try to block other permits Delaware River Partners will need to develop the site, including state environmental approvals, Coast Guard permits, and Energy Department permits if LNG is exported. Delaware River Partners LLC, in securities filings, has suggested that its initial interest is primary to develop the Repauno port to export propane and butane from Marcellus producers to European petrochemical manufacturers. The site has a 186,000-barrel underground storage tavern suitable for liquid fuel like propane, but not LNG.
Judge dismisses antitrust lawsuit against energy providers Eversource, Avangrid - A federal judge in Boston has dismissed a proposed antitrust class action accusing Eversource Energy and Avangrid, two of New England’s largest energy providers, of manipulating pipeline capacity to inflate prices of natural gas and electricity. Filed in 2018 by New Hampshire energy marketer PNE Energy, the antitrust lawsuit said the two companies tied up natural gas capacity on New England’s main pipeline, the Algonquin, in a deliberate bid to drive natural gas and wholesale electricity prices higher, hurting competitors. But in a decision on Friday, U.S. District Judge Denise Casper said the natural gas prices the defendants allegedly manipulated were federally regulated and could not be interfered with by the court. To read the full story on WestlawNext Practitioner Insights, click here: bit.ly/2XDxDdu
Fumes from the Petroleum Tanks in this Port City Never Seem to Go Away. Are They Dangerous? - In late March, the city of South Portland was blindsided when the EPA filed a consent decree with a company that operates industrial storage tanks here. Global Partners, a Massachusetts-based energy supply company that owns four of them, had been violating its emissions permit since at least 2013. The amount of volatile organic compounds (VOCs) being emitted was reportedly more than double what was permitted, and the problem had gone unabated for years. VOCs are a range of chemicals that can cause a range of problems, including a one-two punch of health and climate impacts. They can irritate the eyes, nose and throat, damage the nervous system and cause cancer. VOCs can also lead to the formation of ground-level ozone, a short-lived climate pollutant that exacerbates climate change and can trigger asthma and breathing problems—especially in the elderly and the young. A 2016 study found that ozone pollution from oil and gas production causes more than 750,000 summertime asthma attacks in children across the U.S. each year. When I found out about the consent decree, I hopped on Google Maps to see where the tanks were, and I felt the sudden urge to throw up. The tanks, which contain bunker fuel and asphalt, are less than a quarter mile from where my kids go to daycare. Just under a mile and a half from my home. South Portland has the largest municipal solar array in the state, bans on plastic bags and pesticide use, and a progressive plan to reduce the city's contributions to climate change while preparing for the future. But how to reconcile that environmental consciousness with 120 giant fuel tanks?
W.Va. Supreme Court: Drilling Rights Are for Minerals Directly Below - The West Virginia Supreme Court has affirmed a lower court’s ruling in favor of landowners’ claims that a company had no right to drill on their property to access oil and gas on other lands. The court’s ruling released Wednesday, June 6, says a mineral owner has the right to access only what’s directly below the surface. The court says “it is trespassing to go on someone’s land without the right to do so.” A Doddridge County Circuit Court jury in 2017 awarded $180,000 to David Wentz and $10,000 to his ex-wife, Margot Beth Crowder, in their lawsuit against EQT Production. The company held a century-old lease allowing it to drill wells to extract oil and gas from beneath the plaintiffs’ land. The plaintiffs sued to challenge the company’s use of their land to drill horizontal wells extending to neighboring properties.
West Virginia Ruling Means Costs Could Increase for Producers Seeking Surface Rights - In a decision that could find producers paying more to develop the Marcellus and Utica shales in West Virginia, the state Supreme Court has finally ruled that operators need clear permission from surface rights owners to site well pads on their land to extract natural gas from nearby properties. The state Supreme Court unanimously affirmed a lower court’s ruling that found EQT Corp. had trespassed by using Margot Beth Crowder and David Wentz’s property in Doddridge County to tap into shale reserves held by other owners nearby. The two filed a lawsuit against the company in 2014 and were eventually awarded $190,000 in damages by a jury. The company appealed the case to the high court. While the farm owners held a lease that allowed EQT to drill wells to tap oil and gas from beneath their surface estate, they argued that the company was not allowed to disrupt their property in order to produce from neighboring properties with horizontal wells. EQT had argued it was not in the wrong because nearly 40% of the lateral was through shale beneath their land, and the lease in question had been unitized with others nearby years ago. Following the ruling, EQT said it would continue to cooperate with its customers, partners and residents in the state.David McMahon, an attorney for the plaintiffs, who is also co-founder of the West Virginia Surface Owners’ Rights Organization, said the court’s ruling was one of the most important for surface estates in decades. In West Virginia, mineral and surface rights are severed, meaning they can be under different ownership, which has created varying interests over the years as unconventional drilling has boomed in the state. In the past, McMahon noted that surface owners often agreed to be paid only what the land was worth as a meadow or a wood lot, for example. After the state Supreme Court’s decision, they can now “insist on surface use protections,” and demand better payment from operators based on what the well pad is worth to development, he said.
How 2 West Virginia residents went up against a big, invasive fracking company — and won a major victory – Seven years ago this month, Beth Crowder and David Wentz told natural gas giant EQT Corp. that it did not have permission to come onto their West Virginia farm to drill for the natural gas beneath neighboring properties. EQT had a lease that entitled the company to the gas directly beneath their farm, but it also wanted to use a new, 20-acre well pad to gather gas from 3,000 acres of adjacent or nearby leases. The company ignored their warnings. It built roads and drilled a well, and it put in horizontal pipes stretching for miles in all directions. Crowder and Wentz sued — and they’ve been fighting EQT in court ever since. On Wednesday, the West Virginia Supreme Court ended the matter with a surprisingly straightforward and unanimous conclusion: Going onto someone else’s land without their permission is trespassing. Gas and other mineral companies must obtain permission from surface owners in order to use their land to reach reserves under other properties, Justice John Hutchison wrote for the court. “The right must be expressly obtained, addressed, or reserved in the parties’ deeds, leases, or other writings,” he wrote. Attorney Dave McMahon, who represented Crowder and Wentz, broke the news to them by phone. “The short answer is, we won. And we won big time,” he said. Kristina Whiteaker, another lawyer for Crowder and Wentz, told them, “You guys really made some good law for the whole state.” Officials from EQT have not responded to requests for comment on the Supreme Court ruling. Neither did officials from the West Virginia Oil and Natural Gas Association, an industry trade association.
Court rules with Antero, but doesn’t set new standards for gas drilling - The West Virginia Supreme Court on Monday sided with Antero Resources in a case brought by Harrison County landowners, but it did not fully close off the ability of residents to use the courts to limit the effects of West Virginia’s growing natural gas industry.Justices upheld a lower court ruling that threw out a collection of lawsuits that argued Antero’s operations in the Cherry Camp area had created a nuisance, but the 3-2 decision written by Justice Evan Jenkins did not include any new points of law setting precedent for future cases.The decision is the second one issued by the court this month on major disputes between surface landowners and natural gas companies.Last week, in a unanimous decision, the court ruled that gas companies no longer may drill on one person’s property to reach gas reserves underneath adjacent tracts without permission of the surface owner.Monday’s decision involved a different situation, in which the residents suing were surface landowners who did not have wells located on their property, but wells located nearby to reach gas under their surface property.Anthony Majestro, a lawyer for the Harrison County residents, said the ruling reflects the developing law over the kinds of conflicts that are occurring in parts of the state where the natural gas industry has dramatically expanded. “As the Marcellus Shale drilling has expanded, there have been conflicts between surface owners and the companies that are drilling,” Majestro said. “These cases are new cases, and we are seeing from the Supreme Court what theories work and what theories don’t. Trespass works, and the jury is still out over nuisance.”
Fracking Companies Lost on Trespassing, but a Court Just Gave Them a Different Win -- A week after the West Virginia Supreme Court unanimously upheld the property rights of landowners battling one natural gas giant, the same court tossed out a challenge filed by another group of landowners against a different natural gas company. In the latest case, decided Monday, the court upheld a lower court ruling that threw out a collection of lawsuits alleging dust, traffic and noise from gas operations were creating a nuisance for nearby landowners. Charlie Burd, executive director of the Independent Oil and Gas Association of West Virginia, said the latest ruling lets “Wall Street know capital investment in oil and natural gas is welcome in West Virginia” and increases the possibility of more such investments in drilling and in so-called “downstream” chemical and manufacturing plants related to the gas industry. In the property rights case last week, the justices set a clear legal standard that natural gas companies can’t trespass on a person’s land, without permission, to tap into gas reserves from neighboring tracts. In Monday’s case, the justices didn’t articulate a new legal precedent. The mixed messages of the two cases show that “this is new litigation and the theories are evolving,” said Anthony Majestro, a lawyer who represented residents who lost their nuisance action before the Supreme Court. “As the Marcellus shale drilling has expanded, there have been conflicts between surface owners and the companies that are drilling,” Majestro said. “Absent some legal requirement to require the industry to be good neighbors, I’m afraid we’ll continue to have these situations.”
Tyler County, WV, gas tank fire under investigation | WV News - Officials from Dominion Energy are conducting an investigation into a fire at one of the company’s storage tanks in the Ohio Valley during Memorial Day weekend with an eye toward preventing future incidents.The fire was reported at the site of a natural gas condensate tank in the unincorporated community of Ben’s Run near Friendly in the afternoon hours of May 25. Several Tyler County fire departments and even industrial fire fighting crews were called to the scene. Gov. Jim Justice also ordered state resources to the scene to assist upon being informed of the situation by Department of Environmental Protection Secretary Austin CapertonThe fire wasn’t extinguished until about 5 a.m. the following morning.Lora D. Lipscomb, public information officer for the West Virginia Division of Homeland Security and Emergency Management, said Dominion is investigating the fire, which was believed to have been caused by a lightning strike since thunderstorms were moving through the area at the time.“They don’t know for sure,” she said. “No one saw anything until the smoke started coming off and someone at a factory adjacent saw the smoke from the storage tank and called the fire departments.” Lipscomb said firefighters from Paden City and New Martinsville in Wetzel County also were called to the scene. She said the industrial fire suppression specialists brought in by Dominion were equipped with special chemical foams much more potent than water, but the flames proved too intense even for that, and it soon became a matter of letting the fire burn itself out while containing it.
Dominion confident it will win Atlantic Coast Pipeline legal challenges - Dominion Energy expects to win one of two legal challenges its Atlantic Coast Pipeline faces within the next four to six weeks and be able to resume construction on a portion of the 600-mile route after that, an executive said Tuesday. Donald Raikes, senior vice president for gas transmission operations in Dominion's Gas Infrastructure Group, added that he believes the US Supreme Court will agree to hear the second legal challenge, involving a permit to cross the Appalachian Trail, and ultimately rule in the operator's favor, allowing it to complete the project. The optimism comes as Dominion holds to its current timeline to begin partial service in late 2020 and full service in early 2021. The up-to-$7.5 billion project has been beset by delays and cost increases, largely because of opposition from environmental groups that has resulted in the legal challenges. Atlantic Coast Pipeline is among several Northeast gas infrastructure projects designed to boost takeaway capacity from the Appalachian Basin that have been delayed or stalled because of regulatory and legal hurdles. "This is not about Duke, or Dominion or Southern," Raikes said at the LDC Gas Forums conference in Boston. "This is about the industry. This is about all of us.".The federal government is expected to back with its own appeal Dominion's Supreme Court appeal of a 4th US Circuit Court of Appeals decision that invalidated US Forest Service authorizations for the project to cross the Appalachian Trail. While the government's support could bolster Dominion's case, success is not assured. Some analysts have questioned whether the high court will hear the case, and if it does whether it will make a favorable decision in a timely way to allow the operator to keep to its current in-service schedule. The 4th Circuit has become a very difficult venue for Dominion.
State denies Mountain Valley Pipeline application for now - The state has denied, for now, the Mountain Valley Pipeline Southgate’s applications for water quality certification and riparian buffer authorization. The Division of Water Resources learned from MVP that updated impact tables, final plan and profile views for proposed effects wouldn’t be available until after July, and decided to deny the application altogether. The N.C. Department of Environmental Quality informed MVP June 3 in a letter to Matthew Raffenberg of Mountain Valley LLC. The letter noted that any work done within the state waters or riparian buffers might violate state law. The division received the application for the certification and authorization Nov. 30, according to the state, and requested additional information Jan 10. On Feb. 12, it received a “partial response,” saying “Mountain Valley is currently completing route evaluations and will be providing updated impact tables at a later date. Mountain Valley will provide final plan and profile view for all proposed permanent fills of aquatic resources in North Carolina ... once all surveys have been completed and project design is finalized.” On March 25, the state returned the application as incomplete. “Once a draft [Environmental Impact Statement] has been issued and a preferred route is identified by [the Federal Energy Regulatory Commission], you may reapply to the division,” the state said in the June 3 letter.
In pet coke fight, Marathon points fingers at dusty neighbors - The Marathon refinery in Detroit making a push against its neighbors as it works to change an ordinance on airborne particles. Across Oakwood Boulevard from the refinery, front-end loaders scoop up and dump asphalt millings at neighbor Edward C. Levy Co.'s Cadillac Asphalt plant, kicking up dust that can be seen from atop of the glowing 200-foot tower at the Marathon plant that defines the skyline of industrial southwest Detroit. "Look at all of the dust coming from the Levy asphalt plant," Marathon refinery general manager Dave Roland says pointing west from atop of the tower. After years of being the brunt of criticism about its environmental track record, Findlay, Ohio-based Marathon Petroleum is pushing back in unusual ways — pointing fingers at its odor-emitting and dust-creating neighbors in a bid to win approval from the City of Detroit to continue operating its pet coke storage and disposal without a covered roof over the massive pit. "No one ever complains about the (smell of the) waste water treatment plant — especially the city," Roland said during a recent tour with Crain's of the refinery's coker, where the pet coke is produced during the refining process. The city's Buildings, Safety, Engineering and Environmental Department (BSEED) recently denied Marathon's variance request to continue outdoor storage under a 2017 ordinance that City Council passed in response to Detroit Bulk Storage's previous storage of 40-foot piles of pet coke along the Detroit River that created black dust storms that could be seen — and breathed — in Windsor. "The goal is protect public health so that stuff is not blowing into people's homes," said City Councilwoman Raquel Castañeda-López, who represents southwest Detroit. Marathon officials are questioning why Detroit's bulk materials storage ordinance applies to pet coke but not the petroleum-based asphalt millings piled up at the Cadillac Asphalt plant across the street from the refinery or the Detroit Salt Co.'s dusty salt piles that sit next to the refinery along I-75.
Aging Enbridge oil pipelines face setbacks over fears of Great Lakes spills - (Reuters) - Fears about oil spills into the Great Lakes from two aging U.S. pipelines have flared, raising doubts about their future and creating fresh headaches for operator Enbridge Inc and the Canadian energy sector. Canada has faced years of delay in getting new oil pipelines built because of environmental opposition, resulting in severe congestion in Alberta, the country’s main crude-producing province, that forced the provincial government to impose production cuts this year. Pipelines face increasing scrutiny from environmental groups worried about leaks, and U.S. Great Lakes states are taking a hard look at the risks. The Minnesota Court of Appeals ruled on June 3 that the environmental impact statement for Enbridge’s Line 3 failed to properly address the spill risk in Lake Superior, imposing a fresh challenge to the company’s construction schedule. Also last week, Michigan Governor Gretchen Whitmer repeated a threat to shut down Line 5 unless Enbridge accelerated its timeline to replace it. “That is a real-time problem because (Line 3) was the most imminent chance for Canadian production to see some pressure release on the system,” said Rafi Tahmazian, senior portfolio manager at Canoe Financial, which owns shares of Canadian Natural Resources and other oil producers. “It’s disappointing and concerning.” Line 3 carries oil from Alberta to U.S. refineries in Minnesota and Wisconsin. Line 5 takes oil from Wisconsin to refineries in Sarnia, Ontario, passing through the Straits of Mackinac channel connecting Lake Michigan and Lake Huron. Both were built in the 1960s.
Whitmer task force to identify Line 5 propane alternatives - As a battle over the fate of Line 5 heads to court, Michigan Gov. Gretchen Whitmer on Friday created a new task force to study propane delivery alternatives for the Upper Peninsula. Enbridge on Thursday sued the state after talks with Whitmer over an accelerated tunnel plan broke down. The governor demanded for a two-year timeline to shut down the aging oil and gas pipeline, which helps transport propane many U.P. residents use to heat their homes. Whitmer’s new task force, created by executive order, is charged with identifying alternative propane delivery options in he event of a Line 5 shut down, along with ways to rein in other energy rates in high-cost regions of the U.P. “Our jobs, economy and public health depend on the preservation of the Great Lakes, which literally define us as a state,” the governor said in a statement. “Enbridge has a disappointing safety record in Michigan, and the dual pipelines that run through the Straits of Mackinac create an unacceptable risk of an oil spill by anchor strike or other means. Such an event would be catastrophic for The Great Lakes and our economy, and would send energy costs skyrocketing for UP families.” The Enbridge lawsuit filed Thursday seeks court validation of a tunnel agreement the Canadian energy firm had brokered late last year with former Gov. Rick Snyder. Whitmer halted state action on the plan in March after Attorney General Dana Nessel invalidated an underlying law that had allowed the deal. Whitmer said in April that she is open to a tunnel option but wanted a plan to get Line 5 out of the Great Lakes faster than the five-year to 10-year construction estimate. Her office claimed that Enbridge “walked away from the negotiating table” on Tuesday and chose litigation instead.
Propane likely to shift to rail if Michigan forces Enbridge to shut Line 5 | S&P Global Platts — The propane-by-rail market would likely have enough slack to replace pipeline flows into Michigan if the state carries through with a threat to force Enbridge to decommission the 540,000 b/d Line 5, according to S&P Global Platts Analytics. The future of Line 5 is in doubt after talks broke down last week between Enbridge and Michigan Governor Gretchen Whitmer's office. In March, Whitmer made good on a campaign promise to halt Enbridge's project to build a utility corridor under the Straits of Mackinac. The tunnel would address environmental safety concerns surrounding the 65-year-old pipeline and house a future replacement. The system remains a key route for light crude and NGLs to the US Midwest and Ontario, including up to 75% of Michigan's propane demand. "Ultimately, the question is more about logistics and connecting propane production, whether in Canada or in the US, to demand," Platts Analytics senior NGL analyst Andrew Neal said Monday. Enbridge spokesman Michael Barnes said Monday that the Line 5 tunnel project is "the best long-term opportunity to secure the energy needs of the state while making an already safe pipeline even safer." He said a 2017 analysis commissioned by the state found no viable alternative to moving the products carried by Line 5 on other pipelines, rail or truck. Platts Analytics estimates Line 5 carries 20,000-30,000 b/d of propane from Canada into the US Great Lakes, with roughly half the volume coming off the pipe at fractionators in Clearbrook, Minnesota; Superior, Wisconsin; and Rapid River, Michigan. The rest is re-exported to Canada, where it and moves into storage facilities spanning the border between eastern Michigan and southern Ontario. Neal said most of the product comes off the pipe in Minnesota or Wisconsin, before it reaches Michigan. Much of the volume bound for storage near Sarnia, Ontario, likely ends up back in Michigan for consumption, but refined product pipe networks in the Chicago area and around Detroit and Northwest Ohio can supply propane as well, he said.
Meteor Timber Takes DNR To Court Seeking Wetland Fill For Frac Sand Facility - Atlanta based Meteor Timber is taking the state Department of Natural Resources to court as part of a four-year push to build a frac sand processing facility on 16 acres of high quality wetlands in Monroe County.Since 2015, Meteor Timber has sought approval to build a $75 million frac sand processing and rail loading facility on property that includes rare hardwood swamp. Environmental groups and the Ho-Chunk Nation have opposed the project.In 2017, the DNR issued a wetland fill permit despite objections — obtained by WPR through an open records request — that showed staff felt pressured to approve the permit despite what staff called a lack of basic information from the company about how it would mitigate the wetland destruction.The Ho-Chunk Nation, Midwest Environmental Advocates and Clean Wisconsin challenged the DNR’s permit through a contested case hearing and in May of 2018, an administrative law judgeoverturned the Meteor Timber permit saying the agency lacked important information and didn’t prove it could mitigate the loss of the rare wetlands.Meteor Timber disagreed and pointed to thousands of pages of documents submitted to the DNR throughout the permitting process. The company appealed the administrative law judge’s decision and asked the DNR to review and potentially overturn it through a little used state statute. Former DNR Secretary Dan Meyer, an appointee of former Gov. Scott Walker agreed to have a staff attorney review the matter but no decision was made before Gov. Tony Evers took office in January.
