oil prices ended lower for a 3rd week in four as the Chinese pulled a Trump and unexpectedly hit US goods with new tariffs, and Trump responded by ordering US companies to get out of China, ratcheting up the trade war to a whole new level...after managing a small 0.7% increase to $54.87 a barrel last week after Trump had decided to delay his latest Chinese tariffs, prices of US crude for September delivery opened higher on Monday after a weekend attack on a Saudi oil facility by Yemen’s Houthis threatened crude supplies, and continued higher to settle up $1.34, or 2.44% at $56.21 a barrel, with further gains limited by what was seen as a downbeat OPEC report on Friday...pricing for September oil continued higher on Tuesday, on expectations that the coming weekly oil data would show a decline in U.S. crude supplies, with trading in the September crude contracted expiring 13 cents higher at $56.34 a barrel, while crude oil for October delivery, the new front month contract, fell a penny to $56.13 a barrel....after rising to as high as $57.13 a barrel on a bullish API inventory report early on Wednesday, October oil prices then slid after the EIA reported a crude oil drawdown that was less than traders had hoped for and went on to close at $55.68, a loss of 45 cents on the day....oil prices opened higher on new tensions with Iran on Thursday, but then fell back on recession fears as the Fed's annual economic symposium got underway in Jackson Hole, Wyoming, with oil ending down 33 cents at $55.35 a barrel...oil then sold off with global markets on Friday, after China unveiled new tariffs on U.S. goods, dampening economic expectations, and after Trump responded by ordering US firms out of China, with US crude prices settling $1.18 lower at $54.17 a barrel, after earlier falling to as low as $53.24...US crude prices thus ended 1.3% lower than the previous Friday's close, but October Brent crude, the international benchmark, managed to show a 1.2% week-on-week increase, having risen 27 cents on Wednesday, and only falling 58 cents to $59.34 a barrel on the US/China trade war news on Friday...
natural gas prices also ended the week lower, largely because a big dome of cooler-than-normal temperatures was forecast to sit in the middle of country by the extended outlooks all week and there was no other news to move them higher...after rising 8.1 cents, or 3.8% to $2.200 per mmBTU on a bullish storage report last week, natural gas for September delivery managed to close a penny higher on Monday, overcoming cooler temperatures and record production which had pushed prices more than 6 cents lower early in the day, on word that a new natural gas export pipeline would soon be up & running...prices managed another eight-tenths of a cent gain on Tuesday before closing 4.8 cents lower on Wednesday, unable to repeat the bounce from the lows seen on Monday...prices then fell 1.1 cents on Thursday when the natural gas storage report showed no surprises, and then finished the week by slipping another seven-tenths of a cent to $2.152 per mmBTU on Friday, as cooler weather forecasts persisted for the final week of August and into the beginning of September..
the natural gas storage report for the week ending August 16th from the EIA indicated that the quantity of natural gas held in storage in the US increased by 59 billion cubic feet to 2,797 billion cubic feet by the end of the week, which meant our gas supplies were 369 billion cubic feet, or 15.2% more than the 2,428 billion cubic feet that were in storage on August 16th of last year, while still 103 billion cubic feet, or 3.6% below the five-year average of 2,900 billion cubic feet of natural gas that have been in storage as of the 16th of August in recent years....this week's 59 billion cubic feet injection into US natural gas storage was close to the 61 billion cubic feet injection predicted by analysts surveyed by S&P Global Platts, while it was above the average 50 billion cubic feet of natural gas that have been added to gas storage during the second full week of August over the past 5 years, the 21st such average or above average storage build in the last 23 weeks...the 1,619 billion cubic feet of natural gas that have been added to storage over the 21 weeks of this year's injection season is the second most on record, eclipsed only by the record 1660 billion cubic feet of natural gas that were injected into storage over the same 21 weeks of the 2014 natural gas injection season...
The Latest US Oil Supply and Disposition Data from the EIA
US oil data from the US Energy Information Administration for the week ending August 16th indicated that because our oil imports fell while our refinery consumption of oil rose, we had to pull oil out of storage for the first time in 3 weeks...our imports of crude oil fell by an average of 497,000 barrels per day to an average of 7,218,000 barrels per day, after rising by an average of 566,000 barrels per day over the prior week, while our exports of crude oil rose by an average of 120,000 barrels per day to an average of 2,803,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,415,000 barrels of per day during the week ending August 16th, 617,000 fewer barrels per day than the net of our imports minus exports during the prior week...over the same period, the production of crude oil from US wells was reported to be unchanged 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 16,715,000 barrels per day during this reporting week..
meanwhile, US oil refineries were reportedly processing 17,702,000 barrels of crude per day during the week ending August 16th, 401,000 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 390,000 barrels of oil per day were being pulled out of the supplies of oil stored 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, from oilfield production, and from storage was 598,000 barrels per day less than what our oil refineries reported they used during the week...to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA inserted a (+598,000) 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"...obviously, with that much oil unaccounted for this week, it calls into question the other oil totals that the EIA has reported and we have transcribed (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 rose to an average of 7,186,000 barrels per day last week, which was still 10.8% less than the 8,053,000 barrel per day average that we were importing over the same four-week period last year...the 390,000 barrel per day decrease in our total crude inventories was all pulled out of our commercially available stocks of crude oil, while the amount of oil stored in our Strategic Petroleum Reserve remained unchanged...this week's crude oil production was reported to be unchanged at 12,300,000 barrels per day even though the rounded estimate of the output from wells in the lower 48 states rose by 100,000 barrels per day to a record high 12,000,000 barrels per day, because a 94,000 barrels per day decrease to 339,000 barrels per day in Alaska's oil production lowered the final rounded national production total by 100,000 barrels per day...last year's US crude oil production for the week ending August 17rd was rounded to 11,000,000 barrels per day, so this reporting week's rounded oil production figure was 11.8% 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 95.9% of their capacity in using 17,702,000 barrels of crude per day during the week ending August 16th, up from 94.8% of capacity the prior week, refinery utilization rates that are fairly typical for mid summer....however, the 17,702,000 barrels per day of oil that were refined this week were still 1.1% below the 17,892,000 barrels of crude per day that were being processed during the week ending August 17th, 2018, when US refineries were operating at 98.1% of capacity....
even with the increase in the amount of oil being refined, gasoline output from our refineries was somewhat lower, decreasing by 306,000 barrels per day to 9,897,000 barrels per day during the week ending August 16th, after our refineries' gasoline output had decreased by 218,000 barrels per day the prior week....that left this week's gasoline production 2.5% below the 10,151,000 barrels of gasoline that were being produced daily over the same week of last year....on the other hand, our refineries' production of distillate fuels (diesel fuel and heat oil) rose by 263,000 barrels per day to 5,340,000 barrels per day, after our distillates output had decreased by 209,000 barrels per day the prior week....but even with this week's increase, our distillates production was 1.6% less than the 5,426,000 barrels of distillates per day that were being produced during the week ending August 17th, 2018....
even with the decrease in our gasoline production, our supply of gasoline in storage at the end of the week managed an increase for the fourth time in 10 weeks and for the 6th time in twenty-six weeks, increasing by 312,000 barrels to 234,072,000 barrels during the week to August 16th, after our gasoline supplies had fallen by 1,412,000 barrels over the prior week....our gasoline supplies increased this week because the amount of gasoline supplied to US markets decreased by 306,000 barrels per day to 9,626,000 barrels per day, and because our imports of gasoline rose by 89,000 barrels per day to 892,000 barrels per day, while our exports of gasoline rose by 213,000 barrels per day to 676,000 barrels per day...after this week's increase, our gasoline supplies ended fractionally lower than last August 17th's inventory level of 234,328,000 barrels, but remain roughly 4% above the five year average of our gasoline supplies at this time of the year...
with the increase in our distillates production, our supplies of distillate fuels rose for the 10th time in the past 23 weeks, increasing by 2,610,000 barrels to 138,123,000 barrels during the week ending August 16th, after our distillates supplies had decreased by 1,938,000 barrels over the prior week...our distillates supplies increased this week because our imports of distillates rose by 84,000 barrels per day to 210,000 barrels per day while our exports of distillates fell by 202,000 barrels per day to 1,419,000 barrels per day, and because the amount of distillates supplied to US markets, a proxy for our domestic demand, decreased by 101,000 barrels per day to 3,758,000 barrels per day....after this week's inventory increase, our distillate supplies were 5.6% higher than the 130,838,000 barrels of distillates that we had stored on August 10th, 2018, while still around 2% below the five year average of distillates stocks for this time of the year...
finally, with less oil being imported at the same time our refineries were using more oil, our commercial supplies of crude oil in storage fell for the eighth time in ten weeks but for the fourteenth time in 31 weeks, decreasing by 2,732,000 barrels, from 440,510,000 barrels on August 9th to 437,778,000 barrels on August 16th...even after that decrease, our crude oil inventories were still roughly 2% above the five-year average of crude oil supplies for this time of year, and were about 31% higher than the prior 5 year (2009 - 2013) average of crude oil stocks for the 3rd Friday of August, 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 had generally been rising since this past Fall up until the most recent 10 weeks, after generally falling until then through most of the prior year and a half, our oil supplies as of August 16th were still 7.2% above the 408,358,000 barrels of oil we had stored on August 17th of 2018, but at the same time were 5.5% below the 463,165,000 barrels of oil that we had in storage on August 18th of 2017, and 11.2% below the 492,962,000 barrels of oil we had in commercial storage on August 19th of 2016...
Why Everyone Got the OPEC Report Wrong
you should recall that we covered the August OPEC report last week, because even if you didn't read it, our headline noted that report had showed that July's oil output was 2 million barrels per day short of demand...since i don't see a lot of the coverage of such Friday reports while i'm working on these newsletters on Saturdays, i was surprised to see a number of articles when the next week began characterizing that report as bearish, including those from Reuters, Bloomberg, and oilprice.com...since that certainly wasn't my take, i went back to the OPEC report (which i had downloaded), to see where that misunderstanding was coming from...since many who covered it had reported that OPEC had reported that they had revised this year's global demand for oil lower, i went straight to the demand section of the report, which begins on page 33, or pdf page 43...pasted below is a copy of the introduction to the demand section, so you can see how it reads...
notice first that demand is expected to rise, but by a bit less they had previously forecast, and hence the growth of demand was revised lower...and that's what was picked up by the Reuters article, which reads "the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020."...however, that OPEC synopsis of their own report above, as repeated by Reuters, is a serious misstatement of what the data actually shows, which you'll see on the table showing global demand for 2019, which appeared on the same page of the report as the text above, directly below it...
the table above came from page 33 of the August OPEC Monthly Oil Market Report (pdf page 43), 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...in red on the right, we've circled the metrics that the OPEC summary, and by extension everyone else who repeated it, were referring to...as you can see on the revision line, demand growth for 2019 was expected to be 1,100,000 barrels per day, revised down -0.04 mb/d, or 40,000 barrels per day...
so, how did that revision come about? 2019's demand growth is the change from 2018 demand to 2019 demand, and we've circled the revisions for demand for those years in green and blue above...in the far left column, we see that global demand for 2018 was revised HIGHER, from 98.73 million barrels of oil per day to 98.82 million barrels per day, which is rounded down to an 80,000 barrel per day UPWARD revision....in the blue ellipse, we can see that global demand for 2019 was also revised HIGHER, by 50,000 barrels per day to 99.92 million barrels of oil per day...however, when we take the difference between those two upward revisions as circled in red, we find the year over year growth in demand is lower than had previously been reported, simply because the upward revision to 2018 was greater than the upward revision to 2019...
unfortunately, everyone who is writing about this OPEC report, including the OPEC analyst who wrote the summary, has taken that downward revision of growth to mean a downward revision to demand, which is not the case...in fact, third quarter demand was revised 0.08 million barrels of oil per day higher and came in 1.98 million barrels of oil per day greater than July's global output, as our analysis last week showed...the key point is that demand growth was adjusted lower, not that demand was adjusted lower...in fact, 2019's demand was adjusted higher, but 2018's demand was revised even higher, and hence the difference between 2018 and 2019, ie "growth", was less...but an 50,000 barrel per day upward revision to 2019 demand, combined with a 2 million barrel per day shortage of oil during the month of July, is decidedly not bearish by any interpretation of the facts...
This Week's Rig Count
the US rig count fell for the 23rd time in 27 weeks over the week ending August 23rd, and is now 15.4% lower than where it began the year at....Baker Hughes reported that the total count of rotary rigs running in the US fell by 19 rigs to a 21 month low of 916 rigs this past week, which was also down by 128 rigs from the 1044 rigs that were in use as of the August 24th report of 2018, and less than half of the shale era high of 1929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC announced their attempt to flood the global oil market...
the count of rigs drilling for oil decreased by 16 rigs to 754 rigs this week, which was a 19 month low for oil rigs and 106 fewer oil rigs than were running a year ago, and quite a bit below 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 decreased by 3 rigs to 162 natural gas rigs, a 28 month low for gas rig activity and down by 20 rigs from the 182 natural gas rigs that were drilling a year ago, and way down from the modern era high of 1,606 rigs targeting natural gas that were deployed on August 29th, 2008...
however, the rig count in the Gulf of Mexico was up by 1 to 26 rigs this week, as a new rig began operating off the shore of Texas...that rig was added to the 25 rigs offshore from Louisiana already operating in the Gulf, a net increase of 10 Gulf of Mexico rigs from the 16 rigs that were deployed in the Gulf in the same week a year ago, when 14 rigs were drilling in Louisiana waters and two were deployed offshore from Texas...in addition, there continues to be two rigs deployed off the coast of the Kenai Peninsula in Alaska this week, same number as were drilling off the Alaskan shore a year ago, for a total US offshore rig count of 28, up from the total of 18 offshore rigs that were deployed a year ago...
the count of active horizontal drilling rigs was down by 18 to 797 horizontal rigs this week, which was the least horizontal rigs deployed since December 29, 2017 and hence a new 19 month low for horizontal drilling...it was also 122 fewer horizontal rigs than the 919 horizontal rigs that were in use in the US on August 24th 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 vertical rig count was down by 2 rigs to 50 vertical rigs this week, and those were down by 13 from the 63 vertical rigs that were operating during the same week of last year...on the other hand, the directional rig count was up by 1 to 69 directional rigs this week, and those were up by 7 from the 62 directional rigs that were in use on August 24th of 2018...
the details on this week's changes in drilling activity by state and by major 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 August 23rd, the second column shows the change in the number of working rigs between last week's count (August 16th) and this week's (August 23rd) count, the third column shows last week's August 16th 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 24th of August, 2018...
with the Permian showing a 7 rig decrease, we'll start by looking at that region in Texas, where we find 5 more rigs were shut down in Texas Oil District 8, which would be the core Permian Delaware, and another rig was shut down in Texas Oil District 8A, encompassing the northern part of the Permian Midland, while a rig was started up in Texas Oil District 7C, or the southern part of the Permian Midland....with Texas Permian rigs thus down 5, that means that the 2 rigs that were shut down in New Mexico had both been operating in the western-most reaches of the Permian Delaware, to arrive at the 7 rig decrease across the entire basin...then, we can figure that at least 4 of the 5 rig decrease in the DJ Niobrara chalk of the Rockies' front range appear to have been pulled out of Colorado, while the fifth one was offset by a startup in that state or Wyoming which isn't shown, leaving us uncertain from whence it came...Oklahoma's decreases came out of the Cana Woodford, the Ardmore Woodford, and one elsewhere in the state also not shown above, while the rig added in the Mississippian basin this week was in Kansas, which shared a spate of 65 earthquakes with Oklahoma this week, probably due to drilling waste water injections, as they occurred in an otherwise seismically inactive area...for rigs targeting natural gas, there was just the 3 rig decrease in the Marcellus, which came by way of a 6 rig decrease in Pennsylvania and a 3 rig increase in West Virginia, while all the other rig changes around the country you see above involved rigs targeting oil formations...we should note, however, that other than the changes shown above for the major producing states, both Florida and Illinois saw initial rig start-ups this week, while Mississippi saw its six rig deployment cut in half to three...for Florida, the rig start up seems to be a continuation of the on-and-off several weeks of drilling followed by several wees of layoff that have prevailed in the state over the past year, while the Illinois start-up is the first drilling in the state since a 4 week run last November...meanwhile, Mississippi has seen between 2 and 6 rigs drilling in the state since the beginning of 2018, with no discernible pattern to their changes in activity....
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Developer scrubs plans for 3rd power plant after nuke bailout - Clean Energy Future is canceling plans to build a third gas-fired power plant in Lordstown, the company announced Tuesday. “This decision is based on the July 2019 passage” by the Ohio General Assembly of House Bill 6, Bill Siderewicz, president of CEF, said in a news release.The third plant would have cost $1.1 billion, Siderewicz said. Clean Energy Future has already spent more than $1 million in development and permitting costs.No third plant means the loss of 1,100 new local union construction jobs, 2.6 million man hours of union construction labor over 34 months, and $150 million in water purchases from Youngstown, Siderewicz said.He said a third plant would have produced additional full-time jobs and local supplies and services. It would have generated $300 million in local property, salary and income taxes.Over its 50-year life, it would have produced $29 billion of economic benefit, Siderewicz said. It was supposed to begin construction in 2020.
HB6 fallout: $1.5 billion in natural gas-power plant investments pulled from Ohio - When state legislators debated this year whether to bail out Ohio’s two nuclear power plants, some opponents warned that the subsidies would upset Ohio’s blossoming oil and natural gas industry.That is starting to happen. Clean Energy Future said this week that it is terminating plans to add a $1.1 billion natural-gas-fired power plant to its operations in Lordstown, in northeast Ohio, because of House Bill 6. Before the vote to approve the bill in July, another company, LS Power, said it would cancel its $500 million plan to expand its natural-gas-fired power plant in Luckey, in northwest Ohio near Toledo. The company did not respond to requests for comment Friday. “Political tampering with Ohio’s free electricity-generation markets has very real impacts and results, as we see happening now,” said William Siderewicz, president of Clean Energy Future. “Power plants, pipelines — without those demand outlets coming online, there isn’t the incentive to produce the amount we’re producing,” said Chris Zeigler, executive director of API Ohio, which represents oil and gas interests. Siderewicz pegged the economic loss at $29 billion over the expected 50-year life of the planned Lordstown plant. That project would have created 1,100 construction jobs in an area of the state that has struggled financially. “Sadly enough, this direct damage to Ohio is just the tip of the iceberg in terms of bad news for Ohio,” he said. House Bill 6 requires the state’s residential electricity customers to pay an extra 85 cents a month from 2021 through 2027 to shore up the Davis-Besse and Perry nuclear plants owned by FirstEnergy Solutions, an arm of Akron-based FirstEnergy that is working to emerge from bankruptcy protection. The company had said that without subsidies, it would have to close the plants, which produce about 15% of the state’s electricity and employ about 1,400 workers. The fee is expected to generate about $150 million a year for the plants. The company will have to demonstrate the need for the subsidies every year. The legislation also bails out two coal-fired power plants, one in Ohio and the other in Indiana, owed by a group of power companies that include American Electric Power.
Utica Shale well activity as of Aug. 17 - Nine horizontal permits were issued during the week that ended Aug. 17, and 14 rigs were operating in the Utica Shale.
- DRILLED: 253 (253 as of last week)
- DRILLING: 171 (171)
- PERMITTED: 471 (468)
- PRODUCING: 2,246 (2,240)
- TOTAL: 3,141 (3,132)
TOP COUNTIES BY NUMBER OF PERMITS:
- 1. BELMONT: 654 (654 as of last week)
- 2. CARROLL: 526 (526)
- 3. HARRISON: 477 (474)
- 4. MONROE: 435 (435)
- 5. GUERNSEY: 277 (277)
Ohio Residents Who Complain About Oil And Gas Feel 'Abandoned' By State - A decade ago, people in Ohio hadn't heard much about fracking for natural gas in the state. But since then, the ups and downs of the gas industry have literally changed the rural landscape of eastern Ohio. For some people that has meant new jobs or royalty payments from leasing their land. But the thousands of new well pads, the pipelines, compressor stations, and waste injection wells haven't been welcomed by everyone. Citizens have filed thousands of complaints with the Ohio Department of Natural Resources (ODNR) about everything from gas leaks and crumbling roads to odors and noise they blame on energy development. Kerri and Jeff Bond's house in the hills of Noble County, Ohio is nearly empty. After 40 years here, they feel they need to leave."It's been difficult," said Kerri Bond. "But today, I have just this peace, because we're finally going to get out of here." The reason Bond says they need to leave is why many in the crowd here are intrigued by this auction: The lucrative underground mineral rights are for sale. Those mineral rights are leased to Antero Resources. The Bonds signed their first lease in 2013, at the beginning of the fracking boom. Then two years later, the family was forced by the state to sign another lease with Antero, which is allowed under Ohio law. Antero's well pad sits a quarter mile uphill from the Bonds' house. Four lines extract gas from under the property, providing the Bonds with monthly royalty payments. The last month’s royalty check was $42,000. So, why would someone forgo that kind of money, leave their farm, and their family? The Bonds say the gas industry that has made them money, has also sullied their land, water and air.The Allegheny Front confirmed that the Bond family made numerous complaints to various state agencies, concerning well pad noise and bright nighttime lights, and that gas development was polluting the air and water, and harming their health."Every tree in the yard was dying, my cats died, my chickens died, we got sheep dying," Kerri Bond claimed.Bond complained to the state about her family getting odd rashes, headaches and dizziness. She said her grandson developed a breathing problem. She feared high levels of radiation. Bond complained to the Ohio Department of Health, but its testing found no radiological health hazard.She complained to the Ohio Environmental Protection Agency (OEPA). The OEPA declined to comment, but sent their investigative report to The Allegheny Front. The report clarified that while the agency has no authority to regulate noise or light pollution, it tested air quality at the well pad, and on the Bonds' property. Antero was allowed to test at the same time. The OEPA found leaks from the well pad equipment of benzene and volatile organic compounds, but at levels allowed under Antero's permit.
Yale and MIT Researchers Studying Water Quality and Oil and Gas Drilling in Ohio's Appalachian Basin - Yale News Researchers from the Yale School of Public Health (YSPH), Yale Forestry & Environmental Studies and the Massachusetts Institute of Technology will be testing drinking water samples and conducting interviews from approximately 200 households in Belmont and Monroe Counties in Ohio this summer.The effort is part of the WATer and Energy Resources Study (“WATER Study”) to investigate how oil and gas activities may influence groundwater chemistry and human health in the Appalachian Basin.Oil and gas extraction has been particularly intensive in Belmont and Monroe Counties, where more than 1,000 horizontal wells have been drilled in the last decade. This surge in energy production has helped make oil and gas more abundant and less expensive, but deployment of new technologies, including high-volume hydraulic fracturing (“fracking”), has been accompanied by concerns about environmental contamination and health problems in host communities. “Though fossil-fuel development involving hydraulic fracturing has expanded rapidly in Eastern Ohio, evidence on whether the practice affects water quality in nearby communities remains limited,” said YSPH Assistant Professor Nicole Deziel, one of the study’s lead investigators. “We are conducting the largest water quality study in the region to date to address these information gaps.”The Ohio WATER Study started at the end of May and will continue through mid-August. As part of the study, residents will receive a report with their individual water testing results. “Providing measurements of their home water quality is one way to address community concerns about the unknown,” says Deziel.
Shell cracker is a harbinger of things to come, drawing in President Trump and protesters - Like it or not, the $6 billion plant is a large link in an oil and gas supply chain — likely the harbinger of more chemical development in Appalachia and support for a struggling oil and gas industry overwhelmed by too much product and too few dollars. The administration — through Department of Energy Secretary Rick Perry, and DOE Assistant Secretary Steve Winberg — has embraced the petrochemical industry and the oil and gas industry as beacons of economic potential. Mr. Winberg, a former Consol Energy Inc. executive, even hired a full-time promoter for the “Appalachian petrochemical renaissance.” Ken Humphreys, a senior adviser to Mr. Winberg, said in June that he has been coordinating with federal agencies to shepherd petrochemical projects. He said if the opportunity is fully developed it could yield 100,000 jobs in the industry. The Shell cracker plant project was greenlighted a few months before Mr. Trump was elected president in 2016. It has been considered the centerpiece of the region’s pitch for more such plants as well as for a $10 billion natural gas liquids storage hub. The combination would help ethane, the feedstock for the cracker, develop its own local market in Appalachia.Mr. Winberg said at a petrochemical conference in Pittsburgh in June that he and Mr. Perry “hit the road every chance we get to talk about this opportunity.” “The EPA and other agencies are redesigning regulations to speed up these projects while still protecting the environment,” he said.When asked for specifics, an EPA spokesman on Monday cited a number of Trump administration initiatives, including removing requirements for facilities that want to upgrade equipment to come up to current permitting standards. Another effort makes it easier for pipelines to secure water crossing permits under the Clean Water Act — in part by limiting the information that state regulators can consider and the time they have to consider it. He also noted the swapping out of the Obama-era Clean Power Plan — that administration’s hallmark climate change legislation — with the less restrictive Affordable Clean Energy rule.The spokesman also said the Trump administration is getting ready to propose changes to oil and gas rules that will “remove regulatory requirements that are not appropriate to regulate, and will reduce unnecessary regulatory duplication, saving $85 million in regulatory costs from 2019 to 2025.”