Lowest crude oil imports since 1986 indicate changes in U.S. Gulf Coast crude oil supply – EIA -- U.S. Gulf Coast crude oil imports averaged 1.8 million barrels per day (b/d) in March 2019, the lowest level since March 1986 and significantly lower than the peak of 6.6 million b/d in March 2007. Preliminary weekly data indicate that Gulf Coast crude oil imports have averaged about 1.9 million b/d through April and May (Figure 1). Falling crude oil imports into the U.S. Gulf Coast so far in 2019 are the result of both recent events and continuing longer-term trends. Recently, sanctions on Venezuelan imports and heavy refinery maintenance have reduced imports. At the same time, imports to the Gulf Coast have also decreased because of sharp declines in imports from the Organization of the Petroleum Exporting Countries (OPEC) following an agreement among members to reduce production and because imports are being replaced by increased production of domestic crude oil. Together, these trends have fundamentally changed how the Gulf Coast region is supplied with crude oil. In the past five consecutive months, the U.S. Gulf Coast hasexported more crude oil than it imported (net exports), and since 2015, it has consistently received more crude oil from other regions of the United States than it has sent to other regions (net receipts). Gulf Coast crude oil imports are typically lower in the early months of the year as refineries reduce runs as part of their seasonal maintenance. This year, planned maintenance activity was higher than usual. The four-week average of gross refinery inputs in the Gulf Coast fell from 9.6 million b/d for the week ending January 4, higher than the five-year (2014-18) maximum and 648,000 b/d higher than the five-year average, to a low of about 8.6 million b/d from mid-February until mid-April. Although 8.6 million b/d of gross refinery inputs is more than the Gulf Coast’s five-year average level for the period, eight consecutive weeks of relatively flat refinery runs is longer than normal during refinery maintenance at this time of year. This extended period of lower refinery runs for longer in the early months of 2019 reduced the need for crude oil imports, contributing to the more-than-three-decade-low crude oil imports during this period. Around the same time, the U.S. government announced additional sanctions on Venezuela that included limitations on crude oil imports from Venezuela. In 2018, 20% of all Gulf Coast crude oil imports were from Venezuela, an annual average of 498,000 b/d. The Gulf Coast was the destination for 98% of all U.S. imports of Venezuelan crude oil in 2018. Because of the imposition of sanctions, refiners in the Gulf Coast sharply reduced imports of Venezuelan crude oil. Between January and March 2019, Gulf Coast imports of crude oil from Venezuela fell by 498,000 b/d to 47,000 b/d in March. As a result of the Gulf Coast reductions, U.S. four-week average imports from Venezuela fell from 603,000 b/d for the week ending January 25 to 12,000 b/d for the week ending May 31 (Figure 2).
Port Arthur, Corpus Christi Terminals Get an Upgrade - Howard Energy Partners completes expansion of Port Arthur and Corpus Christi terminals This week, Howard Energy Partners (HEP) announced the completion of two expansion projects at its Port Arthur and Corpus Christi bulk liquid terminal facilities, increasing HEP’s Gulf Coast storage capacity to 2.6 million barrels. The expansion also upped the number of ship and barge docks by three each, the unit train loading capacity to two trains per day, and the direct pipeline connectivity through wholly-owned pipelines to seven refineries. “We currently have more than 470 acres for additional Gulf Coast expansion projects, including significant water frontage,” said HEP Co-Founder and President Brad Bynum.
New pipelines to connect Port of Corpus Christi to key U.S. oil producing regions — Two separate joint ventures announced by Phillips 66 Monday will connect the Port of Corpus Christi to key shale oil producing regions in the U.S. Phillips 66 is partnering with Bridger Pipeline LLC to build the Liberty Pipeline, which will provide crude oil transportation services from the Rockies and Backen production areas to Cushing, Oklahoma, the main thoroughfare for Central U.S. crude production. Phillips 66 is also partnering with Plains All American Pipeline to build the Red Oak Pipeline, which will transport multiple grades of crude oil from Cushing and the Permian Basin to the Port of Corpus Christi. Officials said pending permitting, service on both pipelines could begin as early as 2021. "These newly announced pipelines are pivotal developments in establishing the Port of Corpus Christi as the preferred gateway for U.S. crude exports. These lines will add new North American crude slates such as Bakken, Niobrara/DJ Basin, SCOOP & STACK to our already high-quality Permian and Eagle Ford barrels," said Sean Strawbridge, Chief Executive Officer for the Port of Corpus Christi. "The discerning Asian and European crude customer will certainly appreciate the expanded menu of options Corpus Christi provides when buying American crude oil." The Port of Corpus Christi forecasts exports of nearly $15 billion of crude oil in 2019.
Exxon, Saudis Bet on Plastics Growth in Giant Gulf Coast Plant - Exxon Mobil Corp. and Saudi Arabia’s state-controlled petrochemicals company formally approved construction of a new chemical complex in Texas that will process production from the Permian Basin’s booming oil and natural gas wells. The project near Corpus Christi will be the world’s largest steam cracker and create $50 billion of “economic output” in the first six years, Exxon and Saudi Basic Industries Corp., known as Sabic, said in a joint statement on Thursday. The facility will convert hydrocarbons such as ethane and propane to ethylene, a chemical used to make everything from plastics to antifreeze.It’s the latest in a slew of chemical and refining plants set for the Gulf Coast, gaining from ultra-cheap production from the Permian, the world’s largest shale basin. As explorers boost oil output, associated supplies of gas and liquid byproducts provide some of the cheapest chemical feedstocks in the world. Situated “on the doorstep of rapidly growing Permian production gives this project significant scale and feedstock advantages,” Exxon Chief Executive Officer Darren Woods, said in the statement. Industry executives have been lauding chemicals as an emerging driver of global oil and gas markets. Earlier this week, BP Plc Chief Economist Spencer Dale earlier predicted petrochemicals will dominate energy demand growth for the next two decades. Plastics and chemicals are seen as increasingly vital to Big Oil’s future given uncertainty over crude demand and the push toward electric vehicles and cleaner energy sources. But some of the world’s most-advanced economies are increasingly clamping down on single-use plastics such as shopping bags and straws. That hasn’t scared off Exxon. This year alone, the oil giant approved major expansions to its giant Baytown petrochemical complex and Beaumont refinery in Texas as well as a plastics unit in Louisiana. CEO Woods, former head of the company’s downstream division, sees the plants as essential to making money all the way from the wellhead to the final products. The business also acts as a natural hedge against commodity-price swings.
Sempra Energy ships first liquefied natural gas cargo from Cameron LNG export facility -- On May 31, 2019, Sempra Energy, the majority owner of the Cameron liquefied natural gas (LNG) export facility,announced that the company had shipped its first cargo of LNG, becoming the fourth such facility in the United States to enter service since 2016. Upon completion of Phase 1 of the Cameron LNG project, U.S. baseload operational LNG-export capacity increased to about 4.8 billion cubic feet per day (Bcf/d). Cameron LNG’s export facility is located in Hackberry, Louisiana, next to the company’s existing LNG-import terminal. Phase 1 of the project includes three liquefaction units—referred to as trains—that will export a projected 12 million tons per year of LNG exports, or about 1.7 Bcf/d. Train 1 is currently producing LNG, and the first LNG shipment departed the facility aboard the ship Marvel Crane. The facility will continue to ship commissioning cargos until it receives approval from the Federal Energy Regulatory Commission to begin commercial shipments. Commissioning cargos refer to pre-commercial cargo loaded while export facility operations are still undergoing final testing and inspection. Trains 2 and 3 are expected to come online in the first and second quarters of 2020, according to Sempra Energy’s first-quarter 2019 earnings call. Cameron LNG has regulatory approval to expand the facility through two additional phases, which involve the construction of two additional liquefaction units that would increase the facility’s LNG capacity to about 3.5 Bcf/d. These additional phases do not have final investment decisions. Cameron LNG will be the fourth U.S. LNG-export facility placed into service since February 2016. LNG exports rose steadily in 2016 and 2017 as liquefaction trains at the Sabine Pass LNG-export facility entered service, with additional increases through 2018 as units entered service at Cove Point LNG and Corpus Christi LNG. Monthly exports of LNG exports reached more than 4.0 Bcf/d for the first time in January 2019. Currently, two additional liquefaction facilities are being commissioned in the United States—the Elba Island LNG in Georgia and the Freeport LNG in Texas. Elba Island LNG consists of 10 modular liquefaction trains, each with a capacity of 0.03 Bcf/d. The first train at Elba Island is expected to be placed into service in mid-2019, and the remaining nine trains will be commissioned sequentially during the following months. Freeport LNG consists of three liquefaction trains with a combined baseload capacity of 2.0 Bcf/d. The first train is expected to be placed in service during the third quarter of 2019.
Energy Giants Set Their Sights On Brownsville As Home For New Liquefied Natural Gas Plants -- Brownsville, Texas is one of the poorest metropolitan areas in the nation. But it is now being considered for almost $40 billion worth of investment. Three energy companies are planning projects to bring liquefied natural gas plants to the area – striking community controversy and organized opposition to the proposals. Sergio Chapa is an energy reporter for The Houston Chronicle, and he’s been following this story. Chapa says the reason the port city of Brownsville is being pursued by the energy companies is two-fold. “About ten years ago or so, the discovery of the Eagle Ford Shale and the shale revolution, which unlocked previously trapped reserves of oil and gas in the United States,” Chapa says. “It made it economic to tap those resources underground, so what we have created is a surplus of oil and natural gas.” The availability of land, Chapa says, is the other reason the LNG industry is interested in Brownsville. “A lot of the ports along the Gulf Coast are already out of land they can lease,” Chapa says. “[These large facilities] require hundreds of acres in some cases, and without any land at some of the more traditional ports like Corpus Christi or Houston, these developers started looking further south.” While the plan includes nearly $40 billion in private investment, thousands of jobs and additional U.S. exports of natural gas, Chapa says critics are focused on preserving quality of life and the environment in the region. “There’s a lot on the line here,” Chapa says. “These projects are being built in one of the poorest areas of the state, one of the areas of the state with the highest unemployment and also in an endangered species wildlife corridor.” Chapa says one retired couple with firsthand experience in the energy industry is helping lead their community in the fight against the construction of these LNG plants. “[The Gundersons] lived in Texas City – it’s a suburb of Houston – for a number of years, where George Gunderson worked at the B.P. oil refinery,” Chapa says. “That was until an accident in March 2005. A cloud of gas ignited killing a number of people and injuring more than a hundred others.”
In an energy-hungry world, natural gas gaining the most - Natural gas was the fastest-growing energy source in the world last year — when global energy consumption rose at its fastest pace in nearly a decade, according to a new International Energy Agency report. Natural gas accounted for 45% of all energy consumption growth in 2018. Most regions and many industries, including the shipping sector, as shown in the above chart, are turning to the fuel as a cleaner-burning, cheap alternative to coal and oil. Development of new gas resources, led by America, has ushered in what the IEA predicated in 2011 would be a “golden age of gas.” This is reshaping geopolitics and complicating efforts to address climate change. While the cleanest-burning fossil fuel, natural gas still emits greenhouse gas emissions compared to sources like renewables or nuclear power. One stark example of how environmental concerns overlap with natural gas is the shipping industry’s anticipated shift to liquefied natural gas (LNG) over fuel oil.
- The IEA projects a tenfold increase in LNG as shipping fuel by 2024, with container and cruise ships accounting for most of that.
- This shift is being chiefly driven by tougher environmental rules on the maritime industry that a U.N. agency will begin implementing in January 2020.
Much of the debate around natural gas focuses on electricity, such as its role in displacing coal and competing with (and sometimes complementing) variable renewable energy. But it's industrial uses for natural gas, such as chemicals and fertilizers, that are the biggest drivers of growth in most areas of the world, per the IEA report. These uses can’t be as easily replaced with renewables like electricity can. IEA sees more demand growth ahead, but not as fast as last year’s. It projects worldwide demand will rise more than 10% over the next 5 years, with China alone expected to account for 40% of the increase.
Prices Continue Lower On High Injections And Moderate Temperature Forecasts --Highlights of the Natural Gas Summary and Outlook for the week ending June 7, 2019 follow. The full report is available at the link below.
- Price Action: The now prompt July contract fell 15.7 cents (6.0%) to $2.454 on a 20.2 cent range ($2.646/$2.444).
- Price Outlook: Prices continued to slide as the EIA reported another storage injection well above expectations while weather forecasts were also considered bearish. The market has now posted a new weekly low for 3 consecutive weeks after the recent 4 consecutive weeks that witnessed a new weekly high. However, this streak falls far shy of the record 9 consecutive weeks lower posted in 2008. Thus, while prices have fallen below long-tern technical support near $2.50, the market is not considered extended to the downside or “due” for a correction..
- Weekly Storage: US working gas storage for the week ending May 31 indicated an injection of +119 bcf. Working gas inventories rose to 1,986 bcf. Current inventories rise 169 bcf (9.3%) above last year and fall (245) bcf (-11.0%) below the 5-year average.
- Supply Trends: Total supply rose 1.2 bcf/d to 85.2 bcf/d. US production rose. Canadian imports rose. LNG imports fell. LNG exports rose. Mexican exports fell. The US Baker Hughes rig count fell (9). Oil activity decreased (11). Natural gas activity increased +2. The total US rig count now stands at 975 .The Canadian rig count rose +18 to 103. Thus, the total North American rig count rose +9 to 1,078 and now trails last year by (96). The higher efficiency US horizontal rig count fell (7) to 855 and falls (79) below last year.
- Demand Trends: Total demand rose +0.9 bcf/d to +69.9 bcf/d. Power demand rose. Industrial demand rose. Res/Comm demand fell. Electricity demand rose +2,063 gigawatt-hrs to 77,831 which trails last year by (5,752) (-6.9%) and exceeds the 5-year average by 557 (0.7%%).
- Nuclear Generation: Nuclear generation rose 2,406 MW in the reference week to 90,191 MW. This is (3,460) MW lower than last year and +438 MW higher than the 5-year average. Recent output was at 90,078 MW.
The cooling season is beginning. With a forecast through June 21, the 2019 total cooling index is at 424 compared to 1,007 for 2018, 863 for 2017, 850 for 2016, 589 for 2015, 601 for 2014, 648 for 2013, 968 for 2012 and 1,000 for 2011.
Hotter Weather Changes Help Extend Natural Gas Rally -- While natural gas prices remain at very low levels historically, we have now put together nearly a 10 cent rally off the multi-year lows set late last week. The July contract closed the day up just over 4 cents, closing a tick under the $2.40 level. Changes in supply / demand balance data along with firmer cash prices certainly helped the market set at least a temporary bottom, but weather changes have grown increasingly bullish as well compared to what we saw at the conclusion of last week. This was a risk we alerted clients to back in our Friday afternoon "Pre-Close Update". It took a couple of days, but those warmer risks have become much more apparent. Take, for example the 7-11 day surface temperature anomaly forecast from the GEFS back on Sunday: The current forecast, valid the same period, has shifted decidedly warmer: The changes continued beyond this period as well, as can be seen by comparing Sunday's 11-15 day GEFS forecast to the latest run, valid the same dates. Here is Sunday's run: Now, the latest run: The warmer shift in both periods has boosted weather demand forecasts, contributing to this week's natural gas rally.
East Texas spot natural gas prices sink to multiyear lows, but exports may bring support— Spot natural gas prices for the five primary East Texas natural gas benchmarks dropped to their lowest levels since November 2016 this week on weaker demand and rising production, but increased exports may provide support. On Thursday, Houston Ship Channel fell to $2.275/MMBtu; Katy Hub to $2.285/MMBtu; Carthage Hub to $2.175/MMBtu and Transco Zone 1 to $2.215/MMBtu. Texas Eastern East Texas fell to $2.18/MMBtu Tuesday and stayed near that low Wednesday and Thursday at a settlement price of $2.185/MMBtu. For the first two weeks of June, the five benchmarks settled an average of 56.8 cents lower this year compared with the same period a year ago. Houston Ship Channel has averaged $2.333/MMBtu the first half of June, down from $2.995/MMBtu the same period a year ago. Carthage Hub has averaged $2.222/MMBtu for the first half of June, down from $2.766/MMBtu a year ago. Texas Eastern East Texas has averaged $2.219/MMBtu this year, compared with $2.784/MMBtu a year ago. Katy Hub has averaged $2.347/MMBtu for the first half of June, down from $2.983/MMBtu last year and Transco Zone 1 averaged $2.293/MMBtu the first half of June, down from $2.727/MMBtu a year ago. Gas production for the first half of June in Texas has averaged 20.7 Bcf/d, 5% above the 2018 average of 19.7 Bcf/d. The state's strongest production increases have come from East Texas Haynesville, which rose about 64% year on year, averaging 2.8 Bcf/d the first two weeks this year from 1.7 Bcf/d the same period a year ago. This increased production in Texas has contributed to stronger reported storage builds this year than last. The US Energy Information Administration reported a South Central regional storage level of 842 Bcf for the week that ended June 7, 5.8% above the 796 Bcf reported for the same week a year ago. Mild temperatures also played a role in the low prices -- the average temperature in Texas for the first two weeks of June was 78 degrees, well below the year-ago average of 84 degrees.
EIA Reports Low-End, Triple-Digit Natural Gas Storage Build - The Energy Information Administration (EIA) on Thursday reported a 102 Bcf injection into storage inventories for the week ending June 7. The slightly smaller-than-expected build provided an initial modest uplift for natural gas futures prices, trimming earlier losses by around 1.5 cents. Ahead of the EIA’s 10:30 a.m. ET report, the July Nymex gas futures contract was trading 2.6 cents lower at $2.36, but as the print hit the screen, the prompt month rose to $2.376, down only a penny on the day. By 11 a.m., however, July futures were trading back down to $2.359, off 2.7 cents. The reported 102 Bcf injection was larger than both last year’s 95 Bcf build and the five-year average injection of 92 Bcf. However, it came in on the low end of expectations as most estimates had clustered around a build near 110 Bcf. NGI had projected a 108 Bcf injection. Nevertheless, most market analysts shrugged off the slight miss, especially after two massively bearish storage reports in a row. With prices remaining in the red, there was further downside risk ahead, according to Flux Paradox LLC President Gabriel Harris. Thus far, lower prices have not made the weather-adjusted injections look any tighter, which starts to cause reasonable doubt in the market on the whole coal-to-gas switching mechanism, according to Harris. “The market will need dramatic evidence that the price-switching mechanism is at full strength before a bottom occurs.” However, Bespoke Weather Services said balance wise, the 102 Bcf injection is considerably tighter than last week’s loose 119 Bcf print, giving the firm more confidence in the data after the previous two big misses. “We feel that the tighter balances will show up in next week’s number as well, though with this week being a low demand week, we could still see another triple-digit build.” By region, the Midwest reported a 33 Bcf injection into inventories, while the East added 26 Bcf, according to the EIA. Stocks in the Mountain region grew by a larger-than-expected 10 Bcf, and stocks in the Pacific rose by 14 Bcf. Working gas in storage as of June 7 stood at 2,088 Bcf, which is 189 Bcf higher than a year ago but still 230 Bcf below the five-year average, according to EIA.
Have Natural Gas Prices Found A Bottom? - It was a choppy week in the world of natural gas, though it ended on a higher note, with the July contract closing just over 6 cents higher on the day today, giving it a 5 cent gain since last Friday's close. The bullish case had gradually been building all week long. We highlighted the other day the hotter changes in the weather pattern, meaning more demand for natural gas, which has held into today's forecasts, thanks to some heat creeping into the South. The gradual hotter changes were not enough to bring buyers back in initially, however. After two bearish EIA reports in a row, the market wanted to make sure we would not see a third surprise. We did not, as the report showed a build of 102 bcf, very close to our estimate of 100 bcf. This confirmed our view that balances had tightened significantly compared to prior weeks. The recipe for a rally had one last hurdle to climb, and that was cash, which was very weak yesterday, again scaring off potential buyers. We maintained our "slightly bullish" view yesterday afternoon nonetheless, feeling that cash would firm back up as demand increases, and allow prices to run higher. It didn't take long for that to occur, as cash firmed up in today's session with higher demand coming over the weekend and into Monday. This finally gave the green light to buyers that it was safe to at least dip their feet into the water.
With prices ending the week almost 9 cents off the lows of late last week, has a bottom been found? We will refrain from going far enough to make that claim, but we can offer analysis to keep you a step ahead of the market's next move.
U.S. gas flaring spiked 48% last year — study - Flaring of natural gas jumped by almost half in the U.S. last year on the heels of surging shale oil production, new satellite data suggests.
Texas Drillers Resort to Pumping Gas Down Wells - Texas drillers may have found a solution to the stubborn natural gas glut that’s forced them to either burn it off into the air, or pay others to take it away. At least five producers, led by EOG Resources Inc., are experimenting with shooting highly-pressurized natural gas into past-their-prime wells that have seen their output slip. The wells are then capped to build up pressure inside with the aim of dislodging any oil still hiding in the rock. The methodology’s been used in conventional wells elsewhere with both natural gas and carbon dioxide for years, but it’s just now emerging in America’s fracked shale fields. The win-win goal: The trapped gas is put to work, and there’s a 30%-to-70% gain in oil output from older wells, according to EOG. As the shale boom ages, the potential could be extensive. “If widely adopted, if it doesn’t lead to challenges and the formations behave as we expect, then we expect it could utilize 25% of the associated gas produced,” Natural gas almost always comes up with oil during drilling, but it’s increasingly become a largely unwelcome byproduct in Texas. With pipeline capacity for gas limited, prices there have cratered, dropping as low as minus $9 per million British thermal units in early April. In late 2018, Permian flaring -- the burning off of associated gas -- more than doubled from a year earlier to 500 million cubic feet a day, and that’s likely to rise, It’s a problem from both an economic point of view, and environmentally. Generally, the use of injected gas is known as enhanced oil recovery, or EOR. Initially, EOG was the main company using natural gas to boost shale oil output. "But the fact is that now we have seen four other producers do it," he said. “And with remarkable results.” . Gas injection can potentially extend crude production volumes in older wells by 18 to 24 months, Krishnamoorti said. What’s still to be determined is how well EOR works in different types of rock formations. Not all rock is the same, and while it does appear to be an attractive option in many parts of the Permian, it’s “not particularly good” in at least one section, the Wolfcamp zone, according to Krishnamoorti,
The World's First Zero-Carbon Oilfield Could Be Coming To Texas – Maybe? - Experts say carbon emissions need to be reduced and even removed from the atmosphere to avoid catastrophic climate change. Could carbon-neutral oil be a part of that? One company setting up shop in the West Texas oilfields says yes. The Canadian firm Carbon Engineering recently announced a partnership with oil giant Occidental Petroleum to create what they say could amount to a carbon-neutral oilfield. The plan is to build a facility in the Permian Basin to filter carbon dioxide out of the atmosphere. The oil company will then pump that CO2 back into the earth to force more oil out of the ground, in a process called enhanced oil recovery. Carbon Engineering CEO Steve Oldham stands in front of the company's Squamish, British Columbia, plant. Simply put: It would replace the oil in the ground with atmospheric CO2. If the process can be accomplished without extra emissions, the companies say, the oil that’s produced can be considered carbon-neutral. KUT spoke with Carbon Engineering CEO Steve Oldham to learn more. (interview transcript)
Agency: Safeguards Failed in Fire That Killed 5 at Gas Well (AP) — The failure of safety devices designed to prevent blowouts contributed to an explosion and fire that killed five workers last year at a southeastern Oklahoma natural gas well, according to a federal agency's report Wednesday that also lists inadequate training and a deactivated alarm system as factors. The report by the U.S. Chemical Safety and Hazard Investigation Board says the safeguards, designed to prevent the uncontrolled release of gas and other fluids from the well, were ineffective before the Jan. 22, 2018, explosion and fire in Pittsburg County near Quinton, which is about 125 miles (200 kilometers) east of Oklahoma City. Among other things, the 158-page report found certain operations at the Houston-based Patterson-UTI Energy Inc. drilling site were conducted "without needed planning, equipment, skills, or procedures," nullifying the primary barrier designed to prevent a blowout. In a statement, Patterson said it does not agree with all of the agency's findings but is evaluating what policies, procedures and training it could implement to address the issues raised in the report. "We remain committed to preventing an accident like this from ever happening again," the statement says. The explosion was the deadliest drilling accident since the Deepwater Horizon rig exploded in the Gulf of Mexico in 2010, killing 11 people. The report represents the first time the board has investigated a deadly accident at an onshore drilling site, according to its interim executive, Kristen Kulinowski,
Court Sides With Trump on Keystone XL Permit, but Don’t Expect Fast Progress - A federal appeals court on Thursday threw out a lower court decision to halt construction of the Keystone XL pipeline. But several major obstacles remain to the controversial project's progress, ensuring that the much-delayed Keystone XL will likely not be built soon.The Ninth Circuit Court of Appeals decision hands a victory, at least for now, to the Trump administration and tar sands oil interests that have sought to jump-start construction of the northern leg of the pipeline from Alberta to Nebraska. President Barack Obama had decided in 2015 that Keystone XL should not be built, saying it wouldn't serve the U.S. national interest. But in one of his first acts in the White House, President Donald Trump signed an executive order reversing that decision and directing the State Department to issue a construction permit. The issue has been litigated ever since. Last November, a federal district court judge in Montana stopped construction of the pipeline, ruling that the Trump administration had failed to fully take into account the pipeline's impact on the environment, including the climate. "The Trump administration "simply discarded prior factual findings related to climate change to support its course reversal," wrote Judge Brian Morris of the United States District Court for Montana. In response, Trump scrapped the pipeline's State Department approval in March and issued in its place a new presidential permit for Keystone XL, arguing that such a permit, originating in the White House, does not need to abide by federal environmental reviews. Keystone XL's owner, TC Energy, and the administration then appealed the Montana court's decision to the Ninth Circuit Court, asking the panel of judges to throw out the lower court's ruling since the State Department permit had been revoked. The Ninth Circuit ruled in favor of the administration and the company.
Wyoming BLM: Study drilling project climate impacts — The Bureau of Land Management’s Wyoming Office has directed federal regulators to do additional analysis of the climate impacts of a planned 156-well drilling project in northern Converse County.The Casper Star-Tribune reports that the decision Wednesday states that the BLM Casper Field Office must complete a supplementary analysis of additional greenhouse gas emissions that would result from the development of oil and gas wells on public lands leased by Houston-based EOG Resources. A representative from the Center for Biological Diversity says the decision appears to represent a “growing acknowledgment” within the BLM that environmental laws require public land managers to consider the climate consequences of public lands fossil fuel development. A spokesman for EOG Resources says the company will continue to work with the BLM on the project.
Plans advance for new oil pipeline to serve Bakken, Rockies regions -- Two companies announced Monday they plan to move forward with a new oil pipeline to transport Bakken crude to Oklahoma, but the route of the project is not yet clear. Phillips 66 and Bridger Pipeline announced they have formed a joint venture to build the Liberty Pipeline to transport growing volumes of crude oil from production areas in the Bakken and the Rockies. If approved, it would be the first major crude oil transmission pipeline built in North Dakota since Dakota Access, which began operating in June 2017 to transport oil to Illinois. The North Dakota portion of the Liberty Pipeline is proposed for the southwest corner of the state, said Bill Salvin, a spokesman for Bridger. North Dakota crude would flow to Guernsey, Wyo., and then on to Cushing, Okla., though the exact route is still being determined, he said. The project, which will need approval from regulators, is expected to transport up to 200,000 barrels of oil per day from the Williston Basin to Cushing, said Justin Kringstad, director of the North Dakota Pipeline Authority. The $1.6 billion pipeline could be in service as early as the first quarter of 2021, the companies announced. Previously, they said the project would have a total capacity of up to 350,000 barrels per day. Phillips 66 will lead the project construction and operate the pipeline, according to a news release.
$1.6B pipeline proposed to move North Dakota crude oil (AP) — Two companies are proposing a $1.6 billion pipeline to move North Dakota crude oil, making it the biggest such project to move oil out of the state since the Dakota Access pipeline that sparked violent clashes between protesters and law enforcement in 2016 and 2017. Houston-based Phillips 66 and Casper, Wyoming-based Bridger Pipeline announced the joint venture called Liberty Pipeline on Monday. It’s designed to move 350,000 barrels of oil daily — the bulk of which from western North Dakota’s oil patch — to the nation’s biggest storage terminal in Cushing, Oklahoma. From there, the companies said shippers can access multiple Gulf Coast destinations. The exact route of the 24-inch (60-centimeter) pipeline has not been disclosed, though the companies said in a statement the project “will utilize existing pipeline and utility corridors and advanced construction techniques to limit environmental and community impact.” The pipeline would start in Guernsey, Wyoming, and end in Cushing, Oklahoma, Bridger Pipeline spokesman Bill Salvin said. A separate 55-mile (88.5 kilometer), 16-inch (40-centimeter) North Dakota line would run through the west-central part of the state, travel south though Montana and connect with the Liberty Pipeline at Guernsey, Salvin said. Forty-four miles of the North Dakota portion would parallel an existing pipeline corridor, he said. As described, the pipeline would be west of the Dakota Access pipeline and far from the most productive portion of North Dakota’s oil patch in the northwestern part of the state. “Pipelines are a matter of great concern to folks,” Salvin said. “We are acutely aware of pipeline routing in North Dakota and we are doing everything in our power to use existing pipeline rights of way and corridors.” “Importantly, the new line will not cross any tribal lands,” he said.
Delegation urges feds to settle state's DAPL cost claim - North Dakota’s congressional delegation is urging two Trump administration officials to address the state’s year-old demand for $38 million to cover the cost of policing large-scale and at times violent protests against the Dakota Access oil pipeline. The request last Thursday by U.S. Sens. John Hoeven and Kevin Cramer and U.S. Rep. Kelly Armstrong came the same day that a federal appeals court ordered dismissal of a lawsuit by environmentalists and American Indians who seek to stop the Keystone XL oil pipeline. Opponents have vowed similar protests against that project. President Donald Trump has been a staunch advocate of both pipelines and has actively pushed for their completion. “This administration has reset the precedent on permitting this type of project,” the delegation said in a letter to U.S. Attorney General William Barr and Acting Defense Secretary Patrick Shanahan. “But we urge you to also reset the federal government’s precedent in these matters to maintain law and order on federal land and recognize the overwhelming responsibility the state and local authorities in North Dakota employed to maintain public safety.” The all-Republican delegation asks Barr and Shanahan to work with North Dakota “to achieve an equitable settlement” of the state’s claim. North Dakota contends the Army Corps of Engineers allowed protesters to illegally camp without a federal permit. The Corps has said protesters weren't evicted due to free speech reasons. Justice Department spokesman Wyn Hornbuckle declined comment Monday, the day the delegation announced the letter. The Defense Department didn’t immediately comment.
US Leads the World in Oil Reserves- The U.S. currently holds the title of global leader in recoverable oil resources, according to the latest annual report of world recoverable oil resources by energy research firm Rystad Energy. With 293 billion barrels of recoverable oil resources, the U.S. beats out both Saudi Arabia and Russia by 20 billion barrels and 100 billion barrels, respectively. Rystad’s estimates of U.S. recoverable oil is also five times more than reported proven reserves published in the BP Statistical Review of World Energy 2019. According to Rystad analysis, the Permian’s tight oil plays hold 100 billion barrels of recoverable oil resources and the resources there remain largely flat from the previous year. Improvements in well configuration plays a part in this. “We also note that production has not been fully replaced by increased reserves in some U.S. shale plays, including Eagle Ford in Texas and Utica in Ohio,” Rystad Energy CEO Jarand Rystad said in a release sent to Rigzone. “Oil companies have been focusing on core development and cash flows rather than exploration and de-risking non-core assets.” Using the standard of the Society of Petroleum Engineers (SPE) when estimating reserves and resources in fields in order to consistently compare OPEC and non-OPEC countries as well as conventional and unconventional fields, Rystad estimates the world’s proven oil reserves to total 386 billion barrels. “Official reserves reporting from Saudi Arabia indicates an upwards revision of 10 percent, but we don’t see increases in activity that would justify such a large upgrade, so this revision could be due to changes in reporting methodology,” said Per Magnus Nysveen, Rystad’s head of analysis. “The 20 percent revision to official U.S. reserves, on the other hand, is due to higher reserves reported by the operators and is based on more stringent rules from the U.S. Security Exchange Commission.”
US 2018 Oil, Gas Output Surges Outpaced All Countries -- U.S. natural gas and crude oil production increased last year at the fastest pace ever for a single country. U.S. gas output soared 86 billion cubic meters in 2018, the largest annual increase by any country ever, according to statistics published Tuesday by BP Plc. That’s roughly equivalent to consumption in the U.K., one of the oldest users of the fuel, and almost 40% more than the previous record set by Russia in 2010. And in a twin first, U.S. oil output jumped 2.2 million barrels a day -- also the largest amount ever by a single country in a year. “What you saw last year was really quite amazing -- this amazing unique double first for the U.S.,” said Spencer Dale, BP’s global chief economist. “This is pretty astonishing growth and I don’t think this is some sort of unique aberration. This is a function of the U.S. shale revolution in both oil and natural gas -- it’s alive and well and it’s powering strongly.” The jump in the production of the polluting fossil fuels happened three decades after nations including the U.S. set up a United Nations framework to try save the climate. The figures will stoke angst in those continuing negotiations, where countries are seeking to collaborate and tighten greenhouse-gas targets ahead of the Paris climate deal to limit the risk of runaway heatwaves, drought and flooding after next year. As part of the talks, they’re discussing historical responsibility for the climate crisis.
Where Is All the Missing US Oil? -- Oil traders and analysts closely watching weekly U.S. inventory figures have been scratching their heads in the last few weeks wondering one thing: Where are the missing barrels? U.S. Energy Information Administration data Wednesday showed a crude supply adjustment factor -- the difference between reported stockpiles and those implied by production, refinery demand, imports and exports -- of more than 800,000 barrels a day. While that doesn’t seem like that much, it’s added up to more than 24 million barrels over the past four weeks, and potentially hundreds of millions of dollars in trading opportunities. The figure tends to swing back and forth, depending on irregularities in various surveys the EIA pulls from for its reports. It’s the only time since records going back nearly two decades that reported stockpiles have been so much higher than the implied figure for so long, which has surprised traders and investors. Popular guesses for the discrepancy include missing production from the prolific Permian Basin or miscounting of imports or exports. The source could be important, because higher-than-expected production would continue weighing on U.S. oil prices just as investors expect the start of summer driving demand season to spark a rebound. While crude production may be higher, it’s unlikely the full picture, said Robert Merriam, director of the office of petroleum and biofuels statistics at the EIA. He cautioned that while the adjustment factor is high, it only accounts for about 4% of U.S. crude demand. Besides understating oil production, one of the culprits may be plant condensate associated with natural gas output, Merriam said. That plant condensate -- a natural gas liquid recovered and separated in processing plants -- can get blended into the crude oil stream. While that supply is added into inventories, it’s not getting counted as crude production because it comes from the natural gas stream. As a result, crude stockpiles could rise without a commensurate increase in output.In a research note on Wednesday, Macquarie Group Ltd. analysts suggested potential errors in net imports could be the culprit. The analysts added that May balances implied exceptionally strong production, which means U.S. oil output may be even higher than the 12.4 million barrel-a-day record in this week’s data -- a narrative that many bearish market participants believe. Rystad Energy AS said Thursday that its May data shows crude supply averaging 12.5 million.
A Gusher Of Red Ink For US Shale - Oil prices are off more about 20 percent in the last two weeks on growing fears of a brewing economic recession. Commodities of all types have been hammered by the pessimism. “Fear of global economic growth slowing,” said Peter Kiernan, lead energy analyst at the Economist Intelligence Unit (EIU), according to Reuters, “afflicting the entire energy complex with worries that demand growth will be bearish this year.” Prices for coal, natural gas and LNG, and crude oil have plunged. “The continued escalation in trade tensions and broad-based fall in manufacturing...suggest that the downside risks to growth are becoming more prominent,” Morgan Stanley analysts said in a note. Yet another downturn could not come at a worse time for U.S. shale drillers, who have struggled to turn a profit. Time and again, shale executives have promised that profitability is right around the corner. Years of budget-busting drilling has succeeded in bringing a tidal wave of oil online, but a corresponding wave of profits has never materialized.Heading into 2019, the industry promised to stake out a renewed focus on capital discipline and shareholder returns. But that vow is now in danger of becoming yet another in a long line of unmet goals.“Another quarter, another gusher of red ink,” the Institute for Energy Economics and Financial Analysis, along with the Sightline Institute, wrote in a joint report on the first quarter earnings of the shale industry.The report studied 29 North American shale companies and found a combined $2.5 billion in negative free cash flow in the first quarter. That was a deterioration from the $2.1 billion in negative cash flow from the fourth quarter of 2018. “This dismal cash flow performance came despite a 16 percent quarter-over-quarter decline in capital expenditures,” the report’s authors concluded. Rystad Energy put it somewhat differently, although came to the same general conclusion. “Nine in ten US shale oil companies are burning cash,” the Norwegian consultancy said late last month. Rystad studied 40 U.S. shale companies and found that only four had positive cash flow in the first quarter. In fact, the numbers were particularly bad in the first three months of this year, with the companies posting a combined $4.7 billion in negative cash flow. “That is the lowest [cash flow from operating activities] we have seen since the fourth quarter of 2017,” Rystad’s Alisa Lukash said in a statement.
Can Shale Survive Low Oil Prices- OilPrice.com - Lower oil prices could drag down U.S. shale drillers at a time when their finances are already looking shaky. But the impact on oil production growth is still murky. WTI is in the low-$50s per barrel, which means that the average shale driller is likely burning through cash. In the first quarter, most U.S. E&Ps were cash flow negative, a period of time when WTI averaged $54 per barrel, right about where oil is trading today. The rig count continues to fall. In the week ending on June 7, the U.S. oil rig count plunged by 11, falling to 789. The rig count has declined by roughly 11 percent, or 100 rigs, from a recent peak reached last November. In the Permian basin, where much of the action is, the rig count fell by more than 9 percent over that timeframe, from 493 to 446. Complicating matters further for Texas shale drillers is the increasing shift of the oil slate to lighter forms of crude. Oil coming out of the ground in West Texas was light to begin with, but as drillers begin to shift increasingly from the Midland to the Delaware basin, oil is becoming lighter and lighter. The refineries along the Gulf Coast are not equipped to handle oil that light. It is typically mixed in with other streams to create WTI, but rising volumes of ultra-light oil are forcing changes. Instead, the industry is beginning to separate out oil of different qualities, forming new grades, as Reuters reports. In addition to WTI, markets are opening up for West Texas Light (WTL) and even West Texas Condensate (WTC). These newer, lighter grades are trading for discounts, which means that some companies are selling their product for prices well below the prevailing WTI price. But while drillers take an additional hit from discounts, the larger problem is an inability to turn a profit during virtually any period of the shale revolution. Despite years of cost-saving measures, improvements in drilling techniques and promises to lower break-even costs, the shale industry is by and large still not profitable. Investors are losing patience, and as the Wall Street Journal reports, access to capital is beginning to close off for many shale companies. “By our math, very few oil-and-gas companies, 15% or less, can really achieve capital discipline,” Todd Dittmann, head of energy at Angelo Gordon & Co., told the WSJ. “This leaves most public companies with hope strategies and little more, hoping insufficient capital spending won’t lead to near-term production declines.”