Trump’s large union crowd at Shell was given the option of not showing up — and not getting paid Post-Gazette The choice for thousands of union workers at Royal Dutch Shell’s petrochemical plant in Beaver County was clear Tuesday: Either stand in a giant hall waiting for President Donald Trump to speak or take the day off with no pay. “Your attendance is not mandatory,” said the rules that one contractor relayed to employees, summarizing points from a memo that Shell sent to union leaders a day ahead of the visit to the $6 billion construction site. But only those who showed up at 7 a.m., scanned their ID cards, and prepared to stand for hours — through lunch but without lunch — would be paid. “NO SCAN, NO PAY,” a supervisor for that contractor wrote. That company and scores of other contractors on site and their labor employees all have their own contracts with Shell. Several said the contracts stipulate that to get paid, workers must be onsite. Those who decided not to come to the site for the event would have an excused but non-paid absence, the company said, and would not qualify for overtime pay on Friday. Shell spokesman Ray Fisher explained that the workers onsite have a 56-hour workweek, with 16 hours of overtime built in. That means those workers who attended Mr. Trump’s speech and showed up for work Friday, meeting the overtime threshold, were being paid at a rate of time and a half, while those who didn’t go to hear the president were being paid the regular rate, despite the fact that both groups did not do work on the site Tuesday. “This is just what Shell wanted to do and we went along with it,” said Ken Broadbent, business manager for Steamfitters local 449.
Fracking at Edgar Thomson steel mill among concerns discussed at environmental forum in Forest Hills - Braddock resident Je'Amour Matthew punctuated Tuesday's environmental forum hosted by state Rep. Summer Lee with a passionate speech that resonated with the roughly 50 people who attended.“What have they done for you, my friends?” Matthew said, referring to what she sees as inaction by elected officials. “When you stand up and start asking your representatives, ‘What the hell?’ I am of flesh and blood. I matter. Your pocket shouldn’t be benefitted for my health.”Matthew said she feels that some officials are neglecting the health concerns of their constituents to support the fracking and petrochemical industries. “We know these mills are affecting our lungs and our health and shortening lives,” she said. “What is a dollar bill worth if you don’t have a quality of life?” As Matthew made her way back to her seat, the crowd gathered in the Forest Hills Borough Building erupted with applause and cheers.The public forum was organized to provide information about actions being taken on key environmental justice issues at the state level in Harrisburg and the community level in Allegheny County. Several members of the audience shared their dissatisfaction with what they viewed as a delayed public notification by the Allegheny County Health Department to a December fire at U.S. Steel Clairton Coke Works. The fire damaged equipment that is responsible for cleaning sulfur dioxide before it’s emitted into the community. Sulfur dioxide can irritate the lungs. Attendees also raised concerns about the proposal to drill for natural gas, or frack, at U.S. Steel’s Edgar Thomson Steel Works in Braddock. Earlier this month, Lee sent a letter to the Allegheny County Board of Health and Allegheny County Health Department expressing concerns about public health and safety due to the proposed natural gas drilling at the Edgar Thomson steel mill. The letter highlights that to a community that is already suffering from high asthma rates and other health concerns, the new fracking wells will only create more public health and air quality violations. “We just wanted to make it known that we object, that this is a dangerous proposal, that Merrion Oil & Gas are not equipped to do this type of fracking, and that all throughout the process, they have not been in compliance,” Lee said at the forum. “Fracking is already dangerous. It is even more dangerous to have someone come in who is inexperienced in the particular type that they are doing.”
Pipeline board plan running into resistance — A legislative proposal to create a pipeline oversight board intended to provide greater transparency and reassure the public that the infrastructures are safe is running into resistance. Some state officials say the measure wouldn’t do enough to protect information that should remain secret to protect the infrastructure from terrorists. Pipeline safety has become an issue of concern statewide as fracking has made Pennsylvania one of the country’s leading sources of natural gas, she said. A pipeline explosion in Beaver County destroyed a home prompted the evacuation of neighboring homes last September, according to the Associated Press. Agency officials said that the proposal for the board would create problems with the way the state handles confidential information about pipelines. The board would provide for the collection and sharing of information and appropriate public safety measures related to the planning, siting, construction, and safety of emergency response procedures for pipelines. In addition, the board would be responsible for coordinating communications regarding pipeline activities between government agencies, the pipeline companies and the public.
‘Great progress’ in South Philly refinery cleanup, fire commissioner says - The dangerous task of disposing of a toxic chemical at the Philadelphia Energy Solutions refinery has had “very good results,” leaving about half of the original 30,000 gallons of hydrofluoric acid remaining, according to city officials. “We’re fortunate that we have not had any injuries. … Great progress has been made,” Philadelphia Fire Commissioner Adam Thiel said. Philadelphia Energy Solutions workers, along with contractors, began neutralizing hydrofluoric acid at the South Philadelphia refinery last week, more than a month after an explosion and fire destroyed the unit that used the chemical to create high-octane gasoline. Hydrofluoric acid, or HF, was integral to the process at the alkylation unit that blew up June 21. A PES employee quickly transferred the chemical to another container after the explosion, saving workers and the surrounding neighborhood from what experts say could have been a catastrophe. But tens of thousands of gallons of HF remained after the fire itself was contained. At room temperature, HF is a gas, but for industrial use it is dissolved into a liquid solution. Swallowing just a small amount of HF or getting small splashes on the skin can be fatal, according to the Centers for Disease Control and Prevention. The acid molecules are very small and can easily penetrate the skin and get directly into bones, where the acid reacts with calcium and effectively dissolves the bones. In the gaseous state, the CDC says, low levels of HF can irritate the eyes, nose and respiratory tract. Breathing it at high levels “can cause death from an irregular heartbeat or fluid buildup in the lungs.”
PES up against the clock to sell Philadelphia refinery in cash crunch (Reuters) - Finding a buyer for Philadelphia Energy Solutions’ oil refinery has grown urgent as the bankrupt company’s funds dwindle and no signs emerge that it is winning a fight for insurance payouts after a June blaze at the plant, according to court documents and bankruptcy experts. Without access to the more than $1 billion in insurance coverage, selling the refinery has become one of the company’s only options to raise cash before being forced to liquidate. At least three parties have potential proposals to buy the shut Philadelphia refinery, each with plans to reopen the 1,300-acre (5.3-square km) site with a mix of oil refining and alternative energy production, sources familiar with the plans said. Initial meetings are scheduled between the prospective buyers and a collection of vetters over the next several weeks, but it is unclear how long it would take for any official bid to come together, the sources said. PES was not available for comment on whether it had reviewed any of the proposals or how viable it considered them to be. For the second time in less than two years, PES filed for Chapter 11 bankruptcy on July 21, exactly a month after fire and blasts destroyed an alkylation unit at the 335,000-barrel-per-day refinery. PES shut its final crude unit in late July, and more than 600 workers are in the process of being laid off without severance pay or the option for continued health insurance. The company has no prepackaged arrangement to restructure the business or income from running the refinery, the largest in the U.S. Northeast, raising the likelihood it will be forced to liquidate.
Bankrupt Philly Refinery’s Hiring of Kirkland Opposed by DOJ - The Justice Department is opposing Philadelphia Energy Solutions Inc.'s plans to hire Kirkland & Ellis LLP as bankruptcy counsel because the law firm also represents the oil company’s largest shareholders and largest creditors.Bankruptcy counsel should not have an interest “materially adverse to the interest of the estate or of any class of creditors or equity security holders,” the U.S. Trustee, the DOJ bankruptcy watchdog, said in its Aug. 16 objection to the hiring of Kirkland. Kirkland’s duty to the equity holders and creditors show it’s not a “disinterested” party under the law, the trustee said in the filing at the Delaware bankruptcy court.Kirkland disclosed it represents entities holding more than two-thirds of Philadelphia Energy’s equity, the U.S. Trustee said.The trustee also objected to the refinery operator’s selection of Alvarez & Marsal North America LLC as its restructuring advisors. It said that Alvarez shouldn’t be allowed an “evergreen” retainer—a deposit that’s replenished every time a firm draws against it for fees—because Alvarez already has a $1 million retainer and gets favorable payment terms from the bankruptcy court’s earlier orders. Philadelphia Energy July 21 filed its second Chapter 11 case in a less than a year, about a month after catastrophic explosions and fires forced the company to close its refineries in South Philadelphia.
Exclusive: Biofuels company proposes to buy fire-damaged Philadelphia refinery - (Reuters) - A biofuels producer said on Thursday it is proposing to acquire the fire-damaged Philadelphia Energy Solutions refinery and convert it to make renewable diesel and jet fuels. S.G. Preston Co is the first company to identify itself as a potential buyer of the refinery, the oldest and largest on the East Coast. PES’s owners halted production at the 335,000 barrel-per-day refinery and put the 1,300-acre (526-hectare) facility up for sale after a June fire damaged one of its gasoline-producing units. The biofuels company would convert at least a portion of the plant to make renewable diesel, marine diesel and jet fuel. Raw material for the fuels would be fats, oils and grease acquired mainly from surrounding communities, two people familiar with the meetings said. “We can use the existing equipment, labor and regional waste streams to show the rest of the country how to bring back our jobs and industries,” Randy LeTang, chief executive of Philadelphia-based S.G. Preston, said in a statement.
CNX Resources Lays Off 10% of Total Workforce – More Cuts Coming? - CNX Resources has just laid off (i.e. fired) roughly 50 employees company-wide, most of them at company headquarters in Canonsburg. But not all. We heard from an MDN trust source who said at least nine workers got their walking papers in West Virginia. Given the company employs about 500 people, 50 fired represents 10% of the workforce. Question is, will there be more firings?
Rice taking the reins at EQT - — EQT Energy is under new management, and new CEO Toby Rice talked a big game about the future of the company last week, seeking to restore the faith of the shareholders. Rice addressed close to 200 landowners from across Belmont County and the region during a town hall meeting at the Union Local High School commons Thursday evening. He described his route to taking control of EQT in July, the company’s future goals and practices in the area, and answered questions from the landowners. Rice said EQT would work on more solid business practices, heightening communication with landowners and producing results for the shareholders. Numerous attendees spoke about their past problems with EQT, including disorganization and lack of response. The attitude at the town hall was enthusiastic and welcoming of Rice’s leadership. Rice Energy was sold to EQT in 2017, and the Rice family — who founded the company in 2008 — and other shareholders were subsequently dissatisfied with EQT’s operations. He said EQT has a responsibility to provide heating energy for customers, new profits for shareholders, and fair treatment and consideration for the properties of landowners who have signed leases with the firm. He said EQT’s third quarter of 2018 was unsatisfactory. Rice expressed his frustration when working with EQT during this time, adding that advice and offers of assistance from the Rice Energy team was ignored. “Every instance that we offered to EQT was ignored, rejected and rebuffed, and we were left with no other choice but to go and speak with the shareholders and ask us to allow them to have majority control of the board,” he said. A vote placed seven Rice candidates on the board and Rice was named CEO in July. “The shareholders are supporting us. The board is supporting us.”
Electric fracking promises millions in savings, reduction in emissions - On the surface, the Richhill 13 well pad, nestled among the hills of Greene County near the West Virginia border, looks like any other of CNX Resources Corp’s drilling operations. The well bores have already been drilled deep underground, and CNX crews are moving to the next phase, fracking, which shoots water and sand into the well to permeate the rock beneath and stimulate the natural gas trapped down there to flow to the surface. But look a little closer and it’s apparent that this isn’t just any traditional well pad. Instead, it’s a pioneer among Marcellus Shale wells in the use of a new, more cost-efficient and environmentally friendly way to frac gas. Canonsburg-based CNX has signed a three-year contract to use Evolution Well Services’ all-electric frac fleet, which is used in the hydraulic fracturing process and includes a natural gas-fired engine to run the machinery and a turbine that pumps sand and water to bring gas up out of the ground. CNX is the first producer in the Appalachian basin to use an all-electric frac fleet, and the Richhill well is one of the first to use the new equipment. Traditionally, hydraulic fracturing is a complicated, energy and labor-intensive process, one that requires engines that have lots of horsepower, a multitude of pipes and constant attention by workers to make sure it’s going right. But walk around Richhill 13, or any of CNX’s other all-electric frac operations, and you’ll notice how quiet it is. That’s because instead of using diesel fuel and diesel engines to run the equipment, Evolution uses natural gas produced on site to fuel the jet engine-like turbines that power the fracking operation. Natural gas not only is plentifully available at the site, but it also removes from the roads the constant flow of diesel trucks to keep the 24/7 operation running.
How an Application for Propane Fracking Attempts to Circumvent New York's Fracking Ban – DeSmog - Four years after New York announced the state was banning hydraulic fracturing (fracking), Tioga Energy Partners, LLC hasfiled an application with the state to frack for natural gas, but there's a catch. The company is proposing to swap propane into the industry standard mix that usually calls for water.Environmental advocates consider this application to use liquefied petroleum gas (LPG), and specifically a propane gel, an attempt to circumvent New York's 2015 ban on fracking for fossil fuels.This idea was first proposed the same year the state banned high volume hydraulic fracturing. At the time, pro-fracking industry news site Marcellus Drilling News described it as “a brilliant move by the landowners in Tioga County.”But New York’s activist community, which led the years-long effort to secure the prohibition on fracking in the first place, doesn’t agree, according to Yvonne Taylor of the nonprofit Seneca Lake Guardian.“New York is a front runner in the charge to wean ourselves off of fossil fuels while we stare down a Global Climate Emergency,” Taylor told DeSmog via email. “Governor Cuomo's Climate Leadership and Community Protection Act (CLCPA) was recently signed into law and is designed to transition New York off of fossil fuels in the next 30 years. Approval of using propane to extract fracked gas flies in the face of this initiative, and must be flatly denied.”A broad coalition of groups is opposing the potential propane fracking project. Sixteen organizations, including Earthjustice, Catskill Mountainkeeper, Riverkeeper, and the Sierra Club, signed an August 2 letter voicing concerns over the proposal to the New York State Department of Environmental Conservation (DEC). The letterdescribes the risks of LPGfracking, such as “…groundwater contamination, radioactive wastes, dangers in transport of LPG, harmful air emissions, and direct and indirect impacts upon public health.”
Wolf tells pipeline activists he won’t shut down Mariner East - Gov. Tom Wolf told anti-pipeline activists on Thursday that he is not going to stop construction or operation of Sunoco’s Mariner East pipelines. At a rare face-to-face meeting with opponents at a pipeline construction site in East Goshen Township, Chester County, Wolf was repeatedly urged to shut down the pipeline until public safety can be assured. But he disappointed activists by stating clearly that he would not do so. Eve Miari, an organizer of the event, said Wolf’s statement was the first time he had gone on the record saying clearly that he would not shut down the line because of safety concerns. Wolf’s appearance a few yards from backhoes and other construction vehicles on the pipeline right-of-way was seen by activists as a rare opportunity to state their case that the natural gas liquids pipelines represent a grave risk to public safety in their densely populated suburb. Six people who live near the cross-state pipeline, plus a supervisor for East Goshen Township, took turns pressing that case to Wolf. Ginny Kerslake, a resident of West Whiteland Township, said residents really wanted to show Wolf specific places where she said pipeline construction and operation threatens their water quality and physical safety, but instead only had the opportunity for an impromptu meeting in a supermarket parking lot next to the construction site.
Sixth man admits role in altering emission control devices on trucks used in Marcellus Shale gas fields -– An inventory and logistics analyst has become the sixth individual to admit participating in a scheme to tamper with emission control devices on heavy duty diesel trucks used in the Marcellus Shale natural gas fields. Brian Mellott, 46, of Cumberland, Maryland, pleaded guilty Wednesday in U.S. Middle District Court to a charge of conspiracy to defraud the United States by obstructing a lawful function of government and violations of the Clean Air Act. It is the same charge to which the other five pleaded guilty and admitted between August 2013 and March 2016 they altered the devices on more than 30 heavy duty trucks to reduce repair costs and maintenance down time. Mellott’s involvement included ordering equipment that when installed fooled control devices into believing emission systems were operating correctly. He also admitted falsifying invoices by listing the “defeat” devices as exhaust systems. Mellott worked in Lycoming County at the Linden facility of Rockwell Northeast, a subsidiary of Rockwater Energy Solutions Inc. of Houston, Texas. Rockwater provides transportation of water and wastewater to and from natural gas wells. The scheme to which all six admitted participating involved:
- Replacing hardware control devices with exhaust tubing or “straight pipes” that do not limit emissions.
- Removing the hardware control devices from their compartments and then re-welding the entry point to create a false appearance they remained installed.
Natural Gas Prices Overcome All Bearish Obstacles To Close Higher - It's not how you start, but how you finish. That's today's motto for the natural gas market, which looked poised to close potentially several cents lower on the day in early trading. The September contract was down more than six cents at one point before staging a major comeback and ending the day a penny higher than Friday's close. The initial downward push came as the result of bearish forces on both the supply and demand sides of the equation. First, we saw new all-time record highs over the weekend in natural gas production. On the demand side, the weather forecast shifted cooler, resulting in fewer Gas-Weighted Degree Days (GWDDs), or in simpler terms, less natural gas demand compared to Friday's forecast. Basic economics says when you have more supply and less demand, price should fall, and that's what happened in the early morning hours. But notice in the above graphic, despite the cooler change (fewer GWDDs), the 15 day GWDD total is still well above normal, some 12.5 GWDDs above normal to be exact. Furthermore, when looking at the daily GWDDs in chart form, we see that tomorrow is the hottest (highest GWDD total) of the entire forecast period. The high near-term heat led to strong Henry Hub cash prices, which at one point traded as much as 6-7 cents over prompt month, and rallied as the session wore on, taking prompt month prices close to unchanged on the day after the early morning lows. A second boost came about an hour before the market's close, as it was reported that exports to Mexico may increase as early as next week due to the Sur de Texas pipeline finally coming into service, finding a home for a little of the excess supply, as pushing prompt month prices over the top to finish green on the day. This continues the trend we have seen in recent weeks where there has been an abundance of intraday volatility even on days that wind up with a very small daily move, creating opportunities for the active trader to cash in on moves in both directions.
US natural gas in underground storage increases by 59 Bcf - US natural gas in storage added 59 Bcf last week, just below a survey of analysts expecting a 61 Bcf build, while NYMEX Henry Hub futures remained nearly static following the announcement. US natural gas in storage increased to 2.79 Tcf for the week ended August 16, the US Energy Information Administration reported Thursday morning. The injection was slightly less than an S&P Global Platts' survey of analysts calling for a 61 Bcf injection. Survey responses ranged from 54 to 65 Bcf. The build was more than the 47 Bcf build reported during the corresponding week in 2018, as well as the five-year average injection of 51 Bcf, according to EIA data. As a result, stocks were 369 Bcf, or 15.2%, more than the year-ago level of 2.428 Tcf and 103 Bcf, or 3.6%, less than the five-year average of 2.9 Tcf.The NYMEX Henry Hub September contract fell 1 cent to $2.16/MMBtu following the announcement. The October contract also fell 1.3 cent to $2.16/MMBtu as well. Both the summer and winter contract strips are seemingly stuck in a slump, with a roughly 10 cent mid-August bump leading to prices transacting now at early August levels. The EIA's Midwest region registered the largest net injection, adding 31 Bcf to 760 Bcf. It is currently the only region trending above its five-year average of 753 Bcf. The only region to post a withdrawal for the week was the South Central, which subtracted 4 Bcf to 935. This was due to a 9 Bcf drawdown in the salt-dome facilities. Unlike most storage facilities, which are typically installed in depleted oil fields, the salt domes allow for quickly switching from injections to withdrawals. The South Central salt domes currently hold 205 Bcf, which is 19% below the five-year average. US Onshore production continued to set new record highs, gaining 0.3 Bcf/d from the Northeast and Southeast week over week, averaging 87.3 Bcf/d for the reference week, according to S&P Global Platts Analytics. Warmer temperatures across the Lower 48 softened estimated power burn demand by about 6 Bcf, which was partially offset by a corresponding 2 Bcf gain in residential and commercial demand. While weekly injections continue to run above average the Mexican government and pipeline operators have reportedly reached an agreement this week that will provide some much-needed southbound export capacity for the oversupplied US gas market and support gas prices through September, according to Platts Analytics.
A Look Back At This Week In The World Of Natural Gas -- Natural gas prices wound up moving lower this week, closing about a nickel under last Friday's close, though we did see some of our usual volatility, as prices tested the 2.25 level in the September contract earlier in the week before sellers stepped in. The contract finished the week just over the 2.15 level. natural gas commodity weather As usual, there were multiple forces at work. On the bearish side of the spectrum, we saw new all-time highs hit in natural gas production this week. We also saw cooler weather forecast changes for the final third of August into the first few days of September, with blue colors making a return to our forecast maps. natural gas commodity weather On the bullish side, LNG returned to much higher levels this week, with maintenance on LNG facilities coming to a completion. natural gas commodity weather We also heard earlier in the week that exports to Mexico could increase as early as next week, as the Sur de Texas pipeline begins service. Yesterday's EIA report came and went, and was mostly neutral, with the reported build coming in at 59 bcf for the week ending 8/16, almost dead-on our estimate of 58 bcf. In our view, that was not a complete rejection of the bullish EIA report last week, but was a little looser week over week, and still loose when looking at the same gas week in previous years. natural gas commodity weather Of course, a lot of the "looseness" was still due to low LNG intake for the week, which brings us to the question, what do we see next in the world of natural gas? The return of LNG should help supply / demand balances tighten from here, but does production continue to make new highs to negate some of that impact? On the weather side, yes, it is September, so it is more difficult for weather to move the needle as much, but we are seeing some turning back upward in the forecast demand charts at the end of the 15 day period. natural gas commodity weather Does the weather now begin to turn back in the more supportive direction after the Labor Day holiday weekend? We will casually mention that seasonality often begins to favor the bulls after Labor Day as well, although this is of course not something that guarantees a similar result this year. Our products can help you sort through all of these potential market-moving issues to give an idea how price action will behave next. Sign up for a 10-day free trial here to take a look at what we have to offer, and what our research suggests in terms of anticipating natural gas' next move.
Pipeline opponents arrested after locking themselves to construction equipment - Two opponents of the Mountain Valley Pipeline were arrested Thursday, after they attached themselves to construction equipment in Franklin County. Pipeline opponents arrived at the work site along Wades Gap Road around 7 a.m., and two of them attached themselves to two pieces of equipment. The Franklin County Sheriff's Office responded, and called in the Virginia State Police to help remove the devices protesters used to secure themselves to the equipment. "Nobody's been unruly. Everybody's been talkative, been able to communicate," said Major Mike Bowman, with the Franklin County Sheriff's Office, "but they told us they had nothing really to say to us until things were finished and complete." As officers worked to free one of the protestors, tarps blocked the view of cameras. But reporters could see what was happening with the second protester, as police cut away the restraint and took the person into custody.
Why the Mountain Valley Pipeline is uniquely risky - On Aug. 8, Mountain Valley Pipeline requested “emergency authorization” from the Federal Energy Regulatory Commission to repair an eight-acre landslide that “has progressed to the point where a residence directly downslope is unsafe to be occupied.” Unfortunately, events like this are almost expected; MVP chose to route, and FERC chose to approve, this titanic 42-inch diameter, 303-mile pipeline across several hundred of miles of “high landslide potential” areas. While MVP is not the first pipeline to cross unstable terrain, nor the first pipeline to be located in landslide-prone Appalachia, is MVP actually any different from previously built pipelines? The answer is an unequivocal “yes.” In fact, it appears MVP has the notoriety of crossing more miles of high-risk terrain than any other major natural gas transmission pipeline in the past two decades. And perhaps ever. Since 1997, FERC has approved no fewer than 46 new natural gas mega-pipelines, defined here as pipelines that are at least 24 inches in diameter, more than 100 miles long, and not installed along pre-existing utility corridors. A review of the landslide hazard information contained in the environmental impact statements (EIS) for this set of pipelines reveals 22 of them – almost half – do not traverse any high landslide risk areas at all. The remaining 24 pipelines cross anywhere from 0.2 to more than 200 miles of high risk terrain.Out of all these mega-pipeline projects, MVP finds itself infamously at the top of the list, having routed 225 miles of the pipeline – 74 percent of its total length – across high landslide risk terrain. Just behind MVP, the 42-inch Rover Pipeline crosses 224 miles of high landslide risk areas. Yet it is a much longer pipeline; these high risk areas account for 44% of its 510-mile length. The Rover Pipeline is notoriously one of the most environmentally destructive pipelines in recent history. Last year, the pipeline was fined $430,000 for a litany of water quality violations in West Virginia due to failed sediment and erosion control devices.
Oil Companies Persuade States to Make Pipeline Protests a Felony - After protesters disrupted construction of an oil pipeline in North Dakota by chaining themselves to construction equipment and pitching tents along the route, oil and chemical companies found a way to keep it from happening again.They made it a crime.The companies, including Koch Industries Inc., Marathon Petroleum Corp.and Energy Transfer Partners LP -- whose Dakota Access project in North Dakota was targeted three years ago -- lobbied state legislatures to effectively outlaw demonstrations near pipelines, chemical plants and other infrastructure. Nine states have gone along so far, in some cases classifying the activities as felonies. More are considering measures.The lobbying campaign, documented in state disclosures and other records reviewed by Bloomberg News, has raised concerns about corporate influence muzzling free speech. “Oil refiners, especially Koch Industries and Marathon Petroleum, orchestrated this unholy alliance of oil, gas, chemical, and electric utility companies to crush resistance to polluting industries,” said Connor Gibson, an investigator with Greenpeace who has tracked the efforts. Industry representatives portray their efforts as a necessary counter to the increasingly aggressive tactics of activists, which include videotaping confrontations with police for posting on social media. Bills criminalizing trespassing near oil pipelines, gas processing equipment and other designated “critical infrastructure” passed this year in Indiana, North Dakota, South Dakota, Tennessee and Texas -- building on similar measures previously enacted in Oklahoma and other states. Supporters are now pushing to create infrastructure protest laws in Illinois, Ohio and Pennsylvania.Their template is model legislation endorsed by the American Legislative Exchange Council, the conservative group backed by the Charles Koch Institute, which encourages state lawmakers to advance ready-made bills on topics ranging from gun rights to tort reform.