Energy Dominance Or Flatulence? Shale Drillers Bleed Cash - All of President Trump’s foreign policy can be summed up by two themes, making the world safe for Israel and controlling the price of energy. He calls the latter “Energy Dominance.” And to those who still believe Trump has a plan, these two things are the only ones consistently in evidence. His reactions to things contrary to his plan, however, are purely limbic.These two themes converge completely with Iran. Trump wants Iran neutered to force Jared Kushner’s now-delayed again, “Deal of the Century” onto the Palestinians while also taking Iran’s oil off the market to support surging U.S. domestic production in the hopes of taking market share permanently.Everything Trump does is in support of these two themes while throwing some red meat at his base over China, Mexico and the border.It was never his intention to leave Syria back in December, really. Look how easy was it for John Bolton and the Joint Chiefs to convince him to stay because how else would we cut Iran’s exports to zero if we didn’t stop the land route through Iraq?This is why we’re still harboring ISIS cells in the desert crossing around Al-Tanf at the Jordan/Iraq/Syria border, to stop Iranian oil from coming into the country.This feeds right into hurting all of Syria’s allies to strengthen Israel’s position.To paraphrase the song from Aladdin, “It’s stupid, but hey, it’s home.”If the average Trump voter truly understood the lengths we are going to starve the Syrian army from having enough energy to finish wiping out the Al-Qaeda-linked groups in Idlib and Homs provinces they would burn their MAGA hats and stay home next November.But they don’t so Trump’s approval rating keeps climbing.On the other hand, people mostly understand exactly what the “Bay of Fat Pigs” operation in Venezuela was all about, protecting domestic oil production and getting control of Venezuela’s.The sad truth is that many Americans consider this comeuppance for being stupid enough to elect Nicolas Maduro President.But this is the guts of Trump’s “Energy Dominance” policy. Use tariffs, sanctions, threats and hybrid warfare to destroy the competition and therefore MAGA.It would be sad if it wasn’t so pathetic. And the irony is that the whole plan is predicated on sustainable and nigh-exponential growth of U.S. domestic production. There’s only one problem with that. It’s completely unsustainable. From Zerohedge via Nick Cunningham at Oilprice.com comes this beauty of an image:
The US will maintain oil production despite falling prices, says deputy energy secretary - The U.S. will maintain its oil production — or even ramp it up higher — despite low energy prices and slowing economic growth, Deputy Energy Secretary Dan Brouillette said Wednesday. Shale producers in the U.S. will continue to produce a record 12 million barrels a day throughout next year, he said, citing projections from the Energy Information Administration. They may even go up to as high as 13 million barrels, he added. “U.S. production numbers are going to continue for quite some time,” Brouillette told CNBC. U.S. West Texas Intermediate (WTI) crude futures have fallen almost 20% since reaching their 2019 peaks in late April, as oil prices were dragged down by intensifying fears of an economic downturn that’s started to impact oil consumption. But Brouillette rejected fears that oil demand would be hit amid slowing growth. “Growth is slowing down slightly ... over the course of early 2019. But I suspect that as the economy begins to rev up, we’ll start to see that demand pick up as well. And it’s going to be good news for oil producers,” he said. On Wednesday, Brent crude futures were at $61.34 per barrel, and U.S. crude futures were at $52.40 per barrel — off this year’s highs of around $74 and $66 per barrel in April.Even though shale drillers in the U.S. have been said to face obstacles on growing output amid a wave of belt-tightening that’s cutting billions of dollars from budgets, and the number of operating oil rigs have declined this year, Brouillette said that production is not actually the biggest problem.“Our biggest challenge in the United States is not maintaining production, it’s actually getting the product to market. We are developing infrastructure ... at a rapid pace, but we need to do more. We need more pipeline capacity in order to have the oil and the gas reach these export markets,” he said.In fact, Brouillette said, there will be increased production, not falling output, in the U.S.
Trump Thinks US Oil Is His Strength When It's His Achilles' Heel - Headlines abound about the massive surge in US shale oil production. The energy independence-cheering punditocracy hail this as a great victory. This includes President Trump. And it would be if this surge in production was built on financially stable ground. But it isn’t. The fracking industry continues to bleed massive amounts of cash. As I pointed out in an article earlier this week, when accounting for this inconvenient truth much of the U.S’s return to dominance in the energy space is a lot of hot air. Heading into 2019, the industry promised to stake out a renewed focus on capital discipline and shareholder returns. But that vow is now in danger of becoming yet another in a long line of unmet goals. “Another quarter, another gusher of red ink,” the Institute for Energy Economics and Financial Analysis, along with the Sightline Institute, wrote in a joint report on the first quarter earnings of the shale industry. The report studied 29 North American shale companies and found a combined $2.5 billion in negative free cash flow in the first quarter. That was a deterioration from the $2.1 billion in negative cash flow from the fourth quarter of 2018. “This dismal cash flow performance came despite a 16 percent quarter-over-quarter decline in capital expenditures,” the report’s authors concluded. This lack of profitability is maintained solely through financial engineering and a continued bull market in structured credit in the US due to the needs of pension funds to make a 7.5% yield to maintain their defined benefit payouts. They aren’t the only ones fueling this fracking boom but it is a major driver of both US equities and the commercial paper market. . So, why is this Trump’s foreign policy Achilles’ heel? Because with the global economy slowing down, US domestic production is already in massive oversupply. There is a glut of oil and gas so profound that it ensures the bottom lines of these companies will not improve, leaving them at the mercy of these creditors. There are two problems with this. First, other countries with lower costs of production can keep the market in relative equilibrium, living on small profits, but profits nonetheless. Second, and more importantly, US shale oil has an upper limit on demand since it’s too light for most refineries and requires blending with heavier feedstock. This is why, for example, US imports of Russian oil are rising rapidly to feed Gulf coast refineries starved of Venezuelan oil thanks to Trump trying to take it off the market.
Will Occidental's $38B Gamble Be a Shale Win? - Oxy is aiming for billions of dollars' worth of cost savings and productivity gains from the Anadarko deal, but many investors remain skeptical. Occidental Petroleum, ranked 167 in Fortune 500, recently snatched victory from Chevron with a winning bid of $38 billion for one of the largest U.S. Independent oil and gas companies; Anadarko ranked just 237, making this the largest American oil and gas merger in more than a decade and the 11th biggest ever, for an energy and power company, according to business data provider Refinitiv. Having outbid Chevron and perhaps before any asset sales take place, Occidental must reduce its debt and pay an 8 percent dividend on the $10 billion of preference shares it sold to Berkshire Hathaway. The Anadarko purchase doubles the size of Occidental and will saddle the company with debts of around $50bn, in return for a business that has been failing to cover its capital spending from its operating cash flows. Another oil price crash bringing oil below $40 a barrel could jeopardize Occidental’s financial position. In addition, there is growing public concern, backed up by recent studies by the Universities of Texas and Dallas, that the re-injection of waste water into the ground produced from fracking, could be triggering increased seismic activity in previously dormant areas. Unless the industry can reassure the public by finding a solution to prevent such “earthquakes,” public opinion could constrict further growth in fracking activity. Vicki Hollub has made it clear that Occidental’s real interest lies in Anadarko’s 10,000 drilling sites in the Permian Basin, which is currently one of the world’s most productive, producing 3.8 million barrels a day at the end of 2018, according to reasearch firm Rystad Energy. In addition, the Permian is one of the cheapest places for oil drilling in the world. Some Permian drillers can make money at $40 per barrel. Before the takeover, Occidental was already the largest owner of drilling rights in the Permian and has developed an in-depth knowledge of the Permian plays, especially the Delaware Basin. On average, Occidental’s shale wells in the region have produced 74 percent more oil in their first six months than Anadarko’s. Also Occidental expects that, with economies of scale and its scientific and logistical capabilities, to boost recovery rates of 6 percent today to at least 14 percent by employing the “huff-and-puff” method: pumping carbon dioxide into a well, waiting for a while, and then allowing the oil to start flowing out mixed with the gas.
2 Key U.S. Pipelines for Canadian Oil Run Into Trouble in the Midwest -- The fate of two major oil pipelines for carrying crude oil from Canada's tar sands region has been called into question over environmental concerns as judges in Minnesota overturned a key approval for a proposed pipeline and Michigan's attorney general threatened to shut down an aging pipeline under the Great Lakes. The actions are a further setback for Enbridge, the company behind both pipelines, and for Canadian tar sands oil producers that have struggled in recent years as attempts to build more pipeline capacity failed.New pipelines for tar sands crude oil have faced fierce opposition from environmental and indigenous rights advocates who fear both the immediate effects of an oil spill and as the climate impact from tar sands oil, a particularly carbon-intensive fuel. The Minnesota Court of Appeals on Monday reversed a decision by state regulators who, last June, approved an environmental impact assessment for a larger replacement of the existing Line 3. The project would carry tar sands crude oil across northern Minnesota on its way from Alberta to U.S. refineries.The judges ruled in favor of environmental and Native American groups who argued that the environmental impact statement of the proposed replacement pipeline did not address the risk of an oil spill into the Lake Superior watershed. The ruling was the latest setback for a series of five pipeline projects designed to bring additional tar sands crude to market that have either been canceled or delayed. The other projects include Energy East andNorthern Gateway, both of which were canceled, and Trans Mountain expansion and Keystone XL pipelines, both of which are on hold. "What you are looking at is an industry that has put forward these five proposals and so far none of them have been completed," Collin Rees of Oil Change International said. "Line 3 I think they actually thought was the one that was almost certainly going to go through, but there has been this incredible resistance. The political terrain has changed, and it's looking much less certain."
Produced water spill prompts AER to order energy company to suspend activity at affected well = The Alberta Energy Regulator says it has ordered Calgary-based Obsidian Energy to suspend activity at a well “and associated infrastructure” where 400,000 litres of produced water spilled late last month. Story continues below Advertisement“The company has notified Yellowhead County and one area landowner of the release,” the AER said in a statement emailed to Global News on Monday. “This release occurred at an water injection well, not a hydraulic fracturing site, due to a failed piping component near the well.” According to Obsidian Energy, the spill was discovered on Wednesday afternoon. The AER said Monday it occurred about 40 kilometres northwest of Drayton Valley. While a nearby wetland was impacted, the AER said no impacts to wildlife were reported as a result of the produced water spill. “Produced water is a byproduct of oil and gas development,” the energy regulator said. “It refers to water that is extracted with oil from reservoir formations. The impact of produced water is extremely variable depending on the concentration of oil and whether the substance is ‘sweet’ or ‘sour.'” It also depends on the regional conditions of the release, detection and containment actions taken. “Produced water contains chloride, which can adversely impact the safety of wildlife and the environment. In the case of this release, the produced water was sweet — meaning it is salt water that does not contain H2S (hydrogen sulfide).”
Oil spill near Blackfalds being cleaned up --There was an oil spill just outside of Blackfalds earlier this week.Vesta Energy Ltd. experienced a pipeline release of oil during construction activities on a well site about six kilometres out of town around 4 p.m. on Wednesday.“The pipeline was immediately depressurized and isolated. There were no injuries,” a company release said.The size of the spill is estimated at 10 cubic metres and is being cleaned up. The release states there is no impact to wildlife and watercourses. “Vesta is working with the Alberta Energy Regulator to determine the cause. Nearby landowners have been notified.”
New Brunswick's Indigenous chiefs issue warning against Tory OK of gas fracking -- A decision by New Brunswick's Progressive Conservative government to allow shale gas development in one region is drawing sharp criticism from Indigenous leaders who say they weren't properly consulted. Premier Blaine Higgs confirmed on Tuesday that his government has quietly passed regulatory changes to permit the method of extracting hydrocarbons to resume in the Sussex area. The process known as fracking involves pumping water and chemicals deep underground at high pressure to fracture layers of shale and release pockets of gas. Higgs's move fulfils a commitment his minority government made in its throne speech earlier this year and is in line with his party's past support of the process. However, the organization that represents Mi'kmaq chiefs -- Mi'gmawe'l Tplu'taqnn Inc., or MTI -- denounced the step as secretive and a step backwards in the province's relationship with Indigenous populations. A 2016 final report of a commission on the shale gas issue had urged the province to rebuild its relationship with Indigenous peoples, and to maintain the moratorium introduced in 2014 by the Liberals. The decision by former Tory Premier David Alward to embrace the shale gas industry led to a series of public protests, culminating in a violent demonstration in the fall of 2013 in Rexton. A total of 40 people were arrested and six police vehicles were burned. Many of those arrested were Mi'kmaq residents involved in the protests.
Shell to invest up to $2.4 billion in Mexican deepwater oil projects – (Reuters) - Mexico’s oil regulator on Thursday approved exploration plans for four deepwater areas operated by Royal Dutch Shell , after it gave the green light to five others earlier this week, committing the oil major to invest at least $791 million. The plans stipulate that the Anglo-Dutch company could invest up to $1.06 billion in the four blocks, mostly dedicated to drilling at least six new wells. One of the blocks is in the Perdido Fold Basin, which straddles the U.S.-Mexico maritime border in the Gulf of Mexico, while the other three are further south in the Salina Basin. On Tuesday, the regulator, known as the National Hydrocarbons Commission, or CNH, approved Shell exploration plans for five other deepwater areas in the same two basins which included investment commitments of at least $397 million and as much as $1.316 billion. Taken together, Shell could invest up to $2.4 billion in the nine deepwater areas over the next four years and will drill at least 13 wells in the projects. The blocks are not expected to begin producing oil and gas until 2026 at the earliest, said CNH Commissioner Sergio Pimentel. Shell won exploration and production rights to the nine deepwater blocks at an auction run by the CNH in early 2018.
Greenpeace Activists Stop BP Rig Bound for North Sea, Stalling Plan to Drill for 30 Million Barrels of Oil - Three Greenpeace campaigners halted a British Petroleum oil rig off the coast of Scotland on Sunday as it prepared to leave for the North Sea to drill oil wells. Carrying enough provisions to last several days aboard the rig, the climate action advocates pulled up to the 27,000-ton vessel in small boats as it attempted to leave Cromarty Firth, bound for the Vorlich oil field whereBP plans to access up to 30 million barrels of oil.The campaigners unfurled a banner reading "Climate Emergency" after climbing the rig. BREAKING: Two activists are blocking a @BP_plc oil rig from setting out to the North Sea where it intends to drill for 30 million barrels of oil. We're in a #ClimateEmergency - the age of oil is over. RT to show your support! #NoMoreOil — Greenpeace UK (@GreenpeaceUK) June 9, 2019 Despite recent studies from the world's top climate scientists warning that governments must transition torenewable energy sources and end their dependence on fossil fuels to stem the effects of the climate crisis, the UK's Oil and Gas Authority last week awarded 37 license areas to 30 companies."The approval threatens to result in scores of new projects at exactly the time we need to halt the growth of new oil and gas production," said Greenpeace.The new licenses suggest that the country is not following its recent declaration of a climate emergency with concrete action, as campaigners have demanded."The government may be bent on draining the North Sea of every last drop of oil but this clearly contradicts their climate commitments," said one of the activists who boarded the rig, who was identified as Jo."The perverse idea we must maximize our oil and gas reserves cannot continue," she added. "That means the government must seriously reform the Oil and Gas Authority and instead invest heavily in the crucial work of helping oil communities like those in Scotland move from fossil fuels to the industries that will power our low carbon future."
Trump team is adopting a pipeline plan to wean Europe off Russian fuel - President Donald Trump’s top national security aides believe the roadmap to Middle East peace has been traced on a physical map they have hanging in the White House marked by power plants, gas terminals and ambitious pipeline projects. According to three senior administration officials, that map – declassified and obtained by McClatchy – has motivated members of the National Security Council to prioritize the formation of a gas forum in the Eastern Mediterranean that would simultaneously boost and entangle the economies of several countries that have been at odds for decades. Fascination with regional energy resources has formed the basis of an organizing principle for policymaking among key members of Trump’s inner circle, who similarly view oil and gas needs as critical to their strategies toward Russia and the European Union, according to White House and Defense Department sources. It is a rare instance of continuity between the Trump and Obama administrations. The map was first created by State Department cartographers and energy diplomats working at the direction of former Vice President Joe Biden, according to its architect, Amos Hochstein, former special envoy and coordinator for international energy affairs. “It took us a long time to create,” Hochstein told McClatchy. “There’s complete continuity, and it is thanks to the vision and leadership of Vice President Biden.” The Trump administration is supporting two bipartisan congressional efforts that track with its approach: One bill that “promotes security and energy partnerships in the Eastern Mediterranean,” introduced on a bipartisan basis in both houses in May, and another threatening to sanction European firms supporting the construction of Nord Stream 2 pipelines into Germany, predominantly funded by Russia’s state-owned Gazprom. Secretary of Energy Rick Perry briefed President Donald Trump two weeks ago in the Oval Office on the Russian pipeline effort, which circumvents Ukraine by running through the maritime territory of Baltic states that are entirely reliant on Russian fuel. The administration has grown increasingly vocal in its opposition to the Nord Stream 2 project. “If Germany persists in building the Nord Stream 2 pipeline, as President Trump said, it could turn Germany’s economy into literally a captive of Russia,” Vice President Mike Pence said in April at a NATO anniversary event in Washington.
Trump considering sanctions over Russia's Nord Stream 2 natgas pipeline (Reuters) - President Donald Trump said on Wednesday he was considering sanctions over Russia’s Nord Stream 2 natural gas pipeline project — which the United States has told European companies to avoid — and warned Germany against being dependent on Russia for the fuel. “We’re protecting Germany from Russia and Russia is getting billions and billions of dollars from Germany,” Trump told reporters at an appearance with Polish President Andrzej Duda at the White House. Nord Stream 2, a 760-mile (1,225-km) pipeline project to ship gas from Russia under the Baltic Sea to Germany, would double the capacity of the existing Nord Stream pipeline and has divided the European Union. Eastern European, Nordic and Baltic Sea countries see the pipeline as increasing Moscow’s economic grip on Europe. But many politicians and energy companies in Germany support Nord Stream 2 because the country, Europe’s biggest economy, needs steady gas supplies as it seeks to wean itself off of coal and nuclear power. Nord Stream 2 is led by Russian state gas producer Gazprom, with 50% of the funding provided by Germany’s Uniper and BASF’s Wintershall unit, Anglo-Dutch firm Shell, Austria’s and France’s Engie.
Trump says he's considering slapping sanctions on gas pipeline from Russia to Germany - President Donald Trump on Wednesday said he is still considering using sanctions to block a controversial pipeline that would increase natural gas flows from Russia to Germany. “Well, we’re looking at it. People have a right to do what they want to do. I think it’s something that I’ve been looking at and I’ve been thinking about and I’m the one that brought up the pipeline problem,” Trump told reporters during an appearance with Polish President Andrzej Duda. Trump has claimed since last year that Germany is captive to Russian energy exports. Like past U.S. presidents, he opposes the Nord Stream 2 pipeline, which would run beneath the Baltic Sea alongside an existing line linking eastern Russia and northern Germany. The U.S. and many European nations fear the pipeline would help Russia bypass infrastructure in Ukraine, allowing Moscow to use energy supplies as a weapon against its neighbors without disrupting flows to Western Europe. Russia and Germany assert Nord Stream 2 is a purely economic project. Russian energy giant Gazprom is building the line, with financing from European companies including Royal Dutch Shell and Wintershall. Sen. Ted Cruz, R-Texas, and Sen. Jeanne Shaheen, D-N.H., last month filed a bill that would impose sanctions on vessels used to build Nord Stream 2. Energy Secretary Rick Perry and other administration officials have also raised the prospect deploying sanctions to block construction. The Trump administration is seeking to displace Russian pipeline supplies to Europe with U.S. exports of liquefied natural gas, a form of the fuel chilled to liquid form for transport by tanker ship. Poland, one of the fiercest critics of Nord Stream 2, has entered agreements to buy U.S. LNG in a bid to reduce its dependence on Russian gas.
Ecologists inspect oil spill in Yakutia - Ecologists launched an inspection of the oil spill that took place in Yakutia's Mirninsky District, while the local authorities declared a state of emergency. The spill was caused by a leak in the Irelyakhskoye pipeline owned by Vostochnaya Sibir, said Yakutia's Minister of the Environment, Natural Resources and Forestry Sakhamin Afanasyev in an interview with RIA Novosti. The ecologists report that the oil spill covers an area about eight kilometers from the city of Mirny. Since the pipeline is located underground, experts failed to identify the leak in the course of above-ground inspection. "We are now carrying out an administrative investigation, taking samples, calculating the spilled oil volume," the minister said. "Following the investigation, we will prosecute the subsoil user responsible for the spill as well as clean the spill up and reclaim the land at the expense of the responsible party. The Mirninsk District administration declared a state of emergency." Ecologists launched an inspection of the oil spill that took place in Yakutias Mirninsky District, while the local authorities declared a state of emergency . . .