Oil Lobbyist Touts Success of Criminalizing Pipeline Protests – The American Fuel & Petrochemical Manufacturers, a powerful lobbying group that represents major chemical plants and oil refineries, including Valero Energy, Koch Industries, Chevron, ExxonMobil, and Marathon Petroleum, has flexed its muscle over environmental and energy policy for decades. Despite its reach, AFPM channels dark money and influence with little scrutiny. The group is now leveraging its political power to criminalize protests of oil and gas infrastructure. In an audio recording obtained by The Intercept, the group concedes that it has been playing a role behind the scenes in crafting laws recently passed in states across the country to criminalize oil and gas pipeline protests, in response to protests over the Dakota Access pipeline. The laws make it a crime to trespass on public land used for “critical infrastructure,” impose a fine or prison time for violators, and hold protesters responsible for damage incurred during the protest. Many of the laws also carry heavy fines to groups and individuals who support such demonstrations. The trade group, which was founded in 1902, has long played an outsized role in shaping policy disputes. Last year, AFPM and its members mobilized over $30 million to defeat the carbon tax proposed in Washington State, easily outspending an environmentalist campaign funded by philanthropist billionaires and small donors. In June, Derrick Morgan, a senior vice president for federal and regulatory affairs at AFPM, spoke at the Energy & Mineral Law Foundation conference in Washington, D.C., explaining the role his trade group has played in criminalizing protests. AFPM did not respond to a request for comment.
2 pipelines damaged in Lincoln County explosion could be up and running by end of August - Texas Eastern plans to have two pipelines that were damaged in the explosion earlier this month in Lincoln County up and running by the beginning of next month. The company said, depending on when it gets regulatory approval, one of its lines could be back in service by this weekend. Construction on the other line could wrap up by the end of the month or the beginning of September. On Aug. 1, a gas pipeline exploded, killing 58-year-old Lisa Derringer and hurting five others. The explosion and fire shook homes, destroyed buildings and scorched the ground over hundreds of feet, burning cars out and turning yards black. The fire from that blast burned a roughly quarter-mile area, consuming trees and vegetation. A man living near the site had third-degree burns over 75 percent of his body, according to a federal report.
KY Regulators Want Proof Of Bernheim's Standing In Pipeline Complaint - Kentucky utility regulators want more information to decide whether Bernheim Arboretum and Research Forest has legal standing to file a complaint over a natural gas pipeline in northern Bullitt County. Bernheim filed a complaint with utility regulators in early August alleging Louisville Gas and Electric bypassed the typical process for a new natural gas pipeline and hid information from the public. Then the Kentucky Attorney General’s Office jumped into the fray last week asking to intervene and expand the scope of the case. The order issued Tuesday says the Kentucky Public Service Commission can’t make a decision to move forward with the case until it learns more about Bernheim’s legal status. Much of the order revolves around questions about Bernheim’s property rights (or lack thereof) at the time the pipeline project was approved, said Andrew Melnykovych, Public Service Commission spokesman. LG&E first mentioned the need for another 12-mile-long gas pipeline buried inside hundreds of pages of testimony in a 2016 rate case. The line would cut about three-quarters of a mile through Bernheim’s property, mostly along an existing electric transmission line. Ordinarily, utilities apply to the Kentucky Public Service Commission for a certificate that a new project is safe, reliable and necessary. LG&E said it didn’t need it. The commission said it did, but didn’t make them apply and instead approved one based on information supplied in the rate case. Bernheim’s complaint argues if the utility had filed an application, it could have given the public additional information about the proposed pipeline.
In North Carolina, novel legal maneuver deployed against Atlantic Coast Pipeline - With the Atlantic Coast Pipeline mired in federal lawsuits and its construction stalled indefinitely, North Carolina environmental advocates are attempting a novel legal maneuver to stop the gas project from ever coming to the Tar Heel State. Friends of the Earth and the North Carolina Climate Solutions Coalition have filed a petition with the administration of Democratic Gov. Roy Cooper, asking officials to revoke a key water quality certificate they issued for the pipeline early last year. The filing rests on a little-known administrative rule that allows state officials to cancel the certificate if the conditions around its approval change, or if the information justifying it turns out to be wrong. Petitioners say a revocation is warranted because — among other reasons — developers vastly understated the project’s environmental footprint, especially at its proposed terminus in Robeson County. A request like this hasn’t been made recently, if ever, and no one knows quite how it will proceed. At a minimum, it will reignite debate over the pipeline’s impacts in Robeson, one of the poorest and most racially diverse counties in the country. At its most successful, the petition could kill the project altogether. Designed to transport gas from Marcellus shale fields through West Virginia to Virginia and North Carolina, the 600-mile Atlantic Coast Pipeline once seemed inevitable. It was backed by utility heavyweights Duke Energy and Dominion Energy, who promised a $4.5 billion investment and hundreds of jobs. It was blessed by a string of politicians from governors to county commissioners, many praising fossil gas as a clean alternative to coal to environmentalists’ dismay. But today, the pipeline looks iffy, at least in its current iteration. Lawsuits have halted construction since December, with appeals likely to drag on into next year. Duke and Dominion predict they’ll ultimately prevail in court but haveacknowledged they need a “Plan B” if they lose. Costs have ballooned to $7.8 billion, and some hard-nosed investors doubt the project will ever be built. Environmental advocates claim the pipeline isn’t necessary to meet the region’s energy demands and have sued to overturn the permission slip from the Federal Energy Regulatory Commission, or FERC. The panel’s approval underpins a complex web of other permits from federal and state agencies. The FERC case is yet to be heard, and so far, pipeline foes’ most successful legal arguments have centered in the Virginias, where the project’s 100-foot wide construction berth would cross the Blue Ridge Parkway, the Appalachian Trail and two national forests.
Federal court order blocks pipeline near Hancock — A federal judge Wednesday upheld Maryland’s denial of an easement for a proposed natural-gas pipeline west of Hancock. “We are pleased that the court has agreed that a private pipeline company cannot force the state to accept a pipeline under the Western Maryland Rail Trail,” Maryland Attorney General Brian Frosh said in a written statement. “We will continue to defend Maryland’s right to control its public lands against any other efforts by the natural gas industry to move forward with this project.” The decision Wednesday came from a judge in the U.S. District Court in Baltimore. Columbia Gas Transmission, a subsidiary of TC Energy, has proposed running the pipeline from existing facilities in Pennsylvania to a new Mountaineer Gas Co. pipeline in West Virginia. Proponents have said the new pipeline is critical to economic development in West Virginia’s Eastern Panhandle. “We will be evaluating our options in response to today’s decision,” Tim Wright, a spokesman for TC Energy, wrote in an email Wednesday. “We are committed to moving forward with this project to ensure that we can safely and reliably deliver a vital energy source to help power a region’s homes, businesses and economy.” Opponents have said the pipeline, which would burrow more than 100 feet under the Potomac River, would threaten the environment and drinking water while bringing little benefit to the state. “Really, why do we need this pipeline if it doesn’t benefit Maryland?” Brent Walls of the Potomac Riverkeeper Network said in an interview Wednesday.
U.S. oil firms challenge pipeline surcharge for steel tariff - (Reuters) - Two U.S. shale producers have challenged an energy pipeline operator’s proposed surcharge for the Trump administration’s 25% tariff on imported steel, raising the stakes for pipeline builders facing higher construction costs. The United States imposed tariffs on imported steel and aluminum last year to shield U.S. producers from overseas competition. U.S. energy industry trade groups have warned the tariffs could raise costs for companies and consumers. U.S. oil producer ConocoPhillips and a unit of Canadian producer Encana Corp on Monday asked the Federal Energy Regulatory Commission to reject Plains All American Pipeline’s (PAA.N) proposed tariff surcharge on its Cactus II oil pipeline, according to a regulatory filing. Houston-based Plains this month proposed charging shippers a 5 cents per barrel fee on its 670,000 barrel-per-day (bpd) Cactus II pipeline next April to offset higher construction costs due to the steel tariffs. “We feel the tariff filing should be denied because it is procedurally incorrect, (and) does not clearly describe or justify the surcharge,” ConocoPhillips spokesman Daren Beaudo said in an email. Encana and Plains did not respond to requests for comment. In their filing, ConocoPhillips and Encana said Plains’ surcharge was premature because the U.S. Commerce Department may still grant the pipeline operator an exemption before the fee goes into effect in April. The companies said surcharges “are generally disfavored” by FERC.
Three counties pass same Line 5 resolution GT commissioners propose -- A resolution supporting Enbridge Energy’s proposed tunnel under the Straits of Mackinac will appear before the Grand Traverse County Commissioners Wednesday morning, and it’s almost identical to what three Upper Peninsula counties already passed.The tunnel through bedrock would replace the Line 5 twin oil pipelines that currently sit on the lakebed. Dickinson County passed the resolution on June 24. Iron and Gogebic counties adopted nearly identical versions last week. Dickinson County Commissioner Barbara Kramer said her board drafted a resolution after Enbridge appeared at the spring meeting of the Upper Peninsula Association of County Commissioners."They're anxious to promote this, and we're anxious to support it,” she said. “It's hands down just the best way to go."She added that Enbridge did not suggest specific language for the resolution. She thinks Enbridge has been forthcoming and sees a tunnel as a more environmentally protective option.Joe Bonovetz, a commissioner for Gogebic County, said it’s common to share resolutions between different U.P. counties. “It was a resolution that we received from Dickinson County,” Bonovitz said. “They had passed it prior to us.”Enbridge spokesperson Ryan Duffy said the support reflects the company’s engagement efforts. “We've had several open houses, we're talking to people, we're talking to elected officials and answering questions, and we're seeing a lot of support for the tunnel project,” he said. “I think that's what you're seeing here."
Equinor Completes $1B Gulf of Mexico Deal - Equinor revealed Monday that it has completed its $965 million deal with Shell Offshore Inc to acquire an additional 22.45 percent interest in the U.S. Gulf of Mexico (GOM) Caesar Tonga oil field. Equinor’s interest in Caesar Tonga, which is situated 180 miles south-southwest of New Orleans in the Green Canyon area, has now jumped from 23.55 percent to 46 percent. Anadarko Petroleum Corporation is the operator with a 33.75 percent interest and Chevron holds a 20.25 percent stake. Equinor first announced the deal in May, labeling the field as an asset the company understood well in a company statement at the time."Deepwater Gulf of Mexico forms an important part of Equinor’s portfolio,” Christopher Golden, Equinor’s senior vice president for International and North America offshore development and production, said back in May.“This deal will strengthen our position in this prolific basin and build on the recent discovery in the Blacktip well,” he added.Shell Offshore Inc. announced a “significant” discovery at the Blacktip prospect in the deepwater U.S. GOM in April. Equinor holds a 19.1 percent working interest in the block. Equinor has been present in the U.S. GOM since 2005. The company also has U.S. onshore operations in the Eagle Ford, Bakken and Appalachian basins.
BHP Delivers Largest Bid in US Gulf of Mexico Lease Sale -A U.S. Gulf of Mexico lease sale held Wednesday morning yielded almost $159.4 million in high bids for 151 tracts, the U.S. Department of the Interior’s Bureau of Ocean Energy Management (BOEM) reported.Lease Sale 253, which was livestreamed from New Orleans, saw BHP deliver the largest bid of $22.5 million for the Green Canyon 124 block.The top five companies based on the sum of their high bids are:
- BHP | 20 high bids | $41.8 million
- Anadarko Petroleum | 14 high bids | $23.4 million
- Chevron Corp. | 17 high bids | $22.6 million
- Equinor ASA | 23 high bids | $16.8 million
- BP, plc | 21 high bids | $14.7 million
“We are excited about the results from today’s lease sale, which show a continued upward trend for the year,” said Andrea Travnicek, the Interior’s deputy assistant secretary for land and minerals management. “The total from today’s lease sale and the March sale is the highest since 2015 for high bids.”Aside from BHP’s highest bid, Chevron and Royal Dutch Shell plc submitted the next highest bids at $6.7 million and $5.6 million, respectively.The National Ocean Industries Association (NOIA) issued the following statement regarding what they referred to as “modest results” of the lease sale.The results “reflect the cautiously optimistic attitude of an offshore industry still in recovery. While companies have improved the efficiency of their operations and rig rates and supply chain prices are more competitive, oil prices remain flat. Bidding activity today may reflect the slower than desired improvement in prices. There is also uncertainty surrounding pending regulatory actions such as financial assurance and fair market valuation.” The NOIA noted that deepwater and ultra-deepwater tracts drew high interest in this sale and shallow water tracts also proved to be attractive.
Gulf of Mexico oil, gas lease bidding down from last 2 sales (AP) — Oil and gas companies made $159.4 million in high bids Wednesday for federal leases in the Gulf of Mexico, down from sales in March and a year ago.The Bureau of Ocean Energy Management says 29 companies bid on 144 tracts. That’s about 1% of the tracts offered.The March sale drew $244.3 million in high bids on 227 tracts, and the one in August 2018 brought $178.1 million in bids on 144 tracts.A news release said this year’s total high bids are the highest since 2015.Agency statistics indicate totals of $419.2 million this year and $561.5 million in 2015. Totals were $174.5 million in 2016, $395.9 million in 2017 and $302.8 million last year.
LOUISIANA: Coast Guard says it burned oil spill outside New Orleans -- The Coast Guard said it has burned off oil that spilled last week in a marsh about 42 miles south-southeast of New Orleans.
‘They do not need Louisiana’s permission’: Pipeline companies seize land rights with eminent domain - In the patchwork of rice fields and pastures spreading across southwest Louisiana is a parcel Jay Lewis’ family has called their own for longer than anyone can remember. “It’s been with us since our great, great grandfather, maybe longer,” said Lewis, 50, as he trudged through a soggy pasture on a cold January day in Jefferson Davis Parish, which is about 10 miles from Lake Charles. “Every day, I’ve been here. I’m a piece of this.” “If you don’t have land, you don’t have nothing.” Last year, he was shocked to learn that a Houston, Texas oil company had Louisiana’s blessing to take some of his family’s land and run a pipeline through it. Energy Transfer Partners was claiming eminent domain, a power used by governments to seize private property for public benefit, wherever it met resistance along the route of its 163-mile-long Bayou Bridge Pipeline. The expedited project, which was completed in March, serves as the last link in a pipeline network connecting North Dakota’s Bakken oil fields with ports and refineries in Louisiana and Texas. Louisiana isn’t the only place where energy companies use eminent domain to take property for oil and gas infrastructure. Several states — most of them in the South — have long granted oil and gas companies this right, a process also known as expropriation. Seizures used to happen infrequently and quietly, typically in rural or impoverished areas where political support for the oil industry is strong. Now, pipeline companies are asserting eminent domain rights more boldly as they try to keep pace with the recent boom in domestic oil and gas production. Construction is expected to speed up as President Donald Trump removes barriers to new pipelines and streamlines review processes. As a result, more landowners in Louisiana and across the South could lose property rights with little compensation.
LOOP stepping up domestic oil exports The Louisiana Offshore Oil Port is located about 18 miles off the coast of Port Fourchon in the Gulf of Mexico.The 40-year-old deep water facility is designed for unloading crude oil cargo from deep-draft tankers.The United States lifted its ban on oil exports in December 2015. Since then LOOP has gone from taking in imports to pushing out exports. LOOP President Terry Coleman said the terminal is now exporting about 150,000 barrels of oil per day.
BHGE Wins Louisiana LNG Project - Baker Hughes, a GE company (BHGE) reported Tuesday that it has won a contract and has been granted a notice to proceed on Venture Global LNG’s Calcasieu Pass Project in southwestern Louisiana. Earlier Tuesday, Venture Global noted that it had reached a favorable final investment decision and closed project financing for the Calcasieu Pass LNG facility and the associated TransCameron pipeline. BHGE will supply the LNG liquefaction train system (LTS), power island system and field support services under the contract, the company noted in a written statement emailed to Rigzone. The Calcasieu Pass LTS will comprise 18 modularized compression trains across nine blocks and boast a total nameplate capacity of 10 million tonnes per annum (mtpa), according to the contract recipient. Also, BHGE explained that the modularized system speeds installation and reduces construction and operational costs. The firm added the modules will be manufactured, assembled, tested and transported from BHGE plants in Italy. “By providing innovative LNG technology solutions to projects such as Calcasieu Pass, BHGE is continuing to help unlock the potential of natural gas,” Rod Christie, president and CEO of BHGE’s Turbomachinery and Process Solutions unit, said on his company’s behalf. BHGE stated that it expects equipment deliveries to begin in the second half of 2020, adding that it will provide associated field support services to assist in the oversight, installation and commissioning of the supplied equipment. Moreover, the firm noted the Calcasieu Pass contracts are the first such deals awarded under a master equipment supply agreement through which it will provide 60 mtpa of standardized LNG production at Venture Global’s Calcasieu Pass and Plaquemines LNG projects. Shortly after clearing a crucial federal regulatory milestone, Venture Global began full-site construction of Calcasieu Pass in February of this year. In Tuesday’s announcement, the firm noted that proceeds from the newly secured $7.1 billion – a combination of $1.3 billion in equity investment and $5.8 billion in debt – will fully fund the balance of construction and commissioning for the export facility.
Cameron LNG begins commercial operations - - The first production unit at the Cameron LNG export terminal in Louisiana has started commercial operations. In a Monday afternoon statement, San Diego utility company Sempra Energy reported that Train 1 at its Cameron LNG facility is officially exporting liquefied natural gas on a commercial basis. "We are proud that Cameron LNG has realized this key milestone with an excellent safety record and zero lost-time incidents," Sempra executive Lisa Glatch said in a statement. "We remain focused on safely achieving commercial operations of Train 2 and Train 3."Federal regulators have given crews until September 2020 to complete the second and third production units at the Louisiana facility.Once all three are in operation, Cameron LNG will be able to make nearly 12 million metric tons of liquefied natural gas per year. Those production figures translate roughly to about 1.7 billion cubic feet of natural gas per day, enough energy to power 8.5 million U.S. homes for a day.
Freeport LNG produces first batch of liquefied natural gas - Freeport LNG is on track to become the second liquefied natural gas export terminal in Texas after the facility produced its first batch of the supercooled fuel. In an Monday afternoon statement, McDermott International, Chiyoda International Corporation and Zachry Group reported that an LNG production unit named Train 1 has produced its first liquid. While the plant remains in uts startup phases, first liquid is considered a significant project milestone and a precursor to the facility's first export cargo, which is expected later this month. "When a facility starts producing a product, it is always a notable achievement, especially for large-scale projects, such as Freeport LNG," McDermott Senior Vice President for North, Central and South America Mark Coscio said in a statement. Train 1 was originally supposed to be in production by the fourth quarter of 2018. Facing months of construction delays, Freeport LNG asked federal regulators to postpone the startup until Sept. 2019. The startup for Train 2 have been postponed until Jan. 2020 while the startup for Train 3 has been postponed until May 2020.
Permian Highway Pipeline beginning construction - Preliminary construction for the Permian Highway Pipeline kicked off Wednesday near Pecos, an approximately 430-mile-long natural gas pipeline expected to provide additional takeaway capacity to the region. The pipeline, being built by Kinder Morgan Texas Pipeline, will run from the Pecos area to the Katy area, near Houston, transporting natural gas from the Permian Basin to various markets across Texas, as the pipeline cuts right through the hill country of Texas south of Austin. “It’s a significant capacity takeaway for much needed natural gas transportation,” Allen Fore, Kinder Morgan vice president, public affairs said. “In crude extraction, natural gas is a byproduct, and if you don’t have a place to put it, the producers flare it.” Initial construction activity is starting in the Pecos area before initial construction activity begins across the rest of the project, Fore said. They are currently doing survey staking, which Fore said is identifying a center line to construct the pipe, and that the actual earth-moving activity of installing the pipe underground would begin next month. “The key part of it really is [natural gas] is going to have a place for it to go to,” Fore said. “If you don’t have a transportation mechanism it can potentially be flared away.” Flaring is an environmental concern for many, and Fore said the installation of this pipeline would reduce the activity in the Permian Basin, while also providing more natural gas for power generation in Texas. “If natural gas is the predominant source of fuel for power generation, that’s better than most of the alternatives, which are less clean burning,” Fore said. Natural gas isn’t as clean as, say, solar power, but the U.S. Energy Information Administration reports burning natural gas for energy results in less emissions of nearly all types of air pollutants and carbon dioxide than burning coal or petroleum products.
19-year-old urges gas pipeline safety after surviving explosion - - A 19-year-old is recovering after surviving an accident involving a gas pipeline in Fort Bend County. On Aug. 16, Jacob Kowalik says a gas pipeline exploded right next to him while he was working for the Fort Bend County Drainage District. "It was just a normal day," Kowalik said. He told ABC13 that he was in a slow mowing tractor when his coworker, who was about 20 yards ahead of him in a 15-foot shredder, unknowingly hit a gas pipeline and it exploded. "There was no signage telling me there was a pipeline there," Kowalik said. Initially, Kowalik said he did not know what was happening. He said he thought his mower was having some kind of equipment issues. "I got off my tractor and the gasses pushed me to the ground and threw me like a rag doll," Kowalik said. "I was thrown probably 10 yards in the bottom of the creek bed behind my tractor." The pressure from the pipe was tremendous, and the force sent rocks and other debris shooting into the teen's back. A picture of his injuries shows several red bumps. The force was so strong the teen told ABC13 that he lost his shoes, phone and hat. The Texas Railroad Commission sets the safety guideline for pipelines in Texas and confirmed to ABC13 that the department is looking into the incident:
US Oil, Gas Rig Count Plummets by 19 - The U.S. dropped 16 oil rigs and three gas rigs for a net loss of 19 rigs, according to BHGE.The U.S. dropped 16 oil rigs and three gas rigs for a net loss of 19 rigs, according to weekly data from Baker Hughes, a GE Company.This is in sharp contrast to last week’s gain of six oil rigs. This brings the total number of the nation’s active rigs to 916, down 128 from the count of 1,044 a year ago. The following states lost rigs:
- Pennsylvania (-6)
- Colorado (-4)
- Texas (-4)
- Oklahoma (-3)
- Alaska (-2)
- New Mexico (-2)
- Louisiana (-1)
West Virginia and Kansas were the only states to add rigs this week at three and one, respectively. Among the major basins, the Permian led this week with a loss of seven rigs. Despite the loss, the Permian still has 434 active rigs, which account for almost half of the nation’s active rigs. Additional losses include:
- DJ-Niobrara (-5)
- Marcellus (-3)
- Ardmore Woodford (-1)
- Cana Woodford (-1)
The Mississippian added one rig this week.
US rig count slips below 1000 for first time since May 2017 - — The US oil and gas rig count slipped below 1,000 for the first time in nearly 28 months as industry awaits signs that could point the way out of a sluggish, uncertain market, weekly figures from RigData supplied by Enverus, formerly called DrillingInfo, showed Thursday. For the week ended Wednesday, the total rig count stood at 998, down 9 on the week, with two-thirds of the decrease from rigs chasing natural gas. This is the first time the total rig count has been below 1,000 since the first week of May 2017. The gas rig count stood at 199, down 6 on the week - the first time gas rigs have numbered less than 200 since the last week of April 2017. The other third of rigs that left the field were oil-weighted, down by 3 to 793 - the lowest oil rig count also since early May 2017. Both Brent and WTI have been in a range of respectively at or just below $60/b and in the mid-$50s/b for about the last month. NYMEX WTI crude oil 12 months out is $52.46/b, while ICE Brent 12 months forward is $57.33/b. These are 7% and 4% respectively below current trading prices. For the week ended Wednesday, the largest movement versus the previous week came from the Permian, where rigs were up 4 to 434. Other than that, rigs in the other seven of the eight named US basins in the Enverus count went up or down a rig or two, except for the Williston Basin in North Dakota and South Dakota which stayed the same at 57.Gaining one rig during the week were the Denver-Julesburg Basin in Colorado, up to 29, and the Marcellus Basin, mostly in Pennsylvania, up to 49. Basins with rig losses included the Eagle Ford Shale of South Texas, down two this week to 76. Three other named basins lost one rig each - the Haynesville Shale in East Texas and Northwest Louisiana, down to 52; the SCOOP-STACK play in Oklahoma, down to 70; and the Utica Shale largely in Ohio, down to 15.In addition, permits were down substantially this past week by 377 to a total of 667. That is nearly triple the amount they were down last week -- by 124.Biggest losses in permits came from the D-J Basin, down by 156 to 88 on the week, while the Permian permits were down 46 to 124 and the Dry Marcellus, largley in Pennsylvania, down by 28 permits from last week to 28 this week. Other named basins were down or up less than 10 permits week on week.
Texas well completions drop 12% through July - (Reuters) - The number of oil and gas wells in Texas readied for production fell nearly 12% in the first seven months of 2019 compared with the same time last, according to data from the state energy regulator, as activity dropped on concerns of slowing demand and oversupply.Producers completed 5,749 wells in Texas from January to July versus 6,514 in the same period last year, the Railroad Commission of Texas said on Friday. Completion means the wells are ready to start producing.Permits to drill new wells in the largest U.S. oil-producing state also declined this year, falling by about 14% to 7,166 in the first seven months of the year from 8,330 last year.The declines have hurt companies that provide hydraulic fracturing and other services to energy producers. Many pressure pumping firms raced to build or acquire new equipment in recent years on hopes that producers would begin working through a build-up of drilled-but-uncompleted (DUC) wells.Shares of pressure pumper Liberty Oilfield Services this week fell to a record low of $10.96, less than half its peak of $23.90 in May 2018. Rival ProPetro traded down to $10.91 this week, near a record low and 57% below its peak in April 2019.Across the United States, the total number of DUCs is anticipated to have fallen by about 100 in July to 8,108, according to estimates from the U.S. Energy Information Administration. The only major U.S. shale field still adding to its DUC backlog is the Permian Basin, which stretches across West Texas and eastern New Mexico. In the Permian, the number of DUCs is expected to rise by 9 in July to 3,999, the EIA said in its latest Drilling Productivity Report.