Colombia tribunal begins hearing evidence on use of fracking - (Reuters) - Colombia’s top administrative court on Friday began hearings that could be long and contentious about proposals to drill for oil using the technique known as fracking, hailed for sharply boosting supplies but criticized for causing environmental damage. The public hearings in the Council of State, which is tasked with ruling on administrative matters, stem from a decision made late last year to temporarily suspend regulations for development of non-conventional oil deposits. Fracking is not yet in use in Colombia. While there is no law against the practice, the government says regulations are needed before it can be used. Its possible use has sparked vitriolic debate among lawmakers, activists, officials and regular citizens about whether it could cause pollution or other environmental harms. “We consider this high-impact litigation,” Magistrate Ramiro Pazos told Reuters after the largely procedural hearing. “It’s an issue of extreme importance for the country.” Six magistrates could rule next month on whether the suspension should continue, Pazos said, while evidence gathering on whether fracking should go ahead will take until the end of the year. The next hearing, which will include witness testimony, is scheduled for July. The tribunal’s decision to suspend the regulations came after environmental lawyer Esteban Lagos, with support from the Universidad del Norte college, anti-fracking activists and a leftist lawmaker, filed a suit against the energy ministry to halt potential use of the technique.
Ecopetrol closes section of pipeline after oil found in Colombia river (Reuters) - Colombia’s state-run oil company Ecopetrol said late on Tuesday it closed the valves on a section of its Cano Limon pipeline in central Boyaca province after crude oil was detected in a local river.The 485-mile (780-km) pipeline was not pumping when the oil was detected, the company said in a statement, but people in the area around the Cobaria river should not drink water. The causes of the incident are unclear, Ecopetrol said, and it is sending a technical team to investigate. It added the area has recently been affected by heavy rains and rising river levels. Pipelines in the Andean country are regularly bombed in attacks generally attributed to the National Liberation Army (ELN) rebel group. There have been more than two dozen attacks on Colombian pipelines so far in 2019. Cano Limon was hit more than 80 times in 2018, which kept it offline for most of the year.
Shell FLNG Facility Ships Maiden Cargo - The first shipment of liquefied natural gas (LNG) from the Shell-operated Prelude Floating LNG (FLNG) facility offshore Australia has sailed and is destined for customers in Asia, Royal Dutch Shell plc reported Tuesday. Shell operates Prelude FLNG – located 295 miles (475 kilometers) northeast of Broome, Western Australia – on behalf of joint venture partners INPEX Corp., Korea Gas Corp. (KOGAS) and CPC Corp. unit Overseas Petroleum and Investment Corp. (OPIC). The Spanish-flagged LNG carrier Valencia Knutsen is transporting the maiden cargo. According to the website MarineTraffic.com, the ship departed Prelude shortly after 11 p.m. local time Monday. According to Shell, Prelude FLNG can produce 3.6 million tonnes per annum (mtpa) of LNG, 1.3 mtpa of condensate and 0.4 mtpa of liquefied petroleum gas (LPG). An Oct. 2017 fact sheet published by the company, which owns a 67.5-percent interest in the facility, states that Prelude LNG’s dimensions of 1,601 feet (488 meters) long by 243 feet (74 meters wide make it the largest offshore floating facility ever built. INPEX, KOGAS and OPIC own 17.5-percent, 10-percent and five-percent stakes, respectively.
Mysterious 150m oil spill in Christchurch creek still not cleared - The cause of a large oil spill in the middle of a Christchurch creek remains a mystery. Environment Canterbury (ECan) Banks Peninsula Gillian Jenkins said an apparent oil spill of about 150 metres in length was discovered on Lodestar Avenue in Wigram on Wednesday. On Wednesday evening, ECan staff along with CityCare, attempted the initial clean-up, but the decision was made to reassess the site in the morning. About 150 meters of vegetation was covered in oil-like sludge.On Thursday, they discovered about 150m of vegetation was covered in oil-like sludge. The spill is contained within a Christchurch City Council reserve. ECan and Christchurch City Council (CCC) will work to remove the rest of the oil on Monday. Fire and Emergency New Zealand assisted ECan on Friday, but were unable to clear all the affected area. The cause is unknown and it remains under investigation. There were no threats to drinking water supply. "To ensure the safety of people and domestic pets we would recommend avoiding the stream until it has been cleaned up. Some plants may be affected by the oily substance and are likely to need removal." Under the Resource Management Act, if the source of the contamination could be found, the parties responsible could face an infringement fine of $750.
Makueni government, KPC clash over Kiboko oil spill - The Makueni county leadership and residents of Kiboko have accused Kenya Pipeline of colluding with government administrators to cover up the Kiboko oil spill. Oil spillage hit Kiboko natural springs along the newly constructed Sh48 billion Mombasa-Nairobi pipeline on March 30. The Water Resources Authority has said Kiboko River water is unfit for human and livestock consumption. KPC, however, disputed the results arguing that it had conducted independent chemical and toxicological analysis of the water which showed no contamination. When the Senate Energy committee conducted public hearings on the spill on Monday, it was clear mistrust had set in among the county and national governments, the agencies handling the matter and residents. Kiboko Water Resource Users Association chair Wilson Munguti unleashed the first salvo accusing Kenya Pipeline of disregarding joint water testing by Nema, KPC and WRA. "In the last meeting we held with KPC, we all agreed that we will have to choose together the laboratories to do testing of the water. Nema was chairing the meeting together with WRA but in between KPC started playing games. They held another meeting and chose three laboratories without involving the county government and the residents through the Water Resource Users Association", Munguti said.
Platts: OPEC Oil Production Slumps With Saudis Cutting Deeper - OPEC’s oil production dropped by 170,000 bpd from April to 30.09 million bpd in May—the lowest level since February 2015, as Saudi Arabia cut its oil output even deeper despite the end of the U.S. sanction waivers for Iranian oil customers, according to the monthly S&P Global Platts survey. According to the survey that measures well-head crude oil production in each OPEC state, the cartel’s largest producer Saudi Arabia further slashed its production in May—by 120,000 bpd from April to 9.7 million bpd last month. This was the lowest Saudi oil production in four and a half years, according to Platts estimates. At the end of May, a Reuters survey showed at that although OPEC’s oil production dropped to a 2015 low of 30.17 million bpd in May, Saudi Arabia boosted its production by 200,000 bpd. This rise in Saudi supply, however, was unable to offset an even larger production decline in Iran after the U.S. removed all sanction waivers at the beginning of May.After the U.S. choked off more Iranian supply with the end of the waivers, Saudi Arabia appears to have lifted its oil supply by 200,000 bpd to 10.05 million bpd, according to the monthly Reuters survey that tracks supply to the market from shipping data and sources at OPEC, oil companies, and consulting firms. Related: Why Is China Pouring Money Into The Arctic? Yet, even with the 200,000-bpd boost in May estimated by Reuters, Saudi Arabia was comfortably below its 10.311-million-bpd cap under the OPEC+ deal as it had been overachieving in its share of the cuts by 500,000 bpd in the previous months. The Platts survey showed that the Saudis appear to have cut deeper last month, despite the end of the U.S. waivers for Iranian buyers and the opportunity to increase the Saudi market share at the expense of Iran. OPEC will release its official crude oil production data for May in the Monthly Oil Market Report (MOMR) on Thursday, June 13, weeks before OPEC and allies are set to discuss the fate of their production cut pact currently expiring at the end of June. OPEC is close to reaching an agreement to extend the deal beyond June, Saudi Energy Minister Khalid al-Falih said last week.
Hedge funds sell oil as economic fears intensify- Kemp (Reuters) - Hedge fund managers are liquidating bullish oil positions at the fastest rate since the fourth quarter of 2018 amid increasing fears about the health of the global economy. Hedge funds and other money managers were net sellers of 104 million barrels of futures and options linked to the six most important petroleum contracts in the week to June 4. Fund managers have sold a total of 290 million barrels of petroleum in the last six weeks, after buying 609 million in the previous 15 weeks since Jan. 8. Portfolio managers still have an overall bullish position of 621 million barrels but that has been reduced sharply from a peak of 911 million on April 23 (https://tmsnrt.rs/2R64PYJ). Funds were net sellers last week of Brent (48 million barrels), NYMEX and ICE WTI (13 million barrels), U.S. gasoline (10 million), U.S. heating oil (5 million) and European gasoil (28 million). Hedge fund long positions now outnumber short positions by a ratio of 4:1, down from almost 9:1 on April 23, according to an analysis of exchange and regulatory records. Mounting fears about a possible recession in the United States and around the rest of the world have outweighed continued output restraint by Saudi Arabia and disruptions to exports from Russia, Iran and Venezuela. Since the end of April, oil prices have tumbled in tandem with equity prices and bond yields, before recovering slightly late last week amid growing hopes of a cut in interest rates by the U.S. Federal Reserve.
Oil steady as Russia and Saudis discuss output deal, US-China trade war lingers - Oil prices steadied on Monday as major producers Saudi Arabia and Russia had yet to agree on extending an output-cutting deal and U.S.-China trade tensions continued to threaten demand for crude. Front-month Brent crude futures, the international benchmark for oil prices, were down 28 cents at $63.01 around 10:25 a.m. ET (1425 GMT). U.S. West Texas Intermediate crude futures were down 11 cents at at $53.88 per barrel. Saudi Energy Minister Khalid al-Falih said on Monday that Russia was the only oil exporter still undecided on the need to extend the output deal agreed by top producers. OPEC and some non-members, including Russia, have withheld supplies since the start of the year to prop up prices. Moscow is considering whether further cuts could allow the United States to take Russian market share and has yet to signal whether it will continue to curb its supply. Russian Energy Minister Alexander Novak said on Monday he could not rule out a drop in oil prices to $30 per barrel if the global deal was not extended, saying there were big risks of oversupply. A deal between the United States and Mexico to combat illegal migration from Central America late last week removed the threat of U.S. tariffs on goods imported from Mexico, buoying markets on Monday. But analysts said there were still concerns about the health of the global economy with no signs of an end in sight to the United States’ trade war with China.
US crude falls 1.4% in delayed settle amid uncertainty on supply cuts, US-China tariffs -- Oil prices settled lower after a choppy trading session on Monday, as major producers Saudi Arabia and Russia had yet to agree on extending an output-cutting deal and U.S.-China trade tensions continued to threaten demand for crude. U.S. West Texas Intermediate crude futures settled 73 cents lower at at $53.26 per barrel, falling 1.4% on the day and settling later than usual on Monday. Front-month Brent crude futures, the international benchmark for oil prices, fell $1 per barrel, or 1.6%, to $62.29. Saudi Energy Minister Khalid al-Falih said on Monday that Russia was the only oil exporter still undecided on the need to extend the output deal agreed by top producers. OPEC and some non-members, including Russia, have withheld supplies since the start of the year to prop up prices. Moscow is considering whether further cuts could allow the United States to take Russian market share and has yet to signal whether it will continue to curb its supply. Yet Russian energy minister Alexander Novak said there is a still a risk that oil producers pump out too much crude and prices fall sharply. Novak said he could not rule out a drop in oil prices to $30 per barrel if the global deal was not extended. “Indeed, there are big risks of over-production. But on the whole ... we need to analyze deeper and look at how the events will develop in June in order to take a balanced decision at the joint OPEC+ meeting in July.” Many oil exporting countries have confirmed they are prepared to hold a policy meeting with OPEC in Vienna over July 2-4, instead of the scheduled date later this month, Novak said.
OPEC’s Struggle To Avoid $40 Oil - On Monday, officials from Saudi Arabia and Russia reportedly discussed a possible scenario in which oil prices crashed below $40 per barrel, a recognition that the market has rapidly deteriorated. They view that outcome as a possibility if they can’t agree on an extension. “Today there are big risks of oversupply,” Russian Energy Minister Alexander Novak said in Moscow after meeting with Saudi oil minister Khalid al-Falih. “We’ve agreed that we need to run a deeper analysis and to see how events unfold in June.” Russian President Vladimir Putin seemed to fuel speculation of a rift in Vienna in comments to Interfax news last week. “Of course Saudi Arabia wants oil prices to remain higher,” the Interfax news agency quoted Mr. Putin as saying. “But we have no such need due to the more diversified nature of the Russian economy.” The Saudis, of course, are desperate to prevent such a downward spiral. “Both at the bilateral and the OPEC+ level, we work in order to take preventive steps so as not to allow that scenario to happen,” al-Falih said in Moscow. He is undoubtedly trying to convince Novak of the wisdom of extending the production cuts. Perhaps to sweeten the pot, Saudi Arabia is considering investments in “multiple” projects in Russia, including the Arctic LNG 2 gas project, a stake in Russian petrochemical company Sibur Holding, along with other projects in partnership with Gazprom and Rosneft, Bloomberg reports. The outlook for the oil market has darkened rather quickly. Less than a month ago, the IEA predicted a rather significant supply deficit in the second quarter even as it acknowledged some cracks in demand. But since then things have seemingly taken a turn for the worse, with oil posting its worst month since the financial crisis. A growing number of analysts are drawing up downbeat assessments for the oil market next year. “The balances for 2020 were already worrisome, and the downgrade in demand we are contemplating put them potentially in the ugly category,” Roger Diwan of IHS Markit Ltd. told Bloomberg. Notably, top analysts see a supply surplus next year even if output from Iran and Venezuela fails to rebound. For instance, S&P Global Platts, as of now, estimates a surplus of 400,000 bpd in 2020, while the EIA puts the glut at a more modest 100,000 bpd. IHS Markit sees a whopping 800,000-bpd surplus. The reason is that demand is cratering and U.S. shale is still expected to grow. “There is growing evidence of a sharper-than-expected slowdown in demand,” said Martijn Rats, oil analyst at Morgan Stanley, according to Bloomberg. The U.S.-China trade war has dramatically increased concerns about an economic slowdown. The global economy is decelerating, with manufacturing activity around the world slowing down, a sure sign of an economy hitting some bumps.
Oil edges up as OPEC supply cuts counter growth concerns - Oil prices edged higher on Tuesday as firmer equities and expectations that OPEC and its allies will keep withholding supply countered concern about slowing economies and demand. Russia said on Monday it might support an extension of OPEC-led supply cuts that have been in place since January, while equities rose after China eased financing rules to stem an economic downturn, giving oil a lift. Brent crude, the global benchmark, rose 10 cents to $62.39 a barrel around 9:50 a.m. ET (1350 GMT). U.S. West Texas Intermediate was up 30 cents, or or half a percent, at $53.56. “Prices are finding support from the prospect of OPEC oil production remaining restricted beyond mid-year,” said Carsten Fritsch, an analyst at Commerzbank. Still, the price of Brent is down about 17% from its 2019 peak above $75 a barrel in April, pressured by an economic downturn that has started to impact oil demand. “Even planned and unintentional supply restrictions of more than 4 million barrels per day have not been able to support prices as economic considerations took over in the last two weeks,” said Tamas Varga of oil broker PVM. “The immediate price outlook remains anything but clear.” OPEC and some allies including Russia, known collectively as OPEC+, have been withholding supplies since the start of the year to prop up prices. OPEC+ is due to meet in late June or early July to decide whether to extend the pact. Russia’s comments on Monday, and remarks last week from Saudi Arabia, bolstered expectations the deal will be renewed. While the talk of prolonged supply restraint is supporting prices, concern about slowing demand and economic growth has had a bigger impact on sentiment. “It is proving hard work papering over a suite of rather less supportive data being digested by the market,”
Saudi Arabia Successfully Calms Oil Markets – Oil prices rebounded a bit on Tuesday on Saudi assurances that OPEC+ would not let the oil market slide any further. “Prices are finding support from the prospect of OPEC oil production remaining restricted beyond mid-year,” Commerzbank said in a note. Saudi oil minister Khalid al-Falih traveled to Moscow to meet his counterpart, and the two apparently discussed the possibility that crude oil would crash below $40 per barrel without a deal in Vienna. While Russia has been cagey about committing to an extension, market analysts say the odds of a rollover in the cuts is likely. The Trump administration is considering another round of sanctions that would target the European Union’s financial vehicle that was intended to keep trade alive with Iran. The U.S. sanctions would hit the financial entity Iran established to do business with the EU. Europe’s effort has largely been inadequate, but any U.S. move would damage its relationship with its European allies. Iran has no intention of leaving OPEC despite the fact that the group has been turned “into a political forum,” treating Iran like an enemy, Iranian oil minister Bijan Zanganeh said. Iran has been outraged at the seeming cooperation between Saudi Arabia and the U.S. to block Iranian oil exports. When the new regulations on marine fuels take effect at the start of next year, jet fuel could become more expensive. The heightened demand for low-sulfur fuels and distillates will cut into supplies needed by the aviation industry. The red ink accumulated by U.S. shale companies is making it difficult for them to access capital markets as investors are growing tired of the poor returns. New bond and equity issuances have ground to a halt, forcing more asset sales. If low oil prices persist, bankruptcies could begin to pile up.
Oil Closes Near $53 - Oil was little changed Tuesday as the market awaited U.S. crude inventory figures and continued to speculate on the outcome of a potential OPEC+ meeting in coming weeks. Futures closed 1 cent higher at $53.27 a barrel in New York as traders looked ahead to the industry-funded American Petroleum Institute’s report scheduled for 4:30 p.m. in Washington, and U.S. government inventory numbers that are due on Wednesday. U.S. stockpiles probably shrank by 1 million barrels last week, according to a Bloomberg survey, which would be the biggest decline since May. The U.S. Energy Information Administration has reported U.S. crude inventory builds for three out of the last four weeks of data. That’s a bearish indicator, said Tariq Zahir, a commodity fund manager at New York-based Tyche Capital Advisors LLC, since drawdowns of stockpiles normally occur this time of year. Crude edged higher earlier in the session amid speculation that the Organization of Petroleum Exporting Countries and its allies will reach an agreement to extend supply curbs when it meets the coming weeks, said James Williams, president at WTRG Economics in London, Arkansas. “We probably have some upside here in oil, commodities and risky assets," Jeffrey Currie, global head of commodities research at Goldman Sachs Group, said in a Bloomberg Television interview. In a separate interview, Currie pointed to the U.S.-China trade dispute complicating OPEC+’s task of balancing supply and demand. Current demand growth “neither will support exiting the production agreement, nor is bad enough to reinforce more cuts,” he said. West Texas Intermediate futures trading stood at 1.04 million contracts Tuesday, according to preliminary numbers, the lowest since May 21. The contract fell 73 cents to close at $53.26 on Monday, snapping a two-day gain. Brent for August settlement dropped $1 to $62.29 a barrel on London’s ICE Futures Europe Exchange. It closed up 2.6% on Friday. The global benchmark crude was trading at an $8.6 premium to WTI for the same month
WTI Tumbles To $52 Handle After Another Surprise Crude Build - Oil prices were practically unchanged on the day, unable to hold the $54 handle early on in the day as eyes once again focus on US crude inventories.Additionally, BP said in its annual energy statistical review released Tuesday that the oil market’s "rollercoaster" would run for some time to come, with slowing economic expansion possibly impacting demand. API
- Crude +4.85mm (-1.0mm exp)
- Cushing +2.4mm (+1.97mm exp)
- Gasoline +830k (+700k exp)
- Distillates-3.5mm (+1.1mm exp)
After last week's surprise inventory builds across the board, expectations (or bullish hopes) were for a small draw but API reported another major crude build (+4.85mm vs -1.0 exp)WTI tumbled on the print, testing down to a $52 handle... Jeffrey Currie, global head of commodities research at Goldman Sachs pointed to the U.S.-China trade dispute complicating OPEC+’s task of balancing supply and demand. Current demand growth “neither will support exiting the production agreement, nor is bad enough to reinforce more cuts,” he said.
Has the Oil Glut Disappeared? -It would seem from the IEA’s May Oil Market Report that geopolitical issues and industry disruptions are confusing the market. Ongoing production problems in Libya, alongside OPEC+ production cuts and U.S. sanctions on Iran, as well as lower than expected output in Mexico, have raised fears of a supply crunch. In addition, attacks by pirates or terrorists on shipping near the UAE port of Fujairah and the pumping stations of a Saudi oil pipeline have unsettled traders. On April 24th, Transneft halted shipments of contaminated Urals blend to the 1.4 mb/d (million barrels per day) Druzhba pipeline system and to tankers at the Ust-Lunga export terminal in the Baltic, which serve refineries in Germany, Poland, Ukraine, Hungary, Slovakia and the Czech Republic. As of April 25th, while the Czech Republic and Hungary have started to receive half their normal daily supply, the northern spur pipeline to Belarus, Poland and Germany was still closed, depriving European refineries of around 700,000 barrels of crude per day. In Germany, Total’s Leuna plant has shut down and in Rotterdam some refineries are running at lower rates. It could take months to clean up the contaminated oil and will prove costly. This incident has spurred a loss of confidence in Russia’s ability to supply market grade crude and the search is on for alternative suppliers. In sum, these supply interruptions have caused a shortage of heavy and medium sour crudes which could impact prices. To mitigate against these supply declines and disruptions, U.S. crude oil output is expected to climb by 1.7 bpd this year, not to mention the 650m barrels of crude in the strategic oil reserves, enough to meet U.S. demand for a month. Two thirds of this crude consists of sour, viscous grade, ideal for U.S. refineries. Moreover, the International Energy Agency requires its members to hold the equivalent of 90 days-worth of crude imports and China has some 300 million barrels in reserve. Also, as Bloomberg has pointed out, Russia is still pumping 11 mb/d despite the pipeline contamination. Surprisingly, in the light of the diminishing supply picture, Brent crude prices have fallen rather than risen. This could reflect confidence that OPEC+ could ramp up production to compensate for supply cuts from Iran and Venezuela and still meet current global demand.
WTI Plunges To $50 Handle After Crude Stocks Hit 2-Year Highs - Oil prices extended their losses overnight after API surprised with notable builds in crude and gasoline (and at Cushing) - sending WTI to a $51 handle - and not helped as US-China tensions show no sign of abatement. “U.S. crude stocks have been rising almost uninterrupted since mid-March,” said Bjarne Schieldrop, Oslo-based chief commodities analyst at SEB AB. DOE:
- Crude +2.21mm (-1.0mm exp)
- Cushing +2.096mm (+1.97mm exp)
- Gasoline +764k (+700k exp)
- Distillates -1.0mm (+1.1mm exp)
After last week's biggest US aggregate energy inventory build in history, hope was for some draws this week but once again that hope was dashed as EIA reported builds in Crude and Gasoline stocks (and at Cushing). U.S. crude stockpiles rose to the highest since July 2017 as oil production hovered near record highs. US Crude production reached a new record high the prior week, but the turn down in rig counts suggests that peak production is imminent. WTI traded around $52 the figure ahead of the EIA data (having bounced from intraday lows in the European session) but pushed back towards the lows after the crude build...
Oil falls on weaker oil demand growth, surprise rise in US crude stocks - Oil prices sank on Wednesday following government data that showed another rise in U.S. crude stockpiles and as the market continues to grapple with concerns about weakening fuel demand.U.S. commercial crude inventories rose by 2.2 million barrels in the week through June 7, according to the U.S. Energy Information Administration. Analysts in a Reuters poll had expected stockpiles to fall by 481,000 barrels.Brent crude, the international benchmark for oil prices, was down $1.14, or 1.8%, at $61.15 around 10:40 a.m. ET (1435 GMT). Brent hit a session low at $60.30 in early morning trading.U.S. West Texas Intermediate crude futures fell $1.18, or 2.2%, to $52.09 per barrel. WTI fell as low as $51.46 earlier in the session. Crude futures fell to a nearly five-month low last week after EIA figures showed crude stocks surged to the highest level since July 2017. Brent is now down nearly 20% from its 2019 high in April, while WTI is trading more than 22% lower over the same period. Oil prices ended Tuesday’s session roughly flat, supported by expectations that OPEC and its allies will continue to prop up prices by limiting production, but buffeted by concerns that the U.S.-China trade war will weigh on global economic growth and fuel demand. President Donald Trump on Tuesday said he is holding up negotiations until Beijing agrees to return to the terms of negotiations laid out earlier in trade talks.
Oil Prices Tumble More Than $2 - Price movements were decidedly downward Wednesday for West Texas Intermediate (WTI) and Brent crude oil futures.The July WTI contract price plunged $2.13 during midweek trading, settling at $51.14 per barrel. The benchmark traded within a range from $50.72 to $53.05.As Bloomberg reported earlier Wednesday, oil demand projections by major Wall Street players such as Morgan Stanley and JPMorgan Chase & Co. have been increasingly pessimistic. Moreover, concerns about ongoing trade tensions between the United States and China have dampened the outlook for oil consumption growth.Steve Blair, senior account executive with the RCG Division of Marex Spectron, observed that the WTI has been in a wide congestion pattern – bounded by a resistance and support levels from $55.10 to near $51.00, respectively – since May 31.“This market continues to be subject to the weekly petroleum reports, which has been one of the main attractions along with the concerns regarding global and, particularly, Chinese demand as the trade war continues between the U.S. and China,” said Blair. “We look to trade this congestion range until such time as it is broken out of, on a close basis. Should major support be broken on a close basis, there could be another $3 to $4 downside action, as seen on the daily and daily continuation charts.”Also falling sharply was Brent crude oil for August delivery, which lost $2.32 to end the day at $59.97. Blair pointed out the recent pattern for Brent has closely resembled that of WTI. He noted that August Brent’s congestion pattern has been slightly wider than that of July WTI, bounded by $64.26 on the upside and $59.66 on the downside. “The $58.49 level is also an important support level which is seen on the more macro weekly chart,” he said. “Like WTI, we want to trade this congestion pattern until such time as the market breaks either side, on a close basis. Also like WTI, a breakdown through support could see the market move much lower to the $56.53 level and potentially the $55.00 level, as seen on the daily and daily continuation charts.”
Oil prices could fall to $45 per barrel if US-China trade war escalates, says investor - Global oil prices could fall to as low as $45 per barrel if tensions between the U.S. and China worsen, an investment strategist told CNBC Thursday.Oil prices have been on a downward trend in recent weeks as investors become increasingly concerned about slowing demand. Appetite for oil is at risk of a further slump if the U.S. and China fail to the resolve trade differences, which will cause the global economy to weaken even more, said Rainer Michael Preiss, executive director at Taurus Wealth Advisors.“I think a lot of market focus is on the G-20 meeting,” Preiss told CNBC’s“Capital Connection” on Thursday.“If America and China couldn’t agree, and America raises tariffs again on Chinese imports, potentially this could slow down the economy meaningfully,” he added.U.S. President Donald Trump previously said he would make a decision about whether to impose further tariffs on China after meeting Chinese President Xi Jinping at the G-20 meeting in Japan later this month.Washington has so far slapped 25% tariffs on $250 billion of Chinese goods, with Trump threatening to apply the same elevated levy on the remaining imports from China worth around $300 billion. In retaliation, Beijing raised tariffs on billions of dollars worth of American products.Tensions between the U.S. and China have also extended beyond trade.Washington placed Huawei on a blacklist that restricts American companies from doing business with the Chinese tech giant, while China threatened tocut off its supply of rare earths to the U.S.Those developments have hurt sentiment among businesses and consumers, and are blamed for contributing to much of the economic slowdown globally. Now, any potential uplift in the global economy hinges on Trump and Xi reaching a deal, said Preiss.
Oil extends decline after slump on high inventories, demand outlook - Oil prices fell for a second day on Thursday, extending declines of as much as 4% in the previous session, on continued increases in U.S. crude stockpiles and concerns about lower demand growth. Brent crude futures were down 6 cents, or 0.1%, at $59.91 a barrel by 0336 GMT after earlier rising slightly. Prices fell 3.7% on Wednesday to settle at $59.97, the international benchmark’s lowest close since Jan. 28. U.S. West Texas Intermediate crude futures were down 8 cents, or 0.2%, at $51.06 a barrel. They fell 4% in the previous session to $51.14, the lowest close since Jan. 14. “It was a brutal move, sheer panic,” said Stephen Innes, managing partner at Vanguard Markets. The U.S. Energy Information Administration (EIA) on Wednesday reported crude stockpiles rose unexpectedly for a second week in a row, climbing 2.2 million barrels last week after analysts had forecast a decrease of 481,000 barrels. At 485.5 million barrels, U.S. commercial stocks were at their highest since July 2017 and about 8% above the five-year average for this time of year, it said. On Tuesday, the EIA cut its forecasts for 2019 world oil demand growth. The negative outlook is prompting hedge fund managers to exit oil positions at the fastest rate since the fourth quarter of 2018 due to increasing fears about the health of the global economy. The escalating trade war between the United States and China, the world’s two biggest oil consumers, is causing the most concern among oil analysts, with consultants and banks cutting their demand growth forecasts Goldman Sachs said on Wednesday an uncertain macroeconomic outlook and volatile oil production from Iran and others could cause the Organization of the Petroleum Exporting Countries (OPEC) to roll over supply cuts it has enacted with other producers. OPEC and non-member producers including Russia have limited their oil output by 1.2 million barrels per day this year to prop up prices.
Oil jumps more than 3% on reports of tanker incident in the Gulf of Oman off Iran coast -- Brent crude spiked 3% on Thursday morning on reports of tanker explosions in the Gulf of Oman. United Kingdom Maritime Trade Operations, a division of the U.K. Royal Navy, said it is currently investigating what it has called an “incident” in the Gulf near the Iranian coastline. It has urged “extreme caution” amid mounting tensions between Iran and the U.S. Iranian state media has reported that two oil tankers were targeted in explosions, without providing evidence.A spokesman for the US Navy’s Fifth Fleet in Bahrain told the Associated Press that his command was “aware” of the incident and was seeking further details. U.S. Naval ships are in the area and are “rendering assistance” after forces in the region received two separate distress calls, the Fifth Fleet said. Brent crude is currently trading at $61.77 a barrel.
Oil jumps on reports of tanker incident in Gulf of Oman off Iran coast - Oil prices jumped as much as 4% on Thursday following attacks on tanker ships off the coast of Iran, renewing fears about conflict in the Middle East following a series of strikes last month. Brent crude, the international benchmark for oil prices, was up $2.02, or 3.4%, at $61.99 per barrel around 9 a.m. ET (1300 GMT). Brent earlier rose more than 4% to $62.64. U.S. West Texas Intermediate crude rose $1.66, or 3.3%, to $52.80, after topping out at $53.45 earlier in the session. Tankers the Front Altair and the Kokuka Courageous have sustained significant fire damage and its crews have been evacuated, according to multiple shipping agents and chartering sources. The Kokuka Courageous, a chemical tanker that loaded in Saudi Arabia and was en route to Singapore, caught fire at the same time as the Front Altair just before 6:00 a.m. local time. The cause of the fires remain unclear, but they’ve sparked fears of attack and come just weeks after alleged ship sabotage in the region. AP: Oil tanker on fire Gulf of Oman 190613 In this photo released by state-run IRIB News Agency, an oil tanker is on fire in the sea of Oman, Thursday, June 13, 2019. Two oil tankers near the strategic Strait of Hormuz have been reportedly attacked. IRIB News Agency via AP A representative for BSM Ship Management, the Kokuka’s Singapore-based manager, said 21 crew had abandoned ship due to the “security incident”, which damaged the ship’s starboard hull. They were rapidly rescued from a lifeboat by a nearby vessel, according to the company’s spokesman. “The Kokuka Courageous remains in the area and is not in any danger of sinking. The cargo of methanol is intact,” the spokesman said in a statement. The ship is roughly 14 nautical miles off the coast of Iran and 70 nautical miles from the coast of the United Arab Emirates’ Fujairah, which was the site of alleged sabotage attacks on four tankers in mid-May that U.S. authorities have blamed on Iran. Iran denies any involvement. When four tankers sustained damage in the attacks of May 12 — two Saudi-owned, one from the UAE and one from Norway — crews did not have to abandon ship, indicating that today’s attack is much more serious.
IEA sees oil demand growth falling to lowest level in years as global economy stalls - The International Energy Agency (IEA) slashed its estimate for global oil demand growth for the second consecutive month on Friday, citing intensifying trade concerns amid fears of a global recession. The energy agency’s closely-watched report comes as world oil markets have undertaken a dramatic shift in recent months, switching from supply-side risks like OPEC’s output cuts or U.S. sanctions against Iran and Venezuela to worries about deteriorating demand growth. Crude futures have turned a 45% price rally in the first four months of 2019 into a fall of more than 15% since the start of April. “The main focus I think we should be looking at here is that until very recently the geopolitical factors related to Iran and Venezuela and Libya… they were at the forefront of people’s minds,” Neil Atkinson, head of the oil industry and markets division at the IEA, told CNBC’s “Street Signs Europe” on Friday. “Now we are starting to see that confidence in demand is taking over and that is the main driving factor behind the current state of the oil market.” International benchmark Brent crude traded at around $61.25 Friday morning, down around 0.1%, while U.S. West Texas Intermediate (WTI) stood at $52.15, nearly 0.3% lower.
US crude rises on Iran tensions, but posts weekly loss as oil demand outlook weakens -- Oil rose on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions, but prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand. U.S. West Texas Intermediate crude futures settled 23 cents higher at $52.74. Brent crude futures rose 70 cents, or 1.1%, at $62.01 a barrel. Futures briefly extended gains on Friday as Iranian military fast-boats in the Gulf of Oman were preventing two privately owned tug boats from towing away one of the oil tankers. The attacks near Iran and the Strait of Hormuz pushed up oil prices by as much as 4.5% on Thursday. It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s attacks, prompting a denial and criticism from Tehran. “Yesterday’s attacks on the Japanese and Norwegian tankers in the Gulf of Oman underscore the severity of the security risks stemming from the Iran crisis and the difficulty of achieving a diplomatic off-ramp as long as the crippling U.S. sanctions remain in place,” RBC bank said. Still, Brent was on course to register a weekly decline of more than 1.5% and U.S. crude fell 2.7% on the week. “The deteriorating demand outlook is holding back prices, despite these tensions,”
OPEC’s oil output falls to 5-year low in May as group warns of weaker demand --Oil output from OPEC fell in May, hitting a five-year low as the group warned that U.S.-China trade tensions could lead to slower economic growth and weak fuel demand.Production from the 14-nation producer club fell by 236,000 barrels per day last month to 29.88 million bpd, according to independent sources cited by OPEC in its monthly report. It was the first time OPEC pumped below 30 million bpd since June 2014.The slump in production comes as OPEC is considering whether to extend a six-month deal to hold down output. In the monthly report, OPEC says it will carefully consider the economic outlook when it meets with Russia and other oil-exporting nations in coming weeks.“Throughout the first half of this year, ongoing global trade tensions have escalated, threatening to spill over, and geo-political risks remained in many key regions,” OPEC said. “This has resulted in a slowdown in global economic activities, and weaker growth in global oil demand, both compared to a year earlier.” OPEC expects the global economy to remain under pressure in the second half of 2019, largely due to trade disputes, casting uncertainty over oil demand.The group now expects global oil demand to grow by 1.14 million bpd in 2019, slightly lower than its last forecast. OPEC expects producers outside the group to hike output by 2.14 million bpd this year, meaning supply growth will swamp the rise in demand. Concerns about softening demand have pushed oil prices to five-month lows, but crude futures rose about 3% on Thursday on reports of tanker attacks in the Gulf of Oman.
OPEC Says Trade Tensions are Hurting Oil Demand - OPEC said that international trade tensions are hurting demand for oil, slashing its estimates for consumption earlier in the year and predicting further challenges ahead. The organization, due to meet in the coming weeks to set production levels for the second half, said demand increased by less than 1 million barrels a day in the first quarter after cutting its assessment by more than 20%. The world economy is headed for its weakest growth in a decade, buffeted by a prolonged tariff battle between the U.S. and China. “Throughout the first half of this year, ongoing global trade tensions have escalated,” resulting in “weaker growth in global oil demand,” the cartel’s Vienna-based secretariat said in its monthly report. “The observed slowdown in the global economy in the first half will be further challenged in the second half.” Oil prices slumped into a bear market last week, sinking below $60 a barrel in London for the first time since January, on concerns that faltering demand would lead to a crude surplus even as the Organization of Petroleum Exporting Countries and its allies keep supply in check. Prices surged 3% today on suspected attacks on oil tankers in the Persian Gulf. Although OPEC reduced demand estimates for the first quarter, it kept forecasts for 2019 as a whole mostly unchanged and projects that consumption growth will accelerate during the rest of the year. World demand will rise by 1.14 million barrels a day, or 1.2%, on average this year, down from an estimate of 1.21 million a day in last month’s report. As a result, the report signaled that if OPEC maintains production at current levels then global markets should tighten significantly during the third quarter, by about 1.3 million barrels a day. Output from its 14 members fell by 236,000 barrels a day to 29.9 million a day last month as the U.S. tightened its squeeze on Iranian exports, it said. Nonetheless, as OPEC and its partners prepare to meet in Vienna, its members appear focused on continuing to restrict supplies.
Oil rises but ends week lower on demand fears despite Mideast tensions (Reuters) - Oil rose about 1% on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions, but prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand. Brent futures settled 70 cents, or 1.1%, higher at $62.01 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.4%, to close at $52.51. The attacks on oil tankers near Iran and the Strait of Hormuz pushed up oil prices by as much as 4.5% on Thursday. It was the second time in a month tankers have been attacked in the world’s most important zone for oil supplies as tensions increase between the United States and Iran. Washington blamed Iran for Thursday’s attacks, prompting a denial and criticism from Tehran. On Friday, a U.S. official said Iranian military fast-boats in the Gulf of Oman were preventing two privately-owned tug boats from towing away one of the damaged tankers. “The possibility of what we’ve seen (in the Middle East) over the past few days could intensify into the weekend and traders are reluctant to be short in front of that,” said Anthony Headrick, energy market analyst at CHS Hedging LLC in Inver Grove Heights, Minnesota, noting “The recent headline of restricting those tug boats got some traders off the fence to cover shorts.” Still, Brent registered a weekly decline of around 2%, putting it down for a fourth week in a row, while U.S. crude lost almost 3%. “The deteriorating demand outlook is holding back prices, despite these tensions,” said John Kilduff, a partner at Again Capital LLC in New York. Slowing economic conditions have eaten into demand growth, overshadowing ongoing tensions between the U.S. and Iran, Kilduff said. As a result, prices may be stuck in a holding pattern. “We are stalemated here.” The International Energy Agency cut its demand growth forecast for 2019 by 100,000 barrels per day (bpd) to 1.2 million bpd, citing worsening prospects for world trade. However, the Paris-based agency said it expects demand growth to climb to 1.4 million bpd in 2020. On Thursday, the Organization of the Petroleum Exporting Countries (OPEC) cut its 2019 forecast for growth in global oil demand even lower than the IEA, to 1.14 million bpd.