Texas shale towns grapple with growth as oil-bust fears fade - (Reuters) - In west Texas, the center of the U.S. oil boom, about 3,800 students at Permian High School are crammed into a campus designed for 2,500, with 20 portable buildings to help with the overflow. School officials had expected enrollment to fall after the last oil price crash, starting in 2014, but it kept rising - one sign of a growing resilience in the region’s oil economy as Exxon Mobil, Chevron, and other majors continue pouring billions of dollars into long-term investments here. For most of the last century, oil money has flowed into this region like a rising tide during booms - but residents here had enough sense to know it would flow right back out again when the next bust hit. That cycle has always made officials, developers and voters wary of investing too much during the good times on everything from school construction to roads to housing. That hesitance is fading fast as oil majors make ever-larger and longer-term commitments to drill in the Permian Basin and residents grow weary of traffic jams on once-rural roads, long waits for medical appointments, pricey housing and overcrowded schools. Local governments, industry and foundations are joining forces to tackle the region’s overwhelmed infrastructure and public services. “When you have more students, you need more teachers,” said Danny Gex, principal at the Odessa school, which was made famous as the home of the Permian Panthers football team in the book and screen adaptations of “Friday Night Lights.” Texas has a statewide teacher shortage, Gex said, and “when you’re in a desert, it makes it a lot more difficult to find them.” Also in severe shortage: housing. The median price of a home in Midland, $311,000 in April, was higher than any other Texas city except the hip tech-industry hub of Austin, according to data tracked by Texas A&M University.
Texas Driller Sues US to Get Visa for Big-Game Hunter-- Matador Resources Co. is suing U.S. immigration authorities to give the oil driller’s $110,00-a-year big-game hunting expert a visa. Roy Dirk Ludick, a professional hunter and guide licensed in Zimbabwe since 2003, plays a critical role in Matador’s outreach to “high-valued partners, shareholders, and stakeholders,” the company said in a lawsuit against the U.S. Citizenship and Immigration Services. The agency erred in denying Matador’s request to classify Ludick as an alien “of extraordinary ability in business,” according to the suit. Matador said Ludick is so good at what he does that he makes more than twice what other guides rake in. U.S. oil producers are facing increasing pressure to curb spending -- especially on perks and salaries -- from investors keen to see better returns. Explorers such as Whiting Petroleum Corp. and Devon Energy Corp. have been slashing jobs to rein in costs. Halcon Resources Corp. elbowed aside its founder, wildcatter Floyd Wilson, who was criticized for things like flying private after the driller emerged from bankruptcy. Matador “has access to various hunting properties in the United States,” according to the suit. “The hunting camps and surrounding habitats require year-round management by a professional guide with knowledge of and experience in extensive camp construction and maintenance, habitat management, and conservation.”
Will state officials backtrack on protections for a rare lizard in the West Texas oil patch? - In a clash between habitat conservation for a rare lizard native to West Texas and oil and gas interests, the Trump administration, in league with officials from a major subsidiary of Exxon Mobil, appears close to quashing a state proposal favoring beefed-up species protections, according to multiple people involved in negotiations. The tactic comes as the Trump administration this month announced it was weakening endangered species protections, clearing the way for more oil and gas development. The Texas issue concerns protections for the dunes sagebrush lizard, a species environmental groups want to be designated an endangered species. To preempt the lizard’s listing — which historically carries heavy federal regulations — Texas officials years ago implemented a voluntary program in which oil and gas companies agreed to some habitat protections. But state Comptroller Glenn Hegar proposed the heavier-duty state plan a year ago to replace a previous version that he said suffered from “systemic problems.” Oil and gas interests, however, are trying to revive the old, discredited plan, and the comptroller’s replacement proposal has languished in Washington, with the U.S. Interior Department holding off on putting the proposal on the Federal Register for public comment — a major step toward codifying the plan.
Exclusive: Lotus Midstream mulls reversing West Texas to Cushing pipeline - (Reuters) - Pipeline operator Lotus Midstream LLC may reverse flows on a line now sending crude from West Texas to Cushing, Oklahoma, the main hub for pricing U.S. crude futures, three people familiar with the matter said on Tuesday, an unusual move that could lift U.S. benchmark prices by draining supplies. Reversing the flow on a portion of Lotus’s Centurion pipeline would send oil on a circuitous route from the country’s main storage hub at Cushing to the its top shale field in West Texas and then via new pipelines into Gulf Coast export hubs, they said.But with the operators of the new pipelines offering discounted prices to attract shippers and as oil in West Texas fetching higher prices than in Cushing, the reversal would be lucrative for shippers, traders and analysts said.“Centurion is always evaluating the best ways to serve its shippers,” said Lotus spokeswoman Casey Nikoloric, declining further comment. Centurion, which consists of two lines rated at 170,000 barrels per day (bpd) combined, had the smaller line flowing to West Texas. But in 2014 former owner Occidental Petroleum shifted its direction to Cushing to take advantage of the then-deep discounts on shale in the Permian Basin. Lotus is considering reversing the flows on either its Centurion North Line, which has 110,000 bpd of capacity, or the South Line, with 60,000 bpd capacity, the people said. Permian output has risen to 4.3 million bpd from 1.68 million bpd since that reversal, helping drive U.S. crude exports this year above 3 million bpd, according to U.S. government data. Three new pipelines from the Permian will increase existing capacity by two-thirds, with about 2.5 million bpd in additional space. Reversing one line would support crude prices at Cushing as storage there is drained, and restrain Midland prices that have risen with the startup of new Plains All American Pipeline LP and EPIC Midstream Holdings LLC’s lines, traders and shippers said. “The Midland differential to Cushing would be a lower premium than expected,” one U.S. trader said. “The reversal would help pull down Cushing (inventories) faster,” he added. Inventories at Cushing fell to 44.8 million barrels in the week ended Aug. 9, after peaking at 53.5 million in mid-June.
This Isn't Normal- Kansas & Oklahoma Hit By 65 Earthquakes In Last 7 Days - The state of Kansas is certainly known for a lot of things, but earthquakes are not one of them, and that is why what we just witnessed is so startling. According to the Kansas City Star, one county in central Kansas alone has been hit by 11 quakes within the past five days… A county in central Kansas experienced a pretty shocking uptick in seismic activity last week — 11 earthquakes in five days. It started with a magnitude-2.4 earthquake Wednesday morning just 2 1/2 miles southwest of Hutchinson, Kansas, in Reno County, according to the United States Geological Survey. There would be 10 more before the week was out. The biggest one of the group hit on Friday morning. It was originally reported to be a magnitude 4.2 quake, but it was later downgraded to magnitude 4.1. Due to the geology of the region, earthquakes in the middle of the country are often felt more acutely, and this particular earthquake was powerful enough to shake things off the shelves of people’s homes…Tim Black, who lives in Hutchinson, told the TV station his house shook and things fell off the walls. And Hutchinson resident Alice Hinnen said things fell off shelves in her home. She said she has felt earthquakes before, but this is the strongest one yet.KWCH said people across Kansas felt this earthquake. “We’ve heard reports from people as far away as Topeka, Hays, Arkansas City, and into northern Oklahoma,” the station said on its website. Further south, Oklahoma has experienced even more earthquakes than Kansas has over the past seven days. Overall, there has been a total of 65 earthquakesbetween the two states over the past week.
Nebraska Supreme Court upholds route of controversial Keystone XL pipeline — In a long-awaited decision, the Nebraska Supreme Court on Friday affirmed the route across Nebraska of the controversial Keystone XL pipeline chosen by the State Public Service Commission. The unanimous decision was a victory for TC Energy, formerly TransCanada, and a blow to groups fighting the 36-inch-diameter crude oil pipeline, which was proposed more than a decade ago.The court, in a 59-page opinion that was nine months in the making, ruled that the Public Service Commission's selection of the so-called "mainline alternative route" was in the public interest, and that the Public Service Commission had the authority to choose such an alternative.The president and CEO of TC Energy, Russ Girling, said the ruling "is another important step as we advance towards building this vital energy infrastructure project.” The company had hoped to begin construction of the Keystone XL segment from Canada to a terminal at Steele City, Nebraska, this spring but was delayed by pending court cases.Gov. Pete Ricketts said it's “time to build the pipeline,” adding that the project will bring great-paying jobs and property tax revenue to the counties along the route.A leading opponent of the Keystone XL, Jane Kleeb of the group Bold Nebraska, said the ruling does not clear the way for construction of the pipeline due to federal lawsuits still pending in Montana. She said that her group will urge landowners to fight TC Energy's use of eminent domain in local courts, and urge the Nebraska Legislature to change "backward" laws that allow a foreign corporation to obtain right of way in court from private landowners.Kleeb, who is also head of the Democratic Party in Nebraska, said Bold will also work to unseat President Donald Trump, who resurrected the Keystone XL project after he took office. The pipeline lawsuit was filed after the Public Service Commission in November 2017 voted 3-2 to approve the alternative route rather than a preferred route chosen by the pipeline developer. Commissioners ruled that the alternative route aligned for about 90 more miles with an existing Keystone pipeline, and that there were "many benefits" for co-locating the two pipelines, including faster response times for potential leaks. It forced a delay in the project as TC Energy began bargaining with a new set of landowners for right-of-way agreements.
Line 3 protesters rally at Minnesota Enbridge office (AP) — Dozens of people rallied outside a Minnesota office of Enbridge Energy to protest the company’s proposed Line 3 oil pipeline replacement. Protesters say six members of their group chained themselves to a gate early Monday at Enbridge’s office in Bemidji, prompting the office to close for the day. Police Capt. David LaZella said demonstrators left on their own and no arrests were made. The $2.6 billion replacement pipeline would carry Canadian crude from Alberta across northern Minnesota to Enbridge’s terminal in Superior, Wisconsin. Enbridge says the current Line 3, which was built in the 1960s, is subject to corrosion and cracking. Environmental and tribal groups say the project risks oil spills in pristine areas of the Mississippi River headwaters region.
Elizabeth Warren comes out against Line 3 and Twin Metals, and Minnesota construction unions are not happy - U.S. Sen. Elizabeth Warren waded into a pair of controversial environmental debates in Minnesota this week by saying she opposed a copper-nickel mine planned in Superior National Forest and an oil pipeline that would cut through the Mississippi River headwaters. In a tweet ahead of her rally Monday in St. Paul, Warren said Enbridge’s Line 3 project would threaten water and lands important to several tribes, and pledged in a short video statement to “stop all mining on federal public lands, including the Minnesota Boundary Waters.”While mining is already banned within the Boundary Waters Canoe Area Wilderness, the video was filmed to support an environmental advocacy group that aims to stop Twin Metals Minnesota from building a mine just outside the protected area — and within its watershed.Warren is the third presidential candidate to come out against Line 3, a $2.6 billion project that has received most major permits for construction. Vermont Sen. Bernie Sanders and Washington Gov. Jay Inslee have also said it should not be built. But Warren is the first Democratic candidate to specifically target Twin Metals and copper mining near the BWCA, and could push the issue further into the national spotlight. President Donald Trump has been an outspoken advocate of the prospective mine.The Boundary Waters Action Fund and other environmental groups celebrated Warren’s announcements, but the Massachusetts Democrat also drew the ire of some labor leaders in Minnesota who have traditionally aligned with her party.Mike Syversrud, president of the Iron Range Building and Construction Trades Council, said it “pisses me off” that Warren would take a stance before Twin Metals submits a mining plan to state and federal regulators and said the senator was abandoning rural workers to align with Twin Cities-area Democrats. Syversrud’s union on Wednesday is formally signing an agreement with Twin Metals to build the mine, if it’s approved by regulators. “Why would you want to be against something that will create so many jobs, and living [wage] jobs, within an area that desperately needs it?” Syversrud said.
Reversing Trump's Pipeline Approvals Is the Latest Litmus Test For Democratic Presidential Candidates - When Donald Trump took over the White House in 2017, one of his first acts was helping fast track major oil projects. Slowly, Democratic presidential candidates are coming out of the fold to declare that if they secure the White House, they’ll move to reverse that ASAP.The Keystone XL and Dakota Access pipelines are becoming the latest environmental litmus test for candidates who are in Sioux City, Iowa, this week for the Frank LaMere Native American Presidential Forum 2019. Native Americans have been at the forefront of the efforts to stop these pipelines, and some candidates are quickly realizing that these are top issues for the communities who live closest to this energy infrastructure and yet have had little to no say in their development.The promises began last week when Bold Nebraska challenged candidates to take the “NoKXL Pledge” to revoke the presidential memorandum Trump signedin March for the Keystone XL Pipeline. The proposed 1,179 mile-long pipeline would transport crude oil from the Alberta tar sands in Canada all the way to Nebraska where it would connect with the already-built Keystone Pipeline. Washington state Governor Jay Inslee was the first to sign on publicly. Billionaire candidate Tom Steyer quickly followed. Senator Elizabeth Warrenwent even further to note that she’d also revoke the permit Trump issued in January 2017 for the Dakota Access Pipeline, a 1,172-mile stretch of pipe that transports some 470,000 barrels of crude oil a day through the Midwest. As of Monday, former San Antonio Mayor Julián Castro became the latest presidential candidate to sign the pledge, also including Dakota Access.
Bureau of Land Management retirees fight plan to relocate agency out west - A group of retired Bureau of Land Management (BLM) employees are pushing the Senate to hold a hearing on the agency’s plan to move its headquarters to Colorado and scatter Washington-based staff in offices across the West. The Public Lands Foundation, a 600-member group comprised of former BLM employees, asked leaders of the Senate Energy and Natural Resources Committee to hold a hearing on a relocation they say will “functionally dismantle” the agency. The Department of Interior announced in July that it would move 27 top BLM officials to a new headquarters in Grand Junction, Colo., while nearly 300 other D.C.-based staffers would head to existing offices elsewhere in the country. “This plan is so radical that we question whether it was studied or analyzed by non-political budget analysts or organization experts and whether BLM senior management were involved or consulted,” the group wrote to committee Chairwoman Lisa Murkowski (R-Alaska) and ranking member Sen. Joe Manchin (D-W.Va.). Interior has argued the move will get high-level career staff closer to the lands they manage, which are primarily located in the West. But critics say it will break up staff by spreading them across the country, keeping them away from the corridors of power in D.C. while putting them closer to energy interests. “We believe this plan will result in BLM serving only the short-term wants of locally powerful stakeholders to the detriment of all other constituents and the long term needs of public lands,” the group said in its letter.
Wyoming's U.S. Congress delegates want to stop oil and gas permitting delays - — Wyoming’s delegates in the United States Congress want to ensure that delays to the oil and gas lease permitting process do not continue. “U.S. Senators Mike Enzi and John Barrasso and Congresswoman Liz Cheney, all R-Wyo., asked the Department of the Interior (DOI) what steps it was taking to ensure that future development on federal oil and gas leases in Wyoming are allowed to continue without interruption,” a Monday, Aug. 19 press release from the Wyoming Delegation states. A March 20 “Wild Earth Guardians v. Zinke” court decision “halted drill permitting on Wyoming oil and gas leases.” A federal district court judge issued a decision that the Bureau of Land Management “did not adequately complete climate reviews for a series of Obama-era oil and gas lease sales,” according to the delegation. “The court remanded the issue back to the BLM and said that the BLM must complete a more robust environmental analysis to predict greenhouse gas emissions linked to drilling and downstream uses of the oil and gas from Wyoming leases,” the release states. The delegation penned a letter to the Department of the Interior to “work fervently” to ensure that environmental regulations required for permitting are met. They also urged the department to appeal the court decision “if necessary to establish a clear standard regarding greenhouse gas analyses in environmental reviews.”The delegation also said that they were concerned that environmental groups bringing such cases to court are motivated to “end all oil and gas development.” “’We are also concerned these groups will continue to pursue litigation without resolution,’ the delegation wrote. ‘It is imperative that DOI continue to expeditiously and thoroughly complete its analyses, and see these matters to completion so final decisions are attained.’”
Tribe wants challenges to Dakota pipeline permits resolved (AP) — The Native American tribe leading the fight against the Dakota Access oil pipeline wants a judge to resolve all legal challenges to federal permits issued for the project. The Standing Rock Sioux filed a motion for summary judgment in federal court Friday. The tribe argues the $3.8 billion project needs to be shut down until the government has conducted a thorough environmental analysis and studied alternative pipeline routes. The pipeline sparked massive protests in North Dakota before it began moving oil from the state in 2017. The pipeline runs through the Dakotas and Iowa to a shipping point in Illinois. Texas-based Energy Transfer announced in June it plans to expand the pipeline’s capacity from more than 500,000 barrels per day to as much as 1.1 million barrels.
Commentary: Fracking and flaring a danger to families, oil field workers --I was recently on vacation with my 11-year-old granddaughter when her nose started to bleed on two separate occasions. I talked to her dad about it. I could tell he was looking to me for assurance she was all right and that nosebleeds might be a common occurrence for a little girl. My son and his family live on the Fort Berthold Reservation about three-quarters of a mile from Marathon Oil fracking operations and natural gas flares. Our family lives in the Bakken oil fields where flares burn night and day in western North Dakota. In a lengthy fracking review five years ago, the New York Department of Health found environmental problems that could adversely affect public health. New York health professionals also discovered that people living around fracking areas had symptoms of skin rash, nausea or vomiting, abdominal pain, breathing difficulties, cough, anxiety, stress, headache, dizziness, eye irritation, throat irritation and nosebleeds. In the interest of state citizens, New York banned fracking in favor of further review. Today, a comprehensive 361-page report titled, “Compendium of Scientific, Medical, and Media Findings Demonstrating Risks and Harms of Fracking” relies on 1,500 studies, government reports and investigative reporting. The report is blistering and bleak: “All together, the data show that fracking impairs the health of people who live nearby, especially pregnant women, and swings a wrecking ball at the climate,” said Sandra Steingraber, co-founder of Concerned Health Professionals of New York. “We urgently call on political leaders to act on the knowledge we’ve compiled.” Meanwhile, unconventional oil shale production rages on as does the burning of natural gas at well sites. Satellite images show natural gas flares lighting up the Bakken like a monotone Christmas tree. Oil companies burn less lucrative natural gas in the Bakken typically because oil production outpaces the infrastructure needed to transport the gas.
Scientists: Conventional Oil Impacts Groundwater More Than Fracking - While many protests against the oil and gas industry focus on the effects of fracking on the environment, scientists say that as far as groundwater is concerned, conventional oil and gas exploration and production could affect underground water supply much more than hydraulic fracturing could.According to a recent study by hydrogeologists Jennifer McIntosh from the University of Arizona and Grant Ferguson from the University of Saskatchewan (USask), the amount of water injected and produced in the ground during fracking operations is smaller than the amounts that conventional oil and gas production injects. “The amount of water injected and produced for conventional oil and gas production exceeds that associated with fracking and unconventional production by well over a factor of ten,” McIntosh said in a statement of the University of Saskatchewan.According to McIntosh and Ferguson, fracking receives much of the attention, but most of the bigger picture is associated with conventional oil and gas activities. “There’s a critical need for long-term—years to decades—monitoring for potential contamination of drinking water resources not only from fracking, but also from conventional oil and gas production,” McIntosh said.McIntosh and Ferguson analyzed information about water injection in the Western Canada Sedimentary Basin, the Permian, and the states of Oklahoma, California, and Ohio, and the amount of water produced by high-volume fracking throughout the U.S. The researchers found that due to enhanced oil recovery (EOR) at conventional wells, there’s likely more water underground at oil sites, and this could change the behavior of all liquids in the ground, increasing the possibility of contamination of the water in underground freshwater formations.
North Dakota producers flare 24% of all natural gas produced - North Dakota’s Bakken Shale natural gas output rose to a new record, but so did flaring, as pipeline and processing outages caused producers to burn off nearly 700 MMcf/d, the latest state data showed. As North Dakota oil production reached a record high of about 1.42 million b/d in June, associated gas production followed suit, reaching a new peak of 2.876 Bcf/d, according to the North Dakota Industrial Commission. But a lack of adequate gas gathering infrastructure combined with outages during the month prompted producers to flare 24%, or 686 MMcf/d, of the product. This represented a month-on-month increase of 154 MMcf/d. The percentage flared was double current state regulations, which require operators to flare no more than 12%. The figure drops to 9% in November 2020. Producers who fail to meet these requirements face possible fines. Flaring was particularly high in the Fort Berthold Indian Reservation, where operators flared an average of 37% of associated gas in June. But because of outages, most of the producers flaring above the limit in June will likely be granted an exception by the state. Alliance Pipeline, which transports gas from North Dakota and Canada to Midwest markets, was one of the drivers of the dramatic increase. The pipeline was out of service June 18-23 as service was conducted on the line farther downstream. The Bantry and Tioga gathering lines tie into Alliance in North Dakota. After providing an average of 245 MMcf/d of gas to Alliance throughout the first part of the month, those points fell to zero during the outage, according to S&P Global Platts Analytics data. Even after coming back online June 24, they only supplied an average of 207 MMcf/d to Alliance over the rest of the month. Also, Oasis’s Wild Basin gas processing plant was shut from mid-June through part of July, and Kinder Morgan’s Watford City processing plant was shut for more than a week during June for repairs.
Did North Dakota Regulators Hide an Oil and Gas Industry Spill Larger Than Exxon Valdez? – In July 2015 workers at the Garden Creek I Gas Processing Plant, in Watford City, North Dakota, noticed a leak in a pipeline and reported a spill to the North Dakota Department of Health that remains officially listed as 10 gallons, the size of two bottled water delivery jugs. But a whistle-blower has revealed to DeSmog the incident is actually on par with the 1989 Exxon Valdez oil spill in Alaska, which released roughly 11 million gallons of thick crude.The Garden Creek spill “is in fact over 11 million gallons of condensate that leaked through a crack in a pipeline for over 3 years,” says the whistle-blower, who has expertise in environmental science but refused to be named or give other background information for fear of losing their job. They provided to DeSmog a document that details remediation efforts and verifies the spill’s monstrous size.“Up to 5,500,000 gallons” of hydrocarbons have been removed from the site, the 2018 document states, “based upon an…estimate of approximately 11 million gallons released.”Garden Creek is operated by the Oklahoma-based oil and gas service company, ONEOK Partners, and processes natural gas and natural gas liquids, also called natural gas condensate, brought to the facility via pipeline from Bakken wells.Neither the National Oceanic and Atmospheric Administration (NOAA), which monitors coastal spills, nor the Environmental Protection Agency (EPA) could provide records to put the spill’s size in context, but according to available reports, if the 11-million-gallon figure is accurate, the Garden Creek spill appears to be among the largest recorded oil and gas industry spills in the history of the United States.However, the American public is unaware, because the spill remains officially listed as just 10 gallons. That is despite the fact that a North Dakota regulator has acknowledged the spill was much larger, and even the official record, right after stating the spill was 10 gallons, notes that the area was “saturated with natural gas condensate of an unknown volume,” and thus may have been larger.
2015 North Dakota liquid gas spill much bigger than reported (AP) — A 2015 pipeline spill of liquid natural gas in western North Dakota initially reported as just 10 gallons is at least hundreds of thousands of gallons larger and may take another decade to clean up, state health officials said Tuesday. Oklahoma-based Oneok Partners LP reported the 10-gallon spill of natural gas liquids, or “condensate,” from a pipeline at its Garden Creek gas plant near Watford City in July 2015. A report by the North Dakota Health Department said “ground around the pipe was saturated with natural gas condensate of an unknown volume.” State Environmental Quality Chief Dave Glatt said the company reported last October that it had recovered 240,000 gallons of the liquid gas and that cleanup was ongoing. But the Health Department never updated its report to reflect the severity of the spill. Glatt said doing so was not required and would have been “just wild guesses anyway.” The larger-than-reported size of the spill was first reported Monday by DeSmog, a blog dedicated to fighting climate change skepticism, which reported that the spill could be as large as 11 million gallons. The blog cited an unnamed person who provided a draft document on a cleanup plan. Oneok said in a statement Tuesday that the document was done by a consultant “as part of their design process to address the release.” The company said the actual amounts of the release aren’t known. “The volume estimates included in the document were hypothetical assumptions and were used solely as a basis for the vendor’s equipment design to complete the response action efforts,” the company said. Oneok said the release was caused by “hairline cracks” in a 2-inch-wide underground pipe at the facility. Regulators don’t know how long the line had been leaking, but they said it was repaired immediately after being discovered. State environmental scientist Bill Suess visited the site the Tuesday, the day after the blog post appeared. He estimated the affected area to be about 240,000 square feet. Suess said some groundwater was affected at the site but the spill didn’t reach beyond the facility’s boundaries. The site can’t be excavated due to extensive piping beneath the natural gas factory, Suess said. Instead, the company is drilling “bore holes” to recover the liquid natural gas, which tends to evaporate when exposed to air. Suess estimated the cleanup could take “another five to 10 years.”
Spill revelation raises questions about North Dakota system (AP) — The North Dakota Health Department’s acknowledgment this week that a 2015 pipeline leak of liquid natural gas is hundreds of thousands of gallons larger than reported raises questions about how many other spills and leaks are underreported — and state officials were not immediately able to answer Wednesday. State Environmental Quality Chief Dave Glatt said the agency does not update initial public reports on spills but is considering doing so in the future. The agency said Tuesday that a 2015 pipeline spill of gas liquids, or “condensate,” at a western North Dakota natural gas plant that was first reported as just 10 gallons (8 imperial gallons) is at least hundreds of thousands of gallons larger and may take an additional decade to clean up. The initial state report on the spill at Oneok Partners LP’s Garden Creek I gas processing plant was never updated, even as Oneok updated the state on cleanup. In October, Oneok told the state it had recovered 240,000 gallons (nearly 200,000 imperial gallons) of the liquid gas and cleanup continued. The environmental blog DeSmog, which first reported the discrepancy, reported that the spill may be as large as 11 million gallons (9 million imperial gallons). The blog cited an unidentified person who provided a draft document on a cleanup plan.The company said the actual amounts of the release aren’t known. Republican Gov. Doug Burgum, who took office in late 2016, said he was unaware of the spill until reports of it surfaced this week. He said he was not told of the spill because it was not a considered a health or environmental threat and it had been contained.Under a law signed by Burgum, oil companies no longer must report spills of up to 10 barrels or 420 gallons (350 imperial g allons), if it is contained on site. Glatt said the spill at the gas plant in 2015 would still need to be reported because it doesn’t involve an oil production facility.