Oil Prices Down for the Week - West Texas Intermediate (WTI) crude oil for July delivery finished higher Friday, gaining 23 cents to settle at $52.51 per barrel. Compared to the June 7 close, the WTI is down 2.7 percent. August Brent futures also rose, adding 70 cents to end the day at $62.01 per barrel. Week-on-week, Brent is down two percent. Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business, observed that crude oil entered its fourth week of a bearish trend this past week. He added that weakening demand and a surprise increase in inventory overshadowed the attack on two oil tankers in the Gulf of Oman near the Strait of Hormuz. “Lower early week trading reflected ongoing concerns about the global economy and possibly lower demand for oil while a bearish inventory report only served to propel prices even lower Wednesday,” said Seng. “With the threat of tariffs on Mexican imports delayed, the market turned this week to the continuing lack of a trade agreement between the U.S. and China as a factor in a possible global economic slowdown along with actual weaker economic data coming out of China.” Seng also noted that increasing U.S. oil inventories, coupled with tepid gasoline demand and record U.S. production, cast a “solid bearish slant” on market fundamentals. He said that Wednesday’s Weekly Petroleum Status Report from the U.S. Energy Information Administration (EIA) revealed:
- An unexpected second straight weekly increase in oil inventories that sent the daily settlement price to levels not seen since mid-January; the 2.2-million-barrel build was well below the American Petroleum Institute’s 4.9-million-barrel projection but higher than the Wall Street Journal’s 600,00-barrel forecast
- Total crude stocks at 485 million barrels – the highest level since July 2017 and eight percent above the five-year average for this time of year
- An increase in refinery utilization to 93.2 percent with an increase in gasoline production and a decrease in distillate output
- 52.9 million barrels of oil in storage, or approximately 70 percent of available capacity, at the Cushing, Okla., hub – a 2.1-million-barrel increase
- A nine-percent drop in U.S. crude imports compared to year-ago levels
- A decrease in oil production from 12.4 to 12.3 million barrels per day (bpd)
“Yesterday’s attacks on the two oil tankers in the Gulf of Oman spurred a rally which almost erased the losses from the prior session,” continued Seng, adding that oil prices nevertheless remain below week-ago levels. Seng also pointed out that BP’s latest installment of its Annual Statistical Review of World Energy – released this week – reported that global energy grew 2.9 percent last year while oil demand and U.S. energy consumption rose by 1.5 percent and 3.5 percent, respectively. He added that the report indicated the U.S. experienced the largest year-on-year gain for oil and gas production of any country – ever. Moreover, he noted that U.S. stock market indicators stayed close to their recent levels on settlement – a scenario that provided little signal for oil price direction.
Escalating Trade War Signals More Pain For Oil - Trump backed off his proposed trade war with Mexico in the face of intense pressure from business groups and even his own party, but his faith in tariffs remains unbowed. In fact, Trump may have internalized a lesson that presents further risks to the global economy and to oil markets. “If we didn’t have tariffs, we wouldn’t have made a deal with Mexico,” Trump said on Monday. “We got everything we wanted.”The proposed 5 percent tariff on Mexico was suspended because Trump said that the Mexican government agreed to a series of demands to tighten up migration through the country. However, press reports suggest that some of the provisions in the deal, such as Mexico agreeing to buy agricultural goods, are a mirage, while others, such as expanding border security, were agreed to months ago.Leaving those pesky details aside, Trump was triumphant. Indeed, even though the White House saw pushback from business groups and the Republican-controlled U.S. Senate, in Trump’s mind the whole episode seems to have reaffirmed his strategy.With the U.S.-China trade war unfinished, the U.S. President feels emboldened to take a hardline on Beijing.“The China deal’s going to work out,” Trump said in an interview on CNBC. “You know why? Because of tariffs. Because right now China is getting absolutely decimated by companies that are leaving China, going to other countries, including our own, because they don’t want to pay the tariffs.” Moreover, he says that the tariffs to date have been successful. “We’ve never gotten 10 cents from China. Now we’re getting a lot of money from China, and I think that’s one of the reasons the G.D.P. was so high in the first quarter because of the tariffs that we’re taking in from China,” he told reporters on Monday. All evidence points to the contrary. Global growth concerns have ballooned since the hike in tariffs last month. Recently, finance ministers from G-20 recently met and said that risks from trade and geopolitical tensions were “intensifying.”
The Most Crucial Pipeline Of The Middle East -- Contemporary Middle Eastern history is strongly influenced by energy politics. Besides providing revenue for the state’s coffers, oil is also a potent geopolitical tool in the hands of resource-rich countries. Recently, officials from Lebanon, Syria and Iraq have engaged in talks to restart the dysfunctional pipeline that once connected oilfields near Kirkuk in Iraq with the coastal city of Tripoli in Lebanon. Restarting the pipeline could have long-term political, economic, and strategic consequences for the involved states and the wider region. The original infrastructure was constructed during the 30s of the previous century when two 12-inch pipes transported oil from Kirkuk to Haifa in British mandated Palestine and Tripoli in French-mandated Lebanon. The Tripoli line was supplemented by a 30-inch pipeline in the 50s which could transport approximately 400,000 barrels/day. The Kirkuk-Tripoli pipeline was suspended by Syria during the Iraq-Iran war in an attempt to support Tehran in its struggle against Baghdad. The current political climate, which has enabled cooperation between Lebanon, Syria, and Iraq, is the consequence of one country’s foreign policy. Since the U.S. invasion of Iraq and the overthrow of Saddam Hussein, Iranian influence has grown considerably across the Middle East. Tehran’s support for proxies in neighboring countries has strongly influenced regional politics and made Saudi Arabia nervous of what it sees as “Persian encroachment”. While Iran’s participation in regional politics was necessary for creating the right environment for cooperation, Russia's involvement has proven to be crucial. The Kremlin’s decision to participate in the Syrian civil war on the side of Assad’s forces was a pivotal moment in reestablishing control over territories essential for the Kirkuk-Tripoli pipeline to commence operations. Moscow has also established good political relations with both Iraq and Lebanon to become a broker for facilitating an agreement. The participation of Rosneft was very useful for Moscow’s efforts in the region. The Russian energy giant maintains good relations with the Iraqi government where it operates several oil fields and the Kirkuk-Ceyhan oil pipeline. Recently, Rosneft signed an agreement with the Lebanese government to operate the storage facility in Tripoli for the next twenty years. Therefore, Russian involvement was important for the Arab countries to consider refurbishing the outdated Kirkuk-Tripoli pipeline. Despite the modest capacity of the pipeline, reestablishing trade could have a long-term impact on regional politics. The new pipeline would be a physical link between the participating countries and will cement the political ties for decades due to interdependency regarding energy security and the economic interest of energy exports.
Iran scrambles to lift petrochemical sales as sanctions hammer oil (Reuters) - Iran has been racing to step up exports of petrochemicals and tap new markets to compensate for sliding oil sales, Iranian and international industry sources said, but now risks losing that crucial revenue as Washington tightens the screw on sanctions.Tehran has been selling increased volumes of petrochemical products at below market rates, in countries including Brazil, China and India, since the United States reimposed sanctions on Iranian oil exports in November, according to the six sources who include two senior Iranian government officials. Available ship-tracking data also points to a rise in monthly shipments since then. The scramble to bolster petrochemical sales could be an indication of how successful the U.S. administration of Donald Trump has been in choking off Iran’s oil revenues, which have fallen further than under previous sanctions in 2012. While the November sanctions applied to petrochemicals as well, the four industry sources said there was a degree of ambiguity given the multiple types of products - including urea, ammonia and methanol - which allowed Iran to keep selling. However on Friday the U.S. Treasury moved to tighten the restrictions by prohibiting companies from doing any business with Iran’s largest petrochemical group, Persian Gulf Petrochemical Industries Company, citing its ties to Iran’s elite Revolutionary Guards. The measures also apply to 39 subsidiary companies and foreign-based sales agents. The Treasury said it intended to “vigorously enforce” the new petrochemical sanctions, which could deal another hammer blow to the Iranian economy. It is difficult to put a comprehensive figure on Iran’s income from petrochemicals, Iran’s second-largest export industry after oil and gas, but officials said in February that non-oil revenues had surpassed the amount earned by oil exports. This week Iranian media quoted Ahmad Sarami, a member of the Iranian Oil, Gas and Petrochemical Products Exporters’ Union, as saying Tehran received $11 billion from petrochemical exports in the year ending in March.
US Middle East commander proposes permanent buildup against Iran - The chief of Central Command (CENTCOM), which oversees all of the Pentagon’s operations in the Middle East, claimed over the weekend that Iran continues to pose an “imminent” threat to Washington’s interests in the region and that a permanent military escalation against the country and its 82 million people may be required. Gen. Frank McKenzie during a tour of the region that included both Baghdad and the carrier USS Abraham Lincoln, sailing in the north Arabian Sea, told reporters that he is “negotiating” with the Pentagon on plans for “bringing additional resources into the theater” to step up the military campaign against Iran. Last month, the Trump administration ordered the USS Lincoln’s carrier battle group, a bomber strike force led by nuclear-capable B-52s, along with 900 additional ground troops and a Patriot missile battery into the region on the pretext of responding to supposed Iranian threats. Plans were also leaked calling for the mobilization of as many as 120,000 troops for deployment to the region, a similar force as that which was assembled in advance of the 2003 US invasion of Iraq. General McKenzie claimed that the military deployments and US threats had caused Iran to “step back and recalculate the course that they apparently were on.” He told the Associated Press, however, “I don’t believe the threat has diminished. I believe the threat is very real.” Speaking with reporters, he said that US intelligence on Iranian threats was “clear” and “compelling,” adding that these alleged threats were “advanced, imminent and very specific.” The AP noted, however, that the general provided no specific information on the “threats,” insisting that the “compelling” intelligence was all classified. In addressing thousands of sailors assembled on aircraft carrier Lincoln, McKenzie declared: “I am the reason you are here. I requested this ship because of ongoing tensions with Iran, and nothing says you're interested in somebody than 90,000 tons of aircraft carrier and everything that comes with it. “My intent by bringing you in here was to stabilize the situation, let Iran know that now is not the time to do something goofy.”
Iran at High Level of Readiness as US General Continues to Claim Imminent Threat - Growing US military buildups throughout April and May in the Middle East were a reaction, according to officials, to Iran’s military being at a high level of readiness. Now, with all those extra US forces in the area, Iran remains at a high level of readiness.This is something of a challenge for the US to parse, now, as it makes sense for Iran to be at a high level of readiness after months of escalation and US threats, and officials are trying to figure out if this is just the new normal.Gen. Frank McKenzie, the top US commander in the region, is continuing to hype up Iran as an “imminent threat.” Gen. McKenzie played up this threat on Thursday, and used virtually identical comments on Saturday, claiming Iran’s threat has “evolved in certain ways.”Rear Admiral John Wade, the commander of the USS Lincoln’s carrier strike group, on the other hand, downplayed the situation. Rear Adm. Wade says that all interactions with Iran have been “safe and professional,” and Iran has done nothing to impede the strike group’s maneuverability. This suggests the Pentagon is at least somewhat split on the matter, and the rear admiral is talking up a situation of relative normalcy, even as Gen. McKenzie, likely aware that regional military funding hinges on there being a “threat,” continues to see a threat evolved, but otherwise intact.
System to circumvent US sanctions on Iran ready soon: German FM -- A European payment system designed to circumvent US sanctions on Iran will be ready soon, Germany announced on Monday. German Foreign Minister Heiko Maas met Iranian President Hassan Rouhani and Foreign Minister Mohammad Javad Zarif in Tehran as part of European efforts to salvage the historic JCPOA nuclear pact and defuse rising US-Iranian tension. Iran and Germany held "frank and serious" talks on saving the 2015 deal with world powers, Zarif told a joint press conference. "Tehran will cooperate with EU signatories of the deal to save it," Zarif said. Maas said earlier the payment system, known as INSTEX, (Instrument in Support of Trade Exchanges) will soon be ready to go after months of work. "This is an instrument of a new kind so it's not straightforward to operationalise it," he said, pointing to the complexity of trying to install a totally new payment system. "But all the formal requirements are in place now, and so I'm assuming we'll be ready to use it in the foreseeable future," added Mass about the system for barter-based trade with Iran. A cautious thaw in relations between Tehran and Washington began in 2015 when the deal was struck between six world powers and Iran, limiting its nuclear activity. But tensions with the US have mounted since President Donald Trump withdrew Washington from the accord in 2018 and reimposed sweeping sanctions. Iran has criticised the European signatories of the JCPOA for failing to salvage the pact after Trump pulled the US out. "There is a serious situation in the region. An escalation of tension is becoming uncontrollable and military action wouldn't be in line with the interests of any party," Maas said.
Tanker incident in Gulf of Oman CNN - What you need to know about the apparent vessel attack Two tankers were apparently attacked in the Gulf of Oman Thursday, less than a month after four other ships were struck in the region. Here's what we know about the apparent attack:
- The ships involved: The two ships — one carrying oil and the other transporting a cargo of chemicals — were struck in international waters near the strategically important Strait of Hormuz.
- What happened: Three explosions were reported on board the Marshall Islands-flagged "Front Altair" oil tanker, which is owned by the Bermuda-based Norwegian company Frontline, the Norwegian Maritime Agency said. The company said that a fire broke out after an explosion and that the cause of the blast was unclear. A second vessel, the Japanese-owned chemical tanker, "Kokura Courageous" was "attacked" twice "with some sort of shell" around 6:00 a.m. local time (10 p.m. ET Wednesday), the ship's co-manager Michio Yuube said.
- Condition of the crew: All crew members were evacuated and are safe, according to the owners of the two ships. The US Navy said it was providing assistance.
- Past oil tanker attacks: In May, four oil tankers were attacked off the coast of the United Arab Emirates, an incident that the US suspected was the responsibility of Iran. Tehran denied any involvement in the earlier attacks. Iran's Foreign Minister Mohammad Javad Zarif said "suspicious doesn't begin to describe" this latest incident.
Trump administration blames Iran for oil tanker attacks in Middle East – Secretary of State Mike Pompeo on Thursday blamed Iran for attacks earlier in the day on oil tankers in the Gulf of Oman near Iran and the Strait of Hormuz, a vital shipping route through which much of the world’s oil passes. “Iran is lashing out because the regime wants our successful maximum pressure campaign lifted,” Pompeo said without citing specific evidence as to why Tehran was responsible. “No economic sanctions entitle the Islamic Republic to attack innocent civilians, disrupt global oil markets and engage in nuclear blackmail.” “The international community condemns Iran’s assault on the freedom of navigation and the targeting of innocent civilians,” he said, adding that the U.S. will defend its forces, interests and partners. Oil prices rose as much as 4% on Thursday on renewed fears of conflict in the Middle East after a series of strikes last month. Crude futures briefly jumped back above 3% after Pompeo accused Tehran of being involved in the latest attacks. The White House said President Donald Trump was briefed on the matter and blamed Tehran for being behind a similar attack on May 12 on four tankers in the same area. Trump wrote in a tweet Thursday that “it is too soon to even think about making a deal” with Iran, saying that “they are not ready, and neither are we!”
Today’s Attacks On Ships In The Gulf Of Oman Are Not In Iran’s Interest – Or Are They? (Updated) Early this morning, around 6:00 UTC, two tankers in the Gulf of Oman were attacked by surface weapons. Both ships were some 50 kilometers south-east of Bandar-e Jask, Iran, and some 100+ kilometers east of Fujairah. The Front Altair, a 250 meter long crude oil tanker under the flag of the Marshal Islands, came from the United Arab Emirates and was on was on its way to Taiwan. Its load of 75,000 tons of naphta caught fire and the crew had to abandon the ship. The second attacked ship is the Kokuka Courageous, a 170 meter long tanker flagged by Panama. It was coming from Saudi Arabia and on its way to Singapore. The ship has its hull breached above the water line, but its load of methanol seems to be intact. The Iranian Search and Rescue ship Naji picked up the 44 crews members of both ships and brought them to Bandar-E Jash. Oil prices increased by some 4%.These attacks come a month after four ships anchoring near the UAE port Fujairah were damaged by explosives attached to their hulls. The investigation of that incident by the UAE did not blame anyone for the attack but suggested that a nation state must have been behind it. U.S. National Security Advisor John Bolton blamed Iran.It is likely that Iranian proxy forces were involved in the May attacks. It seems unlikely that Iran had anything to do with today's attacks.The May attack was accompanied by two drone strikes launched by Houthi forces in Yemen on the Saudi east-west pipeline that allows some Saudi exports to avoid a passage through the Street of Hormuz. A third strike was a medium range missile launch by the Islamic Jihad in the Gaza strip against the city of Ashkelon in Israel.All three strikes together were a warning that those countries who instigate for a U.S. war on Iran would get seriously hurt should Iran be attacked. The attack today comes at an inconvenient time for Iran. The loud anti-Iran campaign John Bolton initiated in April and May recently calmed down. That Iran might have this motive does not mean or prove that it is responsible for today's attack. Risking to sink two foreign tankers in international water is not what an otherwise cautious Iran would typically do. Someone else might have initiated it to blame it.
Tanker attacks were Iran's doing, Mike Pompeo says after 2nd attack on vessels in Gulf of Oman today - Two tankers were attacked Thursday near the strategic Strait of Hormuz, marking the second time in a month tankers have been seriously damaged in the region. U.S. intelligence pointed to Iran as being responsible for the attacks, Secretary of State Mike Pompeo said Thursday. "This assessment is based on intelligence, the weapons used, the level of expertise needed to execute the operation, recent similar Iranian attacks on shipping and the fact that no proxy group operating in the area has the resources and proficiency to act with such a high degree of sophistication," Pompeo said. Pompeo said U.S. Ambassador to the United Nations Jonathan Cohen would raise the issue at a hastily called meeting of the Security Council on Thursday. The U.S. mission to the U.N. requested the Security Council hold closed-door consultations Thursday on the situation in the Middle East. Thursday's attack near the vital shipping channel of the Strait of Hormuz was "only the latest in a series of attacks started by Iran and its surrogates against American and allied interests" aimed at "escalating tension," Pompeo said. "On April 22nd, Iran promised the world it would interrupt the flow of oil through the Strait of Hormuz. It is now working to execute on that promise." He said the U.S. would defend its forces and interests in the region but gave no specifics about any plans for retaliation, and he took no questions.
Iran says US has no 'shred of factual or circumstantial evidence' that Tehran attacked oil tankers - Iran has denied that it was responsible for the attacks on two oil tankers in the Middle East. U.S. Secretary of State Mike Pompeo on Thursday blamed the Islamic Republic for the explosions on the oil tankers in the Gulf of Oman. In response, Iranian Foreign Minister Mohammad Javad Zarif on Friday accused the U.S. of jumping “to make allegations against Iran—w/o a shred of factual or circumstantial evidence.” Two oil tankers — the Norwegian-owned Front Altair and the Japanese-owned Kokuka Courageous — suffered significant damage after experiencing explosions while they were traveling near the Strait of Hormuz, the world’s busiest sea lane for oil shipments. Crews were forced to abandon ship and leave the vessels adrift in waters between Gulf Arab states and Iran. It was not immediately clear who was responsible for the attacks, but the U.S. military released footage on Thursday which it said showed Iran’s Revolutionary Guard Corps removing an unexploded mine from the side of one of the stricken tankers. The attacks come as tensions between Washington and Tehran soared after the Trump administration withdrew from an international nuclear pact with Iran. Tehran has repeatedly threatened to block traffic in the Strait of Hormuz in retaliation for U.S. sanctions on the Islamic Republic. Earlier, Iran’s mission to the United Nations said in a statement: “Iran categorically rejects the U.S. unfounded claim with regard to 13 June oil tanker incidents and condemns it in the strongest possible terms.” On Twitter Friday, Zarif accused the U.S. of “sabotage diplomacy” adopted by the “B-Team.” The so-called B-Team refers to a group including U.S. National Security Advisor John Bolton — an Iran hawk, Israeli Prime Minister Benjamin Netanyahu, and Saudi Crown Prince Mohammad Bin Salman. Zarif had previously said the group could prod U.S. President Donald Trump into a conflict with Tehran.
U.S. releases video purporting to show Iranians removing mine before ship explosions WaPo - The Trump administration on Friday intensified its effort to demonstrate Iran’s culpability in a spate of damaging oil tanker attacks, as dueling accusations from Washington and Tehran heightened concerns about military conflict. American officials said newly released intelligence, including a grainy video, illustrated Tehran’s role in twin explosions Thursday that crippled Japanese- and Norwegian-owned ships in the Gulf of Oman. But European nations appealed to all sides to de-escalate, as statements by the owner of one of the targeted ships appeared to challenge the U.S. account that Iranian naval boats had employed limpet mines. President Trump insisted that the video released by U.S. Central Command that appeared to show unidentified people in a small boat removing something from the side of a tanker — which officials said was an unexploded mine — was proof that Iran had carried out the attacks. “Well, Iran did do it,” he told Fox News. “And you know they did it because you saw the boat.” Depicting Iran as a “nation of terror,” the president’s remarks underscored the urgency that has characterized his administration’s approach to a country it has identified as its primary adversary in the Middle East.
Japanese oil tanker owner disagrees with US military that a mine caused blast near Iran — The Japanese owner of one of the oil tankers attacked near Iran on Thursday said the vessel was struck by a projectile and not by a mine, which is what U.S. officials assessed as the source of the blast. “We received reports that something flew towards the ship,” Yutaka Katada, president of Kokuka Sangyo, said at a press conference Friday. “I do not think there was a time bomb or an object attached to the side of the ship,” he said, adding that a projectile landed above the waterline. On Thursday, U.S. Central Command said in a statement that the Japanese oil tanker, Kokuka Courageous, had an “unexploded limpet mine on their hull following an initial explosion.” The Pentagon did not immediately respond to CNBC’s request for comment. President Donald Trump said Friday that if Iran were to block the Strait of Hormuz, “it’s not going to be closed for long,” but did not elaborate on what potential steps the U.S. would take in response. “They’re not going to be closing [the strait],” Trump reiterated during a telephone interview on “Fox & Friends.” Earlier this year, Iran threatened to close the strait in response to a U.S. decision to end waivers on reimposed sanctions for companies that export oil from Iran. The Strait of Hormuz is the world’s most important oil choke point. It’s a gateway for almost a third of all seaborne crude oil.
Iran FM: "Suspicious Doesn't Begin To Describe" Attack On Japanese Tanker During Abe's State Visit - With the words "Gulf of Tonkin" trending on Twitter this morning at a moment that a senior American defense official told CBS News that "it's highly likely Iran caused these attacks," it appears the general public is not even close to buying the claim that Iran attacked two tankers near the strategic Strait of Hormuz this morning. Iranian Foreign Minister Javid Zarif pointed out a crucial obvious factor not likely to make it across the US mainstream airwaves or headlines: "Suspicious doesn't begin to describe what likely transpired this morning," he said. This especially crucial — according to his comments — given that one of the vessels is aJapanese tanker supposedly "attacked" by Iran in the middle of a visit to Tehran by Japan's Prime Minister Shinzo Abe. Japan's Trade Ministry later confirmed that one of the ships hit Thursday morning was carrying "Japan-related cargo." The details of the Japanese tanker are described by the AP as follows: The Japanese operator of a tanker that was damaged in a suspected attack in the Strait of Hormuz says all of its crewmembers are now safe onboard a U.S. Navy warship. The chemical tanker Kokuka Courageous, operated by Kokuka Sangyo Co., was apparently attacked as it was passing through the Strait of Hormuz toward Singapore and Thailand destinations to deliver methanol. Currently Iran is desperately attempting to salvage the 2015 nuclear deal with other world powers at a time its economy is being crushed under US sanctions, and Wednesday's visit by the Japanese PM appears an attempt to mediate. The tanker incident and emergency nature of what transpired "eclipsed the Abe visit, an unexpected bit of outreach to Iran by someone Trump calls a friend," as CNN noted.
Trump says 'Iran did do it,' as U.S. seeks support on Gulf oil tanker attacks -(Reuters) - The United States on Friday blamed Iran for attacks on two oil tankers at the entrance to the Gulf and said it was seeking international consensus about the threat to shipping, despite Tehran denying involvement in the explosions at sea. Thursday’s attacks raised fears of a confrontation in the vital oil shipping route at a time of increased tension between Iran and the United States over U.S. sanctions and military moves in the Middle East, Tehran’s proxy groups in the region and its nuclear program. “Iran did do it and you know they did it because you saw the boat,” U.S. President Donald Trump told Fox News. He was referring to a video released on Thursday by the U.S. military which said it showed Iran’s Revolutionary Guards were behind the blasts that struck the Norwegian-owned Front Altair and the Japanese-owned Kokuka Courageous in the Gulf of Oman, at the mouth of the Gulf. Iran said the video proved nothing and that it was being made into a scapegoat. “These accusations are alarming,” Foreign Ministry spokesman Abbas Mousavi said.
The US blames Iran for the tanker attacks. Here’s what the Navy could do next - The war of words between the U.S. and Iran took a dangerous turn after two ships were attacked in the Gulf of Oman. One of the tankers was operated by a Japanese company. They were hit Thursday, the same day Japanese Prime Minister Shinzo Abe met with Iran’s Supreme Leader Ayatollah Ali Khamenei and President Hassan Rhouhani. The Trump administration put the blame squarely on Iran. “It was not an accident that the Japanese tanker was attacked,” said Alireza Nader, who heads the New Iran Foundation, a Washington-based think tank that opposes the Islamic Republic. “This was a very blunt warning. Iran is saying to the world we are able to disrupt the world’s oil markets and we’re going to do it.” But not everyone is convinced. “You have to fully understand what happened before you start shooting” said Mark Cancian, a defense expert with Center for Strategic and International Studies and a former colonel in the Marines with decades of operational knowledge of naval combat.“The Department of Defense will be reluctant to retaliate until they are certain what happened and who fired on whom, and why,” he said. Nader and Cancian believe it’s possible Iranian-funded Houthi rebels, who are mired in a civil war in Yemen, may be to blame. If that’s the case, “the U.S. will not want to get involved in a shooting war over Yemen,” Cancian said. It will likely take days, weeks or even months for the military to go through the forensics needed to find out exactly who is behind the attack. But if it is determined to be Iran, Cancian believes the U.S. forces in the area will make quick work of Iran’s navy. “The U.S. has assets designed to take on Russia and China. Iran’s ships are very exposed. I’d expect the U.S. would be able to sink Iran’s navy in about two days.”
Iran Has Little to Gain From Oman Tanker Attacks -- Two oil tankers have been damaged in a suspected attack in the waters between the United Arab Emirates and Iran as they were leaving the Persian Gulf. This is the second incident in four weeks, and raises the question of who gains what from them. Fingers will certainly be pointed at Iran as the mastermind behind these events. But the potential benefits to the Persian Gulf nation are outweighed by the risks. And even if Tehran isn’t responsible, it will still suffer the consequences. If Tehran is attacking tankers leaving the Persian Gulf — either directly, or through proxies — it sends a message that transit through the world’s most important choke point for global oil flows is not safe without its consent. If Iran is pushed to the brink economically by sanctions, it will not go quietly. Other nations in the region will bear the cost of disruptions to their own oil exports, while America and its allies will have to cope with higher crude prices and disruptions to supplies.Not since 2005 have the world’s insurers considered shipping in the Persian Gulf so dangerous for oil tankers. Nevertheless, we are still far from the level of tension that existed during the so-called Tanker War of the 1980s, when 451 vessels (259 of them oil or refined petroleum product tankers) suffered some sort of attack in the region, according to a report from the U.S. Naval Institute. The incidents took place during the Iran-Iraq War, and the culprits were forces from both countries. Then, the U.S. Navy resorted to escorting vessels through the Persian Gulf. That would be an expensive operation to repeat and would tie up a large part of the U.S. and allied fleets in the region. It would also raise the cost of the U.S. drive against Iran, which began with President Donald Trump’s decision to pull out of the Iran nuclear deal in May 2018.
Trump: If Iran blocks the Strait of Hormuz, 'it's not going to be closed for long' - President Donald Trump said Friday that if Iran were to block the Strait of Hormuz, “it’s not going to be closed for long,” but he did not elaborate on whether the United States had an obligation to keep open the international shipping gateway, which is critical to the oil industry.“They’re not going to be closing [the strait],” Trump said in response to a hypothetical question during a telephone interview on “Fox and Friends.”“They know it, and they’ve been told in very strong terms. We want to get them back at the table, if they want to go back,” he said, referring to the administration’s ongoing efforts to start bilateral negotiations on a new nuclear deal with Iran. “I’m ready when they are, but whenever they’re ready, it’s OK. And in the meantime, I’m in no rush. I’m in no rush,” he added. Earlier this year, Iran threatened to close the strait in response to a U.S. decision to end waivers on reimposed sanctions for companies that export oil from Iran. However, analysts question whether closing the channel is feasible, given the large American naval presence in the strait and the portions of coastline that are controlled by Oman and the United Arab Emirates.The president was responding to attacks Thursday on two oil tankers in the Gulf of Oman, south of the strait, for which the United States has blamed Iran. The Strait of H ormuz is a crucial maritime shipping channel that serves as a gateway for up to a third of all the world’s tanker-carried crude oil and petroleum products.
Tanker Strikes Spell Doomsday Scenario For OPEC - An attack by an unknown party on two oil tankers in the Gulf of Oman has put the Arabian/Persian Gulf region on edge. After the possible Iranian attack on three vessels offshore the Emirati port ofFujairah last month, the current attack could be setting the scene for a direct military confrontation. Two tankers, the Front Altair and the Kokuka Courageous, both filled with petroleum and chemical products, such as methanol, were “suspected to be hit by a torpedo”. This statement was made by Taiwanese company KPC and Front Altair’s owner, Norwegian company Frontline and has also been confirmed by the operator of the Kokua Courageous, Bernard Schulte Shipmanagement, which claimed that the ship was damaged in a "suspected attack." The last hours, search and rescue operations have been performed by the US, Iran and others. No direct accusations have been made at present, but indicators point to Iran or Iranian proxies, even as Tehran already has denied any involvement. The oil market is in a state of shock, and many analysts weren’t expecting an increased military escalation between Iran and its Arab neighbors. After the Fujairah attacks, tensions have eased somewhat, but today’s attacks could end the status quo in the Strait of Hormuz. After two weeks of media frenzy that the bulls have left the market and that OPEC is struggling to quell the negative sentiment in the market, a new reality could be here very soon. Oil prices surged today, incorporating the increased risk of a regional confrontation that could be threatening the majority of oil and gas supplies heading to Asia. This time, the targets have been chosen very well, as they don’t involve Saudi or Emirate vessels, but Western tankers filled with petroleum products, such as methanol. Based on current information, the involvement of torpedoes, which suggests a high level of planning by sophisticated culprits, could lead to a military escalation in the ongoing US/Arab-Iranian confrontation. If it’s true that the Kokuka Courageous has been hit twice within three hours, it means that the attack is most probably conducted by a submarine or by under-the-radar moving assets, which points at the involvement of a state-level party, and not a proxy in the region. The US Navy’s 5th Fleet, which is patrolling in and around the Gulf region, has already reacted to the attack, as officials stated.
Iran renews nuclear pact ultimatum amid tensions with U.S. - (Reuters) - Iran will continue scaling back compliance with a nuclear deal unless other signatories to the pact show “positive signals”, the Iranian president said on Saturday as tensions with the United States escalated over tanker attacks in the Gulf region. Iran stopped complying in May with some commitments in the 2015 nuclear deal that was agreed with global powers, after the United States unilaterally withdrew from the accord in 2018 and ratcheted up sanctions on Tehran. “Obviously, Iran cannot stick to this agreement unilaterally,” President Hassan Rouhani told Russian, Chinese and other Asian leaders at a conference in Tajikistan. His comments follow rising tensions with Washington, which has accused Tehran of carrying out Thursday’s attacks on two oil tankers in a vital oil shipping route at the mouth of the Gulf. Tehran has denied having any role. Rouhani did not refer to this week’s tanker incident in his speech to the Conference on Interaction and Confidence Building Measures in Asia, behind held in the Tajik capital Dushanbe. “It is necessary that all the sides of this agreement contribute to restoring it,” he said, adding that Iran needed to see “positive signals” from other signatories to the pact, which include Russia, China, Britain, France and Germany.
NZ troops to pull out of Iraq 'alongside of Australia' - New Zealand will withdraw its troops from Iraq over the next year and do so "alongside of Australia", its defence minister says. Since 2015, New Zealand has deployed personnel alongside Australian forces to train Iraqi soldiers at Camp Taji, north of Baghdad, with 95 Kiwis currently there. Its government on Monday afternoon announced the nation's contribution to the mission would be ending over the next year, with its troops to be gradually withdrawn by June in 2020. "The goal of any training mission is to ensure that it becomes a sustainable program," Defence Minister Ron Mark said. "Significant progress has been made in this area, which will allow the mission to reduce in numbers and conclude within the next year." But Mr Mark added New Zealand's withdrawal was not unilateral. "Now it's about mentoring and training trainers and then, alongside of Australia, exiting and having an exit plan. It's not just New Zealand that's downsizing here," he told reporters. "We will be downsizing alongside of them, working with them, not just walking away from the mission." New Zealand Prime Minister Jacinda Ardern said "I think their deployment has changed but it's not for me to ultimately put a date on their decision". She said she had discussed New Zealand's withdrawal with Prime Minister Scott Morrison. The Australian government has also been considering the future of Task Group Taji, amid speculation a ninth rotation of trainers, deployed in June, may be the last.
U.S. Ambassador to Israel: Israel has right to annex part of West Bank - U.S. Ambassador to Israel David Friedman said that Israel has the right to annex some but "unlikely all" of the West Bank in an interview with The New York Times on Friday. This comes after Prime Minister Benjamin Netanyahu promised to begin annexing settlements in the West Bank, a move that would put a dent in any attempts at a two-state solution in the area. "Under certain circumstances, I think Israel has the right to retain some, but unlikely all, of the West Bank," Friedman said. Following Friedman's interview, an administration official reacted Saturday, saying: "Our policy has not changed," The Jerusalem Post's Omri Nahmias reports. The comment by Friedman stirred plenty of controversy, since much of the world views Israeli settlements in the West Bank as illegal. Friedman further clarified that the "Deal of the Century" was aimed at improving life for Palestinians, but without any "permanent resolution to the conflict." However, the United Nations resolution in 2016 allowed by the Obama administration which condemned the Israeli settlements in the West Bank was heavily criticized by Friedman, who said that "Israel's entitled to retain some portion of it." "David Friedman has once again made clear that he is acting not as the US ambassador to Israel but as the settlement movement's ambassador to the United States," said Jeremy Ben-Ami, president of the pro-Israel liberal nonprofit J Street, which encourages American leadership to end the Arab-Israeli conflict. "By essentially giving the Netanyahu government a green light to begin unilaterally annexing Palestinian territory in the West Bank, the Trump administration is endorsing a flagrant violation of international law."
Yemen's Houthis strike Saudi airport, coalition vows to retaliate - (Reuters) - The Saudi-led military coalition vowed to respond firmly to a missile attack by Yemeni Houthi forces on a civilian airport in southern Saudi Arabia on Wednesday that wounded 26 people. The Western-backed, Sunni Muslim alliance that has been battling the Iran-aligned Houthi movement in Yemen said the early morning strike was proof of Iranian support for what it called cross-border terrorism. The coalition said a projectile hit the arrivals hall at Abha airport, causing material damage. Three women and two children were among the wounded, who were of Saudi, Yemeni and Indian nationalities, it said in a statement. The Houthis said on their media channels that they fired a cruise missile at Abha airport, which is about 200 km (125 miles) north of the Yemen border and serves domestic and regional routes. “Evidence indicates Iran’s Revolutionary Guards supplied the Houthis with the weapon that targeted Abha airport,” Saudi-owned Al Arabiya TV quoted the coalition as saying. The Saudi civil aviation body told Reuters flight traffic was currently running normally at the airport. The Houthi media center said the strike destroyed the control tower. The coalition’s spokesman did not immediately respond to a request for comment. Reuters could not independently verify the claim. The attack follows an armed drone strike last month on two oil-pumping stations in the kingdom that were claimed by the Houthis. Saudi Arabia accused Iran of ordering the attack, a charge that Tehran and the Houthi movement deny. The coalition said the strike on Abha airport could amount to a war crime and it would take “urgent and timely” measures in response.
Saudi Arabia is Using Battlefield Technology to Track Down Women Fleeing the Country— Saudi Arabia is going to extraordinary lengths to hunt down women who are fleeing the country seeking life outside the repressive kingdom. Technology normally used by the military to track targets for lethal drone strikes is being used against women that run away from the country. The use of such advanced technology, which is rarely employed by civilians, was exposed by four Saudi women who spoke to the Business Insider about the way in which they were tracked down through their mobile phone’s unique 15-digit International Mobile Equipment Identity (IMEI) number. Saudi security services used various means to track the IMEI number including raiding the homes and interrogating the family members of women who fled the country. They demand to be shown the packaging box of cell phones which contain the IMEI number. Some of the women who had fled to Europe and were tracked down were brought back to the country. This method of tracking people using an IMEI is thought to be almost exclusively a tool used by the police, national security and military bodies. Saudi Arabia’s use of this technology against civilians is said to be not only a sign of desperation but also an indication of the threat faced by dozens of women that have fled the kingdom. The seriousness with which Riyadh views this growing phenomenon is a source of concern. According to the Business Insider after two high-profile escapes in early 2019, Saudi Arabia’s Presidency of State Security produced a video in February likening women who run away to jihadist terrorist operatives working for the likes of Daesh. Technology experts said that escaping the radar of the kingdom’s security was not a simple matter. Changing a phone’s SIM card is not sufficient. IMEI numbers are unique to the phone and the only way to escape being tracked is to replace the handset, physically remove and replace a chip to obtain a new IMEI, or use a phone which has a reprogrammable IMEI.
With Friends Like Turkey, Who Needs Enemies? -Turkey, America’s erstwhile NATO ally, is now arming America’s enemies in Libya, a flagrant violation of the 2011 United Nations arms embargo. The clearest evidence of Turkey’s violation of U.N. embargoes came in the hold of a Turkish-crewed ship named “Amazon.” It delivered some 20 Turkish-made armored vehicles, known as “MRAPs,” the military news website South Front reported. A local blogger photographed the armored vehicles on the dock.Turkey supports Libya’s Government of National Accord holed up in Tripoli. Qatar and, seemingly, Iran also back it. If it prevails, its government will impose Sharia law, corrupt the press, socialize the economy, and open a safe haven for terrorists. America backs General Khalifa Haftar’s Libyan National Army, which commands a large swathe of eastern Libya. Gen. Haftar’s promises an Egypt-style government, if he wins. That means basic human rights, rule of law, a semi-free press, and regular elections that are usually won by the ruling party. And a new ally in the war on terror. America’s security is often strengthened by such hard compromises with its principles, leaving many Americans uneasy. This is an alliance that makes sense. Mainly because all of the realistic alternatives are far worse.Gen. Haftar was once a high-ranking official in Muammar Gadhafi’s regime. He defected, worked with the CIA, and spent the better part of two decades living in the northern Virginian suburbs before returning to his homeland a few years ago. His forces are large, broadly disciplined, and well equipped. So far Haftar’s army has easily swept away all opposition in their path. Yet Tripoli may be beyond its grasp. Urban warfare is the opposite of fast-moving desert campaigns. It is usually a house-to-house proposition in which defenders make invaders pay for yards gained… in lives lost. Civilians are often murdered, maimed, or raped by one side or the other. Some join the resistance, becoming human bombs or amateur snipers. Even corpses are boobytrapped with explosives. Tripoli is a humid Stalingrad. Haftar’s forces arrived in April. Almost two months later, it controls less than half of the city. In this urban battleground, Turkish-supplied armor makes a big impact. America used similar vehicles to clear the Baghdad airport road of dug-in insurgents in 2005. Turkish armor will either lengthen the war and widen the death toll or, worse, prevent the war’s end by enforcing a murderous stalemate. Without aircraft or armor of its own there is little Haftar’s soldiers can do.
US Wipes Out Entire Afghan Security Forces Unit in Second Major Friendly Fire Incident — For the second time in less than a month, US forces carried out airstrikes “in self defense” in Afghanistan, only to discover that they were actually attacking Afghan security forces. The Wednesday strike ended up wiping out an entire unit, though officials have yet to disclose the exact number of deaths, beyond it apparently being everyone present.The previous attack saw US ground troops believing they were under fire, and the warplanes attacking police, killing 18. In this case, too, US officials said they believed the troops came under fire, and the airstrikes targeted the Afghan forces, who had been firing machine guns.Despite all the talk of self defense and US troops being “under effective fire,” officials insist not a single US casualty occurred. US officials expressed “regret” for the deaths of Afghan partners. Interestingly, however, US spokesman Col. David Butler praised the operation as “extensively planned and coordinated” with the Afghan forces, with an eye toward preventing exactly what ended up happening. An investigation is promised, but all too often the investigations into incidents like these, where the result was particularly embarrassing, never really publicly end, and the day of the attack ends up the last we hear about it.