North Dakota agency disregarded policy on spill reporting - (AP) — North Dakota’s Health Department disregarded its own policy in updating the volume of a 2015 pipeline spill at a natural gas processing plant, and it remains unclear whether promised quarterly inspections of the site have been done in the past two years as cleanup continued.Oklahoma-based Oneok Partners LP reported a 10-gallon (38-liter) spill of natural gas liquids, or “condensate,” from an underground pipeline at its Garden Creek gas plant near Watford City in July 2015. The company told the state last October that it had recovered 240,000 gallons (908,400 liters) of the liquid gas. The second sum was not put into an incident report that can be accessed on the agency’s website.“It should have been updated,” State Environmental Quality Chief Dave Glatt said Thursday. “It was in a file, but people (the public) didn’t know where to find it.” An incident report has not been done since June 2017. At that time, the report said the spill site would be inspected quarterly. Glatt said he was investigating whether that had happened.
Long Train Runnin' - Unit Trains Now Delivering U.S. Propane To Mexico --In May 2019, Twin Eagle Liquids Marketing shipped a 100-car train filled with propane from North Dakota to Mexico, marking the first-ever single-commodity train — i.e. “unit train” — between the Bakken and the U.S.’s southern neighbor. As it turns out, it was also the first of what appears to be a regularly scheduled run to Mexico. Since May, three more unit trains have made the journey south from the Bakken’s first unit train terminal for propane. Rail shipments of propane to Mexico as part of mixed-goods trains aren’t new, but figuring out how to economically ship large quantities of propane via unit trains has long evaded NGL marketers and producers — that is, until now. What are the economics and other factors that finally made it possible, and what are the prospects and challenges ahead for unit-train exports to Mexico? Today, we look at how the first all-propane train to Mexico came to pass and what the outlook might be Before we get to this latest development in U.S. propane exports to Mexico, it’s worth stepping back for a quick review of what’s transpired in the Mexican propane market in recent years.
Long Train Runnin', Part 2 - The Economics Of Bakken-To-Mexico Propane Unit Trains --In May 2019, the first-ever propane unit train from the Bakken to Mexico reached its destination, and since then, three more of these 100-car, single-commodity “bulk” trains have made the same trip. Facilitating these shipments by Twin Eagle Liquids Marketing is Marathon Petroleum Corp.’s (MPC) unit train-loading terminal in Fryburg, ND, which was initially set up to load crude oil but was recently expanded to handle propane too. And soon, the terminal in Torreón, Mexico, that has been receiving these unit trains will have a new loop track too, enabling producers and marketers to take full advantage of the bulk transport option. Today, we look at the economics and challenges of this relatively new propane export route.As we discussed in Part 1, Mexico’s need for propane — widely used for cooking and heating water — is on the rise, even as local supply has been dwindling. That’s boosted propane imports to the c ountry, including from the U.S. and Canada in recent years. While most of those imports come to Mexico via ship (~52% or 83 Mb/d in 2018) or are trucked across the U.S.-Mexico border (33 Mb/d or 21%), a good portion (29 Mb/d or 18%) of it is railed in. [Only 14 Mb/d, or less than 10%, of it was transported via pipeline last year, owing to the limited pipeline capacity and routes available to reach key markets in interior Mexico.]
Revealed: emails raise ethical questions over Trump official's role in gas project --The US interior secretary, David Bernhardt, is promoting a fossil fuel project for which his former employer, a lobbying firm, is a paid advocate, e-mails obtained by the Guardian suggest.Experts say Bernhardt is probably violating ethics guidelines issued by the Trump administration with the stated goal of “draining the swamp”. Based on these rules, Bernhardt should be recused from specific issues involving a former client for at least two years.The Jordan Cove Energy Project was proposed by the Canadian energy giant Pembina to transport fracked natural gas through Oregon to the international port at Coos Bay in the state. It would include a new 232-mile pipeline thatpasses through several dozen miles of interior department land.Several county commissioners from Colorado, where much of the gas is fracked, met with Bernhardt in Washington DC to boost the project in March. They included Mike Samson, Bernhardt’s former high school teacher. “Awesome time in DC he is totally behind the project and has people working on it towards completion,” Samson wrote concerning Bernhardt in a 7 March email to Ray Bucheger, a Jordan Cove lobbyist with the firm FBB Federal Relations. “He recognizes that time is of the essence and that meaningful progress needs to [be] made this year.” A screenshot from the email. A separate text message also shows that Bucheger had hosted the county commissioners at a dinner the night before the meeting and had asked Samson to report to him what Bernhardt said about Jordan Cove. Bernhardt represented oil companies and agribusiness interests at the Brownstein Hyatt Farber Schreck lobbying firm before joining the Trump administration in August 2017. Brownstein Hyatt has worked to promote the Jordan Cove project since December 2018, federal records show.
California regulators still allowing industry to inject toxic oilfield waste into drinking water aquifers, violating Safe Drinking Water Act; Companies will sue if ordered to stop. - Encana frac’d about 200 gas wells into fresh water zones at Rosebud (before April 2006), of which about 60 were more shallow than 200 metres bgs, including intentionally into the community’s drinking water aquifers, two most shallow gas wells perf’d at 100.5 m and 121.5 m bgs (Encana injected 18 million litres frac fluid into drinking water aquifers on this one gas well alone] In response to reporting from the Desert Sun that California regulators continue to allow oil field wastewater injection into potential drinking water sources in Kern County, Andrew Grinberg of Clean Water Action issued the following statement:“It’s unacceptable that oil companies are still injecting toxic wastewater into potential drinking water sources, in violation of the Safe Drinking Water Act. Despite significant progress by state agencies in recent years to improve California’s Underground Injection Control program, the oil and gas industry still has far too much influence. State regulators need to stand up to fossil fuel interests and take more aggressive action to protect our water.… Regulators have failed to rein in these harmful impacts of this industry and protect our communities.California can no longer afford to be a fossil fuel state — it’s time to accelerate the transition away from our oil-soaked history and toward a clean energy future. If the oil industry can’t operate responsibly, then it shouldn’t operate here at all. Clean water is the most important resource for California’s future. After committing $130 million annually to help the one million Californians without safe drinking water, and adopting new underground injection regulations in April, Governor Newsom, his regulators, and the Legislature need to ensure the immediate protection of California groundwater from the threat of oil field wastewater injection.”
The U.S. leads global petroleum and natural gas production with record growth in 2018 – EIA - U.S. petroleum and natural gas production increased by 16% and by 12%, respectively, in 2018, and these totals combined established a new production record. The United States surpassed Russia in 2011 to become the world's largest producer of natural gas and surpassed Saudi Arabia in 2018 to become the world's largest producer of petroleum. Last year’s increase in the United States was one of the largest absolute petroleum and natural gas production increases from a single country in history. For the United States and Russia, petroleum and natural gas production is almost evenly split; Saudi Arabia's production heavily favors petroleum. Petroleum production is composed of several types of liquid fuels, including crude oil and lease condensate, natural gas plant liquids (NGPLs), and bitumen. The United States produced 28.7 quadrillion British thermal units (quads) of petroleum in 2018, which was composed of 80% crude oil and condensate and 20% NGPLs. U.S. crude oil production increased by 17% in 2018, setting a new record of nearly 11.0 million barrels per day (b/d), equivalent to 22.8 quadrillion British thermal units (Btu) in energy terms. Production in the Permian region of western Texas and eastern New Mexico contributed to most of the growth in U.S. crude oil production. The United States also produced 4.3 million b/d of NGPLs in 2018, equivalent to 5.8 quadrillion Btu. U.S. NGPL production has more than doubled since 2008, when the market for NGPLs began to expand. U.S. dry natural gas production increased by 12% in 2018 to 28.5 billion cubic feet per day (Bcf/d), or 31.5 quadrillion Btu, reaching a new record high for the second year in a row. Ongoing growth in liquefied natural gas export capacity and the expanded ability to reach new markets have supported increases in U.S. natural gas production. Russia’s crude oil and natural gas production also reached record levels in 2018, encouraged by increasing global demand. Russia exports most of the crude oil that it produces to European countries and to China. Since 2016, nearly 60% of Russia’s crude oil exports have gone to European member countries in the Organization for Economic Cooperation and Development (OECD). Russia’s crude oil is also an important source of supply to China and neighboring countries. Russia’s natural gas production increased by 7% in 2018, which exceeded the growth in exports. The Yamal liquefied natural gas (LNG) export facility, which loaded its first cargo in December 2017, can liquefy more than 16 million tons of natural gas annually and accounts for almost all of the recent growth in Russia’s LNG exports. Since 2000, more than 80% of Russia’s natural gas exports have been sent to Europe. Saudi Arabia’s annual average crude oil production increased slightly in 2018, but it remained lower than in 2016, when Saudi Arabia’s crude oil output reached a record high. Saudi Arabia’s crude oil production reached an all-time monthly high in November 2018 before the December 2018 agreement by the Organization of the Petroleum Exporting Countries (OPEC) to extend production cuts.
The United States tends to produce lighter crude oil and import heavier crude oil - EIA - In 2018, total U.S. crude oil production grew by 17%, led by increased production of relatively light, less dense crude oil. The increase in light crude oil production is largely the result of the growth in crude oil production from shale and tight rock formations, which are now more accessible because of improvements in horizontal drilling and hydraulic fracturing.Crude oil with a higher API gravity is lighter, or less dense. Production of crude oil with an API gravity greater than 40 degrees grew from 1.2 million barrels per day (b/d) in 2015 to more than 5.8 million b/d in 2018. Production in this API range accounted for 55% of total Lower 48 production in 2018, an increase from 50% in 2015, the earliest year for which EIA has crude oil production data by API gravity. API gravity can differ greatly by production area. For example, oil produced in Texas—the largest crude oil-producing state—has a relatively broad distribution of API gravities, and most crude oil produced there ranges from 30 to 50 degrees API. Relatively light crude oil with an API gravity from 40 to 50 degrees accounted for most Texas production in 2018, at 56%. Crude oil in this API gravity range—the fastest-growing category overall—reached 2.5 million b/d in 2018, driven by increasing production in the tight oil plays of the Permian and Eagle Ford. The crude oil produced in North Dakota’s Bakken formation also tends to be relatively light. Conversely, the crude oil produced in California and the Federal Gulf of Mexico tends to be heavier. In contrast to the light crude oil that is increasingly produced in the United States, imported crude oil tends to be heavier. In 2018, 7.5 million b/d (97%) of imported crude oil had an API gravity of 40 or lower, compared with 4.7 million b/d (45%) of domestic production. Although the United States has been producing record levels of domestic crude oil, it continues to import crude oil because of variations in crude oil quality. API gravity, along with sulfur content, determines the type of processing needed to refine crude oil into fuel and other petroleum products, all of which factor into refineries’ profits. Overall U.S. refining capacity is geared toward a diverse range of crude oil inputs, so it can be uneconomic to run some refineries solely on light or heavy crude oil. The API gravity of domestic and imported crude oil used in U.S. refineries has increased from a low of 30.2 degrees in 2004 to an average of 32.2 degrees in 2018. Since 2008, U.S. imports of crude oil have decreased 21%. During the same time period, domestic production grew 120% and consequently provided a greater share of refinery inputs.
A 2019 Permian Output Surge May Impact Oil Prices - The question for the longer-term is whether or not OPEC producers will respond by trying to lower global oil prices. Over the next eighteen months, pipeline capacity from the Permian is expected to increase by 1.5-2.0 mb/d, including increased delivery capacity to export terminals. This should have a number of effects, mostly positive for producers, but other constraints will mean that a sudden surge should not be expected. Higher prices for Permian crude and greater volumes will be the primary results, although an increase in flaring might bring new pressure to regulate ‘wastage’ of gas. The EIA projects slower growth in production from the 4th quarter of 2019 to the fourth quarter of 2020 -- 0.99 mb/d versus 1.75 mb/d from 4th quarter 2018 to 4th quarter 2019. This could be partly due to lower capital spending by shale oil producers, but it still seems unusually low. Although pipeline capacity theoretically comes online instantaneously--pipelines have to be filled, pressure ramped up, and some testing will mean it will take place over days or weeks—the supply change should not be that strong. Instead, supply now moving by rail and truck will be switched to pipeline, at least until production exceeds capacity again. So, the market impact won’t be the same as, say, major oil fields in Libya going on- and offline suddenly. There are also constraints on how quickly production can increase. The large and growing number of unproductive wells in the Permian suggests that new pipeline capacity, allowing for higher wellhead prices, will see a surge in well fracking/completions, depending on the availability of crews. Historically, the number of wells fracked in a given month in the Permian has been as high as 668 (October 2014) versus a recent level of 530, and the rate has increased as much as 20-30/month, sometimes much higher. It seems unlikely that the number of fracked wells can increase by more than 50/month, but since the typical well adds about 600-700 b/d of gross output, the implication is that Permian output could grow by an additional 30 tb/d per month, or 360 tb/d by December 2020 versus the year earlier amount. This amount is probably incremental to existing projections
The US is set to drown the world in oil - A staggering 61% of the world’s new oil and gas production over the next decade is set to come from one country alone: the United States. The sheer scale of this new production dwarfs that of every other country in the world and would spell disaster for the world’s ambitions to curb climate change – the effects of which we’re already witnessing through massive heat waves, flooding, and extreme weather. Earlier this year, we crunched the numbers from the latest climate science and industry forecasts and found that we can’t afford to drill up any oil and gas from new fields anywhere in the world if we’re to avoid the worst impacts of climate change.In our analysis, we assumed that existing oil and gas fields are going to keep on pumping for as long as they can. That means that the decisions about new projects will shape the future for the oil and gas industry and our climate. And when it comes to these new oil and gas fields, production from the US is set to eclipse the rest of the world. Production from new fields in the US is set to be eight times that of the next largest producing country – Canada. New US production is forecast to be 20 times that of Russia and more than 1.5 times the total of all other countries combined.Output is set to be so vast that if US states were treated as countries, Texas is forecast to be the biggest producer of new oil and gas in its own right, with production nearly four times that of Canada. Seven out of the top 10 biggest oil and gas producers would be US states, with only Canada, Brazil and Russia making it onto the list. Pennsylvania is set to be the third largest producer of new oil and gas, producing more than double that of Russia.If things don’t change, by the end of the next decade, new oil and gas fields in the US will produce more than twice what Saudi Arabia produces today. The future of our changing climate and its increasingly devastating impacts across the globe will be shaped by future oil and gas production. And if the future of oil and gas production is decided by what happens in new fields, then it will be determined by what happens in the US in the next decade.
US Fracking Sector Disappoints in 2Q - A review of 29 fracking-focused oil and gas companies revealed “meager” cash returns in the second quarter of 2019. The report, which was carried out by Sightline Institute and the Institute for Energy Economics and Financial Analysis (IEEFA), noted that only 11 of the 29 companies under review registered positive free cash flows and that the 29 companies combined generated $26 million in aggregate free cash flows. These aggregate free cash flows were said to be “far too modest to make a significant dent in the more than $100 billion in long-term debt owed by these companies, let alone reward equity investors who have been waiting for a decade for robust and sustainable results”. The report, which stated that free cash flow is a crucial gauge of financial health, highlighted that “disappointing” cash flows have “soured” investors on the sector. It also noted that, at the close of 2Q, the oil and gas sector was near the bottom of the S&P 500 and stated that by August 15, the sector hit “rock bottom, with drilling, exploration and production, and equipment and services leading the decline”. “There were winners and losers this quarter, but overall, the oil and gas sector is still underperforming on virtually every financial measure,” Sightline Institute’s Clark Williams-Derry said in a company statement. “Fracking remains a highly tenuous proposition for investors,”
U.S. refiners limit crude processing amid slack fuel demand- Kemp (Reuters) - U.S. refineries have cut the volume of crude processed so far this year, but stocks of gasoline and distillates remain ample, highlighting the slack demand for transportation fuels. Fuel consumption has stalled, part of a worldwide slowdown in oil demand associated with the slackening of manufacturing and freight activity. U.S. refineries have reduced crude input by an average of 247,000 barrels per day since the start of the year compared with the same period in 2018, according to data from the U.S. Energy Information Administration (EIA).Year-to-date processing rates have fallen for the first time since 2011 and by the most since the recession of 2008/09 (“Weekly petroleum status report”, EIA, Aug 21).Refinery crude consumption has fallen by around 56 million barrels so far compared with the same period in 2018 (https://tmsnrt.rs/2NvuABQ).Refineries cut processing sharply during the regular maintenance season in March and April and have never made up the shortfall.Processing has remained at or below prior-year rates throughout the summer driving season, normally the highest demand of the year.Philadelphia Energy Solutions’ 335,000 bpd refinery on the East Coast has been shut since a fire and explosion on June 21, which may have contributed to the loss of crude processing.But processing was already running below prior-year rates before the plant exploded and has been below 2018 rates for 13 out of the last 16 weeks since the start of May.Refiners on the East Coast have cut processing by an average of almost 120,000 bpd so far this year (mostly due to the Philadelphia explosion).But they have also reduced processing by 87,000 bpd in the Midwest, 15,000 bpd along the Gulf Coast and 45,000 bpd on the West Coast.Despite the reduction in processing, there has been no shortage of either gasoline or distillate fuel oil, with gasoline stocks level with last year and distillates comfortably above it. Fuel consumption is broadly unchanged compared with 2018, with the volume of gasoline supplied to domestic customers flat so far this year and distillate consumption down slightly.
Shale Bond Buyers Get Picky-- After years pouring funds into the shale boom, bond buyers are getting increasingly selective as defaults rise and many explorers continue to burn more cash than they make. While Exxon Mobil Corp. and Occidental Petroleum Corp. have recently sold a combined $20 billion of investment-grade debt, junk rated issuers are getting a far different market reception. High-yield energy companies have sold about half as much corporate debt this year as they had at the same time in 2018, according to data compiled by Bloomberg. Issuance in the broader junk bond market, by contrast, was up about 30%. “We haven’t seen new energy deals getting done in the first seven months of the year for anything rated lower than B,” Eric Rosenthal, senior director for leveraged finance at Fitch Ratings, said in a telephone interview. Wary investors are more than ever pushing shale explorers to shift from the growth-focused novelty they once were to better-managed, cash-generating businesses. While they’re sitting on a wealth of crude in regions like the Permian Basin of West Texas and New Mexico, constantly tapping those resources with high-tech rigs and fracking technology can be a money drain that some have handled poorly. And while oil has more than doubled from the 2016 low, trading has been erratic. Earlier this month one oil benchmark suffered the steepest one-day drop since February 2015, as the escalating trade war between the U.S. and China roiled financial markets. Falling crude prices hurt revenue and make it difficult for companies to continue spending as much money on projects. “Ultimately, investors are also becoming a little more disciplined, if you will, and part of it may be just because of volatility on the commodity side,” said Mark Freeman, Founder and Chief Investment Officer at Socorro Asset Management LP. On Monday, West Texas Intermediate oil futures were trading around $55 a barrel. The energy sector, which makes up the biggest chunk of the U.S. high yield bond market, has been the laggard this year in the Bloomberg Barclays high-yield index as defaults ratcheted higher.
Investors Are Ditching High-Yield Shale Bonds - Investors in high-yield riskier bonds of U.S. shale firms have caught up with equity investors in showing impatience over the mounting debt that the shale patch has piled up to fund production growth at the expense of cash flow and profits. So far this year, bond issues of high-yield energy firms have been half the amount they had sold at this time last year, while total bond issues by all junk rated companies have grown by 30 percent, data compiled by Bloomberg shows.In the Bloomberg Barclays high-yield index, the energy bond issuance has been underperforming the other sectors. The energy sector itself represents the single largest portion of the high-yield bond market in the United States. Persistently low oil prices and high corporate debt at the high-yield energy companies point to more pain and more defaults ahead, analysts say.Signs have already started to emerge. Earlier this month, Halcon Resources Corporation filed for Chapter 11 bankruptcy proceedings, its second Chapter 11 this decade.A few days later, Sanchez Energy also filed for reorganization under Chapter 11 following “an extensive review of strategic alternatives to align its capital structure with the continued low commodity price environment.”In July, Fitch Ratings expected the energy sector to lead U.S. high yield default volume for the third consecutive month after Weatherford’s bankruptcy. The trailing 12 months (TTM) energy default rate stood at 4.1 percent in July, compared to 1.9 percent for the overall market, Fitch said. The Halcon and Sanchez bankruptcies in August pushed the U.S. high yield energy default rate to 5.7 percent from 4.1 percent, marking the sixth consecutive month of an energy filing, Fitch Ratings said in a report last week.
Oil CEOs Sell Stock and Rip Investor Apathy, Raymond James Says - The top executives at America’s independent oil and gas producers say over and over again that their poor stock performance presents a buying opportunity. That hasn’t stopped them from dumping their own shares.That’s the result of a Raymond James analysis of chief executive officers’ pay across U.S. explorers. Over the past five years, the typical CEO liquidated about $4 million worth of equity, based on the median of data assessed by Raymond James, and almost 60% were net sellers.It’s a trend that makes it harder to buy CEOs’ oft-repeated message that their companies are undervalued. An index of independent explorers is down 27% in the last year, while the S&P 500 is up 2.6%.Investors and analysts have been calling on companies to better align executive compensation plans with shareholder returns, rather than production growth. That’s generally happening, according to Raymond James analysts including John Freeman, but shareholders keep complaining that CEOs don’t have enough “skin in the game.”The CEOs of about 80% of the companies in Raymond James’ coverage space hold less than 1% of outstanding shares, the report said.
Bankruptcy Filings Rise Among US Energy Producers, Report - According to a new report from law firm Haynes and Boone LLP, bankruptcies in the upstream sector are increasing this year as energy spot prices remain subdued amid a cyclical downshift in the economy. So far, 26 exploration and production (E&P) firms have filed for bankruptcy through mid-August, with debts totaling $10.96 billion. The firm noticed a surge in bankruptcies began in May, following a -23% correction in WTI prices from mid-April to mid-June. In 2018, 28 E&P firms filed for bankruptcy, posting $13.2 billion in debt, while 24 firms asked for protection in 2017 with $8.5 billion in debt. The firm points out that insolvencies in the energy patch are gaining momentum."So far this year there has been an uptick in the number of filings," Haynes & Boone said. Oil and gas prices have remained depressed for 2019. The law firm said it's hard to tell if a new bankruptcy wave is imminent, but said, "some stakeholders may have given up hope that resurgent commodity prices will bail everyone out," especially operators who have been on the verge of bankruptcy."For these producers, the game clock has run out of time to keep playing 'kick the can' with their creditors and other stakeholders," the firm warned.Buddy Clark, a Haynes & Boone partner, told Reuters that many of 2019's bankruptcies are pre-planned, Chapter 11 restructurings, where creditors agree in advance on restructuring plans."I don't think you will see a lot of Chapter 7 (liquidations)," he said. "When you see Chapter 7s is when there are no assets left. Typically, there are always assets left." Natural Gas Intelligence believes a bankruptcy wave for the upstream sector could be nearing. This is because operators across the country have been scaling back since oil crashed -44% in 4Q18. Producers have been faced with margin compression, high debt loads, and oversupplied markets so far this year.
Shale Bleeds Cash Despite Best Quarter In Years - The second quarter earnings results are complete, and it was another rough three-month period for U.S. shale. Oil prices climbed in the second quarter, with Brent topping out in the mid-$70s, before falling again after the U.S.-China trade war escalated. Notably, the extension of the OPEC+ cuts failed to rally oil prices amid growing concerns about demand. For U.S. shale, higher oil prices helped to some degree, but by and large it was another period of disappointment for a sector that has underwhelmed for years. Investors are increasingly losing patience, punishing the energy sector as a whole, and financially-strapped companies in particular. In a study of 29 fracking-focused oil and gas companies by the Sightline Institute and the Institute for Energy Economics and Financial Analysis (IEEFA), only 11 companies posted positive free cash flow. Even then, the figures were paltry. Collectively, the group only reported $26 million in free cash flow for the second quarter, “far too modest to make a significant dent in the more than $100 billion in long-term debt owed by these companies, let alone reward equity investors who have been waiting for a decade for robust and sustainable results,” the report said.To be sure, the free cash flow result – only slightly positive – was the best result in years, the IEEFA/Sightline Institute report said. It points to progress for U.S. shale, a sector that routinely posted billions of dollars of red ink and negative cash flow in years past. The second quarter result stands in sharp contrast to the $2.81 billion the group of companies lost in the first quarter.Yet, despite the dramatic improvement, the financial results remained unimpressive. It’s an indictment of the business that one of the best quarters in years was barely cash flow positive “Last quarter’s cash performance—just a hair over breaking even—would count as a bitter disappointment in virtually any other sector of the economy,” the report stated. “But for an industry that has posted negative cash flows for a decade, these mediocre results represent a financial high-water mark.”
Investigation and cleanup underway after oil spill near Edmonton - The Alberta Energy Regulator is investigating an oil spill southwest of Edmonton. The spill happened in the Washout Creek Natural Area, which is about 150 kilometres from Edmonton.The AER first received notice of the spill on Thursday night. It’s believed 40 cubic metres of crude oil spilled into the creek, a tributary of the North Saskatchewan River. Containment booms have been put in place. The pipeline belonged to Bonterra Energy Corporation which has been ordered to clean up the site.
Alberta Extends Oil Output Cuts to End of 2020 -- Canada’s oil-rich province of Alberta is extending its output cuts by a year as delays to key pipelines threaten to prolong a glut of crude in the region. The curtailment program, which will now end in December 2020, had been slated to wrap up at the end of this year as Enbridge Inc.’s expansion of the Line 3 pipeline began moving oil. But that project was set back by a year because of permitting delays in Minnesota, leaving the province’s drillers churning out more oil than they could ship to refineries. TC Energy Corp.’s planned Keystone XL line and the Canadian government’s expansion of the Trans Mountain conduit also have been bogged down by legal challenges. Alberta’s delay in ending the curtailment program may help support oil prices, as U.S. Midwest and Gulf Coast refiners face the prospect of constrained shipments of Canadian heavy crude at the same time that they’re getting reduced supplies from Mexico and Venezuela. The policy is a mixed bag for Canadian drillers, who are benefiting from the higher prices but frustrated by their inability to expand output. “This is a short-term solution, and it is the last thing we want to be doing,” Alberta Energy Minister Sonya Savage said during a news conference. “We’re doing it because it’s essential.” Ending the program too early could cause a collapse in Western Canadian Select crude prices, hurting producers and reducing the value of royalties paid to the province, she said. Alberta could still end the curtailment before December 2020, but will need to do so in an orderly fashion, she said.
Foreign Oil Firms Are Bailing on Canada-- Capital keeps marching out of Canada’s oil industry, with Kinder Morgan Inc.’s sale of its remaining holdings in the country on Wednesday adding to more than $30 billion of foreign-company divestitures in the past three years.Pembina Pipeline Corp., based in Calgary, is snapping up Kinder’s Canadian assets and a cross-border pipeline in a $3.3 billion deal. For Houston-based Kinder, the deal completes an exit from a country that has frustrated more than a few companies -- from ConocoPhillips and Royal Dutch Shell Plc to Marathon Oil Corp.The drumbeat of exits, rare for such a stable oil-producing country, adds an extra layer of gloom for an industry that accounts for about a fifth of Canada’s exports. The energy sector -- centered around Alberta’s oil sands -- has struggled to rebound since the 2014 crash in global oil prices, with capital spending declining for five straight years and job cuts pushing the province’s unemployment rate above 6%. Alberta is forecast to post the slowest growth of any region in Canada this year.The situation isn’t likely to improve any time soon, with key pipelines like TC Energy Corp.’s Keystone XL and Enbridge Inc.’s expansion of its Line 3 conduit bogged down by legal challenges. The lack of pipelines has weighed on Canadian heavy crude prices for years, sending them to a record low late in 2018.“If they thought things were getting better in Canada, they might hold on, but they don’t see things getting better,” Laura Lau, who helps manage more than C$2 billion ($1.5 billion) at Brompton Corp. in Toronto, said in an interview. “The pipeline situation is getting worse; everything is getting worse.”Other recent major divestitures include ConocoPhillips’ $13.2 billion sale of oil-sands and natural gas a ssets to Cenovus Energy Inc. in 2017, and Shell’s and Marathon’s sales of their stakes in an oil-sands project to Canadian Natural Resources Ltd. for about $10.7 billion that same year. Canadian Natural also bought Oklahoma City-based Devon Energy Corp.’s Canadian heavy oil assets this year for $2.79 billion. Norway’s Equinor ASA pulled out in 2016 after facing pressure at home to invest in lower-emission projects.
Shale gas developer frustrated by uncertainty surrounding fracking -- The New Brunswick government has yet to fulfill a controversial election promise to reopen the door to natural-gas fracking, and now one of the key players in the gas industry says the uncertainty surrounding fracking is becoming an issue. With more than two dozen wells in the Sussex area, Corridor Resources is the biggest player in the province’s domestic-gas industry, but the company is waiting for the moratorium on fracking to be lifted in the area. As a result, the company has halted the process. Corridor has also expressed concern over coming consultations with the Aboriginal community. “Predicting a timeline as to when the consultation process is completed is difficult,” states the company in its quarterly report. But the New Brunswick Aboriginal Peoples Council says it has many questions about fracking and needs to be properly consulted on the issue. “What is actually going on here? Can it be done safely? Can it not be done safely? Is it going to affect the water? How is it going to affect the water? The whole process, they have to come and sit down and properly consult,” said Chief Barry Labillois. Holland says consultations with First Nation groups over the possible extraction of natural gas in Sussex have been ongoing, and he plans to set up in-person meetings soon. Meanwhile, environmental groups say First Nation communities are being made into scapegoats. “Oil companies and the gas companies, and some slow-to-the-case premiers, like to blame regulatory uncertainty and First Nations vetoes for just about everything,” said Lois Corbett of the New Brunswick Conservation Council.
Legal Tussle Prevents $2.5 Billion Gas Pipeline to Mexico From Opening – WSJ - In June, construction crews finished work on a 500-mile, $2.5 billion natural-gas pipeline that runs under the Gulf of Mexico from South Texas to the port of Tuxpan in northeastern Mexico. Once it turns on, the pipeline will increase Mexico’s capacity to import natural gas by 40%, fueling the power plants and industrial installations that drive the country’s export-driven manufacturing economy. But...
CNPC Shuns Venezuela Oil on Tighter US Sanctions-- China’s biggest energy company is backing away from direct purchases of Venezuelan crude as the Trump administration tightens sanctions against the South American nation. China National Petroleum Corp. has canceled plans to load about 5 million barrels worth of Venezuelan oil onto ships this month in the aftermath of the latest executive order by President Donald Trump, according to people with knowledge of the situation who asked not to be identified discussing proprietary information. CNPC joins Turkey’s largest bank, Ziraat Bank, which severed its relationship with Venezuela’s Central Bank following sanctions. The moves represent a setback for Venezuelan President Nicolas Maduro, who has been counting on both China and Russia to keep the country going amid a humanitarian crisis, food shortages and hyperinflation. China became the top destination for Venezuelan crude after U.S. sanctions against state-owned Petroleos de Venezuela SA were announced at the end of January. Venezuela may run low on options without the help of CNPC to export oil, a main source of revenue that bankrolls the Maduro regime. The three August-loading cargoes canceled by CNPC’s subsidiary PetroChina Co. Ltd. haven’t so far attracted another buyer, according to reports seen by Bloomberg. PetroChina’s press office declined to comment on market speculation, citing company policy. On Aug. 5, Trump signed an executive order authorizing sanctions on anyone who provides support to Maduro. Opposition leader Juan Guaido, recognized by the Trump administration as the country’s leader, is backed by more than 50 countries. PetroChina’s pullback doesn’t mean China will completely turn away from Venezuelan oil. Other companies can continue to supply China’s independent refiners known as teapots with the South American nation’s crude, according to people familiar with the matter. China has been a staunch supporter of the Venezuelan government since its first oil-backed loan to late president Hugo Chavez. The Asian nation has loaned $50 billion in the past decade in exchange for oil. China, along with Russia, is one of 14 nations that support Maduro.
Half of Venezuela's Oil Rigs May Shut Down If US Waivers Lapse -- A looming U.S. sanctions deadline is threatening to clobber Venezuela’s dwindling oil-rig fleet and hamper energy production in the nation with the world’s largest crude reserves. Almost half the rigs operating in Venezuela will shut down by Oct. 25 if the Trump administration doesn’t extend a 90-day waiver from its sanctions, according to data compiled from consultancy Caracas Capital Markets. That could further cripple the OPEC member’s production because the structures are needed to drill new wells crucial for even maintaining output, which is already near the lowest level since the 1940s. A shutdown in the rigs will also put pressure on Nicolas Maduro’s administration, which counts oil revenues as its main lifeline. The U.S. is betting on increased economic pressure to oust the regime and bring fresh elections to the crisis-torn nation, a founding member of the Organization of Petroleum Exporting Countries and Latin America’s biggest crude exporter until recent years. Venezuela had 23 oil rigs drilling in July, down from 49 just two years ago, data compiled by Baker Hughes show. Ten of those are exposed to U.S. sanctions, according to calculations by Caracas Capital Markets. The Treasury Department extended waivers in July for service providers to continue for three more months, less than the six months the companies had sought. Most other government agencies involved in the deliberations opposed any extension, a senior administration official said last month, adding that another reprieve will be harder to come by.
U.S. Sanctions Backfire, Lead To Boost In Russian Oil Exports - U.S. sanctions against Venezuela and Iran have had an unplanned side effect: they have increased exports of heavy, sour crude from Russia, Bloomberg reports, adding that calculations have shown Russian oil companies raked in an additional US$905 million at least from these sales between November and July. The Urals blend is the big winner of the U.S. sanctions, according to Bloomberg’s calculations. Venezuela is one of the main global suppliers of heavy crude, but U.S. sanctions have shrunk its exports significantly. Iran also produces heavy, which has now become less readily available to foreign buyers, freeing up space for Urals. Finally, OPEC members prioritized cutting their heavy crude production as part of their December 2018 agreement and that added to the strain on heavy crude supply. Like heavy crude in general, Urals normally trades at a discount to Brent. However, like other heavy blends, the Russian one has narrowed the gap since November, when U.S. sanctions against Iran snapped back, despite the waivers granted to eight importing countries. Eventually, it swung to a premium, especially in the Mediterranean, where a lot of Iranian oil used to go.Right now, Urals is trading at a discount of more than $2 per barrel to Brent crude but at a premium to West Texas Intermediate. It has swung to a premium to Brent several times this year. Meanwhile, according to information from oil data analytics firm OilX, Russia’s overall production is also on the rise, after a temporary decline. As of August, this climbed back above 11.3 million bpd, after dropping below 11.2 million bpd in July. U.S. sanctions are definitely changing production and price patterns in heavy crude and so is U.S. production. Italy’s Eni said in its latest World Oil Review report recently that last year that the portion of heavier sour crude grades had fallen below 40 percent of the total for the first time ever. At the same time, thanks to the U.S. shale revolution, the share of light, sweet crude increased to more than 20 percent. This, too, has had an effect on the price difference between lighter and heavier crudes.
Trump Sanctions Leave Russian Exporters $1B Richer - -- U.S. President Donald Trump’s sanctions against Iran and Venezuela have inadvertently increased demand for a Russian brand of crude oil, boosting revenues for the nation’s exporters.Russian oil companies received at least $905 million in additional revenues between November and July, data compiled by Bloomberg show. The calculation is based on difference between the Urals spread to the Brent benchmark over the period compared to the five-year average.The sanctions added to a jump in demand for Russian crude in the wake of output cuts from the Organization of Petroleum Exporting Countries and their partners. As a result, Russia’s Urals blend of crude has started to regularly trade at a premium to Brent.“There is a shortage of competing heavier, sourer crude right now as a result of sanctions on Iran and Venezuela, but also because of OPEC+’s current production cut agreement,” Konstantsa Rangelova, analyst at JBC Energy, said by email. “Urals in the Mediterranean is at an all-time high.”The Bloomberg calculations are based on terminal data, oil loading programs for Russian ports and information from a trader monitoring S&P Global Platts oil assessments. The estimate doesn’t include any of the overall effect on Brent prices from Trump’s policies or the OPEC+ deal, just the shift in relative prices. The U.S. announced sanctions against Venezuela in late January and removed the remaining waivers for buyers of Iranian oil from May. The measure created a shortage of the heavy, sour kind of crude that the two export, a variety similar to that produced in Russia. While this oil is considered to be of lower quality, some refineries are built to process it and switching to other grades is costly.
Exclusive: Russia's Rosneft to switch to euros in oil products tenders - traders (Reuters) - Russia’s Rosneft, one of the world’s top oil producers and exporters, has notified customers that future tender contracts for oil products will be denominated in euros not dollars, five trading sources told Reuters. The move, which could come as soon as this year, is likely to be seen as an attempt to offset any potential negative impact of U.S. sanctions on Russia. Rosneft, which accounts for over 40% of oil output in Russia, produced 45.8 million tonnes of oil products at home in the first six months of this year - from diesel and gasoline to fuel oil and petrochemicals. Around half was exported to west and south-east Europe and to Asia, according to the company’s own data. The bulk of oil products for export are sold at tenders: Rosneft holds annual tenders as well as a number of spot or short-term tenders, with BP, Glencore, Trafigura, Vitol and Cetracore among top buyers. Last year, trading sources told Reuters that Russian energy majors were asking Western oil buyers to prepare to make payments in euros instead of dollars. Rosneft last week asked buyers to use the euro as the default currency for the first time in a spot tender to sell naphtha, an official company document showed. Rosneft was included in a list of some U.S. sanctions imposed on Russian companies in 2014, although those sanctions do not limit U.S. dollar usage in Rosneft tenders.
Rosneft becomes top Venezuelan oil trader, helping offset U.S. pressure (Reuters) - Russian state oil major Rosneft has become the main trader of Venezuelan crude, shipping oil to buyers in China and India and helping Caracas offset the loss of traditional dealers who are avoiding it for fear of breaching U.S. sanctions. Trading sources and Refinitiv Eikon data showed Rosneft became the biggest buyer of Venezuelan crude in July and the first half of August. It took 40% of state oil company PDVSA’s exports in July and 66% so far in August, according to the firm’s export programs and the Refinitiv Eikon data, double the purchases before sanctions. Three industry sources said Rosneft, which produces around five percent of the world’s oil, is now taking care of shipping and marketing operations for the bulk of Venezuelan oil exports, ensuring that PDVSA can continue to supply buyers. Rosneft used to resell volumes it bought from PDVSA to trading firms and was less involved in marketing. Now it has started supplying some PDVSA clients - Chinese and Indian refineries - while trading houses such as Swiss-based Trafigura and Vitol have walked away because they fear they could breach secondary U.S. sanctions, according to six trade sources. Oil accounts for more than 95 percent of Venezuela’s export revenue and Washington has warned trading houses and other buyers about possible sanctions if they prop up Caracas.
Trade war impasse casts a 'dark cloud' over outlook for US oil shipments, analysts warn --An escalating trade war between the world’s two largest economies is negatively impacting the outlook for U.S. crude shipments, energy analysts have warned, amid fears that China could soon dramatically reduce its intake of American oil.Trade tensions between Washington and Beijing prompted some external observers to warn the outlook for China-bound U.S. crude shipments wasfirmly skewed to the downside.“Casting another dark cloud over the outlook for U.S. crude shipments is the ongoing U.S.-China trade impasse,” Stephen Brennock, oil analyst at PVM Oil Associates, said in a research note.It was around this time last year that China emerged as the biggest buyer of U.S. crude, Brennock said, but Chinese buyers were now seen as a “virtual shoo-in” to halt their intake of American oil.He explained that while losing what was once your biggest customer could hardly be conducive to sustained growth, any drop-off in Chinese purchases might be offset by an increase in exports to other consumers.“All things considered, the U.S. crude-export machine may struggle to maintain its record-breaking run,” Brennock said. At the start of August, President Donald Trump announced the White House would impose additional 10% tariffs on $300 billion worth of Chinese imports from September 1. In response, China let its yuan weaken below the key 7-per-dollar level for the first time in more than a decade. Trump appeared to escalate tensions even further by declaring China as a currency manipulator. The tit-for-tat dispute sent oil prices tumbling, with crude futures dropping to a seven-month low at one stage.Oil prices have since pared some of their recent losses. International benchmark Brent crude traded at $59.08 Monday afternoon, up around 0.8%, while U.S. West Texas Intermediate (WTI) stood at $55.32, almost 0.9% higher.
Cuadrilla Halts UK Fracking Again After Biggest Tremor Yet - Just a week after resuming fracking at its UK site, Cuadrilla paused operations—yet again—after a tremor estimated to be the biggest yet since the UK shale gas company began hydraulic fracturing exploration in northwest England last year.Cuadrilla confirmed that micro seismicity had been detected at the monitoring system in place at the shale gas exploration site at Preston New Road near Blackpool in Lancashire. The company said that “Most local people will not have felt it due to its small size,” adding that it was pausing operations and would monitor the situation for the next 18 hours. The halting of fracking comes just a week after Cuadrilla resumed fracking at a second well at Preston New Road after it secured all permits to do so. Cuadrilla resumes its fracking operations in Lancashire amid opposition from local residents, while the company—as well as the British government—believe that shale gas could reduce the UK’s gas import dependence and contribute to its net zero emissions target by 2050.At the Preston New Road fracking site, Cuadrilla has stopped fracking at its first well multiple times over the past year, because under UK regulations, in case of micro seismic events of 0.50 on the Richter scale or higher, fracking must temporarily be halted and pressure in the well reduced.While Cuadrilla aims to continue with its well completion program at the site andtouts spending on shale gas as boosting the Lancashire economy, climate activists and local residents continue to voice their opposition to the activities. Friends of the Earth UK says that “It’s time for this climate-wrecking industry to be banned,” and calls on the new UK government “not to frack it up.”
UK has five times less shale gas than previously thought, fracking study finds - There may be a lot less shale gas in the UK than previously thought – and fracking may only yield 10 years’ worth of the fuel, a study has suggested. This is five times less than 2013 estimates of 50 years’ worth, according to analysis of Bowland Shale Formation in north England. The new estimates are based on lab analysis by the University of Nottingham and British Geological Survey (BGS). Researchers used a high-pressure water technique that simulates oil and gas generation in deep reservoirs and applied it to shale to evaluate in the laboratory how much gas could be extracted. Fracking has proved controversial in the UK. Backers, including the government, claim exploiting the fossil fuel could reduce reliance on imports, secure supplies, help cut carbon emissions and create jobs. But opponents say fracking can cause earthquakes, damage the countryside and keep the UK hooked on fossil fuels instead of focusing on renewables to help tackle climate change. Researchers analysed shale rock in two locations, and extrapolated the findings to the whole of the Bowland Shale. They concluded that the maximum gas there equated to “potentially economically recoverable reserves of less than 10 years of current UK gas consumption”. Report author Professor Colin Snape said: “We have made great strides in developing a laboratory test procedure to determine shale gas potential. “This can only serve to improve people’s understanding and government decisions around the future of what role shale gas can make to the UK energy’s demand as we move to being carbon neutral by 2050.”
Ever Fewer Wealthy, Ever More Poor, Projected To Equal Ever More Demand?!? -
- Wealthier half of the world population (with incomes of $4k+) consumes 90% of total energy and oil.
- The under 65yr/old population of the wealthier nations begins declining (depopulating) in 2023, declining in excess of 10 million annually by 2035.
- Despite the imminent decline in working age / consumer age populations of wealthier nations, total global energy and oil consumption are projected to continue rising on growth among the poor.
First chart is the 0 to 65 year old population of the worlds nations that have in excess of $4,000 annual gross national income per capita or average of $16k per capita (solid blue line) and their total energy consumption (dashed blue line). This is versus the worlds nations with annual gross national income per capita below $4,000 or average of $1.6k per capita (solid red line) and their total energy consumption (dashed red line). Same variables as above but showing the annual change in the nations with $4k+ and annual change in population under $4k...again versus their total energy consumptions. Population data includes anticipated ongoing immigration to the wealthier nations away from poorer nations at present rates...absent this, the wealthy nation depopulation begins sooner and is even more significant. Global oil consumption with EIA projection through 2040 (black line), annual wealthier under 65 year old population growth (blue columns), annual poorer under 65 year old population growth (red columns), plus Federal Reserve set federal funds rate (yellow line). Finally, just two variables - the change per five years of the 0 to 65 year old wealthier (blue columns) and poorer (red columns) nations populations versus change per five years of global oil consumption (black line). As the population of nations that consumes 90% of oil globally begins declining and growth among the poorer nations decelerates, oil consumption is projected to continue increasing?!? Despite population growth driving up to half of GDP growth and the poorer nations reliant on growth among wealthier nations for their own growth...despite present near zero, zero, and negative interest rates to accommodate massive debt loads...somehow depopulation amidst the heavily indebted nations that consume 90% of global energy (coupled with conservation and innovation) is projected to be offset and outweighed by demand growth among the consumers of 10% of global energy?!?. Go figure.
Glencore, BP stuck with tainted Russian crude - (Reuters) - BP and Glencore are struggling to sell around 600,000 tonnes of tainted Russian oil more than three months after the contamination was discovered, according to six trading sources. Russia’s oil industry was plunged into a crisis in April after about 5 million tonnes of oil for export was found to be contaminated with organic chloride, a chemical used to help boost oil extraction but which can damage refining equipment. Exports through the Druzhba pipeline that transports oil to Germany, Poland, Hungary, Slovakia, the Czech Republic, Ukraine and Belarus were halted. The Baltic port of Ust Luga loaded some 15 cargoes or 1.5 million tonnes of the contaminated oil for Western buyers. At least 6 cargoes that sailed from Ust Luga remain unsold, according the trading sources. Glencore is stuck with 500,000 tonnes in one very large crude carrier (VLCC) Amyntas and two smaller tankers - Searanger and Searuby, according to the sources and Refinitiv Eikon vessel tracking system. BP has tried to sell its cargo Fsl Shanghai at a tender earlier this month but failed, according to the same traders. BP and Glencore both bought the oil from Russian state oil major Rosneft. BP and Glencore declined to comment. Rosneft did not respond to a Reuters request to comment. They cannot claim compensation until they sell the oil. “You can’t file a claim against Russia until you have actually sold your oil and counted your losses,”
South Sudan Makes New Oil Discovery in Adar-- South Sudan has made a new crude find in the northern oilfields of Adar and plans production by the end of the year, Information Minister Michael Makuei Lueth said. The oil will be linked to the nearby Paloch oilfields that are managed by Dar Petroleum Operating Co., Lueth said Monday by phone from the capital, Juba. Petroleum Minister Awow Daniel Chuang announced the discovery to the cabinet on Friday, Lueth said. “It will start as soon as they finish connectivity and the production will likely begin towards the end of this year,” Lueth said, without giving further details. “This is a new discovery and hence people will have to do so many things in order get to production. It needs a pipeline to connect it to the main pipe.” Ruined by war, South Sudan is trying to recover by resuming crude production. Output has increased to 180,000 barrels per day from 130,000 barrels per day during its five-year civil war.
Qatar may be losing the top spot as world's biggest LNG exporter - Qatar will lose its title as the world’s largest exporter of liquefied natural gas (LNG) within the next year, as Australia ramps up production on a slew of multi-billion dollar export projects. “Australia and Qatar continued to jostle for the title of the world’s largest LNG exporter over the first five months of 2019,” the Australian government said in a recent report. Australia exported more LNG than Qatar in November 2018 and April 2019. But now, the U.S Energy Information Administration (EIA) says Australia is on track to consistently export more LNG than Qatar, as recently commissioned projects such as Wheatstone, Ichthys, and Prelude ramp up production. Prelude, Royal Dutch Shell’s floating LNG facility in a remote field northeast of Broome in Western Australia, shipped its first LNG cargo to customers in Asia in June. The landmark facility, capable of holding 175 Olympic-sized swimming pools of LNG in its storage tanks alone, was the last of eight new LNG projects that came online in Australia between 2012 and 2018. The new facilities have pushed Australia’s export capacity from 2.6 billion cubic feet per day (bcf/d) in 2011 to more than 11.4 bcf/d in 2019. The EIA says Australia has already surpassed Qatar in LNG production capacity. More supply will pressure spot prices The ramp up of new capacity and exports combined with fragile demand from key customers in Japan, China and South Korea has resulted in a drastic decline in spot LNG prices since late 2018.
China's petrochemical expansion to overwhelm Japan, South Korea producers - (Reuters) - A massive surge in China’s manufacturing capacity for paraxylene, a petrochemical used to make textile fibers and bottles, could force leading exporters in Japan and South Korea to cut production as early as the second quarter of 2020. China will add about 10 million tones of paraxylene manufacturing capacity from March 2019 to March 2020, according to company reports and officials, that is enough for making 22 trillion 500-milliliter plastic bottles. The world’s top consumer of paraxylene (PX), China imports 60% of its need for the chemical to feed polyester demand that has more than doubled since 2010. Over half of China’s PX imports come from South Korea and Japan and the new capacity is expected to cut Chinese imports by about 50%. Without Chinese demand, the profit margins for regional manufacturers such as Japan’s JXTG Holdings Inc (5020.T), South Korea’s Lotte Chemical (011170.KS) and Hyundai Cosmo Petrochemical and domestic producer Dalian Fujia are expected to drop further, likely causing a rollback in output and decline in earnings. “We will see drastic cutbacks in PX operating rates among many Asian exporters, and potential capacity rationalization in sites where integrated refining-aromatics margins are poor,” said Darryl Xu, principal analyst for Asia chemicals at consultancy Wood Mackenzie. Private companies are leading China’s latest PX boom through a string of projects often integrated with big oil refineries which make them more cost competitive and flexible. China’s Hengli Group launched in March a PX plant capable of producing 4.5 million tonne per year (tpy) in the city of Dalian and Zhejiang Petrochemical is slated to start a 4 million tpy plant in Zhoushan late in 2019. In July, Shandong-based Hongrun Petrochemical began trial runs at its 700,000 tpy plant and China Petroleum and Chemical Corp, or Sinopec (0386.HK), will start a plant in Hainan producing 1 million tpy in the third quarter.
China-Owned Tanker Carrying 2M Barrels Of Iranian Oil Caught 'Ghosting' --China continues to play a large part in preventing Trump's desire to take Iran's crude exports down to zero, despite a noticeable drop on its Iran oil imports over the summer after the end of the US waiver program; however, more evidence has emerged that the sanctions evasion continues. A Chinese owned tanker believed carrying about 2 million barrels of oil has been caught 'ghosting' according to ship tracking data:While in the Indian Ocean heading toward the Strait of Malacca, the very large crude carrier (VLCC) Pacific Bravo went dark on June 5, shutting off the transponder that signals its position and direction to other ships, ship-tracking data showed.Reuters says an American official has put ports in Asia on notice, warning them not to allow the Pacific Bravo to dock in violation of US sanctions. Besides 'ghosting' — a common tactic used in Iran sanctions busting — the tanker also appears to have tried concealing its identity with a name change, on July 18 suddenly presenting on global trackers as the VLCC Latin Ventura and appearing off Port Dickson, Malaysia.Tracking data shows this was nearly 1000 miles from where the Pacific Bravo had last been signalling. Reuters describes the gambit was easily uncovered, with US authorities accusing the ship of evading sanctions:But both the Latin Venture and the Pacific Bravo transmitted the same unique identification number, IMO9206035, issued by the International Maritime Organization (IMO), according to data from information provider Refinitiv and VesselsValue, a company that tracks ships and vessel transactions... Since IMO numbers remain with a ship for life, this indicated the Latin Venture and the Pacific Bravo were the same vessel and suggested the owner was trying to evade Iranian oil sanctions.
US Sanctions Force Iran to Ditch Cleaner Fuels Push-- Iran is about to burn a lot more fuel oil as a result of U.S. sanctions and new global shipping rules, reversing the nation’s progress in switching to cleaner-burning natural gas. Power plants and other industrial facilities will burn more than 200,000 barrels a day of highly polluting fuel oil next year, double the amount Iran used in 2018, according to a forecast by Iain Mowat of consultant Wood Mackenzie Ltd. Iran produces a surplus of fuel oil, and the excess has swelled since the U.S. began restricting the OPEC member’s exports last year. Sanctions also prevent Iran from importing the equipment it would need to refine the heavy oil product into less-polluting products like gasoline and, even if they find a way building refineries takes time. The situation will only worsen once the International Maritime Organization restricts the use of high-sulfur fuel oil for most vessels starting Jan. 1. Commercial ships and power stations are the two main sources of demand for fuel oil. By curbing the shipping industry’s appetite, the UN agency’s new measure will leave Iran little choice but to burn more fuel oil at home to generate electricity. Iranians “will have no choice but to dump it at whatever low price they can get for it, cut back on refining or use it themselves,” said Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy. Since anyone buying Iranian fuel oil would run afoul of U.S. sanctions, even rock-bottom prices might not be enough to stimulate sales, he said. Iran is a prime candidate for flouting the next year’s new IMO rules by using high-sulfur fuel oil in its own fleet, Mills said. International ports, however, have arranged for harsh penalties for violators. Iran’s government says it wants to build new refineries to process fuel oil into other products. Although refineries typically take four years to complete, Tehran is hoping for faster results, said Sakineh Almasi, a spokeswoman for the parliamentary energy commission, according to the parliament’s Icana news service. Almasi didn’t say how the government plans to work around U.S. sanctions. Meanwhile, Iran’s storage facilities for oil and fuel are filling up fast. Because the government prefers to reserve precious spare storage capacity for higher-value products such as condensate, it can’t accumulate surplus fuel oil for long, Mills said.
OPEC Turns Bearish On Oil - OPEC sees a “somewhat bearish” outlook for the rest of 2019, even as supplies remain tight in the short run. In its latest report, OPEC only slightly downgraded its forecast for global oil demand, lowering it to 1.10 million barrels per day (mb/d) for 2019, down only a minor 0.04 mb/d from a month earlier. That estimate could end up being too optimistic, and OPEC itself said the forecast is “subject to downside risks stemming from uncertainties with regard to global economic development.” Notably, OPEC said that global supply could grow by 1.97 mb/d this year, significantly outpacing demand growth. Still, that figure is down by 72,000 bpd from a previous estimate, due to lower-than-expected production growth in the U.S., Brazil, Thailand and Norway. In another worrying sign of a brewing supply surplus, OPEC said that oil inventories in OECD countries rose by 31.8 million barrels in June from a month earlier, rising to 67 million barrels above the five-year average. In other words, just as OPEC+ was meeting to extend the production cuts for another 9 months, inventories were rising, an indication of an oversupplied market. On a slightly positive note (for OPEC), the group revised up demand for its crude by 0.1 mb/d for both 2019 and for 2020. Still, it said that demand for its oil, often referred to as the “call on OPEC,” would drop to 29.4 mb/d in 2020, down from 30.7 mb/d this year. Based on those numbers, OPEC+ is staring down a serious supply glut next year absent further action. The group can either stick with current production levels and risk another market downturn, or it can swallow further production cuts.
Oil market starts to rebalance at lower prices- Kemp - (Reuters) - Global oil consumption is falling at the fastest rate for almost five years as manufacturing activity and trade flows slip around the world and vehicle production tumbles. Consumption in the top 18 consuming countries, each using more than 1 million barrels per day (bpd), fell by almost 0.2% in the three months between March and May compared with the same period a year earlier. Oil use is falling at the fastest rate since the third quarter of 2014, according to national government data submitted to the Joint Organisations Data Initiative. Falling consumption five years ago, combined with surging U.S. shale output and Saudi Arabia’s refusal to cut production, led to the price slump in 2014-2016. This time around, consumption has also stalled, and shale output is surging again, but Saudi production cuts have limited the fall in prices. Front-month Brent futures prices have so far fallen by $27 per barrel, or just over 30%, from their recent peak compared with a decline of almost $90 - or 77% - between June 2014 and January 2016. Like the earlier episode, however, a sustained period of lower prices will be needed to curb shale production growth and make consumption more affordable to restore market balance. The adjustment is already underway, with the number of rigs drilling for oil in the United States down by almost 120, or 13%, over the last nine months (https://tmsnrt.rs/2ZbDOKZ). U.S. crude oil production growth has decelerated to a year-on-year rate of around 1.6 million bpd, down from more than 2.0 million bpd at the end of 2018. As a rule of thumb, it takes 3-4 months for a change in benchmark oil prices to filter through to U.S. drilling rates and 9-12 months to affect production.
Oil up after drone attack on Saudi field, but OPEC report caps gains - Crude oil prices rose on Monday following a weekend attack on a Saudi oil facility by Yemeni separatists and as traders looked for signs of progress in U.S.-China trade negotiations. Price gains were, however, capped to some degree by an unusually downbeat OPEC report that stoked concerns about growth in oil demand. Brent crude, the international benchmark for oil prices, was up 67 cents, or 1.1%, at $59.31 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up 76 cents, or 1.4%, at $55.63 a barrel. A drone attack by Yemen’s Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected. “The oil market seems to be pricing in again a geopolitical risk premium following the weekend drone attacks on Saudi Arabia, but the premium might not sustain if it does not result in any supply disruptions,” said Giovanni Staunovo, oil analyst for UBS. Iran-related tensions appeared to ease after Gibraltar released an Iranian tanker it seized in July, though Tehran warned the United States against any new attempt to seize the tanker in open seas. Concerns about a recession also limited crude price gains.
Oil rises 2% after attack on Saudi field, stimulus expectations (Reuters) - Oil prices gained roughly 2% on Monday after a weekend attack on a Saudi oil facility by Yemen’s Houthi forces threatened crude supplies and as traders looked for signs that top economies would take measures to counteract a global slowdown. Brent crude LCOc1, the international benchmark for oil prices, settled at $59.74 a barrel, rising $1.10, or 1.88%. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled at $56.21 a barrel, up $1.34, or 2.44%. Signs of a slight softening of the trade war between the United States and China, including Washington extending a reprieve that permits China’s Huawei Technologies HWT.UL to buy components from U.S. companies, also helped oil prices. A drone attack by the Houthi group on an oilfield in eastern Saudi Arabia on Saturday caused a fire at a gas plant, adding to Middle East tensions, but state-run Saudi Aramco said oil production was not affected. “The oil market seems to be pricing in again a geopolitical risk premium following the weekend drone attacks on Saudi Arabia, but the premium might not sustain if it does not result in any supply disruptions,” said Giovanni Staunovo, oil analyst for UBS. Iran-related tensions appeared to ease after Gibraltar released an Iranian tanker it seized in July, with the vessel sailing for Greece, though Tehran warned the United States against any new attempt to seize the tanker in open seas.
Oil rises slightly as hopes of easing trade tensions lend support - Oil prices steadied on Tuesday on optimism U.S.-China trade tensions will ease and hopes major economies will take stimulus measures to ward off a possible economic slowdown, after falling earlier on concerns over future demand. Brent crude rose 3 cents to $59.77 a barrel by 12:10 p.m. EDT (1510 GMT), while U.S. crude was down 11 cents at $56.10 a barrel. Both contracts had traded lower earlier in the session. The United States said it would extend a reprieve that permits China’s Huawei Technologies to buy components from U.S. companies, signaling a slight softening of the trade conflict between the world’s two largest economies. “It’s the ebbing and flowing of the U.S.-China trade war and some hope of economic stimulus that’s coming at these markets, including potential fiscal stimulus by the Germans,” said John Kilduff, a partner at Again Capital in New York. Concerns over the overall level of demand for oil continue to weigh on crude prices. The Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market would be in slight surplus in 2020. A rally in equity markets around the world on growing expectations that global economies will take action against slowing growth also gave oil prices a floor.
Oil Markets On Edge Over Trade War Uncertainty - Oil prices rose slightly on Monday after a Houthi drone attack on a Saudi oil field led to concernsabout geopolitical unrest. That trend reversed on Tuesday however after Secretary of State Mike Pompeo issued harsh comments about Huawei and the threat of China. An analysis from Raymond James found that top CEOs at U.S. oil and gas firms have sold an average of $4 million worth of stock in their own companies over the past five years, at a time when they talk up their stocks to investors. Bakken flaring has spiked as production of both oil and gas rises amid a pipeline bottleneck. Drillers are now flaring roughly 24 percent of the gas produced in the Bakken, which is twice as high as state limits. China’s CNPC suspended oil purchases in August from Venezuela following stricter U.S. sanctions. “We were told that China oil will not load any oil in August. We don’t know what will happen after,” a source told Reuters. Bloomberg reports that Saudi Aramco has picked Lazard Ltd. and Moelis & Co. to advise the company on its IPO. In a blow to the Trump administration’s efforts to slash fuel economy standards, Mercedes-Benz is preparing to join four other automakers in agreeing to the stricter fuel economy standards laid out by California. The New York Times also reported that the policy process within the Trump administration is in disarray. The balking of top automakers and the internal disorder could imperil the deregulation effort. The U.S. government extended waivers on sanctions on companies doing business with Huawei, viewed as a conciliatory gesture towards China. Fears of an economic recession seem to have the Trump administration concerned, and top U.S. officials have talked up trade negotiations. The Trump administration is also reportedly exploring a payroll tax amid growing concerns about the economy. The Standing Rock Sioux Tribe has asked a judge to toss out a federal permit for the Dakota Access pipeline, due to lack of consultation. The issue comes as the pipeline’s owner, Energy Transfer Partners. hopes to double the pipeline’s capacity. Meanwhile, several Democratic presidential candidates vowed to revoke the pipeline’s permits if they became president. . The number of oil and gas wells completed in Texas declined by 12 percent in the first 7 months of 2019 compared to the same period a year earlier. Permits to drill new wells also declined by 14 percent. Slower activity has been a blow for oilfield services companies.
Front-month oil futures settle higher, with data expected to reveal a weekly decline in U.S. crude supplies - Front-month oil futures contracts settled higher for a third straight session on Tuesday, ahead of U.S. government data that are expected to reveal a weekly decline in domestic crude stockpiles, following back-to-back weekly supply increases. Prices also climbed on Monday, with that rally partly fueled by reports that Yemen’s Houthi rebels launched a drone attack over the weekend on one of Saudi Arabia’s largest oil fields.“Crude’s trading path over the next 48 hours should be heavily influenced by U.S. inventories once again, especially given the turn towards crude storage builds in recent weeks,” said Robbie Fraser, senior commodity analyst at Schneider Electric. The U.S. government has reported crude supply increases in each of the last two weeks. “Consensus market estimates have called for a slight draw” from American Petroleum Institute numbers due out late Tuesday, followed by Wednesday’s “more definitive” Energy Information Administration report, said Fraser, in daily commentary. “However, as WTI’s discount to Brent narrows, U.S. exports could be challenged, leaving more supply to be absorbed by a U.S. refining sector that is nearing the end of the peak demand season.” West Texas Intermediate crude for September delivery tacked on 13 cents, or 0.2%, to finish at $56.34 a barrel on the New York Mercantile Exchange, shaking off earlier losses. The front-month contract, which expired at the end of the day’s regular trading session, gained 2.4% on Monday. The most-active, and new front-month October WTI contract shed a penny to settle at $56.13. The October contract for global benchmark Brent crude edged 29 cents, or 0.5%, higher at $60.03 a barrel on ICE Futures Europe, with prices settling back above $60 for the first time in a week. Analysts polled by S&P Global Platts expect the EIA on Wednesday to report a fall of 3.1 million barrels in U.S. crude stockpiles for the week ended August 16, along with supply declines of 1.6 million for gasoline and 200,000 barrels for distillates, which include heating oil.
WTI Hovers At $56 As Algos Unimpressed By Bigger-Than-Expected Crude Draw -- Oil prices dumped and pumped after US SecState Pompeo raised more uncertainty about MidEast and China during an interview with CNBC this morning. WTI did recover back to $56 by the NYMEX close ahead of the inventory data. “The weakening global economic backdrop continues to control the narrative across equities and other asset classes and the oil market is certainly not being spared,” said Michael Tran, commodity strategist at RBC Capital Markets. API
- Crude -3.454mm (-1.8mm exp)
- Cushing -2.803mm - biggest draw since Feb 2018
- Gasoline -403k
- Distillates +1.806mm
After two weekly builds, API reports a bigger than expected crude draw, with Cushing stocks plunging most since Feb 2018... WTI hovered around $56 ahead of the data, dipped very modestly after but was basically unimpressed...
WTI Slides After Crude Inventories Drawdown Less Than Hoped - Oil prices held on to gains overnight after a surprisingly large crude draw reported by API (though crude is down about 18% from its late April highs as the trade war between the U.S. and China, the world’s biggest economies, weighs on demand.). “The drawdown will certainly help support sentiment,” said Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney. “But the market is definitely taking the glass-half-empty type approach to data.” DOE:
- Crude -2.73mm (-1.8mm exp)
- Cushing -2.485mm
- Gasoline +312k
- Distillates +2.61mm
After two weeks of unexpected builds, crude inventories drew down more than expected last week (though less than API reported) but Gasoline and Distillates stocks rose more than expected... Despite the ongoing collapse in the oil rig count, US crude production remains near record highs...
Oil rises as US crude inventories fall - Crude oil futures rose on Wednesday after U.S. government data showed a big drawdown in domestic crude stockpiles, but rises in refined product inventories limited price gains, as did lingering worries about the global economy. Brent crude futures rose 1.2%, to $60.72 a barrel. It reached a session high of $61.41 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 0.5%, to $56.42 a barrel, after hitting $57.13 a barrel. Prices pared gains after inventory data from the U.S. Energy Information Administration showed builds in gasoline and distillate stocks. Crude stockpiles decreased by 2.7 million barrels in the week to Aug. 16, the data showed, a bigger drawdown than the 1.9 million barrels that analysts had forecast. Gasoline stocks rose by 312,000 barrels, while distillate stockpiles gained by 2.6 million barrels “It looks like gasoline demand has peaked for the season, and will only trend lower from here,” said John Kilduff, partner at energy hedge fund Again Capital Management in New York. Tensions between the United States and Iran remained in focus. Iranian President Hassan Rouhani said that if Iran’s oil exports are cut to zero, international waterways will not have the same security as before, cautioning Washington against tightening pressure on Tehran. The comment coincided with a remark by Iranian Foreign Minister Mohammad Javad Zarif that Tehran might act “unpredictably” in response to U.S. policies under President Donald Trump.
U.S. oil prices settle lower as crude supplies log first weekly slump in 3 weeks -- U.S. oil futures settled lower Wednesday after the government reported a weekly decrease in domestic crude supplies, the first in three weeks, but smaller than the market expected. Concerns over energy demand also continued to pressure prices. Looking at the inventory data from a trend standpoint, “it appears the stretch of steep draws in crude supply, which were offering fundamental price support to the oil market earlier in the summer, have abruptly ended according to the last three EIA reports, as stockpiles have actually risen modestly since late July,” said Tyler Richey, co-editor at Sevens Report Research. “Demand concerns linked to a potential global economic slowdown remain the No. 1 headwind for oil right now,” he added. West Texas Intermediate crude for October delivery, +0.36% fell by 45 cents, or 0.8%, to settle at $55.68 a barrel on the New York Mercantile Exchange, following gains in each of the last three trading sessions. It was at $56.77 shortly before the supply data. The October contract for global benchmark Brent crude BRNV19, +0.52%, however, rose 27 cents, or 0.5%, to $60.30 a barrel on ICE Futures Europe. On Tuesday, Brent finished above $60 for the first time in a week. The Energy Information Administration on Wednesday reported that U.S. crude supplies fell by 2.7 million barrels for the week ended Aug. 16. That followed increases in each of the previous two weeks. Analysts polled by S&P Global Platts, on average, expected a decline of 3.1 million barrels, while the American Petroleum Institute on Tuesday reported a 3.5 million-barrel decrease. The EIA data also showed that inventories of gasoline edged up by 300,000 barrels, while distillate stockpiles rose by 2.6 million barrels last week. The S&P Global Platts survey had shown expectations for a supply decreases of 1.6 million barrels for gasoline and 200,000 barrels for distillates. On Nymex, September gasoline rose 1.3 cents, or 0.8%, to $1.6938 a gallon, while September heating oil added nearly half a cent, or 0.2%, to $1.8573 a gallon. Also on Nymex, September natural gas fell 4.8 cents, or 2.2%, to settle at $2.17 per million British thermal units. A report from the EIA due Thursday is expected to show a 61-billion-cubic-foot climb in last week’s U.S. natural-gas inventories, according to analysts polled by S&P Global Platts. Oil prices saw little reaction to the Wednesday release of minutes from the Federal Open Market Committee’s July meeting. Fed officials shied away from saying how many more easing steps they might be willing to support this year. Some officials said the Fed had to remain “flexible” and focused on the economic data given the risks weighing on the economy.
Oil slips below $60, Jackson Hole summit in focus - Oil slipped below $60 a barrel on Thursday despite a drop in U.S. crude inventories and OPEC-led supply cuts as worries about the global economy weighed on crude prices. Brent crude fell 45 cents to $59.85 a barrel while U.S. West Texas Intermediate crude shed 42 cents to $55.26. Traders on Thursday parsed through commentary from Federal Reserve officials delivered from Jackson Hole, Wyoming. Both Kansas City Federal Reserve President and Philadelphia President told CNBC they don’t believe further interest rate cuts are needed, fostering fears that the central bank won’t come to the rescue if the U.S. economy decelerates. Still, the losses were limited given inventories data. “Today prices are basically unchanged in the same relatively small range,” said Olivier Jakob of Petromatrix. “The focus now is going to be on Jackson Hole, I think, to the end of the week.” U.S. crude inventories fell by 2.7 million barrels last week, more than analysts expected. Still, the U.S. Energy Information Administration also said gasoline and distillate inventories rose. The price of Brent is up by 12 percent this year, supported by supply cuts led by the Organization of the Petroleum Exporting Countries, and export cuts in Iran and Venezuela which are under U.S. sanctions. Iran on Wednesday said if its oil exports are cut to zero, international waterways would not have the same security as before, cautioning Washington against raising pressure on Tehran. Still, lingering fears about slowdown in economic growth amid the U.S.-China trade dispute and Brexit has been pressuring prices and forecasters such as the International Energy Agency have been lowering forecasts for world oil demand.
Oil Prices Rise On Stock Drawdown, Iran-West Tensions - Oil prices rose on Thursday after U.S. government data showed a drawdown in domestic crude stocks. Benchmark Brent crude climbed 0.75 percent to $60.74 a barrel, extending gains for a fifth consecutive session. West Texas Intermediate (WTI) crude futures were up 0.7 percent at $56.08 per barrel. Data released by Energy Information Administration on Wednesday showed that U.S. crude stockpiles dropped by 2.7 million barrels in the week ended August 16, after registering increases in the previous two weeks. However, gasoline inventories were up 300,000 barrels last week and distillate stockpiles increased by 2.6 million barrels. Oil markets also remained supported by simmering tensions between the United States and Iran, with Iranian President Hassan Rouhani striking a muscular tone on dealings with the United States. In a speech in Tehran during the unveiling of the Bavar-373, Rouhani said that talks are useless when enemies do not accept logic. Iran's state TV reported that the Bavar-373 is able to recognize up to 100 targets at a same time and confront them with six different weapons.
Oil slips 0.6% as global growth fears, Fed comments weigh on crude - Oil prices weakened on Thursday as worries about the global economy weighed and equity markets were under pressure as uncertainty over the outlook for U.S. interest rate cuts left investors on edge. U.S. West Texas Intermediate crude shed 33 cents to $55.35 per barrel while Brent crude lost 39 cents to $59.91. Traders are awaiting a speech from Federal Reserve Chair Jerome Powell on Friday in Jackson Hole, Wyoming, that could indicate whether the U.S. central bank will continue to cut interest rates. “The market will be shifting focus today to broader based macro headlines with comments out of Jackson Hole likely to be prioritized in this regard,” said Jim Ritterbusch, president of Ritterbusch and Associates. “While we are not expecting any dramatic developments capable of swinging the equities either way by more than 1% or so, we feel that current bullish momentum in the oil market could allow the energy complex to absorb bearish guidance much easier than any negative Jackson Hole guidance that may be forthcoming.” U.S. stocks turned lower on Thursday as the first contraction in the manufacturing sector in nearly a decade and after Philadelphia Federal Reserve Bank President Patrick Harker said on Thursday that he does not see the case for additional stimulus. The Jackson Hole speech is important for oil as signals from the Fed on monetary easing affect the U.S. dollar. A weaker U.S. currency tends to support oil prices, and the dollar eased on Thursday against a basket of currencies. Concerns over the impact of the trade tensions between Washington and Beijing on the U.S. economic expansion, the longest on record, prompted the Fed to cut interest rates last month for the first time since 2008. The prolonged trade spat has sparked worries about growth in oil demand. Forecasters such as the International Energy Agency have been lowering forecasts for world oil demand. U.S. President Donald Trump on Wednesday said he was “the chosen one” to address trade imbalances with China, even as congressional researchers warned his tariffs would reduce U.S. economic output by 0.3% in 2020.
Oil plunges 3% as new China tariffs dent global growth expectations - Crude prices plunged on Friday after China unveiled new tariffs on U.S. goods, dampening expectations of global economic growth. U.S. oil traded 3.2% lower, or $1.76 at $53.58 per barrel and reached its lowest level in a week. Brent oil fell 2%, or $1.19 to trade at $$58.75 per barrel. China said it will slap tariffs on $75 billion worth of U.S. imports ranging from 5% to 10%. The tariffs will take effect in two batches on Sept. 1 and Dec. 15. The goods targeted by China in these tariffs include autos. Earlier in the day, crude prices were up slightly while investors awaited clues on the U.S. Federal Reserve’s monetary policy. A speech by Fed Chair Jerome Powell later on Friday at a meeting of global central bankers in Jackson Hole, Wyoming, is expected to provide clues on whether the U.S. central bank will cut interest rates for a second time this year to boost the world’s largest economy. Traders’ expectations of further U.S. monetary easing were clouded by comments from two Fed officials on Wednesday who said they do not see a case for a rate cut now. “If Powell talks about lower for longer and reverses some of the hawkish comments that we heard from Fed members earlier this week, we could see it supporting oil,” said Michael McCarthy, chief market analyst at CMC Markets in Sydney.
Oil Prices Mixed for the Week - WTI and Brent crude futures declined Friday, but the Brent managed to show a slight week-on-week increase. West Texas Intermediate (WTI) and Brent crude futures declined Friday, but the latter benchmark nevertheless showed a slight week-on-week increase. The October WTI contract price lost $1.18 Friday to settle at $54.17 per barrel. It peaked at $55.60 and bottomed out at $53.24 during the late-week session. Compared to the August 16 close, the WTI is down 1.3 percent. Brent crude oil for October delivery posted a more modest decline Friday, falling 58 cents to end the day at $59.34 per barrel. Week-on-week, the Brent is up 1.2 percent. “Same old song, new verse,” commented Tom Seng, Assistant Professor of Energy Business at the University of Tulsa’s Collins College of Business. “After higher prices Monday fueled by optimism about the U.S./China trade war, oil prices traded in a fairly tight range this week until today.” Both the WTI and Brent declined amid an escalation the bilateral trade dispute, with China unveiling new tariffs to be imposed on copper and crude oil imports, Seng explained. He added that the crude tariff announcement applied more downward pressure on crude in an oil market already facing concerns about global demand growth. “The ‘tit-for-tat’ tariff impositions by the U.S. and China have turned the global economy on its head with the U.S. stock market getting thumped today after a ripple effect of this latest announcement moved across the globe overnight,” said Seng. Seng also pointed out the latest EIA Weekly Petroleum Status Report showed:
- A 2.7 million-barrel (Bbl) decline in commercial crude stocks – far higher than Wall Street Journal analysts’ forecast of a 1.5 million-Bbl draw but lower than the 3.5 million-Bbl draw reported Tuesday by the American Petroleum Institute
- A total of 438 million Bbl of crude in storage – two percent above the five-year average for this time of year
- 42 million Bbl of crude in storage at the Cushing, Okla., hub, reflecting 55 percent of capacity there and a 2.5 million-Bbl week-on-weed decline
- A 1.1-percent increase in refinery utilization to 17.7 million Bbl per day (bpd), or 95.9 percent, that contributed to a drawdown in stocks
- An 11-percent year-on-year decrease in crude imports
- Steady U.S. oil production at 12.3 million bpd for another week
Chaotic & Unpredictable - Iran Vows Oil Routes Won't Be Safe If It Can't Export -- The White House policy of taking Iranian oil exports to "zero" still has a long way to go, thanks in no small part to China, and also despite Pompeo touting this week that US sanctions have removed nearly 2.7 million barrels of Iranian oil from global markets. US frustration was evident upon the release of the Adrian Darya 1, with Gibraltar resisting Washington pressures to hand over the Iranian vessel, given as its en route to Greece, American officials are now warning that they will sanction anyone who touches the tanker. Seizing on Washington's frustration as part of its own "counter-pressure" campaign of recent weeks, Iran has again stated if it can't export its own oil, it will make waterways unsafe and "unpredictable" for anyone else to to so. “World powers know that in the case that oil is completely sanctioned and Iran’s oil exports are brought down to zero, international waterways can’t have the same security as before,” President Hassan Rouhani said while meeting Supreme Leader Ayatollah Ali Khamenei, according to Khamenei’s official website. The provocative statements corresponded with similar remarks from Iranian Foreign Minister Mohammad Javad Zarif, who also warned Tehran might act “unpredictably” in response to “unpredictable” US policies under Trump, according to Reuters. Zarif made the statements in a speech at the Stockholm International Peace Research Institute (SIPRI) while on a broader tour of European countries urging leaders to resist US sanctions threats and abide by commitments under the JCPOA:“Mutual unpredictability will lead to chaos. President Trump cannot expect to be unpredictable and expect others to be predictable. Unpredictability will lead to mutual unpredictability and unpredictability is chaotic,” Zarif said. Iran's military has repeatedly said it alone can secure the vital Strait of Hormuz tanker route, while at the same time warning any outside 'maritime coalition' patrols would be seen as an act of aggression, especially involving the US or Israel.
Iran tanker heads to Greece, U.S. warns against helping vessel - (Reuters) - An Iranian tanker at the center of an angry confrontation between Iran and Washington sailed for Greece on Monday after it was freed from detention off Gibraltar, as Washington called the release unfortunate and warned Greece and Mediterranean ports against helping the vessel. Tehran said any U.S. move to seize the vessel again would have “heavy consequences”. While Iranian Foreign Minister Mohammad Javad Zarif appeared to downplay the possibility of military conflict with Washington in an interview on U.S. television, he also indicated on a visit to Finland that Washington was seeking “more escalation”. The Grace 1, renamed the Adrian Darya 1, left anchorage off Gibraltar about 11 p.m. (2100 GMT) on Sunday. Refinitiv ship tracking data showed on Monday that the vessel was heading to Kalamata in Greece and was scheduled to arrive next Sunday at 0000 GMT. The seizure of the tanker by British Royal Marines near Gibraltar in July 4 on suspicion of carrying oil to Syria in violation of European Union sanctions led to a weeks-long confrontation between Tehran and the West. It also heightened tensions on international oil shipping routes through the Gulf. Gibraltar, a British overseas territory, lifted the detention order on Thursday. But the next day, a federal court in Washington issued a warrant for the seizure of the tanker, the oil it carries and nearly $1 million.
U.S. Warns Mediterranean Ports Against Aiding Iranian Tanker - The United States has issued a warning to Greece as well as to all ports in the Mediterranean Sea about providing assistance to an Iranian tanker that Washington suspects of transporting oil to Syria and having ties to a sanctioned organization, Reuters reported, citing a U.S. State Department official. Any aid would be interpreted as providing material support to Iran's Islamic Revolutionary Guards Corps (IRGC), which Washington considers a foreign terrorist organization. Facilitating the tanker carries potential immigration and criminal consequences, the unidentified U.S. State Department official said on August 19. The warning concerns the Adrian Darya 1, formerly known as Grace 1, a supertanker that left Gibraltar on August 19 after spending 45 days in detention over British suspicions that it was violating European Union sanctions on Syria. Officials in Gibraltar on August 18 rejected a U.S. request to seize the tanker, letting it sail with $130 million worth of crude oil. U.S. Secretary of State Mike Pompeo said the tanker's release was "unfortunate" in an August 19 interview on Fox News Channel. If Iran turns a profit from the tanker's load, the IRGC will have "more money, more wealth, more resources to continue their terror campaign," Pompeo said. Online vessel-tracking sites like Refinitiv show the vessel is heading toward Kalamata, Greece, and is scheduled to arrive on August 25.
Another Tanker With Iranian Oil Now Headed For Syria, Intel Sources Say -- A new report suggests we could be headed toward yet another Grace 1-type incident and showdown involving an Iranian tanker intercept by US or UK forces.A tanker full of Iranian oil is said to be currently on its way to Dubai, with an ultimate offload destination of its 600,000 barrels of oil in Syria. According to the breaking Fox report, citing unnamed Western intelligence sources: The Bonita Queen loaded 600,000 barrels of crude oil on August 2 near the Iranian coast at Kharg Island. Shortly after, the tanker was de-flagged by the country of St. Kitts and Nevis, fearing retaliatory U.S. sanctions. The vessel is now headed to Dubai, where it will refuel before beginning a months-long journey around the horn of Africa, through the Mediterranean and to the shores of Syria. The Bonita Queen, according to its reported route, intends to link up with two Syrian-owned tankers in the Mediterranean in the coming months, where it will conduct a ship-to-ship transfer of the Iran-sourced crude. Analysts have claimed to identify the Syrian tankers as the "Kader" and "Jasmine" — described as owned by a businessman said to be close to Assad, Muhammad al-Qatirji. Qatirji and his firm, the Qatirji Company, are under sanction by the US Treasury. The news comes just as the newly released from Gibraltar/UK custody Iran-flagged Adrian Darya, previously called the Grace 1, is on the move and is headed to waters off Greece.
Iran Oil Tanker Makes Distress Call-- The Iranian oil carrier Helm experienced technical issues in the Red Sea off the Saudi port of Yanbu and the crew is working to resolve the issues, according to the National Iranian Tanker Co. The vessel, one of the world’s largest crude tankers, signaled distress at 6:30 a.m. Iran time on Tuesday, about 75 miles (about 121 kilometers) off of Yanbu, owner NITC said in a statement. Both the ship and crew are safe and stable, NITC said without saying whether the Helm can continue the voyage. Iran’s tanker fleet is under global scrutiny amid U.S. sanctions seeking to choke off the country’s crude sales. The U.S. failed in efforts to seize a loaded supertanker allegedly bound for Syria that had been blocked in Gibraltar for more than a month. That vessel, the Adrian Darya 1, is now sailing east in the Mediterranean and signaling Greece, potentially to transfer crude to other ships. Another tanker loaded crude this month in Iran with the aim of delivering oil to Syria, Fox News reported, citing unidentified intelligence officials. Iranian tankers have turned off their satellite transponders intermittently in an apparent attempt to mask their voyages to supply crude. The Helm appears to have used that strategy since loading some crude in Iran in May. It’s unclear when the Helm entered the Red Sea or what was the ship’s last port of call, based on tanker-tracking data available on Bloomberg. Until this week when the vessel made the distress call, the tanker’s last known position was in the Persian Gulf in May when satellite signals showed the tanker was half full and heading for the Suez canal.
Houthi Drone Attack Sets Saudi Oil Field On Fire --A drone attack by the Yemeni Houthis caused fire at an oil and gas field in Saudi Arabia, the Kingdom’s Energy Minister said as quoted by the Saudi Press Agency.Khalid al-Falih also said the damage caused by the explosive-laden drones was limited to a processing unit of the natural gas processing plant at the Shaybah field.The Yemeni rebel group had earlier said it was using 10 drones to attack the Shaybah field in what they said was the “biggest attack in the depths” of Saudi Arabia yet, as per a Reuters report on the event. The Shaybah field lies about 600 miles from the Houthi-controlled parts of Yemen.The Saudi Press Agency quoted Al-Falih as referring to the event as a “terroristic attack” and noting it had resulted in no casualties and had had no effect on Saudi oil and gas production or exports.The minister also said, as quoted by the SPA, that “these attacks not only target Saudi Arabia, but also the global energy security of supply and through that the global economy, demonstrating once again the imperative for the global community to confront all terrorist entities that carry out such acts of sabotage, including the Houthi militias in Yemen.” This is by far not the first attack on Saudi oil and gas infrastructure by the Iran-affiliated Houthi rebels. Earlier this year, the group said it had a list of 300 military targets in Saudi Arabia and the United Arab Emirates, including oil and gas infrastructure. Following this Saturday’s attack, the leader of the Houthis said “The drone operation today is an important warning to the Emirates,” as quoted by an Iran-affiliated news website.
Separatists Seize Military Bases in Yemen – Separatists in Yemen supported by the United Arab Emirates have seized military bases in Abyan province in the country’s south, just over a week after making similar advances in the port of Aden. On Tuesday, the militia—which represents the pro-secession Southern Transitional Council (STC)—again clashed with government forces, who are their supposed allies in the Saudi-led coalition against the rebel Houthi movement. The government has labeled their actions a “coup” attempt. The renewed fighting raises questions about the internationally-recognized government’s control over its remaining territory, particularly since the UAE began withdrawing some of its troops from the country earlier this month. The U.N. envoy for Yemen, Martin Griffiths, said Tuesday that political fragmentation was becoming a greater threat. “The stakes are becoming too high for the future of Yemen,” he said. The fighting between the separatists and government forces seems to reflect a growing rift between the UAE and Saudi Arabia. The UAE reduced its troops and allowed the southern militia to fill in—leaving behind potential competition. Now, an STC spokesman says that it refuses to withdraw from the military bases but is open to talks with the government. Griffiths, the U.N. envoy, emphasized the urgent need to accelerate the peace process—something the UAE and Saudi Arabia appear to disagree over. The rising tensions between the southern separatists and the government could further jeopardize peace talks involving all parties in the ongoing conflict, including the Houthis.
Rebels claim to have shot down US drone in Yemen - Yemen's Houthi rebels claimed they shot down a US drone over the country's north, as a leading rights group said on Wednesday the Saudi-led coalition fighting the Houthis killed at least 47 Yemeni fishermen in bombing attacks on fishing boats last year. Yahia Sarie, a military spokesman for the Iran-backed Houthis, said in a statement their air defenses downed a US MQ-9 drone on Tuesday over the northern city of Dhamar."The rocket which hit it was developed locally and will be revealed soon at a press conference," he said.The US military's Central Command said in a statement that it was investigating the Houthi claims that they attacked an unmanned US drone "operating in authorised airspace" over Yemen. "We have been clear that Iran's provocative actions and support to militants and proxies, like the Iranian-backed Houthis, poses a serious threat to stability in the region and our partners," said US Army Lt. Col. Earl Brown, a Central Command spokesman.This was the second US drone allegedly downed by the Yemeni rebels. In June, the US said an MQ-9 Reaper was shot down by the Houthis. It said Iran helped the Yemeni rebels bring down the drone.For more than a decade, the US has waged a drone war against al-Qaida in Yemen, trying to eliminate one of the most dangerous branches of the terror network. Rights groups have criticized the attacks because of its civilian casualties. An Associated Press investigation found that at least 30 civilians were killed in such attacks in 2018. Also on Wednesday, Human Rights Watch said the Saudi-led coalition carried out at least five deadly attacks on Yemeni fishing boats in 2018, killing at least 47 Yemeni fishermen, including seven children.
Yemen threatens to act internationally to stop UAE support for separatists - The Yemeni government threatened, Wednesday, to take necessary measures following international law to ensure the suspension of the UAE’s support for separatists, the so-called Southern Transitional Council, a day after Yemen’s official accusation of Abu Dhabi before the UN Security Council of supporting the separatist insurgency in Aden.A statement by Yemen’s Vice Minister of Foreign Affairs Mohammed Al-Hadhrami said: “The government is taking action to take the necessary measures per international law and the UN Charter to ensure the suspension of the UAE’s support for the Transitional Council, which has enabled the armed insurgency in Aden and Abyan.”Al-Hadhrami reiterated his appreciation of Saudi Arabia’s call for dialogue between the Yemeni government and the separatist council. But he said that the government would participate in any discussion with the “Transitional Council” only when it complies with the demands of the coalition and withdraws. Yemen’s announcement of its intention to act against the UAE came a day after the government officially accused the UAE of supporting the armed separatist insurgency in Aden. Yemen’s UN Permanent Representative, Ambassador Abdullah Al-Saadi, told the UN Security Council, Tuesday, that “without the full planning, execution and financial support of the UAE the military coup against the legitimate government in the city of Aden, would not have happened. We hold the UAE responsible for the repercussions of the armed insurgency.”
Explosion rocks arms depot north of Iraq's Baghdad -A blast has hit an arms depot belonging to Iranian-backed paramilitaries north of Baghdad, according to media reports.The site struck on Tuesday is close to the Balad Air Base, which hosts US forces and contractors and is located about 80km north of the Iraqi capital, in the Salahuddin province.The explosion is the latest in a series of mysterious blasts in recent weeks, targeting bases and warehouses belonging to groups under the umbrella of militias known as the Popular Mobilization Forces (PMF). Some have been blamed on drone attacks, others on faulty storage.There was no immediate claim of responsibility for Tuesday's explosion.A military official told Reuters news agency the intended target was the militia's position near the base, while a paramilitary source said his group's weapons depot was specifically targeted by an aerial bombardment.Witnesses told Reuters the explosion caused stored rockets to fly into nearby orchards and into Balad base itself.Separately, a police source told Reuters news agency that the cause of the explosion was still unclear, adding that two fighters were killed and five were wounded.Last week, at least one person was killed and 29 others wounded after homes were damaged by an explosion at a weapons depot in Baghdad. Some analysts have suggested the strikes might have been carried out by Israel, which last year signalled that it could attack suspected Iranian military assets in Iraq, as it has done with scores of air raids in Syria. "Iraq's air defences have very high capability, but one thing they couldn't detect is an advanced Israeli air attack," Baghdad-based security analyst Hisham al-Hashimi, who advises the government, told Reuters.
Mystery Airstrikes Rock Baghdad Base With US Forces Present; Deaths Reported — Another Shiite militia base near Baghdad has been attacked by airstrikes from an unknown source on Tuesday, one week after a huge blast ripped through a separate pro-Iran militia weapons storehouse near the Iraqi capital’s ‘Green Zone’.Arabic media published images of a massive cloud of smoke coming from the Balad Air Base (also known as al-Bakr base) north of Baghdad, with Iraqi officials confirming the airstrikes. The attack is already being blamed on Israel, and comes following Iraq late last week shutting down its airspace to all ‘unauthorized’ flights not specifically approved at the top levels of the Iraqi government and military.Military Times reported of Iraq’s closure of its airspace last Thursday: “U.S. military officials in Iraq will now seek out Iraqi approval before launching any air operations, a move made a day after that nation’s prime minister announced a ban of unauthorized flights, including those involving coalition forces fighting ISIS.” Prime Minister Abdul-Mahdi had called for an end to all “unauthorized flights” including US drones, spy planes, jets, or helicopters. The directive demanded that all aerial vehicles comply with Iraqi law and operations must be under Iraqi government authorization.Crucially, Balad base – the location of the alleged new airstrikes – hosts US forces and contractors, according to Reuters. There are reports of an unknown number of fatalities at the installation which also hosts US-supplied Iraqi F-16 fighter jets.
Iraqi militias blame US and Israel for attacks on bases Iraq's paramilitary groups backed by Iran have blamed a series of recent blasts at their weapons depots and bases on the United States and Israel, vowing to defend themselves against any future attack. The statement on Wednesday came from the Popular Mobilisation Forces (PMF), or Hashd al-Shaabi, the umbrella grouping of Iraq's mostly Shia militias. It said the US had allowed four Israeli drones to enter the region accompanying US forces and carry out missions on Iraqi territory. "We announce that the first and last entity responsible for what happened are the American forces, and we will hold them responsible for whatever happens from today onwards," said the statement, signed by the PMF's deputy head, Jamal Jaafar Ibrahimi, also known as Abu Mahdi al-Mohandes. The US-led coalition, in Iraq to fight remnants of the Islamic State of Iraq and the Levant (ISIL, or ISIS) group, dismissed the statement. "The mission of CJTF-OIR in Iraq is solely to enable our Iraqi Security Force partners in the mission of an enduring defeat of Daesh," it said, using an alternative name for ISIL. "We operate in Iraq at the invitation of the government of Iraq and comply with their laws and direction." The statements came a day after several blasts hit a position held by a PMF group next to Balad airbase, about 80km north of the capital, Baghdad.
Iraq Closes Airspace Even To US Coalition Flights After Suspected Israeli Raid - In what is a severely under reported but perhaps the most alarming development out of the Middle East this week, Iraq's government has said it's ready to down any aircraft violating its airspace amid a blanket ban on 'unauthorized' flights not specifically approved by the prime minister's office. Military Times reported the day after Iraq closed its airspace on Thursday: U.S. military officials in Iraq will now seek out Iraqi approval before launching any air operations, a move made a day after that nation’s prime minister announced a ban of unauthorized flights, including those involving coalition forces fighting ISIS.Prime Minister Abdul-Mahdi called for an end to all “unauthorized flights” including US drones, spy planes, jets, or helicopters on Thursday. The directive demanded that all aerial vehicles comply with Iraqi law and operations must be under Iraqi government authorization. The US Coalition on Friday issued a statement saying that it is ready to comply with the order: The US-led Coalition says it is complying with an order by Iraq's Prime Minister banning airspace access to international aircraft [following a recent claimed US or Israeli strike on an arms dump near Baghdad, which killed a civilian and destroyed c$100m of munitions] pic.twitter.com/qtafT7csEH — Airwars (@airwars) August 16, 2019 The drastic Baghdad decision came after on Monday a massive blast ripped through a neighborhood in the city, which Iraqi officials believe was the result of an Israeli strike on a pro-Iranian militia ammunition depot. The resulting fire had raged throughout the day not far from the 'Green Zone' and sent mortars and exploding munitions across the city, resulting in the death of at least one civilian and wounding of nearly 40 others, many of them children. The weapons base reportedly belonged to the pro-Iran Kataib Sayyid Al-Shuhada militia, and an estimated $110 million worth of munitions were wiped out.
Hundreds of ISIL Terrorists Preparing to Attack Mosul’s Nearby Cities (FNA)- A senior Kurdish militia commander warned against an imminent attack by several hundred ISIL terrorists, who are stationed in a region in Southern Mosul, on other cities of Nineveh province, the Arabic-language media outlets said. The Arabic-language al-Ma’aloumeh news website quoted Ghias al-Sourji as saying that around 400 to 500 ISIL terrorists together with their families are still present in Qara Joukh mountain near the city of Makhmour, South of Mosul. He pointed to the ISIL's recent increased movements in the region, and said that the presence of such a number of terrorists in Makhmour is a serious threat to Nineveh, Kirkuk and Erbil. There are reports that the terrorists stationed to the South of Mosul are getting prepared to penetrate into several Iraqi cities. In a relevant development earlier in August, a former Iraqi parliamentarian said that there are still hundreds of ISIL militants in Western Iraq even after the official declaration on the annihilation of the terrorist group. The Arabic-language website of the Russia Today quoted the former head of Iraqi Parliament’s Security and Defense Committee, Hakem al-Zameli, as saying that according to the accurate information of the Iraqi government, the total number of the ISIL’s active terrorists in Iraq currently stands at 1,500, who move between Iraq and Syria. Al-Zameli reiterated that the ISIL terrorists are deployed in desert regions, specially border regions between Iraq and Syria as well as the Hamrin mountains and areas under dispute by Iraq's Central government in Baghdad and the Iraqi Kurdistan Regional Government. In a relevant development in late June, a prominent Iraqi security expert warned of the US plot to transfer the ISIL terrorists to the bordering areas with Syria in collaboration with the two countries’ tribes. Al-Ma’aloumeh news website quoted Hossein al-Kanani as saying that the US attempts to transfer the ISIL terrorists to the bordering areas of Iraq and Syria and build safe shelters for them through coordination with a number of tribal leaders in the region. He referred to the recent attempts by US Ambassador to Baghdad Matthew Tueller to meet the Iraqi tribal leaders, and said other goals are also pursued by the measure, including targeting the Hashd al-Shaabi (Iraqi popular forces) and Iraqi security forces in these regions and cutting Tehran-Baghdad-Damascus-Beirut connections by taking control over the Iraqi-Syrian borders.
Russia's Sound Proposal for Gulf Peace - There is an eminently reasonable and feasible way to avoid conflict in the Persian Gulf, and to secure peace. The principles of multilateralism and international law must be adhered to. It seems almost astounding that one has to appeal for such obvious basic norms. Fortunately, Russia has presented a roadmap for implementing a security concept in the vital waterway based on the above principles.Russia’s deputy envoy to the United Nations, Dmitry Polyansky, outlined a possible international coalition to provide security for commercial shipping through the strategically important Persian Gulf. The narrow outlet accounts for up to 30 per cent of all globally shipped oil on a daily basis. Virtually every nation has a stake in the safe passage of tankers. Any disruption would have huge negative consequences for the world economy, impacting all nations.The Russian proposal, which has been submitted to the UN Security Council, is currently being considered by various parties. Crucially, the security concept put forward by Moscow relies on the participation of the Gulf n ations, including Iran. Rather than being led by an outside power, the Russian proposal envisages a region-led effort.This multilateral arrangement for cooperation between nations is solidly within the principles of the UN Charter and international law. Potentially, it can build trust and positive relations, and thereby reduce the climate of tensions and uncertainty which have intensified over recent months, primarily between the United States and Iran. One thing for sure is that the US proposal for a naval coalition led by Washington, purportedly to “protect shipping” in the Gulf, is a non-starter. Most nations have rebuffed the American plan. Germany, France and other European Union states have given it a resounding pass. Even Arab nations allied with the US, such as Saudi Arabia and the United Arab Emirates, have demurred on the idea. Significantly, too, the Gulf states have refrained from following Washington’s line of fingering Iran for the unknown sabotage incidents. After weeks of lobbying for its US-led “navy coalition”, Washington appears to have recruited just two other partners: Britain and Israel. The term “coalition” is therefore a misnomer in this context. It also has no credibility as a force serving to uphold international law and security. The position of the US-led axis is one of outright hostility towards Iran. It is premised on the flawed assumption that Iran is the “problem”.
Sudan opposition leaders form government with the army - The Force for Freedom and Change (FFC), an umbrella group of opposition groups, have signed a power-sharing agreement with the Transitional Military Council (TMC), Sudan’s military junta. The agreement reached on Saturday August 17, was initialed just days after the TMC gunned down school children in El-Obeid. It gives free rein to the military and security forces, which ousted long-term dictator President Omar al-Bashir in April to prevent the overthrow of the entire regime, to rule Sudan under the guise of a civilian “government” but on behalf of the tiny venal elite that has controlled the country since independence in 1956. The agreement was met with a palpable sense of relief in Western and regional capitals that eight months of mass protests may now finally be over. It is a shameless betrayal of the movement which brought cities across the country to a virtual standstill demanding a fundamental transformation of the entire social order. Heads of state, prime ministers and dignitaries from several countries, including Ethiopia’s Prime Minister Abiy Ahmed and South Sudanese President Silva Kiir, attended the signing ceremony. The agreement, the subject of months-long talks that stalled repeatedly amid the junta’s violent and bloody crackdowns on hundreds of thousands of protestors, was brokered by the butcher of the Egyptian revolution, President Abdel Fattah el-Sisi, in his role as the chair of the African Union (AU), and Ethiopian envoy Mahmoud Dirir. All this took place under the watchful eye of Washington and its junior partner in London, Sudan’s former colonial master, determined to ensure that the uprising does not spread to its regional allies, Saudi Arabia, the United Arab Emirates and Egypt, without whose support the junta would not have survived.
China’s Ultimate Play For Global Oil Market Control - All attention is focused on the twists-and-turns of the very noisy US-Iran dispute in the Persian Gulf, but all the while the People’s Republic of China (PRC) is rapidly and quietly consolidating a dominant presence in the area with the active support of Russia. Beijing, as a result, is fast acquiring immense influence over related key dynamics such as the price of oil in the world market and the relevance of the petrodollar. The PRC and the Russians are capitalizing on both the growing fears of Iran and the growing mistrust of the US. Hence, the US is already the main loser of the PRC’s gambit. The dramatic PRC success can be attributed to the confluence of two major trends:
- (1) The quality and relevance of what Beijing can offer to both Iran and the Saudi-Gulf States camp; and
- (2) The decision of key Arab leaders — most notably Saudi Crown Prince Mohammed bin Salman bin ‘Abd al-’Aziz al Sa’ud (aka MBS) and his close ally, the Crown Prince of Abu Dhabi, SheikhMohammed bin Zayed Al Nahyan (aka MBZ) — to downgrade their traditional close ties with the US, and reach out to Beijing to provide a substitute strategic umbrella.
Hence, the PRC offer to oversee and guarantee the establishment of a regional collective security regime — itself based on the Russian proposals and ideas first raised in late July 2019 — is now getting considerable positive attention from both shores of the Persian Gulf. Iran, Saudi Arabia, the United Arab Emirates (UAE), Qatar, and Oman appear to be becoming convinced that the PRC could be the key to the long-term stability and prosperity in the Persian Gulf and the Arabian Peninsula. Iran is also considering the expansion of security cooperation with Russia as an added umbrella against potential US retaliation. Overall, according to sources in these areas, the US was increasingly perceived as an unpredictable, disruptive element. The profound change in the attitude of the Saudi and Emirati ruling families, who for decades have considered themselves pliant protégés of the US, took long to evolve. However, once formulated and adopted, the new policies have been implemented swiftly. The main driving issue is the realization by both MBS and MBZ that, irrespective of the reassuring rhetoric of US Pres. Donald Trump and Jared Kushner, their bitter nemesis — Qatar — is far more important to the US than the rest of the conservative Arab monarchies and sheikhdoms of the GCC. There are good reasons for the US preference of Qatar. The Al-Udeid Air Base in Qatar is by far the most important US base in the entire greater Middle East. Qatar is mediating between the US and several nemeses, including Afghanistan, Iran, and Turkey. Qatar is providing “humanitarian cash” to HAMAS in the Gaza Strip, thus buying quiet time for Israel. Qatar has given generous “political shelter” to numerous leaders, seniors, and commanders of questionable entities the US would like to protect but would never acknowledge this (including anti-Russia Chechens and other Caucasians, and anti-China Uighurs).
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